Exhibit C
Minutes Exhibit C
Port Commission Regular Meeting
of November 22, 2016
GROUND LEASE AGREEMENT
SEATTLE GATEWAY 2
(NERA 2)
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TABLE OF CONTENTS
Page
ARTICLE 1: DEFINITIONS.................................................................................................... 1
ARTICLE 2: LEASE OF PROPERTY; CONDITION AND USE OF PROPERTY .............. 9
ARTICLE 3: TERM ............................................................................................................... 10
ARTICLE 4: RENT ................................................................................................................ 16
ARTICLE 5: TENANT'S SECURITY .................................................................................. 20
ARTICLE 6: PRE-LEASE OBLIGATIONS OF TENANT .................................................. 20
ARTICLE 7: CONSTRUCTION, OPERATION AND OWNERSHIP OF THE
PROJECT.......................................................................................................... 21
ARTICLE 8: ALTERATIONS; OWNERSHIP OF CERTAIN INSTALLATIONS............. 28
ARTICLE 9: USE................................................................................................................... 29
ARTICLE 10: REAL AND PERSONAL PROPERTY TAXES ............................................. 29
ARTICLE 11: INDEMNITY AND INSURANCE .................................................................. 30
ARTICLE 12: OPERATING EXPENSES; UTILITIES .......................................................... 34
ARTICLE 13: REPAIR AND MAINTENANCE; COMPLIANCE WITH LAWS ................ 35
ARTICLE 14: COMPLIANCE WITH ENVIRONMENTAL LAWS ..................................... 36
ARTICLE 15: DAMAGE OR DESTRUCTION...................................................................... 44
ARTICLE 16: CONDEMNATION.......................................................................................... 44
ARTICLE 17: SURRENDER AND HOLDING OVER.......................................................... 46
ARTICLE 18: IMPAIRMENT OF TITLE ............................................................................... 48
ARTICLE 19: ESTOPPEL CERTIFICATES, ATTORNMENT AND
SUBORDINATION.......................................................................................... 48
ARTICLE 20: MORTGAGES OF TENANT'S INTEREST ................................................... 49
ARTICLE 21: DEFAULT ........................................................................................................ 52
ARTICLE 22: RELOCATION; EASEMENTS ....................................................................... 55
ARTICLE 23: NO WAIVER; LANDLORD'S RIGHT TO PERFORM................................. 55
ARTICLE 24: ASSIGNMENT................................................................................................. 57
ARTICLE 25: SUBLEASE ...................................................................................................... 59
ARTICLE 26: MISCELLANEOUS ......................................................................................... 61
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GROUND LEASE AGREEMENT
THIS GROUND LEASE AGREEMENT (the "Agreement") is made as of this ____ day
of ____________, 2016 by and between the PORT OF SEATTLE, a Washington municipal
corporation ("Port"), and SEATTLE GATEWAY 2, LLC, a Delaware limited liability company
("Tenant").
For and in consideration of the mutual promises, covenants and conditions hereinafter set
forth, the parties agree as follows:
ARTICLE 1: DEFINITIONS
The following terms shall have the meanings specified in this Article, unless otherwise
specifically provided. Other terms may be defined in other parts of the Agreement.
1.1 Additional Rent. "Additional Rent" shall have the meaning set forth in Section
4.3 below.
1.2 Adjustment Date. "Adjustment Date" shall have the meaning set forth in Section
4.2.4 below.
1.3 Affiliate. "Affiliate" shall mean and refer to any Person, directly or indirectly
controlling or controlled by, or under direct or indirect common control with, or managing
another Person. A Person shall be deemed to control another Person for the purposes of this
definition if such first Person possesses, directly or indirectly, the power to direct, or cause the
direction of, or participate in the management and policies of the second Person, whether through
the ownership of voting securities, common directors, trustees, membership or officers, by
contract or otherwise.
1.4 Agreement. "Agreement" shall mean and refer to this Agreement, together with
the Exhibits, and all agreements supplemental to or modifying this Agreement, whether made
contemporaneously herewith or subsequent hereto.
1.5 Agreement Year. The first (1st) "Agreement Year" shall be the twelve (12)
month period commencing upon the first (1st) day of the calendar month following the
Commencement Date of this Agreement. Thereafter, "Agreement Year" shall mean and refer to
each successive twelve (12) month period following the expiration of the first Agreement Year.
1.6 Airport. "Airport" means Seattle-Tacoma International Airport.
1.7 Alteration. "Alteration" shall have the meaning set forth in Section 8.1 below.
1.8 Authorities. "Authorities" shall mean and refer to the United States, State,
County, City or other local governmental or quasi-governmental authorities, or any department,
office, or agency of the foregoing now existing or hereafter created.
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1.9 Base Rent. "Base Rent" shall have the meaning set forth in Section 4.2 below.
1.10 City. "City" shall mean and refer to the City of Burien, Washington.
1.11 Commencement Date. "Commencement Date" shall be the date upon which
Tenant elects to waive the Due Diligence Period, but no later than April 1, 2017. The
Commencement Date shall be documented by letter agreement between the Port and Tenant and
incorporated into this Agreement.
1.12 Cure Notice. "Cure Notice" shall have the meaning set forth in Section 20.3.3
below.
1.13 Default Rate. "Default Rate" shall mean and refer to twelve percent (12%) per
annum or the maximum interest rate permitted by law for this transaction in the State of
Washington, whichever is less.
1.14 Due Diligence Period. "Due Diligence Period" means the period set forth in
Section 6.2 during which Tenant may review the condition of the Property for suitability for
development.
1.15 Earthwork Construction Start Date. "Earthwork Construction Start Date" shall
mean the date on which any construction involving earthwork, excavation, trenching, clearing,
grubbing, and/or any other soil-disturbing work on the Premises is begun.
1.16 Earthwork Construction End Date. "Earthwork Construction End Date" shall
mean the date on which all construction involving earthwork, excavation, trenching, clearing,
grubbing, and/or any other soil-disturbing work on the Leased Premises is concluded.
1.17 Environmental Construction Support Work Plan. "Environmental Construction
Support Work Plan" or the "Work Plan" shall mean the approved plan for managing Hazardous
Substances and USTs during construction of the Project as detailed in Section 6.4 and Exhibit F.
1.18 Environmental Construction Field Data Report. "Environmental Construction
Field Data Report" shall mean the document that contains all field observations and data
collected by Tenant and Port environmental professionals during Project construction regarding
the Required Management of suspected and contaminated soil, as approved by Port.
1.19 Environmental Information. "Environmental Information" shall mean and refer to
any environmental documents, records or data, including, without limitation, any study,
evaluation, investigation or results of any environmental testing conducted, or any draft or final
plan concerning environmental matters prepared, by or for Tenant with respect to the Premises.
1.20 Environmental Laws. "Environmental Laws" shall mean and refer to any and all
Legal Requirements relating to the protection of human health and the environment.
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1.21 Event of Default. "Event of Default" shall have the meaning set forth in Section
21.1 below.
1.22 Extension Option(s). "Extension Option(s)" shall have the meaning set forth in
Section 3.2 below.
1.23 Extension Term(s). "Extension Term(s)" shall have the meaning set forth in
Section 3.2 below.
1.24 FAA. "FAA" shall mean and refer to the Federal Aviation Administration.
1.25 Fair Market Rent. "Fair Market Rent" shall have the meaning set forth in Section
4.2.5 below.
1.26 Final Plans. "Final Plans" shall mean Permit Plans (defined in Section 7.3.2)
that have received all approvals necessary to proceed with construction from government and
other Authorities.
1.27 Force Majeure Event. "Force Majeure Event" shall mean delays which are
beyond the control of Tenant and which are directly caused by strikes, lockouts, riots,
insurrections, acts of terrorism, war, fire or other casualty or acts of God, and not caused by or
resulting from an act or neglect of Tenant. Delays beyond the control of Tenant that are directly
caused by weather, governmental entities, procedures or inspections may be considered a "Force
Majeure Event" only if such events could not be reasonably anticipated by Tenant.
1.28 Future Charges. "Future Charges" shall have the meaning set forth in Section
21.2.2 below.
1.29 Hazardous Substance. "Hazardous Substance" shall mean any substance or
material defined or designated as a hazardous waste, toxic substance, solid waste or other
pollutant or contaminant under any Environmental Laws.
1.30 Incremental Environmental Costs. "Incremental Environmental Costs" shall have
the meaning set forth in Section 7.12.
1.31 Leasehold Mortgage. "Leasehold Mortgage" shall have the meaning set forth in
Section 20.1 below.
1.32 Leasehold Mortgagee. "Leasehold Mortgagee" shall have the meaning set forth
in Section 20.2 below.
1.33 Legal Requirements. "Legal Requirements" shall mean and refer to all laws,
statutes and ordinances including building codes and zoning regulations and ordinances and the
orders, rules, regulations and requirements (whether now or hereafter in effect) of all federal,
state, county, city or other local jurisdiction departments, agencies, bureaus, offices and other
subdivisions thereof, or any official thereof, or of any other governmental, public or quasi-public
Authority, finally determined to be applicable to or have jurisdiction over the Property, or the
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sidewalks or streets adjacent thereto; and all applicable requirements, obligations and conditions
of all Permitted Encumbrances. Tenant may, at its cost, contest any assertion that the Project
does not, or Tenant's Operations do not, comply with Legal Requirements and, so long as Tenant
is pursuing such contest in good faith, Tenant shall not be in default hereunder notwithstanding
such assertion.
1.34 Lien. "Lien" shall mean and refer to any mortgage, lien, security interest,
encumbrance, charge on, pledge of, conditional sale or other encumbrance on the Property,
Project or Premises and any Alteration, fixture, improvement or appurtenance thereto arising by
or through Tenant or Tenant's Operations.
1.35 New Lease. "New Lease" shall have the meaning set forth in Section 20.3.5
below.
1.36 Non-Disturbance and Attornment Agreement. "Non-Disturbance and Attornment
Agreement" or "NDA" shall have the meaning set forth in Section 24.5 below.
1.37 Notice of Default. "Notice of Default" shall mean and refer to written notice of
any Event of Default to Tenant.
1.38 Operating Expenses. "Operating Expenses" shall have the meaning set forth in
Section 12.1 below.
1.39 Intentionally Deleted.
1.40 Permit Plans. "Permit Plans" shall have the meaning set forth in Section 7.3.1
below.
1.41 Permitted Assignment. "Permitted Assignment" shall have the meaning set forth
in Section 24.4 below.
1.42 Permitted Encumbrances. "Permitted Encumbrances" shall mean and refer to the
encumbrances of record referred to in the title commitment issued by First American Title
Insurance Company dated October 26, 2016 as supplemented and amended, (subject to the Port's
obligation to cure any such encumbrances, as set forth in Section 2.2 of this Agreement) and that
would be disclosed by a detailed inspection and/or survey of the Property.
1.43 Permitted Liens. "Permitted Liens" shall mean and refer to the following liens on
Tenant's leasehold interest in the Property and Tenant's interest in the Project so long as they are
subordinate to this Agreement:
(a). Liens arising by statute in connection with worker's compensation,
unemployment insurance, old age benefits, social security obligations, taxes, assessments,
statutory obligations, mechanics liens or labor and material liens arising out of the construction
of improvements, or other similar charges, good faith cash deposits in connection with tenders,
contracts or leases to which Tenant is a party or other deposits required to be made in the
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ordinary course of business, provided in each case that the obligation is not for borrowed money
and that the obligation secured is not delinquent (or, in the event of a dispute, that Tenant is
prosecuting or defending the dispute at Tenant's cost to the extent required to protect the Port
from any loss, cost or expense arising from such lien); and
(b). Any Leasehold Mortgage.
1.44 Permitted Subleases. "Permitted Sublease" shall mean any sublease by Tenant to
a user who will occupy and use some or all of the Premises, so long as Tenant remains the tenant
and obligated under this Agreement and the term of the sublease is for a shorter period that the
Term of this Agreement and consistent with this Agreement.
1.45 Person. "Person" shall mean and refer to an individual, partnership, corporation,
company, limited liability company, association, trust, unincorporated organization or any other
entity or organization, including a government or agency or political subdivision thereof.
1.46 Port. "Port", or "the Port" shall mean and refer to the Port of Seattle, whose street
address for purposes of notice is Aviation Division, 17801 International Blvd. (Pacific Highway
S.), Main Terminal Building Mezzanine Level Room A6012M, Seattle, Washington 98158,
Attention: Manager, Aviation Properties and whose mailing address for purposes of notice is P.
O. Box 68727, Seattle, Washington 98168, Attention: Manager, Aviation Properties.
1.47 Port Party. "Port Party" shall have the meaning set forth in Section 11.1.2.
1.48 Post-Termination Remediation. "Post Termination Remediation" shall have the
meaning set forth in Section 14.4 below.
1.49 Pre-existing Hazardous Substances. "Pre-existing Hazardous Substances" shall
mean and refer to any actionable levels (as such may change from time to time) of Hazardous
Substances, including those set forth in the Pre-Lease Environmental Evaluation Report, and
excluding any Hazardous Substances brought onto the Property by Tenant or its employees,
agents or invitees.
1.50 Pre-Lease Environmental Condition. "Pre-Lease Environmental Condition" shall
mean and refer to the nature and extent of Hazardous Substances and USTs on the Property, as
determined by and set forth in the Pre-Lease Environmental Evaluation Report.
1.51 Pre-Lease Environmental Evaluation. "Pre-Lease Environmental Evaluation"
shall mean and refer to an environmental assessment, conducted pursuant to the
American Society for Testing and Materials ("ASTM") standard 1527-05 or current ASTM
standard for the conduct of environmental site assessments, performed by the Tenant on the
Property during the Due Diligence Period as it may be modified during the construction of the
Project. The Pre-Lease Environmental Evaluation shall consist of the following four (4)
investigation elements:
(a) A Phase 1 environmental site assessment;
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(b) A Phase 2 environmental site assessment (as needed based on the results
of the Phase 1 assessment);
(c) A geotechnical investigation; and
(d) Observations of environmental professionals collected during construction
of the Project and documented in the Environmental Construction Field Data Report.
1.52 Pre-Lease Environmental Evaluation Report. "Pre-Lease Environmental
Evaluation Report" shall mean and refer to the report containing the Pre-Lease Environmental
Evaluation as it may be amended.
1.53 Premises. "Premises" shall mean and refer to the leased Property together with
the Project to be erected by Tenant on the Property.
1.54 Project. "Project" shall mean and refer to the one (1) commercial and industrial
building as well as the on and off site improvements to be constructed by Tenant on the Property,
including the Emergency Easement under Section 7.1.3.
1.55 Property. "Property" shall mean that parcel of land, comprising approximately
7.1 acres, legally described in Exhibit A hereto and depicted on Exhibit B hereto, subject to the
Permitted Encumbrances.
1.56 Property Value. "Property Value" shall have the meaning set forth in Section
16.2.1 below.
1.57 Rent. "Rent" shall mean and refer collectively to sums denominated as Base
Rent, Additional Rent and any such other sums or charges otherwise payable by Tenant under
the terms of this Agreement. Failure by Tenant to pay any sum denominated as Rent shall entitle
the Port to pursue any or all remedies specified in this Agreement or, to the extent not precluded
by this Agreement, otherwise allowed by law.
1.58 Rental Deficiency. "Rental Deficiency" shall have the meaning set forth in
Section 21.2.2 below.
1.59 Required Management. "Required Management" shall mean appropriate
management of Hazardous Substances in compliance with Legal Requirements.
1.60 Security. "Security" shall have the meaning set forth in Section 5.1 below.
1.61 Site Plan. "Site Plan" shall mean the preliminary Site Plan for development of the
Property as attached hereto as Exhibit B.
1.62 Substantial Completion. "Substantial Completion" shall have the meaning set
forth in Section 7.6 below.
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1.63 Tenant. "Tenant" shall mean Seattle Gateway 2, LLC, a Delaware limited
liability company.
1.64 Tenant's Operations. "Tenant's Operations" shall mean and refer to commercial,
industrial and warehouse building operations.
1.65 Term. "Term" shall have the meaning set forth in Section 3.1 below.
1.66 Termination Assessment Report. "Termination Assessment Report" shall have
the meaning set forth in Section 14.4 below.
1.67 Trade Fixture. "Trade Fixture" shall mean and refer to any furniture, fixtures
and/or equipment located on or about the Premises that may be removed from the Premises
without causing damage to the Premises that cannot readily be restored or repaired without
undue expense and that has not become so related to the Property or the building thereon such
that an interest in them arises under real property law.
1.68 USTS. " USTs" shall mean underground storage tanks present on the Property on
the Commencement Date.
ARTICLE 2: LEASE OF PROPERTY; CONDITION AND USE OF PROPERTY
2.1 Agreement. Subject to the provisions, covenants and agreements contained in this
Agreement, the Port hereby leases to Tenant and Tenant hereby leases from the Port the Property
for the Term.
2.2 Condition and Use of Property. As of the Commencement Date, Tenant is fully
familiar with the physical condition of the Property, has received the same in good order and
condition and, subject to the Port's obligation with respect to Pre-existing Hazardous Substances
and the USTs arising out of the Pre-Lease Environmental Condition, accepts the Property in its
present, "as is" condition, with all faults and defects, known and unknown, without warranty or
representation of any kind or character by the Port, including, without limitation, the physical
condition of the Property or its adequacy for construction and operation of the Project. Tenant
may use the Property for the uses set forth in ARTICLE 9 hereof so long as such uses are in
conformity with all Legal Requirements affecting the Property, and Tenant will not, by action or
inaction, take or allow any action or thing which constitutes a public or private nuisance or
waste. As of the Commencement Date, Tenant also accepts the Property subject to all the
Permitted Encumbrances. The Port shall deliver the Property to Tenant free and clear of those
liens and encumbrances that may, in Tenant's reasonable judgment, materially interfere with the
Project, or Tenant's use of the Property, and of which Tenant has notified the Port in writing on
or before the end of the Due Diligence Period.
2.3 Quiet Enjoyment. So long as Tenant is not in default under this Agreement and
subject to the specific provisions, covenants and agreements contained in this Agreement, the
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Port covenants and agrees that the quiet and peaceful possession and enjoyment of the Property
by Tenant shall not be disturbed or interfered with by the Port or by any other party claiming by
or through the Port.
2.4
2.5 Rights Reserved to the Port. Tenant acknowledges that Tenant's right to utilize
the Property shall at all times be subject to the Port's reserved rights described, and subject to the
limitations set forth, in ARTICLE 22 and Section 26.8, but the Port's reserved rights shall only
be exercised in accordance with Legal Requirements applicable to Tenant's use and operations of
the Premises and with Tenant's reasonable security and safety protocols.
ARTICLE 3: TERM
3.1 Term. The initial term of this Agreement (the "Term") shall commence on the
Commencement Date and shall extend through the fifty-fifth (55th) Agreement Year. In the
event that Tenant appropriately exercises any Extension Option(s) set forth in Section 3.2, the
Term of this Agreement shall automatically be extended by the Extension Term for each such
Extension Option exercised.
3.2 Extension Options. The Port hereby grants Tenant two (2) successive options to
extend the Term of this Agreement (herein referred to individually as an "Extension Option")
for an additional period of ten (10) years for each option (herein referred to individually as
"Extension Term") on the same terms, covenants, and conditions, except that no additional
Extension Options shall apply following the second Extension Term and Rent during any such
Extension Terms shall be determined and adjusted pursuant to Section 4.2. Written notices of
Tenant's exercise of the Extension Option for each Extension Term must be given to the Port no
less than six (6) months prior to the expiration of the then-current Term (the "Extension Notice
Date"). Tenant shall have no right to exercise its right to extend the Term of this Agreemen t at
such time as an Event of Default is outstanding beyond the applicable notice and cure period;
provided, that, if the Port declares an Event of Default within thirty (30) days prior to the
Extension Notice Date, then the period of time within which said option may be exercised shall
be extended as reasonably necessary for Tenant to cure the Event of Default. In the event that
Tenant fails to exercise an Extension Option within the time period stated above, Port will give
written notice to the Leasehold Mortgagee and Leasehold Mortgagee shall have thirty (30) days
from receipt of the notice to exercise the Extension Option in the place and stead of the Tenant.
In the event that both Tenant and Leasehold Mortgagee fail to exercise an Extension Option in
the time periods contemplated above, the Term of this Agreement shall expire upon the
expiration of the then-current Term, and Tenant shall have no further right to extend the Term
hereof. The Extension Options herein granted to Tenant may not be separated from this
Agreement in any manner, by reservation or otherwise; however, Permitted Subleases may
provide that notice of exercise of a materially co-terminus (e.g., not more than one (1) month
shorter) corresponding extension option by the subtenant of the entirety of the Premises is
binding upon both Tenant and the Port under this Agreement.
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ARTICLE 4:RENT
4.1 Payment of Base Rent. Beginning on the earlier of (i) the day construction of the
Project begins or (ii) April 1, 2017 (such earlier date the "Base Rent Commencement Date");
Base Rent shall be paid in advance on the first day of each and every month during the Term to
the Port without any prior demand therefor and without any abatement, deduction or setoff
whatsoever, except as provided herein. If the Term commences on any day other than the first
day of a calendar month, Base Rent for any fractional month shall be prorated based upon the
actual number of days in such fractional month.
4.2 Base Rent. For the period commencing on the Base Rent Commencement Date
and continuing through the Term and any Extension Terms, the Base Rent shall be payable as
follows:
4.2.1 During Construction. From the Base Rent Commencement Date until the
earlier of (i) Substantial Completion of the Project; or (ii) January 1, 2018; Tenant will pay rent
equal to Seven and 1/2 Cents ($0.075) per square foot of the Property per year.
4.2.2 Post Construction. After the earlier of (i) Substantial Completion of the
Project; or (ii) January 1, 2018; Tenant will pay Eighty-Eight Cents ($0.88) per square foot of the
Property per year..
4.2.3 Good Faith Deposit Credit. Upon execution of this Ground Lease, Tenant
will provide the Port with a One Hundred Thirty-Five Thousand Five Hundred Dollar
($135,500.00) deposit ("Good Faith Deposit") in the form of a promissory note payable to the
Port, in a form attached hereto as Exhibit C and made a part hereof.
4.2.4 Base Rent Adjustments. Base Rent will increase by ten percent (10%)
throughout the Term and any Extension Terms beginning at the sixth (6th) Agreement Year and
then every five (5) years thereafter (each, an "Adjustment Date"). To the extent that the Base
Rent is not determined and agreed upon by the parties before the Extension Options are
exercised, if Tenant disagrees with the adjustment of the Base Rent for the Extension Term
determined after the exercise of the Extension Option, Tenant may withdraw its exercise of the
Extension Option and this Agreement will terminate at the end of the existing Term as if the
Extension Option had not been exercised.
4.2.5 Base Rent Adjustments Reflecting FMV Re-appraisals. Notwithstanding
Section 4.2.4, Base Rent for the twenty first (21st), thirty first (31st), forty first (41st) and fifty first
(51st) Agreement Years and the sixty first (61st) and seventy first (71st) Agreement Years (to the
extent Tenant chooses to exercise one or both of the Extension Options) will be adjusted to the
then-prevailing fair market rental rate (the "Fair Market Rent") considering similarly-zoned,
unimproved industrial property located in the vicinity of the Airport to be delivered to a new
tenant for development as of the applicable Adjustment Date. The value of any improvements
made to the Property by Tenant at no cost to the Port will not be considered in establishing the
Fair Market Rent. In no event will the Fair Market Rent adjustments be less than ninety five
percent (95%) of the then current Base Rent or more than one hundred ten percent (110%) of the
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then current Base Rent. The then applicable Base Rent will increase by ten percent (10%) at the
26th, 36th, and 46th (and the 56th and 66th, as applicable) Agreement Years.
4.2.5.1 Fair Market Rent Proposal Process. The Port will obtain an
appraisal of the fair market value of the Property as unimproved land no sooner than one hundred
eighty (180) days before but not later than one hundred fifty (150) days before the applicable
Adjustment Date and will deliver to Tenant and Leasehold Mortgagee a Fair Market Rent
proposal along with the appraisal report. In the event the Tenant disputes the Fair Market Rent
determination or the Port's appraisal and the parties do not agree on the adjusted Base Rent for
the Property before the ninetieth (90th) day prior to the effective date of the adjustment, the Port
and Tenant shall each deliver to the other a "Final Offer" on the 90th day prior to the effective
date of the adjustment and invoke the Rent Dispute Resolution process described in Section
4.2.5.2 below. "Final Offer" shall mean the last offer with regard to what the Port or Tenant,
respectively, will accept as the rent rate for the Premises on the 90th day prior to the effective
date of the adjustment.
4.2.5.2 Rent Dispute Resolution. Thereafter, the adjusted Fair Market
Rent of the Property will be determined by three (3) arbitrators, each of whom shall be a member
of one of the Society of Industrial and Office Realtors, the American Society of Real Estate
Counselors or the Washington-British Columbia Chapter of the American Institute of Real Estate
Appraisers. The Port and Tenant will each select and fully compensate one of the three
arbitrators and the third arbitrator will be selected by the other two and compensated in equal
shares by the Port and Tenant. Each party shall select an appraiser to be a member of the
arbitration panel within twenty-one (21) days of either party invoking the Rent Dispute
Resolution process. Each party shall cooperate to expedite the selection of the three arbitrators
and in no case may either party delay the selection of the arbitration panel. In the event that
there is a dispute with regard to the selection of the third member of the arbitration panel, either
party may apply to the Superior Court of King County for appointment of the third member of
the arbitration panel. Neither party may use the court process to delay the appointment of the
third arbitrator and each party must cooperate with the party applying for appointment to
accomplish the appointment of the third arbitrator by the most expeditious means, including
acceptance of service if an action is required to be filed, use of the ex parte department or letter
to the presiding judge requesting appointment/designation of arbitrator. The arbitration to
achieve Rent Dispute Resolution shall be based on an approach to valuation consistent with the
standards of professional appraisal practice. For purposes of the Rent Dispute Resolution, the
arbitration panel may ask questions and request further information from each party, but the
arbitration panel shall have discretion with respect to what the panel deems comparable
properties in light of the requirement in Section 4.2.5 that similarly situated industrial property in
reasonable proximity to the Property be considered. The arbitrators shall ultimately select one of
the Final Offers as the resolution of the dispute, and may not render a compromise decision.
Leasehold Mortgagee shall participate in the arbitration process to the extent the Tenant refuses
or fails to participate after due written notice by Port of Tenant's failure to or refusal to
participate.
4.2.5.3 Required Rent. In the event that the Fair Market Rent cannot be
determined until after the applicable Adjustment Date, Tenant shall pay Base Rent at the rate
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proposed by the appraiser appointed by the Port prior to submission of the question to arbitration.
Upon final determination of the Fair Market Rent, any overpayment resulting from the
arbitration decision (or settlement between the parties in anticipation thereof) shall be promptly
refunded by the Port to Tenant together with interest at the Default Rate within fifteen (15) days
from the arbitration decision (or final approval of such settlement).
4.3 Absolute Net Agreement; Additional Rent. It is the intent of the parties that Base
Rent provided in this Agreement shall be an absolutely net payment to the Port. Accordingly, in
addition to Base Rent described in Section 4.2 above, Tenant covenants and agrees to pay as
"Additional Rent" the following: (a) general property taxes (ARTICLE 10); (b) insurance costs
(ARTICLE 11); (c) operating expenses (ARTICLE 12); (d) utility charges (ARTICLE 12); (e)
maintenance and repair expenses (ARTICLE 13) and (f) any other cost or expense associated
with Tenant's Operations on or occupation of the Property, of whatever description, and whether
imposed in the first instance on the Port or Tenant to the extent that the failure to pay such
expenses will result in a liability to the Port or a lien on the fee title to the Property. Except as
otherwise provided herein, to the extent that Tenant is billed for and obligated to pay, any
Additional Rent shall become due with the next monthly installment of Base Rent and shall be
paid to the Port without deduction, set-off or abatement whatsoever. Otherwise, Tenant shall pay
all such insurance costs, taxes operating expenses, utility changes directly to the providers of
such services or operations. Tenant, however, shall not be required to pay any mortgage
indebtedness or any interest on any mortgage that at any time may encumber the interest of the
Port in the Property.
4.4 Remittance Address. Any and all payments due to the Port by Tenant shall be
remitted to the following address: Port of Seattle, P.O. Box 24507, Seattle, WA 98124-0507, or
at such other place as the Port may direct in writing.
4.5 Late Payment. If any payment of Rent is not received by the Port within ten (10)
days of when due, Tenant shall pay to the Port a late payment charge equal to five percent (5%)
of the amount of such delinquent payment of Rent in addition to the installment of Rent then
owing. Notwithstanding anything to the contrary in this Section, late payment and interest
charges shall be subject to a minimum, monthly charge of five dollars ($5.00). In addition, if
such delinquent payment of Rent and late charge are not received within fifteen (15) days of
when such delinquent payment of Rent was originally due, Tenant shall further pay interest on
such delinquent payment of Rent and late charge thereafter at the Default Rate. The Port and
Tenant recognize that the damages which the Port will suffer as a result of Tenant's failure to
timely pay Rent are difficult or impracticable to ascertain, and agree that said interest and late
charge are a reasonable approximation of the damages that the Port will suffer in the event of
Tenant's late payment. This provision shall not relieve Tenant from payment of Rent at the time
and in the manner herein specified. Acceptance by the Port of any such interest and late charge
shall not constitute a waiver of Tenant's default with respect to said overdue amount, nor shall it
prevent the Port from exercising any other rights or remedies available to the Port. The Port
shall have all of the same remedies for Tenant's failure to pay Additional Rent as for failure to
pay Base Rent.
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ARTICLE 5: TENANT'S SECURITY
5.1 Security. On or before the Base Rent Commencement Date, Tenant shall pay to
the Port a security deposit (hereinafter referred to as the "Security") to secure Tenant's full
performance of this Agreement, including the payment of all fees and other amounts now or
hereafter payable to the Port hereunder. The Security will be in the amount of one (1) year of
Base Rent in one of the following forms: (i) delivery of an irrevocable stand-by letter of credit
issued by a bank in a form reasonably approved by the Port; (ii) establishment of a custodial
deposit account; (iii) delivery to the Port of a cash deposit; or (v) delivery of a bond issued by a
bonding company reasonably approved by the Port. The amount of the Security shall be adjusted
consistent with and on the effective date of each Base Rent adjustment set forth in Section 4.2.4
and Section 4.2.5. Upon delivery of the Security to the Port the Good Faith Deposit held by the
Port will be released to Tenant. The Security shall remain in place at all times throughout the
Term of this Agreement and throughout any holdover period (provided that in the event of an
assignment of this Agreement, the Port shall accept a substitute Security from the assignee and
release the initial Security to original Tenant upon request).
5.2 Return of Security. The Security is a part of the consideration for execution of
this Agreement. If Tenant shall have fully performed all terms and conditions of this Agreement,
the Security (or such portion as remains without claim by the Port) shall be returned to Tenant
within sixty (60) days following the termination (or expiration) date; otherwise the Port shall, in
addition to any and all other rights and remedies available under this Agreement or at law or
equity, retain title to that portion of the Security sufficient to remedy the default.
5.3 Application of Security. The Port may apply all or part of the Security to unpai d
rent or any other unpaid sum due hereunder, or to cure other defaults of Tenant. If the Port uses
any part of the Security, Tenant shall restore the Security to its then-currently required amount
within fifteen (15) days after the receipt of the Port's written request to do so. The retention or
application of such Security by the Port pursuant to this Section does not constitute a limitation
on or waiver of the Port's right to seek further remedy under law or equity.
ARTICLE 6: PRE-LEASE OBLIGATIONS OF TENANT
6.1 Subdivision/Plat. Tenant shall be responsible for accomplishing lot consolidation
of the Property required to create one legal lot necessary for the Project's Site Plan.
Construction on the Property shall be consistent with approval required by the City.
6.2 Due Diligence Period - License. The Port grants Tenant a license to occupy the
Property commencing upon mutual execution of this Ground Lease for the later of one hundred
and twenty (120) days or March 31, 2017. Tenant's rights under said license include physical
inspection of the Property, survey of the Property, obtain engineering information, develop preconstruction
architectural information, conduct tests and studies that Tenant deems appropriate,
prepare the Pre-Lease Environmental Evaluation Report, and otherwise examine the Property in
preparation for development ("Due Diligence Period"). At any time during the Due Diligence
Period, Tenant may terminate this Ground Lease in its sole and absolute discretion by written
notice delivered to the Port. If Tenant terminates this Ground Lease during the Due Diligence
{00209478.DOCX; 2 / 13166 / LSE } 12
Period, or fails to deliver written notice to the Port that Tenant is waiving the Due Diligence
Period and electing to proceed with this Ground Lease, then the Good Faith Deposit shall be
promptly returned to Tenant and neither party shall have any further rights or obligations under
this Ground Lease except for those obligations that are to survive the termination of this Ground
Lease. Tenant's failure to deliver written notice to the Port that Tenant is waiving the Due
Diligence Period and electing to proceed with this Ground Lease shall be deemed Tenant's
election to terminate the Ground Lease.
6.2.1 The indemnification provision and the insurance requirements of Section 11
shall apply during the Due Diligence Period.
6.3 Pre-Lease Environmental Evaluation. Tenant will conduct a Pre -Lease
Environmental Evaluation on the Property prior to the end of the Due Diligence Period in
accordance with the provisions of Exhibit F attached hereto and incorporated herein. A final
Pre-Lease Environmental Evaluation Report shall be prepared by Tenant and submitted to the
Port for review and approval at least fifteen (15) days prior to Substantial Completion of the
Project, which approval shall not be unreasonably withheld by the Port.
6.4 Environmental Construction Support Work Plan.
6.4.1 The parties acknowledge that, pursuant to the requirements of Exhibit F,
Tenant will prepare an Environmental Construction Support Work Plan. No later than ten (10)
business days before the Earthwork Construction Start Date, Tenant shall submit to the Port a
final Environmental Construction Support Work Plan which incorporates the comments of the
Port and captures any necessary updates to the Work Plan.
6.4.2 Purpose. The primary purpose of the Work Plan is to ensure the proper
management of Hazardous Substances and UST removal, and to ensure that the Port is paying
only those Incremental Environmental Costs for which it is responsible under Section 7.12 of
this Ground Lease. In addition, the Work Plan shall be designed to facilitate construction of the
Project, regardless of the presence of contamination conditions, consistent with construction
plans and specifications, the construction contract, and in compliance with all Legal
Requirements.
6.4.3 Contents. The Work Plan shall include at least the following information,
delegation of responsibilities, and standard operating procedures:
(a) Personnel roles and responsibilities, including contact information and
process for unanticipated condition call-out;
(b) Environmental professional minimum qualifications;
(c) Designation of known contaminated areas (if any) in construction documents;
(d) Field inspection of construction project areas; and
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(e) Use of standardized procedures to obtain Port concurrence with respect to
Required Management of Pre-Existing Hazardous Substances and USTs,
including but not limited to:
(i) Field screening, sample collection and laboratory analysis;
(ii) Construction excavation of known contaminated areas (if any);
(iii) Construction excavation of unanticipated soil contamination;
(iv) Underground storage tank removal;
(v) Removal of soil containing free draining product;
(vi) Soil handling and disposal, including identification of
contamination action levels for offsite disposal, restricted onsite
reuse, and/or unrestricted onsite reuse, in coordination with
designed excavation limits and geotechnical suitability
determinations;
(vii) Determination of whether suspected contaminated materials will
be managed by direct-haul or on-site stockpiling
(viii) Response to contractor spills or other releases, verification of
cleanup, and appropriate documentation;
(ix) In-field dispute resolution;
(x) Accounting and documenting of Incremental Environmental Costs;
(xi) Required construction support documentation; and
6.5 Permit Applications. To the extent Tenant requires governmental permits or
approvals prior to the Commencement Date of this Agreement, the following provisions shall
apply: Subject to the requirements of ARTICLE 7, Tenant shall have the right, at Tenant's sole
cost and expense, to commence and prosecute any proceedings necessary to cause the issuance
of any development approvals, conditional use, grade and fill, building and any other
governmental permits or approvals desired by Tenant in connection with the development of the
Project or Tenant's Operations. The Port agrees to execute an authorization letter pursuant to
Section 7.1.1 of this Agreement, and such other documents as Tenant may reasonably request in
such regard and for such purpose and the Port further agrees to support and otherwise fully
cooperate with such action commenced by Tenant; provided, however, that except as otherwise
provided in this Agreement: (i) the Port shall not be required to incur any e xpense in doing so,
(ii) Tenant shall exercise commercially reasonable efforts (not including variances or other
processes for deviations from normal code requirements) to cause any such document to be so
worded or submitted as to leave the Port and the Property and all other Port property without
residual liabilities, obligations or encumbrances should Tenant fail to proceed with this
Agreement, (iii) no action affecting the Property or any other Port property shall be finalized and
{00209478.DOCX; 2 / 13166 / LSE } 14
no document referencing the Property or any other Port property shall be recorded without the
Port's express written consent to such finality or recording, which shall not be unreasonably
withheld, conditioned, or delayed (and, unless otherwise indicated, the Port's execution of an
application or petition shall not constitute the Port's consent to finalization of the action
requested in such application or petition or to recording of any document), (iv) the terms of such
permits and any associated agreements are subject to the approval of the Port to the extent that
the terms thereof would bind the Port following expiration or termination of this Agreement,
except that once the Project Site Plan has been approved by the Port no further approvals will be
required for the construction plans and specifications, shop drawings, grading and building
permits for horizontal or vertical construction of improvements or any modifications thereto or
final approval of the construction of the improvements (however, Tenant shall provide copies of
the approved construction plans and specifications, building permit, and final Certificate of
Occupancy and as-built plans to the Port), (v) such documents shall provide that the Port shall
have no liability during the Term for any costs or other liabilities related solely to such permits
or agreements, provided that this Section shall not limit the Port's obligations under applicable
law or as set forth elsewhere in this Agreement, and (vi) Tenant may not execute any documents
that constitute an encumbrance on the Port's fee interest to the Property or conveyance of the
title to the Property or other Port property (except for a Memorandum of an authorized sub-lease
that may be recorded).
6.6 Permanent Improvements. Until the Commencement Date has occurred, Tenant
shall have no authority whatsoever to make any improvements to the Property or commence any
construction of the Project.
6.7 Intentionally Deleted.
ARTICLE 7: CONSTRUCTION, OPERATION AND OWNERSHIP OF THE PROJECT
7.1 Construction of the Project. Following the Commencement Date, Tenant shall
commence the construction of the Project designed for the uses permitted by ARTICLE 9. The
Project shall be of fire-resistant construction according to the standards and ratings of the local
fire insurance rating organization. It shall be constructed in good and workmanlike manner and
in accordance with all Legal Requirements, and with the requirements of the foregoing rating
organization. Tenant or its designee shall obtain all necessary permits, including any
discretionary permits, from the City, the Department of Ecology, and the Army Corps of
Engineers. The plans and specifications shall be prepared by a duly qualified architect (and
engineer, if necessary) licensed in the State of Washington. The Port shall reasonably cooperate,
at no cost to the Port in such permitting processes, including, without limitation, execution of
required applications. To facilitate construction of the Project, the Port shall grant Tenant a
slope easement in a form substantially similar as Exhibit G to this Agreement, over other Port
property located to the east and south of the Property based on the dimensions shown thereon.
7.1.1 Authorization Letter. Following mutual execution of this Ground Lease,
the Port will provide letters to the City of Burien and any other applicable permitting Authority,
authorizing Tenant to sign on behalf of the Port with respect to any permit applications required
{00209478.DOCX; 2 / 13166 / LSE } 15
for the Project. Said letters will be in a form and contain such information required by the
applicable permitting Authority to effectuate the foregoing authorization.
7.1.2 Emergency Vehicle Access Easement. Tenant shall, as part of the Site
Plan, design and construct, to the City's specifications, certain road improvements for emergency
vehicle access in the area adjacent to the Property and marked on Exhibit B. The Port hereby
grants Tenant a temporary easement for the purpose of constructing the road improvements
pursuant to this Section. Notwithstanding anything to the contrary, the indemnification and
insurance provisions of ARTICLE 11 shall apply to Tenant's performance under this Section
7.1.2. The Port will grant an easement for such emergency vehicle access to the City. [SUBJECT
TO REVIEW OF TITLE REPORT]
7.2 Project Fully Contained Within the Property. Except as otherwise provided in
this Agreement, the Project shall be a complete independent building erected wholly within the
boundary lines of the Property. Furthermore, all appurtenances thereto, specifically including
but not limited to any parking necessary for Tenant or for any agent, employee, guest or invitee
of any such Person, shall also be erected or constructed within the boundary lines of the
Property.
7.3 Port Review of Project; Compliance with Site Plan. The Port will review and
provide written approval of the Site Plan, and all elements of the Project, which approval will not
be unreasonably withheld, conditioned, or delayed. Tenant will deliver preliminary plans and
specifications for the Project and prepare final plans and specifications substantially confirming
to any conceptual and preliminary plans previously approved by the Port. The Port will review,
inspect and approve the work related to the design at thirty percent (30%), sixty percent (60%),
and one hundred percent (100%). The Port will coordinate with Tenant to facilitate Project
review by the FAA, if applicable. Any disapproval by the Port will be given by written notice to
Tenant specifying the reasons for such disapproval.
7.3.1 Permit Plans. Tenant shall prepare a permit ready set of plans and
specifications at the appropriate stage of design substantially conforming to Site Plan previously
approved by the Port and provide a copy to the Port. The plans provided shall be referred to as
the "Permit Plans."
7.3.2 Review Reimbursement. The parties acknowledge that the Port will engage
a third party representative to: (i) coordinate with Tenant throughout the design, design approval,
permitting and construction process and (ii) interface with the Port's staff throughout planning,
design and construction of the site utilities and infrastructure for the Project. Tenant agrees to
reimburse the Port for the expenses actually incurred by the Port in engaging such representative,
not to exceed Fifty Thousand Dollars ($50,000.00), within thirty (30) days following Tenant's
receipt of a written invoice from the Port for such reimbursement.
7.4 Building Permits. After completion, acceptance and initialing of the Permit Plans
by the parties hereto, Tenant shall, at its expense, promptly submit the Permit Plans and any
other documents required for construction of the Project to all Authorities having jurisdiction
with respect to the erection of the Project for any and all governmental approvals. The Port and
{00209478.DOCX; 2 / 13166 / LSE } 16
Tenant hereby agree not to unreasonably withhold, condition, or delay their consent to the
modification of the Permit Plans in order to secure governmental approvals. Tenant shall use its
best efforts to obtain all necessary governmental approvals from said Authorities as soon as
practicably possible and the Port shall use its best efforts to cooperate with Tenant, at no cost to
the Port, in connection therewith and, if requested by Tenant, to lead efforts (consistent with its
own policies and regulatory obligations) to secure any necessary approvals from the FAA or
other regulators of Port activities that have a regulatory role in review of the Project.
7.5 General Contractor Review, Payment and Performance Bond. Before any
construction on the Premises is commenced, (i) Tenant shall provide the Port with a copy of
Tenant's contract with Tenant's general contractor for review by the Port and (ii) Tenant or its
general contractor will post a payment and performance bond which shall be in an amount equal
to the contract price for the construction of the Project and written by a company qualified to
issue bonds in the State of Washington; notwithstanding the foregoing, by reviewing Tenant's
contract with the general contractor, the Port is not in any way accepting responsibility or
liability under Tenant's contract, or in any way agreeing to diminish or waive any of its rights
under this Agreement. The payment and performance bond will be released by the Port upon
Substantial Completion as defined in Section 7.6 of this Agreement.
7.6 Diligent Prosecution of Construction; Temporary Certificate of Occupancy. After
construction is commenced, it shall be prosecuted diligently (subject to Force Majeure Events),
in accordance with the Final Plans, in a good and workmanlike manner and in compliance with
all Legal Requirements and pursuant to the conditions of the governmental approvals until the
Project is substantially completed. Substantial completion ("Substantial Completion") of the
Project shall occur when Tenant's construction of the Project has been completed as evidenced
by the issuance by general contractor and the Project architect of a Certificate of Completion on
an accepted AIA or similar form, notwithstanding that minor or insubstantial details of
construction, mechanical adjustment or decoration remain to be performed, the non-completion
of which would not interfere with opening the Project for business or obtaining a Certificate of
Completion.
7.7 Permanent Certificate of Occupancy. Notwithstanding Substantial Completion of
the Project, Tenant shall use reasonable efforts to cause its contractor to diligently proceed to
complete full construction of the Project and obtain a permanent certificate of occupancy for the
Project once there is an occupant or user for the Property, subject to any delay caused by the
occupant or user of the Property.
7.8 As-Built Drawings. Tenant shall deliver to the Port full and complete "as built"
drawings of the Project in machine readable format in full conformance with the Port's CAD
standards manual and complete operations and maintenance manuals within three (3) months
after Substantial Completion or, if later, within one (1) month following final completion.
7.9 Intentionally Deleted.
7.10 Ownership of Project. Tenant shal l own the Project as it is built "brick by brick."
At all times while this Agreement is in force, title to the Project shall belong solely to the Tenant.
{00209478.DOCX; 2 / 13166 / LSE } 17
Tenant shall have the right, but not the obligation, to remove any portion of Project at any point
prior to the expiration or earlier termination of this Agreement, except as otherwise provided in
Section 17.1. Upon expiration or earlier termination of this Agreement, title to the Project then
situated on the Property shall pass automatically to the Port, without payment therefor, and
Tenant shall have no further rights therein.
7.11 Sustainable Development. The Port encourages Tenant to integrate sustainable
development elements in the planning, design, construction and operation of the Project to the
extent such elements are technically and financially practical, including but not limited to the
incorporation of sustainable materials and construction practices, the incorporation of design and
technologies to reduce energy use, and consideration of Leadership in Energy and Environmental
Design certification for new construction. This Section is aspirational and not specifically
enforceable.
7.12 Incremental Environmental Costs.
7.12.1 Port Responsibility. The Port shall be responsible for the Incremental
Environmental Costs for Required Management of Pre-existing Hazardous Substances and USTs
identified in the Pre-Lease Environmental Evaluation Report. "Incremental Environmental
Costs" means the costs and expenses incurred in investigating, testing, designating, handling,
transporting, disposing of, or otherwise managing any Pre-existing Hazardous Substances and
USTs on the Property in accordance with the Work Plan, to the extent those costs and expenses
exceed the costs and expenses, including, but not limited to, costs and expenses for development
and construction of the Project, that would have been incurred had Pre-existing Hazardous
Substances and USTs not been present, and any fines, fees, or penalties, or similar costs assessed
by any Authority as a result of the presence of Pre-existing Hazardous Substances on, or
migration of Pre-existing Hazardous Substances from, the Property; provided, however, the Port
shall not be responsible for (i) the cost of any investigation and/or testing performed and reports
prepared by or for Tenant during the Due Diligence Period, including but not limited to the Pre-
Lease Environmental Evaluation Report, the Environmental Construction Field Data Report and
the Environmental Construction Support Work Plan or any amendments thereto; or (ii) any costs
or expenses associated with the excavating, investigating, testing, handling, transporting,
disposing or management of the soil or other materials on the Property that are not identified as
Pre-existing Hazardous Substances or UST's in the Pre-Lease Environmental Evaluation Report
as it may be amended. If Tenant incurs any Incremental Environmental Costs, Tenant shall
submit a written application for payment to the Port, along with any back up documentation
reasonably requested by the Port. The Port will have ten (10) days following its receipt of such
written application and back up documentation to approve such application, which approval shall
not be unreasonably withheld, conditioned or delayed, and the Port shall reimburse Tenant
within twenty (20) days after such approval.
7.12.2 Port's Options. If any Pre -existing Hazardous Substances and/or USTs
are found that are not attributable to Tenant during construction of the Project and prior to
Substantial Completion of the Project, the Port shall reach agreement with Tenant within ten (10)
days after written notice of such, under which Tenant will perform the Required Management of
the Pre-existing Hazardous Substances and/or USTs at the Port's cost, subject to Port review of
{00209478.DOCX; 2 / 13166 / LSE } 18
compliance with Section 7.12.1, and according to the procedures provided in the Work Plan.
Tenant shall have no claim for delay or constructive eviction as a result of the presence or
Required Management of any such Pre-existing Hazardous Substances or USTs.
7.13 Labor Disputes. Tenant agrees to use its best efforts to avoid disruption to the Port,
its tenants or members of the public, arising from labor disputes involving Tenant, and in the
event of a strike, picketing, demonstration or other labor difficulty involving Tenant, to use its
good offices, including the utilization of available legal remedies, to minimize and/or eliminate
any disruption to the Port, its tenants or members of the public, arising from such strike,
picketing, demonstration or other labor difficulty. To achieve this end, the Port encourages
Tenant to work proactively with the construction trades to prevent work stoppages and resolve
grievances.
ARTICLE 8: ALTERATIONS; OWNERSHIP OF CERTAIN INSTALLATIONS
8.1 Alterations. Tenant, after completion of the Project, may from time to time
during the Term make such changes, alterations, additions, substitutions, tenant improvements,
or improvements (collectively referred to as "Alterations") to the Project as Tenant may
reasonably consider necessary and desirable to adapt or equip the Project for Tenant's use and
occupancy. All such Alterations shall be done at Tenant's sole cost and expense.
8.2 Limitations on Alterations. Tenant shall make no Alterations that will impact the
electrical, natural gas, water, sewer or other utility systems of the Project that are reasonably
likely to affect systems serving properties other than the Property, unless Tenant shall first
deliver plans and specifications to the Port and obtain the Port's prior written approval thereof
which shall not be unreasonably withheld, conditioned, or delayed following the Port's receipt of
the proposed plans and specifications therefor as well as any permits required by any Authority
other than the Port. Port shall deliver its approval of or comments to the plans and specifications
within ten (10) business days of receipt.
8.3 Requirements for All Alterations. Any Alteration shall be performed (i) in a good
and workmanlike manner, (ii) in compliance with all Legal Requirements, (iii) in a manner that
will not unreasonably interfere with or disturb the Port or its tenants of Port property other than
the Property, and (iv) at Tenant's sole cost and expense. Tenant shall provide as-built drawings
of any material alterations within thirty (30) business days following completion.
8.4 Trade Fixtures. Tenant or its subtenants shall retain ownership of all Trade
Fixtures and business equipment and furnishings from time to time installed in the Project by
Tenant at its expense. Tenant may remove any Trade Fixtures or other property of Tenant or any
subtenant at any time during the Term and shall remove all thereof prior to the expiration of the
Term. Any Trade Fixtures not removed at the expiration of the Term shall, at the election of the
Port, become the property of the Port without payment to Tenant, or be deemed abandoned and
removed by the Port, at Tenant's expense. Upon any removal of such Trade Fixtures, Tenant
shall promptly repair any and all damage to the Premises caused thereby and reimburse the Port
for its costs and expenses in removing any such Trade Fixtures not removed by Tenant and
{00209478.DOCX; 2 / 13166 / LSE } 19
repairing any such damage not repaired by Tenant. This covenant shall survive the termination
of this Agreement.
ARTICLE 9: USE
9.1 Use of Premises. Subject to and in accordance with all present and future Legal
Requirements, Tenant shall have the right to use the Premises for a high-quality business park
with a mix of commercial and light industrial uses. For any use other than what is described in
this Section, Tenant shall obtain the Port's prior approval, which shall not be unreasonably
withheld, conditioned or delayed. Tenant's us e shall be compatible with normal Airport
operations as well as compatible with noise levels associated with operating the Airport and shall
not conflict with the Airport's use, operation and development for flight-related activities and
function.
9.2 General Standards Governing Use. Tenant shall not use or occupy or permit the
Premises or any part thereof to be used or occupied, not do or permit anything to be done in or
on the Premises, in whole or in part, in a manner which would in any way (i) violate any
applicable Legal Requirements, or (ii) violate any of the covenants, agreements, provisions and
conditions of this Agreement, or (iii) violate the certificate of occupancy then in force with
respect thereto, or (iv) as will constitute a public or private nuisance.
9.3 Signs. Tenant may install, post, erect and, as Tenant desires or may be required,
illuminate exterior facility identification, traffic control, safety, security, ADA, and other code
required signage complying with applicable building code, municipal code requirements, and
FAA regulations. No other signs or other advertising matter, symbols, canopies or awnings shall
be attached to or painted on the Premises, including the walls, windows and doors thereof,
without the prior written approval of the Port, which shall not be unreasonably withheld,
conditioned, or delayed. At the termination or sooner expiration of this Agreement, all such
signs, advertising matter, symbols, canopies or awnings attached to or painted by Tenant shall be
removed by Tenant at its own expense, and Tenant shall repair any damage or injury to the
Premises and correct any unsightly condition caused by the maintenance and removal of said
signs, etc.
ARTICLE 10: REAL AND PERSONAL PROPERTY TAXES
10.1 Payment of Real Property Taxes by Tenant. Tenant shall be liable for, and shall
pay throughout the Term and all Extension Terms of this Agreement, all license and excise fees
payable for, or on account of, the activities conducted on the Premises and all taxes on the
property of Tenant on the Premises and any taxes on the Premises and/or on the leasehold
interest created by this Agreement and/or any taxes levied in lieu of a tax on said leasehold
interest and/or any taxes levied on, or measured by, fees payable hereunder, whether imposed on
Tenant or on the Port and including, without limitation, leasehold excise tax due under Chapter
82.29A of the Revised Code of Washington.. Tenant shall reimburse the Port for all such taxes
paid or payable by the Port. With respect to any such taxes payable by the Port that are on or
measured by the rent or fee payments hereunder, Tenant shall pay to the Port with each Rent or
fee payment an amount equal to the tax on, or measured by, that particular payment All other
{00209478.DOCX; 2 / 13166 / LSE } 20
tax amounts for which the Port is or will be entitled to reimbursement from Tenant shall be
payable by Tenant to the Port at least fifteen (15) days prior to the due dates of the respective tax
amounts involved; provided, that Tenant shall be entitled to a minimum of thirty (30) days'
written notice of the amounts payable by it.
10.2 Tenant's Personal Property Taxes. Tenant shall pay or cause to be paid, prior to
delinquency, any and all taxes and assessments levied upon all Trade Fixtures, inventories and
other real or personal property placed or installed in and upon the Premises by Tenant. If any
such taxes on Tenant's personal property or Trade Fixtures are levied against the Port or the
Port's property, and if the Port pays the taxes based upon such increased assessment, Tenant
shall, upon demand, repay to the Port the taxes so levied.
ARTICLE 11: INDEMNITY AND INSURANCE
11.1 Indemnity.
11.1.1 Waiver by Tenant. Except to the extent of the negligence or other fault of
one or more Port Parties (defined below), the Port, its officers, employees and agents shall not be
liable for any injury (including death) to any persons or for damage to any property on the
Premises regardless of how such injury or damage be caused, sustained or alleged to have been
sustained by Tenant or by others, including but not limited to all persons directly or indirectly
employed by Tenant, any other occupants of the Property, or any agents, contractors,
subcontractors, licensees or invitees thereof, as a result of any condition (including existing or
future defects in the Premises) or occurrence (including failure or interruption of utility service)
whatsoever related in any way to the use or occupancy of the Premises by Tenant.
Notwithstanding any other provision of this Agreement, to the fullest extent permitted by law,
Tenant hereby agrees that the Port shall not be liable for injury to Tenant's personal property or
its business or any loss of income therefrom, whether such injury or loss results from conditions
arising upon the Property, including any interruption of services and utilities or any casualty or
condemnation, whether the cause of such injury or loss or the means of repairing the same is
inaccessible to the Port or Tenant.
11.1.2 Indemnity by Tenant. Tenant shall defend (with counsel approved by the
Port and Tenant's insurer), and except for the Port's obligations with respect to the Pre-Lease
Environmental Condition covered in Section 7.12 fully indemnify, and hold entirely free and
harmless the Port and its Commissioners, officers, and employees (each, a "Port Party") from
any and all loss, damages, expenses, reasonable attorneys' fees, consultants' fees, court costs and
other costs for or from: (a) anything and everything whatsoever arising from the condition of the
Premises, other than the Pre-Lease Environmental Condition established by the Pre-Lease
Environmental Evaluation; (b) the occupancy of the Premises by the Tenant or subtenant,
licensee, invitee or concessionaire of Tenant; and (c) any accident, injury, death or damage to
any party however caused in or about the Premises, whether or not caused by the negligence of
Tenant or any third party; and (d) any fault or negligence by Tenant or any sublessee, licensee,
invitee or concessionaire of the Tenant or of any officer, agent, employee, guest or invitee of any
such Person. Nothing herein shall require Tenant to indemnify the Port from any accident,
injury, death or damage to the extent arising from the negligence or other fault of the Port or its
{00209478.DOCX; 2 / 13166 / LSE } 21
Commissioners, officers, contractors, agents, invitees, or employees. Tenant agrees that the
foregoing indemnity specifically covers actions brought by its own employees, and thus Tenant
expressly waives its immunity under industrial insurance, Title 51 RCW, as necessary to
effectuate this indemnity; provided, however, that such extension shall not be interpreted or
construed as a waiver or limitation of Tenant's right to assert any such immunity, defense, or
protection directly against any of its own employees, or such employees' estates or other personal
representatives.
11.1.3 Concurrent Negligence. Notwithstanding the foregoing, in the event of
the concurrent negligence of Tenant, its subtenants, licensees, assignees, concessionaires, agents,
employees, or contractors on the one hand and the negligence of the Port, its agents, employees
or contractors on the other hand, which concurrent negligence results in injury, death, or damage
to persons or property of any nature and howsoever caused, and relates to the construction,
alteration, repair, addition to, subtraction from, improvement to or maintenance of the Premises
such that RCW 4.24.115 is applicable, Tenant's obligation to indemnify the Port as set forth in
this Section shall be limited to the extent of Tenant's negligence and that of Tenant's officers,
sublessees, assignees, agents, employees, contractors or licensees, including Tenant's
proportional share of costs, court costs, reasonable attorneys' fees, consultants' fees and
expenses incurred in connection with any claim, action or proceeding brought with respect to
such injury or damage.
11.1.4 Mutual Negotiation. TENANT AND THE PORT AGREE AND
ACKNOWLEDGE THAT THIS PROVISION IS THE PRODUCT OF MUTUAL
NEGOTIATION. Tenant's obligations under this Section 11.1 shall be in effect upon mutual
execution of this Agreement, including during the Due Diligence Period, and shall survive the
expiration or earlier termination of this Agreement.
11.2 Insurance.
11.2.1 General Requirement. Tenant shall obtain and keep in force, at its sole
cost and expense, during the Term of this Agreement (and as respects the insurance required by
Section 11.2.3, during any period prior to the Commencement Date, including the Due Diligence
Period, for which Tenant, or its contractors, agents or employees are present on or about the
Property) the types of insurance, in the amounts specified and in the form hereinafter provided
for below in this Section 11.2.
11.2.2 Self-Insurance. Tenant shall have the right to substitute self-insurance or
self-insured retentions for any insurance requirements in this Section 11.2 pursuant to Tenant's
self-insurance program. Any deductible, self -insured retention or other financial responsibility
for claims must be covered directly by Tenant in lieu of insurance.
11.2.3 Liability Insurance. Tenant shall obtain and keep in force during the Term
of this Agreement a commercial general liability policy of insurance protecting Tenant and the
Port, as an additional insured, using an insurance industry standard form (CG 00 01 or CG 00 02)
or equivalent, against claims for bodily injury, death, personal injury and property damage based
upon, involving or arising out of the tenancy, use, occupancy or maintenance of the Property or
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Premises and all areas appurtenant thereto, and specifically including the action/inaction of any
subtenant, licensee or concessionaire permitted by ARTICLE 25. Such insurance shall provide
single limit coverage in an amount not less than One Million Dollars ($1,000,000) per
occurrence or claim for policies without a general aggregate limit. For policies with a general
aggregate limit, such aggregate limit shall be not less than Two Million Dollars ($2,000,000).
The policy shall contain a minimum Two Hundred Fifty Thousand Dollars ($250,000) sub-limit
that covers damage to premises rented or leased to Tenant, including fire damage. In the event a
claims made policy form is used (Form CG 00 02) the policy shall have an extended one year tail
reporting period to allow for the submission of claims that occurred during the policy but are not
reported until one-year following the end of the policy term. In addition, all claims made policy
forms shall have a retroactive date that is equal to or prior to the Commencement Date of this
Agreement.
11.2.4 Automobile Liability Insurance. Tenant shall obtain and keep in force a
commercial automobile liability policy of insurance, written on ISO Form CA 00 01 07 97 (or
equivalent), that protects against claims for bodily injury and property damage based upon,
involving or arising out of Tenant's motor vehicle operations on or about the Premises and all
areas appurtenant thereto. Such insurance shall cover any "Auto" (i.e., owned, hired and nonowned
used by Tenant) and shall be on an occurrence basis providing single limit coverage in an
amount not less than One Million Dollars ($1,000,000) per occurrence.
11.2.5 Builder's Risk Insurance. Before any construction of the Project
commences, and until final completion of the Project and obtaining a permanent certificate of
occupancy, Tenant shall obtain and keep in force or require its contractor to obtain and keep in
force "special extended" or "all risk" builder's risk insurance in an amount equal to the agreed
value of the Project, covering improvements in place and all material and equipment at the job
site furnished under contract, but excluding contractor's, subcontractor's, and construction
manager's tools and equipment and property owned by contractor's or subcontractor's
employees.
11.2.6 Property Insurance. Tenant shall obtain and keep in force during the Term
of this Agreement "special extended" or "all risk" property insurance, insuring loss or damage to
the Premises, including any betterments, improvements or Alterations. The policy shall include
coverage for any additional costs resulting from debris removal and reasonable amounts of
coverage for the enforcement of any ordinance or law regulating the reconstruction or
replacement of the Premises, including any undamaged sections of the Premises required to be
demolished or removed by reason of the enforcement of any Legal Requirement as the result of a
covered cause of loss.
11.3 Insurance by Third Parties. Prior to their entry on the Property, any subtenant
must provide to the Port proof of insurance meeting the requirements in 11.2.3 above including
naming the Port as an additional insured on the third party's commercial general liability
insurance required under 11.2.3; provided that such subtenant may not substitute self-insurance
without the Port's prior consent.
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11.4 Insurance Policies. Insurance required hereunder shall be in companies duly
licensed to transact business in the State of Washington and maintaining during the policy term a
general policyholders rating of no less than A-, VII as currently rated by A.M. Best's Insurance
Guide. Tenant shall not do or permit to be done anything which shall invalidate the insurance
policies referred to in this ARTICLE. Tenant shall cause to be delivered to the Port certificates
of insurance and endorsements where applicable evidencing the existence of coverage and
amounts of such insurance as required by this Agreement. No such policy shall be cancelable
except after thirty (30) days (or ten (10) for nonpayment of premiums) prior written notice to the
Port. Tenant shall, prior to the expiration of such policies, furnish the Port with evidence of
renewals, such as certificates of insurance, evidencing renewal thereof.
11.5 Waiver of Subrogation. Without affecting any other rights or remedies, Tenant
and the Port (for themselves and on behalf of anyone claiming through or under them by way of
subrogation or otherwise) hereby waive any rights either may have against the other, or their
respective officers, agents or employees (whether in contract or in tort) on account of any loss or
damage occasioned arising out of or incident to the perils required to be insured against under
this ARTICLE 11 or covered by any insurance maintained by the Port. Accordingly, the parties
shall cause any such insurance policy to further contain a waiver of subrogation clause. The
effect of such release and waiver of the right to recover damages shall not be limited by the
amount of insurance carried or required or by any deductibles applicable thereto.
11.6 Miscellaneous Insurance Provisions.
11.6.1 The limits of insurance required by this Agreement or as carried by Tenant
shall not limit the liability of Tenant nor relieve Tenant of any obligation hereunder. All
insurance to be carried by Tenant shall be primary to and not contributory with any similar
insurance carried by the Port, whose insurance shall be considered excess insurance only. If at
any time during the Term, Tenant shall have in full force and effect a blanket policy of
commercial general liability and umbrella liability insurance covering the Premises and other
premises and/or properties of Tenant, such insurance shall satisfy the requirements hereof,
provided said policy contains a specific endorsement providing a minimum amount of coverage
applicable to the Premises equal to or greater than the amount required above.
11.6.2 The amounts and types of liability insurance specified in this Agreement
shall be subject to periodic adjustment to reflect reasonable changes in insuring practices for
similar properties in the same geographic area and changes in insurance products.
ARTICLE 12: OPERATING EXPENSES; UTILITIES
12.1 Operating Expenses; Responsibility for Operations and Maintenance. Begi nning
on the Commencement Date and continuing thereafter during the Term of this Agreement,
Tenant shall pay, as Additional Rent, directly to all third parties the total of all the costs and
expenses incurred with respect to the operation and maintenance of the Premises and the services
provided for the benefit of the Tenant (the "Operating Expenses").
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12.2 Utilities. Tenant shall, at its sole cost and expense, arrange for the furnishing of
all utilities, including natural gas, electricity, telecommunications, water and sewer, as well as
stormwater charges, necessary for the operation of the Premises, and Tenant covenants and
agrees to pay all such charges directly, to the applicable public utility or governmental authority
furnishing such service to the Premises, the amounts due for such services as indicated by meters
measuring Tenant's consumption thereof.
12.3 Port Not Responsible. The Port shall not be required to furnish any services or
utilities of any nature to the Property during the Term of this Agreement, Tenant hereby
assuming full and sole responsibility for the supply of and payment for all utilities and services.
Furthermore, the Port shall not be liable in any way to Tenant for any failure or defect in the
supply or character of electrical energy or water and sewer service furnished to the Premises by
reason of any requirement, act or omission of the public utility providing such service or for any
other reason. However, failure of the Tenant to pay such Operating Expenses or utilities shall
not be a breach of this Agreement, so long as the Port is not obligated for such payment or the
failure to pay does not result in a lien on the fee title to the Property.
ARTICLE 13: REPAIR AND MAINTENANCE; COMPLIANCE WITH LAWS
13.1 Duty to Repair and Maintain. The Premises, both outside and inside, together
with all Alterations, equipment and installations therein and the appurtenances thereto, shall be
put and kept in good order, maintenance and repair by Tenant at Tenant's sole cost and expense,
and Tenant shall undertake all maintenance and make all repairs and replacements, ordinary, as
well as extraordinary, foreseen and unforeseen, structural or otherwise, which may be necessary
or required so that at all times the Premises and all Alterations, equipment, installations and
appurtenances shall be in thorough good order, condition and repair.
13.2 Continuing Compliance. Throughout the Term of this Agreement, Tenant shall,
at its own cost and expense, promptly and diligently do the following:
13.2.1 Observe and comply with all Legal Requirements, whether or not such
compliances herewith shall require structural repairs, changes or alterations in and about the
Premises, or repairs, changes or alterations incident to or as the result of any use or occupation of
the Premises or interfere with the use and enjoyment of the Property or any part thereof, and
whether or not the same now are in force or at any time in the future may be passed, enacted, or
directed (but this Section shall not require Tenant to upgrade the Project to meet code as against
which the Project is vested);
13.2.2 Procure, maintain and comply with all permits, licenses, franchises and
other authorizations required for any use of the Property or any part thereof then being made and
for proper erection, installation, operation and maintenance of any improvements or any part
thereof; and
13.2.3 Comply with any Permitted Encumbrances.
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13.3 Repair & Maintenance Indemnity. Tenant shall defend (with counsel reasonably
approved by the Port and Tenant's insurer), fully indemnify, and hold entirely free and harmless
the Port from any action, suit or proceeding and all costs, expenses, claims, fines, penalties, and
damages that may in any manner arise out of or be imposed because of the failure of Tenant to
comply with Section 13.2. In no event shall the foregoing be interpreted to require Tenant to
indemnify the Port to the extent of the negligence or other fault of any Port Party or in
connection with Pre-existing Hazardous Substances or pre-existing title defects or encumbrances
of record. Tenant's obligations of indemnity under this Section shall survive the expiration or
earlier termination of this Agreement.
13.4 Waste. Tenant will not do or permit or suffer any waste, damages, disfigurement
or injury to or upon the Property or any part thereof; provided that Tenant shall have the right to
remove any portion of the Project at any point prior to the expiration or earlier termination of this
Agreement.
ARTICLE 14: COMPLIANCE WITH ENVIRONMENTAL LAWS
14.1 Hazardous Substances. Tenant shall not allow the release, spill, discharge, leak,
emission, injection, escape, migration, or dumping in, on, about, from or adjacent to the Premises
(including, but not limited to, storm drains, sanitary sewer systems, surface waters, soils,
underground waters or air) of any Hazardous Substances in any manner not in compliance with
any Environmental Law. To the extent applicable, Tenant shall provide the Port upon request an
opportunity to review all Material Safety Data Sheets (MSDS) for all Hazardous Substances used
or stored on the Premises. To the extent applicable, Tenant shall provide the Port an opportunity
to review any environmentally related regulatory permits or approvals (including revisions or
renewals) and any material report or notice Tenant receives from, or provides to, any
governmental unit or agency in connection with Tenant's handling of Hazardous Substances or
the presence, or possible presence, of any Hazardous Substance in, on, about, or migrating from
the Premises. Tenant shall promptly report any spills or emissions of Hazardous Substances to
the Port and, as required by applicable Environmental Laws, to the appropriate regulatory
authorities.
14.1.1 Records. Tenant shall maintain all records related to Tenant's
Operations and its compliance with requirements of any applicable Environmental Laws
(including but not limited to the underground storage tank regulations). Tenant shall
provide the Port with copies of such records upon the Port's request.
14.2 Compliance with Environmental Laws. If Tenant, or the Premises, is not in
compliance with any Environmental Law concerning the presence, use or handling of Hazardous
Substances Tenant shall promptly notify the Port of such noncompliance and shall use best
efforts to comply with the applicable Environmental Law. If Tenant does not reasonably act to
correct the noncompliance, the Port shall have the right, but not the obligation, to enter the
Premises and take such action as the Port deems necessary to address the noncompliance. If the
Port has a reasonable belief that Tenant is not in compliance with any Environmental Law or that
Tenant's actions or inactions are likely to present a threat of noncompliance with any
Environmental Law, the Port shall have the right, after providing Tenant written notice, to enter
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the Premises and take such action as the Port deems necessary in its reasonable discretion to
correct any such noncompliance. The Port shall at all times comply with Tenant's reasonable
security protocols. Except as set forth in Section 7.12, all costs and expenses incurred by the
Port in connection with any such actions shall become immediately due and payable by Tenant
upon presentation of a proper invoice.
14.3 Environmental Inspections.
14.3.1 Tenant's Environmental Inspection. Tenant shall conduct an
environmental inspection of the entire Premises including operations, equipment, facilities and
fixtures only in the event that there is evidence of the presence of environmental contamination
on the Property. Tenant shall notify the Port of its intent to conduct an environmental inspection
at least two (2) days prior to conducting such inspection. The environmental inspection shall be
conducted consistent with industry best practices by a qualified environmental professional
selected by Tenant. The Port shall have the right for a Port representative to attend and observe
any site visits or inspections associated with the environmental inspection. Tenant shall meet
with the Port to present the results of the environmental inspection within thirty (30) days of
completion and shall provide the Port with a copy of any final data or reports created in
connection the environmental inspection.
14.3.2 Port Environmental Audit. The Port shall, at the Port's expense, have the
right to conduct an environmental audit of the Premises. The Port shall have access to the
Premises to conduct (but shall have no obligation to conduct) an annual environmental
inspection, including (but not limited to) an environmental audit at the Port's expense; provided
that any of the Port's employees, representatives, agents, or contractors entering the Premises
shall at all times be accompanied by a representative of Tenant and/or its subtenant, and shall
observe Tenant's or its subtenants' reasonable security protocols, while present on the Premises.
The Port shall provide Tenant with copies of any reports received, or notices given, as a result of
the annual environmental inspections. In conducting any environmental audit, the Port shall not
interfere with Tenant's Operations, or the operations of a sub-tenant. Prior to conducting any
intrusive or invasive testing or investigation, the Port will present a work plan to Tenant for
Tenant's approval which will not be unreasonably withheld. If the Port damages or otherwise
disturbs the Premises during such environmental audit, it shall restore the Premises to the
condition in which they existed prior to the damage.
14.4 Post-Occupancy Environmental Site Assessment. Within thirty (30) days after
the expiration date of the Term or Extension Terms of this Agreement or any earlier termination
of this Agreement, Tenant shall conduct an investigation to determine whether any Hazardous
Substances, other than Pre-existing Hazardous Substances, may be present on the Premises
and/or migrating from the Premises ("Environmental Site Assessment" or "ESA") and shall
submit a report to the Port describing the results of such investigation ("Phase I ESA Report").
The scope of the ESA shall conform to the ASTM E 1527-13 Standard Practice for
Environmental Site Assessments, as amended, or equivalent in effect at the time, and shall
include, at a minimum, a review and summary of tenant/occupant operational history, reasonably
ascertainable audit reports and responses, spill and spill response reports, and any other relevant
environmental records, including sampling data. If the Phase I ESA Report identifies the
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potential contamination of the Premises by Hazardous Substances (other than Pre-exising
Hazardous Substances), Tenant shall conduct a further investigation, consistent with industry
best practices, to identify the scope of potential contamination, including soil, groundwater,
surface water, or sediments sampling as appropriate ("Phase II ESA"). Tenant shall submit a
report documenting the results of the Phase II ESA to the Port within ninety (90) days after the
expiration date of the Term or Extension Terms of this Agreement or any earlier termination of
this Agreement. Receipt of the Phase I ESA Report and, if applicable, the Phase II ESA Report
shall be a condition precedent to the Port's payment of any Security to Tenant upon termination
or expiration of this Agreement.
14.5 Remedies Not Exclusive. Except as otherwis e provided in this
Agreement, no remedy provided herein shall be deemed exclusive. In addition to any remedy
provided above, and except as set forth in Section 7.12 or otherwise limited in this Agreement,
the Port shall be entitled to full reimbursement from Tenant whenever the Port incurs any costsas
a result of Tenant's handling, storage, use or Required Management of Hazardous Substances on
the Premises, including but not limited to, costs of clean-up or other remedial activities, fines or
penalties, or injuries to persons or other property, except to the extent any environmental
condition is exacerbated by any Port Party.
14.6 Environmental Indemnity. In addition to all other indemnities provided in this
Agreement, Tenant shall defend, indemnify and hold the Port free and harmless from any and all
claims, losses, and expenses, including without limitation cleanup or other remedial costs (and
including reasonable attorneys' fees, costs and all other reasonable expenses when incurred and
whether incurred in defense of actual litigation or in reasonable anticipation of litigation), to the
extent arising from any Hazardous Substance stored, handled or released, in, on or about the
Property after the Commencement Date (i) by Tenant or its employees, agents, invitees or
sublessees or (ii) by any third parties, if prevention of the release was within Tenant's control
and occurred before Tenant terminated possession. Except as otherwise provided in this
Agreement, Tenant's obligations under this Section shall survive the expiration or earlier
termination of this Agreement. Notwithstanding the foregoing, the Port shall defend, indemnify
and hold Tenant free and harmless from any and all claims, losses, and expenses, including
without limitation investigation and cleanup, or other remedial costs (and including attorneys'
fees, costs and all other reasonable litigation expenses when incurred and whether incurred in
defense of actual litigation or in reasonable anticipation of litigation), arising from Pre-existing
Hazardous Substances on the Premises or the migration of any Hazardous Substance onto the
Premises from other properties owned by the Port or otherwise caused by the Port or its agents,
consultants or employees. In addition, if Tenant disposes of any Pre-existing Hazardous
Substances or Hazardous Substances that have migrated onto the Premises from other properties
owned by the Port at a facility previously approved by the Port, then the Port shall sign generator
slips, as requested by Tenant, with respect to any such Pre-existing Hazardous Substances or
Hazardous Substances that have migrated onto the Premises from other properties owned by the
Port. The Port's obligations under this Section shall survive the expiration or earlier termination
of this Agreement.
14.7 Environmental Dispute Resolution. If disputes or disagreements arise
between the parties with respect to any matter under this ARTICLE 14 (each, an
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"Environmental Dispute"), the Port and Tenant commit to resolving such disputes or
disagreements in an amicable, professional and expeditious manner as provided in this Section
14.7.
14.7.1 The Port and Tenant will first attempt to resolve Environmental Disputes
at the field level through discussions between the parties' environmental professionals, consistent
with the Work Plan, as applicable.
14.7.2 If an Environmental Dispute cannot be resolved through the parties'
environmental professionals within two (2) business days after first meeting, senior
representatives of the Port and Tenant, upon the request of either party, shall meet as soon as
possible, but in no case later than five (5) business days after such a request is made, to attempt
to resolve such Environmental Dispute. Prior to any meetings between the senior
representatives, the parties will exchange relevant information to assist the parties in resolving
their Environmental Dispute.
14.7.3 If, after meeting, the senior representatives determine that the
Environmental Dispute cannot be resolved on terms satisfactory to both parties, the parties shall
submit the Environmental Dispute to mediation, which submittal to mediation shall be binding
upon the parties. Any party may request mediation by submitting the request (the "Mediation
Notice") in writing to the other party to this Agreement. The mediation shall be conducted by a
mutually agreeable mediator, or if the parties cannot agree on a mediator within five (5) days of
receipt of the request, either party may file a mediation request with the American Arbitration
Association ("AAA") pursuant to its Construction Industry Mediation Rules. The mediation will
be governed by and conducted pursuant to a mediation agreement negotiated by the parties or, if
the parties cannot so agree, by procedures established by the mediator. This requirement to
mediate is a condition precedent to litigation and cannot be waived except by an explicit written
waiver signed by the Port and Tenant. A representative of the Port and Tenant must attend the
mediation session, all having authority to settle the claim, or, in the case of the Port, if Port
Commission or CEO approval is required, the management authority to recommend settlement
of the claim directly to the Port Commission or CEO. To the extent there are other parties in
interest, such as contractors, or subcontractors of any tier, their representatives, with full
authority to settle the claim, shall also attend the mediation session. Unless the Port and Tenant
mutually agree in writing otherwise, all unresolved claims shall be considered at a single
mediation session which shall occur within ten (10) days of the Mediation Notice. The
mediator's fee will be divided equally among the parties participating in the mediation.
ARTICLE 15:DAMAGE OR DESTRUCTION
15.1 Duty to Repair. If the Project or any other improvement at any time on the
Premises shall be damaged or destroyed by any cause whatsoever during the Term of this
Agreement, Tenant shall, with reasonable promptness, repair and replace the same at its own
expense, to a condition reasonably comparable to the condition existing immediately prior to the
damage or destruction, but except for matters governed by ARTICLE 13 (Repair and
Maintenance), only to the extent the proceeds of any insurance policies covering the loss are
sufficient to reimburse Tenant therefor; provided, however, that if the proceeds of insurance are
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more than sufficient to pay the cost of the rebuilding, Tenant shall be entitled to retain that
surplus.
15.2 Abatement of Rent. Except as otherwise provided herein, Tenant shall not be
entitled to any abatement of rent, nor shall its obligations under this Agreement be terminated
during the Term, notwithstanding any destruction or damage to the Premises by any cause
whatsoever; provided, however, that if the whole or materially all of the Premises are destroyed
by fire or other casualty at any time during the last two (2) years of the Term, or during any
Extension Term, then Tenant may terminate this Agreement by written notice given to the Port
within sixty (60) days after the date of such destruction, and Base Rent, Additional Rent and
other charges under this Agreement will be apportioned as of the date of destruction, and Tenant
will be discharged from responsibility to repair the damage, shall remove debris and restore the
Premises to a clean, graded and safe condition, and all proceeds of insurance covering the loss
shall in that circumstance belong to Tenant free of any claim thereto by the Port.
ARTICLE 16: CONDEMNATION
16.1 Termination on Substantial Taking. If any competent authority for any public or
quasi-public use or purpose takes or condemns (hereafter "takes" or "taking") the whole or
materially all of the Premises at any time during the Term, this Agreement shall terminate and all
Base Rent, Additional Rent, and other charges under this Agreement shall be apportioned as of
the date of vesting of title in such taking or proceedings. For the purposes of this ARTICLE, a
taking of "materially all" of the Premises, as distinguished from a taking of the whole of the
Premises, means a taking of such scope that the untaken portion of the Premises is insufficient to
permit Tenant or its subtenant to occupy the Premises as a high-quality business park, eliminates
or material adversely affects access to the Premises or otherwise results in the elimination of
parking or truck docks such that the Property cannot be used for the original intended purpose, or
any other then current use of the Premises, as reasonably determined by Tenant.
16.2 Right to Award on Substantial Taking. If title to the whole or materially all of the
Premises shall be taken, the rights of the Port and Tenant to share in the net proceeds of any
award for the respective Property and Project, and the damages upon the taking, shall be in the
following order of priority:
16.2.1 The Port, at all times, regardless of when the taking occurs, shall be entitled to
receive, that portion of the award as shall represent compensation for the value of the Property,
considered as vacant and improved only to the extent existing at the Commencement Date, but
subject to a ground lease similar to this Agreement, such value being hereinafter referred to as
the "Property Value."
16.2.2 The remaining portion of the award shall be paid to the Tenant, subject to the
rights of any Leasehold Mortgagee (the "Remaining Value").
16.2.3 In addition, to the extent consistent with Washington eminent domain law, Tenant
shall have the right to seek an independent and separate award from the condemning authority
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for loss of value of the leasehold improvements, relocation benefits, and for any tangible
personal property of the Tenant or any subtenant that is taken.
16.3 No Termination on Partial Taking. In the event of a taking of less than materially
all of the Premises, this Agreement (except as hereinafter provided) shall nevertheless continue,
but Base Rent to be paid by Tenant shall thereafter be reduced in the ratio that the rental value of
the portion of the Premises taken bears to the rental value of the entire Premises at the time of the
taking, and Tenant shall promptly restore the Premises as below provided. The Tenant shall
undertake the work of repair and restoration as soon as reasonably practicable; and Tenant shall
make the repairs and restoration even if the Remaining Value is insufficient for that purpose.
16.4 Right to Award on Partial Taking. In the event of a taking of less than materially
all of the Premises, the rights of the Port and Tenant to share in the net proceeds of any award for
the respective Property and Project, and the damages upon the taking, shall be in the following
order of priority:
16.4.1 The Port, at all times, regardless of when the taking occurs, shall be
entitled to receive that portion of the award as shall represent compensation for the Property
Value.
16.4.2 The Remaining Value of the award shall be payable to Tenant, subject to
the rights of any Leasehold Mortgagee.
Should, however, the partial taking occur during the last two (2) years of the Term, then
Tenant at its option upon thirty (30) days' prior notice to the Port, given at any time within sixty
(60) days after the vesting of title in the taking authority, may terminate this Agreement. Upon
that termination the Rent and other charges under this Agreement shall be apportioned as of the
date of termination and the Tenant will be discharged from responsibility to restore the Premises.
Upon that termination the entire Remaining Value shall belong to the Port free of any claim
thereto or any part thereof by Tenant, anything in this ARTICLE to the contrary notwithstanding.
16.5 Value of Respective Interests. If t he Property Value is determined in the
proceeding pursuant to which the Premises shall have been taken, the Property Value and
consequent Remaining Value so determined shall be conclusive upon the Port and Tenant. If
these values shall not have been so determined, they shall be fixed by agreement between the
Port and Tenant.
16.6 Temporary Taking. This Agreement shall not be affected if the taking Authority
by the exercise of its power of eminent domain shall take the use or occupancy of the Premises
or any part thereof for a temporary period (hereafter "temporary taking"). Tenant shall continue
to pay, in the manner and at the time specified in this Agreement, the full amounts of Base Rent,
fees and all Additional Rent and other charges payable by Tenant under this Agreement. Except
only to the extent that Tenant may be prevented from so doing pursuant to the terms of the order
of the taking Authority, Tenant shall also continue to perform and observe all its other
obligations under this Agreement, as though the temporary taking had not occurred. Tenant shall
be entitled to receive the entire amount of any award made for the temporary taking, whether
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paid by way of damages, rent, or otherwise, unless the period of temporary use or occupancy
shall extend to or beyond the expiration date of the Term of this Agreement, in which case the
award shall be apportioned between the Port and Tenant as of the date of expiration of the Term.
Tenant covenants that, upon the termination of any temporary taking, prior to the expiration of
the Term, it will, at its sole cost and expense, restore the Premises, as nearly as may be
reasonably possible, to a condition reasonably comparable to that in which the same was
immediately prior to the temporary taking, but only to the extent the condemnation proceeds are
sufficient to do so.
ARTICLE 17: SURRENDER AND HOLDING OVER
17.1 Port's Option for Removal of Modifications; Surrender.
17.1.1 The Port shall have the option, in its sole discretion, to require Tenant to remove
all or a portion of the building elements of the Project, but only down to the foundation, and
related debris ("Improvement Removal"). To exercise the option under this Section 17.1.1, the
Port shall provide notice to Tenant, in writing, no later than ninety (90) days before (i) the
expiration of the Term, if Tenant fails to exercise an extension or (ii) the expiration of the last
Extension Term exercised by Tenant, (as applicable, the "Removal Date"). Tenant shall
diligently complete the Improvement Removal no later than sixty (60) days following the
Removal Date..
17.1.2
17.2 Holding Over. If the Premises are not surrendered as provided in this Agreement,
Tenant shall indemnify and hold the Port harmless against third party claim for loss or liability
resulting from the delay by Tenant in so surrendering the Premises, including, without limitation,
any claims made by any succeeding occupant founded on such delay. Any holding over with the
consent of the Port after expiration or earlier termination of this Agreement shall be construed to
be a tenancy from month-to-month upon the same terms and conditions provided in this
Agreement. Any holding over without the consent of the Port after expiration or earlier
termination of this Agreement shall be construed to be tenancy at sufferance upon the same
terms and conditions provided in this Agreement, except that Base Rent shall be one hundred
fifty percent (150%) of that which it was immediately prior to expiration or earlier termination of
this Agreement.
17.3 Survival. Tenant's obligations under this ARTICLE shall survive the expiration
or earlier termination of this Agreement. No modification, termination or surrender to the Port
of this Agreement or surrender of the Property or any part thereof, or of any interest therein by
Tenant, shall be valid or effective unless agreed to and accepted in writing by the Port, and no act
by any representative or agent of the Port, other than such written agreement and acceptance,
shall constitute an acceptance thereof.
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ARTICLE 18: IMPAIRMENT OF TITLE
18.1 Liens. Except for Permitted Liens on Tenant's interest in th e Project only, Tenant
will not directly or indirectly create or permit to be created and/or to remain a Lien upon the
Property, Project, Premises, and any Alterations, fixtures, improvements or appurtenances
thereto that would attach to the Port's interest in the Property. In the event any such Lien(s) have
been created by or permitted by or through the actions of Tenant or any Person claiming through
Tenant in violation of this ARTICLE, Tenant shall immediately discharge as of record, by bond
or as otherwise allowed by law, any such Lien(s). Tenant shall also defend (with counsel
reasonably approved by the Port), fully indemnify, and hold entirely free and harmless the Port
from any action, suit or proceeding which may be brought on or for the enforcement of such
Lien(s). This obligation shall survive termination of this Agreement.
ARTICLE 19: ESTOPPEL CERTIFICATES, ATTORNMENT AND SUBORDINATION
19.1 Estoppel Certificates. Each party shall, at any time and from time to time as
requested by the other party, upon not less than thirty (30) days' prior written notice, execute,
acknowledge and deliver to the other a statement in writing certifying that this Agreement is
unmodified and in full force and effect (or if there have been modifications, that the same is in
full force and effect as modified and stating the modifications), certifying the date through which
Base Rent, Additional Rent and other charges, if any, have been paid, and stating whether or not,
to the best knowledge of the signer, the other party is in default beyond any applicable notice and
cure period provided in the performance of any of its obligations under this Agreement, and if so,
specifying each such default of which the signer may have knowledge, and such other matters as
may be reasonably requested. The parties agree and acknowledge that it is specifically intended
that any such statement delivered pursuant to this Section 19.1 may be relied upon by others with
whom the party requesting the certificate may be dealing.
19.2 Attornment. Tenant shall, in the event any proceedings are brought for the
foreclosure of, or in the event of exercise of the power of sale under, any mortgage or deed of
trust made by the Port, its successors or assigns, encumbering the Premises or any part thereof,
and if so requested, attorn to the purchaser upon such foreclosure or sale or upon any grant of a
deed in lieu of foreclosure and recognize such purchaser as landlord under this Agreement,
provided, that such purchaser recognizes Tenant's rights under this Agreement, Tenant's
subleases, and any modification of this Agreement or any sublease and assumes the Port's
obligations under this Agreement arising after the date of transfer, and agrees not to disturb
Tenant's or its subtenants quiet possession of the Premises for so long as Tenant is not in default
hereunder.
19.3 Title. Notwithstanding the above, the Port shall not use the Property as security
for any monetary obligation or further encumber the Property, except as may be expressly
authorized by this Agreement or by prior written approval of Tenant, which approval shall not be
unreasonably withheld. So long as Tenant is not in default of this Agreement, this Agreement
will not be amended, modified or terminated or subject to termination by any trustee's sale, any
action to enforce the security, or by any proceeding or action in foreclosure.
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19.4 Recording. Tenant covenants and agrees with the Port that Tenant shall not
record this Agreement without the Port's prior written consent. The Port and Tenant agree to
record a memorandum of this Agreement in the form of Exhibit D attached hereto.
ARTICLE 20: MORTGAGES OF TENANT'S INTEREST
20.1 Prior Notice Required; Limited Purpose. Upon prior notice to the Port, Tenant
shall have the right to mortgage its leasehold interest under this Agreement subject to the
limitations set forth in this Article. Any such mortgage ("Leasehold Mortgage") shall be for a
term not to exceed the Term of this Agreement plus any Extension Option that has been
exercised, and shall be subject and subordinate to the rights of the Port.
20.2 No Benefit Without Notice. No holder ( "Leasehold Mortgagee") of a Leasehold
Mortgage on this Agreement shall have the rights or benefits mentioned in this ARTICLE, nor
shall the Port be bound by this ARTICLE, unless and until an executed counterpart of such
Leasehold Mortgage (or any assignment thereof), together with a written notice setting forth the
name, address, contact person (or department) for the Leasehold Mortgagee, is delivered to the
Port. The Leasehold Mortgagee may designate other contact information by providing notice
thereof to the Port in the manner provided by Section 26.1 of this Agreement.
20.3 Obligations to Leasehold Mortgagee. If Tenant mortgages th is Agreement in
compliance with this ARTICLE, then so long as such Leasehold Mortgage shall remain
unsatisfied of record, the following provisions shall apply:
20.3.1 The Port shall serve upon the Leasehold Mortgagee, in the manner permitted by
Section 26.1 of this Agreement, a copy of any notice of default sent to Tenant and any other
notices the Port is required by the terms of this Agreement to provide to Tenant or that will
materially affect the leasehold interest, including but not limited to amendments to this
Agreement, side letters that affect the economics of this Agreement or any waivers of any rights
or obligations under the terms of this Agreement.
20.3.2 The Port, upon providing Tenant any notice of (i) default under this Agreement or
(ii) a termination of this Agreement, or (iii) a matter upon which the Port may predicate or claim
a default, shall at the same time provide a copy of such notice to every Leasehold Mortgagee. No
such notice by the Port to Tenant shall be deemed to have been duly given unless and until a
copy thereof has been so provided to every Leasehold Mortgagee. After such notice has been
given to a Leasehold Mortgagee, such Leasehold Mortgagee shall have the same period after the
giving of such notice upon it for remedying any default or causing the same to be remedied as is
given Tenant after the giving of such notice to Tenant plus, in each instance, the additional
periods of time specified in Sections 20.3.3 and 20.3.4 to remedy, commence remedying, or
cause to be remedied the defaults specified in any such notice. The Port agrees that it shall accept
such performance by or at the instance of the Leasehold Mortgagee as if the same had been made
by Tenant. For such purpose, the Port and Tenant hereby authorize the Leasehold Mortgagee to
enter upon the Premises and to exercise any of Tenant's rights and powers under this Agreement
and, subject to the provisions of this Agreement, under the Leasehold Mortgage.
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20.3.3 Cure Notice to Leasehold Mortgagee. Notwithstanding anything to the contrary in
this Agreement, if any Event of Default shall occur that entitles the Port to terminate this
Agreement, the Port shall have no right to terminate this Agreement unless, following the
expiration of the period of time given Tenant to cure such default, the Port shall notify ("Cure
Notice") every Leasehold Mortgagee of the Port's intent to so terminate at least thirty (30) days
in advance of the proposed effective date of such termination if the nature of such default is the
failure to pay a sum of money, and at least sixty (60) days in advance of the proposed effective
date of such termination if such default is not the failure to pay a sum of money. A six (6) month
extension of the date for termination of this Agreement as provided in Section 20.3.4 shall be
granted by the Port if, during such thirty (30) or sixty (60) day Cure Notice period, any
Leasehold Mortgagee:
(a) Notifies the Port of such Leasehold Mortgagee's desire to nullify such Cure
Notice; and
(b) Pays or causes to be paid all Base Rent and other payments then due and in
arrears as specified in the Cure Notice to such Leasehold Mortgagee and that may become due
during such 30 and 60-day period, provided that any Leasehold Mortgagee shall not be required
to pay any amount before the same is due and owing under this Agreement; and
(c) Complies or in good faith, with reasonable diligence and continuity, commences
to comply with all non-monetary requirements of this Agreement then in default and reasonably
susceptible of being complied with by such Leasehold Mortgagee.
Nothing herein obligates such Leasehold Mortgagee to cure any default of Tenant under
the terms of this Agreement. Notwithstanding the above, Leasehold Mortgagee shall not be
required to cure any default of Tenant resulting from insolvency or bankruptcy of the Tenant.
20.3.4 Six-Month Extension. If the Port shall elect to terminate this Agreement by reason
of any default of Tenant, and a Leasehold Mortgagee shall have proceeded in the manner
provided for by Section 20.3.3, the specified date for the termination of this Agreement as fixed
by the Port in its Cure Notice shall be extended for a period of six (6) months, provided that such
Leasehold Mortgagee, during such 6-month period:
(a) Pays or causes to be paid Base Rent and other monetary obligations of Tenant
under this Agreement as the same become due, including the payment of any sums due under
any Leasehold Mortgage; and
(b) Continues its good faith efforts to perform all of Tenant's other obligations under this
Agreement, including during any period during which the Leasehold Mortgagee has possession
of the Premises the obligation to operate and maintain the Project and Premises in accordance
with the standards set forth by the Port in this Agreement.
20.3.5 Termination; New Lease. In the event that this Agreement is terminated by the
Port for any reason under the terms of this Agreement or on account of a bankruptcy by or
against Tenant, the Port shall serve notice to the Leasehold Mortgagee that the Agreement has
{00209478.DOCX; 2 / 13166 / LSE } 35
been terminated. The notice shall include a statement of any and all sums which would at the
time be due under this Agreement but for such termination and of all other defaults under this
Agreement then known to the Port. Every Leasehold Mortgagee shall thereupon have an option,
which must be exercised within forty-five (45) days after the notice, to obtain a new lease ("New
Lease") in accordance with and upon the following terms and conditions:
(a) The New Lease shall be effective as of the date of termination of this Agreement,
and shall be, for the remainder of the Term of this Agreement, at a rent and fee and upon all of
the original agreements, terms, covenants and conditions. Such New Lease shall require the
lessee to perform any unfulfilled obligation of the Tenant under this Agreement.
(b) Upon the execution of the New Lease, the lessee therein named shall pay any and
all sums which would at the time of the execution thereof be due under this Agreement but for
termination and shall pay all expenses, including reasonable attorneys' fees, court costs and
disbursements, incurred by the Port in connection with any default and termination, the recovery
of possession of the Premises, and the preparation, execution and delivery of the New Lease.
(c) Nothing herein, however, shall be deemed to obligate the Port to deliver
possession of the Premises to the lessee under any New Lease. Upon the execution and delivery
of such New Lease, the lessee, in its own name or in the name of the Port, may take all
appropriate steps as shall be necessary to remove Tenant from the Premises. The provisions of
this Section 20.3.5 shall survive the termination of this Agreement.
20.3.6 Subject to the provisions of this ARTICLE, the Leasehold Mortgagee may
exercise, with respect to the Premises, any right, power, or remedy under the Leasehold
Mortgage. Every Leasehold Mortgagee (or its designee) or any other purchasers in foreclosure
proceedings may become the legal owners and holders of Tenant's interest in this Agreement
through such foreclosure proceedings or by assignment of this Agreement in lieu of foreclosure
and shall provide notice of such assignment and assumption to the Port in compliance with
Section 24.1.1. Leasehold Mortgagee after a foreclosure or assignment in lieu of foreclosure
under the Leasehold Mortgage may subsequently assign the leasehold interest or the New Lease
to a third party who shall assume the lease and provide notice of the assumption to the Port and
otherwise comply with the Provisions of Section 24.1.1. Upon such assumption, the Leasehold
Mortgagee shall be released from all liability for the performance or observance of the covenants
and conditions in this Agreement (or such New Lease) contained on Tenant's part to be
performed and observed from and after the date of such assignment.
20.3.7 Notwithstanding Sections 20.3.5 and 20.3.6, in the event that any person or entity
other than Leasehold Mortgagee (a "Foreclosure Purchaser") shall acquire title to Tenant's
interest in this Agreement as a result of foreclosure or assignment in lieu of foreclosure under the
Leasehold Mortgage, or under a New Lease pursuant to this ARTICLE, the Foreclosure
Purchaser may not assign this Agreement (or such New Lease) without the prior written consent
of the Port in compliance with the requirements of ARTICLE 24. If the Port's consent is
obtained, the assignee must assume Tenant's obligations under this Agreement and an executed
counterpart of such assumption must be delivered to the Port. Upon such assumption, the
Foreclosure Purchaser shall be released from all liability for the performance or observance of
{00209478.DOCX; 2 / 13166 / LSE } 36
the covenants and conditions in this Agreement (or such New Lease) contained on Tenant's part
to be performed and observed from and after the date of such assignment.
20.3.8 Notwithstanding Section 20.3.1, no agreement between the Port and Tenant
modifying, canceling or surrendering this Agreement shall be effective without the prior written
consent of the Leasehold Mortgagee.
20.3.9 Tenant's share, as provided by ARTICLE 16 of this Agreement, of the proceeds
arising from an exercise of the power of eminent domain shall, subject to the provisions of such
ARTICLE 16, be disposed of as provided for by any Leasehold Mortgage.
20.3.10 A Standard Mortgagee Loss Payee Clause naming Leasehold Mortgagee may be
added to any and all property insurance policies required to be carried by Tenant hereunder on
condition that the insurance proceeds are to be applied to rebuilding in the manner specified in
this Agreement and the Leasehold Mortgage shall so provide; provided, however, the Leasehold
Mortgage may provide a manner for the disbursement of such proceeds.
ARTICLE 21: DEFAULT
21.1 Events of Default. The occurrence of any of the following events shall constitute
an "Event of Default" on the part of the Tenant:
21.1.1 The vacating or abandonment of the Premises by Tenant if Tenant has failed to
pay any amounts due and owing hereunder beyond the applicable notice and cure period.
21.1.2 The failure by Tenant to make any payment of Rent, fees or any other payment
required by this Agreement beyond the applicable notice and cure period.
21.1.3 The failure by Tenant to observe or perform any covenant, condition, or
agreement to be observed or performed by Tenant in this Agreement beyond the applicable
notice and cure period.
21.1.4 The filing by Tenant of a petition in bankruptcy, Tenant being adjudged bankrupt
or insolvent by any court, a receiver of the property of Tenant being appointed in any proceeding
brought by or against Tenant, Tenant making an assignment for the benefit of creditors, or any
proceeding being commenced to foreclose any mortgage or other Lien on Tenant's interest in the
Premises or on any personal property kept or maintained on the Premises by Tenant.
21.2 Remedies. Except as otherwise provided her ein, in addition to, and not in lieu or
to the exclusion of, any other remedies provided in this Agreement or to any other remedies
available to the Port at law or in equity:
21.2.1 Except as otherwise provided in ARTICLE 20 (and specifically the notice and
cure rights of a Leasehold Mortgagee under Section 20.3.3) and this ARTICLE 21, whenever
any default continues unremedied in whole or in part (i) for thirty (30) days after Notice of
Default is provided by the Port to Tenant and Leasehold Mortgagee in the case of default for
{00209478.DOCX; 2 / 13166 / LSE } 37
failure to pay any Rent, fees or other required payment when due; or (ii) for sixty (60) days after
Notice of Default is provided by the Port to Tenant and Leasehold Mortgagee in the case of a
nonmonetary Event of Default (or such longer period as is reasonably required to cure the Event of
Default so long as Tenant commences to cure within such sixty (60) day period and diligently
pursues such cure to completion); this Agreement and all of Tenant's rights under it will
automatically terminate if the Notice of Default so provides. Upon termination, the Port may
reenter the Premises using such force as may be necessary and remove all persons and property
from the Premises. The Port will be entitled to recover from Tenant all unpaid Rent, fees or any
other reasonable payments and damages incurred because of Tenant's default including, but not
limited to, the costs of re-letting, including necessary renovations or repairs, advertising, leasing
commissions, and attorneys' fees and costs ("Termination Damages"), together with interest on
all Termination Damages at the Default Rate, from the date such Termination Damages are
incurred by the Port until paid.
21.2.2 In addition to Termination Damages, and notwithstanding termination and
reentry, Tenant's liability for all Rent, fees or other charges which, but for termination of this
Agreement, would have become due over the remainder of the Agreement Term ("Future
Charges") will not be extinguished and Tenant agrees that the Port will be entitled, upon
termination for default, to collect as additional damages, a Rental Deficiency. "Rental
Deficiency" means, at the Port's election, either:
(a) An amount equal to Future Charges, less the amount of actual rent and fees, if
any, which the Port receives during the remainder of the Term of this Agreement from others to
whom the Premises may be rented, in which case such Rental Deficiency will be computed and
payable at the Port's option either:
(i) In an accelerated lump-sum payment discounted to present worth, or
(ii) In monthly installments, in advance, on the first (1st) day of each calendar month
following termination of this Agreement and continuing until the date on which the Term of this
Agreement would have expired but for such termination, and any suit or action brought to collect
any portion of Rental Deficiency attributable to any particular month or months, shall not in any
manner prejudice the Port's right to collect any portion of Rental Deficiency by a similar
proceeding; or
(b) An amount equal to Future Charges less the aggregate Fair Market Rent of the
Premises over the remaining Term of this Agreement, reduced to present worth. In this case, the
Rental Deficiency must be paid to the Port in one lump sum, on demand, and will bear interest at
the Default Rate until paid. For purposes of this subsection, "present worth" is computed by
applying a discount rate equal to one percent (1%) above the discount rate then in effect at the
Federal Reserve Bank in, or closest to, Seattle, Washington.
21.2.3 If this Agreement is terminated for default as provided in this Agreement, the Port
shall have a duty to mitigate its damages and shall use reasonable efforts to re-let the Premises in
whole or in part, alone or together with other premises, for such term or terms (which may be
greater or less than the period which otherwise would have constituted the balance of the Term
of this Agreement), for such use or uses on commercially reasonable terms.
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21.2.4 If upon any reentry permitted under this Agreement, there remains any personal
property upon the Premises, the Port, in its sole discretion, may remove and store the personal
property for the account and at the expense of Tenant. In the event the Port chooses to remove
and store such property, it shall take reasonable steps to notify Tenant of the Port's action. All
risks associated with removal and storage shall be on Tenant. Tenant shall reimburse the Port for
all expenses incurred in connection with removal and storage as a condition to regaining
possession of the personal property. The Port has the right to sell any property which has been
stored for a period of thirty (30) days or more, unless Tenant has tendered reimbursement to the
Port for all expenses incurred in removal and storage. The proceeds of sale will be applied first
to the costs of sale (including reasonable attorneys' fees), second to the payment of storage
charges, and third to the payment of any other amounts which may then be due and owing from
Tenant to the Port. The balance of sale proceeds, if any, will then be paid to Tenant.
21.3 No Counterclaim or Setoff. If the Port shall commence any proceeding for non -
payment of Rent, fees or of any other payment of any kind to which the Port may be entitled or
which the Port may claim under this Agreement, Tenant will not interpose any counterclaim or
setoff of any nature or description in any such proceeding; the parties specifically agreeing that
Tenant's covenant to pay Rent, fees or any other payments under this Agreement are
independent of all other covenants and agreements in this Agreement; provided, however, this
shall not be construed as a waiver of Tenant's right to assert such a claim in any separate action
brought by Tenant.
ARTICLE 22: RELOCATION; EASEMENTS
22.1 Easements. The parties recognize that t he Port's facilities are continuously being
modified to improve the utilities, services and premises used and provided by the Port. The Port,
or its agents (following reasonable notice to Tenant and after providing Tenant with an
opportunity to meet with the Port to discuss the easement, its location, and the process for
implementing and using it), shall have the right to enter the Premises of Tenant, and to cross
over, construct, move, reconstruct, rearrange, alter, maintain, repair and operate the sewer, water,
and drainage lines, and the electrical service, fiber and communication service and all other
services and facilities (collectively, "Facilities") all as required by the Port for its own use or
benefit; provided, however, that (i) the Port by virtue of such use, shall in no event interfere with
Tenant's use of the Premises; and (ii) no Facilities serving the Premises shall be interrupted or
diminished in any manner.
ARTICLE 23: NO WAIVER; THE PORT'S RIGHT TO PERFORM
23.1 Receipt of Monies Following Termination. Subject to the rights granted to a
Leasehold Mortgagee in ARTICLE 20, no receipt of monies by the Port from Tenant after the
termination or cancellation of this Agreement in any lawful manner shall (a) reinstate, continue
or extend the Term of this Agreement; (b) affect any notice theretofore given to Tenant; (c)
operate as a waiver of the rights of the Port to enforce the payment of any Rent and fees then due
or thereafter falling due; or (d) operate as a waiver of the right of the Port to recover possession
of the Premises by proper suit, action, proceeding or remedy; it being agreed that after the
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service of notice to terminate or cancel this Agreement, or after the commencement of suit,
action or summary proceedings, or any other remedy, or after a final order or judgment for the
possession of the Premises, the Port may demand, receive and collect any monies due, or
thereafter falling due, without in any manner affecting such notice, proceeding, suit, action, order
or judgment; and any and all such monies collected shall be deemed to be payments on account
of the use and occupation and/or Tenant's liability hereunder.
23.2 No Waiver of Breach. The failure of either party to insist in any one or more
instances, upon a strict performance of any of the covenants of this Agreement, or to exercise
any option herein contained, shall not be construed as a waiver of or relinquishment for the
future of the performance of such covenant, or the right to exercise such option, but the same
shall continue and remain in full force and effect. The receipt by the Port of the Rent or fees,
with knowledge of the breach of any covenant hereof, shall not be deemed a waiver of such
breach, and no waiver by the Port of any provision hereof shall be deemed to have been made
unless expressed in writing and signed by the Port. The consent or approval of the Port to or of
any act by Tenant requiring the Port's consent or approval shall not be deemed to waive or
render unnecessary the Port's consent or approval to or of any subsequent similar acts by Tenant.
The consent or approval of Tenant to or of any act by the Port requiring the Tenant's consent or
approval shall not be deemed to waive or render unnecessary Tenant's consent or approval to or
of any subsequent similar acts by the Port.
23.3 No Waiver of Rent. The receipt by the Port of any installment of Base Rent, fees
or of any Additional Rent shall not be a waiver of any Base Rent or Additional Rent then due.
23.4 Application of Payments. The Port shall have the right to apply any pay ments
made by Tenant to the satisfaction of any debt or obligation of Tenant to the Port, in the Port's
sole discretion and regardless of the instructions of Tenant as to application of any such sum,
whether such instructions be endorsed upon Tenant's check or otherwise, unless otherwise
agreed upon by both parties in writing. The acceptance by the Port of a check or checks drawn
by others than Tenant shall in no way affect Tenant's liability hereunder nor shall it be deemed
an approval of any assignment of this Agreement or subletting by Tenant.
23.5 Port's Right to Perform. Upon Tenant's failure to perform any obligation, or
make any payment required of Tenant hereunder, beyond the applicable notice and cure period,
the Port shall have the right (but not the obligation) to perform such obligation of Tenant on
behalf of Tenant and/or to make payment on behalf of Tenant to such parties. Tenant shall
reimburse the Port the reasonable cost of the Port's performing such obligation on Tenant's
behalf, including reimbursement of any amounts that may be expended by the Port, plus interest
at the Default Rate, as Additional Rent; provided, however, the Port shall provide Leasehold
Mortgagee notice and opportunity to cure as set forth in ARTICLE 20.
ARTICLE 24: ASSIGNMENT
24.1 Prohibition on Assignment. Except as otherwise specifically permitted in this
Agreement, Tenant shall not, in whole or in part, assign all or any part of this Agreement (as to
all or any part of the Premises) without the prior written consent of the Port in each instance,
{00209478.DOCX; 2 / 13166 / LSE } 40
which consent shall not be unreasonably withheld, conditioned, or delayed. Tenant shall at the
time the Tenant requests the consent of the Port, deliver to the Port such information in writing
as the Port may reasonably require respecting the proposed assignee including, without
limitation, the name, address, nature of business, ownership, financial responsibility and standing
of such proposed assignee and the proposed documentation for the transfer as described below.
Within twenty (30) days after receipt of all required information, the Port shall elect one of the
following: (a) to consent to such proposed assignment or (b) to refuse such consent. In
determining whether to grant consent to an assignment, the Port may consider factors which the
Port reasonably determines in good faith are relevant to its decision.
24.1.1 As a condition for the Port's consent to any assignment, Tenant shall deliver to
the Port a true copy of the fully executed instrument of assignment and an agreement executed
by the assignee in form and substance satisfactory to the Port and expressly enforceable by the
Port, whereby the assignee assumes and agrees to be bound by the terms and provisions of this
Agreement and perform all the obligations of Tenant hereunder.
24.1.2 In the event of any assignment, Tenant and each respective assignor, waives
notice of default by the tenant in possession in the payment and performance of the Rent,
covenants and conditions of this Agreement and consents that the Port may in each and every
instance deal with the tenant in possession, grant extensions of time, waive performance of any
of the terms, covenants and conditions of this Agreement and modify the same, and in general
deal with the tenant then in possession without notice to or consent of any assignor, including
Tenant; and any and all extensions of time, indulgences, dealings, modifications or waivers shall
be deemed to be made with the consent of Tenant and of each respective assignor.
24.1.3 No assignment, other than a Permitted Assignment or any assignment to which
the Port has provided its consent pursuant to this Section 24, shall relieve Tenant of any
obligation under this Agreement, including Tenant's obligation to pay Base Rent, Additional
Rent or other amounts due hereunder. Any purported assignment contrary to the provisions
hereof without consent shall be void. The consent by the Port to any assignment shall not
constitute a waiver of the necessity for such consent to any subsequent assignment or subletting.
Notwithstanding the foregoing, provided that an assignment is a Permitted Assignment or an
assignment to which The Port has provided its consent pursuant to this Section 24, Tenant shall
be released from all obligations of Tenant under this Agreement arising from and after the
effective date of such assignment, including any obligations to pay Base Rent, Additional Rent
or other amounts due hereunder, and from the performance of any of the covenants,
representations or warranties of Tenant under this Lease.
24.1.4 Tenant shall reimburse the Port in the sum of up to Five Thousand Dollars
($5,000.00) for fees and expenses incurred by the Port in connection with any request by Tenant
for consent to an assignment.
24.2 Intentionally Deleted.
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24.3 Scope. The general prohibition against a ssignment contained in this ARTICLE
shall be construed to include a prohibition against any assignment or subletting by operation of
law.
24.4 Permitted Assignments. Notwithstanding anything to the contrary in this
Agreement, Tenant may, without the Port's prior written consent, assign this Agreement or sublet all
or portions of the Premises to: (i) an Affiliate of Tenant, or (ii) a successor corporation, limited
liability company or other entity related to Tenant by merger, consolidation or non-bankruptcy
reorganization or (iii) any investor as part of the organization of Tenant or (iv) any entity owned or
controlled by Carl D. Panattoni, Adon Panattoni or Bart Brynestad (any of the foregoing are referred
to herein as "Permitted Assignments"). No Permitted Assignment shall take effect until Tenant has
delivered to the Port copies of the applicable transfer documents or sublease documents, including
an assumption agreement whereby the Permitted Assignee assumes the obligations of Tenant under
this Agreement from and after the date of the transfer, running in favor of the Port (except for
subleases), and has provided the notice address of the transferee.
24.5 Non-Disturbance and Attornment Agreement. In connection and simultaneously
with any Permitted Assignment of this Agreement or Permitted Sublease, the Port agrees to execute
and deliver to any Permitted Assignee or Permitted Lessee a non-disturbance and attornment
agreement in substantially the form of Exhibit E attached hereto (the "NDA"), whereby the Port
shall agree not to disturb the Permitted Assignee's or Permitted Sublessee's occupancy and quiet
enjoyment of the Premises so long as Tenant or the Permitted Assignee or Lessee is not in default
beyond applicable notice and cure periods on the terms described in the NDA.
ARTICLE 25: SUBLEASE
25.1 Sublease. Except for the Permitted Subleases, Tenant may not sublease, license
or grant concession rights as to (for convenience in this ARTICLE 25, "sublease") any portion of
the Premises without the Port's prior written consent, which consent shall not be unreasonably
withheld, conditioned, or delayed and which consent shall be given if the proposed subtenant is
financially capable of performing the obligations of the Tenant under this Agreement for the
portion of the Premises or portion of the Term being subleased. Tenant shall at the time the
Tenant requests the consent of the Port, deliver to the Port such information in writing as the Port
may reasonably require respecting the proposed subtenant, including, without limitation, the
name, address, nature of business, ownership, financial responsibility and standing of such
proposed subtenant and the proposed documentation for the transfer as described below. In
determining whether to grant such a consent to a sublease, the Port may consider all factors which
the Port reasonably determines in good faith are relevant to its decision. Within twenty (20) days
after receipt of all required information, the Port shall, in its sole discretion, elect one of the
following: (a) to consent to such proposed sublease or (b) to refuse such consent. Any such
sublease shall be subject to all of the covenants, conditions, agreements and terms of this
Agreement.
25.1.1 No sublease by Tenant shall relieve Tenant of any obligation under this
Agreement, including Tenant's obligation to pay Base Rent, fees or Additional Rent hereunder.
Any purported sublease contrary to the provisions hereof (or for which consent is not specifically
{00209478.DOCX; 2 / 13166 / LSE } 42
obtained) shall be void. Any sublease shall specifically be subject and subordinate at all times to
this Agreement, and to all of its covenants, agreements, terms, provisions, and conditions.
25.1.2 Tenant agrees that any sublease will contain a provision in substance that if there
is any termination whatsoever of this Agreement then the subtenant, licensee or concessionaire,
at the request of the Port, will attorn to the Port and the subtenant, licensee or concessionaire, if
the Port so requests, shall continue in effect with the Port. Nothing herein shall be deemed to
require the Port to accept such attornment.
25.1.3 Tenant further agrees that any sublease will contain a provision in substance
requiring each and every subtenant, licensee or concessionaire to maintain commercial liability
insurance protecting against claims for bodily injury including death, personal injury and
property damage in such amounts, and on such forms, as is commercially reasonable in light of
the then-existing insurance and real estate markets.
25.1.4 Tenant agrees that the Port is not, and will not be, responsible for the payment of
any brokerage commissions, or finder's fees or similar charges of any nature in connection with
any sublease, and Tenant agrees to indemnify and hold the Port harmless from and against any
claims liability, losses or expenses, including reasonable attorneys' fees, incurred by the Port in
connection with any claims for a commission by any broker or agent in connection with any
sublease (including any direct relationship with any subtenant, licensee or concessionaire that
may result by way of attornment).
25.1.5 Subject to the terms of a Leasehold Mortgage, in the event that any portion of the
Premises is sublet or occupied by anyone other than Tenant, the Port may, upon the default of
Tenant, collect rent from the subtenant, licensee, concessionaire or occupant and apply the
amount collected to the Rent reserved under the terms of this Agreement, but without thereby
affecting Tenant's liability under this Agreement.
25.2 Copies of Permitted Subleases. Within ten (10) days after entering into a
Permitted Sublease, Tenant shall deliver to the Port a copy of the sublease for its records. The
terms of sublease shall be consistent with the terms of this Agreement. Upon request from the
Port, Tenant shall deliver to the Port a true and correct list of all subtenants, licensees and/or
concessionaires to which Tenant has granted a right to occupy the Premises, an identification of
the specific portion of the Premises that each such subtenant, licensee and concessionaire is
permitted to occupy, the term of permitted occupancy for each such subtenant, licensee and
concessionaire, and a copy of the fully executed instrument of the sublease for each such
subtenant, licensee and concessionaire, but no more often that once annually. Upon entering into
a Permitted Sublease, if requested by Tenant, Port will provide an NDA on the form attached
hereto as Exhibit E.
ARTICLE 26: MISCELLANEOUS
26.1 Notices. All notices required to be given hereunder shall be in writing and mailed
postage prepaid by certified or registered mail, return receipt requested, or by personal delivery,
to the appropriate address indicated in ARTICLE 1 hereof or at such other place or places as
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either the Port or Tenant may, from time to time, respectively, designate in a written notice given
to the other. Notices shall be deemed sufficiently served upon the earlier of actual receipt or the
expiration of three (3) days after the date of mailing thereof.
26.2 Brokers. T he Port and Tenant each warrant to the other that it has had no
discussions, negotiations and/or other dealings with any real estate broker or agent in connection
with the negotiation of this Agreement, and that it knows of no other real estate broker or agent
who is or may be entitled to any commission or finder's fee in connection with this Agreement.
The Port and Tenant each agree to indemnify and hold the other harmless from and against any
and all claims, demands, losses, liabilities, lawsuits, judgments, costs and expenses (including
without limitation, reasonable attorneys' fees and costs) with respect to any leasing commission
or equivalent compensation alleged to be owing on account of such party's discussions,
negotiations and/or dealings with any real estate broker or agent. This Section is not intended to
benefit any third parties and shall not be deemed to give any rights to brokers or finders. No
commission(s) or finder's fee(s) shall be paid to Tenant, employee(s) of Tenant or any
unlicensed representative of Tenant.
26.3 Assignment by Port. In the event of a sale, conveyance, or other transfer by the
Port of the Property or in the event of an assignment of this Agreement by the Port, the same
shall operate to release transferor from any further liability upon any of the covenants or
conditions, express or implied, contained in this Agreement on the part of the Port, and from any
and all further liability, obligations, costs and expenses, demands, causes of action, claims or
judgments arising out of this Agreement from and after the effective date of said release. The
effective date of such release shall be the effective date of an assumption by the assignee
whereby the assignee agrees to assume all of the Port's obligations and liabilities with respect to
this Agreement. In such event, Tenant agrees to look solely to the successor in interest of
transferor. If any Security has been provided by Tenant to secure performance of Tenant's
covenants hereunder, the Port shall transfer such Security to any purchaser and thereupon the
Port shall be discharged from any further liability with respect to the Security and the transferee
shall thereafter be obligated with respect to the Security pursuant to the terms hereof.
26.4 Title Insurance. The parties acknowledge that the Port has delivered to Tenant a
title commitment prepared by First American Title Insurance Company for the issuance of a
policy of title insurance (subject only to the execution of this Agreement and recordation of a
Memorandum of Ground Lease) insuring Tenant's leasehold interest in the Property. The cost
for such policy of title insurance is the responsibility of the Tenant.
26.5 OFAC Compliance. Tenant advises the Port hereby that the purpose of this
paragraph is to provide to ___________________________________, in its capacity as a
member of Tenant, information and assurances to enable ________ to comply with the law
relating to OFAC. The Port represents, warrants and covenants in favor of ________ and Tenant
either that (i) it is regulated by the SEC, FINRA or the Federal Reserve (a "Regulated Entity") or
is a wholly-owned subsidiary of a Regulated Entity, or (ii) it is a Federal, State, or Municipal
Governmental Agency of the United States, or (iii) neither it nor any person or entity that
directly or indirectly (a) controls it or (b) has an ownership interest in it of twenty-five percent
(25%) or more, appears on the list of Specially Designated Nationals and Blocked Persons
{00209478.DOCX; 2 / 13166 / LSE } 44
("OFAC List") published by the Office of Foreign A ssets Control ("OFAC") of the U.S.
Department of the Treasury. The Port covenants during the term of this Agreement to provide to
________ and Tenant information reasonably requested by ________, including, without
limitation, organizational structural charts and organizational documents, which ________ may
deem to be necessary ("OFAC Information") in order to confirm its continuing compliance with
the provisions of this paragraph. The Port represents and warrants to ________ and Tenant that
the OFAC Information it has provided or to be provided to it in in connection with this
Agreement is true and complete.
26.6 Non-Discrimination and Title VI Assurances.
26.6.1 Services. Tenant agrees that it will not discriminate by segregation or otherwise
against any Person or Persons because of race, sex, age, creed, color, national origin or handicap
in furnishing, or by refusing to furnish, to such Person, or Persons, the use of the Project or the
Premises, including any and all services, privileges, accommodations, and activities provided
thereby.
26.6.2 Employment. Tenant covenants and agrees that in all matters pertaining to the
performance of this Agreement, Tenant shall at all times conduct its business at the Premises in a
manner which complies with federal, state and local hiring and employment practices.
26.6.3 Title VI Assurances.
A. The Tenant, for himself, his heirs, personal representatives, successors in
interest and assigns, as a part of the consideration hereof, does hereby covenant and agree as a
covenant running with the land, that in the event facilities are constructed, maintained, or
otherwise operated on the Premises for a purpose for which a U.S. Department of Transportation
program or activity is extended or for another purpose involving the provision of similar services
or benefits, the Tenant shall maintain and operate such facilities and services in compliance with
all other requirements imposed pursuant to 49 CFR Part 21, Nondiscrimination in Federally
Assisted Programs of the Department of Transportation, and as said Regulations may be
amended.
B. The Tenant, for himself, his personal representatives, successors in
interest, and assigns, as a part of the consideration hereof, does hereby covenant and agree as a
covenant running with the land that (1) no Person, on the grounds of race, color, or national
origin shall be excluded from participation in, be 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 such land and furnishing of services thereon, no Person on the
grounds of race, color, or national origin shall be excluded from participation in, denied the
benefits of, or otherwise be subjected to discrimination, (3) that the Tenant shall use the Premises
in compliance with all requirements imposed by or pursuant to Title 49, Code of Federal
Regulations, U.S. Department of Transportation, Subtitle A, Office of the Secretary, part 21,
Nondiscrimination in Federally assisted programs of the U.S. Department of Transportation--
Effectuation of Title VI of the Civil Rights Act of 1964, and as said Regulations may be
amended.
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C. In the event of breach of any of the above nondiscrimination covenants,
and subject to a right and opportunity to cure provided to Tenant and Leasehold Mortgagee as set
forth in this Agreement, the Port shall have the right to terminate this Agreement, and to re-enter
and repossess the Project and the Project thereon, and hold the same as if said Agreement had
never been made or issued.
26.7 Successors Bound. This Agreement and each of its covenants and conditions
shall be binding upon and shall inure to the benefit of the parties hereto and their respective
assignees, subject to the provisions hereof. Whenever in this Agreement a reference is made to
the Port, such reference shall be deemed to refer to the person in whom the interest of the Port
shall be vested, and the Port shall have no obligation hereunder as to any claim arising after the
transfer of its interest in the Premises. Any successor or assignee of the Tenant who accepts an
assignment of the benefit of this Agreement and enters into possession or enjoyment hereunder
shall thereby assume and agree to perform and be bound by the covenants and conditions thereof.
Nothing herein contained shall be deemed in any manner to give a right of assignment to Tenant
without the prior written consent of the Port and without otherwise being in compliance with
ARTICLE 24 hereof.
26.8 Access to Premises. Subject to the provisions of Section 23.5, the Port shall have
the right to enter the Property at all reasonable times during business hours of Tenant on five (5)
days' written notice to show the Property to any prospective purchasers or mortgagees of the
same and for the purpose of ascertaining the condition of the Property or whether Tenant is
observing and performing the obligations assumed by it under this Agreement, provided that any
of the Port's employees, representatives, agents, contractors, prospective purchasers, mortgagees
or their agents entering the Premises shall at all times be accompanied by a representative of
Tenant, and shall observe Tenant's reasonable security protocols, while present on the Premises.
The Port shall also have the right to enter upon the Premises for the purpose of making any
necessary repairs and performing any work that may be necessary by reason of Tenant's failure
to make any such repairs or perform any such work. The above-mentioned rights of entry shall
be exercisable upon request made on five (5) days' written notice to Tenant (or such shorter
notice as may be reasonable in the event of an emergency, which notice may be given orally).
26.9 Time. Time is of the essence of each and every one of the Port's and Tenant's
obligations, responsibilities and covenants under this Agreement.
26.10 Consent. Whenever the Port's prior consent or approval is required by this
Agreement, the same shall not be unreasonably withheld, conditioned, or delayed, unless
otherwise specifically provided by this Agreement.
26.11 Attorneys' Fees. In the event either party requires the servi ces of an attorney in
connection with enforcing the terms of this Agreement or in the event suit is brought for the
recovery of any Rent or fees due under this Agreement or the breach of any covenant or
condition of this Agreement, or for the restitution of the Premises to the Port and/or eviction of
Tenant during the Term of this Agreement, or after the expiration thereof, the substantially
{00209478.DOCX; 2 / 13166 / LSE } 46
prevailing party will be entitled to a reasonable sum for attorneys' fees, consultants' fees, witness
fees and other costs, both at trial and on appeal.
26.12 Captions and Article Numbers. The captions, article and section numbers and
table of contents appearing in this Agreement are inserted only as a matter of convenience and in
no way define, limit, construe or describe the scope or intent of such sections or articles of this
Agreement, nor do they in any way affect this Agreement.
26.13 Severability. If any term, covenant, condition or provision of this Agreement, or
the application thereof to any person or circumstance, shall to any extent be held by a court of
competent jurisdiction to be invalid, void or unenforceable, the remainder of the terms,
covenants, conditions or provisions of this Agreement, or the application thereof to any person or
circumstance, shall remain in full force and effect and shall in no way be affected, impaired or
invalidated, unless the application of the remaining provisions of this Agreement would make it
impractical, in Tenant's reasonable judgment, to use the Premises for Tenant's operations, in
which case, Tenant shall have the right to terminate this Agreement.
26.14 Applicable Law; Waiver of Trial by Jury. This Agreement, and the rights and
obligations of the parties hereto, shall be construed and enforced in accordance with the laws of
the State of Washington. In any action on or related to the terms of this Agreement, the parties
(for themselves and their successors and assigns) hereby waive any right to trial by jury and
expressly consent to trial of any such action before the court.
26.15 Submission of Agreement. The submission of this Agreement for examination
and negotiation does not constitute an offer to lease, or a reservation of or option for leasing the
Premises. This Agreement shall become effective and binding only upon execution and delivery
hereof by the Port and Tenant. No act or omission of any officer, employee or agent of the Port
or Tenant shall alter, change or modify any of the provisions hereof.
26.16 Security Measures. Tenant hereby acknowledges that the Rent payable to the Po rt
hereunder does not include the cost of guard service or other security measures and that the Port
shall have no obligation whatsoever to provide same. Tenant assumes all responsibility for the
protection of the Premises, Tenant, its agents and invitees and their property from the acts of
third parties.
26.17 Entire Agreement; Modification. This Agreement sets forth all covenants,
promises, agreements, conditions and understandings between the Port and Tenant concerning
the Premises, and there are no covenants, promises, agreements, conditions or understandings,
either oral or written, between the Port and Tenant other than as are herein set forth. No
subsequent alteration, amendment, change or addition to the Agreement shall be binding upon
the Port or Tenant unless reduced to writing and signed by the Port and Tenant.
26.18 Relationship of the Port and Tenant. Nothing contained herein shall be deemed or
construed as creating the relationship of principal and agent, partnership, or joint venture
partners, and no provision contained in this Agreement nor any acts of Tenant and the Port shall
be deemed to create any relationship other than that of Tenant and the Port.
{00209478.DOCX; 2 / 13166 / LSE } 47
26.19 Exclusive Negotiations. During the Due Diligence Period, the Port will not
engage in any negotiations with any other party regarding a ground lease of the Property.
26.20 Prevailing Wage. Tenant agrees to comply with the Prevailing Wage requirements
of Chapter 39.12 of the Revised Code of Washington, and include language in Tenant's contract
with the general contractor for the Project obligating all contractors and sub-contractors to pay
prevailing wage. Tenant shall provide the Port with the general contractor's affidavit of wages
paid by no later than Substantial Completion.
26.21. Apprenticeship Utilization. Tenant agrees to incorporate an apprenticeship
utilization (including some targeted percentage of women and minority apprentices) into the
construction agreement with Tenant's general contractor for the Project. Tenant shall provide the
Port with the general contractor's affidavit of apprenticeship utilization by no later than
Substantial Completion.
26.22 Exhibits. The following exhibits are attached to this Agreement after the
signatures and by this reference incorporated herein:
26.22.1 Exhibit A Legal Description
26.22.2 Exhibit B Site Plan
26.22.3 Exhibit C Promissory Note
26.22.4 Exhibit D Form of Memorandum of Lease
26.22.5 Exhibit E Form of Non-Disturbance and Attornment Agreement
26.22.6 Exhibit F Pre-Lease Environmental Evaluation Requirements
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first
above written.
LANDLORD:
PORT OF SEATTLE
A Washington municipal corporation
By: ________________________________
Name: ________________________________
Its: ________________________________
TENANT:
SEATTLE GATEWAY 2, LLC,
a Delaware limited liability company
{00209478.DOCX; 2 / 13166 / LSE } 48
By: ________________________________
Name: ________________________________
Its: ________________________________
{00209478.DOCX; 2 / 13166 / LSE } 49
EXHIBIT A
-- Legal Description --
{00209478.DOCX; 2 / 13166 / LSE } 1
EXHIBIT B
-- Site Plan --
See Attached Pages.
{00209478.DOCX; 2 / 13166 / LSE } 2
EXHIBIT C
Form of Promissory Note.
DEPOSIT NOTE
NERA 2
$135,500.00 November __, 2016
Seattle, Washington
FOR VALUE RECEIVED, the undersigned ("Tenant") agrees to pay to the order of the
Port of Seattle the sum of One Hundred Thirty-Five Thousand Five Hundred Dollars
($135,500.00) as follows:
_____ ______________ days (3 days if not filled in) following mutual acceptance of the
Ground Lease (as defined below).
__x__ Upon satisfaction or waiver of the Due Diligence Period stated in the Ground
Lease.
_____ Other _____________________________________.
This Note is evidence of the obligation to pay the Deposit under that certain Ground Lease
Agreement (the "Ground Lease") dated _________________, 2016, between the Port of Seattle
as Landlord and Seattle Gateway 2, LLC, a Delaware limited liability company as Tenant, for the
above real property located in Burien, Washington.
If this Note shall be placed in the hands of an attorney for collection, or if suit shall be
brought to collect any of the balance due on this Note, Tenant promises to pay a reasonable
attorney's fee as fixed by the Court, and all court and collection costs. This Note shall bear
interest at the rate of ten percent (10%) per annum after default.
Tenant's failure to pay the Deposit shall constitute Tenant/s disapproval of the contingencies
stated in the Ground Lease.
TENANT:
SEATTLE GATEWAY 2, LLC
a Delaware limited liability company
By: __________________________
Bart Brynestad, Local Partner
{00209478.DOCX; 2 / 13166 / LSE } 3
EXHIBIT D
-- Form of Memorandum of Lease
RECORDED AT THE REQUEST
OF:
WHEN RECORDED RETURN TO:
HAIGHT BROWN & BONESTEEL LLP
2485 Natomas Park Drive, Suite 450
Sacramento, CA 95833
MEMORANDUM OF GROUND LEASE
This Memorandum of Ground Lease ("Memorandum"), dated as of ____________, 2016,
is entered into by and between SEATTLE GATEWAY 2, LLC, a Delaware limited liability
company, or its assigns ("Tenant"), PORT OF SEATTLE, a Washington municipal
corporation ("Landlord").
1 Landlord owns fee title to that certain real property located in the City of Burien, King
County, State of Washington, as is more particularly described in Exhibit A attached
hereto and incorporated herein ("Land").
2 On even date herewith, Landlord entered into that Ground Lease Agreement with Tenant
(the "Lease") wherein Landlord agreed to lease to Tenant the Land.
3 The Lease term is for a period of fifty-five (55) years and commences on _______. 2016
and expires on _________, 2071. Tenant has two (2) successive options to extend the
term of the Lease each for a ten (10) year period.
4 This Memorandum is solely for recording purposes and shall not be construed to
supplement, amend, or otherwise modify the terms and conditions contained in the Lease.
5 This Memorandum and the Lease shall bind and inure to the benefit of the parties and
their respective heirs, successors, and assigns, subject, however, to the provisions of the
Lease regarding Assignment.
6 This Memorandum and the Lease are governed by the laws of the State of Washington.
Signatures are on the next page.
{00209478.DOCX; 2 / 13166 / LSE }
SIGNATURE PAGE
to Memorandum of Option to Ground Lease
IN WITNESS WHEREOF, the parties have executed this Memorandum as of the date set
forth above.
[ALL SIGNATURES MUST BE NOTARIZED]
LANDLORD:
PORT OF SEATTLE
A Washington municipal corporation
By: ________________________________
Name: ________________________________
Its: ________________________________
TENANT:
SEATTLE GATEWAY 2, LLC,
a Delaware limited liability company
By: ________________________________
Name: ________________________________
Its: ________________________________
{00209478.DOCX; 2 / 13166 / LSE }
Exhibit A to
Memorandum of Ground Lease
LEGAL DESCRIPTION OF PROPERTY
{00209478.DOCX; 2 / 13166 / LSE }
ACKNOWLEDGMENT
STATE OF ___________________ )
)
COUNTY OF )
On before me, ____________________, Notary Public, personally
appeared , personally known to me, or proved to me on the
basis of satisfactory evidence, to be the person(s) whose name(s) is/are subscribed to the within
instrument and acknowledged to me that he/she/they executed the same in his/her/their
authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or
the entity upon behalf of which the person(s) acted, executed the instrument.
WITNESS my hand and official seal.
(SEAL)
Notary Public Signature
ACKNOWLEDGMENT
STATE OF ___________________ )
)
COUNTY OF )
On before me, ____________________, Notary Public, personally
appeared , personally known to me, or proved to me on the
basis of satisfactory evidence, to be the person(s) whose name(s) is/are subscribed to the within
instrument and acknowledged to me that he/she/they executed the same in his/her/their
authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or
the entity upon behalf of which the person(s) acted, executed the instrument.
WITNESS my hand and official seal.
(SEAL)
Notary Public Signature
{00209478.DOCX; 2 / 13166 / LSE }
EXHIBIT E
-- Form of Non-Disturbance and Attornment Agreement -
RECOGNITION, NONDISTURBANCE AND ATTORNMENT AGREEMENT
THIS AGREEMENT, is made as of ________________, 20__, by and among
_________________, a ________________ (hereinafter referred to as "Prime Lessor"), and
_________________, a ________________ (hereinafter referred to as "Prime Lessee"), and
______________________________, LLC, a Delaware limited liability company (hereinafter
referred to as "Tenant"), with reference to the following facts:
A. Prime Lessor has entered into a Lease with Prime Lessee dated ___________ (the
"Prime Lease") for [the building located at ___________] (the "Property") as more fully
described in the Prime Lease;
B. By a certain sublease entered into between Prime Lessee and Tenant dated
______________ (hereinafter called the "Sublease"), Prime Lessee leased to Tenant [a portion
of] the Property and the improvements to be erected thereon as more particularly described in the
Sublease (said portion of the Property and the improvements now or hereafter erected thereon
being hereinafter called the "Demised Premises");
C. The parties hereto desire to provide for the recognition and nondisturbance to
Tenant by the Prime Lessor; and
D. The parties hereto desire to provide for Tenant's agreement to pay Prime Lessor
the rent payments due under the Prime Lease and to assume the Prime Lease after the occurrence
of a default by Prime Lessee not cured within any applicable cure period.
NOW, THEREFORE, in consideration of the premises and of the mutual covenants and
agreements herein contained, the parties hereto intending to be legally bound hereby agree as
follows:
1. Prime Lessor agrees that as long as the Sublease shall be in full force and effect:
(a) The possession by Tenant of the Demised Premises and the Tenant's
rights thereto shall not be disturbed, affected or impaired by, nor will the Sublease or the term
thereof be terminated or otherwise affected by (i) any suit, action or proceeding upon the Prime
Lease, or by the termination of the Prime Lease or the enforcement of any rights under the Prime
Lease or any other documents held by the Prime Lessor, or by any judicial sale or execution or
other sale of the Demised Premises, or (ii) any default under the Prime Sublease; and
(b) Prime Lessor will not exercise any of its rights under the Prime Lease in a
manner which would effectively prohibit Prime Lessee from performing the Sublease in
accordance with its terms.
2. If the Prime Lessor shall terminate the Prime Lease with Prime Lessee or its
assigns or if the Property shall be sold as a result of any action or proceeding to terminate the
{00209478.DOCX; 2 / 13166 / LSE }
Prime Lease, or transfer of ownership given in lieu of termination, the Prime Lease shall
continue in full force and effect with Tenant, without necessity for executing any new lease, as a
direct lease between Tenant and the then owner of the Property, as "landlord," upon all of the
same terms, covenants and provisions contained in the Prime Lease, and in such event:
(a) Tenant shall be bound to the Prime Lessor or such new owner under all of
the terms, covenants and provisions of the Prime Lease for the remainder of the term thereof
(including the Renewal Periods, if Tenant elects or has elected to exercise its options to extend
the term) and Tenant hereby agrees to attorn to the Prime Lessor or such new owner, as the case
may be, and to recognize the Prime Lessor or such new owner shall, from and after the date the
Prime Lessor or new owner succeeds to the interest of "landlord" under the Prime Lease, have
the same remedies against Tenant for the breach of any covenant contained in the Prime Lease
that Landlord might have had under the Prime Lease against Prime Lessee; and
(b) The Prime Lessor or such new owner shall be bound to Tenant under all of
the terms, covenants and provisions of the Prime Lease for the remainder of the term thereof
(including the Renewal Periods, if Tenant elects or has elected to exercise its options to extend
the term of the Prime Sublease). Tenant shall, from and after the date the Prime Lessor or new
owner succeeds to the interest of "landlord" under the Prime Lease, have the same remedies
against the Prime Lessor or new owner for the breach of any covenant contained in the Prime
Lease that Prime Lessee might have had under the Prime Lease against Landlord if the Prime
Lessor or new owner had not succeeded to the interest of Landlord.
3. Prime Lessee hereby agrees to protect, defend, indemnify and hold Tenant
harmless from and against any and all claims, damages, costs and expenses (including not
limited to reasonable attorneys' fees) incurred by Tenant as a result of the violation of this
Agreement by Prime Lessee or the breach by Prime Lessee of the Prime Lease, including but not
limited to any breach which result in termination of the Prime Lease. Tenant hereby agrees to
protect, defend, indemnify and hold Prime Lessee harmless from and against any and all claims,
damages, costs and expenses (including but not limited to reasonable attorneys' fees) arising
from Tenant's violation of the terms of this Agreement.
4. Prime Lessee hereby authorizes Tenant and Tenant hereby agrees to assume and
make all rent or other payments due to Prime Lessor from Prime Lessee pursuant to the Prime
Lease directly to Prime Lessor as and when such payments are due under the Prime Lease and
otherwise in accordance with the Prime Lease. Prime Lessor hereby agrees to accept such
payments from Tenant as though such payments had been made by Prime Lessee.
5. Any notices or communications given under this Agreement shall be in writing
and shall be given by registered or certified mail, return receipt requested, postage paid or
reliable overnight courier to each of the parties at their respective addresses as hereinabove set
forth or at such other address as a party may designate by notice given in accordance with this
paragraph. Notices shall be deemed delivered upon actual receipt as evidenced by the return
receipt.
6. This Agreement shall bind and inure to the benefit of and be enforceable by the
parties hereto and their respective successors and permitted assigns.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
as of the date first above written.
PRIME LESSOR:
By:____________________________
Name:
Title:
PRIME LESSEE:
By:____________________________
Name:
Title:
TENANT:
_________________________________, LLC,
a Delaware limited liability company
By: ________________________________
Name: ________________________________
Its: ________________________________
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EXHIBIT F
-- Pre-Lease Environmental Evaluation Requirements
Environmental Assessment
Defined Terms. All capitalized and defined terms in this Section shall have the meanings
provided in Article I of the Ground Lease.
Pre-Lease Environmental Evaluation. Tenant has begun the Pre-Lease Environmental
Evaluation for the Project. The intent of the parties is that, while Tenant will conduct the
majority of the Pre-Lease Environmental Evaluation during the Due Diligence Period of the
Ground Lease, Tenant will not be obligated to complete the Pre-Lease Environmental Evaluation
(and finalize the Pre-Lease Environmental Evaluation Report) until after the end of the Due
Diligence Period. The final Pre -Lease Environmental Evaluation will incorporate the field
observations of contaminated soil discovered during construction of the Project as documented in
the Environmental Construction Field Data Report. The Tenant shall submit the
Environmental Construction Field Data Report to the Port for review approval no later than
forty-five (45) days after the completion of the on site earthwork necessary to prep the site for
vertical construction. The Pre-Lease Environmental Evaluation Report will be submitted by
Tenant for review and approval by Port at least fifteen (15) days before Substantial Completion
of the Project, which approval shall not be unreasonably withheld. The Pre -Lease
Environmental Evaluation Report will be relied upon by the parties to document the Pre-Lease
Environmental Condition for the purposes of determining the extent of Pre-existing Hazardous
Substances, compliance with environmental laws, liability, indemnity, and obligations with
respect to post-occupancy remediation.
Environmental Construction Support Work Plan. Tenant will prepare an Environmental
Construction Support Work Plan (the "Work Plan").
Schedule. The first draft Work Plan, shall be submitted for Port review when the Project design
is at the thirty percent (30%) stage. Tenant shall incorporate comments provided by Port within
ten (10) days after Tenant's submission to Port of its Work Plan. If the first draft Work Plan is
revised at any time during design, it will be re-submitted for Port review and incorporation of
comments. No later than ten (10) business days before the start of construction for the on site
earthwork, Tenant shall submit a final Work Plan to the Port.
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EXHIBIT G
-- Diagram of Slope Easement
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