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Home My WebLink AboutCAG2001-0489 - Original - Borden Chemical, Inc. - Purchase of Property at 421-608 1st Ave N, Kent - 02/08/2001 REAL PROPERTY PURCHASE AND SALE AGREEMENT between BORDEN CHEMICAL, INC., a Delaware corporation ("Seller") and CITY OF KENT, a Washington municipal corporation ("Buyer") February S, 2001 TABLE OF CONTENTS Page ARTICLE I. PROPERTY ARTICLE II. PURCHASE PRICE 2.1 Purchase Price..................................................................................................................... 1 2.2 Escrow Holder .................................................................................................................... 1 2.3 Earnest Money Deposit; Liquidated Damages ................................................................... 1 ARTICLE III. TITLE TO PROPERTY ARTICLE IV. INSPECTION AND EVALUATION OF THE PROPERTY 4.1 Review of Property............................................................................................................. 3 4.2 Title..................................................................................................................................... 3 4.3 Survey.................................................................................................................................4 4.4 Appraisal............................................................................................................................. 4 4.5 Environmental Condition of the Property...........................................................................4 ARTICLE V. CONDITIONS PRECEDENT TO CLOSING 5.1 Approval by City Council................................................................................................... 5 5.2 Performance By Seller........................................................................................................ 5 5.3 Representations and Warranties True................................................................................. 5 5.4 Title..................................................................................................................................... 5 5.5 Establishment of Environmental Holdback........................................................................ 6 5.6 No Change in Environmental Condition of Property ......................................................... 6 ARTICLE VI. OPERATIONS PENDING CLOSING 6.1 Continued Operation of the Property.................................................................................. 6 6.2 Condition of Title................................................................................................................ 7 6.3 Buyer Continued Use of Sports Fields................................................................................ 7 ARTICLE VII. CLOSING AND ESCROW 7.1 Closing................................................................................................................................ 7 7.2 Delivery by Seller............................................................................................................... 7 7.3 Delivery by Buyer............................................................................................................... 8 7.4 Other Instruments................................................................................................................ 8 7.5 Prorations............................................................................................................................ 8 -i- P\DRS\DRS22T 7.6 Costs and Expenses............................................................................................................. 9 7.7 Recordation......................................................................................................................... 9 7.8 Notification; Closing Statements........................................................................................ 9 ARTICLE VIII. REPRESENTATIONS AND WARRANTIES 8.1 Seller's Representations.................................................................................................... 10 8.2 Buyer's Representations ................................................................................................... 12 ARTICLE IX. REMOVAL OF PERSONAL PROPERTY AND IMPROVEMENTS; LEASEBACK 9.1 Removal of Personal Property and Other Improvements................................................. 12 9.2. Performance and Payment of Remedial Work for Additional Hazardous Substances......................................................................................................................... 14 9.3 Leaseback.......................................................................................................................... 15 ARTICLE X. LOSS BY FIRE OR OTHER CASUALTY; CONDEMNATION 10.1 Casualty Which Results in a Release of Hazardous Substances....................................... 15 10.2 Non-Material Damage or Destruction .............................................................................. 16 10.3 Demolition of Improvements Following Damage or Destruction.................................... 16 10.4 Condemnation................................................................................................................... 16 ARTICLE XI. POSSESSION ARTICLE XII. MISCELLANEOUS 12.1 Indemnity.......................................................................................................................... 17 12.2 Agency Disclosure............................................................................................................ 17 12.3 Brokers and Finders.......................................................................................................... 17 12.4 Notices .............................................................................................................................. 17 12.5 Amendment, Waiver......................................................................................................... 18 12.6 Survival............................................................................................................................. 18 12.7 Captions ............................................................................................................................ 18 12.8 Merger of Prior Agreements............................................................................................. 18 12.9 No Joint Venture............................................................................................................... 19 12.10 Governing Law; Time...................... 12.11 Specific Performance........................................................................................................ 19 12.12 Authority........................................................................................................................... 19 12.13 Assignment ....................................................................................................................... 19 12.14 Eminent Domain............................................................................................................... 19 12.15 Like-Kind Exchange......................................................................................................... 19 12.16 No Tax Advice.................................................................................................................. 20 -ii- P\DRS\DRS22T Exhibits Exhibit A—Legal Description Exhibit B—Promissory Note Exhibit C—Definition Lease Agr ement Substance m o Exhibit D—For p\DRS\DRS22T -111- REAL PROPERTY PURCHASE AND SALE AGREEMENT REAL PROPERTY PURCHASE AND SALE AGREEMENT (the "Agreement") made and entered into as of this '�_day of February, 2001, by and between BORDEN CHEMICAL, INC., a Delaware corporation ("Seller"), and CITY OF KENT, a Washington municipal corporation ("Buyer"). ARTICLE I. PROPERTY Seller hereby agrees to sell and convey to Buyer, and Buyer hereby agrees to purchase from Seller, subject to the terms and conditions set forth herein, certain real property with a street address of 421 —608 1st Avenue North located in the City of Kent, King County, Washington, and more particularly described on Exhibit A attached hereto and by this reference incorporated herein (the "Land") together with all rights, privileges and easements appurtenant to the Land, including, without limitation, all minerals, oil, gas and other hydrocarbon substances on and under the Land, all development rights, air rights, water, water rights, and any and all easements, rights-of-way and other appurtenances used in connection with the beneficial use and enjoyment of the Land (collectively, the "Property"). The Property does not include any of Seller's personal property, machinery, trade fixtures and equipment presently located on the Property, or the structures, buildings and other improvements presently located on the Property (collectively, "Improvements") which Seller shall remove from the Property prior to the end of the 6-month demolition period as provided in Article IX below or, if Seller elects to lease back the Property pursuant to Article IX below, prior to the end of the 6-month demolition period following termination of Seller's operation of its business on the Property as provided in the Lease. Seller shall also remove or demolish all buildings located on the Property as provided in Article IX below. ARTICLE II. PURCHASE PRICE 2.1 Purchase Price. The purchase price for the Property (the "Purchase Price") shall be Eleven Million One Hundred Twenty-Seven Thousand Eight Hundred and No/100 Dollars ($11,127,800)payable to Seller in cash at Closing(defined below). 2.2 Escrow Holder. Pacific Northwest Title Company of Washington, Inc. ("Escrow Holder") has been designated as escrow holder hereunder by mutual agreement of Seller and Buyer. 2.3 Earnest Money Deposit; Liquidated Damages. (a) Five (5) days following execution and delivery of this Agreement Buyer will deliver to Escrow Holder a promissory note in the amount of One Hundred Thousand Dollars ($100,000) in the form attached hereto as Exhibit B and by this reference incorporated herein (the "Note"). In the event Buyer terminates its obligations under this Agreement on or before the expiration of the Due Diligence Period (as defined in Article IV below), Escrow Holder shall return the Note to Buyer and neither party hereto shall have any further rights or obligations under this Agreement. (b) In the event Buyer does not elect to terminate its obligations under this Agreement as provided in Article IV, the Note shall be due and payable immediately upon waiver or expiration of the Due Diligence Period and once paid will be held by Escrow Holder as earnest money (the "Deposit") pending the closing of the purchase of the Property. The Deposit shall be invested by Escrow Holder in short-term government securities or certificates of deposit issued by a bank selected by Buyer. Except as provided in Section 2.3(c), all interest on the Deposit shall accrue for the benefit of the Buyer. The Deposit (together with investment interest accrued thereon) shall be applied to the Purchase Price at Closing. (c) Following the expiration of the Due Diligence Period, in the event Buyer fails, without legal excuse to complete the purchase of the Property, and provided there is no Event of Default by Seller and no event has occurred that with the giving of notice, the passage of time or both would constitute an Event of Default by Seller under this Agreement, the Deposit and all interest accrued thereon shall be forfeited to the Seller as liquidated damages and as the sole and exclusive remedy available to the Seller for such failure. ARTICLE III. TITLE TO PROPERTY . Buyer acknowledges receipt of a preliminary commitment for title insurance for the Property dated November 29, 2000, under Order No. 393556, Second Report (the "Title Report") issued by Pacific Northwest Title Company of Washington, Inc. (the "Title Company"), as supplemented. Seller shall convey fee simple title to the Property at Closing by bargain and sale deed (except that Seller shall convey Parcel D of the Property by quit claim deed) free and clear of all liens, encumbrances, adverse interests, leases, licenses or other rights to possession of the Property and other defects except for non-delinquent real estate taxes and assessments and those exceptions approved by Buyer in writing during the Due Diligence Period as provided in Section 4.2 of this Agreement. Buyer's obligation to close is expressly subject to Buyer's receipt of an irrevocable commitment by Pacific Northwest Title Company of Washington, Inc. (the "Title Company") to issue Buyer an ALTA extended coverage owner's policy of title insurance (Form B, Rev. 10/17/70, as amended in 1984) with liability in the amount of the Purchase Price, insuring fee simple title to the Property in Buyer, subject only to such exceptions as may be approved by Buyer in writing in its sole and absolute discretion pursuant to Section 4.2 of this Agreement (the "Permitted Exceptions") and such endorsements as Buyer may request during the Due Diligence Period (the "Title Policy"); provided, however, that indemnification of the Title Company to induce it to insure over any otherwise unpermitted exceptions to title shall not be allowed except with the prior written consent of Buyer in its sole and absolute discretion after full disclosure to Buyer of the nature and substance of such exception and indemnity. The Title Policy shall provide full coverage against construction liens arising out of work performed by or on behalf of Seller prior to Closing. Any encumbrance or defect which is not a Permitted -2 P\DRS\DRS22T Exception and not discharged prior to Closing which can be discharged by the payment of money shall be paid out of the Purchase Price at Closing. ARTICLE IV. INSPECTION AND EVALUATION OF THE PROPERTY on a e . Ie� oFk►+e da e.� . os A ar _ 4.1 Review of Property. Buyer shall have until the close of busines February 9, 2001 (the "Due Diligence Period"), in which to conduct its review of the Property. Buyer's obligations under this Agreement are expressly subject to its approval of the Property and the results of its due diligence review of the Property, such approval to be determined by Buyer in its sole and absolute discretion. During the Due Diligence Period Seller shall give Buyer and its agents and consultants full access to the Property after reasonable prior notice and during normal business hours. Buyer and its agents and consultants shall comply with Seller's reasonable safety and confidentiality requirements. Seller will provide such information as Buyer may reasonably request regarding the Property. Buyer shall repair any damage to the Property caused by Buyer, its employees or agents during such inspection and shall protect, defend and hold Seller harmless from any claims, liabilities, costs or liens that may be filed against Seller or the Property as a result of such due diligence investigation. Buyer shall deliver written notice to Seller and Escrow Holder prior to the expiration of the Due Diligence Period that it has either (a) elected to terminate this Agreement, whereupon Escrow Holder shall return the Note to Buyer, this Agreement shall terminate and neither party hereto shall have any further rights or obligations under this Agreement, or (b)Buyer has elected to proceed with the purchase of the Property, in which event the Note shall, be immediately converted to cash and shall be nonrefundable to Buyer except as otherwise expressly provided in this Agreement, or upon breach of this Agreement by Seller. If Buyer fails to deliver written notice to Seller and Escrow Holder prior to the expiration of the Due Diligence Period, Buyer shall be deemed to have not approved its inspection and to have elected not to proceed with the purchase of the Property. 4.2 Title. Buyer shall have until the expiration of the Due Diligence Period within which to review and approve the condition of title to the Property. Seller shall provide Buyer with copies of the most recent property tax bills for the Property. Buyer shall advise Seller in writing on or before the expiration of the Due Diligence Period what exceptions to title, if any, will not be accepted by Buyer. Any change in the legal description for the Property, liens, encumbrances, easements, restrictions, conditions, covenants, rights, rights of way and other matters affecting title to the Property which are created and which may appear of record after the date of the Title Report and disclosed by supplement to the Title Report, but before the Closing Date (collectively, the "Intervening Liens") shall also be subject to Buyer's approval and Buyer shall have until five (5) days after notice in writing of any Intervening Lien, together with a description thereof and a copy of the instrument creating or evidencing the Intervening Lien, if any, to submit written objections thereto or to give Seller notice of acceptance thereof in the manner set forth above. If Buyer fails to notify Seller within said time period, Buyer shall be deemed to have disapproved the Intervening Lien. Seller shall have five (5) days after receipt of Buyer's objections to the title to the Property or any Intervening Lien to give Buyer written notice that: (i) Seller will remove any -3- P\DRS\DRS22T objectionable exception from title and provide Buyer with evidence satisfactory to Buyer of such removal, or provide Buyer with evidence reasonably satisfactory to Buyer that said exceptions will be removed on or before the Closing, or (ii) Seller declines to remove such exception and setting forth, with particularity, the reason Seller declines to remove such exception. Notwithstanding the provisions of the immediately preceding sentence, Seller shall remove all liens, mortgages, deeds of trust or other monetary liens and encumbrances other than Permitted Exceptions prior to or upon Closing and Escrow Holder is authorized to pay and discharge such monetary liens from the Purchase Price at Closing if they have not been previously released or terminated of record. If Seller gives Buyer notice under clause(ii) Buyer shall have three (3)business days to elect to proceed with the purchase and accept title to the Property subject to such exceptions (which exceptions shall then constitute Permitted Exceptions), or to terminate this Agreement. If Buyer shall fail to give Seller written notice of its election within said three (3)business days, Buyer shall be deemed to have elected to terminate this Agreement, Escrow Holder shall deliver the Deposit, together with any investment income then held by Escrow Holder to Buyer, and neither party hereto shall have any further rights or obligations under this Agreement. If Seller gives notice pursuant to clause (i) and thereafter fails to remove any such objectionable exceptions from title prior to the Closing Date, and Buyer is unwilling to take title subject thereto, Seller shall, if it has not cured such matter within an additional 30 days (and the Closing shall be extended to permit Seller such additional cure period), be in default hereunder and Buyer may elect to terminate this Agreement, the Escrow Holder shall return the Deposit (together with all investment interest accrued thereon then held by Escrow Holder) to Buyer and Seller shall be liable for payment of all title and escrow cancellation charges. 4.3 Survey. Prior to the expiration of the Due Diligence Period Buyer shall have an "as-built" survey of the Property ("Survey") prepared at its sole cost and expense by a licensed surveyor or civil engineer acceptable to Buyer which Survey shall be in form and substance satisfactory to Buyer in its sole and absolute discretion. Buyer shall deliver a copy of the Survey to Seller promptly upon receipt. Buyer shall provide written notice to Seller and Escrow Holder no later than the close of business in Kent, Washington on the last day of the Due Diligence Period if Buyer has disapproved the condition of the Property disclosed by the Survey, in which event Escrow Holder shall return the Note to Buyer, this Agreement shall automatically terminate and neither party hereto shall have any further rights or obligations under this Agreement. Buyer's failure to deliver written notice within the time period set forth in this Section 4.3 shall be deemed approval of the Survey. 4.4 Appraisal. Buyer has obtained an appraisal of the Property. 4.5 Environmental Condition of the Property. Seller shall cooperate with Buyer's environmental consultants in their physical inspection of the Property and shall deliver full and complete copies of all environmental reports, studies and data regarding the environmental condition of the Property in Seller's possession or control to Buyer for its review during the Due Diligence Period. The parties acknowledge that Seller has disclosed to the Buyer that certain Hazardous Substances (as defined in Exhibit C)may exist on or under the Property as set forth in that certain report prepared by EMCON Northwest, Inc. dated April2, 1992 and entitled "Summary Report Hydrogeologic Investigation—Borden Packaging and Industrial Products -4- P\DRS\DRS22T Facility, Kent, Washington" (the "EMCON Report") a true and accurate copy of which has been delivered to Buyer. Buyer has also obtained an environmental assessment of the Property prepared by URS dated November 2000 (the "URS Report"), a copy of which has been delivered to Seller. Prior to Closing Buyer will keep the EMCON Report and the URS Report confidential, except as required by law. If Buyer believes it is required by law to disclose such reports either to a governmental agency or any other person, Buyer will give Seller notice of such disclosure and an opportunity to discuss the disclosure with Seller before any disclosure is made. The disclosure limitations on Buyer set forth in this Section 4.5 shall expire upon Closing. Buyer acknowledges that prior to Closing it has inspected the Property, including the environmental condition of the Property and has agreed to accept title to the Property with the knowledge that certain specific Hazardous Substances are present on the Property at the locations and in the quantities and concentrations identified and discussed in the URS Report ? (collectively, the "Existing Hazardous Substances") Buyer acknowledges and agrees that th Purchase Price for the Property was reduced to take into account the presence of the Existin r' Hazardous Substances on the Property as disclosed in the URS Report and to induce Buyer t6 = close the purchase of the Property and accept title to the Property without requiring Borden to' � remediate the Existing Hazardous Substances as disclosed in the URS Report and Buyer release Seller from liability with respect to the Existing Hazardous Substances. tip dis - ro,- ;,P the UR-S 14-p 4 Q1 ; disse,rowd sue` i Seller's ; responsibility with respect to Additional Hazardous Substances as defined in Section 5.5. of this Agreement is limited by and subject to the provisions set forth in Section 9.2 of this Agreement. ARTICLE V. CONDITIONS PRECEDENT TO CLOSING Buyer's obligations to close under this Agreement are expressly conditioned on, and subject to satisfaction of the following conditions precedent: 5.1 Approval by City Council. Final approval of this Agreement by the City Council of Buyer on or before the expiration of the Due Diligence Period. 5.2 Performance By Seller. Seller shall have timely performed all obligations required by this Agreement to be performed by it. 5.3 Representations and Warranties True. The representations and warranties of Seller contained herein shall be true and correct in all material respects as of the Closing Date. 5.4 Title. Buyer shall have approved the condition of title to the Property and its other Property inspections during the Due Diligence Period. -5- P\DRS\DRS22T 5.5 Establishment of Environmental Holdback. During the course of conducting its due diligence investigation of the Property, the parties have determined that additional Hazardous Substances (i.e. Hazardous Substances that are present on the Property but were not identified in the URS Report, including, but not limited to, those that could not be investigated due to the presence of buildings and other Improvements on the Property; any such additional Hazardous Substances are hereinafter referred to in this Agreement as "Additional Hazardous Substances") may exist on the Property, but that it may not be feasible to confirm the absence or existence of such Additional Hazardous Substances prior to discontinuation of Seller's business presently being conducted on the Property, the removal of Seller's personal property, and other Improvements presently located on the Property pursuant to Section 9.1 of this Agreement. In order to induce Buyer to remove contingencies and close the sale of the Property prior to a determination as to whether Additional Hazardous Substances are present on the Property, Seller agrees that Fifty Thousand Dollars ($50,000) of the Purchase Price (the "Environmental Holdback") shall be deposited by Seller into an interest-bearing account to be held by Escrow Holder and used to reimburse Buyer pursuant to Article IX for the cost of Remedial Work (defined in Section 9.2.1) attributable to the presence of Additional Hazardous Substances. Buyer agrees that, as between Seller and Buyer, Seller's responsibility with respect to the remediation of Additional Hazardous Substances is limited to the application of the Environmental Holdback for reimbursement of Remedial Work undertaken by Buyer pursuant to Section 9.2 of this Agreement and Buyer releases Seller from any liability resulting from the presence of the Additional Hazardous Substances (as defined in this Section 5.5) once the Fnvironmental Holdback is funded. 5.6 No Change in Environmental Condition of Property. There has been no material damage or destruction of the Property or the Improvements located thereon between the date the URS Report was delivered to Buyer and Closing which has resulted in a Release (as defined in Exhibit C) of Hazardous Substances or, if there has been a Release, Seller has completed all Remedial Work (as defined in Section 9.2.1) necessitated by the Release in accordance with all applicable environmental laws and to the reasonable satisfaction of Buyer. The foregoing conditions contained in this Article V are intended solely for the benefit of Buyer. If any of the foregoing conditions are not satisfied, Buyer shall have the right at its sole election either to waive the condition in question and proceed with the purchase or, in the alternative, to terminate this Agreement, whereupon this Agreement shall terminate, Escrow Holder shall return the Deposit (together with interest accrued thereon, if any) to Buyer and neither party hereto shall have any further rights or obligations under this Agreement. ARTICLE VI. OPERATIONS PENDING CLOSING 6.1 Continued Operation of the Property. At all times before the Closing, Seller shall have the right to continue the present operation of its business on the Property in the manner in which it has historically operated the Property; provided, Seller shall not enlarge, expand, renovate or remodel any improvements presently located on the Property, nor shall it make any capital improvements to the Property; provided, however, that nothing contained herein prevents Seller from undertaking normal operation and maintenance of the Property and all improvements -6- P\DRS\DRS22T located thereon, or any repair required under applicable laws, fire code regulations or insurance policy provisions. Seller shall maintain its existing property and liability insurance policies on the Property pending Closing and during the 6 month Demolition Period as defined in Section 9.1 of this Agreement unless Seller leases the Property following Closing pursuant to the provisions of Article IX of this Agreement, in which event Seller shall maintain such insurance as is required under the terms of the Lease. 6.2 Condition of Title. Seller hereby agrees from and after the date hereof until the Closing or the termination of this Agreement, whichever first occurs, that (i) it will take no action that will adversely affect title to or development of the Property; (ii) it will not lease, rent, mortgage, encumber or permit the encumbrance of all or any portion of the Property (other than equipment and other personal property) without Buyer's prior written consent; and(iii) it will not enter into any written or oral contracts or agreements with respect to the operation of the Property which cannot be cancelled by Buyer on not more than thirty (30) days notice without premium or penalty. 6.3 Buyer Continued Use of Sports Fields. Seller and Buyer acknowledge that Buyer is presently in possession of the northerly portion of the Property, with Seller's consent, which is used by residents of the City of Kent for recreational use. ARTICLE V II. CLOSING AND ESCROW 7.1 Closing. (a) The Closing hereunder (the "Closing") shall be held and delivery of all items to be made at the Closing under the terms of this Agreement shall be made at the offices of Escrow Holder on February 9, 2001, or such other date prior thereto as Buyer and Seller may mutually agree in writing (the "Closing Date"). The Closing Date may not be further extended without the written approval of Seller and Buyer except as otherwise expressly provided in this Agreement. All documents shall be deemed delivered on the date the Deed is recorded. (b) In the event the Closing does not occur on or before the Closing Date, Escrow Holder shall, unless it is notified by both parties to the contrary within five (5) days after the Closing Date, return to the depositor thereof items which may have been deposited hereunder. Any such return shall not, however, relieve either party hereto of any liability it may have for its wrongful failure to close. 7.2 Delivery by Seller. On or prior to the Closing Date, Seller shall deliver to Escrow Holder: (a) A duly executed and acknowledged bargain and sale deed to Parcels A, B and C of the Property as more particularly described in Exhibit A attached hereto, and a quitclaim deed for Parcel D of the Property as more particularly described in Exhibit A attached hereto, ready for recordation on the Closing Date each of which shall recite that the Property is being conveyed under threat of condemnation together with a duly executed real estate excise tax -7- P\DRS\DRS22T affidavit (which affidavit will state that the conveyance of the Property is exempt from real estate excise tax pursuant to the provisions of WAC 458-61-420(1)(c)); (b) Affidavit executed by Seller which satisfies the requirements of Section 1445 of the United States Internal Revenue Code, regarding foreign investors (the "FIRPTA Affidavit"); (c) If Seller has requested to leaseback a portion of the Property as provided in Article IX, a duly executed and acknowledged Lease in substantially the form attached hereto as Exhibit D; (d) Any reconveyance documents required to eliminate of record any existing deeds of trust and other security documents which are a lien on the Property and any affidavit required to eliminate the title company exception for construction liens arising out of work performed by or on behalf of Seller prior to Closing; (e) Confirmation of warranties made by Seller; (f) Such resolutions, authorizations, certificates or other corporate documents or agreements relating to Seller's authority to enter into and consummate this transaction, as shall be reasonably required in connection with this transaction; (g) Any other documents, instruments, data, records, correspondence or agreements called for hereunder which have not previously been delivered. (h) $50,000 of the Purchase Price shall be held by Escrow Holder in an interest-bearing account (the "Environmental Holdback") and disbursed following Closing in accordance with the provisions set forth in Section 9.2 of this Agreement, which Section shall survive Closing and the recording of the Deed to the extent provided therein. 7.3 Delivery by Buyer. On or before the Closing Date Buyer shall deposit with Escrow Holder (a) the Purchase Price (as adjusted pursuant to Sections 7.5 and 7.6), (b) the Lease duly executed and acknowledged by Buyer, if Seller has elected to leaseback a portion of the Property as provided in Article IX hereof, (c) a counterpart of the real estate excise tax affidavit described in Section 7.2(a), and(d) confirmation of warranties made by Buyer. 7.4 Other Instruments. Seller and Buyer shall each deposit such other instruments as are reasonably required by Escrow Holder or otherwise required to close the escrow and consummate the purchase of the Property in accordance with the terms hereof. 7.5 Prorations. All revenues and all expenses of the Property, including but not limited to,real property taxes, special assessments, rents,water, sewer and utility charges, annual permits and/or inspection fees (calculated on the basis of the respective periods covered thereby), and other expenses normal to the ownership, use, operation and maintenance of the Property shall be prorated as of 12:01 a.m. on the Closing Date. Buyer acknowledges that the tax parcel account for Parcel D of the Property may include other property adjacent to Parcel D and Buyer -8- P\DRS\DRS22T shall be solely responsible from and after Closing for obtaining any tax lot segregation or other approvals required from King County in order to fully segregate the tax parcel account for Parcel D from such other property. 7.6 Costs and Expenses. Seller shall pay the premium for a standard coverage owner's policy of title insurance in an amount equal to the Purchase Price, all real estate excise taxes and the cost of any documentary or other transfer taxes applicable to the sale, but the parties expect that the transfer of the Property may be exempt from real estate excise tax pursuant to WAC 458.61.420(1)(c). The escrow fee shall be borne equally by Seller and Buyer. Buyer shall pay all recording costs, any increase in the title insurance premium attributable to extended coverage, the costs of any survey, and the fees and expenses of its consultants. 7.7 Recordation. Provided that Escrow Holder has not received prior written notice that any condition set forth herein has not been fulfilled, or that either party has elected to terminate its rights and obligations hereunder pursuant to Article IV or Article V and further provided that Title Company has issued or is unconditionally prepared and committed to issue to Buyer the Title Policy, then Escrow Holder is authorized and instructed at 8:00 a.m.(or as soon thereafter as possible) on the Closing Date pursuant to escrow instructions to be executed by Buyer and Seller to: (a) Record the Deed in the official records of King County, Washington; (b) Assemble and deliver at least one fully executed counterpart of the Lease, if any, to both Buyer and Seller; (c) Deliver the FIRPTA Affidavit and all other documents described in Section 7.2 to Buyer; (d) Record any reconveyancing documents delivered by Seller pursuant to Section 7.2(d)hereof; and (e) Deposit $50,000 of Seller's proceeds into the Environmental Holdback established pursuant to Section 5.5 of this Agreement. 7.8 Notification; Closing Statements. If Escrow Holder cannot comply with the instructions herein and to be provided within the time period set by the parties, Escrow Holder is not authorized to cause the recording of the foregoing documents. If Escrow Holder is unable to cause the recording, Escrow Holder shall notify Seller and Buyer and shall, upon five (5) days prior written notice automatically return all documents and monies to the parties depositing the same whereupon Escrow Holder shall be released from all further obligations as escrow agent hereunder. Immediately after the Closing Date, Escrow Holder shall deliver to Seller at the address provided in Section 12.4 a true, correct and complete copy of the Seller's Closing Statement, in form customarily prepared by Escrow Holder and shall deliver to Buyer at the address provided in Section 12.4 a true, correct and complete copy of Buyer's Closing Statement, in form customarily prepared by Escrow Holder. -9- P\DRS\DRS22T ARTICLE VIII. REPRESENTATIONS AND WARRANTIES In order to induce each other to enter into this Agreement and the transactions contemplated hereby, Seller and Buyer make the following representations and warranties as of the date of this Agreement and again as of the Closing Date: 8.1 Seller's Representations. Seller represents and warrants to Buyer as follows: (a) Title. Seller has reviewed the Title Report and Seller is aware of no other matters which adversely affect title thereto. Seller's lease of certain real property (which includes Parcel D and other real property which is not covered by this Agreement) from Burlington Northern-Santa Fe Railroad Company has expired in accordance with its terms. (b) Tenant Leases. Except as noted in Section 6.3, there are no leases, licenses or other agreements granting any person or persons the right to use or occupy the Property or any portion thereof. (c) Service Contracts. Buyer is not acquiring any utility contracts, maintenance contracts, or other service contracts relating to the use, operation, maintenance or repair of the Property from Seller(collectively, "Service Contracts"). It is understood and agreed that Seller shall be responsible for all existing Service Contracts and that such Service Contracts shall not be assumed by Buyer except in the event and to the extent that such Service Contact(s) have been expressly approved by Buyer in writing and specifically assumed by Buyer at Closing. (d) Liti ag tion. There is no claim, litigation, proceeding or governmental investigation pending, or, so far as is known to Seller, threatened against or relating to the Property or Seller's ownership thereof, or the transactions contemplated by this Agreement, or any dispute arising out of any contract or commitment entered into by Seller regarding the Property, nor is there any basis known to Seller for any such action. (e) Compliance With Laws. Except as set forth in Section 4.5, Seller has not received any written notice that the Property or the current use of the Property by Seller for manufacturing purposes does not comply with all zoning, use, environmental, flood control, planning, building, subdivision, wetlands, fire, health, traffic, and similar laws, zoning and land use laws and other applicable laws, codes, rules currently in effect, and Seller has not received any written notice claiming that the Property is in violation of any material agreements, covenants or restrictions affecting the Property. (f) No Defaults. Neither the execution of this Agreement by Seller, the consummation of the transactions contemplated hereby, nor the fulfillment of the terms hereof by Seller, will conflict with or result in a breach of any of the terms, conditions or provisions of, or constitute a default under, any agreement or instrument which affects the Property or to which the Property is subject or, to Seller's knowledge, any applicable laws or regulations of any governmental body having jurisdiction over the Property. -10- P ORSORS22T (g) No Prior Sales or Assignments. Seller has not committed nor obligated itself in any manner whatsoever to sell the Property or any portion thereof(other than sales of equipment and personal property) to any party other than Buyer. (h) Construction Liens. To the extent any improvements have been made or will be made to the Property by or on behalf of Seller prior to the Closing Date which might form the basis of construction liens, Seller agrees to keep the Property free from liens which might result and to indemnify, defend, protect and hold Buyer harmless from any and all such liens and all attorneys' fees and other costs incurred by reason thereof. (i) Commissions. Seller has not retained any broker or other person with respect to the sale of the Property to Buyer contemplated by this Agreement. (j) Environmental Compliance. The Property has been used and operated by yr :,t �► the Seller as a manufacturing facility for the manufacture of formaldehyde, urea formaldehyde I", arid phenol formaldehyde thermoset resins for production of particle board and plywood. Seller bits disclosed to Buyer that certain Hazardous Substances (as defined in Exhibit C) may exist in, o on or under the Property or in the ground water as set forth in the URS Repo xcept as pnCO t'1 0 c isclosed in the URS Report, Seller has not to its knowledge caused or permitted, and Seller has no knowledge of the presence of any Release (as defined in Exhibit C attached hereto and by this KQ,9 ' reference incorporated herein) of any other Hazardous Substances on the Property or any,.�•`,�j L C V�•a migration therefrom which has not been remediated in accordance with applicable law. At , me during Sellers ownership of the Property has Seller used arsenic as an ingredient in its y, 1 ` oducts made at the Property and Seller has not, to its knowledge, used arsenic in its operations at the Property. Certain asbestos containing materials may have been used in the construction of the Improvements and lead-based paints may have been used, both of which will be properly removed and disposed of in accordance with all environmental laws as part of the demolition of the Improvements required under Section 9.1 of this Agreement. (k) Reports. Except for the EMCON Report and the URS Report as to which Seller makes no representation or warranty, all certificates, reports, studies and other documents containing factual information delivered by Seller to Buyer pursuant to or in connection with this Agreement are and shall be true and correct and do not contain any untrue statement of material fact or omit to state any material fact the disclosure of which is necessary to make the statements contained therein and herein, in light of the circumstances under which they were made, not misleading. (1) Organization; Due Authorization. Seller is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware. This Agreement has been duly authorized, executed and delivered by duly authorized officers of Seller and, assuming it has been duly authorized, executed and delivered by Buyer, this Agreement is a valid and binding obligation of the Seller. No other authorizations or approvals, whether of governmental bodies or otherwise will be necessary in order for Seller to enter into this Agreement. Neither the execution and delivery of this Agreement nor the consummation of the transactions contemplated hereunder will: (i) be in violation of Seller's articles of incorporation and bylaws; (ii)to the best of Seller's knowledge, conflict with or result in the breach of any law, -1 1- P MRSORS22T regulation, writ, injunction or decree of any court or governmental instrumentality applicable to Seller; or(iii) constitute a breach of any evidence of indebtedness or agreement to which Seller is a party or by which Seller is bound. Seller hereby agrees to defend, protect, indemnify and hold Buyer harmless from any and all loss, damage, liability or expense, including reasonable attorneys' fees and costs, Buyer may suffer as a result of any breach of or any inaccuracy in the foregoing representations and warranties; provided, however, that the foregoing representations and warranties shall only survive the Closing Date until one (1) year after the later to occur of(a) the Closing Date or(b) if Seller elects to leaseback the Property pursuant to Article IX, one (1) year following expiration or earlier termination of the Lease. 8.2 Buyer's Representations. Buyer represents and warrants to Seller that: Buyer is a municipal corporation duly organized and validly existing under the laws of the State of Washington. This Agreement has been duly authorized, executed and delivered by duly authorized officers of Buyer, and assuming it has been duly authorized, executed and delivered by Seller, this Agreement is a valid and binding obligation of Buyer. No other authorizations or approvals will be necessary in order for Buyer to enter into this Agreement. Neither the execution and delivery of this Agreement nor the consummation of the transactions contemplated hereunder will (i)be in violation of any applicable statutes governing Buyer's status as a Washington municipal corporation, (ii)to the best of Buyer's knowledge, conflict with or result in the breach of any law, regulation, writ, injunction or decree of any court or governmental instrumentality applicable to Buyer, or (iii) constitute a breach of any evidence of indebtedness or agreement to which Buyer is a party or by which Buyer is bound. Buyer hereby agrees to defend, protect, indemnify and hold Seller harmless from any and all loss, damage, liability or expense, including reasonable attorneys' fees and costs, Seller may suffer as a result of any breach of or any inaccuracy in the foregoing representations and warranties; provided, however, that the foregoing representations and warranties shall only survive the Closing Date for one (1) year. ARTICLE IX. REMOVAL OF PERSONAL PROPERTY AND IMPROVEMENTS; LEASEBACK 9.1 Removal of Personal Property and Other Improvements. Seller shall remove all of Seller's personal property, machinery, trade fixtures and equipment located in the buildings presently located on the Property, at Seller's cost and expense prior to the end of the 6-month demolition period described below, unless Seller elects to lease a portion of the Property after Closing pursuant to Section 9.3 below in which event all such personal property, machinery, trade fixtures and equipment shall be removed from the portion of the Property not leased prior to Closing and the remainder of such personal property, machinery, trade fixtures and equipment shall be removed from the leased Property no later than the end of the 6-month demolition period following termination of Seller's operation of its manufacturing facility on the leased Property as provided in the Lease (the "Demolition Period"). Seller shall also remove, dismantle or demolish all structures and Improvements including foundations and underground piping located on the Property, at no cost to Buyer, no later than six (6) months following the Closing or, if -12- P\DRS\DRS22T Seller elects to lease back a portion of the Property, at the end of the 6-month Demolition Period. No Fixed Rent shall be due Buyer during the 6-month Demolition Period following termination of Seller's operation of its manufacturing facility as provided in the Lease during which Seller is removing, dismantling or demolishing all structures and other Improvements located on the Property; provided, however, that all other terms and provisions of the Lease shall remain in full force and effect until the end of the 6-month Demolition Period. Demolition shall include the proper removal and disposal of all lead-based paint and asbestos containing materials in accordance with all environmental laws and all Remedial Work resulting from the removal of Seller's personal property and other Improvements from the Property. Seller shall obtain all demolition and other permits which may be required under applicable law to complete the demolition work and remove and dispose of all lead-based paint and asbestos containing materials. Seller shall notify Buyer prior to any removal, dismantling or demolition of structures or Improvements, including foundations and piping, from the Property. Buyer and Buyer's environmental consultants shall have the right to observe the removal, dismantling and/or demolition process and to conduct such investigation and inspection of the Property as the Buyer deems necessary to determine the environmental condition of the Property underneath the structures and Improvements being demolished, including, but not limited to, obtaining air, soil and ground water samples, and the installation and monitoring of ground wells. Such demolition and removal shall be conducted in accordance with all applicable laws, rules and regulations and with the utmost regard for the safety of persons and property. All man-made structures, buildings, process equipment, above and below ground piping and other structures, foundations, pavements and railroad tracks and ties (other than tracks and ties located on the Burlington Northern site immediately adjacent to the south of the Property) will be demolished and removed from the Property and properly disposed of in accordance with applicable laws. No demolition work will occur on the ballfields on the northern half of the Property. All underground utility lines, including natural gas, storm sewer, sanitary sewer and water, will be capped at the street mains in accordance with the requirements of Puget Sound Energy and the City of Kent, respectively. The underground utility lines will be removed from the ground and disposed of in accordance with applicable laws. All areas of the Property where industrial development has occurred will be regraded flat, to an elevation equal to the top of the curb or the top of the roadway crown of the roadways adjacent to the Property, plus or minus six inches (6"). If fill is required to achieve this elevation, fill material will be comprised of native soils, free of organic material and manmade debris. All soils removed from the Property as a result of the demolition work will be properly classified and disposed of in accordance with applicable laws. Soil fences and erosion control measures will be taken in accordance with all applicable laws. The demolition work will not include hydroseeding or landscaping. Seller shall have the right to retain for its own account all proceeds derived from the sale or other disposition of such personal property, machinery, trade fixtures, equipment, and other improvements located on the Property. -13- P\DRS\DRS22T 9.2. Performance and Payment of Remedial Work for Additional Hazardous Substances. In the event Seller, Buyer or Buyer's environmental consultants discover during or following the demolition process that Additional Hazardous Substances exist in the soil or in the ground water at or originating from the Property, Buyer shall have the right, but not the obligation, to cause such Additional Hazardous Substances to be remediated to the applicable cleanup standards under applicable environmental laws in light of Buyer's intended use of the Property for residential development and to be reimbursed for the cost of the Remedial Work (defined below) from the Environmental Holdback established pursuant to Section 5.5 of this Agreement in accordance with the procedures established in this Section 9.2. 9.2.1. Definition of Remedial Work. As used in this Agreement the term "Remedial Work" means all activities performed after Closing in connection with or in anticipation of the assessment, cleanup, removal, mitigation, monitoring or containment of any Additional Hazardous Substances to meet the requirements of applicable laws relating to the cleanup or remediation of Hazardous Substances in light of the reasonably intended use of the Property at the time the Remedial Work commences. The term "Remedial Work" also includes the defense or prosecution of any proceedings before a court, administrative judge or tribunal or governmental agency and all negotiations with any governmental agency or its employees or consultants relating to the performance of Remedial Work in connection with any Additional Hazardous Substances, the reasonable fees and expenses (including reasonable attorney's fees) of Buyer, and its attorneys and consultants and any fines or penalties assessed against Buyer in connection therewith. Buyer shall not be entitled to reimbursement from the Environmental Holdback for any Remedial Work or any portion thereof caused by or resulting from the negligence of Buyer or from any Hazardous Substances placed on the Property by Buyer after Closing. Buyer shall also have the right to obtain at its sole cost (and not be reimbursed from funds on deposit in the Environmental Holdback) a "No Further Action Letter" from the Washington State Department of Ecology. 9.2.2 Notification and Performance of Remedial Work. Prior to commencement of Remedial Work, Buyer shall notify Seller in writing of its intent to cause performance of any material Remedial Work (the "Remedial Work Notice"). The Remedial Work Notice shall indicate the location, nature and likely source of the Additional Hazardous Substances requiring Remedial Work, the scope of the Remedial Work, and the estimated cost of the Remedial Work. Buyer shall permit Seller's agents, consultants and contractors prompt and reasonable access to the Property to confirm that the Remedial Work is required. 9.2.3 Completion of Remedial Work; Accounting. Once Buyer has substantially completed each phase of the Remedial Work, Buyer shall provide Seller and Escrow Holder with an accounting of the costs for the Remedial Work, and Escrow Holder shall reimburse Buyer for the cost of such Remedial Work until all amounts on deposit in the Environmental Holdback (including all investment earnings thereon) has been expended. Buyer shall be solely responsible for the payment of all costs of Remedial Work in excess of the Environmental Holdback. 9.2.4 Exigent Circumstances. Notwithstanding the provisions of Section 9.2.2 to the contrary, Buyer may, without notice to Seller, cause Remedial Work to be done if the -14- P ORSORS22T Remedial Work is necessary to prevent an immediate and substantial endangerment to the environment or the public health, safety and welfare. In such event, Buyer shall notify Seller as soon as possible after it learns of the presence of Additional Hazardous Substances. Buyer shall be reimbursed from the Environmental Holdback for the cost of such Remedial Work in accordance with Section 9.2.3. 9.2.5 Termination of Environmental Holdback. The provisions of this Section 9.2 and the Environmental Holdback shall survive the Closing and the recording of the Deed to the Property and shall terminate upon the later of(a) one (1) year following Closing, or (b) one (1) year following expiration or termination of the 6-month Demolition Period if Seller has elected to leaseback the Property under Section 9.3 of this Agreement. During such one (1) year period, the provisions of this Section 9.2 may be enforced by Buyer from time to time as it discovers the need for Remedial Work with reference to Additional Hazardous Substances. Notwithstanding anything to the contrary contained herein, Seller's total responsibility for the payment of Remedial Work in connection with Additional Hazardous Substances shall not exceed the Environmental Holdback (including any and all investment earnings thereon). Upon termination of this Section 9.2, all funds, if any, on deposit with Escrow Holder in the Environmental Holdback (including any investment earnings thereon) shall be returned to Seller. 9.3 Leaseback. If requested by Seller at any time prior to Closing, Buyer will lease Seller that portion of the Property on which the plant is presently located following Closing and Seller shall have the right to continue operation of its manufacturing facility for a term of up to two (2) years at a rental rate of$0.30 per square foot per year on an absolute net basis, together with payment of any applicable leasehold excise tax on the terms and conditions set forth in the lease agreement attached hereto as Exhibit D and by this referenced incorporated herein (the "Lease"). Seller shall have the right to extend the term of the Lease and continue operation of its manufacturing facility for two (2) additional terms of six (6)months each. Seller shall have the right to terminate its duty to pay Fixed Rent under the Lease and cease operation of its manufacturing facility at any time during the initial term or either renewal term upon thirty (30) days prior written notice to Buyer. Seller agrees to provide Buyer as much advance notice as possible of the date Seller intends to discontinue its business operations at the Property. During the 6 month Demolition Period as defined in Section 9.1 of this Agreement following termination of the operation of Seller's manufacturing facility, all of the provisions of the Lease shall remain in full force and effect except for the duty to pay Fixed Rent and the provision of Section 2 of the Lease dealing with the Term, and the Lease shall terminate upon expiration of the 6 month Demolition Period. ARTICLE X. LOSS BY FIRE OR OTHER CASUALTY; CONDEMNATION 10.1 Casualty Which Results in a Release of Hazardous Substances. In the event that, prior to Closing,the Property or the Improvements located thereon are damaged or destroyed and as a result there is a Release (as defined in Exhibit C) of Hazardous Substances either party shall have the right, exercisable by giving written notice of such decision to the other within fifteen (15) business days after obtaining actual knowledge or receiving written notice from Seller of such damage or destruction, to terminate this Agreement, in which case, the Deposit (together -1 5- P\DRS\DRS22T with interest accrued thereon, if any) shall be paid to Buyer and neither party hereto shall have any further rights or obligations under this Agreement. If neither party elects to terminate this Agreement, the Purchase Price shall not be changed and all insurance proceeds payable in connection with such damage or destruction shall be paid to Seller. Seller shall at its sole cost and expense and as a condition precedent to Closing perform the Remedial Work (as defined in Section 9.2.1 of this Agreement) necessary to remediate such Release. Any Remedial Work performed by Seller as a result of any damage or destruction to the Property or the Improvements located thereon prior to Closing shall be paid from insurance proceeds or other funds available to Seller and shall not be paid from the Environmental Holdback established pursuant to Section 5.5 of this Agreement. 10.2 Non-Material Damage or Destruction. In the event that prior to Closing, the Property or the Improvements located thereon are damaged or destroyed and the provisions of Section 10.1 do not apply, this Agreement shall not terminate, the Purchase Price shall not be changed and all insurance proceeds payable in connection with such damage or destruction shall be paid to Seller. 10.3 Demolition of Improvements Following Damage or Destruction. In the event the Property is damaged or destroyed prior to Closing and this Agreement is not terminated, neither Seller nor Buyer shall have any obligation to repair or rebuild the Property; provided, however, Seller shall remain obligated to complete the demolition of any remaining Improvements pursuant to Section 9.1 of this Agreement, and Seller's right to lease the Property pursuant to Section 9.3 of this Agreement shall automatically terminate. 10.4 Condemnation. In the event that prior to Closing, condemnation proceedings are threatened or commenced against the Property or Seller receives any request by any governmental authority (other than Buyer) for a transfer in lieu of condemnation, Seller shall promptly notify Buyer of such event. Seller shall not accept or agree to accept any settlement in lieu of condemnation or settle or approve any condemnation claim or suit with respect to the Property without the prior written consent of Buyer. Buyer shall have the right, but not the obligation, and Seller shall permit Buyer, to participate in the prosecution of the condemnation claim and shall cooperate fully with Buyer to enable it to do so. In the event of a condemnation of all of the Property prior to Closing this Agreement shall automatically terminate as of the date of such transfer, the Deposit, together with any investment earnings thereon, if any, shall be returned to Buyer and neither party shall have any further rights or obligations under this Agreement. In the event less than all of the Property shall be taken under any threat of condemnation or any transfer in lieu thereof, then this Agreement shall remain in full force and effect as to the remainder of the Property not so taken and the Purchase Price shall be reduced by the amount of the compensation paid by the governmental authority for such taking or transfer in lieu thereof. Seller and Buyer shall each continue to have all the rights, duties and obligations set forth in Article IX above with respect to that portion of the Property not taken. -16- P\DRS\DRS22T ARTICLE XI. POSSESSION Possession of the Property shall be delivered to Buyer on the Closing Date subject to the rights of Seller under the Lease, if Seller has elected to leaseback a portion of the Property pursuant to Article IX hereof. Seller shall afford authorized representatives of Buyer reasonable access to the Property for the purposes of satisfying Buyer with respect to the representations, warranties, and covenants of Seller contained herein and with respect to satisfaction of any conditions precedent to the Closing contained herein. ARTICLE XII. MISCELLANEOUS 12.1 Indemnity. Seller shall indemnify and hold Buyer harmless from and against any costs, expenses and liabilities, including, without limitation, reasonable attorneys' fees, which Buyer may suffer or incur in connection with(i) its ownership of the Property resulting from any action or inaction of Seller, its agents or employees occurring before the Closing; provided, however, that this indemnification shall not extend to, cover or include matters for which Buyer has released Seller pursuant to Sections 4.5 and 5.5 of this Agreement; (ii) the falsity or breach of any material representation or warranty of Seller set forth in Section 8.1 hereof subject to the limitations contained therein; or (iii) any misrepresentation in or omission of any material documents, items or information to be submitted by Seller to Buyer relating to the Property or its operations known by Seller except for the EMCON Report and URS Report as to which Seller makes no representation or warranty; or (iv) any failure of Seller to perform any of its obligations hereunder. 12.2 Agent Disclosure. At the signing of this Agreement neither party was represented by a real estate agent. 12.3 Brokers and Finders. Each party represents to the other that no brokers have been involved in this transaction. In the event of a claim for broker's fee, finder's fee, commission or other similar compensation in connection herewith, Buyer, if such claim is based upon any agreement alleged to have been made by Buyer, hereby agrees to indemnify Seller against and hold Seller harmless from any and all damages, liabilities, costs, expenses and losses (including, without limitation, reasonable attorneys' fees and costs) which Seller may sustain or incur by reason of such claim, and Seller, if such claim is based upon any agreement alleged to have been made by Seller,hereby agrees to indemnify Buyer against and hold Buyer harmless from any and all damages, liabilities, costs, expenses and losses (including, without limitation, reasonable attorneys' fees and costs) which Buyer may sustain or incur by reason of such claim. The provisions of this Section 12.3 shall survive the termination of this Agreement or the Closing. 12.4 Notices. All notices, demands, requests, consents and approvals which may, or are required to, be given by any party to any other party hereunder shall be in writing and shall be deemed to have been duly given if delivered personally, sent by a nationally recognized -1 /- P\DRS\DRS22T overnight delivery service, or if mailed or deposited in the United States mail and sent by registered or certified mail, return receipt requested,postage prepaid to: Buyer at: City of Kent 220 4th Avenue South Kent, Washington 98032-5895 Attention: Jacki Skaught, Economic Development Manager Seller at: Borden Chemical, Inc. 520— 112th Avenue NE P.O. Box 3626 Bellevue, Washington 98009-3626 Attention: Ross Burkett or to such other addresses as either party hereto may from time to time designate in writing and deliver in a like manner. All notices shall be deemed complete upon actual receipt or refusal to accept delivery. 12.5 Amendment, Waiver. No modification, termination or amendment of this Agreement may be made except by written agreement or as otherwise may be provided in this Agreement. No failure by Seller or Buyer to insist upon the strict performance of any covenant, duty, agreement, or condition of this Agreement or to exercise any right or remedy consequent upon a breach thereof shall constitute a wavier of any such breach or any other covenant, agreement, term or condition. Any party hereto, by notice and only by notice as provided in Section 12.4 hereof, may, but shall be under no obligation to, waive any of its rights or any conditions to its obligations hereunder, or any duty, obligation or covenant of any other party hereto. No waiver shall affect or alter this Agreement, and each and every covenant, agreement, term and condition of this Agreement shall continue in full force and effect with respect to any other then existing or subsequent breach thereof. All the terms,provisions, and conditions of this Agreement shall inure to the benefit of and be enforceable by Seller's or Buyer's respective successors and permitted assigns. 12.6 Survival. All provisions of this Agreement which involve obligations, duties or rights which have not been determined or ascertained as of the Closing Date or the recording of the Deed and all representations, warranties and indemnifications made in or to be made pursuant to this Agreement shall survive the Closing Date and/or the recording of the Deed to the extent provided in Section 8.1, 8.2 or Article IX of this Agreement. 12.7 Captions. The captions of this Agreement are for convenience and reference only and in no way define, limit or describe the scope or intent of this Agreement. 12.8 Merger of Prior Agreements. This Agreement and the exhibits hereto constitute the entire agreement between the parties with respect to the purchase and sale of the Property and supersedes all prior and contemporaneous agreements and understandings between the parties hereto relating to the subject matter hereof, including, but not limited to, the letter of intent dated -18- P\DRS\DRS22T August 18, 2000, and accepted by Seller August 21, 2000, and Buyer acknowledges that Seller has not made any representations or warranties to Buyer with respect to the Property, Seller or any other matter concerning this transaction except as expressly set forth in this Agreement. 12.9 No Joint Venture. It is not intended by this Agreement to, and nothing contained in this Agreement shall, create any partnership, joint venture or other arrangement between Buyer and Seller. No term or provision of this Agreement is intended to be, or shall be, for the benefit of any person, firm, organization or corporation not a party hereto, and no such other person, firm, organization or corporation shall have any right or cause of action hereunder. Nothing in this Agreement is intended or shall be constructed as a waiver of Buyer's regulatory responsibilities as a Washington municipal corporation to enforce local, state and federal laws, rules, regulations and requirements within its jurisdiction nor requires Buyer to exercise its discretionary authority under its regulatory ordinances in favor of Seller nor binds it to do so. Buyer will process applications for permits and approvals and will enforce laws which may be applicable to the use, occupancy or operation of the Property without regard to either party's rights under this Agreement or its ownership of the Property following Closing. 12.10 Governing Law; Time. This Agreement and the right of the parties hereto shall be governed by and construed in accordance with the laws of the State of Washington. Time is of the essence of this Agreement. 12.11 Specific Performance. In the event of a material breach or default in or of this Agreement or any of the representations, warranties, terms, covenants, conditions or provisions hereof by Seller, Buyer shall have, in addition to a claim for actual damages (but not consequential damages) for such breach or default, and in addition and without prejudice to any other right or remedy available under this Agreement or at law or in equity, the right to (a) demand and have specific performance of this Agreement; or (b) terminate this Agreement upon written notice without liability to Seller. 12.12 Authority. The parties signing below represent and warrant that they have the requisite authority to bind the entities on whose behalf they are signing. 12.13 Assignment. Buyer shall have the right, upon fifteen (15) days prior written notice to Seller to assign its rights under this Agreement in whole or in part to a public development authority, municipal corporation or other public entity or nonprofit corporation as may be reasonably necessary in connection with the Buyer's financing of the Property, but no such assignment shall release Buyer from liability hereunder. 12.14 Eminent Domain. The parties acknowledge that the Property is being acquired by Buyer under threat of condemnation by Buyer if a negotiated sale cannot be concluded by the parties. 12.15 Like-Kind Exchange. In the event Seller elects prior to the Closing Date to engage in a like-kind exchange of assets pursuant to Section 1031 of the Internal Revenue Code in which the Property is part of such exchange, Buyer will cooperate with Seller to the extent reasonably necessary to complete such exchange; provided, however, that (a) Buyer shall not be -19- P\DRS\DRS22T required to take title to any other property as part of the Section 1031 exchange, (b) Seller shall be responsible for all costs and expenses related to the Section 1031 exchange, (c) Seller shall indemnify and hold Buyer harmless from and against any and all liabilities, claims, damages and other expenses (including reasonable attorneys' fees and costs) associated with Buyer's participation in such exchange. 12.16 No Tax Advice. Buyer acknowledges that Seller expects that the conveyance of the Property by Seller to Buyer pursuant to this Agreement may be exempt from real estate excise tax pursuant to the provisions of WAC 458-61-420(1)(c). Buyer further acknowledges that Seller may elect to engage in a like-kind exchange of assets pursuant to Section 1031 of the Internal Revenue Code in which the Property is part of such exchange. However, Buyer makes no representation as to the tax consequences of the transactions contemplated by this Agreement under either federal or state tax law, nor shall Buyer incur any liability to Seller in the event that the transaction is determined not to qualify for the exemption from real estate excise tax or held not to constitute an involuntary disposition of real property under threat of condemnation for federal income tax purposes, or in the event Seller is unable to complete a like-kind exchange of assets under Section 1031 of the Internal Revenue Code. Seller agrees that it is relying solely on the advice of independent tax counsel in determining the tax consequences of entering into and performing its obligations under this Agreement under either federal or state tax law. IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first above written. Seller: BORDEN CHEMICAL, INC., a Delaware corporation By .. Its E645, t E Approval as to form Buyer: CITY ATTORNEY CITY OF KENT, a Washington municipal corporation By L By Name Title -20- P\DRS\DRS22T EXHIBIT A Legal Description of Property A certain tract of land situated in the City of Kent, King County, Washington and more particularly described as follows: A-1 P\DRS\DRS22T EXHIBIT A The land referred to is situated in the county of King, State of Washington, and described as follows: PARCEL A: That portion of the northwest quarter of the northeast quarter of Section 24, Township 22 North, Range 4 East, W.M. , in King County, Washington, described as follows: Commencing at the northeast corner of said northwest quarter of the northeast quarter; thence west along the north line thereof to a point in a line parallel with and distant 30 feet west, measured at right angles, from the east line of said northwest quarter of the northeast quarter, said parallel line being the west line of 1st Avenue North; thence south 00°13'30" west along said west line a distance of 548.0 feet to the TRUE POINT OF BEGINNING; thence continuing south 00°13'30" west along said west line a distance of 214 .45 feet; thence southwesterly and westerly on a curve to the right, radius of 265.44 feet, which curve is not tangent to said west line, a distance of 203.73 feet to a point of tangency in a line hereinafter called line "A", which bears south 89°58'30" west from a point in said west line south 00°13'30" west, a distance of 289.58 feet from the TRUE POINT OF BEGINNING, said point of tangency being distant 184.73 feet westerly, measured along said line "A" from said west line; thence south 89*58130" west, a distance of 226. 9 feet; thence on a curve to the right, radius of 742.0 feet, a distance of 221.77 feet; thence north 72°53130" west a distance of 108.4 feet to a point of curve; thence on a curve to the left, radius 787.0 feet, a distance of 169.14 feet, more or less, to a point in the east line of 4th Avenue North, distant 97 .38 feet north, measured along said east line, from said line "A"; thence north 00*13130" east along said east line of 4th Avenue North, a distance of 427.20 feet; thence north 89"58130" east parallel with said line "A" a distance of 440. 964 feet to a point in the centerline of the 10 foot right of way easement for a sewer pipe line heretofore granted to the City of Kent; thence southerly along said center line to a point in a line parallel with and distant 289.58 feet northerly, measured at right angles, from said Line "A which point is south 89058130" west a distance of 457 .522 feet from the TRUE POINT OF BEGINNING; thence north 89°58130" east a distance of 457.522 feet to the TRUE POINT OF BEGINNING EXCEPT that portion thereof condemned in King County Superior Court Cause Number 706251. LEGAL DESCRIPTION, continued: PARCEL B: That portion of the northwest quarter of the northeast quarter of Section 24, Township 22 North, Range 4 East, W.M. , in King County, Washington, described as follows: Commencing at the northeast corner of said northwest quarter of the northeast quarter; thence west along the north line thereof to a point in a line parallel with and distant 30 feet west, measured at right angles, from the east line of said northwest quarter of the northeast quarter, said parallel line being the west line of 1st Avenue North; thence south 00*13130" west along said west line, a distance of 548.0 feet to the TRUE POINT OF BEGINNING; thence south 89°58'30" west a distance of 457.522 feet to a point in the center line of the 10-foot right of way easement for a sewer pipe line heretofore granted to the City of Kent; thence northerly along said center line to a point in a line parallel with and distant 235.0 feet north, measured at right angles, from the last described course; thence north 89°58'30" east a distance of 458.556 feet to said west line; thence south 00°13130" west along west line a distance of 235 feet, more or less, to the TRUE POINT OF BEGINNING; PARCEL C: That portion of the northwest quarter of the northeast quarter of Section 24, Township 22 North, Range 4 East, W.M. , in King County, Washington, described as follows: Commencing at the northeast corner of said northwest quarter of the northeast quarter; thence west along the north line thereof to a point in a line parallel with and distant 30 feet west, measured at right angles, from the east line of said northwest quarter of the northeast quarter, said parallel line being a northerly production of the west line of First Avenue North; thence south 00°13'30" west along said produced west line to a point distant 33 feet south, measured at right angles, from the north line of said northwest quarter of the northeast quarter, said point being the intersection of the west line of First Avenue North and the south line of James (Winner) Street, and the point of beginning; thence continuing south 00°13'30" west along said west line, a distance of 280 feet; thence south 89°58'30" west a distance of 899.52 feet to the east line of Fourth Avenue North; thence north along said east line a distance of 280 feet to the south line of James (Winner) Street; thence east along said south line to the point of beginning; EXCEPT that portion thereof condemned in King County Superior Court Cause Number 706251. LEGAL DESCRIPTION, continued: PARCEL D: That portion of Tract X described as follows: Beginning at the most southwesterly corner of the parcel land conveyed by Northwestern Improvement Company to The Borden Company under deed dated April 12, 1956 and recorded under Recording Number 4688725, records of King County, Washington, being a point in the east line of 4th Avenue in the City of Kent; Thence south 0°13' 11" west along said east line 18.2 feet; Thence south 72°53'30" east 270.58 feet to a point of curve; Thence easterly on a curve to the left with a radius of 776. 62 feet, a distance of 108.07 feet; Thence north 9°08'07" east 22.3 feet to a point of curve from a tangent bearing south 80°51'53" east; Thence easterly on a curve to the left, with a radius of 754 .32 feet, a distance of 120. 6 feet; Thence north 00001'30" west 12.7 feet, more or less, to the southerly line of the above-mentioned parcel of land; Thence westerly along said southerly line to the point of beginning. Said Tract X described as follows: That portion of the northwest quarter of the northeast quarter of Section 24, Township 22 North, Range 4 East, in King County, Washington, lying west of First Avenue North, east of 4th Avenue North, north of Temperance Street and south of the following described line: Beginning at a point on the west line of First Avenue North 762.45 feet south of the north line of said subdivision; Thence southwesterly and westerly on a curve to the right, radius of 265.44 feet, which is not tangent to said west line, a distance of 203.73 feet to a tangency in a line hereinafter called line "A"; Thence south 89°58130" west 226. 9 feet; Thence on a curve to the right, radius of 742.0 feet, a distance of 221.77 feet; Thence north 72°53130" west a distance of 108.4 feet to a point of curve; Thence on a curve to the left, radius 787 .0 feet, a distance of 169.14 feet, more or less, to a point on the east line of 4th Avenue North. EXHIBIT B Promissory Note FOR VALUE RECEIVED, CITY OF KENT, a Washington municipal corporation ("Maker") promises to pay to BORDEN CHEMICAL, INC., a Delaware corporation, or order, the sum of One Hundred Thousand Dollars ($100,000), payable as follows: This promissory note is payable solely upon removal of contingencies in writing during the due diligence period provided for under Article IV of that certain Real Property Purchase and Sale Agreement dated , 2001 by and between Borden Chemical, Inc. as seller and City of Kent as buyer. If contingencies are not removed in writing within said due diligence period, this promissory note shall be null and void and of no further force and effect. If any of the installments due under this promissory note are not paid on the date when due, the whole sum of both principal and interest shall become due and payable at once without further notice, at the option of the holder hereof. This promissory note shall bear interest at the rate of eighteen percent (18%) per annum after maturity or after failure to pay any installment as above specified, and if this promissory note shall be placed in the hands of an attorney for collection, or if suit shall be brought to collect any of the principal or interest of this note Maker promises to pay a reasonable attorneys' fee. CITY OF KENT, a Washington municipal corporation By Name Title B-1 P\DRS\DRS227 EXHIBIT C Definition of Hazardous Substances The term"Hazardous Substances" shall include without limitation: (i) Those substances included within the definitions of "hazardous substances," "hazardous materials," "toxic substances," or "solid waste" in the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (42 U.S.C. §§ 9601 et seq.) ("CERCLA"), as amended by Superfund Amendments and Reauthorization Act of 1986 (Pub. L. 99-499, 100 Stat. 1613) ("SARA"), the Resource Conservation and Recovery Act of 1976 (42 U.S.C. §§ 6901 et se .) ("RCRA"), and the Hazardous Materials Transportation Act, 49 U.S.C. §§ 1801 et seq., and in the regulations promulgated pursuant to said laws, all as amended; (ii) Those substances listed in the United States Department of Transportation Table (49 CFR 172.101 and amendments thereto) or by the Environmental Protection Agency (or any successor agency) as hazardous substances (40 CFR Part 302 and amendments thereto); (iii) Any material, waste or substance which is (A)petroleum, (B) asbestos, (C)polychlorinated biphenyls, (D) designated as a "hazardous substance" pursuant to Section 311 of the Clean Water Act, 33 U.S.C. §§ 1251 et seq. (33 U.S.C. §§ 1321) or listed pursuant to Section 307 of the Clean Water Act (33 U.S.C. 1317); (E) flammable explosives, (F) radon gas, (G) lead or lead-based paint, (H) radioactive materials, (I) coal combustion by-products, or(J) urea formaldehyde foam insulation; (iv) Those substances defined as "dangerous wastes," "hazardous wastes" or as "hazardous substances" under the Water Pollution Control Act, RCW 90.48.010 et seq., the Hazardous Waste Management Statute, RCW 70.105.010 et seg., the Toxic Substance Control Act, RCW 70.105B.010 et SeMc., the Model Toxics Control Act, RCW 70.105D.010 et s q. and the Toxic Substance Control Act, 15 U.S.C., Section 2601 et seg., and in the regulations promulgated pursuant to said laws, all as amended from time to time; (v) Storm water discharge regulated under any federal, state or local law, ordinance or regulation relating to storm water drains, including, but not limited to, Section 402(p) of the Clean Water Act, 33 U.S.C. Section 1342 and the regulations promulgated thereunder, all as amended from time to time; and (vi) Such other substances, materials and wastes which are or become regulated as hazardous or toxic under applicable local, state or federal law, or the United States government, or which are classified as hazardous or toxic under federal, state, or local laws or regulations, all as amended from time to time. C-1 P\DRS\DRS22T "Release" shall mean releasing, spilling, leaking, pumping, pouring, flooding, emitting, emptying, discharging, injecting, escaping, leaching, disposing or dumping, Hazardous Substances in or into the air, soil, surface water or ground water in, on, about or under the Property. C-2 P\DRS\DRS22T EXHIBIT D LEASE THIS LEASE is made and entered into this I- day of February, 2001, by and between the CITY OF KENT, a Washington municipal corporation, ("Landlord") and BORDEN CHEMICAL, INC., a Delaware corporation("Tenant"). RECITALS WHEREAS, Tenant has heretofore owned, occupied and operated all or a portion of the Premises (as defined below) and is in all respects knowledgeable and familiar with all relevant matters affecting the condition, use and operation of the Premises, including the desirability and suitability of the Premises for the continued use and operation thereof by Tenant throughout the terms of this Lease; and WHEREAS, pursuant to the Real Property Purchase and Sale Agreement dated February T--3 2001 (the "Purchase Agreement"), Tenant sold certain real property described therein, including the Premises, to Landlord and Landlord agreed to lease Tenant the Premises on the terms and conditions set forth in Article IX thereof, and WHEREAS, Landlord desires to lease the Premises to Tenant, and Tenant desires to hire the Premises from Landlord, in accordance with the terms and conditions of this Lease. NOW, THEREFORE, the parties agree as follows: 1. PREMISES 1.1 Lease to Tenant. In consideration of the rents to be paid and the covenants and agreements hereinafter provided which Tenant hereby agrees to keep and perform, Landlord hereby leases to Tenant and Tenant hereby hires from Landlord those certain premises ("Premises") together with appurtenances, situated in the City of Kent, King County, Washington, commonly known as manufacturing facility located at 421-608 15t Avenue North, Kent, Washington and more particularly described on Exhibit A-1 attached hereto and by this reference incorporated herein and outlined on the map attached hereto as Exhibit A-2. The Premises shall be completely fenced so as to prevent unauthorized access to the Premises either from the remaining real property acquired by Landlord from Tenant pursuant to the Purchase Agreement or from the public streets adjoining the Premises. 1.2 Title and Condition of Premises. The Premises are leased to Tenant in their present condition and state of repair without representation or warranty of any kind by Landlord express or implied, and subject to (i) the existing condition of title, (ii) all applicable Legal Requirements (defined below) now or hereafter in effect, and (iii) all the covenants, terms and conditions of any and all presently existing agreements affecting the Premises. Tenant has heretofore operated and occupied the Premises and has thoroughly and completely examined the D-1 P\DRS\DRS22T physical condition of and title to the Premises as well as applicable Legal Requirements and has found all of the same to be satisfactory for all purposes. Tenant hereby accepts the Premises subject to all of the foregoing and without any representation or warranty by Landlord, express or implied in fact or by law and expressly without recourse to Landlord as to title to the Premises, the nature, the physical condition or suitability thereof. 2. TERM. 2.1 Term. The term of this Lease shall be for a period of two (2) years commencing on the date hereof ("Commencement Date") and shall end on the last day of January, 2003, unless sooner terminated as provided in this Lease, or unless it is extended pursuant to the provisions of Section 2.2 below. 2.2 Extensions. Provided Tenant is not in default under this Lease beyond applicable cure periods and there is no event that with the giving of notice, the passage of time, or both would constitute an Event of Default under this Lease, Tenant shall have 2 successive options (each, an "Option") to extend the term of this Lease for six months (each, an "Option Period") on the same terms and conditions. In order to exercise an Option, Tenant shall give Landlord written notice of such exercise at least thirty (30) days prior to the end of the then- current term of this Lease. 2.3 Right to Early Termination. Tenant shall have the right to terminate this Lease and cease operation of its manufacturing facility located on the Premises at any time during the initial or any extended term by giving Landlord thirty (30) days prior written notice. Notwithstanding such termination, all of the provisions of this Lease except the provisions of this Section 2 and the obligation to pay Fixed Rent (defined below) shall remain in full force and effect during the 6-month Demolition Period (as defined in Article IX of the Purchase Agreement and Section 18 of this Lease). 3. RENT. 3.1 Fixed Rent. Tenant covenants and agrees to pay to Landlord as rent for the Premises in advance on the first day of each calendar month during the term of this Lease without deduction, offset, prior notice or demand, in lawful money of the United States, the sum of SIXTEEN THOUSAND FIVE HUNDRED and no/100 DOLLARS ($16,500.00) ("Fixed Rent"). If the Commencement Date is not the first day of a month, or if the Lease termination date is not the last day of a month, a prorated monthly installment shall be paid at the then current rate for the fractional month during which the Lease commences and/or terminates. 3.2 Additional Rent. All amounts which Tenant is required to pay to Landlord pursuant to this Lease (other than Fixed Rent) shall constitute additional rent("Additional Rent") whether or not the same be designated as Additional Rent. Fixed Rent and Additional Rent is hereinafter referred to collectively as "Rent". Tenant shall perform all its obligations under this Lease at its sole cost and expense, and shall promptly pay to Landlord all Additional Rent. Tenant shall also promptly pay to all third parties any other sums required to be paid by Tenant under this Lease, when the same shall be due and payable and in all event prior to delinquency, D-2 P\DRS\DRS22T without notice or demand, deduction or offset, except as otherwise expressly provided in this Lease. 3.3 Absolute Net Lease. This Lease is intended to be and shall be construed as an absolutely net lease pursuant to which Landlord shall not, under any circumstances or conditions, whether presently existing or hereafter arising, or whether beyond the present contemplation of the parties, be expected or required to make any payment of any kind whatsoever or be under any other obligation or liability, except as otherwise expressly set forth in this Lease, and Tenant shall make any and all payments required hereunder. 4. [Intentionally Deleted.] 5. TAXES ASSESSMENTS AND UTILITIES• COMPLIANCE BY TENANT. 5.1 Payment by Tenant. Tenant shall pay all Taxes directly to the applicable governmental agency prior to delinquency and shall provide proof of such payment to Landlord promptly upon request. 5.2 "Taxes" means all real estate taxes, personal property taxes, assessments, leasehold excise taxes, other excise taxes, charges for public utilities, payments in lieu of taxes and other charges of whatever kind or nature, general or special, ordinary or extraordinary, foreseen or unforeseen, levied by any public, governmental or quasi-governmental authority against the Premises or improvements, fixtures and equipment therein, and all property of Landlord, real or personal, used directly in the maintenance, repair or operation of the Premises including, without limitation, any installments payable for any personal property taxes or sales taxes. To the extent Taxes, assessments or other charges can be paid in installments, Tenant may pay such Taxes in installments and shall only be liable for installments coming due from and after the date of this Lease. With respect to any general or special assessments which may be levied against or upon the Premises, or which under the laws then in force may be evidenced by improvement or other bonds or may be paid in annual installments, only the amount of such annual installment, and interest due thereon, shall be included within the computation of Taxes. 5.3 Personal Property Taxes. Tenant shall pay prior to delinquency all taxes assessed against and levied upon leasehold improvements, fixtures, furnishings, equipment and all other personal property of Tenant contained in the Premises or elsewhere. When possible, Tenant shall cause said leasehold improvements, trade fixtures, furnishings, equipment and all other personal property to be assessed and billed separately from the real property of Landlord. 5.4 Utilities. Tenant shall pay prior to delinquency for all water, gas, heat, light, power, telephone, sewage, air conditioning and ventilating, scavenger, janitorial, landscaping, and all other materials and utilities supplied to the Premises. Tenant shall pay for all telephone and such other services for the Premises for which Tenant shall have contracted. 5.5 Compliance with Legal Requirements and Agreements. Tenant shall at its sole cost and expense comply with and perform all obligations with respect to (i) all applicable local, state and federal laws, ordinances and regulations, and other governmental rules, orders D-3 P\DRS\DRS22T and determinations now or hereafter in effect, whether or not presently contemplated, applicable to the Premises, or its ownership, operation, use or possession (collectively "Legal Requirements"), including (without limitation) all those relating to parking restrictions, building codes, zoning or other land use matters, life safety, requirements, environmental compliance with respect to, among other things, the handling, manufacture, treatment, storage, disposal, Release, discharge, use and transportation of Hazardous Substances (defined below) and all other laws and regulations, whether presently existing or hereafter enacted, affecting the construction, use, occupancy and operation of the Premises, and (ii) all contracts (including insurance policies, to the extent necessary to prevent cancellation and to insure full payments of any claims made under such policies), covenants, conditions and restrictions and all other documents applicable to the Premises and its ownership, operation, use or possession, (collectively "Agreements"); which compliance shall include the making of any and all required physical alterations or structural changes to the Premises. 6. USE 6.1 Use. The Premises shall be used and occupied by Tenant for manufacturing, office and distribution purposes consistent with Tenant's past practices on the Premises and for no other purpose without the prior written consent of Landlord. 6.2 Suitability. Tenant acknowledges that neither Landlord nor any agent of Landlord has made any representation or warranty with respect to the Premises or with respect to the suitability of the Premises for the conduct of Tenant's business, nor has Landlord agreed to undertake any modification, alteration or improvement to the Premises. The taking of possession of the Premises by Tenant shall conclusively establish that the Premises were at such time in satisfactory condition. 6.3 Uses Prohibited. (a) Tenant shall not do or permit anything to be done in or about the Premises nor bring or keep anything therein which will in any way increase the existing rate or affect any fire or other insurance upon the Premises or any of its contents (unless Tenant shall pay any increased premium as a result of such use or acts), or cause a cancellation of any insurance policy covering said Premises or any of its contents, nor shall Tenant sell or permit to be kept, used or sold in or about said Premises any articles which may be prohibited by a standard form policy of fire insurance. (b) Tenant shall not use or allow the Premises to be used for any unlawful or objectionable purpose, nor shall Tenant cause, maintain or permit any nuisance in, on or about the Premises. Landlord and Tenant agree that the continued use of the Premises as a manufacturing facility for the manufacture of formaldehyde, urea formaldehyde and phenol formaldehyde thermoset resins for production of particle board and plywood shall not constitute an objectionable purpose under this Lease. Tenant shall not commit or suffer to be committed any waste in or upon the Premises. D-" P\DRS\DRS22T (c) Tenant shall not use the Premises or permit anything to be done in or about the Premises which will in any way conflict with any law, statute, ordinance or governmental rule or regulation or requirement of duly constituted public authorities now in force or which may hereafter be enacted or promulgated. 7. MAINTENANCE, REPAIRS AND MODIFICATION 7.1 Tenant, at Tenant's sole cost and expense, shall keep the Premises and every part thereof, including, without limiting the generality of the foregoing, all plumbing, heating, air conditioning and ventilating, electrical and lighting facilities and equipment within the Premises, foundations, exterior walls, roof, fixtures, interior walls, ceilings, windows, doors, plate glass and skylights located within the Premises and all sidewalks, landscaping, driveways, loading docks, parking lots, fences, signs and other such items located in the areas which are included within the Premises in the same order, condition and repair as it historically operated and maintained the Premises during its prior ownership thereof and in compliance with all Legal Requirements. Upon the expiration or earlier termination of this Lease, Tenant shall perform Tenant's obligations under Article IX of the Purchase Agreement, including,but not limited to, removal of Tenant's personal property, machinery, trade fixtures and equipment located in the buildings presently located on the Premises, including demolition of all structures and Improvements in accordance with the provisions of Section 9.1 thereof, and the provisions of Section 18 of this Lease. Tenant shall indemnify the Landlord against any loss or liability resulting from delay by Tenant in so surrendering the Premises, including without limitation any claims made by any succeeding tenant founded on such delay. In the event Tenant fails to maintain the Premises in as good an order, condition and repair as Tenant has historically operated and maintained the Premises or if Tenant fails to comply with all Legal Requirements, Landlord shall give Tenant notice to do such acts as are reasonably required to so maintain the Premises or to comply with all Legal Requirements. In the event Tenant fails to promptly commence such work and diligently prosecute it to completion, then Landlord shall have the right to do such acts and expend such funds at the expense of Tenant as are reasonably required to perform such work. Any amount so expended by Landlord shall be paid by Tenant promptly after demand as Additional Rent with interest at twelve percent (12%) per annum from the date of such work. Landlord shall have no liability to Tenant for any damage, inconvenience or interference with the use of the Premises by Tenant as a result of performing any such work. Nothing in this Lease shall imply any duty or obligation upon the part of Landlord to do any work or to make any alterations and repairs and the performance thereof by Landlord shall not constitute a waiver of Tenant's default in failing to perform the same. D-S P\DRS\DRS22T 7.2 Modifications,Alterations and Additions. Tenant shall make no modifications, alterations, additions or improvements to the Premises or any part thereof without first obtaining the prior written consent of Landlord. As a condition to giving such consent, Landlord will require Tenant to remove any such modification, alteration, improvement or addition at the expiration of the Lease term as part of its demolition of Improvements as required under Section 9.1 of the Purchase Agreement. All such modifications, alterations, additions and/or improvements if approved by Landlord shall be constructed in accordance with Landlord approved plans and specifications and by a contractor and under a construction contract, the terms and conditions of which have been approved by Landlord. 8. ENTRY BY LANDLORD. Landlord reserves and shall at any and all times during normal business hours and upon reasonable prior notice to Tenant's plant manager or superintendent (and, if within Tenant's manufacturing facility located on the Premises in the presence of Tenant's escort), have the right to enter the Premises to inspect the same, to post notices of non-responsibility, to obtain soil samples, install monitoring wells, conduct surveying work and engage in other pre-development activities and to show the Premises to prospective purchasers or tenants thereof. Tenant hereby waives any claim for damages, for any injury or inconvenience to or interference with Tenant's business, any loss of occupancy or quiet enjoyment of the Premises, and any other loss occasioned thereby. For each of the aforesaid purposes, Landlord shall at all times have and retain a key with which to unlock all of the doors in, upon and about the Premises, excluding Tenant's vaults and safes, and Landlord shall have the right to use any and all means which Landlord may deem proper to open doors in any emergency, in order to obtain entry to the Premises, and any entry to the Premises obtained by Landlord by any of said means, or otherwise, shall not under any circumstances be construed, or deemed to be a forcible or unlawful entry into, or a detainer of, the Premises, or an eviction of Tenant from the Premises or any portion thereof. Any entry by Landlord or its agents shall not unreasonably disrupt or interfere with Tenant's operations on the Property, Tenant's safety program or security requirements, or Tenant's demolition activities under Section 18 below. 9. LIENS. Tenant shall keep the Premises free from any liens out of work performed, materials furnished, or obligations incurred by Tenant and shall indemnify, hold harmless and defend Landlord from any liens and encumbrances arising out of any work performed or materials furnished by or at the direction of Tenant. In the event that Tenant shall not, within thirty (30) days following the imposition of any such lien, cause such lien to be released of record by payment or posting of a proper bond, Landlord shall have, in addition to all other remedies provided herein and by law, the right, but not the obligation, to cause the same to be released by such means as it shall deem proper, including payment of the claim giving rise to such lien. All such sums paid by Landlord and all expenses incurred by it in connection therewith including attorneys' fees and costs shall be payable to Landlord by Tenant on demand with interest at the rate of twelve percent (12%) per annum. Landlord shall have the right at all times to post and keep posted on the Premises any notices permitted or required by law, or which Landlord shall deem proper, for the protection of Landlord and the Premises, and any other party having an interest therein, from mechanics' and materialmen's liens. D-6 P\DRS\DRS22T 10. INDEMNITY 10.1 Indemnity. Tenant shall protect, defend, indemnify and hold harmless Landlord from and against any and all claims arising from Tenant's use of the Premises or the conduct of its business or from any activity, work, or thing done, permitted or suffered by Tenant in or about the Premises and shall further protect, defend, indemnify and hold Landlord harmless from and against any and all claims arising from any breach or default in the performance of any obligation on Tenant's part to be performed under the terms of this Lease, or arising from any act or negligence of Tenant, or any of its agents, contractors and employees, and from and against any and all costs, attorneys' fees, expenses and liabilities incurred in connection with such claim or any action or proceeding brought against Landlord by reason of any such claim. Tenant hereby assumes all risk of damage to property or injury to persons, in or about the Premises from any cause. Tenant upon notice from Landlord shall defend the same at Tenant's expense by counsel reasonably satisfactory to Landlord, provided, however, that Tenant shall not be liable for damage or injury occasioned by the negligence or intentional acts of Landlord and its designated agents or employees unless covered by insurance Tenant is required to provide. 10.2 Exception of Landlord from Liability. Landlord shall not be liable to Tenant and Tenant hereby waives all claims against Landlord for injury, illness or death to any person or for damage to any property in or about the Premises by or from any cause whatsoever and, without limiting the generality of the foregoing, whether caused by or resulting from fire, steam, electricity, gas, water or rain, which may leak or flow from or into any part of the Premises, or from breakage, leakage, obstruction or other defects of the pipes, sprinklers, wires, appliances, plumbing, air conditioning or lighting fixtures of the same, whether the said damage or injury results from conditions arising upon the Premises or from other sources. 11. INSURANCE 11.1 Liability Insurance. Tenant shall, at Tenant's sole cost and expense, but for the mutual benefit of Landlord and Tenant, obtain and keep in force throughout the term of this Lease general liability insurance insuring Landlord and Tenant against claims for personal injury (including, without limitation, bodily injury or death), property damage liability and such other loss or damage from such causes of loss as are embraced by insurance policies of the type now known as "Commercial General Liability" insurance, with a combined single limit of $5,000,000. The limits of such insurance shall not, however, limit the liability of Tenant hereunder. 11.2 Property Insurance. Tenant shall, if it desires, obtain and keep in force during the term of this Lease at its sole cost and expense,property insurance on the buildings and any improvements and additions permanently affixed thereto of which the Premises are a part against loss by fire and other causes. Said insurance shall provide for payment of loss thereunder to Tenant. Tenant's decision not to maintain property insurance shall not constitute a defense to Tenant's obligation to remove all of Tenant's personal property machinery, trade fixtures and equipment located in the buildings presently located on the Premises or Tenant's obligation to complete the demolition of all structures and other improvements, including foundations and piping from the Premises in the event of any damage or destruction to the Premises or upon D-7 P\DRS\DRS22T expiration or earlier termination of the Lease as required under Section 9.1 of the Purchase Agreement. 11.3 Coverage for Tenant's Personal Property. Tenant shall, at its sole cost and expense, insure its personal property or trade fixtures on the Premises against loss or damage under insurance policies of the type now known as "all risk" or "special cause of loss" property insurance in an amount equal to the replacement cost thereof. Landlord shall have no obligation to insure any of Tenant's personal property or trade fixtures or repair, replace or restore same when damaged or destroyed from any cause whatsoever. 11.4 Insurance Policies. All insurance required under this Lease shall be effected under valid and enforceable policies issued by companies reasonably satisfactory to Landlord, authorized to do business in the State of Washington. Tenant shall deliver to Landlord prior to possession copies of policies of any insurance required under this Lease, or Certificates of Insurance evidencing the existence and amount of such insurance. Tenant's policies shall name Landlord as an additional insured thereunder. All such liability insurance policies shall provide for cancellation or non-renewal only upon notice by registered or certified mail to Landlord effective not earlier than 30 days after the giving of such notice, and shall otherwise be in form reasonably satisfactory to Landlord. 12. DAMAGE TO PREMISES. In the event that there is damage or destruction to the Premises, Tenant shall have the option to repair or rebuild the portion of the Premises so damaged, it being understood that Tenant shall be obligated in any event to demolish the improvements on the Premises after the expiration or earlier termination of the term of this Lease as provided in Section 7.1 and 18 of this Lease, and as provided in Article IX of the Purchase Agreement. 13. CONDEMNATION. (a) If all or any portion of the Premises shall be taken under any right of condemnation or eminent domain or any transfer in lieu thereof, this Lease and all rights of Tenant shall cease and terminate with respect to such portion of the Premises so taken on the date of such taking or transfer. Upon the date of such taking or transfer, the term of this Lease shall expire as fully and completely as if such date were the date hereinabove set forth for the end of the term of this Lease and Tenant shall thereupon vacate the Premises, without prejudice to any rights and remedies accrued to Landlord under this Lease prior to such termination, and any Rent paid or payable by Tenant shall be adjusted as of the date of such termination. (b) The entire award for the taking under any right of condemnation or eminent domain or any transfer in lieu thereof shall belong to Landlord, and Tenant shall not be entitled to any part thereof or damages for the loss of its leasehold estate or other interest in the Premises and hereby assigns to Landlord all of its right, title and interest in and to any such award. Tenant shall have the right, however, to independently claim and recover from the condemning authority compensation for any loss to which Tenant may be put for Tenant's moving expenses, business interruption, the unamortized cost of Tenant owned and financed tenant improvements or taking of Tenant's personal property (not including Tenant's leasehold D-8 P\DRS\DRS22T interest) provided that such damages may be claimed only if they are awarded separately in the eminent domain proceedings and not out of or as part of the damages recoverable by Landlord. (c) Nothing contained in this Section 13 shall in any way discharge Tenant from its obligations under Section 9.1 of the Purchase Agreement and Section 18 of this Lease, each of which shall remain in full force and effect. 14. ASSIGNMENT AND SUBLETTING. 14.1 Landlord's Consent Required. Tenant shall not assign, transfer, mortgage, pledge, hypothecate or encumber this Lease or any interest therein, and shall not sublet the Premises or any part thereof, without Landlord's prior written consent in each instance, which consent may be withheld by Landlord in its sole discretion. Any request by Tenant for such consent shall be in writing, which shall set forth the details as to the proposed assignment, mortgage or subletting and have annexed thereto a copy of the proposed mortgage, assignment or sublease. Any attempted assignment, transfer, mortgage, encumbrance or subletting without such consent shall be void and shall constitute a breach of this Lease. 14.2 No Release of Tenant. No consent by Landlord to any assignment or subletting by Tenant shall relieve Tenant of any obligation to be performed by Tenant under this Lease, whether occurring before or after such consent, assignment or subletting. The consent by Landlord to any assignment or subletting shall not relieve Tenant from the obligation to obtain Landlord's express written consent to any other assignment or subletting. The acceptance of Fixed Rent or Additional Rent by Landlord from any other person shall not be deemed to be a waiver by Landlord of any provision of this Lease or to be a consent to any assignment, subletting or other transfer. Consent to one assignment, subletting or other transfer shall not be deemed to constitute to any subsequent assignment, subletting or other transfer. 15. SUBORDINATION 15.1 Subordination. This Lease shall be subject and subordinate to the lien of any mortgages or deeds of trust in any amount or amounts whatsoever now or hereafter placed on or against the land or improvements or either thereof, of which the Premises are a part, or on or against Landlord's interest or estate therein, and all modifications or renewals thereof, without the necessity of the execution and delivery of any further instruments on the part of Tenant to effectuate such subordination. 15.2 Subordination Agreements. Tenant covenants and agrees to execute and deliver upon demand without charge therefore, such further instruments evidencing such subordination of this Lease to the lien of any such mortgages or deeds of trust as may be required by Landlord. 15.3 Quiet Enjoyment. Landlord covenants and agrees with Tenant that upon Tenant paying rent and other monetary sums due under the Lease, performing its covenants and conditions under the Lease, Tenant shall and may peaceably and quietly have, hold and enjoy the D-9 P\DRS\DRS22T Premises for the term, subject, however, to the terms of the Lease or any mortgages or deeds of trust described above. 16. DEFAULT, REMEDIES 16.1 Default. The occurrence of any of the following shall constitute a material default and breach of this Lease by Tenant: (a) Any failure by Tenant to pay Rent, Additional Rent or any other monetary sums required to be paid hereunder which is not paid within three (3) business days after notice from Landlord that such payment is overdue; (b) A failure by Tenant to observe and perform any other provision of this Lease, where such failure continues for twenty (20) days after written notice thereof by Landlord to Tenant, provided, however, that if the nature of the default is such that the same cannot reasonably be cured within said twenty (20) day period, Tenant shall not be deemed to be in default if Tenant shall within such period commence such cure and thereafter diligently prosecute the same to completion and further provided that such period of time shall not be so extended as to subject Landlord to criminal liability; (c) Tenant shall file a voluntary petition in bankruptcy or shall be adjudicated a bankrupt or insolvent or shall file any petition or answer seeking any reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under the present or any future federal bankruptcy code or any other present or future applicable federal, state or other statute or law, or shall seek or consent to or acquiesce in the appointment of any trustee, receiver or liquidator of Tenant or of all or any substantial part of its properties or of the Premises; or (d) If within 60 days after the commencement of any proceeding against Tenant seeking any reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under the present or any future federal bankruptcy act or any other present or future applicable federal, state or other statute or law, such proceeding shall not have been dismissed or if, within 60 days after the appointment, without the consent or acquiescence of Tenant, of any trustee, receiver or liquidator of Tenant or of all or any substantial part of its properties or of the Premises, such appointment shall not have been vacated or stayed on appeal or otherwise, or if, within 60 days, after the expiration of any such stay, such appointment shall not have been vacated. 16.2 Remedies. In the event of any such default or breach by Tenant, Landlord may, at any time thereafter without limiting Landlord in the exercise of any right or remedy at law or in equity which Landlord may have by reason of such default or breach: (a) Maintain this Lease in full force and effect and recover the Rent, Additional Rent and other monetary charges as they become due, without terminating Tenant's right to possession irrespective of whether Tenant shall have abandoned the Premises. In the event Landlord elects not to terminate this Lease, Landlord shall have the right to attempt to relet D-10 P\DRS\DRS22T the Premises at such rent and upon such conditions and for such a term, and to do all acts necessary to maintain or preserve the Premises as Landlord deems reasonable and necessary without being deemed to have elected to terminate this Lease, including removal of all persons and property from the Premises. Such property may be removed and stored in a public warehouse or elsewhere at the cost of and for the account of Tenant. (b) Terminate Tenant's right to possession by any lawful means, in which case this Lease shall terminate and Tenant shall immediately surrender possession of the Premises to Landlord. In such event Landlord shall be entitled to recover from Tenant all damages incurred by Landlord by reason of Tenant's default, including without limitation thereto, the following: (i)the worth at the time of award of any unpaid rent which had been earned at the time of such termination; plus (ii)the worth at the time of award of the amount by which the unpaid rent which would have been earned after termination until the time of award exceeds the amount of such rental loss that is proved could have been reasonably avoided; plus (iii)the worth at the time of award of the amount by which the unpaid rent for the balance of the term after the time of award exceeds the amount of such rental loss that is proved could be reasonably avoided; plus (iv) any other amount necessary to compensate Landlord for all the damages proximately caused by Tenant's failure to perform its obligations under this Lease or which in the ordinary course of events would be likely to result therefrom, including, without limitation, costs of reletting, tenant improvements and leasing commissions; plus (v) at Landlord's election, such other amounts in addition to or in lieu of the foregoing as may be permitted from time to time by applicable state law. Upon any such re-entry Landlord shall have the right to make any reasonable repairs, alterations or modifications to the Premises, which Landlord in its sole discretion deems reasonable and necessary. As used in (i) above, the "worth at the time of award" is computed by allowing interest at the rate of twelve percent (12%) per annum from the date of default. As used in (ii) and (iii)the "worth at the time of award" is computed by discounting such amount at the discount rate of the U.S. Federal Reserve Bank at the time of award plus one percent (1%). 16.3 Late Charges. Tenant hereby acknowledges that late payment by Tenant to Landlord of Rent, Additional Rent and other sums due hereunder will cause Landlord to incur costs not contemplated by this Lease, the exact amount of which will be extremely difficult to ascertain. Such costs include, but are not limited to, processing and accounting charges, and late charges which may be imposed on Landlord by the terms of any mortgage or deed of trust covering the Premises. Accordingly, if any installment of rent or any other sum due from Tenant shall not be received by Landlord or Landlord's designee within ten (10) days after such amount shall be due, Tenant shall pay to Landlord a late charge equal to five percent (5%) of such overdue amount. The parties hereby agree that such late charge represents a fair and reasonable estimate of the costs Landlord will incur by reason of late payment by Tenant. Acceptance of such late charge by Landlord shall in no event constitute a waiver of Tenant's default with respect to such overdue amount, nor prevent Landlord from exercising any of the other rights and remedies granted hereunder. 17. ENVIRONMENTAL INDEMNITY. Tenant shall not cause or permit any Hazardous Substances (as defined in Exhibit "B" attached hereto and by this reference incorporated herein) to be brought upon, kept or used in or about the Premises by Tenant, its D-11 P\DRS\DRS22T agents, employees, contractors or invitees, without the prior written consent of Landlord; provided, however, that Tenant shall be permitted to continue to possess and use Hazardous Substances on, in and about the Premises in a manner consistent with Tenant's prior practices in operating its business on the Premises, so long as Tenant uses all such Hazardous Substances in accordance with all Legal Requirements. Notwithstanding the foregoing, Tenant represents and warrants that it does not and will not use arsenic, arsenic containing materials, asbestos, asbestos containing materials or lead based paint in its manufacturing processes and other operations conducted at the Premises. If Tenant breaches its obligations set forth above or if the presence of Hazardous Substances on or about the Premises caused or permitted by Tenant after the date of this Lease results in contamination of the Premises or if contamination of the Premises or surrounding area by Hazardous Substances otherwise occurs after the date of this Lease for which Tenant is legally liable, then Tenant shall protect, defend, indemnify and hold Landlord harmless from and against any and all claims, judgments, damages, penalties, fines, costs, liabilities or losses (including, without limitation, diminution in value of the Premises or any building of which the Premises are a part), damages for the loss or restrictions on use of any space in the Premises, damages arising from any adverse impact on marketability of other properties owned by Landlord or other space in the building of which the Premises are a part, and sums paid in settlement of claims, attorney's fees, consultant fees and expert fees) which arise during or after the term of this Lease as a result of such contamination. This indemnification of Landlord by Tenant includes, without limitation, costs incurred in connection with any investigation of site conditions or any cleanup, remedial, removal or restoration work required by any federal, state or local governmental agency or political subdivision because of a Release of Hazardous Substances by Tenant after the date of this Lease. If the presence of any Hazardous Substance on or about the Premises caused or permitted by Tenant after the date of this Lease results in any contamination of the Premises or surrounding area, or causes the Premises or surrounding area to be in violation of any laws, rules, statutes, or ordinances, Tenant shall promptly take at its sole expense all actions necessary to return the Premises and surrounding area to the condition existing prior to the introduction of such Hazardous Substance; provided that Landlord's approval shall first be had and obtained, which approval shall not be unreasonably withheld so long as such actions would not potentially have any material adverse long-term or short-term effect on the Premises or surrounding area. Notwithstanding anything to the contrary contained in this Section 17 or elsewhere in this Lease, the parties acknowledge that certain Hazardous Substances may be located in, on or under the Premises, as described and acknowledged in Sections 4.5 and 5.5 of the Purchase Agreement, and nothing contained in this Section 17 or elsewhere in this Lease shall be deemed to amend or modify the provisions of the Purchase Agreement with respect to Existing Hazardous Substances (as defined in the Purchase Agreement) identified in the URS Report or require Tenant to perform any remediation of Existing Hazardous Substances identified in the URS Report or Additional Hazardous Substances (as defined in the Purchase Agreement) which were present on the Property as of the commencement of the term of this Lease; provided, however, Tenant shall be required to remediate and shall protect, defend, indemnify and hold Landlord harmless with respect to Hazardous Substances which are first Released by Tenant on the Premises after the date hereof. D-12 P\DRS\DRS22T 18. REMOVAL OF PERSONAL PROPERTY AND OTHER IMPROVEMENTS• DEMOLITION PERIOD. 18.1. Removal of Personal Property and Other Improvements. Tenant shall remove all of Tenant's personal property, machinery, trade fixtures and equipment located in the buildings presently located on the Premises, at Tenant's cost and expense no later than the end of the 6-month demolition period following the termination of Tenant's operation of its manufacturing facility on the Premises as provided in Section 2.3 of this Lease (the "Demolition Period"). Tenant shall also remove, dismantle or demolish all structures and improvements including foundations and underground piping located on the Premises, at no cost to Landlord, no later than at the end of the 6-month Demolition Period. No Fixed Rent shall be due Landlord during the 6-month Demolition Period during which Tenant is removing, dismantling or demolishing all structures and other Improvements located on the Property; provided, however, that all other terms and provisions of this Lease (except for Section 2 dealing with Term) shall remain in full force and effect until the end of the 6-month Demolition Period. Demolition shall include the proper removal and disposal of all lead-based paint and asbestos containing materials in accordance with all environmental laws and all Remedial Work resulting from the removal of Tenant's personal property and other Improvements from the Property. Tenant shall obtain all demolition and other permits which may be required under applicable law to complete the demolition work and remove and dispose of all lead-based paint and asbestos containing materials. Tenant shall notify Landlord prior to any removal, dismantling or demolition of structures or Improvements, including foundations and piping, from the Property. Landlord and Landlord's environmental consultants shall have the right to observe the removal, dismantling and/or demolition process and to conduct such investigation and inspection of the Property as the Landlord deems necessary to determine the environmental condition of the Property underneath the structures and Improvements being demolished, including, but not limited to, obtaining air, soil and ground water samples, and the installation and monitoring of ground wells. Such demolition and removal shall be conducted in accordance with all applicable laws, rules and regulations and with the utmost regard for the safety of persons and property. All man-made structures, buildings, process equipment, above and below ground piping and other structures, foundations, pavements and railroad tracks and ties (other than tracks and ties located on the Burlington Northern site immediately adjacent to the south of the Property) will be demolished and removed from the Property and properly disposed of in accordance with applicable laws. No demolition work will occur on the ballfields on the northern half of the Property. All underground utility lines, including natural gas, storm sewer, sanitary sewer and water, will be capped at the street mains in accordance with the requirements of Puget Sound Energy and the City of Kent, respectively. The underground utility lines will be removed from the ground and disposed of in accordance with applicable laws. All areas of the Property where industrial development has occurred will be regraded flat, to an elevation equal to the top of the curb or the top of roadway crown of the roadways adjacent to the Property, plus or minus six inches (6"). If fill is required to achieve this elevation, fill material will be comprised of native soils, free of organic material and manmade debris. All soils removed from the Property as a result of the demolition work will be properly classified and disposed of in accordance with applicable laws. D-13 P\DRS\DRS22T Soil fences and erosion control measures will be taken in accordance with all applicable laws. The demolition work will not include hydroseeding or landscaping. Tenant shall have the right to retain for its own account all proceeds derived from the sale or other disposition of such personal property, machinery, trade fixtures, equipment, and other improvements located on the Property. 18.2. Performance and Payment of Remedial Work for Additional Hazardous Substances. In the event Tenant, Landlord or Landlord's environmental consultants discovers during or following the demolition process that Additional Hazardous Substances (as defined in the Purchase Agreement) exist in the soil or in the ground water at or originating from the Property, Landlord shall have the right, but not the obligation, to cause such Additional Hazardous Substances to be remediated to the applicable cleanup standards under applicable environmental laws in light of Landlord's intended use of the Property for residential development and to be reimbursed for the cost of the Remedial Work (defined below) from the Environmental Holdback established pursuant to Section 5.5 of the Purchase Agreement in accordance with the procedures established in Section 9.2 of the Purchase Agreement and this Section 18.2. 18.2.1. Definition of Remedial Work. As used in the Purchase Agreement and in this Lease, the term "Remedial Work" means all activities performed after the date hereof in connection with or in anticipation of the assessment, cleanup, removal, mitigation, monitoring or containment of any Additional Hazardous Substances to meet the requirements of applicable laws relating to the cleanup or remediation of Hazardous Substances in light of the reasonably intended use of the Property at the time the Remedial Work commences. The term "Remedial Work" also includes the defense or prosecution of any proceedings before a court, administrative judge or tribunal or governmental agency and all negotiations with any governmental agency or its employees or consultants relating to the performance of Remedial Work in connection with any Additional Hazardous Substances, the reasonable fees and expenses (including reasonable attorney's fees) of Landlord, and its attorneys and consultants and any fines or penalties assessed against Landlord in connection therewith. Landlord shall not be entitled to reimbursement from the Environmental Holdback for any Remedial Work or any portion thereof caused by or resulting from the negligence of Landlord or from any Hazardous Substances placed on the Property by Landlord after the date hereof. Landlord shall also have the right to obtain at its sole cost (and not be reimbursed from funds on deposit in the Environmental Holdback) a "No Further Action Letter" from the Washington State Department of Ecology. 18.2.2. Notification and Performance of Remedial Work. Prior to commencement of Remedial Work, Landlord shall notify Tenant in writing of its intent to cause performance of any material Remedial Work (the "Remedial Work Notice"). The Remedial Work Notice shall indicate the location, nature and likely source of the Additional Hazardous Substances requiring Remedial Work, the scope of the Remedial Work, and the estimated cost of the Remedial Work. Landlord shall permit Tenant's agents, consultants and contractors prompt and reasonable access to the Property to confirm that the Remedial Work is required. D-14 P\DRS\DRS22T 18.2.3. Completion of Remedial Work; Accounting. Once Landlord has substantially completed each phase of the Remedial Work, Landlord shall provide Tenant and Escrow Holder with an accounting of the costs for the Remedial Work, and Escrow Holder shall reimburse Landlord for the cost of such Remedial Work until all amounts on deposit in the Environmental Holdback (including all investment earnings thereon) has been expended. Landlord shall be solely responsible for the payment of all costs of Remedial Work in excess of the Environmental Holdback. 18.2.4. Exigent Circumstances. Notwithstanding the provisions of Section 18.2.2 to the contrary, Landlord may, without notice to Tenant, cause Remedial Work to be done if the Remedial Work is necessary to prevent an immediate and substantial endangerment to the environment or the public health, safety and welfare. In such event, Landlord shall notify Tenant as soon as possible after it learns of the presence of the Additional Hazardous Substance. Landlord shall be reimbursed from the Environmental Holdback for the cost of such Remedial Work in accordance with Section 18.2.3. 18.2.5. Termination of Environmental Holdback. The provisions of this Section 18.2 and the Environmental Holdback shall survive the Closing and the recording of the Deed to the Property and shall terminate upon one (1) year following expiration of the 6-month Demolition Period. During such one (1) year period, the provisions of this Section 18.2 may be enforced by Landlord from time to time as it discovers the need for Remedial Work with reference to Additional Hazardous Substances. Notwithstanding anything to the contrary contained herein, Tenant's total responsibility for the payment of Remedial Work in connection with Additional Hazardous Substances shall not exceed the Environmental Holdback (including any and all investment earnings thereon). Upon termination of this Section 18.2, all funds, if any, on deposit with Escrow Holder in the Environmental Holdback (including any investment earnings thereon) shall be returned to Tenant. 19. MISCELLANEOUS 19.1 Estoppel Certificate. (a) Tenant shall at any time upon not less than ten (10) days prior written notice from Landlord execute, acknowledge and deliver to Landlord a statement in writing (i) certifying that this Lease is unmodified and in full force and effect (or, if modified, stating the nature of such modification and certifying that this Lease, as so modified, is in full force and effect) and the date to which the rent and other charges are paid in advance, if any, and (ii) acknowledging that there are not, to Tenant's knowledge, any uncured defaults on the part of Landlord hereunder, or specifying such defaults if any are claimed. Any such statement may be conclusively relied upon by any prospective purchaser or encumbrancer of the Premises. (b) Tenant's failure to deliver such statement within such time shall be conclusive upon Tenant (i) that this Lease is in full force and effect, without modification except as may be represented by Landlord, (ii) that there are no uncured defaults in Landlord's performance, and (iii)that not more than one month's rent has been paid in advance. D-15 P\DRS\DRS22T 19.2 Transfer of Landlord's Interest. In the event of a sale or conveyance by Landlord of Landlord's interest in the Premises, other than a transfer for security purposes only, Landlord shall be relieved from and after the date specified in any such notice of transfer of all obligations and liabilities accruing thereafter on the part of Landlord, provided that any funds in the hands of Landlord at the time of transfer in which Tenant has an interest, shall be delivered to the successor of Landlord. This Lease shall not be affected by any such sale and Tenant agrees to attorn to the purchaser of assignee provided all Landlord's obligations hereunder are assumed in writing by the transferee. 19.3 Captions; Attachments; Defined Terms. (a) The captions of the paragraphs of this Lease are for convenience only and shall not be deemed to be relevant in resolving any question of interpretation or construction of any section of this Lease. (b) Exhibits attached hereto, and addenda and schedules initialed by the parties, are deemed by attachment to constitute part of this Lease and are incorporated herein. (c) The words "Landlord" and "Tenant," as used herein, shall include the plural as well as the singular. Words used in neuter gender include the masculine and feminine and words in the masculine or feminine gender include the neuter. The obligations contained in this Lease to be performed by Landlord shall be binding on Landlord's successors and assigns only during their respective periods of ownership. Any capitalized terms not otherwise defined herein shall have the same meaning as set forth in the Purchase Agreement. 19.4 Entire Agreement. This instrument along with any exhibits and attachments hereto, constitutes the entire agreement between Landlord and Tenant relative to the leasing of the Premises and this Lease and the exhibits and attachments may be altered, amended, or revoked only by an instrument in writing signed by both Landlord and Tenant. Landlord and Tenant agree hereby that all prior or contemporaneous oral agreements between and among themselves and their agents or representatives relative to the leasing of the Premises are merged in or revoked by this Lease. 19.5 Severability. If any term or provision of this Lease shall, to any extent,be determined by a court of competent jurisdiction to be invalid or unenforceable, the remainder of this Lease shall not be affected thereby, and each term and provision of this Lease shall be valid and be enforceable to the fullest extent permitted by law. 19.6 Costs of Suit. (a) If Tenant or Landlord shall bring any action for any relief against the other, declaratory or otherwise, arising out of this Lease, including any suit by Landlord for the recovery of rent or possession of the Premises, the losing party shall pay the successful party a reasonable sum for attorneys' fees which shall be deemed to have accrued on the commencement of such action and shall be paid whether or not such action is prosecuted to judgment. D-16 P ORSORS22T (b) Should Landlord, without fault on Landlord's part, be made a party to any litigation instituted by Tenant or by any third party against Tenant, or by or against any person holding under or using the Premises by license of Tenant, or for the foreclosure of any lien for labor or material furnished to or for Tenant or any such other person or otherwise arising out of or resulting from any act or transaction of Tenant or of any such person, Tenant covenants to save and hold Landlord harmless from any judgment rendered against Landlord or the Premises or any part thereof, and all costs and expenses, including reasonable attorneys' fees, incurred by Landlord in or in connection with such litigation. 19.7 Time. Time is of the essence of this Lease and each and every provision hereof. All rights and remedies of the parties shall be cumulative and nonexclusive of any other remedy at law or in equity. 19.8 Binding Effect; Choice of Law. The parties hereto agree that all provisions hereof are to be construed as both covenants and conditions as though the words importing such covenants and conditions were used in each separate paragraph hereof. Subject to any provisions hereof restricting assignment or subletting by Tenant and subject to Section 19.2, all of the provisions hereof shall bind and inure to the benefit of the parties hereto and their respective successors and assigns. This Lease shall be governed by the laws of the State of Washington. 19.9 Waiver. No covenant, term or condition or the breach thereof shall he deemed waived, except by written consent of the party against whom the waiver is claimed, and any waiver or the breach of any covenant, term or condition shall not be deemed to be a waiver or any preceding or succeeding breach of the same or any other covenant, term or condition. Acceptance by Landlord of any performance by Tenant after the time the same shall have become due shall not constitute a waiver by Landlord of the breach or default of any covenant, term or condition unless otherwise expressly agreed to by Landlord in writing. 19.10 Surrender of Premises. The voluntary or other surrender of this Lease by Tenant, or a mutual cancellation thereof, shall not work as a merger, and shall, at the option of the Landlord, terminate all or any existing subleases or subtenancies, or may, at the option of Landlord, operate as an assignment to it of any or all such subleases or subtenancies, or may, at the option of Landlord, operate as an assignment to it of any or all such subleases or subtenancies. 19.11 Holding Over. If Tenant remains in possession of all or any part of the Premises after the expiration of the term hereof, with or without the express or implied consent of Landlord, such tenancy shall be from month to month only, and not a renewal hereof or an extension for any further term, and in such case, rent and other monetary sums due hereunder shall be payable in the amount and at the time specified in this Lease and such month to month tenancy shall be subject to every other term, covenant and agreement contained herein. 19.12 Signs. Tenant shall not inscribe, paint, affix, place or permit to be placed any additional projecting sign, marquee, awning, advertisement, sign, notice or placard on the D-1 7 P\DRS\DRS22T exterior or roof of the Premises or upon or about the entrance doors, windows, sidewalks, or areas adjacent to the Premises beyond those signs installed as of the date of this Lease without Landlord's prior written consent. Landlord reserves the right in Landlord's sole discretion to place such notices, signs, marquees, and advertisements as Landlord may deem appropriate in the operation of Landlord's affairs. 19.13 Limitation on Landlord's Liability. Tenant agrees that it shall look solely to the estate and property of Landlord in the land and buildings constituting the Premises for the collection of any judgment requiring the payment of money by Landlord in the event of any default or breach by Landlord with respect to any term, covenant and condition of this Lease to be performed by Landlord and no other assets of Landlord shall be subject to levy, execution or other procedure for the satisfaction of Tenant's remedies. 19.14 Interest on Past Due Obligations. Except as expressly herein provided, any amount due to Landlord not paid when due shall bear interest at twelve percent (12%) per annum from the date due. Payment of such interest shall not excuse or cure any default by Tenant under this Lease. 19.15 Brokers. Each party will defend, indemnify and hold the other party harmless from any claim, loss or liability made or imposed by any other party claiming a commission or fee in connection with this Lease and arising out of its own conduct. The parties' obligations under this paragraph shall survive expiration or termination of this Lease. 19.16 Notices. All notices, demands, requests, consents and approvals which may, or are required to, be given by any party to any other party hereunder shall be in writing and shall be deemed to have been duly given if delivered personally, sent by a nationally recognized overnight delivery service, or if mailed or deposited in the United States mail and sent by registered or certified mail, return receipt requested, postage prepaid to: Landlord at: City of Kent 220 4tt, Avenue South Kent,Washington 98032-5895 Attention: Jacki Skaught, Economic Development Manager Tenant at: Borden Chemical, Inc. 520— 112tt'Avenue NE P.O. Box 3626 Bellevue, Washington 98009-3626 Attention: Ross Burkett or to such other addresses as either party hereto may from time to time designate in writing and deliver in a like manner. All notices shall be deemed complete upon actual receipt or refusal to accept delivery. D-18 P\DRS\DRS22T 19.17 Waiver of Relocation Assistance under Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970, as amended. Tenant acknowledges that Landlord formally notified Tenant that the Premises were acquired by Landlord with federal financial assistance provided to Landlord by King County through the receipt and disbursement of Community Development Block Grant monies made available to King County by the United States Department of Housing and Development (hereinafter "HUD") pursuant to the Housing and Community Development Act of 1974, as amended, and the federal regulations promulgated thereunder. Tenant acknowledges that it has been advised of its rights to relocation payments and other relocation assistance under the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970, as amended ("URA"). Tenant has deliberately, knowingly and intentionally determined not to claim the benefits available to Tenant under URA and hereby releases Landlord and King County from all obligations and liabilities regarding any rights to relocation payments and other relocation assistance under URA. Tenant has had an opportunity to consult with counsel regarding the applicability of URA to the sale of the Property pursuant to the Purchase Agreement and subsequent lease of the Premises under this Lease and does hereby knowingly and intentionally waive its rights to relocation payments and other relocation assistance under URA. Tenant has made this waiver freely and without reservation or qualification. Tenant agrees to execute such additional waivers or other documentation as Landlord or King County may request to confirm the waiver contained in this Section 19.17. 19.18 Corporate Authority. Tenant represents and warrants that it is duly authorized to execute and deliver this Lease in accordance with a duly adopted resolution of the Board of Directors of said corporation or in accordance with the bylaws of said corporation, and that this Lease is binding upon Tenant in accordance with its terms. Landlord represents and warrants that it is duly authorized to execute and deliver this Lease in accordance with a duly adopted resolution of Landlord, and that this Lease is binding upon Landlord in accordance with its terms. D-19 P ORSTRS22T IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease the date and year first above written. LANDLORD: TENANT: CITY OF KENT, a Washington municipal BORDEN CHEMICAL, INC., a Delaware corporation corporation By By Name Name Title Title Approved as to form: CITY ATTORNEY: By Address: Address: 220--4th Avenue South P.O. Box 3626 Kent, Washington 98032-5895 Bellevue, Washington 98009-3626 Attn: Ross Burkett D-20 P\DRS\DRS22T STATE OF WASHINGTON ) ss. COUNTY OF KING ) I certify that I know or have satisfactory evidence that is the person who appeared before me, and said person acknowledged that he/she signed this instrument, on oath stated that he/she was authorized to execute the instrument and acknowledged it as the of the CITY OF KENT,a Washington municipal corporation,to be the free and voluntary act of such party for the uses and purposes mentioned in the instrument. Dated: Notary Public Print Name My commission expires (Use this space for notarial stamp/seal) STATE OF WASHINGTON ) )ss. COUNTY OF KING ) I certify that I know or have satisfactory evidence that is the person who appeared before me, and said person acknowledged that he/she signed this instrument, on oath stated that he/she was authorized to execute the instrument and acknowledged it as the of BORDEN CHEMICAL, INC., a Delaware corporation, to be the free and voluntary act of such party for the uses and purposes mentioned in the instrument. Dated: Notary Public Print Name My commission expires (Use this space for notanal stamp/seal) D-21 P\DRS\DRS22T EXHIBIT A-1 A certain tract of land situated in the City of Kent, King County, Washington and more particularly described as follows: A-1-1 P\DRS\DRS22T EXHIBIT A The land referred to is situated in the county of King, State of Washington, and described as follows: PARCEL A: That portion of the northwest quarter of the northeast quarter of Section 24, Township 22 North, Range 4 East, W.M. , in King County, Washington, described as follows: Commencing at the northeast corner of said northwest quarter of the northeast quarter; thence west along the north line thereof to a point in a line parallel with and distant 30 feet west, measured at right angles, from the east line of said northwest quarter of the northeast quarter, said parallel line being the west line of 1st Avenue North; thence south 00°13130" west along said west line a distance of 548.0 feet to the TRUE POINT OF BEGINNING; thence continuing south 00°13'30" west along said west line a distance of 214. 45 feet; thence southwesterly and westerly on a curve to the right, radius of 265.44 feet, which curve is not tangent to said west line, a distance of 203.73 feet to a point of tangency in a line hereinafter called line "A", which bears south 89°58'30" west from a point in said west line south 00°13'30" west, a distance of 289.58 feet from the TRUE POINT OF BEGINNING, said point of tangency being distant 184.73 feet westerly, measured along said line "A" from said west line; thence south 89058 '30" west, a distance of 226. 9 feet; thence on a curve to the right, radius of 742.0 feet, a distance of 221.77 feet; thence north 72°53130" west a distance of 108.4 feet to a point of curve; thence on a curve to the left, radius 787.0 feet, a distance of 169. 14 feet, more or less, to a point in the east line of 4th Avenue North, distant 97.38 feet north, measured along said east line, from said line "A" thence north 00°13'30" east along said east line of 4th Avenue North, a distance of 427.20 feet; thence north 89°58'30" east parallel with said line "A" a distance of 440. 964 feet to a point in the centerline of the 10 foot right of way easement for a sewer pipe line heretofore granted to the City of Kent; thence southerly along said center line to a point in a line parallel with and distant 289.58 feet northerly, measured at right angles, from said Line "A", which point is south 89058130" west a distance of 457.522 feet from the TRUE POINT OF BEGINNING; thence north 89°58130" east a distance of 457.522 feet to the TRUE POINT OF BEGINNING EXCEPT that portion thereof condemned in King County Superior Court Cause Number 706251. LEGAL DESCRIPTION, continued: PARCEL B: That portion of the northwest quarter of the northeast quarter of Section 24, Township 22 North, Range 4 East, W.M. , in King County, Washington, described as follows: Commencing at the northeast corner of said northwest quarter of the northeast quarter; thence west along the north line thereof to a point in a line parallel with and distant 30 feet west, measured at right angles, from the east line of said northwest quarter of the northeast quarter, said parallel line being the west line of 1st Avenue North; thence south 00°13130" west along said west line, a distance of 548.0 feet to the TRUE POINT OF BEGINNING; thence south 89°58 '30" west a distance of 457.522 feet to a point in the center line of the 10-foot right of way easement for a sewer pipe line heretofore granted to the City of Kent; thence northerly along said center line to a point in a line parallel with and distant 235.0 feet north, measured at right angles, from the last described course; thence north 89°58'30" east a distance of 458.556 feet to said west line; thence south 00°13'30" west along west line a distance of 235 feet, more or less, to the TRUE POINT OF BEGINNING; PARCEL C: That portion of the northwest quarter of the northeast quarter of Section 24, Township 22 North, Range 4 East, W.M. , in King County, Washington, described as follows: Commencing at the northeast corner of said northwest quarter of the northeast quarter; thence west along the north line thereof to a point in a line parallel with and distant 30 feet west, measured at right angles, from the east line of said northwest quarter of the northeast quarter, said parallel line being a northerly production of the west line of First Avenue North; thence south 00013'30" west along said produced west line to a point distant 33 feet south, measured at right angles, from the north line of said northwest quarter of the northeast quarter, said point being the intersection of the west line of First Avenue North and the south line of James (Winner) Street, and the point of beginning; thence continuing south 00°13130" west along said west line, a distance of 280 feet; thence south 89°58'30" west a distance of 899.52 feet to the east line of Fourth Avenue North; thence north along said east line a distance of 280 feet to the south line of James (Winner) Street; thence east along said south line to the point of beginning; EXCEPT that portion thereof condemned in King County Superior Court Cause Number 706251. LEGAL DESCRIPTION, continued: PARCEL D: That portion of Tract X described as follows: Beginning at the most southwesterly corner of the parcel land conveyed by Northwestern Improvement Company to The Borden Company under deed dated April 12, 1956 and recorded under Recording Number 4686725, records of King County, Washington, being a point in the east line of 4th Avenue in the City of Kent; Thence south 0°13'11" west along said east line 18.2 feet; Thence south 72*53130" east 270.58 feet to a point of curve; Thence easterly on a curve to the left with a radius of 776. 62 feet, a distance of 108.07 feet; Thence north 9°08'07" east 22.3 feet to a point of curve from a tangent bearing south 80°51'53" east; Thence easterly on a curve to the left, with a radius of 754.32 feet, a distance of 120.6 feet; Thence north 00*01130" west 12.7 feet, more or less, to the southerly line of the above-mentioned parcel of land; Thence westerly along said southerly line to the point of beginning. Said Tract X described as follows: That portion of the northwest quarter of the northeast quarter of Section 24, Township 22 North, Range 4 East, in King County, Washington, lying west of First Avenue North, east of 4th Avenue North, north of Temperance Street and south of the following described line: Beginning at a point on the west line of First Avenue North 762.45 feet south of the north line of said subdivision; Thence southwesterly and westerly on a curve to the right, radius of 265.44 feet, which is not tangent to said west line, a distance of 203.73 feet to a tangency in a line hereinafter called line "A" ; Thence south 89°58'30" west 226.9 feet; Thence on a curve to the right, radius of 742.0 feet, a distance of 221.77 feet; Thence north 72°53'30" west a distance of 108.4 feet to a point of curve; Thence on a curve to the left, radius 787.0 feet, a distance of 169. 14 feet, more or less, to a point on the east line of 4th Avenue North. EXHIBIT A-2 Map Outlining Premises A-2-1 P 1DRS1DRS22T EXHIBIT B "Hazardous Substances" shall include without limitation: (i) Those substances included within the definitions of "hazardous substances," "hazardous materials," "toxic substances," or "solid waste" in the Comprehensive Environmental Response Compensation and Liability Act of 1980 (42 U.S.C. § 9601 et seq.) ("CERCLA"), as amended by Superfund Amendments and Reauthorization Act of 1986 (Pub. L. 99-499 100 Stat. 1613) ("SARA"), the Resource Conservation and Recovery Act of 1976 (42 U.S.C. § 6901 et seq.) ("RCRA"), and the Hazardous Materials Transportation Act, 49 U.S.C. § 1801 et sec.., and in the regulations promulgated pursuant to said laws, all as amended; (ii) Those substances listed in the United State Department of Transportation Table(49 CFR 172.101 and amendments thereto) or by the Environmental Protection Agency(or any successor agency) as hazardous substances (40 CFR Part 302 and amendments thereto); (iii) Any material, waste or substance which is (A)petroleum, (B) asbestos, (C)polychlorinated biphenyls, (D) designated as a "hazardous substance" pursuant to Section 311 of the Clean Water Act, 33 U.S.C. 1251 et seq. (33 U.S.C. § 1321) or listed pursuant to Section 307 of the Clean Water Act (33 U.S.C. § 1317); (E) flammable explosives; (F)radon gas, (G) lead or lead-based paint, (H)radioactive materials, (I) coal combustion by-products, or (J) urea formaldehyde foam insulation; (iv) Those substances defined as "dangerous wastes," "hazardous wastes" or as "hazardous substances" under the Water Pollution Control Act, RCW 90.48.010 et seg., the Hazardous Waste Management Statute, RCW 70.105.010 et seq., the Toxic Substance Control Act RCW 70.10513.010 et seq., the Model Toxics Control Act, RCW 70.105D.010 et seq. and the Toxic Substance Control Act, 15 U.S.C. Section 2601 et seg., and in the regulations promulgated pursuant to said laws all as amended from time to time; (v) Storm water discharge regulated under any federal, state or local law, ordinance or regulation relating to storm water drains, including, but not limited to, Section 402(p) of the Clean Water Act, 33 U.S.C. Section 1342 and the regulations promulgated thereunder, all as amended from time to time; and (vi) Such other substances, materials and wastes which are or become regulated as hazardous or toxic under applicable local, state or federal law, or the United States government, or which are classified as hazardous or toxic under federal, state, or local laws or regulations, all as amended from time to time. "Release" shall mean releasing, spilling, leaking, pumping, pouring, flooding, emitting, emptying, discharging, injecting, escaping, leaching, disposing or dumping, Hazardous Substances in or into the air, soil, surface water or ground water in, on, about or under the Property. B-1 P\DRS\DRS22T 4 Fs�EASE TYPE OR PRINT ESTATE EXCISE TAX AFFIDAVIT This form is your receipt PLEASE SEE REVERSE CHAPTER 82.45 RCW—CHAPTER 458-61 WAC when stamped by cashier. FOR USE AT COUNTY TREASURER'S OFFICE (Use Form No.84-0001 B for Reporting Transfers of Controlling Interest of Entity Ownership to the Department of Revenue) THIS AFFIDAVIT WILL NOT BE ACCEPTED UNLESS ALL AREAS 1-7 ARE FULLY COMPLETED Name--HORDEN--Cmm-IGAI.,-1D;G r Name CITY—[1F KENT 0 w A DELAWARE CORPORATION `� Street ] Street City/State/Zip City/State/Zip ADDRESS TO SEND ALL PROPERTY TAX RELATED CORRESPONDENCE ALL TAX PARCEL NUMBERS COUNTY TREASURER PLACE ASSESSED VALUE IF TAX EXEMPT Name SAME AS ABOVE GKANI.tt Street 242204-9126-02 242204-9144-00 City/State/Zip 2 4 2i0r$127—01 LEGAL DESCRIPTION OF PROPERTY SITUATED IN 2 4 2 2 0 4—9 010—O 1 15 2 ❑UNINCORPORATED COOUU NTY ❑OR IN CITY OF K E,�1T_ Street Address(if property is improved): LEGAL DESCRIPTION AS SET FORTH IN EXHIBIT "A" ATTACHED HERETO AND BY THIS REFERENCE MADE A PART HEREOF ** Y DEED AS TO PARCELS A, B AND C; QUIT CLAIM DEED AS TO PARCEL D 130,05a;,%C,+Aa &(C— Is this property currently: YES NO Description of personal property included in gross selling price, both tangible(eg; furniture,equipment,etc.)or intangible(eg; goodwill, Classified or designated as forest land? ❑ ❑ agreement not to compete,etc.) Chapter 84.33 RCW Classified as current use land(open space,farm ❑ ❑ and agricultural,or timber)?Chapter 84.34 RCW Exempt from property tax as a nonprofit ❑ ❑ If exemption claimed, list WAC number and explanation. organization?Chapter 84.36 RCW WAC No. (Sec/Sub) Seller's Exempt Reg.No. _____— ___ Receiving special valuation as historic ❑ ❑ Explanationg property?Chapter 84.26 RCW EMINENT DOMAIN Property Type: (]land only ❑land with new building land with previously used building ❑land with mobile home Type of Document 0 timber only ❑building only Date of Document 3QeSa:h 40%at Said. Principal Use: []Apt.(4+unit) ❑residential n timber f-1 agricultural n commercial/industrial Gross Selling Price S 1 i 1 ?7 R n n _ p( L EXHIBIT A The land referred to is situated in the county of King, State of Washington, and described as follows: PARCEL A: That portion of the northwest quarter of the northeast quarter of Section 24, Township 22 North, Range 4 East, W.M. , in King County, Washington, described as follows: Commencing at the northeast corner of said northwest quarter of the northeast quarter; thence west along the north line thereof to a point in a line parallel with and distant 30 feet west, measured at right angles, from the east line of said northwest quarter of the northeast quarter, said parallel line being the west line of 1st Avenue North; thence south 00°13'30" west along said west line a distance of 548.0 feet to the TRUE POINT OF BEGINNING; thence continuing south 00°13'30" west along said west line a distance of 214 .45 feet; thence southwesterly and westerly on a curve to the right, radius of 265.44 feet, which curve is not tangent to said west line, a distance of 203.73 feet to a point of tangency in a line hereinafter called line "A", which bears south 89°58'30" west from a point in said west line south 00°13'30" west, a distance of 289.58 feet from the TRUE POINT OF BEGINNING, said point of tangency being distant 184.73 feet westerly, measured along said line "A" from said west line; thence south 89°58'30" west, a distance of 226.9 feet; thence on a curve to the right, radius of 742.0 feet, a distance of 221.77 feet; thence north 72°53'30" west a distance of 108.4 feet to a point of curve; thence on a curve to the left, radius 787.0 feet, a distance of 169.14 feet, more or less, to a point in the east line of 4th Avenue North, distant 97.38 feet north, measured along said east line, from said line A thence north 00°13'30" east along said east line of 4th Avenue North, a distance of 427.20 feet; thence north 89°58'30" east parallel with said line "A" a distance of 440.964 feet to a point in the centerline of the 10 foot right of way easement for a sewer pipe line heretofore granted to the City of Kent; thence southerly along said center line to a point in a line parallel with and distant 289.58 feet northerly, measured at right angles, from said Line "A" , which point is south 89*58130" west a distance of 457.522 feet from the TRUE POINT OF BEGINNING; thence north 89*58130" east a distance of 457.522 feet to the TRUE POINT OF BEGINNING EXCEPT that portion thereof condemned in King County Superior Court Cause Number 706251. LEGAL DESCRIPTION, continued: PARCEL B: That portion of the northwest quarter of the northeast quarter of Section 24, Township 22 North, Range 4 East, W.M., in King County, Washington, described as follows: Commencing at the northeast corner of said northwest quarter of the northeast quarter; thence west along the north line thereof to a point in a line parallel with and distant 30 feet west, measured at right angles, from the east line of said northwest quarter of the northeast quarter, said parallel line being the west line of 1st Avenue North; thence south 00013'30" west along said west line, a distance of 548.0 feet to the TRUE POINT OF BEGINNING; thence south 89*58130" west a distance of 457.522 feet to a point in the center line of the 10-foot right of way easement for a sewer pipe line heretofore granted to the City of Kent; thence northerly along said center line to a point in a line parallel with and distant 235.0 feet north, measured at right angles, from the last described course; thence north 89°58'30" east a distance of 458.556 feet to said west line; thence south 00*13130" west along west line a distance of 235 feet, more or less, to the TRUE POINT OF BEGINNING; PARCEL C: That portion of the northwest quarter of the northeast quarter of Section 24, Township 22 North, Range 4 East, W.M. , in King County, Washington, described as follows: Commencing at the northeast corner of said northwest quarter of the northeast quarter; thence west along the north line thereof to a point in a line parallel with and distant 30 feet west, measured at right angles, from the east line of said northwest quarter of the northeast quarter, said parallel line being a northerly production of the west line of First Avenue North; thence south 00°13'30" west along said produced west line to a point distant 33 feet south, measured at right angles, from the north line of said northwest quarter of the northeast quarter, said point being the intersection of the west line of First Avenue North and the south line of James (Winner) Street, and the point of beginning; thence continuing south 00°13'30" west along said west line, a distance of 280 feet; thence south 89°58 '30" west a distance of 899.52 feet to the east line of Fourth Avenue North; thence north along said east line a distance of 280 feet to the south line of James (Winner) Street; thence east along said south line to the point of beginning; EXCEPT that portion thereof condemned in King County Superior Court Cause Number 706251. LEGAL DESCRIPTION, continued: PARCEL D: That portion of Tract X described as follows: Beginning at the most southwesterly corner of the parcel land conveyed by Northwestern Improvement Company to The Borden Company under deed dated April 12, 1956 and recorded under Recording Number 4688725, records of King County, Washington, being a point in the east line of 4th Avenue in the City of Kent; Thence south 0*13111" west along said east line 18.2 feet; Thence south 72*53130" east 270.58 feet to a point of curve; Thence easterly on a curve to the left with a radius of 776.62 feet, a distance of 108.07 feet; Thence north 9008'07" east 22.3 feet to a point of curve from a tangent bearing south 80°51'53" east; Thence easterly on a curve to the left, with a radius of 754.32 feet, a distance of 120.6 feet; Thence north 00*01130" west 12.7 feet, more or less, to the southerly line of the above-mentioned parcel of land; Thence westerly along said southerly line to the point of beginning. Said Tract X described as follows: That portion of the northwest quarter of the northeast quarter of Section 24, Township 22 North, Range 4 East, in King County, Washington, lying west of First Avenue North, east of 4th Avenue North, north of Temperance Street and south of the following described line: Beginning at a point on the west line of First Avenue North 762.45 feet south of the north line of said subdivision; Thence southwesterly and westerly on a curve to the right, radius of 265.44 feet, which is not tangent to said west line, a distance of 203.73 feet to a tangency in a line hereinafter called line "A"; Thence south 89°58'30" west 226.9 feet; Thence on a curve to the right, radius of 742.0 feet, a distance of 221.77 feet; Thence north 72°53'30" west a distance of 108.4 feet to a point of curve; Thence on a curve to the left, radius 787.0 feet, a distance of 169.14 feet, more or less, to a point on the east line of 4th Avenue North. Certificate of Non-Foreign Status Name of Transferor: Borden Chemical, Inc., a Delaware corporation Section 1445 of the Internal Revenue Code of 1986, as amended (the "Code"), provides that generally a transferee (buyer) of a "United States real property interest" as defined in section 897 (c) of the Code must withhold tax if the transferor(seller) is a "foreign person" as defined by section 1445 (f) (3) of the Code. To inform the transferee that withholding of tax is not required upon the disposition of a United States real property interest by the Transferor, the undersigned hereby certifies the following on behalf of Transferor: (1) Transferor is not a foreign corporation, foreign partnership, foreign estate (as those terms are defined in the Code and Treasury Regulations); (2) Transferor's U.S. employer identification number is SI-037035(0 ; and (3) Transferor's office address is I QD E. Broad S+- . CoIN it�vS Old 432-15 Transferor understands that this certification may be disclosed to the Internal Revenue Service by transferee and that any false statement contained herein could be punished by fine imprisonment, or both. Under penalties of perjury, I declare that I have examined this certification and to the best of my knowledge and belief, it is true, correct and complete, and I further declare that I have authority to sign this document on behalf of Transferor. BORDEN CHEMICAL, INC., a Delaware corporation Signature: �� Name: M%(ka . Jute Title: r es-de n f C F o Date: K 1200931000041DRSORS_A21 CZ i After Recording Return To: Preston Gates&Ellis LLP 701 Fifth Avenue, Suite 5000 Seattle, Washington 98104-7078 Attn: Diane R. Stokke BARGAIN AND SALE DEED GRANTOR: Borden Chemical Inc., a Delaware corporation GRANTEE: City of Kent, a Washington municipal corporation Legal Description: Abbreviated form: Portion of NW '/4 of NE '/4 524, T22N, R4E, W.M., King County Assessor's Property Tax Parcel Account Number(s): 242204-9126-02 242204-9144-00 242204-9127-01 THE GRANTOR, Borden Chemical Inc., a Delaware corporation, for and in consideration of acquisition under the threat of condemnation, grants, bargains, sells and conveys to the City of Kent, a Washington municipal corporation, the following described real estate, situated in the County of King, State of Washington See Exhibit A attached hereto and incorporated herein by this reference. Subject to and excepting those matters listed in Exhibit B attached hereto and incorporated herein by this reference("Permitted Exceptions"). Dated Z , 2001. Borden Chemical Inc., a Delaware corporation By. Name (Ai' hat ( E. beey Title fre;�denf rCEn STATE OF 0 H 0 ) ss: COUNTY OF 5R AN 9 ri I certify that I know or have satisfactory evidence that is the person who appeared before me, and said person acknowledged that he/she signed this instrument, and acknowledged it is as the Pie s%de a4 r C E 6 of Borden Chemical Inc. to be the free and voluntary act for the uses and purposes mentioned in the instrument. Dated: W 4 f(J/ A„�- � Notary Public BU7 E. �,� . . , -z•r t3 Print Name w My commission expires &1T2eii,nls ' i;.-= e kc�.. (Use this space for notanal staff/seal) -2- PtDRStDRS22W 01/02/02 EXHIBIT A Legal Description The land referred to is situated in the county of King, State of Washington, and described as follows: PARCEL A: That portion of the northwest quarter of the northeast quarter of Section 24, Township 22 North, Range 4 East, W.M., in King county, Washington, described as follows: Commencing at the northeast corner of said northwest quarter of the northeast quarter; thence west along the north line thereof to a point in a line parallel with and distant 30 feet west, measured at right angles, from the east line of said northwest quarter of the northeast quarter, said parallel line being the west line of I"Avenue North; thence south 00°13'30" west along said west line a distance of 548.0 feet to the TRUE POINT OF BEGINNING; thence continuing south 00°13'30" west along said west line a distance of 214.45 feet; thence southwesterly and westerly on a curve to the right, radius of 265.44 feet, which curve is not tangent to said west line, a distance of 203.73 feet to a point of tangency in a line hereinafter called line "A", which bears south 89°59'30" west from a point in said west line south 0093'30" west, a distance of 289.58 feet from the TRUE POINT OF BEGINNING, said point of tangency being distant 184.73 feet westerly, measured along said line"A" from said west line; thence south 89°58'30" west, a distance of 226.9 feet; thence on a curve to the right, radius of 742.0 feet, a distance of 221.77 feet; thence north 72°53'30"west a distance of 108.4 feet to a point of curve; thence on a curve to the left, radius 787.0 feet, a distance of 169.14 feet, more or less, to a point in the east line of 4'h Avenue North, distant 97.38 feet north, measured along said east line, from said line"A"; thence north 00°13'30" east along said east line of 41h Avenue North, a distance of 427.20 feet; thence north 89°58'30" east parallel with said line "A" a distance of 440.964 feet to a point in the centerline of the 10 foot right of way easement for a sewer pipe line heretofore granted to the City of Kent; thence southerly along said center line to a point in a line parallel with and distant 289.58 feet northerly, measured at right angles, from said Line "A", which point is south 89°58'30" west a distance of 457.522 feet from the TRUE POINT OF BEGINNING; A-1 P\DRS%DRS22W O1102102 thence north 89°58'30" east a distance of 457.522 feet to the TRUE POINT OF BEGINNING EXCEPT that portion thereof condemned in King County Superior Court Cause Number 706251. PARCEL B: That portion of the northwest quarter of the northeast quarter of Section 24, Township 22 North, Range 4 East, W.M., in King County, Washington, described as follows: Commencing at the northeast quarter of said northwest quarter of the northeast quarter; thence west along the north line thereof to a point in a line parallel with and distant 30 feet west, measured at right angles, from the east line of said northwest quarter of the northeast quarter, said parallel line being the west line of I"Avenue North; thence south 00°13'30" west along said west line, a distance of 548.0 feet to the TRUE POINT OF BEGINNING; thence south 89°58'30" west a distance of 457.522 feet to a point in the center line of the 10-foot right of way easement for a sewer pipe line heretofore granted to the City of Kent; thence northerly along said center line to a point in a line parallel with and distant 235.0 feet north, measured at right angles, from the last described course; thence north 89°58'30"east a distance of 458.556 feet to said west line; thence south 00°13'30" west along west line a distance of 235 feet, more or less, to the TRUE POINT OF BEGINNING; PARCEL C: That portion of the northwest quarter of the northeast quarter of Section 24, Township 22 North, Range 4 East, W.M., in King County, Washington, described as follows: Commencing at the northeast corner of said northwest quarter of the northeast quarter; thence west along the north line thereof to a point in a line parallel with and distant 30 feet west, measured at right angles, from the east line of said northwest quarter of the northeast quarter, said parallel line being a northerly production of the west line of First Avenue North; A-2 P 1DRS%DRS22W 01/02/02 thence south 00°13'30" west along said produced west line to a point distant 33 feet south, measured at right angles, from the north line of said northwest quarter of the northeast quarter, said point being the intersection of the west line of First Avenue North and the south line of James(Winner) Street, and the point of beginning; thence continuing south 00°13'30"west along said west line,a distance of 280 feet; thence south 89°58'30" west a distance of 899.52 feet to the east line of Fourth Avenue North; thence north along said east line a distance of 280 feet to the south line of James (Winner) Street; thence east along said south line to the point of beginning; EXCEPT that portion thereof condemned in King County Superior Court Cause Number 706251. A-3 P MDRS%DRS22W 01ro2ro2 EXHIBIT B Permitted Exceptions 1. Easement and the terms and conditions thereof Grantee: City of Kent Purpose: Constructing, operating and maintaining a sewer and standard city manholes Recorded: April 9, 1947 Recording Number: 3674629 2. Easement and the terms and conditions thereof: Grantee: Washington Natural Gas Company, a Delaware Corporation Purpose: Maintaining, operating, repairing, altering, replacing and removing gas pipeline Recorded: February 10, 1959 Recording Number: 4995831 3. Agreement and the terms and conditions thereof: By and between: City of Kent and Robert Ramsey et al. Dated: September 11, 1884 Recorded: August 27, 1897 Recording Number: 160080 Regarding: Drainage ditch 4. Right to make necessary slopes for cuts or fills upon property herein described as condemned in King County Superior Court Cause Number 706251. 5. Right to make necessary slopes for cuts or fills upon property herein described as condemned in King County Superior Court Cause Number 708685. B-1 P XDRS\DRS22W 0M2102 r After Recording Return To: PRESTON GATES&ELLIS UP 701 Fifth Avenue, Suite 5000 Seattle, Washington 98104 Attn: Diane R. Stokke QUIT CLAIM DEED Grantor: Borden Chemical Inc., a Delaware corporation Grantee: City of Kent, a Washington municipal corporation Legal Description: Abbreviated Form: Portion of NW V4 of NE '/4 S24, T22N, R 4 E W.M. King County Additional legal on Exhibit A to document Assessor's Tax Parcel ID#: 242204-9010-01 THE GRANTOR, Borden Chemical Inc., a Delaware corporation ("Grantor"), for and in consideration of acquisition under the threat of condemnation, conveys and quitclaims to the City of Kent, a Washington municipal corporation ("Grantee"), the following described real estate, situated in the County of King, State of Washington, together with all after acquired title of the Grantor therein: it As more particularly described on Exhibit A attached hereto and incorporated herein by this reference. Dated 7,16 , 2001. Borden Chemical Inc., a Delaware corporation Name M i c,hn p l E . w ca X Title Pr a s%dent 1, C E o STATE OF 0 W I b ) )ss. COUNTY OF rP A N k l i r11 ) I certify that I know or have satisfactory evidence that 1'( CINAP-k Ic. pace X is the person who appeared before me, and said person acknowledged that he/she signed this instrument, on oath stated that he/she was authorized to execute the instrument and acknowledged it as the PreS%deaf{ a-CE p of Borden Chemical Inc., to be the free and voluntary act of such party for the uses and purposes mentioned in the instrument./ Dated: �{ �/01 -8r 4 . / Notary Public I n""'r E. Print Name D My commission expires Illy ` _ . .. _ , . (Use this space for notarial stamp/seal) —2— P%DRSXDRS22V 01,02/02 EXHIBIT A Legal Description Parcel D: That portion of Tract X described as follows: Beginning at the most southwesterly corner of the parcel land conveyed by Northwestern Improvement Company to The Borden Company under deed dated April 12, 1956 and recorded under Recording Number 4688725, records of King County, Washington, being a point in the east line of 4 Avenue in the City of Kent; Thence south 0°13'11"west along said east line 18.2 feet; Thence south 72°53'30"east 270.58 feet to a point of curve; Thence easterly on a curve to the left with a radius of 776.62 feet, a distance of 108.07 feet; Thence north 9°08'07" east 22.3 feet to a point of curve from a tangent bearing south 80°51'53" east; Thence easterly on a curve to the left,with a radius of 754.32 feet, a distance of 120.6 feet; Thence north 00°01'30" west 12.7 feet, more or less, to the southerly line of the above- mentioned parcel of land; Thence westerly along said southerly line to the point of beginning. Said Tract X described as follows: That portion of the northwest quarter of the northeast quarter of Section 24, Township 22 North, Range 4 East, in King County, Washington, lying west of First Avenue North, east of 4`h Avenue North, north of Temperance Street and south of the following described line: Beginning at a point on the west line of First Avenue North 762.45 feet south of the north line of said'subdivision; Thence southwesterly and westerly on a curve to the right, radius of 265.44 feet, which is not tangent to said west line, a distance of 203.73 feet to a tangent in a line hereinafter called line "A"; Thence south 89°58'30" west 226.9 feet; Thence on a curve to the right, radius of 742.0 feet, a distance of 221.77 feet; Thence north 72°53'30" west a distance of 108.4 feet to a point of curve; Thence on a curve to the left, radius 787.0 feet, a distance of 169.14 feet, more or less, to a point on the east line of 4`h Avenue North. A-1 P,\DRS\DRS22V LIMITED ENGAGEMENT LETTER REGARDING PREPARATION OF DOCUMENTS The law firm of Edwin C. Lagerquist, Inc. , P.S. ( "ECL") has been requested by HORDEN CHEMICAL, INC. , A DELAWARE CORPORATION, Seller and CITY OF KENT, A WASHINGTON MUNICIPAL CORPORATION, Purchaser to prepare the check-marked documents hereinafter described in connection with the real property commonly known as (x) Excise Tax Affidavit LIMITED PREPARATION INFORMATION: The documents shall be consistent with the forms approved by the Washington Supreme Court for preparation by Limited Practice Officers pursuant to APR 12("approved forms") and will be prepared in accordance with the information provided by the parties to the escrow agent, Pacific Northwest Title Company of Washington, Inc. (Pacific Northwest Title) . The parties understand that the only information provided ECL for preparation of the documents will be the legal and personal property descriptions, exceptions to the title, and tax parcel identification numbers provided by Pacific Northwest Title. The documents are to be consistent with the approved forms and are not tailored to specific fact situations which are in variance with those covered by the approved forms. LIMITED SCOPE OF REPRESENTATION: The scope of legal representation by ECL is limited to the preparation of the documents and the parties understand that ECL will not be interviewing the parties and shall in no manner undertake to assist or to render legal advice in connection with this transaction or the above described documents. In exchange for the documents, the parties shall pay a fee to ECL. This amount will be allocated between the parties as they may agree and disbursed from escrow directly to ECL. COMMON REPRESENTATION: The documents prepared by ECL will affect the legal rights of both Seller and Purchaser and each by their signatures below hereby consent to the common representation described herein subject to the specified limitations. INDIVIDUAL LEGAL REPRESENTATION: The parties understand that their interests in the documents may differ and that each of the parties has a right to be represented by their own attorney, including the right to have their own attorney prepare the documents, and further, to have their attorney present at the closing of this transaction. Except as to the preparation of documents as specified herein, ECL is not acting as an advocate or representative of either of the parties. >s ACKNOWLEDGEMENT: The undersigned Seller and Purchaser hereby acknowledge that PRIOR TO THE EXECUTION OF ANY DOCUMENTS IN CONNECTION WITH THIS TRANSACTION, THEY: 1) HAVE READ THE TERMS OF THIS DOCUMENT; 2) UNDERSTAND THE TERMS OF THIS DOCUMENT; and 3) HAVE HAD AMPLE OPPORTUNITY TO OBTAIN INDEPENDENT LEGAL COUNSEL TO ASSIST THEM IN THIS TRANSACTION. MISCELLANEOUS: This document may be executed in one or more counterparts, and all of the counterparts shall constitute one and the same agreement, notwithstanding that all parties hereto are not signatories to the same or original counterpart. Facsimile transmission of any signed document, and retransmission thereof, shall be the same as delivery of an original. At the request of either Seller, Purchaser, Pacific Northwest Title, or ECL, the parties will confirm facsimile transmitted signatures by signing an original document. SELLER: BORDEN CHEMICAL, INC. A DELAWARE CORPMUkTION Dated: BY: pl,chcCt £ Mar ITS: PIde„+4- C£0 PURCHASER: CITY OF KENT, A WASHINGTON MUNICIPAL CORPORATION Dated: BY: ITS: