HomeMy WebLinkAboutEC17-206 - Amendment - Marquee on Meeker - Phase I - Amendment to Real Eastate Purchase & Sale Agreement - 09/20/2017 � ' m le,i
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CONTRACT COVER SHEET
This is to be completed by the Contract Manager prior to submission
to City Clerks Office. All portions are to be completed.
If you have questions, please contact City Clerk's Office.
Vendor Dame: Marquee on Meeker LLC
Vendor Dumber:
JD Edwards Number
Contract Dumber: i I
This is assigned by City Clerk's Office
Project Dame: Mar uee on Meeker LLC Purchase of Par 3
Description: El Interlocal Agreement El Change Order 0 Amendment El Contract
Z Other: Amendment to Real Estate Purchase and Sale Agreement
Contract Effective Date: 9/20/1.7' Termination Date:
Contract renewal Notice (Gays):
Dumber of days required notice for termination or renewal, or amendment
Contract. Manager: Burt Hanson Department: ECD
Contract Amount:
Approval Authority: ❑ Department Director Z Mayor Z City Council
Detail: (i.e. address, location, parcel number, tax id, etc.):
Amendment to PSA to terminate all contingencies.
As of: 08/ 7/14
AMENDMENT TO REAL ESTATE PURCHASE AND SALE AGREEMENTWITH
LEASE/OPTION TO PURCHASE
This Amendment to Real Estate Purchase and Sale Agreement with Lease/Option to Purchase
(the "Amendment") is dated as of September 20, 2017, and is made by and between the CITY OF KENT
("Seller"), and MARQUEE ON MEEKER LLC ("Buyer"'). This Amendment amends the terms of the
Real Estate Purchase and Sale Agreement with Lease/Option to Purchase between Buyer and Seller dated
as of May 5, 2017 (the "Agreement"). Capitalized terms riot defined in this Amendment shall have the
meaning given to them in the Agreement.
For valuable consideration, the receipt of which is acknowledged, Seller and Buyer agree as
follows:
I Buyer and Seller approve the form of the Option to Repurchase Agreement attached
hereto as Exhibit A, the Completion and Performance Guaranty attached hereto as Exhibit B, the Limited
Sale and Transfer Restriction attached hereto as Exhibit C and the Lease (with Option to Purchase)
attached hereto as Exhibit D. Buyer and Seller agree to waive the mutual contingency set forth in Section
6.3 of the Agreement for a development schedule satisfactory to Buyer and Seller for Buyer's submittal of
,applications for, and for Seller's processing and approval of, entitlements and permits required for
Buyer's development of the Property; provided, however, Buyer and Seller agree to work cooperatively
during the next thirty (30) day period to complete the development schedule. Accordingly, Mutual
execution of this Amendment by Buyer and Seller constitutes the waiver by each of Buyer and Seller of
the mutual contingency contained in Section 6.3 of the Agreement, and Buyer hereby authorizes Escrow
Agent to release the Earnest Money Deposit to Seller.
2. Mutual execution of this Amendment shall constitute Buyer's notice to Seller that Buyer's
contingencies contained in Sections 6.1 and 6.2 of the Agreement are satisfied.
Except as modified by this A-mendment, the terms of the Agreement remain in full force and
effect. In case of a conflict between the terms of this Amendment and the tentis of the Agreement, the
terms of this Amendment shall control, "this Amendment may be signed in one or more counterparts,and
by electronic mail or facsimile copy, and each counterpart, facsimile copy and electronic mail copies so
signed shall be deemed an original hereof,
SELLER:
CITY OF KENT
By:
BUVER�
MARQUEE N MEEKEA-t C
By: The Mis ing Links LC, is manager
............
By:
Its:
2841186 09/20117 I psa ainendaient
treadkHADRiverbend Joint venture
AMENDMENT TO REAL ESTATE PURCHASE AND SALE AGREEMENTWITH
LEASE/OPTION TO PURCHASE
This Amendment to [Zeal Estate Purchase and Sale Agreement with [..case/Option to Purchase
(the "Amendment") is dated as of'September 20, 2017, and is made by and between the CITY OF Kf,'INT
("Seller"), and MARQUEE ON ME'EKE'R LLC ("131.1yCr"), '['his Amendment amends the terms of the
Real Estate Purchase and Sale Agreement with Lease/Option to Purchase between Buyer and Seller dated
as ol'May 5, 2017 (the "Agreement"). Capitalized terms not defined in this Anienchrient shall have the
meaning given to them in the Agreement.
For valuable consideration, the receipt of which is acknowledged, Seller and Buyer agree as
follows:
I. BUYU and Seller approve the form of the Option to Repurchase Agreement attached
hereto as"l",xhibit A, the Completion and Pcrformance Guaranty attached hereto as Exhibit B, the I.Jrnited
Sale and Transfer Restriction attached licreto as Exhibit C and the Lease (with Option to Purchase)
attached hereto as Exhibit D. Buyer and Seller agree to waive the mutual contingency set forth in Section
6.3 of the Agreement for a development schedule satisfactory to Buyer and Seller f6r Buyer's Submittal of
applications for, and for Seller's processing and approval of', entitlements and permits required For
Buyer's development of the Property; provided, however, Breyer and Seller agree to %vork cooperatively
during the next thirty (30) clay period to cornplcte the development schedule. Accordingly, mutual
execution of this Amendment by Buyer and Seller constitutes the waiver by each Of'Buyer and Seller of
the mutual contingency contained in Section 6.3 of the Agreement, and Buyer hereby authorizes Escrow
Agent to release the Earnest Money Deposit to Seller.
1 uvIutual execution of this Amendment shall COIIStitUte Buyer's notice to Seller that Buyer's
contingencies contained in Sections 6.1 and 6.2 of the Agreement are satisfied.
['xcept as modified by this Amendment, the terms of the Agreement remain in full force and
effect. In case of a conflict between the terms of"this Arnerichrient and the terms of the Agreement, the
terms of this Amendment shall control. ']'his Amendment may be signed in one or more counterparts, and
by electronic mail or facsimile copy, and each counterpart, facsimile copy and electronic: mail copies so
signed shall be deemed an original hereol'.
SELLER:
CITY OF KENT
13y:
BUYER:
MARQUEE ON MEEKER LLC
By: The Missing I,inks LLC, its manager
By:
Its,:
2841/86 09120/17 psa amendmcnn
IreacNIALARiverhend Jonit Venture
AMENDMENT TO REAL ESTATE PURCHASE AND SALE AGREEMENT WITH
LEAS E/OPTIONTO PURCHASE
This Amendment to Real Estate Purchase and Sale Agreement with Lease/Option, to
Purchase (the "Arriendinerit") is dated as of September 20, 2017, and is made by and between the
CITY OF KFNT ("Seller"), and MARQUEE ON MEEKER LLC ("Buyer"). This Amendment
amends the terms of the Real Estate Purchase and Sale Agreement with Lease/Option to
Put-chase between Buyer and Seller dated as of May 5, 2017 (the "Agreement"). Capitalized
terms not defined in this Amendment shall have the meaning given to them in the Agreement.
For valuable consideration, the receipt of which is acknowledged, Seller and Buyer agree
as follows:
1. Buyer and Seller approve the form of the Option to Repurchase Agreement
attached hereto as Exhibit A, the Completion and Performance Guaranty attached hereto as
Exhibit B, the Limited Sale and 'transfer Restriction attached hereto as Exhibit C and the Lease
(with Option to Purchase) attached hereto as Exhibit D. Buyer and Seller agree to waive the
mutual contingency set forth in Section 6.3 of the Agreement for a development SCIACdUle
satisfiactory to Buyer and Seller fior Buyer's Submittal of appliCILtions for, and for Seller's
processing and approval of, entitlements and permits required for Buyer's development of the
Property; provided, however, Buyer and Seller agree to work cooperatively during the next thirty
(30) day period to complete the development schedule. Accordingly, mutual execution of this
Amendment by Buyer and Seller constitutes the waiver by each of Buyer and Seller of the
mutual contingency contained in Section 6.3 of the Agreement, and Buyer hereby authorizes
Escrow Agent to release the Earnest Money Deposit to Seller.
2. Mutual execution or this Amendment shall constitute Buyer's notice to Seller that
Buyer's contingencies contained in Sections 6.1 and 6.2 of the Agreement are satisfied.
Except as modified by this Amendment, the terms of the Agreement rcrilaill in full force
and effect. In case of a conflict between the terms of this Amendment and the terms of the
Agreement, the terms or this Amendment shall control. This Amendment may be signed in one
or more counterparts, and by electronic inail or facsimile copy, and each counterpart, facsimile
copy and electronic mail copies so signed sliall be deemed all original hereof.
SELLER:
CITY 0 V KE NT
13y:
2841/86 09J20/17 psa amendment v2
trea&HALARivettend Joint Venture
BUYER:
MARQUEE Q MEEKE ,>C
By: The Missi g�i s,LI-C, lits manager
By.
Its: ,
21141;86 09 20,/17 -2. pt a an�eao molt v2
(react FIAL,li.ivalwmi Joint ventme
Exhibit A
Option to Repurchase Agreement
[SEE ATTACHED]
2841/8609/20/17 EXHIBIT A psa amendment
treadlHAL\Riverbend Joint Venture
Property may commence, in Buyer's discretion, not later than 12 months after the Effective Date.
Commencement of Construction shall not include preliminary inspections, borings, test, or
surveys needed to evaluate the feasibility or method of installing any improvement or work,
activities to secure the Properties, construction staging, initial grading, or site preparations.
1.2 "Development Agreement" means that certain Marquee on Meeker
Project Development Agreement, by and between Seller and Buyer related to the Project, as
approved by the City of Kent Council on August 15, 2017, and effective as of August 23, 2017.
1.3 "Force Majeure" means an act of God or the elements, extreme or severe
weather conditions, explosion, fire,epidemic, landslide, mudslide, sabotage, terrorism, lightning,
earthquake, flood or similar cataclysmic event, an act of public enemy, war, blockade, civil
insurrection, riot, civil disturbance or strike or other labor difficulty suffered by a party beyond
the reasonable control of such party. Financial cost alone or as the principal factor shall not
constitute grounds for a claim of Force Majeure. The affected party shall use commercially
reasonable efforts to avoid or remove such causes of nonperformance, to mitigate the duration of
any delay in performance, and shall continue performance hereunder to the extent permissible by
the event of Force Majeure or whenever such causes are removed. A Force Majeure shall not
excuse any obligation to pay any amounts when due and owing. A party claiming a delay due to
an event of Force Majeure shall give written notice to the other party of the circumstances
supporting such claim within five (5) business days after the impact of the event of Force
Majeure is reasonably known.
1.4 "Infrastructure Permits"means all grade, fill and mainline civil
construction permits for the Phase 1 Property and the Phase 2 Property on-site and off-site public
and private mainline infrastructure, including water, storm water, sanitary sewer utilities and
traffic/pedestrian improvements, and including all "Meet Me on Meeker" improvements for the
Phase l Property and the Phase 2 Property, and including, without limitation, permits for the
Phase I Property geo-piers and the Phase I podium building foundation permit.
1.5 "Person" means any individual, sole proprietorship, limited partnership,
joint venture, unincorporated organization, institution, partnership, corporation, association,
trust, limited liability company, or other legal entity.
1.6 "Project" means the Phase 1 Property, Phase 2 Property and Project
Improvements.
1.7 "Project Improvements" means all improvements and on-site and off-site
utility and other infrastructure improvements contemplated and permitted under the
Development Agreement for the full development of the Properties.
1.8 "Repurchase Price" means:
1.8.1 In the event Seller exercises the Right of Repurchase under Section
or Section 2(ii), an amount equal to the purchase price paid by Buyer to Seller for the
Phase 1 Property, minus Seller's cost to cure or remove any liens, encumbrances or other
2841/86 09/12/17 -2- Option to Repurcbase Agreement v4
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matters that exist on title to the Phase I Property or Phase 2 Property that did not exist
when title to the Phase 1 Property originally transferred to Buyer.
1.8.2 In the event Seller exercises the Right of Repurchase under Section
2 iii , an amount equal to the greater of: (X) the appraised fair market value of the Phase
1 Property, in its "as is" condition as of the date of Seller's exercise the Right to
Repurchase, including the value of all permits, entitlements, agreements (including the
Development Agreement), plus the value, if any, of installed infrastructure and
improvements constructed on the Phase I Property as of the date of Seller's exercise the
Right to Repurchase as certified by an agreed-upon licensed independent MAI appraiser,
and (Y) the appraised fair market value of the Phase 1 Property in a vacant, "raw" and
unimproved condition as of the date of Seller's exercise of the Right to Repurchase,
including the value of all permits, entitlements, agreements (including the Development
Agreement) as certified by an agreed-upon licensed independent MAI appraiser. In the
case of either X or Y, the Repurchase Price shall be minus Seller's cost to cure or remove
any liens, encumbrances or other matters that exist on title to the Phase 1 Property or
Phase 2 Property that did not exist when title to the Phase 1 Property originally
transferred to Buyer.
2. RIGHT TO REPURCHASE. If (i) all of the Infrastructure Permits have not
been picked up and paid for by Buyer within fifteen (15) calendar days of the later of: (1) the
date Seller notifies Buyer that the last of the Infrastructure Permits are ready for issuance or (2)
the Effective Date (the "Outside Infrastructure Permits Date"); (ii) Buyer fails to Commence
Construction within thirty (30) calendar days of the later of: (1) the date Buyer picks up and
pays for the last of the Infrastructure Permits or (2) the Effective Date (the "Outside
Construction Commencement Date"); or (iii) construction of the Project is stopped in excess
of ninety (90) consecutive days, subject to Force Majeure, for the period following Buyer's
Commencement of Construction and extending until the date on which Buyer provides
reasonable written evidence to Seller that Buyer has paid at least Fifteen Million Dollars
($15,000,000) in connection with Buyer's purchase, financing, design, engineering, entitlement,
permitting, and construction of the development on the Phase 1 Property and the Phase 2
Property, then, in the case of each of subsection (i), (ii) and/or (iii), Seller shall have the right, in
Seller's sole discretion, at any time thereafter, to purchase the Project and to terminate the Phase
2 Lease Agreement (the "Right to Repurchase") for the Repurchase Price, which Right to
Repurchase must be exercised by written notice delivered to Buyer, in the event of subsection (i)
above, after the Outside Infrastructure Permits Date and before all of the Infrastructure Permits
have been picked up and paid for by Buyer; in the event of subsection (ii) above, after the
Outside Construction Commencement Date and before Commencement of Construction; and in
the event of subsection (iii) above, after construction of the Project has been stopped in excess of
ninety (90) consecutive days, subject to Force Majeure. If the Right to Repurchase has not been
previously exercised by Seller, the Right to Repurchase shall expire on the earlier of following
(the "Repurchase Right Expiration Date"): (a) the date on which Buyer provides reasonable
written evidence to Seller that Buyer has paid at least Fifteen Million Dollars ($15,000,000) in
connection with Buyer's purchase, financing, design, engineering, entitlement, permitting, and
construction of the development on the Phase 1 Property and the Phase 2 Property and (b) ten
(10)years after the Effective Date.
2841/86 09/12/17 -3- Option to Repurchase Agreement v4
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3. DETERMINATION OF REPURCHASE PRICE.
3.1 In the event Seller exercises the Right of Repurchase under Section 26) or
Section 26i), within thirty (30) days, Seller shall send Buyer a determination of the Repurchase
Price together with Seller's calculation of the cost to cure or remove any liens, encumbrances or
other matters that exist on title to the Phase 1 Property or Phase 2 Property that did not exist
when title to the Phase I Property originally transferred to Buyer, together with supporting
documentation.
3.2 In the event Seller exercises the Right of Repurchase under Section 20ii),
within thirty (30) days: (a) Seller shall send to Buyer, Seller's calculation of the cost to cure or
remove any liens, encumbrances or other matters that exist on title to the Phase 1 Property or
Phase 2 Property that did not exist when title to the Phase 1 Property originally transferred to
Buyer and (b) the parties shall retain a licensed independent MAI appraiser to determine the
Repurchase Price, which determination shall be made by the MAI appraiser within ten (10)
business days after such MAI appraiser is retained, unless the parties agree to a longer time
period. The determination of the MAI appraiser shall be binding on the parties and non-
appealable absent manifest error. The fees and costs of the MAI appraiser shall be paid by
Buyer. Within thirty (30) days after the determination of the Repurchase Price by the MAI
appraiser is provided to the parties, Seller shall have the right to elect by written notice to Buyer,
in Seller's discretion, to terminate its election to exercise the Right of Repurchase by written
notice to Buyer. If Seller elects to terminate its election to exercise the Right of Repurchase by
written notice to Buyer, Seller's Right of Repurchase shall be deemed terminated and null and
void. If Seller does not elect to terminate its election to exercise the Right of Repurchase, the
parties shall close the sale of the Project in accordance with Section 4 below.
4. TRANSFER PROJECT. if Seller exercises the Right to Repurchase and does
not elect to terminate its election to exercise the Right of Repurchase under Section 3.2 above,
then:
4.1 The closing shall occur on the date that is ninety (90) days after the
determination of the Repurchase Price is delivered to the parties (or the next business day if such
date falls on a Saturday, Sunday or holiday) (the "Repurchase Closing Date").
4.2 On the Repurchase Closing Date, Buyer shall (i) convey title to the
Properties and the Project to Seller (or to any Person designated by Seller); (ii) assign to Seller
(or to any Person designated by Seller), without additional compensation (to the extent
assignable) and without representation or warranty, all of Buyer's right, title and interest in and
to all development approvals (including the Development Agreement) and all other permits,
entitlements, licenses, approvals, plans, specifications, studies, condominium documents, and
similar documents and materials associated with the Project; (iii) at Buyer's sole cost, remove all
liens, encumbrances and other matters that exist on title to the Properties and the Project that did
not exist when title thereto was originally conveyed by Seller to Buyer (including, without
limitation, any liens in favor of any construction lender) except those encumbrances, easements,
covenants and other matters that are required under the short plat, the Development Agreement
2841/86 09/12/17 -4- Option to Repurchase Agreement v4
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or other approvals related to Buyer's development of the Phase 1 Property and Phase 2 Property
in accordance with Seller's requirements; and (iv) execute and deliver such other documents,
certificates and instruments reasonably necessary in order to effectuate the repurchase described
herein or otherwise customarily delivered in connection with the conveyance of property and
improvements in King County, Washington (including a closing statement, excise tax affidavits,
escrow instructions, and affidavits and documents required by any title or escrow company).
Buyer shall pay all closing costs incurred in connection with Seller's repurchase of the Properties
and the Project hereunder.
4.3 On the Repurchase Closing Date, Seller shall pay the Repurchase Price
into escrow with a reputable title insurance company with instructions to release the Repurchase
Price to Buyer upon satisfaction of the conditions set forth in Section 4.2 above and Section 5
below and such other reasonable conditions as Seller may request.
4.4 The deed and other conveyance and assignment documents will be in
substantially the same form as used to originally convey the Properties and Project from Seller to
Buyer.
5. CLOSING COSTS RELATED TO REPURCHASE. At closing, Buyer shall
pay (or, at Seller's election, such amounts will be paid by Seller or the title company closing the
repurchase and deducted from the Repurchase Price due to Buyer except to the extent previously
deducted from the Repurchase Price) all of the following (collectively, the "Buyer Repurchase
Costs"): (i) all excise taxes and sale, use and personal property taxes payable in connection with
the conveyance, transfer and assignment of the Properties and the Project; (ii) the cost of
removing all liens, encumbrances and other matters on title to the Properties and/or the Project
(including, without limitation, removing all deeds of trust, lines and encumbrances in favor of
any construction lender); (iii) all real estate taxes and assessments and utilities costs related to
any period of time prior to the Repurchase Closing Date; and (iv) all reasonable attorneys' and
consultants' fees, costs and expenses and any other out-of-pocket costs incurred by Seller in
connection with exercising or enforcing the Right to Repurchase and repurchasing the Properties
and the Project. To the extent that the Buyer Repurchase Costs exceed the Repurchase Price,
Buyer shall immediately pay such deficiency to Seller in immediately available funds. Buyer
shall indemnify, defend and hold harmless Seller from and against the Buyer Repurchase Costs
and any associated liabilities, claims, damages and expenses (including reasonable attorneys'
fees and costs) to the extent exceeding the Repurchase Price due to Buyer under this Agreement.
6. NEGATIVE PLEDGE. Until the Repurchase Right Expiration Date, Buyer
shall not, and shall not have right to, grant, create, incur, allow, permit, assume, or suffer to exist
any Lien, of any kind or nature, on the Properties and/or the Project or any portion thereof. For
purpose of this Section 6, "Lien" means any lease, sublease, mortgage, deed of trust, security
interest, pledge, assessment, charge, assignment, hypothecation, encumbrance, attachment,
garnishment, execution, mechanics', or other voluntary or involuntary lien upon or affecting all
or any portion of the Properties or the Project, except (a) liens for taxes which are not delinquent
or which remain payable without penalty, (b) dedications, easements, rights-of-way, and other
similar Project-related encumbrances and agreements contemplated by the Development
Agreement, and (c) commercial leases for individual commercial spaces to be constructed in the
2841/86 09/12/17 -5- Option to Repurchase Agreement v4
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portion of the Project located on the Phase 1 Property (with tenants that are not affiliated with
nor related to Buyer or any of its principals or any affiliates or subsidiaries of the Buyer, any of
its principals or their family members) that expressly contain a unilateral termination right in
favor of Seller(without reimbursement or payment of any penalties, fees or other amounts to the
commercial tenant of any terminated commercial lease) if Seller closes a repurchase of the
Property pursuant to Seller's Right to Repurchase. In the event Seller exercises the Right to
Repurchase, on the closing of the repurchase, without any payment to the holder of any Lien or
interest in any Lien, each Lien shall be deemed to be automatically released, reconveyed,
terminated, and removed from the Properties and the Project and, without limiting the foregoing,
each holder of any Lien or interest any Lien shall, at the request of Seller, provide any
documents requested by Seller to fully document such release, reconveyance, termination, and
removal of its interest and/or the Lien.
7. AUTHORIZATION. The individuals executing this Agreement each warrant
and represent that this Agreement was duly authorized by all individuals or entities whose
authorization was required for this Agreement to be effective and binding on Buyer.
8. SUCCESSORS AND ASSIGNS. Buyer hereby agrees and declares that all of
the Properties and the Project shall be held, sold, leased, used, and conveyed subject to the terms,
covenants, conditions, and restrictions in this Agreement (the "Covenants"). The Covenants
shall inure to the benefit of Seller and its successors and assigns; shall burden the Properties and
the Project; shall run with the land; and shall apply to and be binding upon all parties now or
hereafter having or acquiring any right, title, or interest in the Properties and/or the Project or any
part thereof and their heirs, successors and assigns.
9. NOTICES. Unless applicable law requires a different method of giving notice,
any and all notices, demands or other communications required or desired to be given hereunder
by any party (collectively, "notices") shall be in writing and shall be validly given or made to
another party if delivered either personally or by Federal Express or other overnight delivery
service of recognized standing, or if deposited in the United States Mail, certified, registered, or
express mail with postage prepaid, or if sent by electronic mail. If such notice is personally
delivered, it shall be conclusively deemed given at the time of such delivery. If such notice is
delivered by Federal Express or other overnight delivery service of recognized standing, it shall
be deemed given the next business day after the deposit thereof with such delivery service,
postage prepaid. If such notice is mailed as provided herein, such shall be deemed given two (2)
business days after the deposit thereof in the United States Mail, postage prepaid. If such notice
is given by electronic mail, it shall be deemed given on the date shown on the electronic
confirmation of transmission. Each such notice shall be deemed given only if properly addressed
to the party to whom such notice is to be given as follows:
Seller: City of Kent
220 Fourth Avenue South
Kent, WA 98032
Attn: Tom Brubaker and Kurt Hanson
Email: trubaker@kentwa.gov
khanson@kentwa.gov
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With a copy to: Foster Pepper PLLC
I l 1 l Third Avenue, Suite 3000
Seattle, WA 98101-3299
Attn: Beth Clark
Email: beth.clark@foster.com
Buyer: Marquee on Meeker LLC
c/o Landmark Development Group
2711 West Valley Highway North, Suite 200
Auburn, WA 98001
Attn: Brett Jacobsen
Email: bjacobsen@fnw-inc.com
With a copy to: Marquee on Meeker LLC
c/o HAL Real Estate Inc.
2025 First Avenue, Suite 700
Seattle, WA 98121
Attn: Jonathan Manheim
Email: jmanheim@halrealestate.com
and: Alston Courtnage & Bassetti LLP
1420 51h Avenue, Suite 3650
Seattle, WA 98101-4011
Attn: Tom Read
Email: tread@alcourt.com
Any party hereto may change its address for the purpose of receiving notices as herein
provided by a written notice given in the manner aforesaid to the other party hereto.
10. SUBORDINATION OF LIENS AND INTERESTS. Any Lien or interest now
or hereafter placed upon or granted in the Properties and/or the Project, or any portion thereof,
including any amendments, replacements, renewals and extensions thereof, shall be subject to
and subordinate to this Agreement, as the same may be amended from time to time, including,
without limitation, subject to and subordinate to Seller's rights and remedies under this
Agreement.
11. AMENDMENT, WAIVER. No modification, termination or amendment of this
Agreement may be made except by written agreement of the parties. No failure by Seller or
Buyer to insist upon the strict performance of any covenant, agreement, or condition of this
Agreement or to exercise any right or remedy shall constitute a waiver of any such breach or any
other covenant, agreement, term or condition. 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.
12. HEADINGS; ENTIRETY. The article and paragraph headings of this
Agreement are for convenience only and in no way limit or enlarge the scope or meaning of the
language hereof. This Agreement embodies the entire agreement between the parties and
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supersedes all prior agreements and understandings relating to the subject matter hereof.
13.NO JOINT VENTURE; NO THIRD PARTY BENEFICIARY. 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.
14. COSTS AND EXPENSES. In the event of any lawsuit, mediation, arbitration or
legal proceeding is brought to enforce any of the terms hereof, each party shall be responsible for
its own costs and expenses incurred in connection with such action or proceeding(including any
appeals therefrom) including its own attorneys' and court fees and costs.
15. SEVERABILITY. If any one or more of the provisions of this Agreement, or the
applicability of any such provision to a specific situation, shall be held invalid or unenforceable,
such provision shall be modified to the extent necessary to make it or its application valid and
enforceable, and the validity and enforceability of all other provisions of this Agreement and all
other applications of any such provision shall not be affected thereby.
16.CONSTRUCTION. Seller and Buyer acknowledge that it and its
counsel have reviewed and revised this Agreement and that the rule of
construction to the effect that any ambiguities are to be resolved against the
drafting party shall not be employed in the interpretation of this Agreement
(including the exhibits) or any amendments thereto, and the same shall be
construed neither for nor against Seller or Buyer, but shall be given a
reasonable interpretation in accordance with the plain meaning of its terms
and the intent of the parties.
17. GOVERNING LAW; JURISDICTION; WAIVER OF JURY TRIAL. This
Agreement shall be governed by and construed in accordance with the internal laws of the state
of Washington. The venue of any judicial proceedings related to this Agreement shall be in
Kent, Washington, unless otherwise mutually agreed in writing by the parties. Each party
irrevocably submits to the exclusive jurisdiction of the federal or state courts located in Kent,
Washington. EACH PARTY WAIVES TO THE FULLEST EXTENT PERMITTED BY LAW
TRIAL BY JURY OF ALL DISPUTES ARISING OUT OF OR RELATING TO THIS
AGREEMENT.
18. TIME. "Day" as used herein means a calendar day and "business day" means
any day on which national banks in the location where the Properties are located are generally
open for business. Unless otherwise specified, in computing any period of time described herein,
the day of the act or event after which the designated period of time begins to run is not to be
included and the last day of the period so computed is to be included at, unless such last day is a
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Saturday, Sunday or legal holiday for national banks in the location where the Properties are
located, in which event the period shall run until the end of the next day which is neither a
Saturday, Sunday, or legal holiday. The last day of any period of time described herein shall be
deemed to end at 5:30 p.m. (Pacific), Time is of the essence in the performance of this
Agreement.
19. MEMORANDUM. Concurrently with execution of this Agreement, Buyer will
execute and deliver to Seller a memorandum of this Agreement in a form required by Seller, duly
executed, acknowledged and in recordable form (together with any necessary excise tax
affidavits or other transfer tax forms). Seller shall have the right to record the memorandum
against the Project at Buyer's sole cost and expense (including the payment of any required
excise taxes). Upon Buyer's request on or after the Repurchase Right Expiration Date, Seller
will promptly execute and record a full termination of any memorandum of this Agreement that
is recorded.
20. EXECUTION. This Agreement may be executed in counterparts and, when
counterparts of this Agreement have been executed and delivered by both parties, this Agreement
shall be fully binding and effective, as if both parties had executed and delivered a single
counterpart of this Agreement. Without limiting the manner in which execution of this
Agreement may be accomplished, execution by either party may be effected by facsimile
transmission of a signature page of this Agreement executed by such party. Any party who
effects execution by facsimile transmission of a signature page shall also promptly deliver to the
other party an original counterpart signed by such party, but the failure of any party to furnish
such original counterpart shall not invalidate the execution of this Agreement effected by
facsimile transmission. This Agreement shall not be binding upon or effective as to either Buyer
or Seller until it has been executed by both Buyer and Seller.
[signatures on following page]
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IN WITNESS WHEREOF, the parties have executed this Option to Repurchase
Agreement effective as of the Effective Date first hereinabove written.
SELLER: MARQUEE ON MEEKER LLC,
a Washington limited liability company
By: The Missing Links LLC,
a Washington limited liability company,
its Manager
By:
Name:
Its:
BUYER: CITY OF KENT,
a Washington municipal corporation
By:
Name:
Its:
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EXHIBIT A-1
TO
OPTION TO REPURCHASE AGREEMENT
Legal Description of Phase 1 Property
All that certain real property in the County of King, State of Washington, described as
follows:
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EXHIBIT A-2
TO
OPTION TO REPURCHASE AGREEMENT
Legal Description of Phase 2 Property
All that certain real property in the County of King, State of Washington, described as follows:
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Exhibit B
Completion and Performance Guaranty
[SEE ATTACHED]
2841/8609/20/17 EXHIBIT B psa amendment
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COMPLETION AND PERFORMANCE GUARANTY
THIS COMPLETION AND PERFORMANCE GUARANTY (this "Guaranty") is made
and given effective as of , 201_ (the "Effective Date"), by FNW Inc., a
Washington corporation ("Guarantor"), to and in favor of CITY OF KENT, a Washington
municipal corporation (`Seller").
RECITALS
A. Seller and Marquee on Meeker LLC, a Washington limited liability company
(`Buyer") entered into a Real Estate Purchase and Sale Agreement with Lease/Option to
Purchase dated as of May 5, 2017 (the "Purchase and Sale Agreement"), for the sale by Seller,
and the purchase by Buyer, of certain real property located in King County, Washington, legally
described on Exhibit A-I attached hereto (the "Phase 1 Property") and for the lease with option
to purchase by Seller, as landlord, and the lease with option to purchase by Buyer, as tenant, of
certain adjoining real property located in King County, Washington, legally described on Exhibit
AA=2 attached hereto (the "Phase 2 Property"). The Phase I Property and the Phase 2 Property
are collectively referred to herein as the "Properties."
B. Concurrently with the execution of this Guaranty, Seller is selling the Phase 1
Property to Buyer pursuant to the terms of the Purchase and Sale Agreement.
C. Concurrently with the execution of this Guaranty, Seller is also leasing the Phase
2 Property to Buyer pursuant to the terms of that certain Lease (with Option to Purchase) of even
date herewith by and between Seller and Buyer(the"Phase 2 Lease Agreement").
D. As a condition to the sale of the Phase 1 Property and lease of the Phase 2
Property by Seller to Buyer, Seller required Guarantor to enter into this Guaranty.
E. Guarantor acknowledges that Guarantor will receive a direct or indirect material
benefit from the sale of the Phase 1 Property, and lease of the Phase 2 Property, to Buyer and
therefore is willing to enter into and provide this Guaranty.
F. Except where otherwise provided in this Guaranty, all initially-capitalized terms
used herein shall have the meanings ascribed to them in the Purchase and Sale Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the sale and lease of the Properties by Seller to
Buyer and for other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, Guarantor, for itself, its successors and assigns, hereby covenants and
agrees as follows:
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1. DEFINITIONS. For purposes of this Guaranty:
1.1 "Development Agreement" means that certain Marquee on Meeker
Project Development Agreement, by and between Seller and Buyer related to the Project, as
approved by the City of Kent Council on August 15, 2017, and effective as of August 23, 2017.
1.2 "Person" means any individual, sole proprietorship, limited partnership,
joint venture, unincorporated organization, institution, partnership, corporation, association,
trust, limited liability company, or other legal entity.
1.3 "Phase 1 Project Improvements" means all improvements contemplated
and permitted under the Development Agreement for the full development of the Phase 1
Property, but not including the Project Infrastructure.
1.4 "Project"means the Phase 1 Property, Phase 1 Project Improvements and
Project Infrastructure.
1.5 "Project Agreements" means the Purchase and Sale Agreement, the
Phase 2 Lease Agreement, the Development Agreement, and the Option to Repurchase
Agreement.
1.6 "Project Infrastructure" means (a) all public and private on-site and off-
site utility and other infrastructure improvements, including, without limitation, water, storm
water, sanitary sewer utilities and traffic/pedestrian improvements, required to support the full
development of the Phase 1 Property, all as contemplated under the Development Agreement,
including, without limitation, the "Meet Me on Meeker" improvements and Phase 1 Property
geo-piers and (b) all public and private on-site and off-site mainline utility and other
infrastructure improvements, including, without limitation, mainline water, storm water and
sanitary sewer utilities, and traffic/pedestrian improvements, required to support the full
development of the Phase 2 Property, all as contemplated under the Development Agreement,
including, without limitation, the "Meet Me on Meeker" improvements, but, for clarification, not
including the Phase 2 Property geo-piers or foundation work.
1.7 "Substantial Completion" or "Substantially Completed" means, with
respect to any improvement or work, such improvement or work has been completed in
accordance with all applicable permits and laws and has been inspected and approved by the
appropriate authorities as evidenced by a certificate of occupancy for all residential portions of
the Project, subject only to minor punch-list items (minor details of construction, decoration and
mechanical adjustments) that do not interfere with use and operation of the improvement or work
in question.
2. GUARANTY. Guarantor hereby unconditionally and absolutely warrants and
guarantees to Seller that: (a) construction of the Project shall be Substantially Completed on or
before the date that is thirty (30) months after the date on which Buyer commences construction
of the Project; (b) the Project shall be constructed and completed in accordance with the
Development Agreement, without substantial deviation therefrom unless approved by Seller in
writing; (c) except for a first-priority deed of trust or security interest in the Project granted to
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Buyer's construction lender(that is any institutional bank or lender which is not affiliated with or
related to Buyer or any of its principals or any affiliates or subsidiaries of the Buyer, any of its
principals or their family members), the Project will be constructed and completed free and clear
of all liens and encumbrances, including without limitation all mechanics' liens, materialmen's
liens, and equitable liens; and (d) all costs of constructing and completing the Project will be
paid when due. The obligations described in preceding clauses (a)—(d) are referred to herein as
the "Guaranteed Obligations".
If the Project shall not be constructed and completed as provided above, Guarantor shall:
(a) diligently proceed to cure such default and procure completion of the Project at Guarantor's
sole cost and expense in compliance with all of the requirement provided above; (b) fully pay
and discharge all claims for labor performed and material and services furnished in connection
with the construction of the Project; and (c) pay such amounts as may be necessary to release and
discharge all claims of stop notices, mechanics' liens, materialmen's liens, and equitable liens, if
any, that may come into existence in connection with the construction of the Project.
3. NO REDUCTION OR DISCHARGE OF GUARANTEED OBLIGATIONS.
Guarantor hereby consents and agrees to each of the following, and agrees that Guarantor's
obligations under this Guaranty shall not be released, diminished, impaired, reduced, or
adversely affected by any of the following, and waives any common law, equitable, statutory or
other rights (including, without limitation, rights to notice) which Guarantor might otherwise
have as a result of or in connection with any of the following:
3.1 Any waiver or release by Seller of any of the terms, provisions,
conditions, obligations, and/or agreements constituting all or any part the Guaranteed
Obligations or any of the Project Agreements.
3.2 The direct or indirect, voluntary or involuntary, sale, conveyance,
assignment, lease, or other transfer of any interest in Buyer, all or any portion of the Properties
(or any improvement thereon from time to time) and/or any of the Project Agreements.
3.3 Any amendment, modification of, or supplement to any of the Project
Agreements, or any assignment or transfer thereof.
3.4 Any exercise or non-exercise of any right, power, remedy or privilege, or
granting extension of time, under this Guaranty or any of the Project Agreements or any waiver,
consent, extension,renewal,or modification thereof.
3.5 Any bankruptcy, insolvency, reorganization, arrangement, readjustment,
composition, liquidation or similar law or proceeding related to Buyer or any other Person or any of
their respective assets and/or any order of any court, government or agency thereof purporting to
reduce, amend, or otherwise affect any obligation or liability of Buyer under any of the Project
Agreements.
3.6 Any release or discharge of Buyer or any other guarantor or any other Person
in any receivership, bankruptcy, winding up,or other creditor proceedings.
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3.7 Any change in the name, purposes, capitalization, ownership, management,
or organization of Buyer.
Without limiting the foregoing, Seller may amend or modify any of the Project Agreements
and otherwise may deal with Buyer and its successors and assigns or any other guarantor or any
other Person, without notice to or consent of Guarantor, and without affecting, diminishing, or
otherwise impairing the liability of Guarantor hereunder.
4. NATURE OF GUARANTY. The liability of Guarantor under this Guaranty is an
absolute and unconditional guaranty of payment and of performance and not of collectability. The
liability of Guarantor hereunder is primary and coextensive with that of Buyer and its successors
and assigns and is joint and several. This Guaranty shall be a continuing guaranty. No action or
proceeding brought or instituted under this Guaranty and no recovery in pursuance thereof shall be a
bar or defense to any further action or proceeding which may be brought under this Guaranty by
reason of any further default or defaults hereunder or in the performance and observance of any of
the terms, covenants, conditions, and provisions in this Guaranty and/or any of the Project
Agreements. Guarantor's performance of a portion, but not all, of the Guaranteed Obligations, shall
in no way limit, affect, modify or abridge Guarantor's liability for that portion of the Guaranteed
Obligations which is not completed as required under this Guaranty. Without in any way limiting
the generality of the foregoing, in the event that Seller is awarded a judgment in any suit brought to
enforce Guarantor's covenant to perform a portion of the Guaranteed Obligations, such judgment
shall in no way be deemed to release Guarantor from its covenant to perform any other portion of
the Guaranteed Obligations which is not the subject of such suit. Seller shall not be obligated to
exhaust its recourse against Buyer, or any other guarantor or any other Person, or any security it
may have for the satisfaction of the obligations hereby guaranteed before being entitled to
performance by Guarantor of each and every one of the obligations hereby guaranteed. Seller may,
at its sole discretion and to the extent permitted by law, exercise its rights under this Guaranty either
prior to, concurrently with, or after, the exercise of its remedies for default against Buyer or any
other Person and in this regard, Guarantor hereby expressly waives any limitations on a concurrent
exercise of remedies under this Guaranty which may be imposed under any applicable laws. This
Guaranty is in addition to and not in substitution for any other guaranties held or which may
hereafter be held by Seller, and Guarantor is jointly and severally liable with any such other
guarantors for the payment and performance of the Guaranteed Obligations.
5. RIGHTS AND REMEDIES. If Guarantor shall fail to perform promptly as
provided in this Guaranty within thirty (30) days after written notice from Seller, Seller shall
have the following rights and remedies.
5.1 Perform Guaranteed Obligations. Seller, at its option, but without any
obligation to do so, may proceed to perform on behalf of Guarantor any and all work on the
Project and any of the other Guaranteed Obligations and to pay any costs incurred in connection
with the work and performance. Guarantor, upon Seller's demand, shall promptly pay to Seller
all such sums expended.
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5.2 Cure Defaults. Seller, at its option, but without any obligation to do so,
may cure any defaults, including without limitation, paying any unpaid bills and liens, including,
without limitation, those for construction, labor, and materials. Guarantor, upon Seller's demand,
shall promptly pay to Seller all such sums expended.
5.3 Specific Performance. From time to time and without first requiring
performance on the part of Buyer, to require Guarantor specifically to perform Guarantor's
obligations under this Guaranty, by action at law or in equity or both, and further, to collect in
any such action, compensation for all loss, cost, damage, injury and expense sustained or
incurred by Seller as a direct or indirect consequence of Buyer's or Guarantor's failure to
perform.
5.4 Other Rights and Remedies. In addition, Seller shall have and may
exercise any or all of the rights and remedies it may have available at law, in equity, or
otherwise.
6. FINANCIAL COVENANTS. The following financial covenants, based
on the definitions shown below, must be maintained by Guarantor during the
term of this Guaranty. Compliance with the following financial covenants
shall be measured semi-annually as of the following dates: March 31s` and
September 301h. Guarantor shall certify that it is in compliance with the
following financial covenants by delivering a certificate of compliance in form
reasonably requested by Seller, along with supporting documentation (e.g.,
schedule of assets and liabilities and bank and brokerage statements), which
certificate of compliance shall be provided within thirty (30) days after the
end of each semi-annul period; provided, however, that if a particular
certificate of compliance signed by Guarantor is not received by Seller by the
required deadline, Seller reserves the right to determine Guarantor's
compliance with the terms hereof based on other information available to
Seller.
Notwithstanding the foregoing paragraph, Guarantor may satisfy the
Minimum Adjusted Net Worth requirement in Section 6.2 below by
aggregating Guarantor's Adjusted Net Worth together with the Adjusted Net
Worth of each of Brett Jacobsen and John W. McKenna, Jr. (collectively, the
"Shareholders"). Each of the Shareholders is a shareholder in Guarantor
and shall only be considered a Shareholder under this Guaranty as long as
they remain a shareholder in Guarantor. If Guarantor elects to aggregate the
Adjusted Net Worth of the Shareholders with that of Guarantor for purposes
of satisfying the Minimum Adjusted Net Worth covenant in Section 6.2 below,
Guarantor shall provide to Seller the same type of supporting documentation
concerning the Shareholders' net worth as Guarantor is required to provide
pursuant to the preceding paragraph. For avoidance of doubt, if Guarantor
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elects to aggregate the Shareholders' Adjusted Net Worth with that of
Guarantor for purposes of satisfying the Minimum Adjusted Net Worth
covenant in Section 6.2 below, the Shareholders will not become guarantors
hereunder and will not assume the obligations of Guarantor hereunder. The
current Shareholders shall each execute the joinder provision at the end of
this Guaranty to acknowledge their consent to Guarantor providing to Seller
supporting information concerning the Shareholders' Adjusted Net Worth, in
the event that Guarantor elects to aggregate the assets of the Shareholders
with those of Guarantor as described in this paragraph.
Failure by Guarantor to satisfy each of the following financial covenants
shall constitute a default under this Guaranty. Terms used in such financial
covenants are as defined below.
6.1 Minimum Liquidity. Guarantor shall maintain a total Unencumbered
Liquidity of not less than $3,000,000.
6.2 Minimum Adjusted Net Worth. Guarantor and Shareholders shall
maintain an aggregate minimum Adjusted Net Worth of not less than $10,000,000.
6.3 Definitions. For purposes of the foregoing financial covenants, the
following terms shall have the following meanings:
"Debt" means, for Guarantor or any Shareholder, as applicable, all liabilities,
whether now or hereafter existing, voluntary or involuntary, due or not due,
liquidated or unliquidated.
"Adjusted Net Worth" means, for Guarantor or any Shareholder, such party's
total assets, excluding (1) intangible assets (i.e., goodwill, trademarks, patents,
copyrights, organizational expenses, and similar intangible items, but including
leaseholds and leasehold improvements), (2) treasury stock, (3) cash held in a
sinking or other similar fund established for the purpose of redemption or other
retirement of capital stock, (4) reserves for depreciation, depletion, obsolescence,
or amortization of properties and other reserves for appropriations of retained
earnings that have been or should be established in connection with such party's
business, and (5) any revaluation or other write up in book value of assets
subsequent to the fiscal year of such party; less Debt.
"Unencumbered Liquidity" means the sum of cash, marketable stocks and
bonds, and other near-cash investments held by Guarantor and immediately
available with unimpaired value; but not including pledged assets or IRA, 401(k),
annuity, or trust accounts.
6A Construction Lender Requirements. Notwithstanding the Minimum
Liquidity and the Minimum Adjusted Net Worth of requirements set forth in Sections 6.1 and 6_2
above, if any lender providing the construction loan to Buyer for the construction of the Project
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requires a greater Minimum Liquidity amount and/or a greater Minimum Adjusted Net Worth
amount(and/or any similar financial covenant)applicable to Guarantor, any Shareholder and/or any
other person or party providing a guaranty for completion of the Project construction and/or
repayment of the Project construction loan, then concurrent with the closing of such construction
loan Guarantor and, if applicable, Shareholders agree to increase the Minimum Liquidity and/or
Minimum Adjusted Net Worth of this Guaranty (or provide such similar financial covenant required
by the construction lender), as applicable, to match the greater sum required under the Project
construction loan.
7. WAIVERS. To the maximum extent permitted by law, Guarantor hereby waives
the following: (a) notices of the acceptance of this Guaranty; (b)any statute of limitations affecting
Guarantor's liability hereunder or the enforcement thereof; (c) all defenses based upon any
insolvency or disability of Buyer and any and all other waivable defenses; and (d) all principles or
provisions of law which conflict with the terns of this Guaranty. Moreover, Guarantor agrees that
its obligations shall not be affected by any circumstances which constitute a legal or equitable
discharge of a guarantor or surety.
8. SUBROGATION. Guarantor agrees that until such time as all the obligations of
Buyer and its successors and assigns under the Project Agreements have been fully and irrevocably
paid and discharged, no payment by Guarantor pursuant to any provision hereof shall entitle
Guarantor, by subrogation or otherwise, to the rights of Seller under any of the Project Agreements.
Guarantor further agrees that,to the extent the waiver of its right of subrogation as set forth herein is
found by a court of competent jurisdiction to be void or voidable for any reason, any rights of
subrogation Guarantor may have against Buyer or its successor and assigns shall be junior and
subordinate to all rights that Seller has under the Project Agreements, including, without limitation,
the right of Seller to exercise the right of repurchase under the Option to Repurchase Agreement.
9. TERMINATION OF GUARANTY/REINSTATEMENT IN CERTAIN
CIRCUMSTANCES. This Guaranty shall continue until (A) the Project has been Substantially
Completed in accordance with the Development Agreement, without substantial deviation
therefrom unless approved by Seller in writing and free and clear of all liens and encumbrances
as provided above, and (B) all obligations of Guarantor to Seller under this Guaranty have been
performed in full. If at any time any payment of the amount payable by Buyer or its successor or
assigns to Seller under any of the Project Agreements or is rescinded or must be otherwise
restored or returned upon the insolvency, bankruptcy or reorganization of Buyer or any other
Person or otherwise, the Guarantor's obligations hereunder with respect to such payment shall be
reinstated as though such payment has been due but not made at such time. The covenants and
terms contained in this Section 9 shall survive the payment and performance of the Guaranteed
Obligations and any termination of this Guaranty.
10. REPRESENTATIONS AND WARRANTIES. Guarantor represents and
warrants to Seller that:
10.1 Guarantor now has and will continue to have full and complete access to
any and all information concerning the Properties and Buyer, Buyer's financial status and
Buyer's ability to pay and perform the obligations owed to Seller under the Project Agreements.
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Guarantor has reviewed and approved copies of the Project Agreements. So long as Guarantor's
obligations hereunder remain unsatisfied or owing, Guarantor shall keep fully informed as to all
aspects of Buyer's financial condition and the performance of said obligations.
10.2 No consent of any other person, including, without limitation, any
creditors of Guarantor, and no license, permit, approval or authorization of, exemption by, notice
or report to, or registration, filing or declaration with, any governmental authority is required by
such Guarantor in connection with this Guaranty or the execution, delivery, performance,
validity, or enforceability of this Guaranty and all obligations required hereunder. This Guaranty
has been duly executed and delivered by Guarantor, and constitutes the legally valid and binding
obligation of Guarantor enforceable against Guarantor in accordance with its terms.
10.3 The execution, delivery and performance of this Guaranty will not violate
any provision of any existing law or regulation binding on Guarantor, or any order, judgment,
award or decree of any court, arbitrator or governmental authority binding on Guarantor, or of
any mortgage, indenture, lease, contract or other agreement, instrument or undertaking to which
Guarantor is a party or by which Guarantor or any of Guarantor's assets may be bound, and will
not result in, or require, the creation or imposition of any lien on any of Guarantor's property,
assets or revenues pursuant to the provisions of any such mortgage, indenture, lease, contract or
other agreement, instrument or undertaking.
10.4 Neither Seller nor any other Person has made any representation, warranty
or statement to Guarantor in order to induce Guarantor to execute this Guaranty.
10.5 As of the Effective Date, and after giving effect to this Guaranty and the
contingent obligation evidenced hereby, Guarantor is and will be solvent and has and will have
assets that, fairly valued, exceed Guarantor's obligations, liabilities (including contingent
liabilities) and debts, and has and will have property and assets sufficient to satisfy and repay
Guarantor's obligations and liabilities.
11. AUTHORIZATION. The individuals executing this Guaranty each warrant and
represent that this Guaranty was duly authorized by all individuals or entities whose
authorization was required for this Guaranty to be effective and binding on Guarantor.
12. SUCCESSORS AND ASSIGNS. This Guaranty shall be binding upon Guarantor,
its successors and assigns and shall inure to the benefit of and shall be enforceable by Seller and its
successors and assigns. This Guaranty may be assigned in whole or in part by Seller and it
successors and assigns.
13. NOTICES. Unless applicable law requires a different method of giving notice, any and
all notices, demands or other communications required or desired to be given hereunder by any
party (collectively, "notices") shall be in writing and shall be validly given or made to another
party if delivered either personally or by Federal Express or other overnight delivery service of
recognized standing,or if deposited in the United States Mail, certified, registered, or express
mail with postage prepaid, or if sent by electronic mail. If such notice is personally delivered, it
shall be conclusively deemed given at the time of such delivery. If such notice is delivered by
Federal Express or other overnight delivery service of recognized standing, it shall be deemed
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given the next business day after the deposit thereof with such delivery service, postage prepaid.
If such notice is mailed as provided herein, such shall be deemed given two (2) business days
after the deposit thereof in the United States Mail, postage prepaid. If such notice is given by
electronic mail, it shall be deemed given on the date shown on the electronic confirmation of
transmission. Each such notice shall be deemed given only if properly addressed to the party to
whom such notice is to be given as follows:
Seller: City of Kent
220 Fourth Avenue South
Kent, WA 98032
Attn: Tom Brubaker and Kurt Hanson
Email: trubaker@kentwa.gov
khanson@kentwa.gov
With a copy to: Foster Pepper PLLC
I I I I Third Avenue, Suite 3000
Seattle, WA 98101-3299
Attn: Beth Clark
Email: beth.clark@foster.com
Guarantor: FNW Inc.
c/o Landmark Development Group
2711 West Valley Highway North Suite 200
Auburn, WA 98001
Attn: Brett Jacobsen
Email: bjacobsen@fnw-inc.com
With a copy to: HAL Real Estate Inc.
2025 First Avenue, Suite 700
Seattle, WA 98121
Attn: Jonathan Manheim
Email: jmanheim@halrealestate.com
and: Alston Courtnage& Bassetti LLP
1420 5th Avenue, Suite 3650
Seattle, WA 98101-401 1
Attn: Tom Read
Email: tread@alcourt.com
Any party hereto may change its address for the purpose of receiving notices as herein
provided by a written notice given in the manner aforesaid to the other party hereto.
14. AMENDMENT, WAIVER. No modification, termination or amendment of this
Guaranty may be made except by written agreement of the parties. No failure by Seller to insist
upon the strict performance of any covenant, agreement, or condition of this Guaranty or to
exercise any right or remedy shall constitute a waiver of any such breach or any other covenant,
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agreement, term or condition. No waiver shall affect or alter this Guaranty, and each and every
covenant, agreement, term and condition of this Guaranty shall continue in full force and effect
with respect to any other then existing or subsequent breach thereof.
15. HEADINGS; ENTIRETY. The article and paragraph headings of this Guaranty
are for convenience only and in no way limit or enlarge the scope or meaning of the language
hereof. This Guaranty embodies the entire agreement between the parties and supersedes all
prior agreements and understandings relating to the subject matter hereof.
16. COSTS AND EXPENSES. In the event of any lawsuit, mediation, arbitration or legal
proceeding is brought to enforce any of the terms hereof, the prevailing party shall be entitled to
recover its costs and expenses incurred in connection with such action or proceeding(including
any appeals therefrom) from the non-prevailing party, including reasonable attorneys' and court
fees and costs.
17. SEVERABILITY. If any one or more of the provisions of this Guaranty, or the
applicability of any such provision to a specific situation, shall be held invalid or unenforceable,
such provision shall be modified to the extent necessary to make it or its application valid and
enforceable, and the validity and enforceability of all other provisions of this Guaranty and all
other applications of any such provision shall not be affected thereby.
1S.CONSTRUCTION. Guarantor acknowledges that it and its counsel
have reviewed and revised this Guaranty and that the rule of construction to
the effect that any ambiguities are to be resolved against the drafting party
shall not be employed in the interpretation of this Guaranty (including the
exhibits) or any amendments thereto, and the same shall be construed neither
for nor against Seller or Guarantor, but shall be given a reasonable
interpretation in accordance with the plain meaning of its terms and the
intent of the parties.
19. GOVERNING LAW; JURISDICTION; WAIVER OF JURY TRIAL. This
Guaranty shall be governed by and construed in accordance with the internal laws of the state of
Washington. The venue of any judicial proceedings related to this Guaranty shall be in Kent,
Washington, unless otherwise mutually agreed in writing by the parties. Guarantor irrevocably
submits to the exclusive jurisdiction of the federal or state courts located in Kent, Washington.
GUARANTOR WAIVES TO THE FULLEST EXTENT PERMITTED BY LAW TRIAL BY
JURY OF ALL DISPUTES ARISING OUT OF OR RELATING TO THIS GUARANTY.
20. TIME. "Day" as used herein means a calendar day and "business day" means
any day on which national banks in the location where the Properties are located are generally
open for business. Unless otherwise specified, in computing any period of time described herein,
the day of the act or event after which the designated period of time begins to run is not to be
included and the last day of the period so computed is to be included at, unless such last day is a
Saturday, Sunday or legal holiday for national banks in the location where the Properties are
located, in which event the period shall run until the end of the next day which is neither a
2841/086 09/20/17 ]I - Completion and Performance Guaranty v9
lread11IA[ARlverbend Joint Venture
Saturday, Sunday, or legal holiday. The last day of any period of time described herein shall be
deemed to end at 5:30 p.m. (Pacific). Time is of the essence in the performance of this Guaranty.
21. EXECUTION. Without limiting the manner in which execution of this Guaranty
may be accomplished, execution may be effected by electronic mail or facsimile transmission of
a signature page of this Guaranty executed by Guarantor. If Guarantor effects execution by
electronic mail or facsimile transmission of a signature page, Guarantor shall also promptly
deliver to Seller an original counterpart signed by Guarantor, but the failure of Guarantor to
furnish such original counterpart shall not invalidate the execution of this Guaranty effected by
electronic mail or facsimile transmission.
[signature on following page]
28d 11086 09/20/17 - 12- Completion and Performance Guaranty v9
treadNHAIARiverbend Joint Venture
IN WITNESS WHEREOF, the undersigned has executed this Completion and Performance
Guaranty effective as of the Effective Date first hereinabove written.
GUARANTOR:
FN W INC., a Washington corporation
By:
Name:
Its:
Joinder:
The undersigned Shareholders, Brett Jacobsen and John W. McKenna, Jr., are executing this
Guaranty for purposes of consenting to the provisions of Section 6 of this Guaranty, by which
Guarantor may provide Seller with evidence of the Adjusted Net Worth of each Shareholder in
order to satisfy the Minimum Adjusted Net Worth covenant of Guarantor in Section 6.2 above.
Each of the undersigned Shareholders agrees to furnish such financial schedules and statements
and other information to Guarantor as required for Guarantor to provide Seller the supporting
documentation to establish such Shareholder's Adjusted Net Worth.
Brett Jacobsen
John W. McKenna, Jr.
2841/086 09/20/17 -13- Completion and Performance Guaranty v9
treadll IADRiverbend Joint Venture
EXHIBIT A-1
TO
COMPLETION AND PERFORMANCE GUARANTY
Legal Description of Phase I Property
All that certain real property in the County of King, State of Washington,described as follows:
2941/086 09/20/17 Completion and Performance Guaranty v9
treadlHALlRiverbend Joint Venture
EXHIBIT A-2
TO
COMPLETION AND PERFORMANCE GUARANTY
Legal Description of Phase 2 Property
All that certain real property in the County of King, State of Washington, described as follows:
2841/086 09/20/17 Completion and Performance Guaranty v9
treadlHAL\Riverbend Joint Venture
Exhibit C
Limited Sale and Transfer Restriction
[SEE ATTACHED]
284118609120/17 EXHIBIT C psa amendment
treadll•IAL\Riverbend Joint Venture
LIMITED SALE AND TRANSFER RESTRICTION
THIS LIMITED SALE AND TRANSFER RESTRICTION (this "Agreement") is made
effective as of , 201_ (the "Effective Date"), by and between
MARQUEE ON MEEKER LLC, a Washington limited liability company, and its successor and
assigns (collectively, "Buyer"), and CITY OF KENT, a Washington municipal corporation, and
its successor and assigns (collectively, "Seller").
RECITALS
A. Seller and Buyer entered into a Real Estate Purchase and Sale Agreement with
Lease/Option to Purchase dated as of May 5, 2017 (the "Purchase and Sale Agreement"), for
the sale by Seller, and the purchase by Buyer, of certain real property located in King County,
Washington, legally described on Exhibit A-1 attached hereto (the "Phase 1 Property") and for
the lease with option to purchase by Seller, as landlord, and the lease with option to purchase by
Buyer, as tenant, of certain adjoining real property located in King County, Washington, legally
described on Exhibit A-2 attached hereto (the "Phase 2 Property"). The Phase 1 Property and
the Phase 2 Property are collectively referred to herein as the"Properties."
B. Concurrently with the execution of this Agreement, Seller is conveying the Phase
1 Property to Buyer pursuant to the terms of the Purchase and Sale Agreement.
C. Concurrently with the execution of this Agreement, Seller is leasing the Phase 2
Property to Buyer pursuant to the terms of that certain Lease (with Option to Purchase) of even
date herewith by and between Seller and Buyer (the"Phase 2 Lease Agreement").
D. As a condition to the sale of the Phase 1 Property and lease of the Phase 2
Property by Seller to Buyer, Seller required Buyer to enter into this Agreement.
E. All capitalized terms are defined in the Purchase and Sale Agreement and Phase 2
Lease Agreement unless specifically defined herein.
AGREEMENT
NOW, THEREFORE, in consideration of the sale and lease of the Properties by Seller to
Buyer and the mutual covenants and promises contained herein, and for other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, Seller and Buyer
hereby agree as follows:
1. DEFINITIONS. For purposes of this Agreement:
1.1 "Development Agreement'means that certain Marquee on Meeker
Project Development Agreement, by and between Seller and Buyer related to the Project, as
approved by the City of Kent Council on August 15, 2017, and effective as of August 23, 2017.
1.2 "Project' means the Phase I Property, Phase 2 Property and Project
Improvements.
2841/86 09/12/17 -1 - rransfer Restriction v3
tread1[WARiverbend Joint Venture
1.3 "Project Improvements" means all improvements and on-site and off-site
utility and other infrastructure improvements contemplated and permitted under the
Development Agreement for the full development of the Properties.
1.4 "Substantial Completion" means, with respect to any improvement or
work, such improvement or work has been completed in accordance with all applicable permits
and laws and has been inspected and approved by the appropriate authorities, subject only to
minor punch-list items (minor details of construction, decoration and mechanical adjustments)
that do not interfere with use and operation of the improvement or work in question.
2. LIMITED SALE AND TRANSFER RESTRICTION. Until later of (i)
Substantial Completion of the podium structure on the Phase 1 Property as described in the
Development Agreement and (ii) twenty-four (24) months after the Effective Date (the
"Restriction Period"), Buyer covenants and agrees to not, directly or indirectly, sell, transfer or
convey all or any portion of the Properties or the Project or any ownership interest in the
Properties or the Project (including, directly or indirectly, selling, transferring or conveying, in
one or more transactions, fifty percent (50%) or more of the membership interests in Buyer (the
"Restriction"), except (a) leases of individual residential units in the ordinary course of business
after substantial completion of the residential units in question; (b) leases of individual retail and
commercials spaces in the ordinary course of business after substantial completion of the retail
and commercials spaces in question; and (c) dedications, easements, rights-of-way, and other
similar Project-related encumbrances and agreements contemplated by the Development
Agreement; provided, however, that the Restriction shall be deemed expired in any event upon
the tenth (101h) anniversary of the Effective Date regardless of whether the Restriction has been
previously violated (the "Restriction Outside Expiration Date"). Any sale, transfer or
conveyance that violates the Restriction shall constitute a default under this Agreement and, at
the election of Seller, in Seller's sole and absolute discretion, be null and void.
3. SUBORDINATION. This Agreement is subordinate to a first-priority deed of
trust or security interest in the Properties or Project granted by Buyer to any institutional bank or
lender(which is not affiliated with or related to Buyer or any of its principals or any affiliates or
subsidiaries of the Buyer, any of its principals or their family members) that has provided
financing to Buyer for the construction of the Project which bank or unaffiliated lender is
actively involved in commercial real estate construction financing (a "Permitted Construction
Lien"). The Restriction shall be terminated in the event of a foreclosure of a Permitted
Construction Lien.
4. AUTHORIZATION. The individuals executing this Agreement each warrant
and represent that this Agreement was duly authorized by all individuals or entities whose
authorization was required for this Agreement to be effective and binding on Buyer.
5. SUCCESSORS AND ASSIGNS. Buyer hereby agrees and declares that all of
the Properties and the Project shall be held, sold, leased, used, and conveyed subject to the terms,
covenants, conditions, and restrictions in this Agreement (the "Covenants"). The Covenants
shall inure to the benefit of Seller and its successors and assigns; shall burden the Properties and
the Project; shall run with the land; and shall apply to and be binding upon all parties now or
2841/86 09/12/17 -2- Transfer Restriction v3
tread\11A1ARivcrhend Joint Venture
hereafter having or acquiring any right, title, or interest in the Properties and/or the Project or any
part thereof and their heirs, successors and assigns.
6. NOTICES. Unless applicable law requires a different method of giving notice,
any and all notices, demands or other communications required or desired to be given hereunder
by any party (collectively, "notices") shall be in writing and shall be validly given or made to
another party if delivered either personally or by Federal Express or other overnight delivery
service of recognized standing, or if deposited in the United States Mail, certified, registered, or
express mail with postage prepaid, or if sent by electronic mail. If such notice is personally
delivered, it shall be conclusively deemed given at the time of such delivery. If such notice is
delivered by Federal Express or other overnight delivery service of recognized standing, it shall
be deemed given the next business day after the deposit thereof with such delivery service,
postage prepaid. If such notice is mailed as provided herein, such shall be deemed given two (2)
business days after the deposit thereof in the United States Mail, postage prepaid. If such notice
is given by electronic mail, it shall be deemed given on the date shown on the electronic
confirmation of transmission. Each such notice shall be deemed given only if properly addressed
to the party to whom such notice is to be given as follows:
Seller: City of Kent
220 Fourth Avenue South
Kent, WA 98032
Attn: Tom Brubaker and Kurt Hanson
Email: trubaker@kentwa.gov
khan son@kentwa.gov
With a copy to: Foster Pepper PLLC
1 1 1 1 Third Avenue, Suite 3000
Seattle, WA 98101-3299
Attn: Beth Clark
Email: beth.clark@foster.com
Buyer: Marquee on Meeker LLC
c/o Landmark Development Group
2711 West Valley Highway North, Suite 200
Auburn, WA 98001
Attn: Brett Jacobsen
Email: bjacobsen@fnw-inc.com
With a copy to: Marquee on Meeker LLC
c/o HAL Real Estate Inc.
2025 First Avenue, Suite 700
Seattle, WA 98121
Attn: Jonathan Manheim
Email: jmanheim@halrealestate.com
2841/86 09/12/17 -3- Transfer Restriction v3
treadlHADRiverbend Joint Venture
and: Alston Courtnage& Bassetti LLP
1420 5tb Avenue, Suite 3650
Seattle, WA 98101-4011
Attn: Tom Read
Email: tread@alcourt.com
Any party hereto may change its address for the purpose of receiving notices as herein
provided by a written notice given in the manner aforesaid to the other party hereto.
7. AMENDMENT, WAIVER. No modification, termination or amendment of this
Agreement may be made except by written agreement of the parties. No failure by Seller or
Buyer to insist upon the strict performance of any covenant, agreement, or condition of this
Agreement or to exercise any right or remedy shall constitute a waiver of any such breach or any
other covenant, agreement, term or condition. 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.
8. HEADINGS; ENTIRETY. The article and paragraph headings of this
Agreement are for convenience only and in no way limit or enlarge the scope or meaning of the
language hereof. This Agreement embodies the entire agreement between the parties and
supersedes all prior agreements and understandings relating to the subject matter hereof.
9. NO JOINT VENTURE; NO THIRD PARTY BENEFICIARY. 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.
10. COSTS AND EXPENSES. In the event of any lawsuit, mediation, arbitration or
legal proceeding is brought to enforce any of the terms hereof, each party shall be responsible for
its own costs and expenses incurred in connection with such action or proceeding (including any
appeals therefrom) including its own attorneys' and court fees and costs.
11. SEVERABILITY. If any one or more of the provisions of this Agreement, or the
applicability of any such provision to a specific situation, shall be held invalid or unenforceable,
such provision shall be modified to the extent necessary to make it or its application valid and
enforceable, and the validity and enforceability of all other provisions of this Agreement and all
other applications of any such provision shall not be affected thereby.
12.CONSTRUCTION. Seller and Buyer acknowledge that it and its
counsel have reviewed and revised this Agreement and that the rule of
construction to the effect that any ambiguities are to be resolved against the
2841/86 09/12/17 -4- Transfer Restriction v3
tread\HAL\Riverbend Joint Venture
drafting party shall not be employed in the interpretation of this Agreement
(including the exhibits) or any amendments thereto, and the same shall be
construed neither for nor against Seller or Buyer, but shall be given a
reasonable interpretation in accordance with the plain meaning of its terms
and the intent of the parties.
13. GOVERNING LAW; JURISDICTION; WAIVER OF JURY TRIAL. This
Agreement shall be governed by and construed in accordance with the internal laws of the state
of Washington. The venue of any judicial proceedings related to this Agreement shall be in
Kent, Washington, unless otherwise mutually agreed in writing by the parties. Each party
irrevocably submits to the exclusive jurisdiction of the federal or state courts located in Kent,
Washington. EACH PARTY WAIVES TO THE FULLEST EXTENT PERMITTED BY LAW
TRIAL BY JURY OF ALL DISPUTES ARISING OUT OF OR RELATING TO THIS
AGREEMENT.
14. TIME. "Day" as used herein means a calendar day and "business day" means
any day on which national banks in the location where the Properties are located are generally
open for business. Unless otherwise specified, in computing any period of time described herein,
the day of the act or event after which the designated period of time begins to run is not to be
included and the last day of the period so computed is to be included at, unless such last day is a
Saturday, Sunday or legal holiday for national banks in the location where the Properties are
located, in which event the period shall run until the end of the next day which is neither a
Saturday, Sunday, or legal holiday. The last day of any period of time described herein shall be
deemed to end at 5:30 p.m. (Pacific). Time is of the essence in the performance of this
Agreement.
15. MEMORANDUM. Concurrently with execution of this Agreement, Buyer will
execute and deliver to Seller a memorandum of this Agreement in a form required by Seller, duly
executed, acknowledged and in recordable form (together with any necessary excise tax
affidavits or other transfer tax forms). Seller shall have the right to record the memorandum
against the Project at Buyer's sole cost and expense (including the payment of any required
excise taxes). Upon Buyer's request on or after the Restriction Outside Expiration Date, Seller
will promptly execute and record a full termination of any memorandum of this Agreement that
is recorded.
16. EXECUTION. This Agreement may be executed in counterparts and, when
counterparts of this Agreement have been executed and delivered by both parties, this Agreement
shall be fully binding and effective, as if both parties had executed and delivered a single
counterpart of this Agreement. Without limiting the manner in which execution of this
Agreement may be accomplished, execution by either party may be effected by facsimile
transmission of a signature page of this Agreement executed by such party. Any party who
effects execution by facsimile transmission of a signature page shall also promptly deliver to the
other party an original counterpart signed by such party, but the failure of any party to furnish
such original counterpart shall not invalidate the execution of this Agreement effected by
facsimile transmission. This Agreement shall not be binding upon or effective as to either Buyer
or Seller until it has been executed by both Buyer and Seller.
2841/86 09/12/17 -5- Transfer Restriction 0
tread\][AURiverbend Joint Venture
[signatures on following page]
2841/86 09/12/17 -6- Transfer Restriction A
treadlHAL\Riverbend Joint Venture
IN WITNESS WHEREOF, the parties have executed this Limited Sale and Transfer
Restriction effective as of the Effective Date first hereinabove written.
SELLER: MARQUEE ON MEEKER LLC,
a Washington limited liability company
By: The Missing Links LLC,
a Washington limited liability company,
its Manager
By:
Name:
Its:
BUYER: CITY OF KENT,
a Washington municipal corporation
By:
Name:
Its:
2841/86 09/12/17 .7. Transfer Restriction v3
trcad\1 IAI.\Rivcrbend Joint Venture
EXHIBIT A-1
TO
LIMITED SALE AND TRANSFER RESTRICTION
Legal Description of Phase I Property
All that certain real property in the County of King, State of Washington, described as
follows:
2841/86 09/12/17 Transfer Restriction v3
treadMAURiverbend Joint Venture
EXHIBIT A-2
TO
LIMITED SALE AND TRANSFER RESTRICTION
Legal Description of Phase 2 ProbeM
All that certain real property in the County of King, State of Washington,described as follows:
2841/86 09/12/17 Transfer Restriction v3
treadIHALIRiverbend Joint Venture
Exhibit D
Lease(with Option to Purchase)
[SEE ATTACHED]
2841/86 09/20/17 EXHIBIT D psa amendment
treadUiAL\Riverbend Joint Venture
LEASE (with Option to Purchase)
by and between
City of Kent, as Landlord
and
Marquee on Meeker, LLC,as
Tenant
2841/086 09/12/17 lease with purchase option(Buyer 9/12 Version)
treadlHALNRiverbend Joint Venture
51636549-3
TABLE OF CONTENTS
Page
1. Incorporation of Recitals; Definitions.................................................................................. 2
2. Leased Premises ................................................................................................................... 7
3. Term...................................................................................................................................... 8
4. Rent....................................................................................................................................... 9
5. Taxes and Utilities............................................................................................................... 10
6. Use of Leased Premises; Permitted Use.............................................................................. I 1
A. Use of Leased Premises; Permitted Use...................................................................... 11
7. Liens. .................................................................................................................................. 12
8. Development Agreement.................................................................................................... 13
9. Insurance and Indemnification .......................................................................................... 13
10. Condemnation of the Property ....................................................................................... 17
11. Assignment; Subletting................................................................................................... 17
A. Assignments and other Transfers During Term of Lease........................................... 17
B. Transfers of Interest in Developer............................................................................... 18
C. Definition of Transfer.................................................................................................. 18
12. Title to Leased Premises.................................................................................................. 18
13. Representations............................................................................................................... 20
A. City Representations...................................................................................................20
B. Developer Representations.........................................................................................21
14. "AS-IS" Sale ...................................................................................................................22
15. Conditions Precedent to Developer's Exercise of Option to Purchase the Leased
Premises.....................................................................................................................................23
A. Compliance by Developer..........................................................................................23
B. Correctness of Representations...................................................................................23
C. No Bankruptcy ............................................................................................................23
B. Correctness of Representations .................................................................................. 24
C. Condition of Property..................................................................................................25
D. Title Policy..................................................................................................................25
17. Option to Purchase Leased Premises............................................................................... 25
A. Option to Purchase......................................................................................................25
B. Exercise of Option.......................................................................................................25
C. Payment of Option Price.............................................................................................25
18. Closing of Purchase of Leased Premises.......................................................................25
A. Closing Procedures .....................................................................................................25
B. Delivery by City..........................................................................................................26
C. Delivery by Developer ...............................................................................................26
D. City's Closing Costs ...................................................................................................27
E. Developer's Closing Costs.......................................................................................... 27
F. Prorations........................................................................................................................27
G. Recordation and Delivery of Documents .................................................................. 27
H. Notification; Closing Statements................................................................................ 27
1. Possession.......................................................................................................................28
2841/086 09/12/17 -i- lease with purchase option(Buyer 9/12 Version)
trcadMAIARiverbend Joint Venture
51636549.3
19. Default............................................................................................................................. 28
A. Developer Default....................................................................................................... 28
B. City Remedies upon Developer Event of Default.......................................................29
C. City Default; Remedies............................................................................................ 29
D. Waiver of Consequential and Punitive Damages...................................................... 30
E. Rights and Remedies Cumulative............................................................................... 30
20. Hazardous Substances.................................................................................................... 30
21. Time of the Essence........................................................................................................ 31
22. City's Right to Enter the Leased Premises ...................................................................... 31
A. Condition..................................................................................................................... 31
B. Notices......................................................................................................................... 31
23. Notices ............................................................................................................................31
24. Surrender......................................................................................................................... 33
25. Miscellaneous .................................................................................................................33
A. Entire Agreement ........................................................................................................33
B. Non-Waiver.................................................................................................................34
C. Construction................................................................................................................ 34
D. Severability..................................................................................................................34
E. Neutral Authorship......................................................................................................34
F. Nature of Relationship ...................................................................................................35
G. No Brokers..................................................................................................................35
H. Survival .......................................................................................................................35
1. Recording of Memorandum............................................................................................35
J. Covenants to Run with the Land..................................................................................35
K. Nondiscrimination....................................................................................................... 35
L. No Third Party Rights.................................................................................................35
M. Non-Waiver of Governmental Rights......................................................................... 36
N. Further Assurance....................................................................................................... 36
O. Authority ..................................................................................................................... 36
P. WAIVER OF JURY TRIAL.......................................................................................... 36
Q. Conflicts of Interests................................................................................................... 36
R. Non-Liability of City Officials Employees, and Agents............................................ 36
S. Applicable Law.............................................................................................................. 37
T. Counterparts................................................................................................................ 37
U. Attorneys' Fees............................................................................................................ 37
EXHIBITS
Exhibit A - Legal Description of Land
Exhibit B - Approved Phasing Plan
Exhibit C - Legal Description of Lease Premises
Exhibit D - Map of Property
2841/086 09/12/17 -ii- lease with purchase option(I3uyer 9/12 Version)
treadlHALlRiverbend Joint Venture
516365493
Exhibit E—Legal Description of Phase 1 Property
Exhibit F - Bargain and Sale Deed
Exhibit G- List of Permitted Exceptions
Exhibit H- Pro Forma Title Policy
2841/086 09112 I7 iii- lease with purchase option(Buyer 9/12 Version)
treadll-IAL\Riverbcnd Joint Venture
51636549-3
LEASE (with Option to Purchase)
by and between
City of Kent, as Landlord
and
Marquee on Meeker, LLC,as
Tenant
2841/086 09/12/17 lease with purchase option(Buyer 9/12 Version)
treadlHAURiverbend Joint Venture
51636549.3
TABLE OF CONTENTS
Page
1. Incorporation of Recitals; Definitions..................................................................................2
2. Leased Premises ................................................................................................................... 7
3. Term...................................................................................................................................... 8
4. Rent....................................................................................................................................... 9
5. Taxes and Utilities............................................................................................................... 10
6. Use of Leased Premises; Permitted Use.............................................................................. 11
A. Use of Leased Premises; Permitted Use...................................................................... 11
7. Liens. .................................................................................................................................. 12
8. Development Agreement.................................................................................................... 13
9. Insurance and Indemnification .......................................................................................... 13
10. Condemnation of the Property....................................................................................... 17
ILAssignment; Subletting................................................................................................... 17
A. Assignments and other Transfers During Term of Lease........................................... 17
B. Transfers of Interest in Developer............................................................................... 18
C. Definition of Transfer.................................................................................................. 18
12. Title to Leased Premises.................................................................................................. 18
13. Representations...............................................................................................................20
A. City Representations...................................................................................................20
B. Developer Representations.........................................................................................21
14. "AS-IS" Sale...................................................................................................................22
15. Conditions Precedent to Developer's Exercise of Option to Purchase the Leased
Premises..................................................................................................................................... 23
A. Compliance by Developer..........................................................................................23
B. Correctness of Representations................................................................................... 23
C. No Bankruptcy ............................................................................................................ 23
B. Correctness of Representations .................................................................................. 24
C. Condition of Property..................................................................................................25
D. Title Policy..................................................................................................................25
17. Option to Purchase Leased Premises...........................................:................................... 25
A. Option to Purchase......................................................................................................25
B. Exercise of Option.......................................................................................................25
C. Payment of Option Price.............................................................................................25
18. Closing of Purchase of Leased Premises.......................................................................25
A. Closing Procedures.....................................................................................................25
B. Delivery by City..........................................................................................................26
C. Delivery by Developer...............................................................................................26
D. City's Closing Costs ...................................................................................................27
E. Developer's Closing Costs.......................................................................................... 27
F. Prorations........................................................................................................................ 27
G. Recordation and Delivery of Documents .................................................................. 27
H. Notification; Closing Statements................................................................................ 27
1. Possession.......................................................................................................................28
2841/086 09/12/17 i- lease with purchase option(Buyer 9/12 Version)
tread\"AURiverbend Joint Venture
516365493
19. Default.............................................................................................................................28
A. Developer Default....................................................................................................... 28
B. City Remedies upon Developer Event of Default.......................................................29
C. City Default; Remedies............................................................................................29
D. Waiver of Consequential and Punitive Damages...................................................... 30
E. Rights and Remedies Cumulative............................................................................... 30
20. Hazardous Substances....................................................................................................30
21. Time of the Essence........................................................................................................31
22. City's Right to Enter the Leased Premises ......................................................................31
A. Condition.....................................................................................................................31
B. Notices.........................................................................................................................31
23. Notices............................................................................................................................31
24. Surrender.........................................................................................................................33
25. Miscellaneous .................................................................................................................33
A. Entire Agreement ........................................................................................................33
B. Non-Waiver.................................................................................................................34
C. Construction................................................................................................................34
D. Severability..................................................................................................................34
E. Neutral Authorship......................................................................................................34
F. Nature of Relationship ................................................................................................... 35
G. No Brokers..................................................................................................................35
H. Survival .......................................................................................................................35
I. Recording of Memorandum............................................................................................ 35
J. Covenants to Run with the Land.................................................................................. 35
K. Nondiscrimination....................................................................................................... 35
L. No Third Party Rights................................................................................................. 35
M. Non-Waiver of Governmental Rights......................................................................... 36
N. Further Assurance....................................................................................................... 36
O. Authority..................................................................................................................... 36
P. WAIVER OF JURY TRIAL.......................................................................................... 36
Q. Conflicts of Interests................................................................................................... 36
R. Non-Liability of City Officials Employees, and Agents............................................ 36
S. Applicable Law.............................................................................................................. 37
T. Counterparts................................................................................................................ 37
U. Attorneys' Fees............................................................................................................ 37
EXHIBITS
Exhibit A - Legal Description of Land
Exhibit B - Approved Phasing Plan
Exhibit C - Legal Description of Lease Premises
Exhibit D - Map of Property
284 t/086 09/12/17 ii- lease with purchase option(Buyer 9/12 Version)
tread\HAURiverbend Joint Venture
51636549.3
Exhibit E_Legal Description of Phase 1 Property
Exhibit F - Bargain and Sale Deed
Exhibit G- List of Permitted Exceptions
Exhibit H- Pro Forma Title Policy
2841/086 09/12/17 iii- lease with purchase option(Buyer 9/12 Version)
treadMALlRiverbend Joint Venture
51636549.3
LEASE
(with option to purchase)
This LEASE (WITH OPTION TO PURCHASE) ("Lease") is made and entered into as
of , 2018 (the "Effective Date") by and between the CITY OF
KENT, a Washington municipal corporation, hereinafter called "City", and MARQUEE ON
MEEKER, LLC, a Washington limited liability company, hereinafter called "Developer", with
reference to the following facts:
RECITALS
A. City has planned a revitalization of its downtown area to create a high quality
comprehensive integrated retail, commercial, and residential anchor for downtown, provide
additional housing downtown in close proximity to the Kent commuter rail and bus transit
center, increase pedestrian activity downtown and thereby directly and indirectly improve
public safety in the downtown retail core, improve the economic vitality of City, expand and
diversify City's tax base, increase tax revenues, create jobs and thereby enhance other City
investments and assets, and achieve multiple City objectives.
B. City is the owner of certain real property located at
and more particularly described on Exhibit A attached hereto and by
this reference incorporated herein (the "Land"). The Land is the site of City's existing
Riverbend par 3 golf course and within the City's planned revitalization area described in
Recital A above. The Land is approximately 30 acres in size, consisting of a 6-acre
(approximately) golf driving range area that City shall retain and a 24-acre (approximately) Par
3 golf course area that City has agreed to sell and convey to Developer (herein the "Property")
pursuant to that certain Real Estate Purchase and Sale Agreement with Lease/Option to
Purchase made as of May 5, 2017 by and between City and Developer (the "Purchase
Agreement").
C. Pursuant to that certain Development Agreement approved by the Kent City
Council on August 15, 2017 with an effective date of August 23, 2017 (the "Development
Agreement"), City and Developer have also agreed on the terms and conditions of Developer's
contemplated design and development of the Property including necessary major public and
private improvements and infrastructure, mitigation, dedications and other terms, conditions
and standards associated therewith (the `'Project").
D. The Project is a mixed-use retail/multi-family residential community consisting
of approximately 492 residential apartment units together with certain accessory uses, totaling
approximately 12,000 square feet of commercial/retail as more fully described in the
Development Agreement. The residential units will be contained in two podium style
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buildings and multiple three story urban style walk-up buildings. The podium buildings are
anticipated to have four levels of wood frame residential construction over concrete podium
decks containing approximately 6,000 SF of restaurant/retail space including adjacent exterior
lifestyle patios and approximately 240 stalls of parking. The Project will also contain surface
parking, presently anticipated for an additional 510 stalls for a total of 750 stalls.
E. Developer presently intends to construct the Project in two (2) phases (each a
"Phase" herein), with each Phase comprising approximately one-half of the land area of the
Property and with roughly half of the residential, commercial/retail and accessory parking in
each Phase. The agreed-upon phasing plan for the Project is attached hereto as Exhibit B.
Developer, at Developer's election, may elect to construct the entire Project in a single Phase;
provided, however, that notwithstanding anything to the contrary set forth herein, if the
Developer elects to develop the Project in two Phases, the first Phase construction shall in any
event include construction of on-site and off-site public and private mainline infrastructure,
including water, storm water, sanitary sewer utilities and traffic/pedestrian improvements for
the entire Project and "Meet Me on Meeker" improvements for the entire Project (i.e., both
Phases).
F. In order to facilitate Developer's phased development of the Project, City and
Developer have agreed pursuant to the Purchase Agreement that City shall sell and convey
approximately one-half of the Property to Developer (herein the "Phase 1 Property") and
concurrent therewith City and Developer shall enter into a lease with of the remaining one-half
of the Property (defined herein as the "Phase 2 Property" or the "Leased Premises") as legally
described on attached Exhibit C. Pursuant to the Lease, Developer will have access to the
Leased Premises for purposes of making certain site and infrastructure improvements to the
Leased Premises as agreed to in the Development Agreement or as otherwise required pursuant
to Project permits prior to Developer's purchase of the Leased Premises.
G. Lease of the Leased Premises shall be at the rent and other terms and conditions
set forth below. City has further agreed to grant Developer an option to purchase the Leased
Premises subject to satisfaction of certain conditions precedent, at an option price and on other
terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the foregoing recitals and other good and
valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties
agree as follows:
AGREEMENT
1. Incorporation of Recitals; Definitions. Each recital set forth above is
incorporated into this Lease as though fully set forth herein. As used herein, the following
terms shall have the following meanings:
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"Additional Rent" means any monetary sum required to be paid by Developer to
City under the provisions of this Lease (other than Rent).
"Business Day" means a day other than Saturday, Sunday, any federal or
Washington State holiday, any date on which banks located in the state of Washington are
authorized or obligated to close or any date on which the King County Recorder's office is
closed.
"City"means the City of Kent,a Washington municipal corporation.
"Closing" means the date when Developer and City have delivered to Escrow
Agent all of the documents and funds required to be delivered by them to complete the
purchase and sale of the Leased Premises (if Developer exercises its Option) in accordance
with the provisions of Sections 17 and 18 hereof.
"Closing Date" means the date on which the Closing occurs.
"Construction Lender" means North Cascades Bank, a division of Glacier
Bank, or some other state or national bank, insurance company, pension fund or other major
financial institution which has agreed to make a construction loan to Developer to
construct the Project with a credit rating substantially similar to, or exceeding, that of North
Cascades Bank.
"Construction Permits" means the civil construction permits and building
permits for the Project.
"Developer Parties" means individually and collectively, Developer's agents,
employees, officers, consultants, contractors and subcontractors, guests, licensees or other
invitees of Developer.
"Development Agreement" means that certain Development Agreement
approved by the Kent City Council on August 15, 2017 with an effective date of August 23,
2017 by and between City and Developer for development of the Project.
"Discretionary Permits" means City's design review approval process and any
other permit other than Construction Permits required to build the Project.
"Effective Date" means the date this Lease has been fully executed,
acknowledged, and delivered by City and Developer.
"Environmental Laws" means, as amended from time to time, the Federal
Resource Conservation and Recovery Act of 1976, 42 U.S.C. § 6901 et seq., Federal
Comprehensive Environmental Response, Compensation and Liability Act of 1980, 42
U.S.C. § 9601 et seq., Federal Hazardous Material Transportation Control Act, 49 U.S.C. §
1801 et seq., Federal Clean Air Act, 42 U.S.C. § 7401 et seq., Federal Water Pollution
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Control Act, 33 U.S.C. § 1321, Federal Water Act of 1977, 93 U.S.C. § 1251 et seq..,Federal
Insecticide, Fungicide and Rodenticide Act, Federal Pesticide Act of 1978, 7 U.S.C. § 136 et
seq.,Federal Toxic Substances Control Act, 15 U.S.C. § 2601 et seq., Federal Safe Drinking
Water Act, 42 U.S.C. § 300f et seq., Washington Water Pollution Control Act, RCW ch.
90.48, Washington Clean Air Act, RCW ch. 70.94, Washington Solid Waste Management
Recovery and Recycling Act, RCW ch. 70.95, Washington Hazardous Waste Management
Act, RCW ch. 70.105, Washington Hazardous Waste Fees Act, RCW ch. 70.95E, Washington
Model Toxics Control Act, RCW ch. 70.105D, Washington Nuclear Energy and Radiation
Act, RCW ch. 70.98, Washington Radioactive Waste Storage and Transportation Act of
1980, RCW ch. 70.99, Washington Underground Petroleum Storage Tanks Act, RCW ch.
70.148 and any regulations promulgated thereunder.
"Escrow Agent" means First American Title Insurance Company which shall
provide escrow services and issue the Title Policy to be delivered to Developer in connection
with the Closing.
"Events of Default"has the meaning set forth in Section 19 of this Lease.
"Expiration Date" means the earliest of: (i) the date which is two (2) years
after the closing date of Developer's purchase of the Phase 1 Property (which closing date is of
even date with the Effective Date), subject to extension in accordance with the provisions of
Section 3 below; (ii) the Closing Date; (iii) any date on which this Lease terminates in
accordance with its terms; provided, however, that in no event shall the Expiration Date be a
date which is later than two (2)years after the Effective Date.
"Final Completion" or "Final Completion of the Project" means that (a)
construction of the portion of the Project located on the Leased Premises is substantially
complete as evidenced by a certificate of substantial completion issued by the Project architect,
and (b) City has issued a temporary certificate of occupancy for the portion of the Project
located on the Leased Premises.
"Force Majeure" means extraordinary natural events or conditions such as war,
riot, labor disputes, abnormally extreme weather, or other causes beyond the reasonable control
of the obligated party. City's or Developer's inability to fund, or decision not to fund, any of
its obligations shall not be a Force Majeure event hereunder.
"Governmental Approvals" means all land use and other permits, licenses and
approvals necessary to build the Project on the Property or Leased Premises.
"Governmental Authority" means any court or tribunal in any jurisdiction
within the United States or any federal, state, tribal, municipal or local government or other
governmental body, agency, authority, department, commission, board, bureau, or
instrumentality.
"Hazardous Substances" means any material, waste, substance, industrial waste,
toxic waste, chemical contaminant, petroleum, asbestos, polychlorinated biphenyls or other
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substances regulated or classified by Environmental Laws as hazardous, toxic or lethal to
persons or property.
"Initial Infrastructure" means all Phase 1 Property and Phase 2 Property (i.e.,
the Phase I Property and Leased Premises) on-site and off-site public and private mainline
infrastructure, including water, storm water, sanitary sewer utilities and traffic/pedestrian
improvements and including all "Meet Me on Meeker" improvements for the Project and
including Phase I Property "geo-piers"and podium building foundations.
"Initial Infrastructure Permits" means all grade, fill and mainline civil
construction permits for the Initial Infrastructure.
"Initial Term" means the earliest of- (i) the date which is two (2) years after the
Effective Date; (ii) the Closing Date; or (iii) any date on which this Lease terminates in
accordance with its terms.
"KCC" means the Kent City Code as amended from time to time.
"Laws" means any constitution, statute, ordinance, regulation, rule, resolution,
judicial decision, administrative order, or other requirement of any federal, state, county,
municipal, or other Governmental Authority having jurisdiction over the parties or the Leased
Premises, or both, in effect either at the time of execution of this Lease or at any time during
the Term, including without limitation, any regulation or order of a quasi-official entity or
body (e.g., board of fire examiners or public utilities) including, but not limited to
Environmental Laws and all rules, laws and regulations issued thereunder, as the same may be
amended from time to time.
"Leased Premises" means that portion of the Property which will be leased to
Developer pursuant to this Lease which is legally described on Exhibit C attached hereto and
by this reference incorporated herein and which is depicted on the site plan attached hereto as
Exhibit D and by this reference incorporated herein.
"Liens" means any lien, charge, security interest or encumbrance accruing or
imposed upon the Leased Premises for the period commencing on the Effective Date.
"Option" means Developer's option to purchase the Leased Premises as
provided in Section 17 of this Lease.
"Option Price" means the purchase price for the Leased Premises payable to
City in cash on the Closing Date as described in Sections 17 and 18 of this Lease.
'Phase 1 Property" means that portion of the Property which is legally described
on Exhibit E attached hereto and incorporated herein.
"Project Agreements" means (a) the option to repurchase agreement between
City and Developer of even date herewith; (b) the guaranty of completion and performance
from FNW, Inc. in favor of City; (c) the agreement concerning transfer and encumbrance
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restrictions on the Phase 1 Property of even date herewith (the "Limited Sale and Transfer
Restriction"); (d) the development schedule for the Project for Developer's submittal of
applications for and City's processing of entitlements and permits for the Project and (e) the
Development Agreement.
"Purchase Agreement" means that Real Estate Purchase and Sale Agreement
between City and Developer dated as of May 5, 2017 for the purchase and sale of the Phase 1
Property.
"Rent" means the amount payable by Developer to City pursuant to Section 4
below for the lease of the Leased Premises, and includes Additional Rent.
"Requirements of Law" means all requirements relating to land and building
construction (including those specifically applicable to the contemplated use of the Leased
Premises for the Project), including, without limitation, planning, zoning, subdivision, the
American with Disabilities Act, as amended, environmental, air quality, flood hazard, fire
safety, accessibility and other governmental approvals, permits, licenses and/or certificates as
may be necessary from time to time to comply with all of the foregoing and other applicable
statutes, rules, orders, regulations, laws, ordinances and covenants, conditions and restrictions
which apply to and/or affect the design, construction, existence, intended use, operation and/or
occupancy of the Leased Premises or any part thereof.
"Taxes" means all real and personal property taxes, surface water management
charges and assessments (including assessments for public improvements), charges for public
utilities which if unpaid may become a lien on the Leased Premises, leasehold excise taxes,
other excise taxes, levies, sales, use and occupancy taxes, any tax or charge assessed against
the Taxable Rent as defined in RCW Chapter 82.29A or fair market value of the Leased
Premises and any taxes levied or assessed in addition to or in lieu of, in whole or in part, such
taxes, assessments or other charges (including any leasehold excise taxes which may be from
time to time levied on the leasehold estate created by this Lease) and all other governmental
impositions and charges of every kind and nature, general and special, ordinary and
extraordinary, foreseen and unforeseen of every character (including interest and penalties
thereon) which at any time from and after the Effective Date of this Lease may be imposed,
levied upon or assessed against or which arise with respect to or constitute a lien upon the
Leased Premises (or any part thereof), the leasehold estate created by this Lease or any part
thereof, or any estate, right or interest therein, or any occupancy, use or possession of or
activity conducted on the Leased Premises or any part thereof.
"Term" means the period beginning on the Effective Date and ending on the
Expiration Date.
"Title Company" means First American Title Insurance Company, which will
be issuing the Title Policy.
"Title Policy" has the meaning set forth in Section 12.13 below.
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"Utilities" means all public or private utilities and services furnished to the
Leased Premises, if any.
2. Leased Premises.
A. Leased Premises. City, in consideration of the Rent herein payable by
Developer to City and the terms, covenants, and conditions of this Lease to be kept and
performed by Developer, hereby demises and leases to Developer, and Developer hereby hires
and leases from City,the Leased Premises.
B. Title to and Condition of Leased Premises. Developer has had an
opportunity to investigate the Leased Premises and is knowledgeable and familiar with the
present condition of title and the present condition and state of repair of the Leased
Premises. Developer shall have the right to obtain a leasehold owner's policy of title
insurance at its sole cost and expense as of the Effective Date and, if Developer exercises its
Option, an owner's policy of title insurance from the Title Company with respect to the
Leased Premises in accordance with the provisions of Section 12 hereof. The Leased
Premises are leased to Developer by City in their present condition and state of repair on an
"AS IS" basis and without any representation or warranty of any kind by City, express or
implied, other than as set forth herein, and subject to (a) the existing condition of title
(except for those title exceptions, if any, that City has agreed to remove as set forth in Exhibit
F); (b) all applicable Requirements of Law now or hereafter in effect; (c) any liens,
exceptions or encumbrances created by or arising by or through Developer during the Term of
the Lease; and (d) any exceptions or encumbrances on the Leased Premises as a result of the
Discretionary Permits, the Development Agreement or otherwise consented to in writing by
Developer. Developer shall have the right to use, remove, sell or dispose of all existing
improvements on the Leased Premises, including any and all personal property and equipment
located therein, at Developer's sole cost and expense. Developer hereby accepts the Leased
Premises subject to all of the foregoing and without any representation or warranty by City,
express or implied, except asset forth herein, and expressly without recourse to City as to the
physical condition of the Leased Premises or the suitability of the Leased Premises for
Developer's intended purposes.
C. Seller Disclosure Statement; Waiver of Right to Receive Seller
Disclosure Statement. PURSUANT TO RC W CH. 64.06, AS AMENDED BY CHAPTER
64, LAWS OF 2010, DEVELOPER HEREBY WAIVES ITS RIGHT TO RECEIVE THE
SELLER DISCLOSURE STATEMENT REFERRED TO THEREIN WITH RESPECT TO
THE LEASED PREMISES. THIS WAIVER DOES NOT EXTEND TO THE SECTION
OF THE DISCLOSURE STATEMENT ENTITLED "ENVIRONMENTAL". Developer
acknowledges receipt of the "Environmental" section of the Seller Disclosure Statement
and by executing this Lease, Developer waives its right to receive the balance of the
completed Seller Disclosure Statement with respect to the Leased Premises. Developer
further agrees that any information discovered by Developer concerning the Leased
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Premises shall not obligate Developer to prepare and deliver to Developer a revised or
updated Seller Disclosure Statement. Developer hereby waives any right to receive an
updated or revised Seller Disclosure Statement, regardless of the source of any new
information, either at the time of discovery of such new information or, if Developer
exercises its Option to purchase the Leased Premises, at Closing. Developer acknowledges
that it is a sophisticated party familiar with the ownership and development of real estate
projects similar to the Leased Premises and Developer has or will have adequate
opportunity to complete such independent inspections of the Leased Premises as it deems
necessary, and will elect whether to exercise its Option to acquire the Leased Premises
solely on the basis of and in reliance upon such examinations and not on any information
provided in any Seller Disclosure Statement or otherwise provided or to be provided by
City or by anyone acting or claiming to act by, through or under or on City's behalf. As
provided in RCW 64.06.013(2), the real property transfer disclosure statement shall be for
disclosure purposes only and shall not be considered part of this Lease or the Option to
Purchase set forth in Section 17 hereof.
3. Term.
A. Initial Term. This Lease shall commence on the Effective Date and
shall expire on the Expiration Date, unless sooner terminated as provided herein, or unless
the Initial Term is extended pursuant to the remainder of this Section 3.
B. Option to Extend Because of Appeal of Governmental Approvals. So
long as there exists no Event of Default by Developer (or any other responsible party as
applicable) under this Lease or other Project Agreements and there is no event of default under
any of the foregoing or that would otherwise, with the giving of notice, the passage of time, or
both, constitute an Event of Default by Developer under this Lease, Developer shall have the
right to extend the Initial Term of this Lease and its Option to purchase the Leased Premises
for up to nine (9) months if Developer has not satisfied all of the conditions precedent to
Developer's exercise of its Option to purchase the Leased Premises solely because of a timely
appeal to City's approval of the issuance of the Discretionary Permits for the portion of the
Project located on the Leased Premises; provided, however, that if any such appeal is not
finally concluded within nine (9) months following City's approval of the issuance of the
Discretionary Permits, as applicable, then City shall have the right to terminate this Lease (and
the Option to purchase the Leased Premises set forth in Section 17) without liability to
Developer upon sixty (60)days prior written notice to Developer.
C. Option to Extend for Force Majeure Events. If Developer has been
unable to satisfy all conditions precedent to Developer's exercise of its Option to purchase the
Leased Premises prior to the Expiration Date solely because of the occurrence of one or more
Force Majeure events, then provided (i) that there is no Event of Default by Developer under
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this Lease or Project Agreements and no event that with the giving of notice, the passage of
time or both, would constitute a default thereunder or an Event of Default by Developer under
this Lease, and (ii) Developer provides City with written notice and evidence in form
reasonably satisfactory to City of the occurrence of such Force Majeure event no later than
sixty (60) days prior to the then Expiration Date, Developer shall have the right to extend the
Term of this Lease and its Option to purchase the Leased Premises for the duration of such
Force Majeure event not to exceed three (3) months.
D. Outside Expiration Date. In no event shall the Term of this Lease, as it
may be extended pursuant to the provisions of Section 3.13 or 3.0 above be extended to a date
which is more than nine(9)months after the Initial Term.
E. Developer's Termination Right. Developer shall have the right upon
thirty (30)days prior written notice to City to terminate this Lease prior to the Expiration Date
without any further liability or obligation to City hereunder or otherwise in connection with
the Leased Premises, with the exception of payment of Liens, any and all Rents due for the
period prior to the effective date of termination or other charges that are Developer's
responsibility hereunder, or performance of any indemnification obligations set forth in
this Lease for the period arising or accruing for the period prior to Developer's termination of
the Lease pursuant to this Section 3.E. Termination of this Lease under this Section 3.E shall
automatically terminate Developer's Option to purchase the Leased Premises.
4. Rent.
A. Rent. City acknowledges receipt of the sum of One Dollar ($1.00)
which represents prepaid Rent for the Initial Term. Developer shall pay City Additional Rent
for any extension of the Term as provided in Section 3 above. Rent is fully earned once paid
and is nonrefundable.
B. Leasehold Excise Tax. In addition to prepaid Rent, Developer shall
pay City leasehold excise tax on Taxable Rent as defined in RCW 82.29A (currently 12.84%
of Taxable Rent)commencing as of the Effective Date. Leasehold excise tax is also payable on
any rental payments made during any extension term of the Lease. Notwithstanding anything to
the contrary contained herein, Developer shall be solely responsible for and shall indemnify
and hold City harmless from the total amount of any and all leasehold excise tax on the Leased
Premises, including but not limited to any additional leasehold excise taxes, interest or
penalties due and owing in connection with the lease of the Leased Premises pursuant to a
department of revenue taxable rent computation under RCW 82.29A.020(2)(g).
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C. Additional Rent. All amounts which Developer is required to pay to
City pursuant to this Lease (other than prepaid Rent) shall constitute additional rent
("Additional Rent") whether or not the same be designated as Additional Rent in this Lease.
Except as otherwise expressly provided herein, Developer shall perform all of its obligations
under this Lease at its sole cost and expense, and shall promptly pay all Additional Rent.
Developer shall also promptly pay to all third parties any other sums required to be paid by
Developer under this Lease, when the same shall be due and payable and in all events prior to
delinquency.
D. Absolute Triple Net Lease. This Lease is intended to be and shall be
construed as an absolutely t r i p I e net lease pursuant to which City shall not, except as
otherwise expressly provided in this Lease, 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 payments of any kind whatsoever or be under
any other obligation or liability, except as otherwise expressly provided in this Lease, and
Developer shall make any and all payments required hereunder.
5. Taxes and Utilities.
A. Payment of Taxes by Developer. With the exception of leasehold
excise tax which shall be paid to City as provided in Section 4.B above, Developer shall pay all
Taxes directly to the applicable governmental agency prior to delinquency and shall provide
proof of such payment promptly to City upon request. To the extent Taxes or other charges
can be paid in installments, Developer may pay such Taxes in installments and shall only
be liable for Taxes which accrue from and after the Effective Date. With respect to any
general or special assessments which may be levied against or upon the Leased Premises, or
which under the Laws then in force may be evidenced by improvements 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. Developer's obligation to pay
such Taxes shall survive the expiration or earlier termination of this Lease.
B. Personal Property Taxes. Developer shall pay prior to delinquency all
personal property taxes, if any, assessed against and levied upon all personal property located
on the Leased Premises, if any. Developer shall cause all such property to be assessed and
billed separately from the Leased Premises.
C. Utilities. City shall not be responsible for the cost of providing any
Utilities to the Leased Premises and shall not be liable for any loss, injury or damage to person
or property caused by or resulting from any variation, interruption, or failure of utilities due to
any cause whatsoever, and Rent shall not abate as a result thereof. Developer shall be solely
responsible for determining whether available Utilities, if any, and their capacities will meet
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Developer's needs during the Term of this Lease. In addition, Developer shall be solely
responsible for and shall pay separately for all charges for Utilities used or consumed on the
Leased Premises. It is understood that City shall not be required to provide any Utilities to
Developer, and Developer shall make any necessary arrangements to have all such Utilities
billed directly to and paid for directly by Developer.
6. Use of Leased Premises; Permitted Use.
A. Use of Leased Premises; Permitted Use. Developer shall have the right
to use the Leased Premises for construction of the Initial Infrastructure only pursuant to the
Initial Infrastructure Permits, for construction staging related to Developer's construction of the
portion of the Project located on the Phase 1 Property, for temporary parking, for erecting signs
that comply with City's sign ordinance, and for any pre-construction activities related to the
Project as authorized by City in writing, all at Developer's sole cost and expense (the
"Permitted Use") and for no other purpose without the prior written consent of City, which
consent shall not unreasonably be withheld.
B. Quiet Enjoyment. Upon payment by Developer of Rent as herein
provided and upon the observance and performance of the covenants, terms and conditions on
Developer's part to be observed and performed, Developer shall peaceably and quietly hold
and enjoy the Leased Premises for the Term hereby demised without hindrance or interruption
by City or any person or persons lawfully or equitably claiming, by, through or under City,
except for the rights of parties under Permitted Exceptions.
C. No Insurance Cancellation. Developer shall not do, bring, or keep
anything in or about the Leased Premises that will cause a cancellation of any insurance
required by Developer to have in place for the Leased Premises.
D. No Unlawful Use, Waste, Nuisance or Damage. Developer shall
maintain the Leased Premises in a clean and orderly condition remove all debris and rubbish
and maintain construction fencing or other construction barricades or screening when required by
law and otherwise in good condition and repair. Developer shall not allow the Leased Premises
to be used for any unlawful purpose, nor shall Developer use the Leased Premises in any
manner that will constitute waste of the Leased Premises or a nuisance.
E. Compliance with Laws. Developer shall comply with all Laws
concerning the Leased Premises and Developer's use of the Leased Premises, including
without limitation, Environmental Laws. So long as no Event of Default has occurred and is
continuing, Developer shall have the right to contest at its sole cost and expense and after
prior notice to City, by appropriate legal proceedings conducted in good faith and with due
diligence, any Law, Tax, rule, order, ordinance, regulation or other requirement affecting the
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Leased Premises and to postpone compliance with the same during the pendency of such
contest provided that the enforcement of such Law, Tax, rule, order, ordinance, regulation
or other requirement is stayed during the pendency of such contest and the contest will not
subject City to criminal or civil penalty or fine or jeopardize title to the Leased Premises.
City shall cooperate with Developer in such contest at no cost to City and shall execute any
documents or provide such information as Developer may reasonably request in furtherance
of such proceedings. Developer shall proceed diligently and in good faith to resolve such
contest and shall not postpone compliance with any Law, rule, order, ordinance, regulation
or other requirements if the same shall invalidate any insurance required by this Lease.
Developer shall indemnify, protect, defend and hold City, the Property and the Leased
Premises harmless from any Lien or liability with respect to such Law, Tax, rule, order,
ordinance, regulation or other requirement or contest thereof, including all cost and expenses
related thereto.
7. Liens.
A. Covenant Against Liens. Except as permitted under Section 7.13,
Developer covenants and agrees that it shall not suffer or permit any Liens to be attached to,
upon or against the Property the Leased Premises or any portion thereof or any Rent payable
under this Lease arising out of Developer's possession, use, occupancy, repair, maintenance or
construction of the Initial Infrastructure or otherwise in connection with Developer's activities
on the Leased Premises, or by reason of the furnishing of labor, services, materials or
equipment to the Leased Premises or to Developer or any of the Developer Parties (other
than Liens arising through the actions of City not consented to by Developer). Developer
agrees to indemnify, protect, defend and hold City harmless from and against all liabilities,
losses, damages, expenses and costs (including reasonable attorney's fees and costs)
incurred in connection with any such Lien(s) arising during the Term of this Lease (other
than Liens arising through actions of City not consented to by Developer). Developer's
obligations pursuant to this Section TA shall survive the expiration or earlier termination of this
Lease.
B. Covenant to Remove Developer Liens. Developer will promptly,
and in all events within thirty (30) days following the attachment of same, remove and
discharge any and all Liens (other than Liens arising through actions of City not consented to
by Developer) which attach to, upon or against the Property, the Leased Premises or any
portion thereof. Developer reserves the right to contest the validity or amount of any such
Liens in good faith; provided that within thirty (30) days after the filing of such Liens,
Developer discharges said Liens of record or records a bond which complies with the
requirements of RCW 60.04.161 eliminating said Liens as an encumbrance against the
Property and/or the Leased Premises. In the event Developer shall fail to so remove any
such Liens, City may take such action as City shall reasonably determine to remove such
Liens and all costs and expenses incurred by City including, without limitation, amounts
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paid in good faith settlement of such Liens and attorneys' fees and costs shall be paid by
Developer to City as Additional Rent, together with interest thereon at the rate of eight
percent (8%) interest per annum from the date advanced until paid. Developer's
obligations pursuant to this Section 7.13 shall survive the expiration or earlier termination of this
Lease.
C. Disclaimer of Liability by City. Nothing contained in this Lease
shall be construed as the consent or request of City, express or implied, for the performance by
Developer of any labor or services or for the furnishing of any materials or equipment for
any construction, alteration, addition, repair to the Property or the Leased Premises (or any part
thereof). NOTICE IS HEREBY GIVEN CITY WILL NOT BE LIABLE FOR ANY LABOR,
SERVICES, MATERIALS OR EQUIPMENT FURNISHED OR TO BE FURNISHED TO
DEVELOPER OR ANYONE HOLDING ANY INTEREST IN THE PROPERTY OR THE
LEASED PREMISES OR ANY PART THEREOF THROUGH OR UNDER DEVELOPER
AND NO MECHANIC'S OR OTHER LIENS FOR ANY SUCH LABOR, SERVICES,
MATERIAL OR EQUIPMENT SHALL ATTACH TO OR AFFECT THE INTEREST OF
CITY IN THE LEASED PREMISES OR THE PROPERTY.
8. Development Agreement. In case of a conflict between the terms of this Lease
and the terms of the Development Agreement regarding development of the Project, the terms
of the Development Agreement shall control.
9. Insurance and Indemnification.
A. Insurance. Developer shall procure and maintain, at a minimum, for
the Term of this Lease, the following insurance against claims for injuries to persons or
damage to property which may arise from, or in connection with the performance of work
hereunder by Developer, or any of the Developer Parties. The cost of such insurance shall
be paid by Developer or the Developer Parties. Coverage shall be at least as broad as:
(i) General Liability: Insurance Services Office form number
(CGOO 001) covering Commercial General Liability, with a limit of not less than $2,000,000
combined single limit per occurrence, $2,000,000 aggregate.
(ii) Builders Risk. Builder's risk property insurance on a "broad
form" basis covering all work to be done on the Project for the full 100% replacement cost of
all such improvements. Coverage shall be provided for (i) "extra expense"; (ii) all materials to
be stored onsite, offsite and while in transit to the jobsite; (iii) "cold testing" of building
systems; (iv) Developer's loss of rents and soft costs of the Project due to delays in Project
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completion caused by covered peril losses to the Project; (v) the increased cost of construction,
debris removal and demolition due to the operation of building laws and code upgrades; and
(vi) direct physical damage to the Project and loss of use caused by an off premises power
interruption. The policy shall include a waiver of subrogation provision and shall contain a
separate debris removal limit of liability which is separate from, in addition to, and not part of
the overall policy limit of liability. Developer shall have the required Builder's Risk Policy in
place no later than commencement of construction and coverage shall remain in place until
occupancy of the Project commences with City named as a loss payee. Sublimits for
earthquake and flood may be acceptable with the express written consent of City.
(iii) Automobile Liability: Insurance Services Office form number
(CA 00 01) covering Business Automobile Coverage, symbol 1 "any auto"; or the
combination of symbols 2, 8, and 9, with a limit of not less than $1,000,000 combined single
limit per occurrence, $2,000,000 aggregate.
(iv) Workers' Compensation: Workers' Compensation coverage, as
required by the Industrial Insurance Act of the State of Washington, statutory limits.
(a) Deductibles and Self-Insured Retentions. Any
deductibles or self-insured retentions must be declared to and approved by City, which
approval shall not be unreasonably withheld or delayed. The deductible and/or self-insured
retention of the policies shall be the sole responsibility of Developer.
(b) Other Insurance Provisions. The insurance policies
required by this Lease are to contain or be endorsed to contain the following provisions
where applicable:
(A) Liability Policies:
(i) City, its officers, officials, employees and
agents are to be covered as additional insureds as respects: liability arising out of activities
performed by or on behalf of Developer or any of the Developer Parties in connection with
this Lease.
(ii) Developer's insurance coverage shall be
primary insurance as respects City, its officers, officials, employees and agents. Any
insurance and/or self-insurance maintained by City, its officers, officials, employees and/or
agents shall not contribute with Developer's insurance or benefit Developer in any way.
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(iii) Developer's insurance shall apply
separately to each insured against whom a claim is made and/or lawsuit is brought, except
with respect to the limits of the insurer's liability.
(iv) By requiring such minimum insurance,
City shall not be deemed to, or construed to, have assessed the risks that may be
applicable to Developer associated with this Lease. Developer shall assess its own risks and,
if it deems appropriate and/or prudent, maintain greater limits or broader coverage.
(v) Insurance required under this Lease may
be covered under a blanket policy of insurance so long as such blanket policy of insurance
meets the minimum amounts of insurance required hereunder.
(B) All Policies. Coverage shall not be canceled
until after thirty (30) days' (10 days' for non-payment) prior written notice has been given to
City.
(C) Acceptability of Insurers.
(i) Unless otherwise approved by City, or its
risk manager, insurance is to be placed with insurers with a Best's rating of no less than
A:VIII, or, if not rated by Best's, with minimum surpluses the equivalent of Best's surplus
size VIII. All insurance companies providing insurance under this Lease shall be authorized
to do business in the State of Washington.
(ii) If, at any time, any of the foregoing
policies shall fail to meet the above minimum standards, Developer shall, upon notice to that
effect from City, promptly obtain a new policy, and shall submit the same to City, with
certificates and endorsements, for approval.
(D) Verification of Coverage. Developer shall
furnish City with evidence of the insurance required by this Lease. City reserves the right
to require Developer to deliver complete certified copies of all required policies at any time.
B. Indemnification.
(i) By Developer. Developer shall protect, defend, indemnify, and
save harmless City, and its officers, officials, employees and agents, from any and all claims,
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demands, suits, penalties, losses, damages, judgments, or costs of any kind whatever
(hereinafter "Claims"), to the extent such Claims arise directly or indirectly out of or in any
way result from the acts or omissions of Developer, or any of the Developer Parties or their
respective officers, employees, agents, contractors and/or subcontractors of all tiers, in the
performance of its obligations under this Lease. Developer's obligations under this Section 9.13
shall include, but not be limited to:
(A) The duty to promptly accept tender of defense and
provide defense to City at Developer's own expense.
(B) The duty to indemnify and defend City from any Claim
brought by or on behalf of any of the Developer Parties or any of their respective agents or
employees. The foregoing duty is specifically and expressly intended to constitute a waiver of
Developer's immunity under Washington's Industrial Insurance Act, RCW Title 51, as respects
City only, with a full and complete indemnity and defense of Claims made by employees of
Developer or any of the Developer Parties. The parties acknowledge that these provisions
were mutually negotiated and agreed upon by them.
(C) In the event City incurs any judgment, award, and/or
costs arising therefrom, including attorneys' fees, to enforce the provisions of Section 9.B,
all such fees, expenses, and costs shall be paid by Developer.
Notwithstanding the provisions contained in Subsection 9.13, Developer's obligation to
indemnify City shall not extend to any Claim,to the extent caused by the negligence of City or
any of its officers, officials, employees or agents, or by breach of this Lease by City.
(ii) By City. To the extent permitted by law, City shall protect,
defend, indemnify, and save harmless Developer and its officers, officials, employees and
agents, from any and all Claims, to the extent such Claims arise out of or in any way result
from the negligent acts, omissions or willful misconduct of City in the performance of its
obligations under this Lease. City's obligations under this Section 9.13 shall include, but not be
limited to:
(A) The duty to promptly accept tender of defense and
provide defense to Developer at City's own expense.
(B) The duty to indemnify and defend Developer from any
Claim brought by or on behalf of City's agents or employees. The foregoing duty is
specifically and expressly intended to constitute a waiver of City's immunity under
Washington's Industrial Insurance Act, RCW Title 51, as respects Developer only, with a full
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and complete indemnity and defense of Claims made by employees of City. The parties
acknowledge that these provisions were mutually negotiated and agreed upon by them.
(C) In the event Developer incurs any judgment, award,
and/or costs arising therefrom, including attorneys' fees, to enforce the provisions of this
Section 9.13, all such fees, expenses, and costs shall be paid by City.
Notwithstanding the provisions contained in Subsection 9.13 above, City's
obligation to indemnify Developer shall not extend to any Claim to the extent caused by the
negligence of Developer or any of the Developer Parties, or by breach of this Lease by
Developer.
10. Condemnation of the Property.
A. Entire Condemnation. If the Leased Premises are subject to a taking in
whole by eminent domain, or conveyed under a threat of condemnation, this Lease shall
automatically terminate as of the earlier of the date title vests in the condemning authority or
the condemning authority first has possession of the Leased Premises and all Rent and other
payments shall be paid to that date. City shall be entitled to the entire award from the
condemning authority attributable to the value of the Leased Premises and Developer shall
make no claim for the value of its leasehold.
B. Partial Condemnation. if less than all or substantially all of the Leased
Premises shall be taken as a result of the exercise of the power of eminent domain, then
Developer may, at its option, terminate this Lease by written notice to the City. If the Lease
is so terminated, the Option Payment shall be returned to Developer. If the Lease is not so
terminated, this Lease shall continue in full force and effect as to the remaining Leased
Premises and there shall be no abatement of Rent or adjustment of the Purchase Price.
11. Assignment; Subletting.
A. Assignments and other Transfers During Term of Lease. Developer
shall not assign, transfer, mortgage, pledge, hypothecate or encumber this Lease or any
interest thereon, including, but not limited to its Option to purchase the Leased Premises, or
sublet the Leased Premises or any part thereof, without City's prior written consent in each
instance, which consent may be withheld by City in its sole discretion; provided,,however,
that Developer may assign or transfer its interest under this Lease to an affiliated entity that: (i)
is under common ownership and control with Developer and/or the principals of Developer;
and (ii) assumes in writing all obligations of Developer under this Lease and all Project
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Agreements. Any request by Developer for such consent shall be in writing, which shall
set forth the details as to the proposed assignment, transfer, mortgage, pledge, encumbrance
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.
B. Transfers of Interest in Developer. Developer acknowledges that City is
relying upon the personal knowledge, expertise and experience of Developer and its principals,
and City would not have entered into this Lease or granted Developer an Option to purchase
the Option Property, but for the personal knowledge, expertise and experience of John
McKenna and Brett Jacobsen, and John McKenna's and Brett Jacobsen's continued ownership
of an interest in Developer. Accordingly, the persons holding direct or indirect beneficial
interests in Developer other than John McKenna and Brett Jacobsen may transfer, convey or
assign interests in Developer so long as John McKenna and Brett Jacobsen shall continue to
hold the same proportionate interest in Developer and John McKenna and Brett Jacobsen shall
continue to have a material and active involvement in the on-going management and
development of the Project until Final Completion of the Project.
C. Definition of Transfer. As used herein, a "transfer" includes any
mortgage, pledge or sale, transfer, conveyance, assignment or other disposition of fifty-one
percent (51%) or more of the total outstanding voting membership interests in Developer
(each, a "Controlling Interest"), whether voluntary or involuntary, by operation of law or
otherwise, including transfers to a trustee in bankruptcy, receiver or assignee for the benefit of
creditors, any merger, consolidation, liquidation or dissolution of Developer and includes the
sale, transfer, mortgage, pledge or encumbrance of a Controlling Interest in Developer. The
term "transfer" shall also include a transfer of interest by John McKenna or Brett Jacobsen that
violates the terms of Section 1 I.B. above.
12. Title to Leased Premises.
A. Title to Leased Premises. City shall execute and deliver to Developer
at Closing a bargain and sale deed in the form attached hereto as Exhibit F ("Deed") which
shall be accepted by Developer, conveying fee title to the Leased Premises subject to the
Permitted Exceptions determined in accordance with Sections B and C below.
B. Title Insurance. On the Closing Date, City shall cause the Title
Company to issue Developer a standard coverage Owner's Policy of Title Insurance (the
"Title Policy"), with liability in the amount of the Option Price insuring fee simple title to the
Leased Premises in Developer, against any loss or damage by reason of defects in City's title
to the Leased Premises other than the Permitted Exceptions. Developer may, at its sole cost
and expense, request extended coverage or endorsements to the Title Policy, but the
availability of such extended coverage or endorsements shall not be a condition precedent to
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Closing. Developer, at Developer's sole cost and expense, may further elect to obtain a
leasehold policy of title insurance insuring its interests in the Leased Premises during the Term.
C. Title Review. Developer acknowledges that the Title Company has
provided Developer with a preliminary commitment for title insurance for the entire Property
under First American Title Insurance Order No. 4209-2374009 dated August 8, 2016 as
thereafter supplemented ("Title Commitment"). Developer has approved all of the special
exceptions set forth in Exhibit G attached hereto (the "Permitted Exceptions").
(i) Updated Title Report. Developer shall have the right to order
a supplement to the Title Commitment at any time. Developer shall advise City what
exceptions to title, if any, in addition to the Permitted Exceptions, will be accepted by
Developer within ten (10) days following Developer's receipt of the supplement to the
Title Commitment; provided, however, that Developer shall not be entitled to object to
agreements and easements that are required under the terms of any Governmental
Approvals required to build the Project; or easements, liens or other exceptions arising
through Developer or any of the Developer Parties or Project Agreements, and City shall
be responsible for removing or terminating any additional exceptions to title created by or
through City without the consent of Developer after the Effective Date. If Developer fails
to object in writing to any such additional exceptions within such ten (10) day period,
Developer shall be deemed to have disapproved the same as Permitted Exception(s).
(ii) City's Notice. City shall have ten (10) days after receipt of
Developer's notification within which to notify Developer whether or not it elects to cure
or remove any of the disapproved exceptions (as limted by subsection 12.C.(i) above) of
which City receives timely notice pursuant to Section 12.C(i). City's failure to so notify
Developer shall constitute City's election to not remove all such exceptions.
Notwithstanding the foregoing, City shall remove all exceptions it is required or otherwise
elects to remove on or before the Closing Date for Developer's purchase of the Leased
Premises.
(iii) Developer's Election. If City does not elect to remove all
exceptions disapproved by Developer under Section 12.C(i) (with the exception of any
exceptions City is required to remove thereunder), Developer may elect to terminate this
Lease and Option by written notice to City given within ten (10) days following City's notice,
whereupon this Lease and Option each shall automatically terminate, and except as otherwise
expressly provided herein, neither party hereto shall have any further rights, duties or
obligations under this Lease. If Developer does not elect to terminate this Lease within the
time frame set forth herein, disapproved exceptions that City has not elected to remove (and is
not required to remove) shall become Permitted Exceptions for the Leased Premises.
(iv) Title Not Insurable. If title is not insurable subject only to the
Permitted Exceptions determined in accordance with this Lease, Developer may elect to
proceed with the Closing of the purchase of the Leased Premises despite such noninsurability,
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thereby accepting any such matters as Permitted Exceptions, or Developer may terminate this
Lease by written notice to City in which event this Lease and Option shall automatically
terminate, and except as otherwise expressly provided herein, neither party hereto shall have
any further rights, duties or obligations under this Lease. In addition, if City fails to remove
any additional exception that City is required to remove hereunder, City shall be in default
hereunder and the terms of Section 19.0 below shall apply.
13. Representations. In order to induce each other to enter into this Lease and
the transactions contemplated hereby, City and Developer make the following
representations as of the Effective Date and, if Developer exercises the Option to purchase
the Leased Premises, as of the Closing Date:
A. City Representations. City represents to Developer as follows:
(i) Authority. City is a municipal corporation duly organized and
existing under the laws of the State of Washington. Pursuant to City Council motion dated
August 15, 2017, the City Council authorized its Mayor or Mayor pro tem to execute and
deliver this Lease on behalf of City. No other authorizations or approvals of the City Council
are required for City to lease the Leased Premises to Developer or sell the Leased Premises (if
Developer exercises the Option to purchase the Leased Premises) to Developer.
(ii) No Conflicts. Neither the execution, delivery nor performance
by City of its obligations under this Lease nor the consummation of the transactions
contemplated hereunder will constitute a breach of any contract, evidence of indebtedness or
other financing agreement to which City is a party or by which City is bound.
(iii) Title. To City's Knowledge, there are no liens, encumbrances or
other matters affecting title to the Leased Premises except as disclosed in the Title
Commitment. City has not entered into any agreement granting any person the right to use or
lease all or any portion of the Leased Premises, other than execution of this Lease with
Developer, nor has City granted any option or otherwise committed itself to sell the Leased
Premises or any portion thereof to any party other than Developer.
(iv) No Litigation. There is no litigation pending or, to City's
Knowledge, threatened against the Leased Premises.
(v) No Condemnation. There are no condemnation proceedings
pending or, to City's Knowledge, threatened against the Leased Premises.
(vi) Compliance with Law. Except as delivered to Developer
pursuant to the Purchase Agreement as part of the Property Information, City has not received
any written notification from any governmental authority requiring any work to be done on the
Leased Premises or advising of any condition (including, without limitation, hazardous
substances or wastes) that would adversely affect the use or development of the Leased
Premises. To City's knowledge, there are no hazardous substances or waste present in, on or
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under the Leased Premises in any manner or quantity that would violate any applicable law or
regulation.
(vii) Defaults. City is not in default and there has occurred no
uncured event that, with notice, the passage of time or both would be a default, under any
material contract, agreement, lease, encumbrance, or instrument pertaining to the Leased
Premises which will be binding on Developer or the Leased Premises after the Closing
described in Section 18 below.
(viii) City's Knowledge. As used herein, the term "to City's
Knowledge" means the current actual knowledge of Kurt Hanson, Economic Development
Manager, and Ben Wolters, Director, Economic & Community Development, for City.
In the event that after the Effective Date and prior to the Closing Date,
City becomes aware of the existence of any fact (including a fact revealed by Developer and
not known to City as of the Effective Date), that makes any of the representations set forth
above no longer true and correct, City shall promptly notify Developer of the same. If and to
the extent of disclosure by City of any such change in its representations, Developer may elect
to terminate this Lease on or before the date that is the later of(i) fourteen (14) Business Days
after Developer's receipt of such notice, or (ii) if Developer has exercised the Option to
purchase the Leased Premises, the Closing Date, and the Closing Date shall be extended, if
required to provide Developer with a minimum of fourteen (14) Business Days to evaluate
such additional information. If a representation by City is no longer true and accurate due to a
material breach by City, Developer shall also have the rights described in Section 19.0 below.
B. Developer Representations: Developer represents to City as follows:
(i) Authority. Developer is a limited liability company duly
organized and validly existing under the laws of the state of Washington and has the
power to carry on its business as now conducted. All corporate or other action on the part
of Developer and its directors and shareholders necessary for the execution, delivery and
performance of this Lease has been duly taken and Developer has full corporate power and
authority to enter into, execute and deliver this Lease and perform its obligations under this
Lease.
(i i) No Conflicts. Neither the execution, delivery or performance
by Developer of its obligations under this Lease nor the consummation of the transactions
contemplated hereunder (including the purchase of the Leased Premises if Developer exercises
the Option granted under Section 17 hereof) will constitute a breach of any contracts or
agreements of any kind to which Developer is a party or by which Developer is bound,
including but not limited to any evidence of indebtedness or other financing agreement to
which Developer is a party or by which Developer is bound.
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(iii) All Consents Obtained. No consents, approvals, permissions,
authorizations, orders or licenses of any person or of any Governmental Authority is necessary
in connection with the execution, delivery and performance of this Lease or any transaction
contemplated hereby. There is no provision in Developer's governing documents that would be
contravened by the execution and delivery of this Lease or the performance of any provision,
condition,covenant or other term required to be performed by Developer under this Lease.
(iv) No Litigation. There is no pending or, to Developer's
Knowledge, threatened litigation, tax claim, action, dispute or other proceeding of any nature
whatsoever affecting Developer which could have a material adverse effect on the legal
existence, power or operations of Developer or the financial condition of Developer or the
ability of Developer to perform its obligations under this Lease, and Developer is not in default
with respect to any Requirements of Law that might result in any such effect.
(v) Development of Project. Developer represents and agrees that if
Developer exercises the Option to purchase the Leased Premises, the Leased Premises will
be used solely for the purposes of timely development of the Project and not held by
Developer for speculation.
(vi) Developer's Knowledge. As used herein, the term "Developer's
Knowledge" means the current actual knowledge of John McKenna and Brett Jacobsen.
In the event that after the Effective Date and prior to the Closing Date,
Developer becomes aware of the existence of any fact that makes any of the representations set
forth above no longer true and correct, Developer shall promptly notify City of the same. If
and to the extent of disclosure by Developer of any such change in its representations, City
may elect to terminate this Lease (and the Option to purchase the Leased Premises contained
herein) on or before the date that is the later of (i) fourteen (14) Business Days after City's
receipt of such notice, or (ii) if Developer has exercised the Option to purchase the Leased
Premises, the Closing Date, and the Closing Date shall be extended, if required to provide City
with a minimum of fourteen (14) Business Days to evaluate such additional information.
14. "AS-IS" Sale. If Developer exercises the option to purchase the Leased
Premises, Developer acknowledges that it has had an opportunity to and has conducted a
thorough investigation of the Leased Premises and is in all respects knowledgeable and
familiar with the present condition and state of repair of the Leased Premises. Developer
acknowledges that it will be concluding the purchase of the Leased Premises based solely upon
Developer's inspection and investigation of the Leased Premises and that the Leased Premises
is being sold to Developer in an "AS-IS" condition and state of repair, and with all faults, of
any kind or nature and without any representations or warranties, express, implied or statutory,
EXCEPT AS SPECIFICALLY SET FORTH IN THIS LEASE, THE PURCHASE AND
SALE AGREEMENT AND THE DEVELOPMENT AGREEMENT, CITY MAKES NO
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REPRESENTATIONS OR WARRANTIES WHATSOEVER WITH RESPECT TO THE
PHYSICAL CONDITION OR VALUE OF THE LEASED PREMISES, THE PRESENCE OR
ABSENCE OF HAZARDOUS SUBSTANCES ON THE LEASED PREMISES, SOILS
CONDITIONS, OR OTHER PHYSICAL CHARACTERISTIC OF THE LEASED
PREMISES OR THE SUITABILITY OF THE LEASED PREMISES FOR DEVELOPER'S
INTENDED DEVELOPMENT. CITY MAKES NO REPRESENTATION WHATSOEVER
REGARDING THE FINANCIAL FEASIBILITY OF THE PROPOSED REDEVELOPMENT
OF THE LEASED PREMISES. Except as specifically set forth in this Lease or in the
Purchase and Sale Agreement, upon recording of the Deed to the Leased Premises, Developer
shall be deemed to have accepted the Leased Premises in its "AS-IS, WHERE-IS" condition
and state of repair and does hereby waive and release City, its officials, officers, employees
and agents from any and all claims for damages, losses, liabilities, costs and expense
whatsoever (including, without limitation, reasonable attorneys' fees and costs), whether direct
or indirect, known or unknown, foreseen or unforeseen, which may arise on account of or in
any way arising out of or in connection with the physical or environmental condition of the
Leased Premises or any Requirements of Law applicable thereto. DEVELOPER HEREBY
SPECIFICALLY ACKNOWLEDGES THAT DEVELOPER HAS CAREFULLY
REVIEWED THIS SECTION AND DISCUSSED ITS MEANING WITH LEGAL COUNSEL
OF ITS CHOICE, THAT DEVELOPER IS FULLY AWARE OF ITS CONSEQUENCES,
AND THAT THE PROVISIONS OF THIS SECTION ARE A MATERIAL PART OF THIS
AGREEMENT AND ARE INTENDED TO BE BINDING UPON DEVELOPER AND ITS
SUCCESSORS AND ASSIGNS NOW AND AT CLOSING. THIS SECTION SHALL
SURVIVE CLOSING.
Developer's Initials:
15. Conditions Precedent to Developer's Exercise of Option to Purchase the
Leased Premises. As conditions precedent to City's obligation to sell the Leased Premises to
Developer and Developer's exercise of its Option to purchase the Leased Premises, the
following conditions must be met to the reasonable satisfaction of City:
A. Compliance by Developer. Developer shall have materially
performed, observed and complied with (and shall be in current compliance with) all of the
covenants, agreements, obligations and conditions required by this Lease as required to
be performed, observed and complied with by it prior to or as of the Closing Date.
B. Correctness of Representations. The representations of Developer set
forth in this Lease shall be true and correct in all material respects on and as of the date the
Option is exercised and the Closing Date.
C. No Bankruptcy. Developer shall not have: (a) applied for or consented
to the appointment of a receiver, custodian or trustee for any of his or its property, (b) become
insolvent, (c) failed generally or admitted in writing its inability to pay its debts as they become
due, (d) been consolidated, liquidated or dissolved, (e) filed a petition or action for relief
relating to any federal or state bankruptcy, reorganization, insolvency, moratorium or similar
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statute or any other law or laws for the relief or of relating to debtors, or (f) made an
assignment for the benefit of its creditors or entered into an agreement of composition with its
creditors, nor (g) had a petition been filed against Developer under any federal or state
bankruptcy, reorganization, insolvency, moratorium or similar statute, or any other law or laws
for the relief of or relating to debtors.
D. Project Agreements. Developer shall have materially performed,
observed and complied with (and shall be in current compliance with) all of the covenants,
agreements, obligations and conditions required of it pursuant to the Project Agreements and
any other permits or approvals for the Project or other agreements with City appertaining to the
Property, or Leased Premises, including but not limited to any and all discretionary or
construction—related permits.
E. Other. In addition to the foregoing:
(i) The podium building on the Phase I Property shall be fully
framed in.
(ii) All Initial Infrastructure for the Phase 1 Property and the Leased
Premises pursuant to the Initial Infrastructure Permits shall be complete and accepted or
dedicated to City, as applicable.
(iii) A guaranty of completion and performance by FNW, Inc. to City
for that portion of the Project on the Leased Premises in form and substance substantially
similar to the guaranty of completion and performance for the Phase 1 Property shall have been
executed and delivered to City.
The foregoing conditions contained in this Section 15 are solely for the benefit
of City. If any of the foregoing conditions are not satisfied, City shall have the right, at its sole
election, to waive the condition and proceed with the sale of the Leased Premises.
16. Developer's Conditions Precedent to Closing of Purchase of Leased Premises.
If Developer elects to exercise the Option granted under Section 17 hereof, Developer's
obligations to close the sale of the Leased Premises are subject to satisfaction of each of
the following conditions, each of which is for the benefit of Developer and any or all of
which may be waived by Developer in writing at its option:
A. Compliance by City. City shall have materially performed, observed
and complied with all of the covenants, agreements, obligations and conditions required by
this Lease to be performed, observed and complied with by it prior to the Closing Date.
B. Correctness of Representations. The representations of City set forth in
this Lease shall be true and correct in all material respects on and as of the date the Option is
exercised and the Closing Date.
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C. Condition of Property. City shall be in a position to deliver possession
of the Leased Premises at Closing free and clear of all leases, liens and other exceptions
(except for the Permitted Exceptions) and except for encumbrances created by or through
Developer.
D. Title Policy. The Title Company shall be in a position to issue
Developer the Title Policy in accordance with Section 14 and the Pro Forma Title Policy
attached hereto as Exhibit H.
The foregoing conditions contained in this Section 16 are solely for the benefit
of Developer. If any of the foregoing conditions are not satisfied, Developer shall have the
right, at its sole election, to waive the condition and proceed with the sale of the Leased
Premises.
17. Option to Purchase Leased Premises.
A. Option to Purchase. Provided that Developer is not in default under
this Lease (including payment of any Additional Rent then due and owing), and Developer
has satisfied all of the Conditions Precedent to Developer's exercise of its Option to Purchase
the Leased Premises set forth in Section 15, Developer shall have the option to purchase the
Leased Premises (the "Option") and thereby terminate this Lease at any time prior to the
Expiration Date by giving notice of its election to exercise the Option, paying the Option Price
set forth in Section 17.0 and delivering the documents required under Section 18 of this
Lease.
B. Exercise of Option. Developer shall give written notice of its election to
exercise its Option to purchase the Leased Premises by delivery of written notice to City prior to
the Expiration Date as it may be extended hereunder.
C. Payment of Option Price. The Option Price shall be $10,500,000, less
the purchase price paid by Developer on the Phase 1 Property Closing, payable in cash on the
Closing Date. Developer's earnest money deposit of $500,000 made under the Purchase
Agreement shall serve as an option payment under the Option and shall be applicable to the
Option Price at Closing. The entire amount of the option payment is nonrefundable to
Developer, except as otherwise provided in the Purchase Agreement, or in this Lease.
18. Closing of Purchase of Leased Premises.
A. Closing Procedures.
(i) "Closing" shall occur when the Deed conveying title to the
Leased Premises to Developer is recorded, the Option Price has been disbursed to City and
Developer has executed and delivered the documents required under Section 18.0 below to
City. The Closing shall be held at the offices of Escrow Agent. The Closing Date shall be
on a date designated by Developer which shall be on a Business Day not less than thirty (30)
days nor more than ninety (90) days following exercise of the Option. Such date may not
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be extended without the written approval of City and Developer except as otherwise
expressly provided in this Lease. All documents shall be deemed delivered on the date the
Deed is recorded.
(ii) In the event the Closing does not occur on or before the
Closing Date, Escrow Agent 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.
B. Delivery by City. On or prior to the Closing Date, City shall deposit
with Escrow Agent, and shall deliver copies to Developer to the extent not previously
delivered priorto the Closing, the following:
(i) The Deed to the Leased Premises in the form attached hereto
as Exhibit E executed by City in recordable form conveying fee simple title to the Leased
Premises free and clear of all liens and encumbrances, except for the Permitted Exceptions,
together with a duly executed real estate affidavit;
(ii) Affidavit executed by City which satisfies the requirements of
Section 1445 of the Unites States Internal Revenue Code regarding foreign investors;
Policy;
(iii) City shall cause the Title Company to issue Developer the Title;
(iv) Such resolutions, authorizations, certificates or other corporate
documents or agreements relating to City as shall be reasonably required by Developer or
the Title Company in connection with this transaction; and
(v) City's share of Closing Costs.
C. Delivery by Developer. On or before the Closing Date, Developer
shall deposit with Escrow Agent the Option Price (less any adjustments authorized under
this Lease) and shall deposit the following:
(i) The Deed duly executed by Developer in recordable form,
together with a duly executed real estate excise tax affidavit;
(ii) Such resolutions, authorizations, certificates or other ordinances
or agreements relating to Developer as shall be reasonably required by City or the Title
Company in connection with this transaction; and
(iii) Developer's share of Closing Costs.
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D. City's Closing Costs. In connection with the Closing, City shall pay
the real estate excise tax, if any, the cost of the Title Policy with liability in an amount equal
to the Option Price to the extent of the premium for standard owner's coverage, one-half of
the escrow fees and City's attorney's fees.
E. Developer's Closing Costs. In connection with the Closing,
Developer shall pay the cost of the Title Policy to the extent in excess of the premium for
standard owner's coverage together with all endorsements to the Title Policy requested by
Developer, the cost of any survey required by Title Company in connection with the Title
Policy, one-half of the escrow fees, all recording fees, all costs associated with Developer's
financing, including title premiums and recording costs and Developer's attorney's fees.
F. Prorations. All revenue and all expenses of the Leased Premises
(other than real property taxes) to the extent not otherwise payable by Developer under this
Lease shall be prorated as of the Closing Date. Because City is exempt from real property
taxes, no proration of real property taxes, special assessments or surface water management
charges is required; however, Developer shall be responsible for payment of all property
taxes, including special assessments and surface water management charges which affect the
Leased Premises from and after the Closing Date.
G. Recordation and Delivery of Documents. Provided that Escrow
Agent has not received prior written notice from either party that any condition set forth
elsewhere in this Lease has not been fulfilled, Escrow Agent is authorized and instructed to
take the following actions and record the following documents in the official records of
King County, Washington on the Closing Date pursuant to joint escrow instructions to be
executed by City and Developer:
(i) Record the Deed;
(ii) Deliver the affidavit described in Section 18.B(vi)to Developer;
(iii) Deliver the documents described in Section 18.13 to Developer
and deliver the documents described in Section 18.Cto City.
H. Notification; Closing Statements. If Escrow Agent cannot comply with
the instructions herein and to be provided within the time period set by the parties, Escrow
Agent is not authorized to cause the recording of the foregoing documents. If Escrow Agent
is unable to cause the recording, Escrow Agent shall notify City and Developer at the
addresses set forth in Section 23 below and shall, upon five (5) days prior written notice,
return automatically all documents and monies to the parties depositing the same, whereupon
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Escrow Agent shall be released from all further obligations as escrow agent hereunder.
Promptly following the Closing Date, all closings statements and documents to be delivered to
City and Developer shall be delivered to City and Developer at the address set forth in
Section 23 below.
I. Possession. Developer shall be entitled to possession of the Leased
Premises on Closing, free and clear of all liens, leases,encumbrances and exceptions other than
the Permitted Exceptions and all liens, encumbrances or other exceptions arising through the
actions of Developer or any of the Developer Parties or any of their respective agents,
employees or consultants.
19. Default.
A. Developer Default. The following events will constitute an "Event of
Default" by Developer:
(i) Developer fails to pay Rent, Additional Rent or Taxes prior to
delinquency, permitting or other fees payable to City in connection with obtaining any
Government Approvals required to construct the Project, fails to maintain insurance that
substantially complies with Section 9, or fails to pay any other amount required to be paid by
Developer under this Lease within ten (10) days of the date when due; or
(ii) Developer (or any other responsible party as applicable) fails to
perform any material obligation under this Lease or other Project Agreements; or
(iii) Developer assigns, pledges or encumbers its rights, duties or
obligations under this Lease in violation of this Lease; or
(iv) Any representation made by Developer set forth in Section 13.13
is untrue or breached in any material respect and Developer fails to notify City as required
therein; or
(v) A petition for bankruptcy is filed by or against Developer or if
Developer makes a general assignment for the benefit of his or its creditors, or if a receiver is
appointed on account of his or its insolvency and any such petition or appointment is not
dismissed within sixty (60)days; or
(vi) Any Initial Infrastructure Permits are not picked up and paid for
by Developer within fifteen (15) calendar days of the later of: the closing date of the Phase 1
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Property or City notice to Developer that the Initial Infrastructure Permits are ready for
issuance; or
(vii) Developer fails to "commence construction" within thirty (30)
calendar days of the later of: the closing date of the Phase 1 Property or the date Developer
picks up/pays for the Initial Infrastructure Permits (the term "commence construction" as used
herein shall mean at a minimum the commencement of substantial Project work on the Phase 1
Property and Phase 2 Property pursuant to the Initial Infrastructure Permits with notice to
Developer's general contractor to proceed and commencement of actual on-site construction
activities on a continuous basis as permitted under the Initial Infrastructure Permits, provided,
however, that the foregoing work with respect to the Phase 2 Property only may commence, in
Developer's discretion, not later than twelve (12) months after the closing date of the Phase I
Property); or
(viii) Developer closes on the sale and conveyance of the Phase 1
Property, in whole or in part, prior to Developer's substantial completion of the podium
building on the Phase 1 Property or otherwise violates any term or condition of the Negative
Pledge Agreement; or
(ix) Construction on the Phase 1 Property is halted for in excess of
180 consecutive calendar days, subject to Force Majeure.
B. City Remedies upon Developer Event of Default. Upon any Event of
Default by Developer, City shall give Developer written notice of the same, whereupon
following receipt of such written notice Developer shall have thirty (30) days within which to
commence all necessary action to cure any such Event of Default (and if such cure is
commenced, proceed to diligently complete such cure within a reasonable period of time),
except with respect to Events of Default set forth in Section 19.A(i), (iii), (iv), (v), (vi), (vii) or
(viii) for which no cure period exists beyond the time period stated therein. In the event
Developer fails to cure such Event of Default within the time period set forth above, then City
may elect to take either or both of the following actions: (a) recover Rent, Additional Rent,
Taxes, permitting and application fees and any and all other monetary charges then due and
payable by Developer under this Lease or other Project Agreements, together with interest
thereon at the rate of eight percent (8%) per annum from the date due until paid in full; and/or
(b) terminate this Lease (including the Option to purchase the Leased Premises) by giving
Developer thirty (30) days prior written notice of such termination as its sole and exclusive
remedies for such default.
C. City Default; Remedies. if City fails without legal excuse to perform
any material obligation under this Lease, or under the Development Agreement, Developer
shall give City written notice of same, whereupon following receipt of such written notice, City
shall have thirty (30) days within which to commence all necessary action to cure any such
failure (and if cure is commenced with such thirty (30) day period, proceed to diligently
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complete such cure within an additional period of thirty (30) days). In the event City fails to
cure such failure within the time period set forth above and provided Developer is not in
default hereunder, Developer shall have the right as its sole and exclusive remedy to either (i)
terminate this Lease by giving City written notice of such termination and receive a refund of
the Option Payment or (ii) seek and obtain specific performance of the City's obligations
hereunder; provided, however, that in the event Developer elects the remedy of specific
performance but such remedy is not available to Developer because of the City's prior sale or
conveyance of rights in and to the Leased Premises to a third party, then Developer shall be
entitled to bring suit against the City for Developer's actual, out-of-pocket third party costs
incurred in connection with Developer's lease of and option to purchase the Leased Premises,
including without limitation Developer's costs incurred in constructing and installing Initial
Infrastructure, if any, all of which costs must be substantiated in back-up documentation
reasonably acceptable to City, and provided further that in no event shall Developer's recovery
of such costs from City exceed the sum of One Million Five Hundred Thousand Dollars
($1,500,000).
D. Waiver of Consequential and Punitive Damages. Each of City and
Developer waive any right to sue the other party for consequential, incidental or punitive
damages. The provisions of this Section 19.13 shall survive Closing or termination of this
Lease. Nothing contained herein is intended to waive either party's right to indemnification
under Section 9, City's right to recover Rent, Additional Rent, Taxes, permitting and
application fees or any other amount which Developer is obligated to pay, whether
characterized as Rent, Additional Rent or otherwise, under this Lease or the Development
Agreement.
E. Rights and Remedies Cumulative. Except as otherwise expressly stated
in this Lease, the rights and remedies of the parties are cumulative, and the exercise or failure
to exercise one or more of such rights or remedies by either party shall not preclude the
exercise by it, at the same time or different times, of any right or remedy for the same default
or any other default by the other party.
20. Hazardous Substances. Except in accordance with Environmental Laws,
Developer shall not cause or permit any Hazardous Substances to be brought upon, kept or
used in or about the Leased Premises by Developer, any of the Developer Parties or any of
their respective agents, employees, contractors or invitees, without the prior written consent
of City. If Developer breaches its obligations set forth above or if the presence of Hazardous
Substances on or about the Leased Premises caused or permitted by Developer or any of the
Developer Parties results in contamination of the Leased Premises, then Developer shall
protect, defend, indemnify and hold City harmless from and against any and all claims,
judgments, damages, penalties, fines, costs, liabilities or losses (including, without limitation,
diminution in value of the Leased Premises, damages arising from any adverse impact on
marketability of other properties owned by City, and sums paid in settlement of claims,
attorney's fees, consultant fees and expert fees) which arise during or after the Term of this
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Lease as a result of such contamination. If the presence of any Hazardous Substance on or
about the Leased Premises caused or permitted by Developer or any of the Developer Parties
results in any contamination of the Leased Premises, or causes the Leased Premises to be in
violation of any Environmental Laws, Developer shall promptly take at its sole expense all
actions necessary to return the Leased Premises to the condition existing prior to the
introduction of such Hazardous Substance and in compliance with applicable Environmental
Laws; provided that City'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 Leased Premises. This indemnification shall
survive the expiration or other termination of this Lease and/or the Closing and recording of
the Deed. Nothing contained in this Section 20 shall be deemed to constitute or create an
obligation of either party to indemnify the other party for Hazardous Substances existing on
the Leased Premises prior to the Effective Date of this Lease nor shall either party be required
to remediate any Hazardous Substances existing on the Leased Premises prior to the
Effective Date of this Lease as part of its obligations to the other party under this Lease.
Developer shall promptly notify City in writing if it discovers Hazardous Substances on
the Leased Premises.
21. Time of the Essence. The parties agree that time is of the essence in the
performance of every covenant, term, condition, and obligation to be performed hereunder.
All periods of time referred to herein shall,unless otherwise expressly provided herein, include
Saturdays, Sundays and legal holidays in the State of Washington, except that if the last day of
any period falls on any Saturday, Sunday or such holiday, the period shall be extended to the
next Business Day.
22. City's Right to Enter the Leased Premises. City reserves and shall have the right
to enter the Leased Premises at reasonable times for the below listed purposes, following
prior reasonable notice to Developer. City shall not be liable in any manner for any
inconvenience, annoyance or disturbance to Developer or for any other damages arising out of
City's entry onto the Leased Premises as. provided in this Section 22, provided City will
exercise its rights in a manner so as to minimize interference with Developer's operations at the
Leased Premises:
A. Condition. To determine whether the Leased Premises are in good
condition and whether Developer is in compliance with its obligations under this Lease.
B. Notices. To serve, post or keep posted any notices required or allowed
under the provisions of this Lease.
23. Notices. Any notices or other communication which City or Developer shall
desire or be required to give pursuant to the provisions of this Lease shall be in writing
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and shall be personally delivered or sent by regular mail and registered or certified mail or by
facsimile transmission. The giving of such notices shall be deemed complete on the third
(3rd) Business Day after the same is deposited in a United States Post Office with postage
charges prepaid or on the date when delivered or faxed (provided the fax machine has issued
a printed confirmation of receipt). All notices shall be addressed to the persons intended to
be given such notice at the respective addresses set forth below or to such other address as
such party may theretofore have designated by notice pursuant to this Section 25:
Address of City: City of Kent
400 W. Gowe Street
Kent, Washington 98032
Attention: Ben Wolters, Economic Development Director
Facsimile: (253) 856-6770
With a copy to: City of Kent
220 Fourth Avenue South
Kent, Washington 98032
Attention: City Attorney
Facsimile: (253) 856-5706
And to: Foster Pepper PLLC
I I I I Third Avenue, Suite 3000
Seattle, WA 98101
Attention: Beth A. Clark
Facsimile: (206) 749-1916
Address of Developer: Marquee on Meeker, LLC
Attn: Brett Jacobsen
2711 West Valley Highway North, Suite 200
Auburn, WA 98001
HAL Real Estate Inc.
Attn: Jonathan Manheim
2025 First Avenue, Suite 700
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Seattle, WA 98121
And to: Alston, Courtnage & Bassetti LLP
1420 Fifth Avenue, Suite 3650
Seattle, WA 98101-4011
Attn: Thomas W. Read
Facsimile: (206) 623-1752
Any party may change the address to which notices shall be sent by notice to the other
party in the manner and with the effect set forth in this Section 23.
24. Surrender.
A. Surrender. Developer shall,on the last day of the Term of this Lease or
upon any earlier termination of this Lease (except any termination as a result of Developer's
exercise of its Option to purchase the Leased Premises), surrender and deliver possession of
the Leased Premises to City, free and clear of all Liens other than those existing on the date
of this Lease and those, if any, created or consented to by City.
B. Failure to Surrender. If Developer fails to surrender the Leased
Premises to City on the Expiration Date, Developer shall pay City monthly rent in an amount
equal to one hundred fifty percent (150%) of the then fair market rental value for the Leased
Premises as reasonably determined by City. Nothing contained herein shall constitute the
consent, express or implied, of City to the holding over of Developer after the expiration or
earlier termination of this Lease.
C. Holding Over. If Developer, with City's consent remains in
possession of the Leased Premises after expiration or termination of the Term, or after the
date in any notice given by City to Developer terminating this Lease, such possession by
Developer shall be deemed to be a month-to-month tenancy terminable on twenty (20) days
prior written notice given at any time by either party. During such month-to-month tenancy,
Developer shall pay all Rent in an amount equal to the fair market rental value for the Leased
Premises as reasonably determined by City. All provisions of this Lease, except those
pertaining to Term and the Option to purchase the Leased Premises, shall apply to the month-
to-month tenancy.
25. Miscellaneous.
A. Entire Agreement. This Lease and any exhibits or attachments hereto
and forming a part hereof, set forth the entire agreement of Developer and City concerning
the Leased Premises (includes the Option to purchase the Leased Premises) and there are no
other agreements or understandings, oral or written, between Developer and City
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concerning Developer's lease of the Leased Premises, except as may be set forth in the Project
Agreements, Discretionary Permits or other Governmental Approvals. Any subsequent
modification of this Lease shall be binding upon Developer and City only if reduced to writing
and signed by the party intended to be bound.
B. Non-Waiver. No waiver of any breach by either party of any term,
covenant, condition or agreement herein and no failure by either party to exercise any right or
remedy in respect to any breach hereunder, shall constitute a waiver or relinquishment for
the future of any such tern, covenant, condition or agreement or of any subsequent breach of
any such term, covenant, condition or agreement, nor bar any right or remedy of such party in
respect of any such subsequent breach, nor shall the receipt of any Rent, or any portion thereof
by City operate as an accord and satisfaction or a waiver of the rights of City to enforce the
payment of any other Rent then or thereafter in default, or to terminate this Lease, or to
recover possession of the Leased Premises or to invoke any other appropriate remedy which
City may select as herein or by law provided. No waiver of any term, covenant, condition,
provision or agreement under this Lease shall be deemed to have been made unless in writing
and signed by such party.
C. Construction. Each agreement, term, and provision of this Lease to be
performed by Developer or City shall be construed to be both a covenant and a condition.
Each party will carry out its obligations under this Lease diligently and in good faith. Section
captions contained in this Lease are included for convenience of reference only and form no
part of the agreement between the parties. As used in this Lease, the masculine shall include
the feminine and neuter, the feminine shall include the masculine and neuter, the neuter shall
include all genders, the singular shall include the plural and the plural shall include the
singular, as the context may require.
D. Severability. If any provision of this Lease or the application thereof
to any person or circumstance shall to any extent be invalid or unenforceable, the remainder of
this Lease, or the application of such provision to persons or circumstances other than those
as to which it is invalid or unenforceable, shall not be affected thereby, and each provision
of this Lease shall be valid and enforceable to the fullest extent permitted by law.
E. Neutral Authorship. The provisions of this Lease shall be construed as
a whole according to their common meaning and not strictly for or against any party and
consistent with the provisions contained herein in order to achieve the objectives and
purposes of this Lease. Each party hereto and its counsel has reviewed and revised this
Lease and agrees that the normal rules of construction to the effect that any ambiguities are to
be resolved against the drafting party shall not be construed in the interpretation of this Lease.
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F. Nature of Relationship. The relationship between City and Developer
under this Lease shall be solely that of landlord and tenant and seller and buyer of real
property (if the Option is exercised). It is not intended by this Lease to, and nothing
contained in this Lease or the Option to purchase the Leased Premises granted herein shall,
create any partnership,joint venture or other arrangement between Developer and City.
G. No Brokers. City and Developer each represent to the other that
neither is represented by any broker, agent or finder with respect to this Lease (or the Option to
purchase the Leased Premises contained herein) in any manner with the exception of Matt
Kemper of Jones Lang LaSalle with respect to his representation of City. Each party agrees to
indemnify and hold the other party harmless from and against any and all liability, costs,
damages, causes of action or other proceedings instituted by any broker, agent or finder,
licensed or otherwise, claiming through, under or by reason of the conduct of the
indemnifying party in any manner whatsoever in connection with this Lease or the option to
purchase the Leased Premises contained herein, which indemnification shall survive the
expiration or earlier termination of this Lease, or the Closing of the sale of the Leased
Premises and recording of the Deed.
H. Survival. All provisions of this Lease which involve obligations, duties
or rights which have not been determined or ascertained as of the Closing Date and all
representations, warranties, covenants, agreements and indemnifications made in or pursuant to
this Lease shall survive the expiration or termination of this Lease or the Closing of the sale
of the Leased Premises and the recording of the Deed.
1. Recording of Memorandum. Neither City nor Developer shall record
this Lease without the written consent of the other party; provided, however, that either City or
Developer shall have the right to record a Memorandum of this Lease in a form reasonably
acceptable to both parties.
J. Covenants to Run with the Land. The terms, covenants, agreements
and conditions herein contained are and shall be deemed to be covenants running with the land
and the estate created by this Lease and, subject to the provisions of Section 1 I hereof, shall
bind and inure to the benefit of the parties hereto and their respective successors and permitted
assigns.
K. Nondiscrimination. Developer will not discriminate and shall ensure
that all contractors engaged by Developer in connection with the Project comply with all
applicable federal, state and local discrimination laws,rules and regulations.
L. No Third Party Rights. The provisions of this Lease are intended solely
for the benefit of, and may only be enforced by, the parties hereto and their respective
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successors and permitted assigns. None of the rights or obligations of the parties herein set
forth (or implied) is intended to confer any claim, cause of action, remedy, defense, legal
justification, indemnity, contribution claim, set-off, or other right, whatsoever upon or
otherwise inure to the benefit of any contractor, architect, consultant, subcontractor, worker,
supplier, mechanic, architect, insurer, surety, lender, investor, guest, tenant, member of the
public, or other third parties having dealings with any of the parties hereto or involved, in any
manner, in the Property.
M. Non-Waiver of Governmental Rights. Nothing contained in this Lease
shall require City to take any discretionary action relating to development of the
improvements to be constructed on the Leased Premises as part of the Project, including, but
not limited to, zoning and land use decisions, permitting, design review or any other
governmental approvals.
N. Further Assurance. Each party hereto agrees that it will execute or
furnish such documents and further assurances to the other or to proper authorities as may be
necessary for the full implementation and consummation of this Lease and the transactions
contemplated hereby.
O. Authority. Each of the persons signing below represent and warrant
that they have the requisite authority to bind the party on whose behalf they are signing.
P. WAIVER OF JURY TRIAL. CITY AND DEVELOPER HEREBY
WAIVE ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM ARISING OUT OF THIS
LEASE, WHETHER NOW OR HEREAFTER ARISING AND WHETHER SOUNDING IN
CONTRACT, TORT OR OTHERWISE AND HEREBY CONSENT AND AGREE THAT
ANY SUCH CLAIM SHALL BE DECIDED BY TRIAL WITHOUT A JURY. ANY
PARTY HERETO MAY FILE AN ORIGINAL COUNTERPART OR COPY OF THIS
SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE WAIVER AND
AGREEMENT CONTAINED HEREIN.
Q. Conflicts of Interests. No member, official or employee of City shall
make any decision relating to this Lease which affects his or her personal interests or the
interests of any corporation, partnership or association in which he or she is directly or
indirectly interested.
R. Non-Liability of City Officials Employees, and Agents. No member,
official, employee or agent of City shall be personally liable to Developer, or any successor
in interest, in the event of any default or breach by City or for any amount which may
become due to Developer or such successor or on any obligation under the terms of this Lease.
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treadU WARiverbend Joint Venture
51636549 3
S. Applicable Law. This Lease shall be construed and enforced in
accordance with the laws of the State of Washington, without regard to principles of conflicts
of laws, and venue of any action brought to enforce this Lease shall lie exclusively in King
County Superior Court. The parties hereto consent to the jurisdiction of the King County
Superior Court and waive the right to file suit elsewhere.
T. Counterparts. This Lease may be executed in any number of
counterparts, and each such counterpart hereof shall be deemed to be an original
instrument, but all such counterparts together shall constitute but one agreement.
U. Attorneys' Fees. Except as otherwise expressly provided herein, each
party shall be responsible for payment of the legal fees of its counsel in the event of any
litigation or other proceeding brought to enforce or interpret or otherwise arising out of this
Lease.
[Remainder of page intentionally left blank. Signature page follows.]
2841/086 09/12/17 -37- lease with purchase option(Buyer 9/12 Version)
tread\[IAL\Riverbend Joint Venture
516365493
CITY
CITY OF KENT, a
municipal corporation
By
Name
Title
DEVELOPER
MARQUEE ON MEEKER, LLC, a
Washington limited liability.company
By
Name
Title
2841/086 09/12/17 -38- ]case with purchase option(Buyer 9/12 Version)
treadlHALlRiverbend Joint Venture
51636549.3
EXHIBIT A
LEGAL DESCRIPTION OF LAND
2841/086 09/12/17 -I- lease with purchase option v I I
tread\HAL\Riverbend Joint Venture
EXHIBIT B
APPROVED PHASING PLAN
2841/086 09/12/17 I- lease with purchase option vl 1
treadlHALlRiverbend Joint Venture
EXHIBIT C
LEGAL DESCRIPTION OF LEASED PREMISES
2841/086 09/12/17 1- lcasc with purchase option vl 1
lreadlHADRiverbend Joint Venture
EXHIBIT D
MAP OF PROPERTY
2841/086 09/12/17 -1- lease with purchase option v11
treadlHAL%Riverbend Joint Venture
EXHIBIT E
LEGAL DESCRIPTION OF PHASE 1 PROPERTY
2841/086 09/12/17 -i- lease with purchase option vl I
treadMALUbverbend Joint Venture
EXHIBIT F
BARGAIN AND SALE DEED
2841/086 09/12/17 1- lease with purchase option vl I
treadlHALlRiverbend Joint Venture
EXHIBIT G
LIST OF PERMITTED EXCEPTIONS
r
2841/086 09/12/17 -I- lease with purchase option vl
tread\HAL\Riverbend Joint Venture
EXHIBIT H
PRO FORMA TITLE POLICY
2841/086 09/12/17 1- lease with purchase option v11
treadlHAL\Riverbend Joint Venture
REQUEST FOR MAYOR'S SIGNATURE
Print on Cherry-Colored Paper
KENT
Routing Information-
(ALL REQUESTS MUST FIRST BE ROUTED THROUGH THE LAW DEPARTMENT),
Approved by Director�,_
Originator: Tom Brubaker Phone (Originator): 253-856-5782
Date Sent: 19/20/17 Date Recluirecl: 9/20/17
Return Signed Document to: Cheryl Rolcik-Wilcox Contract Termination Date: n/a
VENDOR NAME: Date Finance Notified:
Marquee on Meeker, LLC (Wy required on contracts n/a
$20,000 and over or on an Grant)
DATE OF COUNCIL APPROVAL: Date Risk Manager Notified:
V (Requ4red on Non-City Standard Contracts/Agreements)
Has this Document been Specificalll Account Number:
Authorized in the Budget? Oe YES 8 NO
Brief Explanation of Document:
Amendment to real estate purchase and sale agreement with lease/option to purcha�se.
-TelugliNfer's 606A, C0k-rr(Qqt1jC4tVS —rzAEWLrr IS. tv.-KOW
I" PtqcK. of CXV'y -
Must Be Routed Through The Law Department
-----------
-V LL..
(This area to be compl ted by he La Department)
Received:
Approval of La6kbd$i1:2017
li aw Ciept, comments;
Datefp.MWOrd'toAftpr
a L-I It I L-11 A W W 2.0 EP-T. I
Shaded Areas To Be Completed By Administration Staff
Received: )EP 2',(
Chty'r
Recommendations and Comments: 51 (�z "I'ril"
... ....... 11�re J.
8VED
Date Returned:
IV W tTV7 FFM- ca
fthXVA 00 U
CITY OF KENT I
CITYCIERi �Ctu"'
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