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Home My WebLink About1710Resolution No. 1710 ["Beginning August 1, 2004"] CFN=1298-Town Square Plaza/Municipal Lot Passed -9/20/05 Municipal Lot Block -Authorize Mayor to Sign Necessary Documents RESOLUTION NO. /7 I() A RESOLUTION of the city council of the city of Kent, Washington, authorizing the mayor to execute all documents necessary to implement a development proposal for a downtown city block, commonly known as the "Municipal Lot Block," which is bounded on the north and south by Smith and Harrison Streets and on the east and west by Second and Fourth Avenues in the city of Kent. RECITALS A. The city of Kent owns portions of certain real property located in downtown Kent and more commonly known as the "Municipal Lot Block." This block is bounded on the north by Harrison Street, on the east by Second A venue South, on the south by Harrison Street, and on the west by Fourth Avenue South. B. The block contains approximately 132,200 square feet and contains seven separate legal parcels, together with a public alley that connects Fourth and Second Avenues. The city of Kent owns approximately 88,586 square feet of property within this block, including the public alley. The remaining property within the block is owned by the following separate entities: MV A Harrison Square I, L.L.C., a Washington limited liability company; MV A Harrison Square II, L.L.C., a Washington limited liability company; Meeker Street Law Building, L.L.C., a Washington limited liability company; and Springboard Properties Investment, L.L.C., a Washington 1 Municipal Lot Block-Authorize Mayor to Sign Necessary Documents limited liability company. Collectively, these entities, along with the city of Kent, own all property located within the Municipal Lot Block. C. A developer, Springboard Holdings, L.L.C., a Washington limited liability company, has entered into a series of negotiations with the individual parties that own the Municipal Lot Block to bring forth a development proposal to redevelop the Municipal Lot Block consistent with Downtown Commercial Enterprise zoning and the Kent Station Planned Action Ordinance. The proposed development would construct a hotel with approximately 74 rooms, a condominium complex with approximately 64 condominiums and 56 senior condominiums, a health spa, a water park feature, a restaurant site, a conference center, a fitness center, and retail space. The development proposal also includes a structured parking garage with not less than 350 stalls. A portion of the block on its southwest corner, to be owned by one or a combination of the Harrison Square and Meeker Street Law entities, will be developed separately. The city of Kent will retain approximately 33,500 square feet on the eastern portion of the block for the Town Square Plaza, a city park. This is the substance of the development proposal, however, these components may change somewhat based on market factors as the project moves from design to construction. D. The city will convey that portion of its property holdings within the block not devoted to public park to the developer in consideration for the following elements: I. A minimum. of 3 50 publicly accessible parking spaces available 24 hours a day, seven days a week, with not more than a 3-hour maximum parking limit. Of these approximately 350 spaces, at least 70 exclusive public, city parking spaces are to remain open to the public, and within the city's exclusive control, in perpetuity; 2. Responsibility for and cost of all operations and maintenance of the structured parking garage will be assumed entirely by the developer, at no additional cost to the city; 2 Municipal Lot Block-Authorize Mayor to Sign Necessary Documents 3. Public restrooms to serve the development and Town Square Plaza to be provided by the developer; and 4. Adequate space within the development buildings to house utilities required to support the Town Square Plaza. The number of permanently dedicated public parking stalls further reflects the appraised fair market value of the property transferred from the city to the developer, divided by the cost to construct each structured parking stall. The remaining spaces in the garage will be available to the public on a shared basis. The developer will be allowed to issue a limited number of special use parking passes without a time limit to hotel guests and condominium dwellers. In addition, Second Avenue North Associates, a garage investor, may issue similar special use permits to tenants in a number equal to the number of stalls in which it invests. E. In addition to the consideration stated above, the substantial private investment proposed for the Municipal Lot Block will improve the fmancial stability and general economic vitality of downtown Kent and the entire city. The proposed redevelopment will provide additional housing downtown in close proximity to the Kent commuter rail and bus transit center, increase pedestrian activity downtown, create additional jobs, and will expand and diversify the city's tax base. The provision of safe, convenient, accessible and attractive public parking in the downtown retail core will increase retail activity, indirectly improve public safety, prevent traffic congestion, and improve vehicular access and circulation within the city, all of which are traditional and well-recognized public purposes. F. The current property ownership of the Municipal Lot Block, shown on Exhibit A to the Land Pooling Agreement, is fragmented and not conducive to the current development proposal. Accordingly, the parties have agreed to rearrange ownership of the various parcels to form uniform blocks of ownership conducive to this development, as shown on Exhibit C to the Land Pooling Agreement. The agreement providing for this reassemblage of properties, entitled the "Land Pooling 3 Municipal Lot Block-Authorize Mayor to Sign Necessary Documents Agreement," is attached as Exhibit A and incorporated by this reference. As soon as the various property ownerships are reassembled and rearranged pursuant to this Land Pooling Agreement, the developer and the city will be positioned to construct both the development proposal and the Town Square Plaza park. G. Once the Land Pooling Agreement has been executed, the city will have conveyed its ownership in property not reserved for the Town Square Plaza park to the developer for the consideration stated above. As security for the developers performance of these conditions, the city has imposed specific deed restrictions as well as obtained a mortgage securing the city's interest in the performance of the developer's obligations. The proposed agreement to address replacement parking issues on the Municipal Lot Block as part of this development, known as the "Replacement Parking Agreement," is attached as Exhibit B, which is incorporated by this reference. H. Having spent a significant amount of time and effort to negotiate and draft these agreements and the overall development proposal, the city council has determined that it is appropriate to approve the development proposal and authorize the mayor to execute all documents attendant to this proposal at this time. NOW THEREFORE, THE CITY COUNCIL OF THE CITY OF KENT, WASHINGTON, DOES HEREBY RESOLVE AS FOLLOWS: RESOLUTION SECTION 1. -Recitals Incorporated as Findings. The foregoing recitals are incorporated as the findings of the city council for the city of Kent for the purposes of this resolution. 4 Municipal Lot Block -Authorize Mayor to Sign Necessary Documents SEC7'JON 2. -Autlfotizqtion for Mayor to Sign Necessary Documents. The city approves this deve1opm0ilt concept and proposal, specifically including the land transactions, and authorizes & mayor to sign all documents necessary to effect this development on the Municipal Lot Block within the city of Kent, specifically including, without limitation, the Land Pooling Agreement and Replacement Parking Agreement substantially in the form attached to this resolution. The mayor is authorized to sign other documents necessary to complete this transaction, subject to review and approval of the final terms and conditions by the city attorney. SECTION 3. -Severability. If any section, subsection, paragraph, sentence, clause or phrase of this resolution is declared unconstitutional or invalid for any reason, such decision shall not affect the validity of the remaining portions of this resolution. SECUON 4. -RatificoJion. Any act consistent with the authority and prior to the effective date of this resolution is hereby ratified and affirmed. SECTION 5. -Effective Date. This resolution shall take effect and be in force immediately upon its passage. PASSED at a regular open public meeting by the city council of the city of Kent, Washington, this r2JJ day of September, 2005. CONCURRED in by the mayor of the city of Kent this :lt!J day of September, 2005. 5 MIUlicipal Lot Block-Authorize Mayor to Sign Necessary Documents ATIEST: ~A-t~--~ BRENDA JACOBER, CICLERK APPROVED AS TO FORM: T~~~~RNEY ' /" ... · ·:·-----....... : _ _, / / :_:-:.::-~~--:\ -~ : .j "-' : ~ -: '.Y::./1"'.-•... :-------· -. _,.? ..... ...-· '.1 ....... _ ....... _~ '1.::--. - I hereby certify that this is a true and correct copy of Resolution No. 11!0 passed by the city council ofthe City of Kent, Washington, the o2/) day of September, 2005. .,6.,_..4. ~~· t..../ BRENDAJACOBE~TYCLERK 6 Municipal Lot Block-Authorize Mayor to Sign Necessary Docui'IU!nts Exhibit A LAND POOLING AGREEMENT POOLING AGREEMENT TinS POOLING AGREEMENT (the "Agreement") is entered into thts day of September, 2005 by and among CITY OF KENT, a Washington mumcipal corporation ("Ctty"), MBA HARRISON SQUARE I LLC, a Washington limited liabllity company and MBA HARRISON SQUARE II LLC, a Washington limited hability company (collectively, "Hamson"), MEEKER STREET LAW BUILDING LLC, a Washington limited liability company ("Meeker Street") (Hamson and Meeker Street are heremafter referred to colle<:tively as "Anderson"), SPRINGBOARD PROPERTIES INVESTMENT LLC, a Washington limited liability cOJnpany ("SPI'') and SPRINGBOARD HOLDINGS L.L.C., a Washington limited liability company {"Dev,eloper") wtth reference to the followmg facts. RECITALS A. City, Anderson, and SPI are the owners of certam real property located m the City of Kent as depicted on the map annexed hereto as Exhibit A and by this reference incorporated herein (collectively, the "Property''). The real property owned by City ts heremafter referred to as the City Property. The real property owned by Anderson following completion of the exchange descnbed m paragraph 9 is heremafter referred to collectively as the Anderson Property. The real property owned by SPI is hereinafter referred to as the SPI Property. Anderson and SPI are hereinafter referred to collectively as "Private Owners". City, in its capactty as the owner of a portion of the Property, and Private Owners are her$after referred to individually as "Owner" and collecttvely as "Owners". B. Owners desire to enter into this Agreement to provide for a redevelopment of the Property through coordinated negotiations with Developer, boundary line adjustments of the Property into lots that, following completion of the boundary line adjustment process and the property exchanges descnbed below, will facilitate such redevelopment on the terms and conditions hereinafter set forth. C. City is interested in redeveloping a portion of the City Property wtth an approxtmately 34,000 square foot town square plaza. The remainder of the City Property (the "City Replacement Parking Property") and the SPI Property is depicted on the map annexed hereto as Exhtbtt C and ts heremafter referred to in this Agreement as the "Project Site". Developer is interested m redevelopmg the Project Site with a privately owned mixed.use development as more particularly described below D. SPI intends to exchange a portion of the SPI Property for real property currently owned by City and to contribute the SPI Property following such exchange to Developer m exchange for an mterest in Developer on the terms and condittons hereinafter set forth. E. A portion of the City's planned town square plaza is located on property currently owned by Hamson. Harrison is willing to exchange the real property owned by Harnson for the Harrison Exchange Property owned by City as hereinafter defined on the terms and conditiOns heremafter set forth. NOW, THEREFORE, in consideration of the foregoing recitals and other good and valuable consideratiOn, the receipt and sufficiency of whtch is hereby acknowledged, the part1es agree as follows: AGREEMENT 1. Standstill Agreement. Each Owner agrees not to sell, transfer, convey, encumber or lease its portton of tlte Property until after September 30, 2005 (the "Standstill Penod"). In the event that on or before September 30, 2005: (i) SPI has entered mto an agreement with Developer to contribute the SPI Property to Developer in exchange for an interest m Developer; (h) the parttes have executed thts Agreement; and (iii) City has entered into a replacement parking agreement wtth Developer, the Standstill Penod shall be extended until December 15, 2005. There shall be no further extension of the Standstill Period without the written consent of all Owners. 2. Reconfiguration of the Property. The Property consists of a City block bordered on the north by Smith Street, on the west by Fourth Avenue, on the south by Harrison Street and on the east by Second Avenue and contains approximately 140,000 square feet. The Property currently consists of seven (7) separate legal lots and a public alley which connects Fourth Avenue and Second Avenue and is owned by the City. The approximate square footage, location and ownership of each of the ex1stmg lots constituting the Property is depicted on the map annexed hereto as Exhib1t A and by this reference incorporated herein. Prior to September 30, 2005, the legal description of each of the existing legal lots will be attached to this Agreement as Exhibits B· 1 through B· 7 and will thereafter become part of this Agreement. Owners agree to jointly petition for vacation of the existing public alley (and m connection therewtth each Owner agrees to quitclaim their interest m the vacated alley to the City at the closmg described in paragraphs 3 and 6 below). Owners shall also jointly enter into any boundary line adjustment deemed reasonably necessary by City, Anderson and Developer to permtt redevelopment of the Project Site, wtth the Project, redevelopment of the southeast corner of the Property w1th an approximately 34,000 square foot town square plaza on land to be owned by the C1ty and exchange by Harrison of real property owned by Harrison for the Harrison Exchange Property. The approximate configuration, square footage, location and ownership of each of the lots followtng vacatiOn of the existmg public alley and completion of the boundary line process is depicted on the map annexed hereto as Exhibit C and by this incorporated herein. The dimension and reconfiguratwn of the Property and each of the legal lots, including the legal descriptions for each of the lots foUowtng completion of the alley vacatiOn (and dedication of their respective interests in the vacated alley by each of the Private Owners to City) and boundary line adjustment process, shall be expressly subject to approval by each of the Owners and Developer, which consent shall not be unreasonably withheld, conditioned or delayed and shall be subject to the normal boundary line adjustment regulatory process. The completiOn of the alley vacation and boundary !me adjustment process and execution and delivery of confirming deeds in connecnon With both the alley vacation and the boundary line adjustment shall occur Immediately pnor to the closing of, and shall be expressly contingent upon the closing of the exchange of the real property owned by Harrison for the Harrison Exchange Property, the exchange of a portion of the SPI Property for real property owned by the City and the contribution or exchange of the ent1re ProJeCt Site (as dep1cted on Exhibtt C) by City and SPI to Developer for redevelopment with the ProJect on or before December 15, 2005. 3. Simultaneous Closing. The Owners and Developer agree that (a) the alley vacation (and corresponding conveyance of the vacated alley to the City), (b) boundary line adjustment (and corresponding conveyance of confirming deeds to the various parcels), (c) exchange of a portion of the SPI Property with the City and contribution by SPI of the remammg SPI Property to Developer, (d) exchange of the City Replacement Property, and (e) exchange of the real property owned by Harrison for the Harrison Exchange Property, shall be closed simultaneously on or before December 15, 2005 ("Closing Date"), and each is expressly contingent upon the completion of the other property transactions descnbed in this Agreement. The Owners and Developer have designated LandAmenca Title Insurance Company to act as the title company and escrow agent to coordinate the Simultaneous closmgs of the vanous transactions described herein. Each Owner and Developer shall be responsible for the payment of real estate excise tax, if any, and associated recording costs in connection wtth the completion of the alley vacatiOn, boundary line adjustments, various property exchanges and recordation of deeds as necessary to accomphsh the foregoing with respect to that portion of the Property owned by such Owner. Each Owner who transfers property pursuant to this Agreement shall provide, at its cost, tts transferee with a standard coverage policy of title insurance in an amount equal to the then assessed valuation of such property. Any transferee shall have the right to obtatn additional t1tle insurance coverage or endorsements on any -2-K120093WOOOSNDRS~RS_A232J property obtained by it in connection with the transactions contemplated by th1s Agreement, at 1ts sole cost and expense, but the avadabdity of such additional title insutanee coverage or endorsements shall not be a condition precedent to the conmDUJition of the transactiona contemplated herein. Each Owner and its transferee shall pay Y:z the escrow fees associated with the portion of the Property owned by such Owner. 4. Termination of I,&ases. Liens and other Rights of Possession. Pnor to September 30, 2005, each Owner of the Property shall have reviewed and approved the condition of title to any real property to be transferred to it m connection wtth the transactions contemplated under this Agreement and must establish to the reasonable satisfaction of the other Owners and Developer, that it has the nght to termmate, or has termmated, all existing leases, licenses or other nghts to occupy all of any port1on of the Property and will be able to deliver posses~ion of its portion of the Property to the exchanging Owner or Developer on the Closing Date set forth in paragraph 6 below, free and clear of all such leases, hcenses and other rights of possession and has either released or has obtained the written collllllltment of any mortgagee or lienholder to release any mortgage, deed of trust or other lien whtch affect such Owner's Property on or prior to Closing (collectively, "L1ens"). Each Owner shall be solely responsible for the termination of all such leases, licenses and other rights of possession, the relocatton of any tenants or occupants on its portion of the Property and release or termination of all such Liens prior to Closing and shall protect, defend, indemmfy and hold the other Owners harmless from any and all damages, liablltttes, costs, expenses and losses (including, without limitation, reasonable attorneys' fees and costs) ansing out of such lease termination and relocatton and terminatiOn of Liens. The provisions of this paragraph 4 shall survive the termination of this Agreement or the consummation of the transactions contemplated under this Agreement. Developer will be responsible for demolishing any existing buildings located on the Property as of Closing at its sole cost and expense. 5. Redevelopment of Project Site. Owners agree to work together cooperatively to JOmtly reconfigure the legal lots constitllting the Property (excluding the Anderson Property) and City and SPI agree to coordinate negotiations with Developer for acqwsition or exchange of the Project Site and subsequent redevelopment of the Project Site with a privately owned mixed-use development consistmg of an approximately 66 room hotel, including reception area, lobby, a conference center of approximately 2,300 square feet and an indoor water park of not less than 6,000 square feet (collectively, the "Hotel Improvements''), approximately 52 units of market rate residential condominiums, approximately 22,000 square feet of restaurant and ground floor retail space, approximately 52 units of market rate senior condominium housing, a pnvate street connecting Smith and Harrison Streets together wtth strucrured parking for approximately 320 cars (collectively, the "Project"). A general site plan for redevelopment of the Project Site with the Project is attached hereto as Exhibit D and by thts reference incorporated herein. As part of the Project, Developer shall provide sufficient parking stalls on the Project Site (excluding public streets adjoining the Project Site) to meet a mmimum parking ratio of l.O stalls per bedroom for any residential unit, and 2.0 stalls per 1,000 rentable square feet for any portton of the Project Site developed for office, commercial or retail use (the "Project Parking Ratios"). For purposes of determining the Project Parking Ratios, the Hotel Improvements shall be considered a residential use and not a commercial use. In addition the Developer shall provide additional parkmg stalls for exclusiVe pubhc parking in the amount set forth in the replacement parkmg agreement to be negotiated between City and Developer. The Project shall be constructed in phases. The Parkmg Garage shall be constructed as part of Phase One of the Project and City shall not be obligated to 1ssue butlding permtts for the remainder of the Project unttl after its acceptance of the public parkmg easement pursuant to the Replacement Parking Agreement as more particularly descnbed m paragraph 7 below. 6. Qisuosition of SPI Propertv and Contributtop Agreement Between SPI and Developer. SPI agrees to exchange a portiOn of the SPI Property for real property currently owned by the C1ty and agrees to enter into negotiations with Developer to contribute the remaining SPI Property (followmg such -3-K 120093\00008\0RS\ORS_A232J exchange and after completion of the boundary line adjustment process) to Developer for redevelopment as part of the Project and shall use reasonable efforts to execute a contnbution agreement Wlth Developer on or before September 30, 2005. The contribution agreement must contain the folloWJng terms and conditions: (i) feasibility period not to exceed forty-five (45) days with closing on or before December 15, 2005; (ii) all exchange or contribution agreements, including the exchange of the real property owned by Harrison for the Harrison Exchange Property and the exchange of the Ctty Replacement Parking Property for a public parking easement to use parking stalls in the parkmg garage to be constructed by Developer as part of the Project pursuant to the City replacement parkmg agreement described in paragraph 7 below, must be closed simultaneously, and each contribution or exchange 1s expressly condttioned on the contribution or exchange of the remainder of the Property; (in) contnbution of the SPI Property for an interest in Developer is for the sole purpose of developing the ProJect on the Project Site; and (iv) construction of the Parking Garage must commence on or before March 31, 2006. 7. Citv Replacement Parking Amement. That portion of the City land (following completion of the boundary line adjustment process and the exchange with SPI and the exchange WJth Harrison) which will not be retained by the City is referred to herein as the "City Replacement Parkmg Property". City agrees to enter into negotiations with Developer to exchange the City Replacement Parking Property for a perpetual easement for public parking in the structured parking garage to be constructed by Developer as part of Project and shall use reasonable efforts to execute a Replacement Parkmg Agreement with Developer on or before September 30, 2005. The Replacement Parkmg Agreement shall require Developer to design, develop and complete construction of a multt-level above- ground structured parking garage containing approxrmately three hundred twenty (320) parking spaces for multi-passenger motor vehtcles (the "Puking Garage") and grant the City a perpetual public parkmg easement which shall provtde that a certain number of parking spaces in the Parking Garage shall be available to members of the general public for short term public parkmg at all ttmes (the "Exclusive Public Parking Stalls"). In addition to the Exclusive Public Parkmg Stalls, the publtc parking easement shall provide that members of the general public shall have the right to park in any open parkmg stall in the Parkmg Garage on a first-come, first-serve basis twenty four (24) hours a day, seven (7) days a week, together with rights of pedestrian and vehicular access to and from the Parking Garage and the public streets adjoining the Property including ingress and egress by means of the private street. The precise number of Exclusive Pubhc Parking "Stalls to be granted City pursuant to the public parkmg easement will be determined based upon the value of the City Replacement Parking Property and the cost of each parking stall to be located m the Patkillg Garage which shall be determined by div1dmg the actual construction cost for the Parking Garage (excluding the cost of land and excluding the cost of any modifications made to the Parking Garage to support an office, commercial structure or use other than short term public parking to be construQted on top of the parking garage, if any) divided by the number of parking stalls. The City and the Developer shall establtsh the actual cost of each parking stall followmg completton of schematic design of the Project and prior to closing of the exchange of the City Replacement Parking Property for the public parking easement, and Wlll adjust the number of Exclusive Public Parkmg Stalls accordingly; provided, however, that in no event shall the number of Exclusive Public Parking Stalls be less than sixty-five (65) parktng stalls. As part of the public parking easement, Developer will agree not to charge members of the public for the nght to park m the Parkmg Garage until such time as the C1ty charges for parking on any City streets located w1thin the Kent Station Planned Action Ordinance Area, or any City~owned surface parkmg lots or parking structures located withm the Kent Station Planned Action Ordinance Area. The form of the public parking easement Wlll be an exhibit to, and approved by the City, Developer and any of Developer's Project lenders or mvestors pnor to executton of the Replacement Parking Agreement. Upon Closmg, the Developer will execute a deed of trust in favor of City encumbering the Project Site ("City Mortgage") to secure the obligatiOns of Developer under the Replacement Parkilli Agreement to design, develop, and complete construct10n of the Parkmg Garage and grant C1ty the public parking easement. The City Mortgage shall be a first hen upon the Project Site and shall not be subordinated to any constructiOn or other loan now or hereafter -4-K 120093100008\DRS\ORS_A232J obtained by Developer. Upon final completion of the Parlong Garage and satisfaction of other terms and conditions set forth in the replacement parking agreement, the City will accept the perpetual easement for public parking in the Parking Garage and reconvey the City Mortgage. The disposition of the City Replacement Parking Property will be closed on or before December 15, 2005, and simultaneous with the closing of the Private Owners' contribution or exchange agreements for the remainder of the Property. The City may negotiate for the acquisition of additional pubhc parking stalls in excess of the number of parlong stalls equal to the value of the City Replacement Parking Property at the same cost per parlong stall. The Replacement Parking Agreement shall contain each of the agreed elements set forth in paragraph 6 above and such additional terms and conditions as City and Developer may negotiate in thetr sole discretion; provided, however, that the City Mortgage and the City's public parking easement shall have priority over any financing now or hereafter recorded agatnst the Project Site. Developer's equity investors and Project lenders shall consent to the City's public parlong easement as a conditiOn to Closing. 8. Operation of Parking Garage. City's obligation to exchange the City Replacement Parkmg Property is expressly contingent on the negotiation of an agreement by Ctty and Developer on or before September 30, 2005, setting forth Developer's responstbility to operate and maintain the Parking Garage to be constructed as part of the Project in first-class order, condition and repair m accordance with practices prevailing in first class urban centers with multi-level structured parking, including, but not limited to, the City's Exclusive Public Parking Stalls. Developer shall agree to manage the Parkmg Garage so as to maximize the availability of parking stalls for short term parking, without charge, by members of the general public on a first come/first serve, unreserved basis. Such parking management agreement may be combined with the City's public parking easement agreement. 9. Harrison Propertv: Redevelopment of Anderson Propertv. Harrison and the City agree to exchange the real property owned by Harrison for the Harrison Exchange Property as identtfied on the map annexed hereto as Exhibtt C and by this reference incorporated herein. The exchange of the real property owned by Harrison for the Harrison Exchange Property shall be closed simultaneously with the exchange by SPI of a portion of the SPI Property for real property owned by the Ctty and the contribution of the SPI Property (followmg such exchange) by SPI to Developer described in paragraph 6 above and the exchange of the City Replacement Parking Property pursuant to the Replacement Parking Agreement more particularly described in paragraph 7 above. Thts exchange of properties is subject to the followmg additional terms and conditions: As part of such exchange, the Anderson Property shall be subject to a restrictive covenant (whtch shall constitllte a covenant runmng with the land in favor of City and Developer) restricting use and development of the Anderson Property as follows: (i) in the event Anderson redevelops (1&. construct buildings for office, residential, commerctal or retatl use) the Anderson Property, Anderson agrees that any such redevelopment shall contain sufficient on-site parlong to meet a minimum parking ratio of 1.0 stalls per residential umt (not per bedroom), and 2.0 stalls per 1,000 rentable square feet for office, commercial or retail use plus an addit10nal 45 parkmg stalls representing the parking stalls needed to provide parking for tenants of property owned by Meeker and Harrison south ofW. Harrison Street; and (ii) Anderson shall not charge the public for the nght to park in any parlong spaces developed as part of such redevelopment until such nme as the City charges for parking on any City streets located Within the Kent Station Planned Action Ordinance Area, or any Ctty- owned surface parking lots or parking structures located withm the Kent Station Planned Action Ordinance Area; provided, however, that such restrict1ve covenant shall not prevent Anderson from providing and charging on a monthly basis for parking to tenants, their employees or invttees under the terms of any space lease(s) of any development hereinafter constructed on the Anderson Property. 10. No Brokers. Each Owner represent to all other Owners that they have dealt directly with one another and there are no brokers, fmders or other consultants who are entitled to payment of any brokerage fee, finder's fee or other compensation in connectton wtth the sale or exchange of the Property -5-K 120093100008\0RS\ORS_A232J contemplated by this Agreement. Each Owner agrees to indemnify, protect, defend and hold all other Owners harmless from any and all damages, liabilities, costs, expenses and losses (mcluding, without limitation, reasonable attorneys' fees and costs) which any Owner may sustam or incur by reason of a claim for any such brokerage fee, finder's fee or other compensation if such claim is based upon any agreement alleged to have been made by such Owner. The provisions of this Section 10 shall survive the termination of this Agreement or the sale, exchange or contribution of the Property by and among Owners and Developer. 11. Citv Approval. City's obugatlons under this Pooling Agreement are expressly subJeCt to approval by the City Council on or before September 30, 2005. City's obligations under the Replacement Parlang Agreement, the public parking ea1tement and the parking management agreement described under paragraphs 7 and 8 above are expressly subject to approval by the City Council on or before September 30, 2005. Nothing contaitted in this Agreement or the proposed Replacement Parking Agreement, public parking easement and the parking management agreement shall constitute a watver of the City's governmental authority relating to development of the Project including, but not lirmted to, zoning and land use decisions, permitting or any other governmental approvals. 12. Miscellaneous. (a) Shapng of Expenses. Owners agree to share the cost of the appraisal of the Property and the fees and expenses associated wtth preparation of the boundary line adjustment, mcludmg costs of any surveying work necessary and the preparation of any legal descriptions and conftrmtng deeds, whtch costs and expenses shall be paid by the Owners in proportton to their percentage ownership mterest in the Property. All such costs and expenses shall be paid promptly following receipt of mvotces or other documentation thereof, and shall accrue interest at the rate of twelve percent (12%) per annum until paid in full tf not paid within thirty (30) days followtng rece1pt of such invotce or other supporting documentation. (b) Attorneys' Fees. Each Owner will 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 otherwtse arising out of this Agreement. (c) Entire Agreement: Mgdifist1ou. This Agreement and the exhtbtts attached hereto const1tutes the entire understanding between the parties hereto with respect to the Standstill Penod and the Owner's respective rights, duties and obligations during the Standstill Period. Neither this Agreement nor any provlSlon hereof may be waived. modified, amended, discharged or termmated except as expressly prov1ded herein or by an iastru.nent in writing signed by the party against which the enforcement of such waiver, modification. amendment, discharge or terrninatton 1s sought. (d) Captions. The captions in this Agreement are inserted for convenience of reference only and in no way define, limit or describe the scope or intent of thts Agreement. (e) Time is of the Essence. Time ts of the essence of this Agreement and of each covenant and agreement that is to be performed at a particular ttme or wtthin a particular period of time. However, if the final date of any period which is set out in any provision of this Agreement or the applicable closing date falls on a Saturday, Sunday or legal holiday under the laws of the United States, or the State of Washington, then the time of such period or the closmg date, as the case may be, shall be extended to the next date which ts not a Saturday, Sunday or legal holiday. -6-K 120093\0000a\DRS\ORS_A232J (f) Further Acts. The parties shall execute and deliver such further mstruments and documents, and take such other further actions, as may be reasonably necessary to carry out the intent and provisions of this Agreement. (g) No Jgint Venture. Nothing contained in this Agreement shall create any partnership, joint venture or other arrangement between Owners other than that of owners of contiguous parcels of real property. The parties intend that the rights, obligat10ns and covenants in this Agreement shall be enforceable only by the Owners. No term or provision of this Agreement 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. To the extent allowed by law, the Owners agree to keep any appraisals oftbe Property completely confidential. (b) Fair Construction. This Agreement has been drafted by legal counsel to the City Prior to execution and delivery of th1s Agreement, each Owner has had an opportunity to consult With legal counsel of its choice. Each of the provisions of this Agreement has been reviewed and negotiated by, and represents the combined work product of, all Owners. No presumption or other rules of construction which would interpret the provisions of this Agreement in favor of or agamst the party preparing the same shall be applicable in connection with the construction or mterpretation of any of the provisions of this Agreement. The provisions of this Agreement shall be construed as a whole accordmg to their common meanmg and consistent With the other provisions contained herein in order to achieve the objectlVes and purposes of this Agreement. (1) Notices. All notices, demands, requests, consents and approvals wh1ch may, or are required, to be given by any Owner to any other Owner hereunder shall be m writing and shall be deemed to have been duly given if delivered personally, sent by a nationally recogmzed overnight delivery serv1ce or by facsimile transmission. or, if mailed or deposited m the United States mail and sent by registered or certified mail, return receipt requested, postage prepa!d, to the address listed folloWing each Owner's signature below, or to such other address as any Owner hereto may from time to time designate in writing and deliver in a like manner. All notices shall be deemed g1ven three (3) business days folloWing the date when mailed or one (I) business day foUowing the date when delivered or faxed (provided the fax machine has issued a printed confirmation of receipt). (j) Counterparts. ThiS AgreeJqent may be executed in one or more identical counterparts, each of wh1ch shall constitute an original and all of which shall constitute but one original and may be delivered by facsimile transmission. (k) Qoyeming Law: Venus:. This Agreement shall be governed by and construed m accordance with the internal laws of the State of Washington, and the parties agree that venue shall lie exclusively in King County Supenor Court. The parties hereto consent to the junsdiction of the Kmg County Superior Court and waive the right to file suit elsewhere. (1) Exhibits. All exhibits shall be reviewed and approved by the Owners and Developer and attached to this Agreement on or before September 30,2005. -7-K \20093100008\0RSIORS_A232J IN WITNESS WHEREOF, tile Owners and Developer have executed th1s Agreement as of the date and year first above written. "CITY'' CITY OF KENT, a Washington municipal corporation By: Name: Title: Address: Facsimile: ----------- APPROVED AS TO FORM Name: Title: "MEEKER STREET" Address: Facsimile: ----------- "HARRISON" Address: Facsimile: ----------- Address: Facsimile:----------- "SPI" SPRINGBOARD PROPERTIES INVESTMENTS, LLC, a Washington limited liability company By: Name: Title: Address: Facsimile: ----------- (signatures continued next page] -8- "DEVELOPER" SPRINGBOARD HOLDINGS L.L.C., a Washington limited liability company By: Name: Title: Address: Facsimile: ------------ -9-K \200931000081DRSIORS_A232J • Exhibits B-1 through B-7 Place holder for the legal description of each of the existing legal lots to be added as Exhibits B-1 through B-7 in accordance with Section 2 of the Land Pooling Agreement, entitled "Reconfiguration of the Property," and as approved by staff. Exhibit ( TO POOLING AGREEMENT ANDERSON PROPERTY PROJECT SITE CITY TOWN SQUARE PLAZA !N o 100 'I' SCALE IN FEET ~ ~ ", ~· ;;"'" " Exhibit 0 To POOLING AGREEMENT I ----L------====---------,r-n-,....,------------+---+-j ~~-~=--~:.------------------',l.JJ.----------~a-~~ .. ~ I ::=~-·112,38881'TOTAL r SMITH 01/EA:QIIMIMIIETAIL i RETAIL~ I I I • i I I I I I I I I I I I I I I I I I I I ~ ~ UODIF SPA 1,111081' J---~----------~~i'!l'"'(-----------==t«t~--~-----=--" 11_! __ =~--------- L-----1---------------------------------------------------------------- rn Plan 8 Development LlC 27JULY05 REV050829 0 10 20' 50' 100' •• I SPRINGBOARD GROUND FLOOR 4 LEVEL PKG GARAGE SCHEME 1 -------------------~ Exhibit B REPLACEMENT PARKING AGREEMENT TABLE OF CONTENTS Page 1. Incorporation ofRecitals; Definitions ................................................................................ 2 2. Project Springboard Development Project... ....................................................................... 2 2.1 Project Elements ..................................................................................................... 2 2.2 General Parking Requirements ............................................................................... 3 2.3 Parking Garage; Minimum Design Criteria ............................................................ 3 3. Acquisition of Property ....................................................................................................... 4 3.1 Contribution ofSPI Land ........................................................................................ 4 3.2 Exchange of Harrison Property ............................................................................... 4 3.3 Disposition of Replacement Parking Site; Public Parking Easement.. ................... 4 3.4 Description of Public Parking Easement ................................................................ 4 4. Fair Value Determination of Replacement Parking Site; Public Parking Easement .......... 5 4.1 Fair Value Determination of Exchange Properties ................................................. 5 4.2 Security; City Mortgage; First Lien on Property .................................................... 5 4.3 Terms of City Mortgage .......................................................................................... 5 4.4 Acceptance of Public Parking Easement Upon Final Completion of Parking Garage; Satisfaction of City Mortgage ...................................................... 6 4.5 Escrow Agent. ......................................................................................................... 6 5. Design Development of Project Springboard Improvements and the Parking Garage ................................................................................................................................. 6 5.1 Construction of Project Springboard Improvements and Parking Garage .............. 6 5.2 Construction Drawings and Detailed Specifications for Parking Garage ............... 6 5.3 Resubmittals ............................................................................................................ 7 5.4 Design Development for Remainder of Project Springboard Improvements ......... 7 5.5 Construction in Phases ............................................................................................ 7 5.6 Permits; Costs, Compliance with Legal Requirements ........................................... 7 6. Title to Replacement Property Site ..................................................................................... 8 6.1 Title to Replacement Parking Site .......................................................................... 8 6.2 Title Insurance ........................................................................................................ 8 6.3 Title Review ............................................................................................................ 8 6.3.1 Developer's Notice ................................................................................... 8 6.3.2 City's Notice ............................................................................................. 9 6.3.3 Developer's Election ................................................................................. 9 6.3.4 Survey ....................................................................................................... 9 6.3.5 Approval of Title to Property .................................................................... 9 6.4 Title to Property ...................................................................................................... 9 7. Title to Public Parking Easement ...................................................................................... 10 7.1 Public Parking Easement ...................................................................................... 1 0 -i-P IDRS\ORS2UB 09114105 7.2 Title fusurance ...................................................................................................... 1 0 7.3 fuitial Title Review ............................................................................................... 10 7.3.1 City'sNotice ........................................................................................... 10 7.3.2 Developer's Notice ................................................................................. 11 7.3.3 City's Election ........................................................................................ 11 7.4 New Exceptions to Title; City Approval .............................................................. II 7.5 Updated Title Commitment .................................................................................. II 8. fuspection and Evaluation of the Property; "AS IS Sale" ................................................. 11 8.1 Due Diligence Period ............................................................................................ 11 8.2 Property fuvestigation ........................................................................................... 12 8.3 Environmental Condition of the Replacement Parking Site ................................. 12 8.4 "AS IS SALE" ...................................................................................................... 13 8.5 Waiver of Due Diligence Period for Property ...................................................... 14 9. Operation of Replacement Parking Site Pending Closing ................................................ 14 10. Conditions Precedent to Closing ....................................................................................... 14 10.1 Representations and Warranties ............................................................................ 14 10.2 Performance .......................................................................................................... 14 10.3 Simultaneous Contribution ofSPI Land ............................................................... 14 10.4 Vacation of Alley; Completion of Boundary Line Adjustment Process ............... 15 10.5 Simultaneous ExchangeofHarrison Property ...................................................... 15 10.6 Application for Parking Garage Building Permits and Downtown Design Review .................................................................................................................. 15 10.7 Availability of Constru~tion and Equity Financing for Springboard .................... 15 10.8 Title Policies ......................................................................................................... 15 10.9 No Bankruptcy ...................................................................................................... 15 10.10 ConditionofProperty ........................................................................................... 16 10.11 City's Right to Terminate ..................................................................................... 16 11. City Representations ......................................................................................................... 16 11.1 Authority ............................................................................................................... 16 11.2 No Litigation ......................................................................................................... 16 11.3 No Condemnation ................................................................................................. 16 11.4 Construction Liens ................................................................................................ 17 11.5 Survival ................................................................................................................. 17 12. Developer's Representations ............................................................................................ 17 12.1 Authority ............................................................................................................... 17 12.2 All Consents Obtained .......................................................................................... 17 12.3 Avai~a?ili~ of Construction and Equity Financing for Project Springboard ....... 17 12.4 No Litigation ......................................................................................................... 18 12.5 No Land Speculation ............................................................................................. 18 12.6 Survival ................................................................................................................. 19 -ii-P IORSIORS2UB 09/14105 13. Closing and Escrow .......................................................................................................... 19 13.1 Time and Place of Closing .................................................................................... 19 13.2 Documents to be Delivered by City ...................................................................... 19 13.3 Delivery by Developer .......................................................................................... 20 13.4 Other Instruments .................................................................................................. 20 13.5 Prorations .............................................................................................................. 20 13.6 Payment of Costs .................................................................................................. 20 13.7 Closing of Contribution of the Private Land ......................................................... 21 13.8 Closing Simultaneous with Other Transactions Contemplated under Pooling Agreement ............................................................................................... 21 13.9 Recordation ........................................................................................................... 21 14. Possession ......................................................................................................................... 22 15. Construction of Parking Garage ........................................................................................ 22 15.1 Construction of Parking Garage; Construction Phasing ....................................... 22 15.2 Commencement and Completion of Construction ................................................ 22 15.3 Unavoidable Delay; Outside Completion Date ..................................................... 22 15.4 Hiring Program ..................................................................................................... 23 15.5 Construction Staging; Remaining Building Demolition; Temporary Parking Area ......................................................................................................... 23 15.6 Project Manager; Construction Progress Reports ................................................. 23 15.7 Changes to Parking Garage Construction Documents .......................................... 24 15.7.1 No Reduction in Parking Garage Capacity or Other Characteristics ......................................................................................... 24 15.7.2 Changes to Construction Documents ...................................................... 24 15.8 Disclaimer: City Not Liable for Construction of Project Springboard Improvements or Parking Garage ......................................................................... 24 15.9 Payment ofParking Garage Costs; Construction Liens ........................................ 25 15.10 Assignment of Contracts ....................................................................................... 25 16. Developer Financing ......................................................................................................... 26 17. Indemnification ................................................................................................................. 26 17.1 Developer's Indemnification ................................................................................ 26 17.2 Notice of Claim ..................................................................................................... 27 18. Insurance ........................................................................................................................... 27 19. Completion of Parking Garage ......................................................................................... 27 19.1 Substantial Completion ......................................................................................... 27 19.1.1 Architect's Certification .......................................................................... 27 19.1.2 Project Substantially Completed ............................................................. 27 19.1.3 Temporary Certificate of Occupancy ...................................................... 27 19.1.4 Owner Acceptance .................................................................................. 28 19.1.5 Completion of Punch List Items ............................................................. 28 19.2 Final Completion of the Parking Garage .............................................................. 28 -iii-P\DR!NlRS2UB 09/14105 19.2.1 Certificate of Occupancy ........................................................................ 28 19.2.2 Contractors' Certification ....................................................................... 28 19.2.3 Punch List Items Completed ................................................................... 28 19.2.4 Construction Costs Paid .......................................................................... 28 19.2.5 No Construction Liens ............................................................................ 28 19.2.6 Private Street Completed ........................................................................ 28 19.2.7 Garage Operational ................................................................................. 28 20. Acceptance of Public Parking Easement; Release of City Mortgage ............................... 29 20.1 Conditions Precedent to City's Obligation to Accept Public Parking Easement ............................................................................................................... 29 20.1.1 Representations and Warranties .............................................................. 29 20.1.2 Performance ............................................................................................ 29 20.1.3 Approval of Condominium Documentation ........................................... 29 20.1.4 Title Policy .............................................................................................. 29 20.1.5 No Bankruptcy ........................................................................................ 29 20.1.6 Additional Construction Agreements ..................................................... 30 20.1.7 No Casualty of Condemnation ................................................................ 30 20.1.8 Project Springboard Improvement Building Permits .............................. 30 20.1.9 Simultaneous Closing of Construction Financing for Remainder of Project Springboard Improvements .................................................... 30 20.1.10 City Right to Terminate .......................................................................... 30 20.2 Documents to be Delivered by Developer ............................................................ 30 20.3 Documents to be Delivered by City ...................................................................... 31 20.4 Other Instruments .................................................................................................. 31 20.5 Prorations; Payment of Costs ................................................................................ 31 20.6 Recordation ........................................................................................................... 31 21. Damage, Destruction or Condemnation Prior to Closing ................................................. 32 22. Damage, Destruction or Condemnation After Closing, but Prior to Final Completion of the Parking Garage ................................................................................... 32 22.1 Damage or Destruction ......................................................................................... 32 22.2 Condemnation ...................•................................................................................... 33 23. Restrictions on Transfers .................................................................................................. 33 23.1 No TransferofRights under Agreement .............................................................. 33 23.2 Restrictions on Transfer of Interests in Developer ............................................... 33 23.3 Definition of Transfer ........................................................................................... 33 23.4 No Transfer of Replacement Parking Site During Construction of Parking Garage ................................................................................................................... 33 24. Events of Default Prior to Closing Date; Remedies ......................................................... 34 24.1 City's Default ........................................................................................................ 34 24.2 Developer's Default .............................................................................................. 34 -tv-P IDRS\DRS2UB 09114105 25. Developer Events of Default Following Closing Date; Remedies ................................... 34 25.1 Developer Default ................................................................................................. 34 25.2 City Remedies upon Developer Event of Default... .............................................. 35 26. City Events of Default Following Closing Date; Remedies ............................................. 35 27. Rights and Remedies Cumulative ..................................................................................... 35 28. Notices .............................................................................................................................. 36 29. Survival ofRepresentations and Warranties ..................................................................... 37 30. Brokerage Fees .................................................................................................................. 37 31. Miscellaneous ................................................................................................................... 37 31.1 Burden and Benefit ............................................................................................... 3 7 31.2 No Continuing Waiver .......................................................................................... 38 31.3 Nondiscrimination ................................................................................................. 38 31.4 NeutralAuthorship ................................................................................................ 38 31.5 Terminology .......................................................................................................... 38 31.6 Complete Agreement; Amendment ...................................................................... 38 31.7 Severability ........................................................................................................... 38 31.8 Relationship ofParties .......................................................................................... 38 31.9 No Third Party Rights ........................................................................................... 38 31.10 Non Waiver of Governmental Rights ................................................................... 39 31.11 Captions ................................................................................................................ 39 31.12 Counterparts .......................................................................................................... 39 31.13 Further Assurance ................................................................................................. 39 31.14 Authority ............................................................................................................... 39 31.15 Time Is of the Essence ........................................................................................... 39 31.16 Memorandum of Agreement ................................................................................. 39 31.17 Attorneys' Fees ..................................................................................................... 39 31.18 Waiver of Jury Trial. ............................................................................................. 39 31.19 Exhibits ................................................................................................................. 40 31.20 Conflicts oflnterests ............................................................................................. 40 31.21 Non-Liability of City Officials Employees, and Agents ...................................... 40 31.22 Applicable Law ...................................................................................................... 40 Exhibits Exhibit A-1 ExhibitA-2 ExhibitA-3 ExhibitB Exhibit B-1 Exhibit B-2 Legal Description for City-Owned Town Square Plaza Site Legal Description for City-Owned Replacement Parking Site Legal Description for Harrison Exchange Property Legal Description for Private Land Legal Description for Harrison Property Legal Description for SPI Land (following completion of boundary line adjustment and alley vacation) -v-P IORS\DRS2UB 09114105 Exhibit C-1 Exhibit C-2 ExhibitD ExhibitE ExhibitF Exhibit G ExhibitH Exhibit I Legal Description for Property (SPI Land plus City-Owned Replacement Parking Site) Legal Description for Harrison Exchange Property Preliminary Site Plan for Project Springboard Improvements Parking Garage Design Standards Public Parking Easement City Mortgage Bargain and Sale Deed Replacement Parking Site Definitions -vi- -'"" ' ---~ P"IORSIDRS2UB 09/14105 .h .. .: ...... ~ .. REPLACEMENT PARKING AGREEMENT THIS REPLACEMENT PARKING AGREEMENT (the "Agreement") is dated as of the 301h day of September, 2005 by and among CITY OF KENT, a Washington municipal corporation ("City''), SPRINGBOARD HOLDINGS, L.L.C., a Washington limited liability company ("Developer"), and Second Avenue Real Estate LLC, a Washington limited liability company ("Second Avenue") with reference to the following facts: RECITALS A. City is the owner of certain real property more particularly described in Exhibit A-1, Exhibit A-2 and Exhibit A-3 attached hereto and by this reference incorporated herein (collectively, the "City Property''). The real property legally described on Exhibit A-1 is hereinafter referred to as the "Town Square Plaza Site". The real property legally described on Exhibit A-2 is hereinafter referred to as the "Replacement Parking Site". The real property legally described on Exhibit A-3 is hereinafter referred to as the "Harrison Exchange Property''. B. City, MBA Harrison Square I LLC, a Washington limited liability company and MBA Harrison Square II LLC, a Washington limited liability company (collectively, "Harrison"), Meeker Street Law Building LLC, a Washington limited liability company ("Meeker Street") and Springboard Properties Investment LLC, a Washington limited liability company ("SPf') are the owners of certain real property located in the City of Kent bordered on the north by Smith Street, on the west by Fourth Avenue, on the South by Harrison Street and on the east by Second Avenue and more particularly described on Exhibit B attached hereto and by this reference incorporated herein (collectively, the "Private Land"). Harrison and Meeker Street are hereinafter referred to collectively as "Anderson". The real property owned by Harrison described in Exhibit B-1 is hereinafter referred to as the "Harrison Property''. Anderson and SPI are hereinafter referred to collectively as "Private Owners". C. Pursuant to the Pooling Agreement dated September 30, 2005 by and among City, Private Owners and Developer ("Pooling Agreement''), the parties to the Pooling Agreement have each agreed to participate in the boundary line adjustment and alley vacation described therein; provided, however, Anderson will not participate in any joint development of the Property (defined below). Anderson will exchange the Harrison Property for the Harrison Exchange Property as described in the Pooling Agreement and will continue to own the same quantity ofland following such exchange in a different configuration (hereinafter, the "Anderson Property'') subject to the restrictive covenant described in the Pooling Agreement. The property described on Exhibit B-2 that will be owned by SPI following the boundary line adjustment is hereinafter referred to as the "SPI Land". The SPI Land and the Replacement Parking Site are more particularly described on Exhibit C-1 attached hereto and by this reference incorporated herein and are hereinafter referred to collectively as the "Property'' or the "Project Site". D. City is interested in redeveloping the Town Square Plaza Site with an approximately 34,000 square foot town square plaza and Developer is interested in acquiring the Project Site for redevelopment with a privately owned mixed-use development, including an -~-- above grade parking garage with a minimum of three hundred fifty (350) parking stalls, each as more particularly described below. E. Developer desires to acquire the Replacement Parking Site from City in exchange for a perpetual parking easement in favor of City in the parking garage to be constructed by Developer on the Property that will provide public parking at all times for not less than seventy (70) multi-passenger motor vehicles at all times, and in addition, grant members of the public the right to park in any open parking stall in the parking garage on a first-come, first serve basis, at all times, in each case, at no initial cost to either City or members of the general public on the terms and conditions hereinafter set forth. City has determined that the substantial private investment proposed for the Property will improve the financial stability and general economic vitality of City. The proposed redevelopment will provide additional housing downtown in close proximity to the Kent commuter rail and bus transit center, increase pedestrian activity downtown, create additional jobs, and will expand and diversity the City's tax base. The provision of safe, convenient, accessible and attractive public parking in the downtown retail core will increase retail activity, indirectly improve public safety, prevent traffic congestion and improve vehicular access and circulation within the City and is a traditional and well-recognized public purpose. NOW, THEREFORE, in consideration of the mutual covenants and conditions contained herein, the grant of a perpetual easement for public parking in favor of City and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, City and Developer agree as follows: AGREEMENT 1. lncomoration ofReci!§Js; Definitions. Each recital set forth above is incorporated into this Agreement as though fully set forth herein. All capitalized terms not otherwise defined herein shall have the meaning set forth in Exhibit J to this Agreement. 2. Project Springboard Development Project. 2. I Project Elements. Developer intends to acquire the Property from City and SPI and redevelop the Property with a privately owned mixed-use condominium development (hereinafter referred to as "Project Springboard''). Project Springboard shall consisting of condominium units created pursuant to a master declaration and survey map and plans prepared by Developer and approved by City, which approval shall not be unreasonably withheld, conditioned or delayed, developed with the following uses: (a) an approximately 74-room hotel, including reception area, lobby, a conference center of approximately 1,600 square feet, a spa of approximately 1,000 square feet and an indoor water park of approximately 7,000 square feet (collectively, the "Hotel Improvements"); (b) approximately 64 units of market rate residential condominiums; (c) approximately 23,000 square feet of restaurant and retail space; (d) on-site parking for approximately four hundred ( 400) multi-passenger motor vehicles to be located within the parking garage more particularly described in Subsection 2.3 below, including access to and from the public streets adjoining the Property; (e) approximately 56 units of market rate condominiums for seniors; and (f) common elements and limited common elements as are set forth in the master condominium declaration and survey map and -2-P~DRSIDRS2UB 09/14105 plans, including, but not limited to, a private street connecting Smith and Harrison Streets, elevated skybridge, elevators, stairs and walkways providing for pedestrian access to and from the various Project Springboard Improvements, including, but not limited to, the Parking Garage, together with easements for vehicular and pedestrian access to and from the Parking Garage, utilities, and such other easements as may be necessary or customary given the nature of the development (collectively, the "Project Springboard Improvements"). Each condominium may contain such number of separate condominium units as Developer shall detennine in the reasonable exercise of its business judgment pursuant to one of more condominium declarations and survey map and plans prepared by Developer. A preliminary site plan for the Project Springboard Improvements is attached hereto as Exhibit D and by this reference incorporated herein. 2.2 General Parking Requirements. Developer shall provide sufficient parking stalls on the Property (excluding parking located on public streets adjoining the Property) to meet a minimum parking ratio of 1.0 stalls per bedroom for any residential unit, and 2.0 stalls per 1,000 rentable square feet for any portion of the Property developed for office, commercial or retail use by constructing an above-ground structured parking garage containing a minimum of three hundred fifty (350) parking spaces for multi-passenger motor vehicles (the "Parking Garage"). For purpose of the foregoing parking ratios, the Hotel Improvements shall be considered a residential use and not a commercial use. In addition, Developer shall provide an additional seventy (70) parking stalls for exclusive public parking. The Parking Garage shall be designed and operated so that all parking spaces are available for use by members of the general public on a first come, first serve basis, twenty-four (24) hours a day, seven (7) days a week. No parking fees shall initially be assessed to members of the general public to park in the Parking Garage. No parking stalls will be allocated to a particular condominium unit, hotel guest, commercial tenant or any of their invitees or customers; provided, however, that the owner of the Parking Garage shall have the right to issue a limited number of special use parking permits as set forth in the Public Parking Easement. The Parking Garage shall be operated as a self-park, public parking garage and shall be managed to maximize the availability of Short Term Parking (as defined in the Public Parking Easement) at all times. 2.3 Parking Garage: Minimum Design Criteria. The Parking Garage shall consist of four (4) levels of above-grade parking containing a minimum of three hundred fifty (350) parking spaces for multi-passenger motor vehicles. Elevators, stairs and pedestrian walkways providing access to the Parking Garage shall be clearly marked or structurally integrated at the ground level so that members of the public, hotel guests, condominium owners and retail tenants and their customers and invitees may easily access the Parking Garage from adjoining public streets or other parts of the Project Springboard Improvements. There shall be at least one entrance and exit to the Parking Garage providing for vehicular ingress and egress to the public streets adjoining the Property utilizing the private street. The Parking Garage shall be designed to high standards for vehicular access and circulation, lighting, safety, ease of maintenance, energy efficiency and attractiveness, including one or more entry and exit plazas and shall conform to the additional design standards set forth on Exhibit E attached hereto and by this reference incorporated herein. The Parking Garage shall be built in compliance with all applicable building codes and other applicable laws, rules and regulations, including, but not limited to, the applicable provisions of Title lli of the Americans with Disabilities Act and -3-P \DRS\DRS2UB 09/14105 regulations issued thereunder concerning accessibility of places of public accommodation and commercial facilities. 3. Acquisition of Property. 3.1 Contribution of SPI Land. Developer represents to City that it has entered into a binding contract with SPI (the "SPI Contribution Agreement") whereby SPI has agreed to contribute the SPI Land (following the SPI exchange with the City) to Developer. The SPI Contribution Agreement contains, at a minimum, the following terms and conditions: (i) feasibility period not to exceed forty-five (45) days with closing on or before December 15, 2005; (ii) the SPI Contribution Agreement for the SPI Land shall provide for a simultaneous closing and shall be expressly conditioned on the contribution or exchange of the remainder of the Property pursuant to the Pooling Agreement, including, but not limited to, the Replacement Parking Site; and (iii) construction of the Parking Garage must commence on or before March 31, 2006. 3.2 Exchange of Harrison Property. Pursuant to Paragraph 9 of the Pooling Agreement, Harrison has agreed to exchange the Harrison Property for the Harrison Exchange Property. 3.3 Disposition of Rg?lacement Parking Site; Public Parking Easement. Subject to all the terms, covenants, conditions and provisions of this Agreement, City agrees to transfer the Replacement Parking Site to Developer upon the express condition that Developer design, develop and complete construction of the Parking Garage on the Replacement Parking Site and grant City the Public Parking Easement upon Final Completion of the Parking Garage and satisfaction of the conditions precedent to acceptance of the Public Parking Easement set forth in Sections 19 and 20 of this Agreement. 3.4 Description of Public Parking Easement. The public parking easement shall grant City, any successor public entity and members of the general public, a perpetual easement to park in the Parking Garage to be constructed by Developer as part of Project Springboard, twenty four (24) hours a day, seven (7) days a week, initially at no charge, together with rights of pedestrian and vehicular access to and from the Parking Garage and the public streets adjoining the Property, including ingress and egress by means of the private street. All parking stalls in the Parking Garage are intended to be used for Short-Term Parking by Springboard Project condominium owners, hotel guests, tenants of Project Springboard Improvements, tenants of real property owned by Second A venue south of Harrison Street and their respective customers and members of the general public on an unreserved first-come, first- serve basis; provided, however, that the owner of the Parking Garage may issue a limited number of special use permits on the terms and conditions set forth in the Public Parking Easement. Not less than seventy (70) parking spaces in the Parking Garage shall be available to members of the general public for Short Term Parking at all times (the "Exclusive Public Parking Stalls"). In addition to the Exclusive Public Parking Stalls which shall be reserved for public parking at all times, members of the general public shall have the right to park in any open parking stall in the Parking Garage on a first-come, first-serve basis twenty-four (24) hours a day, seven (7) days a week. Short Term Parking shall be determined by the City from time to time to maximize utilization of parking stalls in the Parking Garage by members of the general public and hotel P \DRSIDRS2UB 09/14105 guests, condominiwn owners, Project Springboard and Second Avenue tenants and their customers while limiting use of the ,Parking Garage by commuters and tenants of adjoining properties. The public parking easement shall be in substantially the form annexed hereto as Exhibit F and by this reference incorporated herein ("Public Parking Easement"). 4. Fair Value Determination of Replacement Parking Site; Public Parking Easement. 4.1 Fair Value Determination of Exchange Properties. City and Developer agree that City would not agree to transfer the Replacement Parking Site to Developer in exchange for the Public Parking Easement, but for Developer's agreement to: (a) complete construction of the Parking Garage on the Property as part of the Project Springboard Improvements, at its sole cost and expense, pursuant to the provisions of Sections 5 and 15 of this Agreement within nine (9) months following Closing; (b) complete construction of the Parking Garage with a minimwn capacity of three hundred fifty (350) parking spaces for multi- passenger motor vehicles, which is sixty-five (65) parking stalls more than the nwnber of parking stalls that Developer would be required to construct in order to build the Project Springboard Improvements on the Property to satisfy the Project parking ratios set forth in Section 2.2 of this Agreement; (c) manage the Parking Garage so that the seventy (70) Exclusive Public Parking Stalls are reserved for public parking at all times and in addition, members of the general public shall have the right to park in any open parking stall in the Parking Garage on a first-come, first-serve basis at all times; (d) operate the Parking Garage as a self-park, public parking garage open to members of the public twenty-four (24) hours a day, seven (7) days a week, initially without charge, and in a manner which maximizes the availability of Short Term Parking at all times; (e) operate and maintain the Parking Garage at Developer's sole cost and expense in first-class order, condition and repair in accordance with standards prevailing in first class mixed-use developments including multilevel structured parking garages and the multilevel structured parking garage owned, operated and maintained by The Central Puget Sound Regional Transit Authority in connection with its Kent commuter rail station; and (f) grant City, any successor public entity and members of the general public, the Public Parking Easement. 4.2 Security; City Mortgage; First Lien on Property. The obligations of Developer under this Agreement shall be secured by a deed of trust in the form attached hereto as Exhibit G and by this reference incorporated herein (the "City Mortgage") which shall constitute a first lien on the Project Site. Developer shall also assign to City the architect's agreement and construction contracts for the Parking Garage as additional security for the performance of Developer's obligations under this Agreement, which assignments shall be in form and substance satisfactory to Developer and City and shall be consented to by the architect and contractors, respectively. 4.3 Terms of City Mortgage. City shall have the right to foreclose the City Mortgage upon the occurrence of certain Events of Default by Developer under this Agreement as defined in Section 25 of this Agreement. As a condition to Closing, Developer's equity investors and lenders shall approve the form of the Public Parking Easement and pursuant to agreements in form and substance satisfactory to City, agree to consent to and subordinate the lien of any financing to the Public Parking Easement upon Final Completion of the Parking Garage and recordation of the Public Parking Easement in the real property records of King County, Washington. -5-P"\ORSIDRS2UB 09/14/05 4.4 Acce_ptance of Public Parking Easement Upon Final Completion of Parking Garage: Satisfaction of City Mortgage. Provided there is no Event of Default. by Developer under this Agreement and no event that with the giving of notice, the passage of time or both, would constitute an Event of Default by Developer under this Agreement, if (a) Final Completion of the Parking Garage has occurred on or before the Outside Completion Date, and (b) each of the conditions set forth in Sections 19 and 20 of this Agreement have been met to the reasonable satisfaction of City, City will agree to accept title to the Public Parking Easement in full and complete satisfaction of the obligations of Developer to design, develop and complete construction of the Parking Garage pursuant to this Agreement and will record the Public Parking Easement in the real property records of King County, Washington and release the City Mortgage of record. 4.5 Escrow Agent. LandAmerica Title Insurance Company in its capacity as escrow agent ("Escrow Agent") and in its capacity as title insurer (''Title Company'') has been designated as Escrow Agent and Title Company by mutual agreement of City and Developer. 5. Design Development of Project Springboard Improvements and the Parking Garage. 5.1 Construction of Project Springboard Improvements and Parking Garage. City would not have entered into this Agreement and agreed to transfer the Replacement Parking Site in exchange for the Public Parking Easement, but for the agreement by Developer to cause the construction of the Project Springboard Improvements on the Property and to cause the construction of the Parking Garage in accordance with the terms and conditions hereinafter set forth. As of the date of this Agreement, City has reviewed and approved the basic project elements and uses proposed for the Project Springboard Improvements to be constructed on the Property, including the preliminary site plan attached hereto as Exhibit D, the minimum design standards for the Parking Garage attached hereto as Exhibit E. Prior to December 1, 2005, City shall have reviewed and approved the Schematic Design Documents and Detailed Specifications for the Parking Garage (the "Parking Garage Schematic Design Documents"). 5.2 Construction Drawings and Detailed Specifications for Parking Garage. Following approval of the Parking Garage Schematic Design Documents, Developer shall, at its sole cost and expense, cause its architects to prepare construction drawings for the Parking Garage in a form sufficient to apply for a building permit for the Parking Garage ("Construction Drawings"), which Construction Drawings shall be prepared in accordance with the requirements of this Agreement and the Parking Garage Schematic Design Documents in all material respects and shall deliver a copy of same to City for its review and approval. Any change from the Parking Garage Schematic Design Documents shall be clearly highlighted to indicate the changes. City shall promptly review the Construction Drawings and shall give Developer written notice within fifteen (15) days following its receipt of the Construction Drawings, of its approval or disapproval of the Construction Drawings, specifying in the case of its disapproval, its reasons therefore. City shall have the right to disapprove Construction Drawings which (i) do not comply with all Requirements of Law, (ii) do not comply with the Parking Garage Schematic Design Documents in all material respects, (iii) materially change the configuration or layout of the parking stalls from the preliminary site plan attached hereto as Exhibit D or the minimum design standards attached hereto as Exhibit E, or (iv) reduce the capacity of the Parking Garage -6-P IDRS\DRS2UB 09/14105 below three hundred fifty (350) parking stalls. If City has not responded to the Construction Drawings within fifteen (15) days after City's receipt thereof, or of any resubmittals thereof, the Construction Drawings shall be deemed approved. Nothing contained herein shall constitute a waiver of City's rights as the jurisdiction with permitting authority over the Project Springboard Improvements including, but not limited to, the Parking Garage, to review Developer's application for building and other permits, compliance with the City's Downtown Design Review process, or the City's right to impose conditions prior to issuance of permits necessary to construct the Project Springboard Improvements and the Parking Garage in accordance with all Requirements of Law. 5.3 Resubmittals. If objections or comments are submitted in writing by City within the timeframe set forth in the preceding subsection, Developer shall cause its architects to make changes in the Construction Drawings consistent with objections or comments made by City pursuant to the preceding subsection and shall resubmit the same in accordance with the foregoing schedule for further review. The process ofresubmittal and review shall continue until the submittals have been approved by all parties. The final Construction Drawings and Detailed Specifications setting forth in detail the requirements for the construction of the Parking Garage once they have been approved by City are called the ''Parking Garage Construction Documents". There shall be no changes in the Parking Garage Construction Documents without the prior written consent of City as hereinafter provided. 5.4 Design Develgpment for Remainder of Project Springboard Improvements. City acknowledges that the Parking Garage has been designed as an integrated part of a mixed-use commercial development containing a number of different buildings. The remainder of the Project Springboard Improvements more particularly described in Section 2.1 of this Agreement will be constructed on the Property in accordance with the preliminary site plan attached hereto as Exhibit D. Developer reserves the right to make changes, modifications, additions and deletions to the plans and specifications for the Project Springboard Improvements (other than the improvements to be built by Developer pursuant to Section 20.1.6 below and the Parking Garage, unless such change would increase the number of available parking spaces in the Parking Garage subject to the Public Parking Easement) so long as Developer does not change the basic program elements or make any material change in the type of uses proposed as part of the Project Springboard Improvements without the prior written consent of City. 5.5 Construction in Phases. Developer has agreed to construct Project Springboard in phases. The Parking Garage shall be constructed first as part of Phase One. City shall not be obligated to issue building permits for the remainder of Project Springboard until after Final Completion of the Parking Garage and acceptance of the Public Parking Easement pursuant to Sections 19 and 20 of this Agreement. 5.6 Pennits: Costs. Compliance with Legal Requirements. Developer shall obtain all permits and authorizations from any federal, state or local government or departments or subdivisions thereof having jurisdiction over the Property in order to permit construction of the Parking Garage in substantial accordance with the Parking Garage Construction Documents and all Requirements of Law. Nothing contained in this Agreement is intended or shall be construed to require that City exercise its discretionary authority under its regulatory ordinances to further Project Springboard or the Parking Garage nor binds City to do so. City will process -7-P \ORS\ORS2UB 09114105 applications for pennits and approvals as if such applications were made without any City agreement to accept the Public Parking Easement to park in the Parking Garage upon satisfaction of the conditions set forth in Sections 19 and 20 of this Agreement. 6. Title to Reolacement Property Site. 6.1 Title to Replacpent Parking Site. City shall execute and deliver to Developer at Closing a bargain and sale deed in the form attached hereto as Exhibit I and by this reference incorporated herein (''Deed") conveying fee simple title to the Replacement Parking Site subject to Pennitted Exceptions as detennined in accordance with Sections 6.2 and 6.3 below. 6.2 Title Insurance. On the Closing Date, City shall cause the Title Company to issue Developer an Extended Coverage Owner's Policy of Title Insurance (the "Developer's Title Policy''), with liability in the amount of Nine Hundred Ninety-One Thousand and Five Hundred Fifty Dollars ($991,550) insuring good and marketable fee title to the Replacement Parking Site in Developer against any loss or damage by reason of defects in City's title to the Replacement Parking Site, other than Pennitted Exceptions. Developer may, at its sole cost and expense, request endorsements to Developer's Title Policy, but the availability of such endorsements shall not be a condition precedent to closing. 6.3 Title Review. The Title Company shall provide City and Developer with a preliminary commitment for title insurance for the Replacement Parking Site ("Title Commitment'') within ten (10) days following execution of this Agreement, together with complete copies of any exceptions identified in Schedule B thereof. Developer shall conduct its review of the Title Commitment in accordance with the following procedures: 6.3.1 Developer's Notice. Developer shall have fifteen (15) days from the date of receipt of the Title Commitment to notify City of its approval or disapproval of each exception in Schedule B of the Title Commitment. Failure to deliver such notice by that date shall constitute Developer's approval of all exceptions in Schedule B. All monetary liens and encumbrances arising through City's actions other than non delinquent ad valorem property taxes, special assessments and local improvement district assessments will be deemed disapproved and City shall cause all such monetary liens and encumbrances to be fully satisfied, released and discharged of record on or prior to the Closing Date without the necessity of Developer's objection. Developer shall not be entitled to disapprove the general exceptions or 'any exceptions created by or on the account of Developer or exceptions recorded in connection with the proposed redevelopment of the Property with Project Springboard. Covenants, conditions, restrictions, reservations and easements presently of record which are not inconsistent with the redevelopment of the Property with Project Springboard, or proposed Public Parking Easement in favor of City and members of the general public, the City Mortgage, and non-delinquent real estate taxes, special assessments and local improvement district assessments now or hereafter levied against the Replacement Parking Site shall be deemed Pennitted Exceptions and shall not be objected to by Developer. Exceptions deemed approved pursuant to this Section6.3.1 or not disapproved by Developer within the time period set forth above shall be "Permitted Exceptions". -8-P \DRS\DRS2UB 09/14/05 6.3.2 City's Notice. City shall have five (5) days after receipt of Developer's title review letter in which to notify Developer whether or not it elects to cure or remove any of the disapproved exceptions of which City received timely notice pursuant to Section 6.3.1 above. City's failure to so notify Developer shall constitute City's election to not remove all such exceptions. City shall remove all exceptions it elects to remove on or before the Closing Date. 6.3.3 Developer's Election. If City does not elect to remove all exceptions disapproved by Developer, Developer may elect to terminate this Agreement by written notice to City given within five (5) days following City's notice in which event this Agreement shall automatically terminate and except as otherwise expressly provided herein, neither party hereto shall have any further rights, duties or obligations under this Agreement. If Developer does not elect to terminate this Agreement within the time frame set forth herein, disapproved exceptions that City has not elected to remove shall become Permitted Exceptions for the Replacement Parking Site. 6.3.4 Survey. Developer shall obtain a current ALTA/ASCM survey of the Replacement Parking Site prepared by a licensed or registered surveyor, which survey shall be satisfactory to Developer and the Title Company. 6.3.5 Approval of Title to Property. Prior to expiration of the Due Diligence Period set forth i~ Section 8 of this Agreement, Developer shall notify City, Anderson and SPI that it has either: (a) approved the condition of title to all of the parcels constituting the Property and the Harrison Property to be exchanged for the Harrison Exchange Property, or (b) not approved the condition of title to all of the parcels constituting the Property and the Harrison Property to be exchanged for the Harrison Exchange Property. In the event Developer has not approved the condition of title to all such parcels on or prior to expiration of the Due Diligence Period, either party may thereafter terminate this Agreement without liability to the other party upon thirty (30) days written notice, and thereafter, except as otherwise expressly provided herein, neither party shall have any further rights, duties or obligations under this Agreement. 6.4 Title to Property. The Title Company shall also provide City and Developer with a preliminary commitment for title insurance for the entire Property within ten (10) days following execution of this Agreement, together with complete copies of any exceptions identified in Schedule B thereof. City and Developer shall conduct their review and approval of the title commitment for the Property utilizing the same procedure and within the same time period set forth above for Developer's review and approval of title to the Replacement Parking Site and the title exceptions which have been approved by City and Developer shall be referred to as the ''Property Permitted Exceptions''). Once approved by City and Developer, Developer shall not enter into or consent to any Intervening Lien (as defined in Section 7.4) with respect to the Property without the prior written consent of City or which would impair the first lien priority of the City Mortgage. Notwithstanding any provision of this Agreement to the contrary, Developer shall cause any mortgage, deed of trust or other encumbrances to be fully satisfied, released and discharged of record on or prior to the Closing Date without the necessity of City's objections. The Title Company shall also issue City an ALTA Extended Coverage Mortgagee's Policy of Title Insurance (the "City Loan Policy") with liability in the amount of -9-p \ORS\DRS2UB 09114/05 Six Million Five Hundred Ninety-One Thousand and No/100 Dollars ($6,591,000.00) insuring the first lien priority of the City Mortgage on the Property subject only to the Property Permitted Exceptions approved by City and Developer during the title review period. 7. Title to Public Parking Easement. 7.1 Public Parking Easement. Upon Final Completion of the Parking Garage and satisfaction of the conditions set forth in Sections 19 and 20 of this Agreement, Developer shall execute and deliver to City on the Public Parking Easement Acceptance Date (as defined in Section 20 of this Agreement) the Public Parking Easement, subject only to City's Permitted Exceptions as determined in accordance with Section 7.3 below. 7.2 Title Insurance. On the Public Parking Easement Acceptance Date, Developer shall cause the Title Company to issue City an Extended Coverage Owner's Policy of Title Insurance (the "City's Title Policy"), with liability in the amount of One Million Four Hundred Seventy-Five Thousand Seven Hundred Fifty and No/100 Dollars ($1,475,750.00) insuring that City is the owner of, and benefited party under, the Public Parking Easement, and insuring City against any loss or damage by reason of defects in Developer's title to the Property subject to the Public Parking Easement, other than City Permitted Exceptions (as defined below). 7.3 Initial Title Review. The Title Company shall provide City and Developer with a preliminary commitment for title insurance for the property which will be subject to the Public Parking Easement ("City's Title Commitment'') within ten (10) days following execution of this Agreement, together with complete copies of any exceptions identified in Schedule B thereof. City shall conduct its review of City's Title Commitment in accordance with the following procedures: 7.3.1 Citv's Notice. City shall have fifteen (15) days from the date of receipt of City's Title Commitment to notify Developer of its approval or disapproval of each exception in Schedule B of City's Title Commitment. Failure to deliver such notice by that date shall constitute City's approval of all exceptions in Schedule B. All monetary liens and encumbrances other than non delinquent ad valorem property taxes, special assessments and local improvement district assessment will be deemed disapproved and Developer shall cause all such monetary liens and encumbrances to be fully satisfied, released and discharged of record on or prior to the Closing Date without the necessity of City's objection. City shall not be entitled to disapprove the general exceptions or any exceptions created by or on the account of City. Covenants, conditions, restrictions, reservations and easements presently of record which are not inconsistent with the rights of City and members of the general public under the Public Parking Easement, and non-delinquent real estate taxes, special assessments and local improvement district assessments now or hereafter levied against the Property shall be deemed Permitted Exceptions and shall not be objected to by City. Exceptions deemed approved pursuant to this Section 7.3.1 or not disapproved by City within the time period set forth above shall be "City's Permitted Exceptions". Notwithstanding any provision of this Agreement to the contrary, any mortgage or deed of trust which Developer intends to record in connection with financing for Project Springboard shall be expressly subject and subordinate to City's Mortgage and the Public Parking Easement, and upon request by City or the Title Company, Developer shall cause its -10-P \ORS\ORS2UB 09/14105 -_, ~~~--_._ ~'. -~~s: i!. -.,._.,__ lenders to consent to, and subordinate the lien of any mortgage financing to, City's Mortgage and the Public Parking Easement. 7.3.2 Developer's Notice. Developer shall have five (5) days after receipt of City's title review letter in which to notify City whether or not it elects to cure or remove any of the disapproved exceptions of which Developer received timely notice pursuant to Section 7.3.1 above. Developer's failure to so notify City shall constitute Developer's election to not remove all such exceptions. Developer shall provide City with reasonable assurances prior to expiration of the Due Diligence Period that it will remove all such exceptions and shall remove all exceptions it elects to remove on or before the Closing Date set forth in Paragraph 13. 7.3.3 Citv's JMeetion. If Developer does not elect to remove all exceptions disapproved by City, City may elect to terminate this Agreement prior to expiration of the Due Diligence Period by written notice to Developer given within five (5) days following Developer's notice in which event this Agreement shall automatically terminate and except as otherwise expressly provided herein, neither party hereto shall have any further rights or obligations under this Agreement. 7.4 New ExceDtions to Title; City Approval. Once the City's Permitted Exceptions have been determined, Developer shall not enter into any new agreement, easement, restriction, condition, covenant, right--of-way, lease, license or other matter affecting title or create any lien or encumbrance (collectively, "Intervening Lien") which will affect the Property or the Parking Garage without the prior written consent of City which consent shall not be unreasonably withheld so long as such Intervening Lien will not adverse affect or interfere with the rights of City and members of the public under the Public Parking Easement. 7.5 Updated Title Commitment. Upon Substantial Completion of the Parking Garage, Developer shall cause the Title Company to deliver an update to City's Title Commitment to the City and Developer, together with copies of any exceptions identified in any update that were not set forth in the original City Title Commitment, together with a copy of any declaration and survey map and plans which Developer intends to record against the Property in connection with the Parking Garage (which meets the requirements of Section 20.1.3). City agrees not to unreasonably withhold its consent to any new exceptions to title so long as any such exceptions will not adversely affect or interfere with the rights of City and members of the general public under the Public Parking Easement. City shall advise Developer in writing within fifteen (15) days after receipt of the update to the City's Title Commitment what exceptions to title, if any, in addition to the declaration and survey map and plans and the City's Permitted Exceptions will be accepted by City. Developer shall remove all new exceptions objected to by City on or before the Public Parking Easement Acceptance Date. 8. Inspection and Evaluation of the Property; "AS IS Sale". 8.1 Due Diligence Period. Developer shall have until November 15, 2005 in which to conduct its due diligence investigation of the Property including, but not limited to, the Replacement Parking Site, and determine the fmanctal feasibility of Project Springboard ("Due Diligence Period"). Developer's obligations under this Agreement are expressly subject to its approval of the Replacement Parking Site, the suitability of the Replacement Parking Site for -11-P \DRSIDRS2UB 09/14/05 Developer's intended development of Project Springboard, title, the environmental condition of the Replacement Parking Site and the financial feasibility of Project Springboard, such approval to be determined by Developer in its sole and absolute discretion and within the time period set forth in this Secti~n 8.1. Developer shall deliver written notice to City and Escrow Agent prior to expiration of the Due Diligence Period that it has either (a) elected to terminate this Agreement whereupon Developer shall, subject to its legal right to do so, deliver to City the origmals of all site plans, the Parking Garage Schematic Design Documents and Construction Drawings related to the Parking Garage then in existence for no additional consideration, this Agreement shall terminate and, except as otherwise expressly provided herein, neither party shall have any further rights, duties or obligations under this Agreement, or (b) Developer has elected to proceed with the acquisition of the Replacement Parking Site, in which event Developer shall have agreed to accept the Replacement Parking Site in its "AS IS" condition and state of repair and shall have waived its financial feasibility contingency. 8.2 Property Investigation. City shall give Developer and its agents and consultants the right to enter upon the Replacement Parking Site or any part thereof after mutual execution of this Agreement after reasonable prior notice and during normal business hours (subject to the rights of members of the public to use the Replacement Parking Site for public parking) for the purposes of determining the physical condition of the Replacement Parking Site and the financial feasibility and the suitability of the Replacement Parking Site for Developer's intended purposes, including without limitation, the right to conduct soil compaction tests, surveys, engineering, traffic and access studies and review of zoning and other matters, at Developer's sole cost and expense. City shall have the right to accompany Developer or its agents or consultants on all such inspections, studies and tests. Developer and its agents and consultants shall comply with City's reasonable safety requirements and shall conduct all inspections, studies and tests at reasonable times agreed upon by City and Developer, and in a manner so as to minimize any interference with the continued use of the Replacement Parking Site by members of the public for public parking purposes. Developer shall repair any damage to the Replacement Parking Site caused by Developer, its employees or agents during such inspections, studies and tests and shall restore the Replacement Parking Site to the condition it was in immediately prior to Developer's activities on the Replacement Parking Site. Developer shall protect, defend, indemnify and hold City and the Replacement Parking Site harmless from any claims, liabilities, costs, expenses or liens (including, but not limited to, any claims for personal injury or property damage) arising out of or resulting from its inspection of the Replacement Parking Site. This indemnification and restoration obligation shall survive Closing or any termination of this Agreement. If Developer does not approve the condition, feasibility and suitability of the Replacement Parking Site as provided in Section 8.1 above, Developer shall notify City and the Escrow Agent in writing prior to the expiration of the Due Diligence Period. If Developer fails to deliver written notice to City and Escrow Agent prior to the expiration of the Due Diligence Period, Developer shall be deemed to have approved the condition, feasibility and suitability of the Replacement Parking Site for Developer's intended purposes. 8.3 Environmental Condition of the Replacement Parking Site. City expressly makes no representation or warranty regarding the environmental condition of the Replacement Parking Site or the presence or absence of hazardous substances thereon. Developer shall have the right to retain environmental consultants to determine the environmental condition of the Replacement Parking Site and conduct environmental assessments of the Replacement Parking -12-P"\DRS\ORS2UB 09114/05 Site during the Due Diligence Period, at its sole cost and expense. Such additional environmental assessments may include, by way of illustration and not by way of limitation, drilling, sampling, soil borings and the installation of monitoring wells or other equipment on the Replacement Parking Site. Developer shall repair any damage to the Replacement Parking Site caused by Developer or its environmental consultants during such environmental assessment, including properly closing in place all test wells that will remain on the Replacement Parking Site, and will protect, defend, indemnify and hold City and the Replacement Parking Site harmless from any claims, liabilities, costs, expenses or liens (including, but not limited to, any claims for personal injury or property damage) arising out of such evaluation or testing. This indemnification and restoration obligation shall survive Closing or any termination of this Agreement. If Developer does not approve the environmental condition of the Replacement Parking Site, Developer shall notify City and Escrow Agent in writing prior to the expiration of the Due Diligence Period. If Developer fails to deliver written notice to City and Escrow Agent prior to the expiration of the Due Diligence Period, Developer shall be deemed to have approved the environmental condition of the Replacement Parking Site and to have elected to proceed with its acquisition of the Replacement Parking Site. 8.4 "AS IS SALE". Developer acknowledges and agrees that Developer will be concluding its acquisition of the Replacement Parking Site based upon Developer's inspection and investigation of the Replacement Parking Site and its suitability for Developer's intended purposes. Developer further acknowledges and agrees, that, except as expressly provided in this Agreement, City does not make any representations or warranties of any kind, either express or implied, with respect to the Replacement Parking Site, including, but not limited to, the use or condition of the Replacement Parking Site, compliance with applicable statutes, laws, codes ordinances, regulations, or zoning, subdivision, building, fire, safety, health or environmental matters. THE TRANSFER OF THE REPLACEMENT PARKING SITE IS MADE ON AN "AS IS" CONDITION AND BASIS WITH ALL FAULTS AND CITY HAS NO OBLIGATION TO MAKE REP AIRS, REPLACEMENTS OR IMPROVEMENTS TO THE REPLACEMENT PARKING SITE. IN PARTICULAR, BUT WITHOUT LIMITATION, CITY MAKES NO REPRESENTATIONS OR WARRANTIES WHATSOEVER WITH RESPECT TO THE PHYSICAL CONDITION OR VALUE OF THE REPLACEMENT PARKING SITE, THE PRESENCE OR ABSENCE OF HAZARDOUS SUBSTANCES ON THE REPLACEMENT PARKING SITE, SOILS CONDITIONS, OR OTHER PHYSICAL CHARACTERISTICS OF THE REPLACEMENT PARKING SITE OR THE SUITABILITY OF THE REPLACEMENT PARKING SITE FOR DEVELOPER'S INTENDED DEVELOPMENT. CITY MAKES NO REPRESENTATION WHATSOEVER REGARDING THE FINANCIAL FEASffiiLITY OF PROJECT SPRINGBOARD OR THE PARKING GARAGE. UPON CLOSING AND RECORDING OF THE DEED TO THE REPLACEMENT PARKING SITE, DEVELOPER DOES HEREBY WAIVE AND RELEASE CITY, ITS OFFICIALS, OFFICERS, EMPLOYEES AND AGENTS FROM ANY AND ALL DAMAGES, LOSSES, LIABILITIES, COSTS AND EXPENSES WHATSOEVER (INCLUDING, WITHOUT LIMITATION, REASONABLE ATTORNEYS' FEES AND COSTS) AND CLAIMS THEREOF, 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 REPLACEMENT PARKING SITE OR THE PRESENCE OF ANY HAZARDOUS SUBSTANCES WHICH -13-P IDRSIDRS2UB 09/14105 MAY EXIST ON THE REPLACEMENT PARKING SITE OR ANY REQUIREMENT OF LAW APPLICABLE THERETO. 8.5 Waiver of Due Diligence Period for Property. Prior to expiration of the Due Diligence Period set forth in Section 8.1 of this Agreement, Developer shall notify City, Anderson and SPI that it has either: (a) elected to terminate one or more of the contribution or exchange agreements for one or more parcels constituting the Property, in which event this Agreement shall automatically terminate and except as otherwise expressly provided herein, neither party shall have any further rights, duties or obligations under this Agreement or (b) it has elected to proceed with its acquisition of each of the parcels constituting the Property. 9. Operation of Replacement Parking Site Pending Closing. At all times before the closing of the transfer of the Replacement Parking Site, City shall have the right to use the Replacement Parking Site for public parking purposes or as it may otherwise determines in its reasonable discretion; provided, however that: (a) City shall not construct any buildings or install any other permanent improvements on the Replacement Parking Site without the prior written consent of Developer which consent shall not be unreasonably withheld; (b) City shall not encumber the Replacement Parking Site with any mortgage or deed of trust that will not be paid off or reconveyed prior to Closing; provided however, that nothing contained herein shall preclude City from consenting to the formation of a local improvement district which would include the Replacement Parking Site; and (c) City shall not enter into any lease or other agreement regarding the Replacement Parking Site except for leases or other agreements that may be terminated upon transfer of the Replacement Parking Site to Developer pursuant to this Agreement upon thirty (30) days notice without payment of any cancellation or termination fee. 10. Conditions Precedent to Closing. City's obligation to transfer the Replacement Parking Site to Developer pursuant to and subject to all of the terms, covenants, conditions and obligations of Developer set forth in this Agreement is expressly conditioned on, and subject to satisfaction of each of the following conditions precedent which must be met to the reasonable satisfaction of City prior to the Closing Date (as defined in Section 13 of this Agreement): 10.1 Representations and Warranties. All representations and warranties of Developer and City contained herein shall be true, accurate and complete at the time of the Closing as if made again at such time. 10.2 Performance. Developer shall have performed all obligations to be performed by it hereunder on or before Closing (or, if earlier, on or before the date set forth in this Agreement for such performance). Developer is not in Default at the time of Closing, and there is no event that with the giving of notice, the passage of time or both that would constitute an Event of Default under this Agreement. 10.3 Simultaneous Contribution ofSPI Land. The SPI Contribution Agreement entered into by Developer with SPI for contribution of the SPI Land: (a) is in full force and effect; (b) Developer has approved the condition of title to each of the parcels constituting the SPI Land, has completed or waived its due diligence review of such parcel, and is ready to close the contribution of the SPI Land to Developer simultaneous with the closing of its acquisition of , the Replacement Parking Site. -14-P \DRS\ORS2UB 09114/05 10.4 Vacation of Alley: Completion of Boundary Line Adjustment Process. The vacation of the existing public alley has been approved by City, the various property owners have executed quit claim deeds conveying their respective portions of the vacated alley to City, and the reconfiguration of the City Property and Private Land into seven separate legal lots pursuant to boundary line adjustment(s) has been approved by all necessary government authorities, all confirming deeds necessary in connection with such boundary line adjustment(s) have been executed by each of the owners of the affected parcels, subject only to recording ofthe alley vacation quit claim deeds and boundary line adjustment surveys and the confirming deeds in the real property records of King County. 10.5 Simultaneous Exchange of Harrison Property. Harrison and City (i) have executed all documents required to exchange the Harrison Property for the Harrison Exchange Property, (ii) the City, Developer and Anderson have agreed on the tenns of the restrictive covenant contemplated under the Pooling Agreement and (iii) the parties are ready to close the exchange simultaneous with the closing of the acquisition of the Replacement Parking Site. 10.6 Application for Parking Garage Building Permits and Downtown Design Review. Developer has submitted to the City completed applications for all permits necessary to commence construction of the Parking Garage and has filed a completed Downtown Design Review Application and other information required to enable the City to complete design review of the Parking Garage. 10.7 Availability of Construction and Eguitv Financing for Project Springboard. Developer has obtained a commitment letter from a financial institution in an amount sufficient to complete the construction of Project Springboard on terms and conditions acceptable to City and demonstrated to City that it has sufficient cash equity to complete construction of the Parking Garage. 10.8 Title Policies. The Title Company is in a position to issue the Developer's Title Policy in accordance with Section 6.2 and the Title Company is in a position to issue City an ALTA lender's policy of title insurance insuring the City Mortgage as a first lien on the Property, subject only to the Property Permitted Exceptions. 10.9 No Bankruptcy. Neither Developer nor any Private Owner, or any of their respective officials, officers, members or managers: (a) has applied for or consented to the appointment of a receiver, custodian or trustee for it or any of its property, (b) has become insolvent, (c) has failed generally or admitted in writing its inability to pay its debts as they become due, (d) has consolidated, liquidated or dissolved, (e) has filed a petition or action for relief relating to any federal or state bankruptcy, insolvency, moratorium or similar statute or any other law or laws for the relief of or relating to debtors, or (f) has made an assignment for the benefit of its creditors or entered into an agreement of composition with its creditors, nor (g) has a petition been filed by or against Developer, any Private Owner or any of their respective officials, officers, members or managers 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. -15-P \DRS\DRS2UB 09114/05 10.10 Condition of Property. As of the date of this Agreement there is a building located on the SPI Land and SPI is engaged in legal proceedings to resolve issues related to on-going occupancy of the building. SPI has advised the City and the Developer that it expects to resolve such issues and arrange for demolition of the building prior to Closing. Accordingly, unless the parties agree otherwise, it shall be a condition precedent to Closing that City and each of the Private Owners is in a position to deliver possession of that portion of the real property owned by it, vacant, with all above-ground improvements demolished, free of debris or trash, and not subject to the occupancy and/or possession by any tenant or any other person or entity. 10.11 City's Right to Terminate. The foregoing conditions contained in this Section 10 are intended solely for the benefit of City. If any of the foregoing conditions are not satisfied, City shall have the right at its sole discretion either to waive the condition in question and proceed with the exchange or, in the alternative, to terminate this Agreement upon written notice to Developer and the Private Owners, whereupon this Agreement shall terminate, and neither party hereto shall have any further rights, duties or obligations under this Agreement. 11. City Representations. In order to induce Developer to enter into this Agreement and the transactions contemplated hereby, City makes the following representations as of the date of this Agreement and again as of the Closing Date and the Public Parking Easement Acceptance Date: 11.1 Authority. City is a municipal corporation duly organized, validly existing and in good standing under the laws of the State of Washington. Pursuant to City Council Resolution No. adopted , 2005, the City Council authorized its Mayor to execute and deliver this Agreement on behalf of City. 11.2 No Litigation. There is no litigation pending or, to City's knowledge, threatened in writing, against City before any court or administrative agency which might result in City being unable to exchange the Replacement Parking Site to Developer for the Public Parking Easement upon Final Completion of the Parking Garage and satisfaction of the conditions set forth pursuant to this Agreement. In the event that an administrative proceeding or lawsuit is filed against the City prior to the Closing Date, and a result thereof either City or the Developer is unable to perform its obligations under this Agreement, either party may extend the Closing Date for up to ninety (90) days to enable the parties to dissolve any injunction, quash any lis pendens or resolve any litigation; provided, however, neither party shall be required to pay money, settle a claim or post a bond. If the legal action has not been resolved by the end of such period, either party may thereafter terminate this Agreement upon ten (10) days written notice to the other party and except as otherwise expressly provided herein, neither party shall have any further rights, duties or obligations under this Agreement. 11.3 No Condemnatign. There is no condemnation proceeding pending against the Replacement Parking Site. -16-P \ORS\DRS2UB 09/14/05 11.4 Construction Liens. City has not authorized the performance of any improvements to be made to the Replacement Parking Site which might form the basis of any construction liens. 11.5 Survival. All of the representations and warranties of City contained in this Section 11 shall survive the Closing Date. 12. Developer's Representations. In order to induce City to enter into this Agreement and the transactions contemplated hereby, Developer makes the following representations as of the date of this Agreement and again as of the Closing Date and the Public Parking Easement Acceptance Date: 12.1 Authority. Developer is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Washington, and has the power to carry on its business as now being conducted. All limited liability company action on the part of Developer and all corporate or other action on the part of its managers and members necessary for the authorization, execution, delivery and performance of this Agreement, the Pooling Agreement, the contribution and exchange agreements, the City Mortgage and the Public Parking Easement and any other document executed in connection with this Agreement or the Pooling Agreement (collectively, the ''Developer Agreements") has been duly taken. Developer has full power and authority to enter into, execute and deliver the Developer Agreements and to perform its obligations under the Developer Agreements. The Developer Agreements when executed and delivered by Developer will be the legal, valid and binding agreement of Developer, enforceable in accordance with their respective terms. Neither the execution and delivery of this Agreement or the other Developer Agreements nor the consummation of the transactions contemplated hereunder or thereunder will constitute a breach of any evidence of indebtedness or other financing agreement to which Developer is a party or by which Developer is bound. 12.2 All Consents Obtained. No consents, approvals, permissiOns, authorizations, orders or licenses of any person or of any Governmental Authority (except for City approval of the Parking Garage Construction Documents and issuance of building permits necessary for construction of the Project Springboard Improvements) is necessary in connection with the execution, delivery and performance of the Developer Agreements by Developer or any transaction contemplated hereby or thereby, except as may have already been obtained by Developer prior to the date of this Agreement. There is no provision in Developer's certificate of formation or organizational documents nor any provision in the organizational documents of any member or manager of Developer which would be contravened by the execution and delivery of this Agreement or the other Developer Agreements or by the performance of any provision, condition, covenant or other term required to be performed by Developer under this Agreement or the other Developer Agreements. 12.3 Availabilitv of Construction and Eauitv Financing for Project Springboard. Developer has obtained a commitment letter from a financial institution in an amount sufficient to complete the construction of Project Springboard, has sufficient cash equity to complete construction of the Parking Garage, has satisfied all conditions precedent to disbursement of loan proceeds for construction of Project Springboard (subject only to Final -17-P IORS\DRS2UB 09/14105 Completion of the Parking Garage) and is prepared to close any construction loan financing simultaneous with recording of the Public Parking Easement on the Public Parking Easement Acceptance Date. 12.4 No Litigation. There is no action, suit, proceeding or investigation pending, or to Developer's knowledge threatened in writing, before any agency, court or other Governmental Authority affecting Developer or any member or manager of Developer which could have a Material Adverse Effect on the legal existence or powers of Developer or any manager or member thereof, or its financial condition or have a Material Adverse Effect on the ability of Developer or any manger or member of Developer to perform its obligations under this Agreement or the other Developer Agreements and neither Developer nor any manager or member of Developer is in default with respect to any Requirement of Law that could result in any such effect. 12.5 No Land Speculation. Developer represents and agrees that the Property will be used for purposes of timely redevelopment as set forth in this Agreement and not held by Developer for speculation in landholding. For purposes of this Agreement, "Land Speculation" is defined as Developer acquiring the Property and not commencing construction of the Parking Garage on or before March 31, 2006, or not achieving Substantial Completion of the Parking Garage on or before September 30, 2006 ("Substantial Completion Date") which failure to commence construction or achieve Substantial Completion is not due to Unavoidable Delay. Developer understands and agrees that City would not have entered into this Agreement but for this representation and that the following factors and the qualification and expertise and experience of Developer and its members in the development of real property are of particular concern to the community and City: 12.5.1 The importance of the redevelopment of the Property to the general welfare of the community; 12.5.2 The vacation of the public alley and the reconfiguration of the Property to accommodate the development of Project Springboard on the Property; 12.5.3 The agreement by Developer to commence and complete construction of the Parking Garage on the Replacement Parking Site within nine (9) months following the Closing at its sole cost and expense, which Parking Garage shall have a minimum capacity of three hundred fifty (350) parking spaces for multi-passenger motor vehicles, which is an additional seventy (70) parking stalls beyond that required under Requirements of Law for the Project Springboard Improvements; 12.5.4 The agreement by Developer to grant City the Public Parking Easement to provide City and members of the general public a perpetual easement to park in a minimum of seventy (70) parking stalls in the Parking Garage which shall be available for public parking at all times and in addition, the right to park in any open parking stall on a first-come, first-serve basis twenty-four (24) hours a day, seven (7) days a week initially at no charge; 12.5.5 The agreement by Developer to manage the Parking Garage so that a minimum of seventy (70) parking spaces are reserved for public parking by members of the -18-P IORS\DRS2UB 09114105 general public at all times and the remaining parking spaces are available on a first come, first serve basis to members of the general public at all times; 12.5.6 The agreement by Developer to operate the Parking Garage as a self-park, public parking garage open to members of the general public twenty four (24) hours a day, seven (7) days a week, initially without charge and in a manner which maximizes the availability of Short-Term Parking at all times; 12.5.7 The agreement by Developer to operate and maintain the Parking Garage at Developer's sole cost and expense, in first-class order, condition and repair; 12.5.8 The reliance by City upon the unique qualifications and ability of Developer to develop Project Springboard as a mixed-use integrated development which provides an approximately 74-room hotel with conference facilities, indoor water park, retail and restaurant space, and approximately 120 units of market rate condominium housing, in addition to the Parking Garage; and 12.5.9 The fact that there will be no transfer of a controlling interest in Developer or any member or any manager therein, nor any transfer of all or any portion of the Property by Developer prior to Final Completion of the Parking Garage, without the prior written consent of City. 12.6 Survival. All of the representations and warranties of Developer contained in this Section 12 shall survive the Closing Date. 13. Closing and Escrow. 13.1 Time and Place of Closing. The Closing shall be held at the offices of the Escrow Agent on a date chosen by Developer that is after expiration of the Due Diligence Period (as defined above) but in any event on or before December 15, 2005 (the "Closing Date"). As used in this Agreement, "Closing" and "Closing Date" means the date on which all appropriate documents are recorded in order to accomplish the alley vacation, boundary line adjustment and various property contributions and exchanges contemplated under the Pooling Agreement and transfer title to the Property to Developer, and the City Mortgage, and the restrictive covenant affecting the Anderson Property have each been recorded. Developer and City shall place into escrow all instruments, documents and moneys necessary to complete the acquisition of the Replacement Parking Site in accordance with this Agreement, and Developer shall place into escrow all instruments, documents and moneys necessary to complete the contribution of the remainder of the Property from SPI in accordance with the SPI Contribution Agreement. 13.2 Documents to be Delivered by Citv. City shall obtain and deliver to Escrow Agent at Closing the following documents (all of which shall be duly executed and acknowledged where required): 13.2.1 The Deed, together with a duly executed real estate excise tax affidavit; 13.2.2 FIRPTA Affidavit; -19-P \DRSIDRS2UB 09114/05 '. 13.2.3 such other documents as may be required by the Title Company and as are consistent with the provisions of this Agreement; and 13.2.4 City's share of closing costs. 13.3 Delivery by Developer. At Closing, Developer shall obtain and deliver to Escrow Agent the following (all documents shall be duly executed and acknowledged where required): 13.3.1 The executed real estate excise tax affidavit; 13.3.2 the City Mortgage; 13.3.3 such resolutions, authorizations, certificates and other documents or other agreements relating to Developer as are reasonably required in connection with closing this transaction; 13.3.4 Developer's share of closing costs. 13.4 Other Instruments. City and Developer shall each deposit, and the various parties to the Pooling Agreement shall each deposit, such other instruments as are reasonably required by Escrow Agent or otherwise required to close the transactions contemplated by the Pooling Agreement and this Agreement and consummate the exchange of the Property in accordance with the terms of this Agreement, the SPI Contribution Agreement and the Pooling Agreement, including without limitation, any boundary line adjustment surveys, confirming deeds, documents confirming the vacation of the existing public alley, alley vacation quitclaim deeds, and related tax segregation agreements, the various deeds exchanging a portion of the SPI Land for land owned by the City and deeds exchanging the Harrison Property for the Harrison Exchange Property and the restrictive covenant affecting the Anderson Property. 13.5 Prorations. All utilities and special assessments shall be prorated as of the Closing. Because City is exempt from property taxes, no proration of ad valorem property taxes is required; however, Developer shall be responsible for payment of all property taxes and all special assessments and local improvement district assessments, if any, which affect the Property from and after the Closing. 13.6 Pavment of Costs. City shall pay the premium for a standard coverage owner's policy of title insurance in an amount equal to the agreed valuation of the Replacement Parking Site, the premium for any title insurance it elects to obtain insuring the lien of the City Mortgage as a first lien and any real estate excise taxes applicable to the sale. The escrow fee shall be split equally between City and Developer. Developer shall pay all recording costs, any increase in the title insurance premium attributable to extended coverage, any endorsements it requests of the Title Company, and the costs of any survey. City and Developer shall pay their own respective costs incurred with respect to the consummation of the purchase and sale of the Property including, without limitation, attorneys' fees and the fees and expenses of their respective consultants. Developer and City waive the services of the Escrow Agent in disbursing closing funds to satisfy unpaid utility charges affecting the Property pursuant to RCW 60.80. -20-P \DRSIDRS2UB 09/14105 -~-_..~_ .... __ -"""'~~-~ ...... ~' ... --"~- 13.7 Closing of Contribution of SPI Land. Closing of the acquisition of the Replacement Parking Site is expressly subject to the simultaneous closing of SPI's contribution of the SPI Land to Developer. 13.8 Closing Simulymeous with Other Transactions Contemplated under Pooling Agreement. Closing of the acquisition of the Replacement Parking Site is also expressly subject to the simultaneous closing of the alley vacation, recordation of the alley vacation deeds, boundary line adjustment and recording of the boundary line adjustment confirming deeds, and related tax segregation agreements, the various deeds exchanging a portion of the SPI Land for land owned by the City and exchanging the Harrison Property for the Harrison Exchange Property and the restrictive covenant affecting the Anderson Property. Escrow Agent shall establish a series of sub-escrows for each of the parcels constituting the real property and shall coordinate the closings of the various property transactions affecting each of the parcels, all of which shall be deemed to have closed simultaneously and none of which shall be deemed to have closed unless all of the transactions close. Developer shall pay one-half of the escrow charges associated with the escrow and each of the other Owners shall pay the other half of the escrow charges associated with the portion of the real property owned by it. 13.9 Recordation. Provided that the Title Company has issued or is unconditionally prepared and committed to issue Developer the Developer Title Policy and to issue City the City Loan Policy, then Escrow Agent is authorized at 8:00 a.m. (or as soon thereafter as possible on the Closing Date) to record the following documents in the official records of King County, Washington: 13.9.1. Record all quitclaim deeds conveying the vacated alley to City: 13.9.2 Record the boundary line adjustment and all confirming quitclaim deeds executed by the various owners required in order to vest title in accordance the boundary line adjustment survey; 13.9.3 Developer; 13.9.4 Property; 13.9.5 Harrison Exchange Property; 13.9.6 13.9.7 13.9.8 Record the deed of the remaining SPI Land from SPI to Record the restrictive covenant encumbering the Anderson Record the deeds exchanging the Harrison Property for the Record the Deed; Record the City Mortgage; Record the Memorandum of this Agreement; -21-P IDRS\ORS2UB 09/14105 13.9.9 Record any reconveyance documents or releases that may be required to eliminate any liens, mortgages, deeds of trust or other monetary liens against the Property, the SPI Land, the Harrison Property or the Harrison Exchange Property that may be required in order to issue the Developer the Developer Title Policy and the City the City Loan Policy; 13.9.10 Deliver the FIRPTA Affidavit and the Developer Title Policy to Developer and deliver the City Loan Policy to City. 13.9.11 Deliver closing statements and any other documents delivered in connection with the closing of the various transactions to the parties entitled thereto. 14. Possession. Developer shall be entitled to possession of the Property on Closing, free and clear of all liens, encumbrances or other exceptions other than the Permitted Exceptions and any liens, encumbrances or other exceptions arising through the actions of Developer or its agents, employees or consultants. 15. Construction of Parking Garage. 15.1 Construction of Parking Garage; Construction Phasing. Developer shall, at its sole cost and expense, develop and manage the construction of the Parking Garage in substantial accordance with the Parking Garage Construction Documents. Developer may enter into a series of construction contract(s) for various components of the overall project with one or more contractors including a separate construction contract for the Parking Garage as Developer may determine taking into consideration availability of labor, materials, weather, permitting restrictions, statUs of leasing, progress of overall design and development and other construction- related factors. City and Developer further agree that due to the nature of Project Springboard, the Project shall be constructed in stages with the Parking Garage constructed as part of Phase One. City shall not be obligated to .issue building permits for the remainder of the Project Springboard Improvements nor shall Developer commence construction of the remainder of Project Springboard Improvements until after the Final Completion of the Parking Garage and the Public Parking Easement Acceptance Date without the prior written consent of the City. 15.2 Commencement and Completion of Construction. Developer shall cause its general contractor to commence construction of the Parking Garage pursuant to the Parking Garage Construction Documents on or before March 31, 2006 and to thereafter diligently and continuously prosecute construction of the Parking Garage so as to achieve Substantial Completion of the Parking Garage on or before September 30, 2006 (the "Substantial Completion Date") in a good and workmanlike manner, free from defects in work or materials and in substantial accordance with the Parking Garage Construction Documents, and free and clear of all liens. The Parking Garage shall be constructed in accordance with all Requirements of Law applicable to the Parking Garage and the Property. 15.3 Unavoidable Delay: Outside Completion Date. The existence of Unavoidable Delays shall excuse contractors and Developer for delays in achieving Substantial Completion of the Parking Garage on or before the Substantial Completion Date. For purposes of this Agreement, "Unavoidable Delay'' means strikes, riots and judicial and/or regulatory -22-P IORS\DRS2UB 09114105 action by federal, state or local governmental agencies that enjoin or delay construction on the Parking Garage on the Property, acts of God, war or acts of terrorism that delay construction of the Parking Garage. In the event the Parking Garage has not achieved Final Completion on or before March 31, 2007, for any reason whatsoever including, but not limited to, the existence of Unavoidable Delay (the "Outside Completion Date"), Developer shall be in default under this Agreement and City may exercise the remedies set forth in Section 25 of this Agreement. 15.4 Hiring Program. Developer shall use reasonable good faith efforts to cause its contractors and subcontractors hired to work on various phases of Project Springboard to implement a recruitment strategy that encourages hiring of City residents. 15.5 Construction Staging; Remaining Building Demolition; Temporary Parking Area. A plan for construction staging shall be prepared by Developer and approved by City prior to commencement of construction of the Parking Garage. In order to minimize the impact of construction on surrounding businesses and disruption to downtown retail activity, Developer and City may enter into a separate agreement setting forth the terms and conditions under which Developer may utilize all or a portion of the Town Square Plaza Site and City and Developer may utilize the remainder of the Property for construction staging purposes during the course of construction of their respective projects. Developer acknowledges that time is of the essence in the construction of the Parking Garage and that City intends to commence development of the Town Square Plaza Site as a town square plaza immediately following completion of construction of the Parking Garage. Developer agrees to demolish any buildings located on the Town Square Plaza Site, at its cost and expense, remove all construction trailers, materials and equipment then stored on the site and deliver possession of the Town Square Plaza Site vacant, free or trash or other debris and not subject to possession by any person upon sixty (60) days prior written notice from City and in any event prior to the Public Parking Easement Acceptance Date. City will advise Developer as soon as it has determined when it will need possession of the Town Square Plaza Site. Developer shall, in consultation with City, install directional signage on the Property and the public streets adjoining the Property advising members of the public on the location and means of access to and from any temporary public parking area that may be located on the Property or the Town Square Plaza Site. 15.6 Project Manager; Construction Progress Reports. Developer shall appoint an experienced project manager to manage development of Project Springboard prior to Closing. Developer may assign other qualified construction personnel to the construction of Project Springboard and the Parking Garage as needed to construct the Parking Garage in accordance with the requirements of this Agreement so as to achieve Substantial Completion of the Parking Garage on or before the Substantial Completion Date. City shall have the right, but not the obligation, to inspect or hire an independent consulting architect, engineer or other appropriate construction professional to inspect the construction of the Parking Garage as it progresses and to review the construction work and its compliance with the Parking Garage Construction Documents and this Agreement. The cost of any such construction professional shall be paid by City. City shall provide written notice to Developer of such inspection which shall be coordinated with Developer and its contractors so as to not interfere with or delay construction of the Parking Garage. Developer shall record the progress of the Parking Garage and shall submit periodic progress reports to City, and shall provide such information about the on-going progress of construction as City may reasonably request from time to time. -23-P \ORSIDRS2UB 09/14/05 j_- 15.7 Changes to Parking Garage Construction Documents. 15.7 .1 No Reduction in Parking Garage Capacity or Other Characteristics. Developer shall not (a) reduce the capacity of the Parking Garage below three hundred fifty (350) parking stalls for multi-passenger motor vehicles, (b) make any change to the Parking Garage Construction Documents which would require City's approval under Section 5.2 above, or (c) make any change to the Parking Garage Construction Documents that would violate, or cause a violation of, any Requirement of Law. 15.7.2 Changes to Construction Documents. In the event Developer desires to make any material change to the Parking Garage Construction Documents not prohibited by subsection 15.7.1 above, such material change shall first be submitted by Developer to City accompanied by a statement from Developer's architect delineating the nature and extent of the changes, for review and approval or disapproval. Within five (5) business days after such request for change has been received by City, City shall give Developer written notice of its approval or disapproval thereof, specifying in the case of its disapproval its reason therefore. Except as otherwise provided herein, approval of such change shall not be unreasonably withheld, conditioned or delayed. The extent of City's approval rights with respect to any material change(s) shall be the same as would have applied to City's approval of the Parking Garage Construction Documents in the first instance. If City fails to disapprove such change within five (5) business days after the receipt of such change, the same shall be deemed to have been approved by City. 15.8 Disclaimer: City Not Liable for Construction of Project Springboard Improvements or Parking Garage. Notwithstanding any provision of this Agreement to the contrary, City is under no obligation to, nor shall it construct or supervise the construction of the Project Springboard Improvements or the Parking Garage. It is understood and agreed that City's rights to approve the Parking Garage Schematic Design Documents and the Parking Garage Construction Documents as provided in this Agreement is for the sole purpose of protecting its rights under this Agreement, as beneficiary under the City Mortgage and as the benefited party under the Public Parking Easement, and shall not constitute any representation or warranty, express or implied, as to the adequacy of the design or any obligation on City to ensure that work or materials are in compliance with Requirements of Law, the Parking Garage Schematic Design Documents or any building requirement imposed by any governmental agency. City is under no obligation or duty and disclaims all responsibility to pay for the cost of construction of the Project Springboard Improvements, including, but not limited to, the Parking Garage, the cost of which is and shall at all times remain the sole liability and responsibility of Developer. Nothing contained in this Agreement shall be construed as the consent or request of City, express or implied, for the performance of any labor or services or for the furnishing of any materials or equipment for any construction, alteration, addition, repair or demolition of the Property (or any part thereof). NOTICE IS HEREBY GWEN THAT CITY WILL NOT BE LIABLE FOR ANY LABOR, SERVICES, MATERIALS OR EQUIPMENT FURNISHED, OR TO BE FURNISHED TO DEVELOPER FOR CONSTRUCTION OF THE PROJECT SPRINGBOARD IMPROVEMENTS, INCLUDING, BUT NOT LIMITED TO, THE PARKING GARAGE OR ANYONE HOLDING AN INTEREST IN THE PROPERTY (OR ANY PART THEREOF) THROUGH OR UNDER DEVELOPER. -24-P"\ORSIORS2UB 09114105 15.9 Payment of Parking Garage Costs: Construction Liens. The cost of development and construction of the Parking Garage, including, without limitation, any and all sales, business and occupation, employment, withholding and other taxes which may be payable in connection therewith, shall be paid by Developer at its sole cost and expense. Prior to the Final Completion of the Parking Garage, Developer shall pay or cause to be paid within thirty (30) days after the filing thereof any and all construction or other liens that may be filed against the Parking Garage or the Property in connection with labor, services, materials, supplies or equipment furnished or alleged to have been furnished to or upon the request of Developer (collectively, "Liens"). Developer reserves the right to contest the validity or amount of any such Lien claims in good faith provided that Developer shall within thirty (30) days after the filing of such Lien, discharges said Lien of record or records a bond which complies with the requirements of RCW 60.04.161 eliminating such Lien as an encumbrance against the Parking Garage or the Project Site. In the event Developer shall fail to so remove any such Lien, City may take such action as City shall reasonably determine to remove such Lien and all costs and expenses incurred by City including, without limitation, amounts paid in good faith settlement of such Lien and attorneys' fees and costs shall be secured by the City Mortgage and shall be paid by Developer within ten (10) days following request. Developer's obligations pursuant to this Section 15.9 shall survive the expiration or earlier termination of this Agreement. 15.10 Assignment of Contracts. Developer shall assign all of its right, title and interest under (a) the architect's agreement and construction contracts for the Parking Garage and the plans and specifications as additional security for the performance of Developer's obligations under this Agreement and (b) shall cause the architect and contractors to execute a consent to assignment of the architect's agreement and construction contracts, respectively, prior to Closing. Developer shall not further assign its rights under the architect's agreement and/or construction contracts without the prior written consent of the City. Developer shall enforce and secure the performance of all conditions and obligations to be performed or observed by the architect or the contractors under the architect's and construction contracts and shall perform and observe in a timely manner all of its obligations under the architect's and construction contracts. Developer shall notify City of any default or breach of or under the architect's contract or the construction contracts. Upon the occurrence of an Event of Default by Developer under this Agreement, City shall have the right, but not the obligation, and Developer hereby authorizes City, to take over and complete construction of the Parking Garage in accordance with its rights under this Agreement, to enforce Developer's rights under the architect's and construction contracts and to receive the performance of the architect and contractors thereunder. The assignments made herein in no way affect Developer's ability to exercise its rights under the architect's agreement or any construction contract prior to any Event of Default by Developer under this Agreement. City does not assume any of the Developer's obligations or duty under the architect's agreement or any construction contract, including, without limitation the obligation to pay for services rendered or materials supplied thereunder unless and until City shall expressly assume any such obligation by written notice to the architect or the contractors following the occurrence of an event of default by the Developer under this Agreement. In the event of an Event of Default by Developer and subsequent assumption by the City of the obligations o(Developer under the architect's agreement or any construction contract, the cost of performing the obligations of Developer thereunder and hereunder, together with interest thereon at the rate of twelve percent (12%) per annum from the date incurred until repaid in full shall be secured by the City Mortgage. -25-P IDRS\DRS2UB 09114/05 16. Developer Financing. Prior to Final Completion of the Parking Garage Developer shall not grant any lien, mortgage, security interest or other interest in the Property except the City Mortgage without the prior written consent of the City, which consent shall not be unreasonably withheld so long as such lien is expressly subordinated to the City's rights under this Agreement and the City Mortgage and any such lender expressly agrees to subordinate its lien to the Public Parking Easement. Notwithstanding any other provision of this Agreement, following Final Completion of the Parking Garage but prior to fmal completion of Project Springboard, Developer shall not have the right to mortgage, pledge, encumber or assign its rights under this Agreement or the Property, in whole or in part, except in connection with financing of the construction of Project Springboard by Construction Lender, and shall not encumber the Property as security for a loan to acquire, construct, finance or refinance any real property other than the Property. Prior to Final Completion of the Project Springboard Improvements all proceeds of the Construction Loan shall be used solely to pay for costs associated with construction of Project Springboard and shall not be used for any other purpose or applied to any other property or project. 17. Indemnification. 17.1 Developer's lnde.qmification. Developer shall protect, defend, indemnify, and save harmless City and its officers, officials, employees and agents, from any and all claims, demands, suits, penalties, losses, damages, judgments, or costs of any kind whatever (hereinafter "claims"), arising out of or in any way resulting from Developer's officers, employees, agents, contractors and/or subcontractors of all tiers, acts or omissions, performance or failure to perform this Agreement. Developer's obligations under this Section 17 shall include, but not be limited to: 17 .1.1 The duty to promptly accept tender of defense and provide defense to City at Developer's own expense. 17.1.2 The duty to indemnify and defend City from any claim, demand and/or cause of action brought by or on behalf of any of Developer's employees or agents. 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 Developer's employees or agents. The parties acknowledge that these provisions were mutually negotiated and agreed upon by them. 17 .1.3 Developer shall indemnify and defend City from and be liable for all damages and injury which shall be caused to owners of property on or in the vicinity of the construction of Project Springboard or the Parking Garage or which shall occur to any person or persons or property whatever arising out of this Agreement, including, but not limited to, members of the general public who utilize any temporary parking area for parking purposes, whether or not such injury or damage is caused by negligence of the contractors or caused by the inherent nature of the construction of Project Springboard or the Parking Garage. -26-P IDRSIORS2UB 09/14105 17.1.4 In the event City incurs any judgment, award, and/or costs arising therefrom, including attorneys' fees, to enforce the provisions of this Section 17, all such fees, expenses, and costs shall be paid by Developer. Notwithstanding the provisions contained in Subsection 17.1 above, Developer's obligation to indemnify City shall not extend to any claim, demand or cause of action to the extent caused by the negligence of City or breach of this Agreement by City. 17.2 Notice of Claim. Any person making a claim for indemnification pursuant to this Section 17 (an "Indemnified Party'') must give Developer written notice of such claim (an "Indemnification Claim Notice") promptly after the Indemnified Party receives any written notice of any action, lawsuit, proceeding, investigation or other claim (a ''proceeding'') against or involving the Indemnified Party by a government entity or other third party, or otherwise discovers the liability, obligation or facts giving rise to such claim for indemnification; provided that the failure to notify or delay in notifying Developer will not relieve Developer of its obligations pursuant to this Section 17 except to the extent that Developer's ability to defend against such claim is actually prejudiced thereby. Such notice shall contain a description of the claim and the nature and amount of such loss (to the extent that the nature and amount of such loss is known at such time). 18. Insurance. From and after the execution of this Agreement and until Final Completion of the Parking Garage and City's acceptance of the Public Parking Easement, Developer shall maintain builder's risk, commercial general liability insurance and such other insurance as may be required under the terms of the City Mortgage. From and after City's acceptance and recordation of the Public Parking Easement in the King County real property records, Developer shall maintain insurance with respect to its ownership, operation, maintenance and repair of the Parking Garage as may be set forth in the Public Parking Easement. 19. Completion of Parking Garage. 19.1 Substantial Completion. ''Substantial Completion" means that each of the following events shall have occurred with respect to the Parking Garage prior to the Substantial Completion Date: 19.1.1 Architect's Certification. Architect has issued its "Certificate of Substantial Completion" AIA Document G704 stating that the portion of the work under the construction contract for the Parking Garage is substantially complete in substantial accordance with the Parking Garage Construction Documents. 19.1.2 Project Substantially Completed. The Parking Garage has been Substantially Completed in accordance with all Requirements of Law and Developer has received no notice of any violation of any Requirements of Law which have not been fully cured to the reasonable satisfaction of Developer, City and the applicable governmental authority with jurisdiction over the Parking Garage or the Property. 19.1.3 Temoorary Certificate of Occupancy. City has issued a temporary certificate of occupancy for the Parking Garage permitting its use as a parking garage. -27-P \DRSIDRS2UB 09114105 19 .1.4 Owner Acceptance. Developer has accepted the Parking Garage as complete subject to completion of normal punch list items. 19.1.5 Completion of Punch List Items. Following Substantial Completion of the Parking Garage, Developer shall cause all punch list items to be completed promptly in accordance with the Parking Garage Construction Documents. 19.2 Final Completion of the Parking Garage. Developer shall give written notice to City at least thirty (30) days prior to the date upon which the Parking Garage shall have achieved Final Completion, which date shall be a date prior to the Outside Completion Date. "Final Completion" means that each of the following items shall have occurred with respect to the Parking Garage: 19.2.1 Certificate of Occupancy. City shall have issued a final unconditional certificate of occupancy for the Parking Garage permitting the use and occupancy of the Parking Garage for parking purposes. 19.2.2 Contractors' Certification. Each contractor involved in the construction of the Parking Garage shall have issued its "Certificate of Substantial Completion" together with its Affidavit of Payment of Debts and Claims, AlA Forms 706 and 706A together with final waivers and releases of lien from all persons who have provided labor, services, materials or equipment in connection with the construction of the Parking Garage. 19.2.3 Punch List Items Completed. All punch list items have been completed to the reasonable satisfaction of Developer and City. 19.2.4 Construction Costs Paid. Developer shall have submitted evidence reasonably satisfactory to City that all costs associated with the construction of the Parking Garage have been paid in full. 19 .2.5 No Construction Liens. The period for filing construction liens has expired or releases or discharges of construction liens in form and substance satisfactory to City have been obtained by Developer from all contractors in accordance with the Parking Garage Construction Documents. 19.2.6 Private Street Completed. The private street to be constructed by Developer connecting Smith and Harrison Streets as part of Project Springboard and which provides vehicular access to and from the Parking Garage and the public streets adjoining the Property has been completed to the reasonable satisfaction of City and can be used by pedestrian and vehicular traffic. 19.2.7 Garage Qperational. All signage and graphics required under the Parking Garage Construction Documents have been installed, all security systems have been installed and are operational, the Parking Garage is no longer in use as a construction staging area for the storage of construction materials, machinery and equipment or to provide temporary parking for construction workers' automobiles and equipment and the entire Parking Garage is open to members of the general public for the parking of vehicles (the "Opening Date''). -28-P'\ORSIDRS2UB 09114/05 20. Acceptance of Public Parking J3sement: Release of City Mortgage. City shall accept the Public Parking Easement and release the City Mortgage within thirty (30) days following Final Completion of the Parking Garage and the Opening Date ("Public Parking Easement Acceptance Date''). The acceptance of the Public Parking Easement shall be held at the offices of the Escrow Agent on the Public Parking Easement Acceptance Date. As used in this Agreement, the Public Parking Easement Acceptance Date means the date on which the Public Parking Easement is recorded, and the City has executed a request for full reconveyance of the City Mortgage. Developer and City shall place into escrow all instruments, documents and moneys necessary for City to accept the Public Parking Easement in accordance with this Agreement upon satisfaction of the conditions precedent set forth in Section 20.1 and delivery of the documents and other items set forth in Sections 20.2 and 20.3 to Escrow Agent: 20.1 Conditions Precedent to City's Obligation to Accept Public Parking Easement. City's obligation to accept the Public Parking Easement in satisfaction of Developer's obligations under this Agreement is expressly conditioned on, and subject to satisfaction of each of the following conditions precedent which must be met to the reasonable satisfaction of the City prior to the Public Parking Easement Acceptance Date: 20.1.1 Representations and Warranties. All representations and warranties of Developer and City contained herein shall be true, accurate and complete as the time of the Public Parking Easement Acceptance Date as if made again at such time. 20.1.2 Performance. Final Completion of the Parking Garage as defined in Section 19 has occurred and Developer shall have performed all other obligations to be performed by it hereunder on or before the Public Parking Easement Acceptance Date (or earlier, on or before the date set forth in this Agreement for such performance). 20.1.3 Approval of Condominium Documentation. City shall have approved the proposed declaration and the survey map and plans for the master condominium for the Project Springboard Improvements, which approval shall not be unreasonably withheld, conditioned or delayed; provided, however, that such declaration shall provide, inter alia, that (i) the Parking Garage is a separate condominium unit, (ii) there shall be no assessments, or charges for on-going operation, maintenance and repair of the Parking Garage levied against City, in its capacity as the benefited party under the Public Parking Easement, and (iii) no charges shall be imposed on members of the general public to park in the Parking Garage. 20.1.4 Title Policy. The Title Company is in a position to issue the City Title Policy in accordance with Section 7.2 insuring that City is the benefited party under the Public Parking Easement, subject only to the City Permitted Exceptions. 20.1.5 No Bankruptcy. Neither Developer nor any of its officials, officers, members or managers: (a) has applied for or consented to the appointment of a receiver, custodian or trustee for it or any ofits property, (b) has become insolvent, (c) has failed generally or admitted in writing its inability to pay its debts as they become due, (d) has consolidated, liquidated or dissolved, (e) has filed a petition or action for reliefrelating to any federal or state bankruptcy, insolvency, moratorium or similar statute or any other law or laws for the relief of or relating to debtors, or (f) has made an assignment for the benefit of its creditors or entered into -29-P \ORS\DRS2UB 09114/05 - ----'-~ an agreement of composition with its creditors, nor (g) has a petition been filed by or against Developer, or any of its officials officers, members or managers 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. 20.1.6 Additional Construction Agreements. Developer shall at its expense construct a 15 x 15 foot mechanical chase room and men and women's public restrooms which will accommodate three fixtures and two sinks in each restroom. The mechanical chase room and public restrooms will be constructed at the location shown on the preliminary site plan for the Project Springboard Improvements attached hereto as Exhibit D and in accordance with plans and specifications therefore approved by City as part of the construction of the hotel and condominium improvements. The restrooms shall be maintained in good condition and repair by Developer at its sole cost and expense, and shall be available for use by members of the public at no charge. Following completion of construction Developer will grant City an easement for the mechanical chase room on terms mutually acceptable to City and Developer. 20.1.7 No Casualtv of Condemnation. No material part of the Parking Garage shall have been taking in condemnation or other like proceeding (for the purpose of this Agreement a taking for a limited or indefinite term shall be deemed equivalent to a transfer of fee title) and no material part of the Parking Garage shall have been transferred in lieu of condemnation or other like proceeding and no damage to any part of the Property shall have occurred which shall not have been fully restored or replaced. 20.1.8 Project Springboard Improvement Building Permits. Developer has obtained all permits necessary to commence construction of the remainder of the Project Springboard Improvements or has applied for and is diligently working to obtain all such permits. 20.1.9 Simultaneous Closing of Construction Financing for Remainder of Project Springboard Improvements. Developer has satisfied all conditions precedent to disbursement of loan proceeds under its construction financing and is prepared to close the construction loan financing simultaneous with recordation of the Public Parking Easement, and has completed demolition of any building then located on the Town Square Plaza Site. 20.1.10 Citv Right to Terminate. The foregoing conditions contained in this Section 20.1 are intended solely for the benefit of City. If any of the foregoing conditions are not satisfied, City shall have the right at its sole discretion either to waive the condition in question and proceed with the acceptance of the Public Parking Easement or to declare an Event of Default under this Agreement in which event City may exercise its remedies under Section 25 of this Agreement. 20.2 Documents to be Delivered by Developer. Developer shall obtain and deliver to Escrow Agent prior to the Public Parking Easement Acceptance Date the following documents (all of which shall be duly executed and acknowledged where required): -30-P"IDRSIDRS2UB 09114/05 20.2.1 The Public Parking Easement executed by Developer and consented to by Construction Lender together with a duly executed real estate excise tax affidavit; 20.2.2 FIR.PTA Affidavit; 20.2.3 Evidence that the master declaration and survey map and plans for Project Springboard have been recorded in the real property records and the Parking Garage constitutes a separate condominium unit thereunder; 20.2.4 All documents required to close the Construction Loan for the remainder of the Project Springboard Improvements including any subordination of the Construction Mortgage to the rights of the City under the Public Parking Easement to the extent required by the City and/or the Title Company; 20.2.5 such other documents as may be required by the Title Company and as are consistent with the provisions of this Agreement; and 20.2.6 the costs required to close this transaction. 20.3 Documents to be Delivered by City. City shall obtain and deliver to Escrow Agent prior to the Public Parking Easement Acceptance Date the following documents (all of which shall be duly executed and acknowledged where required): 20.3.1 The Public Parking Easement executed by City, together with a duly executed real estate excise tax affidavit; 20.3.2 A request for full reconveyance of the City Mortgage; and 20.3.3 such other documents as may be required by the Title Company and as are consistent with the provisions of this Agreement. 20.4 Other Instruments. City and Developer shall each deposit such other instruments as are reasonably required by Escrow Agent or otherwise required to record the Public Parking Easement in accordance with this Agreement. 20.5 Prorations: Payment of Costs. There shall be no prorations of costs and expenses in connection with the recording of the Public Parking Easement. Developer shall be responsible for payment of all closing costs, including, but not limited to the premium for the City Title Policy, any real estate excise taxes applicable to the transfer, all costs of financing, including lender's title insurance premiums, if any, the escrow fee, and all recording costs. City and Developer shall each pay their own attorneys' fees and the fees and expenses of their respective consultants. 20.6 Recordation. Provided that the Title Company has issued or is unconditionally prepared and committed to issue City the City Title Policy, then Escrow Agent is authorized at 8:00 a.m. (or as soon thereafter as possible on the Public Parking Easement Acceptance Date) to: -31-P"\DRSIORS2UB 09114/05 20.6.1 Record the Public Parking Easement and any subordination agreements in the official records of King County, Washington; 20.6.2 Deliver the FIRPTA Affidavit and the City Title Policy to City; 20.6.3 Record the reconveyance of the City Mortgage in the official records of King County; and 20.6.4 Record the Construction Mortgage and any other documents required by the Construction Lender in connection with the Construction Loan. 21. Damage. Destruction or Condemnation Prior to Closing. In the event that prior to the Closing Date, the Replacement Parking Site is destroyed or materially damaged or if condemnation proceedings are threatened against all or any material portion of the Replacement Parking Site, either party shall have the right by giving written notice of such decision to the other within fifteen {15) days after receipt of written notice from City of such damage, destruction or condemnation proceedings to terminate this Agreement, in which event this Agreement shall automatically terminate, all work product prepared by or on behalf of Developer for development of the Parking Garage shall immediately and without payment of additional consideration be assigned to City, and except as expressly provided herein, neither party shall have any further rights, duties or obligations to the other under this Agreement. If neither party elects to terminate this Agreement, the · Agreement shall remain in full force and effect, Developer shall accept the Replacement Parking Site in its then condition and state of repair, and all proceeds of insurance or condemnation awards payable to City by reason of such damage, destruction or condemnation, if any, shall be paid or assigned to Developer upon closing and used to build the Parking Garage on the Replacement Parking Site. In the event that Developer elects to complete the acquisition of the Replacement Parking Site, it is expressly agreed that City shall have no obligation to repair or restore same. Notwithstanding anything to the contrary set forth herein, any damage to the Replacement Parking Site prior to Closing as a result of Developer's inspections shall be the responsibility of Developer, and City shall have no obligation to repair it. 22. Damage. Destruction or Condemnation After Closing. but Prior to Final Completion of the Parking Garage. 22.1 Damage or Destruction. After the happening of any casualty to the Parking Garage after the Closing but prior to the Final Completion of the Parking Garage and the Public Parking Easement Acceptance Date, Developer shall give City prompt written notice thereof generally describing the nature and cause of such casualty and the extent of the damage or destruction to the Parking Garage. Developer shall cause reconstruction and restoration of the Parking Garage in accordance with the Parking Garage Construction Documents and the provisions of this Agreement. Developer will deposit all insurance proceeds which Developer may be entitled to receive with respect to such damage or destruction with City, who shall thereafter disburse insurance proceeds to reimburse Developer for the cost of restoration or repair in accordance with the terms, covenants, conditions, provisions and procedures set forth in the City Mortgage. -32-P"\ORSIORS2UB 09114/05 22.2 Condemnation. After the Closing but prior to the Final Completion of the Parking Garage, in the event of a partial condemnation of the Project Site or the Parking Garage to the extent that the Parking Garage may still be constructed in accordance with the Parking Garage Construction Documents or may be constructed in accordance with the Parking Garage Construction Documents as modified by changes acceptable to Developer and City, Developer shall proceed to construct the Parking Garage in accordance with the Parking Garage Construction Documents, as modified, if applicable. Any partial condemnation proceeds shall be deposited with City, who shall disburse condemnation proceeds to reimburse Developer for the cost of restoration or repair in accordance with the terms, covenants, conditions, provisions and procedures set forth in the City Mortgage. In the event of a condemnation of all of the Project Site or the Parking Garage or to the extent condemnation proceeds are not used to repair or restore the Parking Garage, such condemnation proceeds shall be paid to City. 23. Restrictions on Transfers. 23.1 No Transfer of Rights under Agreement. Developer acknowledges that City is relying upon the personal knowledge, expertise and experience of Developer and Plan B Development, L.L.C. ("Plan B"), the managing member of Developer, and Ben Errez, the managing member of Plan B, in entering into this Agreement. Developer shall not voluntarily or involuntarily sell, transfer, convey, assign or otherwise dispose of its rights under this Agreement prior to the Public Parking Easement Acceptance Date without the prior written consent of City, which consent may be withheld by City in its sole and absolute discretion. 23.2 Restrictions on Transfer of Interests in Developer. Prior to the Public Parking Easement Acceptance Date, Developer may (a) sell, transfer, convey or assign interests in Developer, (b) admit additional or substitute members in Developer or any member or manager of Developer, or (c) change or transfer the ownership interests in any member or manager of Developer so long as there is no change in the existing ownership interests of the existing members of Plan B and Plan B shall at all times have a controlling interest in and be the managing member of Developer. Any other transfer shall require the prior written consent of City, which consent may be withheld by City in its sole and absolute discretion. City and Developer acknowledge and agree that Developer may grant SPI an interest in Developer pursuant to the SPI Contribution Agreement and may transfer ownership interests in Developer to third parties in the discretion of Developer after the Public Parking Easement Acceptance Date and recordation of the Public Parking Easement in the King County real property records. 23.3 Definition of Transfer. As used in Subsection 23.2, a ''transfer" includes any sale, transfer, conveyance, assignment, mortgage, pledge or other disposition of any interest in Developer or any member or manager of Developer, 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 or any merger, consolidation, liquidation or dissolution of Developer or any member or manager of Developer. 23.4 No Transfer of Reolacement Parking Site During Construction of Parking Garage. Developer shall not sell, transfer, lease, convey, encumber or enter into a contract of sale or other conveyance of all or any part of or any interest in the Parking Garage during the construction thereof and prior to Final Completion of the Parking Garage and the Public Parking -33-P IDRS\DRS2UB 09114/05 Easement Acceptance Date without the prior written consent of City, which consent may be withheld by City in its sole and absolute discretion. City acknowledges that Developer reserves the right to sell all or any portion of Project Springboard, including, but not limited to, sales of residential condominiums to individual homeowners after the Public Parking Easement Acceptance Date. Developer may enter into ''pre-sale" agreements with individual homeowners to purchase a condominium upon final completion thereof without the consent of City. From and after the Public Parking Easement Acceptance Date, Developer shall have the right to sell the Parking Garage, subject to, and on the terms and conditions set forth in, the Public Parking Easement. 24. Events of Default Prior to Closing Date; Remedies. 24.1 City's Default. In the event of a default by City of a material provision under the Agreement prior to the Closing Date, then provided Developer is not in default hereunder, Developer's sole and exclusive remedy shall be either (a) to seek and obtain specific performance of City's obligations hereunder, or (b) to terminate this Agreement upon written notice to City and Escrow Agent and except as otherwise expressly provided herein neither party hereto shall have any further rights, duties or obligations under this Agreement. 24.2 Developer's Default. In the event of a breach or default by Developer without any default by City or failure of any condition precedent to Closing hereunder prior to the Closing Date, City's sole and exclusive remedy shall be either (a) to seek and obtain specific performance of Developer's obligations hereunder, or (b) to terminate this Agreement by written notice to Developer and Escrow Agent whereupon all work product prepared by or on behalf of Developer for development of the Parking Garage shall immediately and without payment of additional consideration be assigned to City, Developer shall pay all title and escrow cancellation charges, if any, and except as otherwise expressly proVided herein, neither party shall have any further rights, duties or obligations under this Agreement. 25. Developer Events of Default Following Closing Date; Remedies. 25.1 Developer Default. The following events shall constitute a "Default" or "Event of Default" by Developer: 25.1.1 If Developer shall fail to perform any material obligation under this Agreement; or 25 .1.2 If Developer has abandoned construction of the Parking Garage for a period of twenty (20) consecutive days (except for Unavoidable Delay); or 25.1.3 If any permit required for construction of the Parking Garage shall be revoked or canceled; or 25.1.4 If Developer shall have assigned, pledged or encumbered its rights, duties or obligations under this Agreement in violation ofthis Agreement; or 25 .1.5 If any representation or warranty made by Developer as set forth in Section 12 shall be untrue or breached in any material respect; or -34-PIDRS\DRS2UB 09/14105 25.1.6 If Developer has not commenced construction of the Parking Garage on or before March 31, 2006; or 25.1.7 If Substantial Completion ofthe Parking Garage has not occurred for any reason except for Unavoidable Delay, on or before September 30, 2006 (the Substantial Completion Date); or 25.1.8 If Substantial Completion of the Parking Garage has not occurred for any reason whatsoever including Unavoidable Delay on or before March 31, 2007 (the Outside Completion Date); or 25.1.9 If Developer files a petition for bankruptcy or if it makes a general assignment for the benefit of Developer's creditors, or if a receiver is appointed on account of Developer's insolvency and any such petition or appointment is not dismissed within ninety (90) days; or 25.1.10 There is an event of default under the City Mortgage which has not been cured prior to the expiration of any cure period contained therein. 25.2 City Remedies yoon Developer Event of Default. Upon any Event of Default by Developer, City shall give Developer written notice of the same, whereupon 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 not to exceed ninety (90) days), except with respect to Events of Default set forth in Section 25.1.4, 25.1.6, 25.1.7, 25.1.8, 25.1.9 or 25.10 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, City may: (a) terminate this Agreement upon ten (10) days prior written notice to Developer; (b) bring an action for damages; (c) seek specific performance of this Agreement; (d) take over and complete the work of construction of the Parking Garage, including the right to enforce contracts or agreements theretofore made by or on behalf of the Developer and to do any and all things necessary or proper to complete the work of construction, as may be deemed reasonably necessary and to recover the cost thereof, together with interest thereon at the rate of twelve percent (12%) per annum; or (e) foreclose the City Mortgage. 26. Citv Events of Default Following Closing Date: Remedies. If City fails to perform any material obligation under this Agreement after Closing but prior to the Public Parking Easement Acceptance Date, 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 complete such cure within a reasonable period of time). In the event City fails to cure such failure within the time period set forth above and provided Developer is not in default hereunder, then Developer's sole and exclusive remedy shall be the right to seek and obtain specific performance of City's obligations hereunder. 27. Rights and Remedies Cumulative. Except as otherwise expressly stated in tlus Agreement, the rights and remedies of the parties are cumulative, and the exercise or failure to -35-P \DRS\DRS2UB 09114105 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 tittles, of any right or remedy for the same default or any other default by the other party. Consequential damages and damages which are speculative or remote are not recoverable under this Agreement even if such damages would otherwise be available under law or equity. 28. 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 the other party if delivered either personally, or by overnight delivery service of recognized standing, or by United States Mail, certified, registered, or express mail with postage prepaid, or by facsimile transmission with electronic confirmation of receipt. If such Notice is personally delivered or delivered by facsimile during normal business hours, it shall be conclusively deemed given at the time of such delivery. If such Notice is delivered by facsimile after normal business hours or is delivered by overnight delivery service, it shall be deemed given one (1) business day after receipt thereof (if sent by facsimile transmission) or one (1) business day after the deposit thereof with such delivery service. If such Notice is mailed as provided herein, notice shall be deemed given three (3) business days after the deposit thereof in the United States Mail. Each such Notice shall be deemed given only if properly addressed to the party to whom such Notice is to be given as follows: To City: With a copy to: To Developer: With a copy to: City of Kent 220 Fourth Avenue Kent, Washington 98030 Attn: City Clerk Fax: (253) 856-6725 CityofKent 220 Fourth Avenue Kent, Washington 98030 Attn: City Attorney Fax: (253) 856-6770 Springboard Holdings, L.L.C. 1627 East Sammamish Place SE Sammamish, Washington 98075 Attn: Ben Errez Fax: (425) 369-9949 Plan B Development, L.L.C. 12889 Casino Drive Anacortes, Washington 98221 Fax: (425) 936-7329 -36-P IDRS\DRS2UB 09/14/Q5 With a copy to: Chairman, Swinomish Indian Tribal Community P.O. Box 817 LaConner, Washington 98257 Fax: (360) 466-5309 To Second Avenue: Second Avenue Real Estate LLC 1301 Fifth Avenue, Suite 2600 Seattle, Washington 98101 Attn: Ben Porter Fax: (206) 587-0579 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 parties hereto. 29. Survival of Re.presentations and Warranties. Except as otherwise expressly provided herein, all representations, warranties, covenants and agreements of the parties contained in this Agreement, or in any instrument or other writing provided for herein, shall survive the Closing. 30. Brokerage Fees. Each party represents to the other that no broker has been involved in this transaction. In the event of a claim for any broker's fee, finder's fee, commission or other similar compensation in connection herewith Developer, if such claim is based upon any agreement alleged to have been made by Developer, hereby agrees to indemnify City and Second A venue against and hold City and Second A venue harmless from any and all damages, liabilities, costs, expenses and losses (including, without limitation, reasonable attorneys' fees and costs) which City or Second Avenue may sustain or incur by reason of such claim. In the event of a claim for any broker's fee, finder's fee, commission or other similar compensation in connection herewith Second A venue, if such claim is based upon any agreement alleged to have been made by Second Avenue, hereby agrees to indemnify City and Developer against and hold City and Developer harmless from any and all damages, liabilities, costs, expenses and losses (including, without limitation, reasonable attorneys' fees and costs) which City or Developer may sustain or incur by reason of such claim. City, if such claim is based upon any agreement alleged to have been made by City, hereby agrees to indemnify Developer and Second Avenue against and hold Developer and Second Avenue harmless from any and all damages, liabilities, costs, expenses and losses including, without limitation reasonable attorneys' fees and costs) which Developer or Second Avenue may sustain or incur by reason of such claim. The indemnification provisions set forth herein shall survive Closing or termination of this Agreement. 31. Miscellaneous. 31.1 Burden and Benefit. The covenants and agreements contained herein shall be binding upon and inure to the benefit of the successors and permitted assigns of the respective parties hereto. Developer agrees that City may transfer its rights under tlus Agreement (including its rights under the Public Parking Easement) whether voluntarily, involuntarily, by operation of law or otherwise, to any city, county, governmental subdivision or agency or other municipal corporation. -37-P IDRSIDRS2UB 09114105 31.2 No Continuing Waiver. Any waiver by either of the parties of any breach of any covenant herein contained to be kept and performed by the other party shall not be deemed or considered as a continuing waiver, and shall not operate to bar or prevent the damaged party from declaring a forfeiture for any succeeding breach, either of the same condition or covenant or otherwise. 31.3 Nondiscrimination. Developer will not discriminate and shall ensure that its consultants and all contractors engaged by Developer in connection with Project Springboard comply with all applicable federal, state and local discrimination laws, rules and regulations. 31.4 Neutral Authorship. In connection with the execution and delivery hereof, each party has been represented by counsel. Each of the provisions of this Agreement has been reviewed and negotiated, and represents the combined work product of the parties hereto. No presumption or other rules of construction which would interpret the provisions of this Agreement in favor of or against the party preparing the same shall be applicable in connection with the construction or interpretation of any of the provisions of this Agreement. 31.5 Terminology. All personal pronouns used in this Agreement, whether used in the masculine, feminine and neuter gender, shall include all other genders, the singular shall include the plural, and vice versa as the context may require. 31.6 Complete Agreement: Amendment. This Agreement together with the exhibits annexed hereto or referred to herein is intended to be the entire agreement of the parties with regard to the subject matter hereof and may only be amended with the written consent of all parties. 31.7 Severability. Each provision of this Agreement shall be considered severable, and if for any reason any provision that is not essential to the effectuation of the basic purposes of the Agreement is determined to be invalid and contrary to any existing or future law, such invalidity shall not impair the operation of or affect those provisions of this Agreement that are valid. 31.8 Relationship of Parties. Developer, Second Avenue and City shall not be construed as joint venturers or general partners, and no party shall have the power to bind or obligate any other party except as set forth in this Agreement. Neither Developer nor Second Avenue shall have any right or authority, express or implied, to commit or otherwise obligate City in any manner whatever except to the extent specifically provided herein or specifically authorized in writing by City. City shall have no right or authority, express or implied, to commit or otherwise obligate Developer or Second A venue in any manner whatever except to the extent specifically provided herein or specifically authorized in writing by Developer or Second Avenue. 31.9 No Third Partv Rights. The provisions of this Agreement are intended solely for the benefit of, and may only be enforced by, the parties hereto and their respective 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 -38-P \DRS\DRS2UB 09/14105 • -.+-, , -=-. _ _.__~--~·----_,..._.,_ ~~-'--:::'l.il.<_,.__ ~- benefit of any contractor, architect, consultant, subcontractor, worker, supplier, mechanic, architect, insurer, surety, guest, condominium owner, tenant, rnember of the public, or other third parties having dealings with any of the parties hereto or involved, in any manner, in the Property. 31.10 Non Waiver of Governmental Rights. Nothing contained in this Agreement shall require City to take any discretionary action relating to development of the improvements to be constructed on the Property as part of Project Springboard, including, but not limited to, zoning and land use decisions, permitting, design review or any other governmental approvals. 31.11 Captions. The captions of this Agreement are for convenience and reference only and in no way define, limit or describe the scope or intent of this Agreement. 31.12 Counterparts. This Agreement 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. 31.13 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 fot the full implementation and consummation of this Agreement and the transactions contemplated hereby. 31.14 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. 31.15 Time Is of the Essence. Time is of the essence of this Agreement. 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. 31.16 Memorandum of Agreement. The Agreement shall not be recorded; however, upon the request of either party, the parties shall record a Memorandum of this Agreement in a form mutually acceptable to both parties in the real property records of King County, Washington. 31.17 Attorneys' Fees. Each party shall be responsible for payment of the legal fees of its counsel in the event of any litigation, mediation, arbitration or other proceeding brought to enforce or interpret or otherwise arising out of this Agreement. 31.18 WANER OF JURY TRIAL. CITY, DEVELOPER AND SECOND AVENUE HEREBY WANE ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM ARISING OUT OF THIS AGREEMENT, 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 WANER AND AGREEMENT CONTAINED HEREIN. -39-P IORSIORS2UB 09/14/05 ·, ' ' -..d::;.t. ~ " , ~ ,.: -It'::._ ~-t.-~ - 31.19 Exhibits. The exhibits referred to herein or attached hereto are made a part of and incorporated into this Agreement. All exhibits not finalized as of the date of this Agreement shall be finalized and agreed to by the parties prior to the expiration of the Due Diligence Period and shall thereafter become part of and incorporated into this Agreement. 31.20 Conflicts of Interests. No member, official or employee of City shall make any decision relating to the Agreement 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. 31.21 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 Agreement. 31.22 Applicable Law. This Agreement 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 Agreement shall lie exclusively in King -40-P"\ORSIORS2UB 09/14105 County Superior Court. The parties hereto consent to the jurisdiction of the King County Superior Court and waive the right to file suit elsewhere. IN WITNESS WHEREOF, the parties have executed this Agreement effective as of the date first above written. DEVELOPER: SPRINGBOARD HOLDINGS, L.L.C., a Washington limited liability company By: ________________________ _ Name: ________________________ _ Title: -------------------------- SECOND A VENUE Second Avenue Real Estate LLC, a Washington limited liability company By: ________________________ _ Name: Title: ------------------------- CITY: CITY OF KENT, a Washington municipal corporation By: ________________________ __ Name: ________________________ _ Title: ------------------------- APPROVED AS TO FORM: CITY ATTORNEY -41-P \DRSIDRS2UB 09114/05 Exhibits A-1 Legal Description for City-Owned Town Square Plaza Site A-2 Legal Description for City-Owned Replacement Parking Site A-3 Legal Description for Harrison Exchange Property B Legal Description for Private Land B-1 Legal Description for Harrison Property B-2 Legal Description for SPI Land C-1 Legal Description for Property (A-2 and B-2) C-2 Legal Description for Harrison Exchange Property D Preliminary Site Plan for Project Springboard Improvements E Parking Garage Design Standards F Public Parking Easement G City Mortgage H CityDeed I Definitions -42-P IDRS\DRS2UB 09/14/06 ExhibitA-1 Legal Description fgr Citv-Owned Town Square Plaza Site [To be provided by Title Company and surveyor and agreed to by parties.] A-1-1 P \ORSIORS2UB 09114105 :._1, .. ~ ExhibitA-2 Legal Description for City-Owned Replacement Parking Site [To be provided by Title Company and surveyor and agreed to by parties.] A-2-1 P \DRSIDRS2UB 09114/05 ----~. ~:l ExhibitA-3 Legal Desctjptjon for Harrison Exchange Property [To be provided by Title Company and surveyor and agreed to by parties.] A-3-1 F>IDRS\ORS2UB 09/14/05 ExhibitB Legal Description for Private Land [To be provided by Title Company and surveyor and agreed to by parties.] B-1 P \DRSIDRS2UB 09/14/0S Exhibit B-1 Legal Description for Harrison Property [To be provided by Title Company and surveyor and agreed to by parties.] B-l-1 P"\ORS\ORS2UB 09/14/05 Exhibit B-2 Legal Description for SPI Land (following completion ofboundarv line adjustment and alley vacation) [To be provided by Title Company and surveyor and agreed to by parties.] B-2-1 P IDRS\DRS2UB 09114105 Exhibit C-1 LeW Description for Property (SPI Land plus City-Qwned Replacement Parking Site) [To be provided by Title Company and surveyor and agreed to by parties.] C-1-1 P \DRS\ORS2UB 09/14/05 Exhibit C-2 Legal DescriptiOn for Harrison Exchange Property [To be provided by Title Company and surveyor and agreed to by parties.] C-2-1 f>IDRS\ORS2UB 09/14105 ExhibitD Preliminary Site Plj~Dfor Project Springboard Improvements [To be provided by Developer; same as Exhibit D to the Pooling Agreement] D-1 p \ORS\DRS2UB 09/14105 ExbibitE Parkins Garage Design Standards 1. Garage Design. Signage and Graphics. The Parking Garage shall be designed to ensure simple ingress and egress by members of the general public to the Parking Garage, and directional signage at appropriate locations on the Property, indicating the location of vehicular and pedestrian entrances and exists to the Parking Garage and traffic circulation within the Parking Garage. To help the customer remember the parking locations, signs designating the floor level and the alphabetical or numerical designation of the aisle shall be displayed throughout the parking area of the Parking<Jarage and adjacent to elevators and other entrances to the Parking Garage. Signage and graphics shall be designed to achieve a superior level of visibility, legibility and user-friendliness. The destgn of the Parking Garage (including signage and graphics) shall be in accordance with the Parking Garage Construction Documents prepared and approved in accordance with this Agreement. Such plans shall incorporate the immediately following elements: 2. Garage lllumination: Adequate lighting is one of the most important safety features of the Parking Garage, and a strong maintenance program is necessary to preserve the lighting levels in the Parking Garage. Lighting for the Parking Garage shall be provided by fixtures with area controls on a seven-day program, sufficient to provide the following light intensity twenty-four (24) hours a day: (a) Traffic Lanes -a minimum maintained intensity approved by the parties as part of the Parking Garage Construction Documents measured thirty (30) inches above finished floor with a uniformity ratio of three to one (3:1) average to minimum; (b) Parking Stalls -a minimum maintained intensity approved by the parties as part of their approval of the Parking Garage Construction Documents measured thirty (30) inches above finished floor with a uniformity ratio of three to one (3:1) average to minimum; (c) Vehicular Entrances -a minimum maintained intensity of thirty (30) foot candles measured thirty (30) inches above finished floor with a uniformity ratio of three to one (3: 1) average to minimum and (d) Stairways open to the public, Vestibules, Corridors and Lobbies -a minimum maintained intensity of twenty-five (25) foot candles measured thirty (30) inches above finished floor with a uniformity ratio of three to one (3:1) average to minimum. The ceilings shall be painted white and all vertical surfaces of the Parking Garage shall be painted white, where practicable. 3. Parking Spaces and Module: Parking shall be available for a minimum of three hundred fifty (350) multi-passenger motor vehicles. There shall be additional parking spaces provided for motorcycles and bicycles. One (1) additional foot for stall width shall be required for parking stalls adjacent to columns. In addition, before issuance of a building permit for the Parking Garage the City shall approve a vehicle maneuvering diagram as submitted by the Developer that shows adequate vehicle maneuvering for parking stalls throughout the garage. 4. Stall Striping: Stalls shall be separated by single four (4) inch paint or therma-plastic stripe. E-1 P \DRS\DRS2UB 09/14105 5. Security Devices: The plans for the Parking Garage shall specify the security devices to be installed, which may including closed circuit T.V. monitors and cameras, assistance call boxes installed on each level at elevators and other critical locations, audio monitoring devices and their locations. 6. Ventilation: The Parking Garage design shall be designed to include a separate ventilation system for the Parking Garage which shall vent automobile exhaust fumes to the outside and ensure that unsafe levels of carbon monoxide, noxious fumes and other pollutants do not remain in the Parking Garage or enter the Project Springboard Improvements. E-2 P"\ORS\ORS2UB 09/14105 Exhibit F Public Parking Easement RECORDING REQUESTED BY AND WHEN RECORDED RETURN TO: CityofKent 220 Fourth Avenue Kent, Washington 98030 Attn: City Attorney PUBLIC PARKING EASEMENT GRANTORS: 1. Springboard Holdings, L.L.C., a Washington limited liability company 2. Second Avenue Real Estate LLC, a Washington limited liability company GRANTEE: City ofK.ent, a Washington municipal corporation Legal Description: Abbreviated form: Additional legal on page Exhibit A Assessor's Property Tax Parcel ID No(s).: F-1 P \DRS\DRS2UB 09114105 PUBLIC PARKING EASEMENT THIS PUBLIC PARKING EASEMENT (the "Easement Agreement'') is executed this __ day of 2006 by SPRINGBOARD HOLDINGS, L.L.C., a Washington limited liability company (''Developer'') and SECOND A VENUE REAL ESTATE LLC, a Washington limited liability company ("Second Avenue") in favor of CITY OF KENT, a Washington municipal corporation, its successors and assigns ("City'') with reference to the following facts: RECITALS A. Pursuant to the terms and conditions set forth in that certain Replacement Parking Agreement dated as of September 30, 2005 by and between City and Developer (the "Replacement Parking Agreement''), City agreed to transfer certain real property more particularly described therein as the Replacement Parking Site on the express condition that the Developer redevelop certain real property located in the City of Kent and generally bordered on the north by Smith Street, on the west by Fourth Avenue, on the south by Harrison Street (excluding certain real property owned by Meeker Street Law Building LLC and MBA Harrison Square I LLC and MBA Harrison Square II LLC, each a Washington limited liability company) and on the east by Second A venue and more particularly described in the Replacement Parking Agreement as the "Property" or the "Project Site", with a privately owned mixed-use condominium development as more particularly described in the Replacement Parking Agreement (collectively, "Project Springboard"). B. Pursuant to the terms and conditions set forth in the Replacement Parking Agreement, including, but not limited to, the design standards set forth in Exhibit E thereto, Developer agreed to design, develop and construct a parking garage consisting of four ( 4) levels of above-grade parking containing a minimum of three hundred fifty (350) parking spaces for multi-passenger motor vehicles (the "Parking Garage"), to grant City, any successor public entity and members of the general public a perpetual easement to park in the Parking Garage twenty four (24) hours a day, seven (7) days a week, initially at no charge, and to thereafter operate and maintain the Parking Garage as a self-park public parking garage and in a manner to maximize the availability of Short Term Parking (as hereinafter defined), on the terms and conditions set forth herein. C. Developer has achieved Final Completion of the Parking Garage (as defined in the Replacement Parking Agreement) and all other conditions precedent to City's acceptance of the public parking easement have been met to the satisfaction of City. NOW, THEREFORE, in consideration of the foregoing recitals, the terms and conditions set forth in the Replacement Parking Agreement and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agree as follows: F-2 P IDRS\OR52UB 09114105 AGREEMENT 1. Recitals Inc01porated: Definitions. Each of the recitals set forth above is incorporated into this Easement Agreement as though fully set forth herein. All capitalized terms not otherwise defined herein shall have the same meaning as set forth in the Replacement Parking Agreement or on Exhibit E to this Easement Agreement. Developer, in its capacity as owner of the Parking Garage, and its successors and assigns, is also referred to in this Easement Agreement as the Parking Garage Owner. 2. Grant of Public Parking Easement. Developer hereby grants and establishes for the benefit of City, any successor public entity, and members of the general public, a perpetual easement to park in the Parking Garage located on the real property more particularly described in Exhibit A attached hereto and by this reference incorporated herein (the "Property'') twenty four (24) hours a day, seven (7) days a week, initially at no charge, together with rights of pedestrian and vehicular access to and from the Parking Garage and the public streets adjoining the Property utilizing the existing private road as outlined in red on the map annexed hereto as Exhibit B. (a) Exclusive Public Parking Stalls. Not less than seventy (70) parking stalls in the Parking Garage located on the first and second levels of the Parking Garage shall be available to members of the general public for Short Term Parking at all times (collectively, the "Exclusive Public Parking Stalls"). The location of the Exclusive Public Parking Stalls is set forth on the map annexed hereto as Exhibit B and by this reference incorporated herein and shall not be changed without the prior written consent of City. (b) Shared Parking Stalls: Public Right to Use Shared Parking Stalls. The remaining parking stalls on level two, and all of the parking stalls on levels three and four of the Parking Garage are intended to be used for Short Term Parking by Project Springboard condominium owners, hotel guests, tenants of Project Springboard Improvements and their customers and tenants of property owned by Second Avenue south of Harrison Street (the "Second Avenue Project Improvements") and their customers on an unreserved, first come, first serve basis. Members of the general public shall also have the right to park in any open parking stall located on the remainder of level two and all of levels three and four on a first-come, first serve basis, twenty four (24) a day, seven (7) days a week (collectively, the "Shared Parking Stalls"). The location of the Shared Parking Stalls is set forth on the map annexed hereto as Exhibit B and by this reference incorporated herein and shall not be changed without the prior written consent of City. No parking stalls will be allocated to a particular condominium unit, hotel guest, commercial tenant or any of their employees, invitees or customers. (c) Short Term Parking For purposes of this Easement Agreement, Short Term Parking means use of a parking stall by the same motor vehicle for up to three (3) hours or less during any twenty four (24) hour period (excluding the hours between midnight and 6:00a.m.). The City shall have the right to revise the definition of Short Term Parking as it applies to the Parking Garage from time to time. The City shall F-3 P \DRS\ORS2UB 09114105 periodically, but not more often than quarterly, review the use of the Parking Garage and following consultation with the Paricing Management Committee established pursuant to Section 10 of this Easement Agreement ("Committee"), revise the definition of Short Term Parking to maximize utilization of parking stalls in the Parking Garage by members of the general public and hotel guests, condominium owners, Project Springboard and Second Avenue Project Improvements tenants and their customers, while limiting use of the Parking Garage by commuters and employees of organizations located in downtown Kent. (d) Special Use Parking Stalls. The Parking Garage Owner may issue special use parking permits to the owner of the Project Springboard Improvements in an amount equal to the number of hotel rooms and number of bedrooms in all condominium units built as part of the Project Springboard Improvements for use solely by Project Springboard condominium owners and hotel guests. Second Avenue shall be entitled to at least seventy (70) special use pennits for use solely by Second Avenue Project tenants, with the total number of special use permits issued to Second Avenue based upon Second Avenue's contribution toward the cost of the Parking Garage. A special use permit shall entitle such permit holder the right to park in the Shared Parking Stalls for periods longer than the then applicable Short Term Parking limit established by the City, on a first come, first serve basis. The Parking Garage Owner shall have the right to issue such special use parking pennits in the exercise of its business judgment and subject to such conditions and limitations as it may detennine from time to time and may charge for issuance of a special use permit; provided, however, the Parking Garage Owner shall not issue more than one special use parking permit per sold or leased condominium unit or occupied hotel room and shall not issue Second Avenue more than one special use permit for each parking stall purchased without the prior written consent of the City. Upon request by any party to this Easement Agreement from time to time, the parties shall confirm the total number of special use permits that can be outstanding at any one time. Special use permits are not transferable and must be surrendered by the permit holder if the permit holder no longer satisfies the requirements for a special use permit set forth in this Easement Agreement and such additional qualifications as Developer or Second Avenue may establish from time to time. Parking Garage Owner and Second A venue shall each maintain records regarding the number of special use permits issued at any time including the name, address and status of the special use permit holder (i.e., hotel guest, condominium unit owner or tenant), date of issuance, motor vehicle license number and such other information as City or the Committee may reasonably request. The holders of special use parking permits may not park in the Exclusive Public Parking Stalls at any time except with the prior written consent of the City. (e) Handicapped Parking Stalls. Notwithstanding the foregoing and provided that there is no reduction in the number of Exclusive Parking Stalls available for use by members of the general public, Parking Garage Owner may reserve parking spaces on each level of the Parking Garage for use by persons with a valid disability parking permit or license plate. The handicapped parking stalls shall be evenly distributed F-4 P \DRS\IlRS2UB 09114/05 throughout the Parking Garage. Only persons with a valid disability parking permit or license plate may park in a parking stall designated as handicapped parking. (f) Uninterrupted Access to Parking Garage. Members of the general public shall have free, open and continuous pedestrian and vehicular access to and from the Parking Garage, the entrances and exits thereto and the sidewalks, streets and public rights of way adjoining the Property, using existing elevators, stairs, skybridges, roadways, driveways and sidewalks now or hereafter located on the Property, including but not limited to the private street connecting Smith and Harrison Streets, at all times (subject to the Parking Garage Owner's right to control pedestrian ingress and egress to the Parking Garage after certain hours to protect the safety and security of patrons of the Parking Garage). With the exception of the Exclusive Public Parking Stalls which shall be reserved for Short Term Parking by members of the general public at all times, parking spaces in the Parking Garage will be provided on an unreserved, first come, first served basis. Persons utilizing the Parking Garage shall not be entitled to use any one particular parking space and may not use more than one parking space at any one time for the parking of a single vehicle. Members of the general public shall also have the right to use the restrooms located adjacent to the spa constructed as part of Project Springboard at no charge. 3. Operation of the Parking Garage. (a) Public Parking Garage. Parking Garage Owner shall at its sole cost and expense, provide for the safe and efficient operation of the Parking Garage as a self- park, public parking garage which can park at least three hundred fifty (350) multi- passenger motor vehicles and which is open to members of the general public for public parking twenty four (24) hours a day, seven (7) days a week in accordance with the terms and conditions set forth in this Easement Agreement. Parking Garage Owner shall pay all Operating Expenses (as defmed in Exhibit C) incurred in connection therewith. The Parking Garage shall be operated and managed to maximize the availability of Short Term Parking at all times in accordance with the provisions of this Easement Agreement. (b) Compliance with All Laws. Parking Garage Owner shall at its sole cost and expense, operate the Parking Garage (and entrances, exits, elevators, stairs, skybridges, sidewalks, driveways and roadways providing pedestrian and vehicular access to the public and private streets adjoining the Property including, but not limited to the private street that will connect Smith and Harrison Streets) in compliance with all Requirements of Law, and in the event any use or operation of the Parking Garage shall constitute a violation of any Requirements of Law, promptly following knowledge of such violation take all steps reasonably necessary to remedy same. Parking Garage Owner shall secure at its sole cost and expense, all permits, licenses, permissions, consents and approvals required to be obtained from governmental agencies or third parties in connection with the operation of the Parking Garage or the making of repairs or replacements to the Parking Garage or equipment thereon. F-5 P IDRS\DRS2UB 09114105 (c) Signage. Parking Garage Owner and City shall mutually agree on the designation and signage in the Parking Garage and elsewhere on the Project Springboard Improvements including designated entrances and exits to the Parking Garage and the Project Springboard Improvements which are adequate to inform members of the public of the location and means of access through the Project Springboard Improvements to and from the Parking Garage, the location of the Exclusive Public Parking Stalls, the then applicable time limitation on the use of the Exclusive Public Parking Stalls, the location of Shared Parking Stalls, and the roadways, sidewalks and streets adjoining the Property. The final design and choice of materials for such signs shall be subject to City's approval, which approval shall not be unreasonably withheld, conditioned or delayed. (d) Parking Garage Rules. Following consultation with the Committee, the Parking Garage Owner may adopt, modify and enforce reasonable rules (the "Parking Garage Rules") governing the use of the Parking Garage so long as such rules do not restrict access to or from the Parking Garage by members of the general public parking in the Parking Garage and are not inconsistent with the terms of this Easement Agreement. The Parking Garage Rules currently in effect are attached hereto as Exhibit D and by this reference incorporated herein. City acknowledges that Parking Garage Owner may refuse to permit any person who violates the Parking Garage Rules to park in the Parking Garage and any serious or repeated violation of the current Parking Garage Rules may result in the removal of the motor vehicle belonging to such a person from the Parking Garage. Parking Garage Owner shall post copies of the Parking Garage Rules in the various entrances and exits to the Parking Garage and shall make copies of the Parking Garage Rules available to the City and all Project Springboard condominium owners, tenants, hotel guests, and their respective tenants, subtenants, invitees and customers who use the Parking Garage, upon any change or modification thereof. (e) Prohibited Uses. (i) The layout, type and number of parking stalls and the configuration of the parking spaces shall not be changed without the prior written consent of the City. The lighting, graphics, signage, structural support characteristics and locations of exits and entrances to the Parking Garage shall not be materially changed from the as- built plans and specifications for the Parking Garage without the prior written approval of City. (ii) Parking Garage Owner shall not do or permit anything to be done in or about the Parking Garage nor bring or keep anything therein which will cause a cancellation of any insurance policy covering the Parking Garage, nor shall Parking Garage Owner sell or permit to be kept, used or sold in or about the Parking Garage any articles which may be prohibited by the terms of the property insurance required to be carried by the Parking Garage Owner pursuant to the provisions of Section 6 of this Easement Agreement. F-6 P \DRS\DRS2UB 09114105 (iii) P~g Garage Owner shall not close any entrance or exit to the Parking Garage that provides pedestrian or vehicular access to or from the Parking Garage, or do or authorize anything to be done in or about Project Springboard or the Parking Garage which will in any way obstruct or interfere with the rights of members of the public to enter or exit the Parking Garage from the roadways, sidewalks and streets adjoining the Property, including, but not limited to the right to use the private street connecting Smith and Harrison Street to enter and exit the Parking Garage. Notwithstanding the foregoing, Parking Garage Owner shall have the right to close portions of the Parking Garage in order to make necessary repairs or maintenance, which repairs and maintenance shall be performed in accordance with the requirements of Section 5 of this Easement Agreement, and, following consultation with the Committee, may control pedestrian ingress and egress to the Parking Garage after certain hours to protect the safety and security of patrons of the Parking Garage. (iv) Parking Garage Owner shall not permit the Parking Garage to be used for any use other than as a self park, public parking garage, or be used for any unlawful or objectionable purpose, nor shall the Parking Garage Owner cause, maintain or permit any nuisance in, on or about the Parking Garage. Parking Garage Owner shall not commit or suffer to be committed any waste in or upon the Parking Garage. (v) Parking Garage Owner shall not install or permit the installation of any underground storage tanks in the Parking Garage, allow any person to sell or dispense gasoline, diesel fuel or other petroleum products from fuel tanks located in the Parking Garage, sell motor oil, nor allow any person to provide automobile repair services (other than emergency repairs) in the Parking Garage. (vi) So as not to interfere with traffic flow to and from the Parking Garage and within the various levels of the Parking Garage there shall be no sales conducted within the Parking Garage without the prior written consent of City and no kiosks, pushcarts or other merchandising units or obstructions shall be placed in the Parking Garage or near the entrances or exits thereto without the prior written consent of the City. (vii) Parking Garage Owner shall not use the Parking Garage or permit anything to be done in or about the Parking Garage which will in any way conflict with any law, statute, ordinance or governmental rule or regulation or requirement of duly constituted public authorities now in force or which may hereafter be enacted or promulgated. {viii) Parking Garage Owner shall operate and maintain or cause the Parking Garage to be operated and maintained so that levels of carbon monoxide, noxious fumes and other pollutants in the Parking Garage do not exceed levels in excess of that established under applicable Environmental or other laws. F-7 P IORS\DRS2UB 09/14105 (ix) With 'the exception of the Exclusive Public Parking Stalls, parking stalls reserved for use by peraons with a valid disability parking permit or license and special use parking permit holders, Parking Garage Owner shall not enter into daily or monthly parking permits, written or oral agreements or other contracts granting any person a right to park in the Parking Garage. (f) Parking Management Plan. Parking Garage Owner shall supervise the daily operation of the Parking Garage and shall, in consultation with the Committee, develop and thereafter enforce a parking management plan to ensure that the Exclusive Parking Stalls are used solely for Short Term Parking by members of the general public at all times and that the remainder of the parking stalls in the Parking Garage are utilized in the manner set forth in Section 2 of this Easement Agreement. Parking Garage Owner shall maintain records of the operation of the Parking Garage and utilization of the Exclusive Parking Stalls and the Shared Parking Stalls, and shall provide periodic written reports to the Committee regarding same. Parking Garage Owner shall monitor the daily use of the Parking Garage and shall take such measures as may be reasonably necessary given the utilization of the Parking Garage, to enforce the limitations on use of the parking stalls set forth in Section 2 of this Easement Agreement. Such measures may include, in addition to signage notifying patrons of the Parking Garage that the Exclusive Public Parking Stalls are reserved at all times for use by members of the general public and the current Short Term Parking limit for parking in the Parking Garage, issuance of warning notices, use of security patrols, observation, or other means necessary to monitor parking compliance. The Parking Garage Owner shall in consultation with the Committee establish, assess and collect penalties from persons who exceed the then applicable Short Term Parking limit and do not have a valid special use permit. Unauthorized vehicles remaining in any parking stall for more than the then applicable Short Term Parking limit may be removed by the Parking Garage Owner at the vehicle owner's expense if the vehicle in question has received more than three (3) ticketed warnings during any thirty (30) day period, and shall be removed from the Exclusive Parking Stalls by the Parking Garage Owner at the vehicle owner's expense if requested by the City. 4. Par.ijng Charges. Parking Garage Owner shall not charge for the right to park in the Parking Garage until such time as the City charges for parking on any of its streets, or City-owned surface parking lots or parking structures located within the Kent Station Planned Action Ordinance Area. Parking Garage Owner acknowledges that City would not have entered into the Replacement Parking Agreement or agreed to accept this Easement Agreement in exchange for the City Replacement Property but for the agreement by Developer and its successors and assigns as owners of the Parking Garage to not charge for parking in the Parking Garage until such time as the City charges for parking on any City streets located within the Kent Station Planned Action Ordinance Area, or City-owned surface parking lots or parking structures located within the Kent Station Planned Action Ordinance Area. Each party to this Easement Agreement agrees that this provision was specifically negotiated by the parties, is a material inducement to the City to enter into this Easement Agreement and that any breach or attempted breach of the terms of this F-8 P IDRSIDRS2UB OQ/14105 Section 4 by the Parking Garage Owner would cause irrevenible and substantial damages to the City that would be extremely difficult or impracticable to determine. Accordingly, City shall be entitled to seek an injunction or other equitable relief from a court of competent jurisdiction to enjoin a breach of the provisions of this Section 4. 5. Maintenance of Parking Garage. (a) Maintenance Reguirements. Parking Garage Owner shall, at its sole cost and expense, maintain the Parking Garage (and entrances, exits, elevators, stairs, skybridges, sidewalks, driveways and roadways providing pedestrian and vehicular access to the public and private streets adjoining the Property including, but not limited to the private street that connects Smith and Harrison Streets) in first class order, condition, appearance and wear, in accordance with standards prevailing in first class mixed-use developments including multilevel structured parking garages and the multilevel structured parking garage owned, operated and maintained by the Central Puget Sound Regional Transit Authority in connection with its Kent commuter rail station. The Parking Garage Owner shall prepare and submit to the Committee for its review and approval an annual operating budget and detailed operating agreement for the Parking Garage which shall comply with all Requirements of Law and this Easement Agreement. The initial operating agreement for the Parking Garage shall be agreed to by the Developer, the City and Second Avenue prior to November 15, 2005. As part of such maintenance obligation, Parking Garage Owner shall take all action and shall perform all interior and exterior, structural and non-structural, foreseen and unforeseen, ordinary and extraordinary, maintenance and repairs (including, without limitation, all necessary repair, replacements and other work required following any damage, destruction or condemnation of the Parking Garage) or any work required under Requirements of Law, as a condition to the continued use of the Parking Garage for parking purposes or any work required by any order of any court or other governmental agency with jurisdiction over the Parking Garage required to keep the Parking Garage (and entrances, exits, elevators, stairs, skybridges, sidewalks, driveways and roadways providing pedestrian and vehicular access to the public and private streets adjoining the Property, including, but not limited to the private street that connects Smith and Harrison Streets) in first class order, condition and repair. All repairs, replacements and renewals shall be substantially equal or superior in quality and class to the original construction work. It is expressly agreed that City shall not be required to maintain, repair or rebuild all or any part of the Parking Garage and shall have no obligation to maintain all of any part of the Parking Garage. (b) City Maintenance Notices. City shall provide the Parking Garage Owner written notice of any maintenance or repair required to the Parking Garage (or any entrance, exit, elevator, stair, skybridge, sidewalk, driveway or roadway providing pedestrian and vehicular access to the public and private streets adjoining the Property, including, but not limited to the private street that connects Smith and Harrison Streets) or of any default by Parking Garage Owner in the performance of its obligations under this Section 5. Parking Garage Owner shall have five (5) business days after receipt of notice F-9 P \ORSIDRS2UB 09/14105 from City detailing the need for maintenance or repair, to commence to perform its obligations under this Easement Agreement or, in the event Parking Garage Owner cannot commence performance within stich five (5) business day period, deliver a detailed maintenance and/or repair plan within such time period together with a schedule for commencement and completion of the maintenance or repair work. Notwithstanding the foregoing, Parking Garage Owner shall perform its obligations as soon as possible if the nature of the problem presents a hazard, threat to public safety or emergency. Parking Garage Owner shall notify City at least thirty (30) days in advance of any temporary closure of all or any portion of the Parking Garage in connection with normal maintenance and in all other cases as soon as Parking Garage Owner becomes aware of the need for temporary closure of the Parking Garage in whole or in part. All work shall be scheduled and conducted in a manner to minimize closure of the Parking Garage or unavailability of the Exclusive Public Parking Stalls for parking by members of the general public, in whole or in part, and to the greatest extent practicable all work shall be conducted between the hours of 5:00p.m. and 5:00a.m. each weekday or on weekends. Parking Garage Owner shall limit access to the Parking Garage and parking stalls by its contractors or maintenance personnel to those portions necessary to conduct repairs, replacement or maintenance of the Parking Garage or the parking stalls and shall cause its contractors and/or maintenance personnel to promptly finish any work for which they entered the Parking Garage. (c) Environmental Condition of the Parking Garage. Parking Garage Owner shall operate and maintain the Parking Garage in compliance with all Environmental Laws and shall not cause or permit any Hazardous Substance to be brought upon, kept or used in or about the Property, the Parking Garage or the Project Springboard Improvements (except for reasonable quantities of Hazardous Substances as may be required to operate and maintain the Project Springboard Improvements and maintain the Parking Garage in accordance with the requirements of this Easement Agreement, which Hazardous Substances shall be stored, used and disposed of in accordance with all Environmental Laws each as defined in Exhibit E hereto). If Parking Garage Owner breaches its obligations under this Easement Agreement or if, as a result of any action or inaction by Parking Garage Owner or any of its agents, employees, invitees, contractors or subcontractors, or as a result of its maintenance of the Parking Garage, there are Hazardous Substances in, on, about or under the Property, the Parking Garage or the Project Springboard Improvements in excess of the quantities permitted under applicable Environmental Laws, Parking Garage Owner shall, at its sole cost and expense, perform all Remedial Work (as defined in Exhibit E) to the Property, the Parking Garage and/or Project Springboard Improvements necessary to comply with then applicable Environmental Laws. (d) Alterations and Additions. Parking Garage Owner shall have the right at any time and from time to time to make renovations, alterations and additions to the Parking Garage or any part thereof; provided, however that any such change, renovation, alteration or addition: F-10 P \ORSIDRS2UB 09/14105 (i) shall .not violate any term of this Easement Agreement, change the use of the Parking Garage, impair the structural integrity of the Parking Garage or interfere with the right of members of the public to park in the Parking Garage on the terms and conditions set forth in this Easement Agreement; (ii) shall be effected with due diligence in good and workmanlike manner and in compliance with all Requirements of Law and insurance requirements; and (iii) shall be promptly and fully paid for by Parking Garage Owner. (e) On-Going Inspections. On the tenth (lOth) anniversary of this Easement Agreement and every five (5) year interval thereafter (each an "Inspection Date"), Parking Garage Owner shall, following consultation with City, retain an independent qualified construction professional with at least five (5) years of experience inspecting multilevel structured parking structures comparable to the Parking Garage in the greater Seattle metropolitan area mutually acceptable to Parking Garage Owner and the City (the "Inspector'') to conduct a physical inspection of the condition of the Parking Garage (including all major building and utility systems, machinery and equipment, elevators, public lobbies and other common areas). Within thirty (30) days following such inspection, the Inspector shall deliver a copy of its report ("Inspection Report") to Parking Garage Owner and the City including a description of what corrective work, if any, needs to be undertaken to restore the Parking Garage (including all entrances, exits, elevators, stairs, skybridges, sidewalks, driveways and roadways providing pedestrian and vehicular access to the public and private streets adjoining the Property including, but not limited to the private street that connects Smith and Harrison Streets) to first class condition and state of repair (the "Corrective Work''), and a description of what work if any, need to be made to the Parking Garage (or the entrances, exits, elevators, stairs, skybridges, sidewalks, driveways and roadways providing pedestrian and vehicular access to the public and private streets adjoining the Property including, but not limited to the private street that connects Smith and Harrison Streets) in order to maintain the Parking Garage in first class, condition and state of repair (the "Maintenance Work") and a recommended schedule of Corrective Work and Maintenance Work to be performed during the next five (5) year period. Parking Garage Owner shall promptly commence all Corrective Work identified by the Inspector in the Inspection Report and shall diligently and continuously prosecute the Corrective Work to completion. Parking Garage Owner shall provide City with a copy of the Maintenance Work Plan and construction schedule which shall be approved by the City. Parking Garage Owner shall thereafter perform the Maintenance Work recommended by the Inspector in the Inspection Report and shall complete such work in accordance with the schedule set forth in the Maintenance Work Plan. Disputes between Parking Garage Owner and the City regarding the Inspection Report, the Corrective Work Plan or the Maintenance Work Plan shall be referred to an independent F-11 P \ORS\DRS2UB 09114105 mediator for resolution pursuant to the independent dispute mediation process set forth in subsection (f) below. (f) Mediation of Disputes. City and Parking Garage Owner agree to follow the independent dispute mediation process set forth in this Section 5(f) to attempt to resolve disputes regarding the proposed Maintenance Work Plan or Corrective Work Plan in an economic and time efficient manner and without resort to litigation so that the proposed Maintenance Work Plan or Corrective Work Plan (collectively, "Work Plans") conforms to the requirements of this Easement Agreement and any maintenance work or repairs made to the Parking Garage (including all entrances, exits, elevators, stairs, skybridges, sidewalks, driveways and roadways providing pedestrian and vehicular access to the public and private streets adjoining the Property) are made in an cost-efficient, appropriate and timely manner. In the event a dispute arises between City and Parking Garage Owner regarding the proposed Work Plans, either party may, by delivering written notice to the other, refer the matter to an independent construction professional with experience in the management and repair of multilevel structured parking garages comparable to the Parking Garage mutually approved by City and the owner (''Mediator'') whom the City and the Parking Garage Owner have mutually designated as an independent mediator to mediate the dispute regarding the proposed Work Plans. Within the fifteen (15) business day period following receipt of notice referring the matter to Mediator, the City the Parking Garage Owner and the Inspector shall submit all necessary information with respect to the matter as to which there is a dispute to Mediator to make a final recommendation. Mediator shall be entitled to consult independently with any of the parties or such of their respective consultants as Mediator determines necessary in order for it to make a final recommendation as to the matter within five (5) business days after receipt of the above information. Any costs incurred in connection with the mediation of the matter under dispute (other than each party's legal fees), including payment of fees to Mediator, shall be paid by the substantially non-prevailing party. 6. Insurance. (a) Propertv Insurance. So long as this Easement Agreement remains in effect Parking Garage Owner or the condominium association consisting of the owners of the Parking Garage and the Project Springboard Improvements, shall maintain property insurance on the Parking Garage in an amount not less than the full insurable replacement cost of the Parking Garage (exclusive of the cost of excavations, foundations and footings below the lowest basement floor) insuring against loss or damage by fire and such other risks as may be covered from time to time by a "special cause of loss" form of property insurance and specifically against the following perils: fire, windstorm, hail, cyclone, tornado, riots, terrorism, civil commotion, malicious mischief, vandalism, aircraft, vehicle, smoke damage and sprinkler leakage, earthquake and explosion. The Parking Garage Owner or the condominium association, at its option, may obtain such additional coverages or endorsements as the Parking Garage Owner or such condominium association deems appropriate or necessary, including. without limitation, business income and rent loss F-12 P \DRS\DRS2UB 09/14105 insurance, boiler and machinery insurance, flood insurance and other coverages. The Parking Garage Owner or the condominium association may maintain such insurance in whole or in part under blanket policies, so long as that does not reduce the type or amount of coverage required under this Easement Agreement. The cost of such insurance shall be paid by the Parking Garage Owner as part of the operating expenses associated with the Parking Garage to be paid by the Parking Garage Owner. (b) Parking Garage Owner's Commercial Liability Insurance. So long as this Easement Agreement remains in effect, Parking Garage Owner shall obtain and keep in force general commercial liability insurance, on an occurrence basis, insuring Parking Garage Owner and City against claims for personal injury (including, without limitation, bodily injury or death), property damage liability and such other loss or damage from such causes of loss as are embraced by insurance policies of the type now known as "Commercial General Liability Insurance," with a combined single limit of not less than $2,000,000 per occurrence and $3,000,000 in the aggregate (per policy year). Parking Garage Owner shall name City as an additional insured and such owner's policy shall be primary and non-contributory to any coverage maintained by City. (c) Insurance PolicY Requirements. All insurance required under this Easement Agreement shall: (i) be issued by insurance companies authorized to do business in the State of Washington with a rating reasonably satisfactory to Parking Garage Owner and City; (ii) be issued as a primary policy in the case of insurance obtained by the Parking Garage Owner pursuant to Section6(b), and (iii) contain an endorsement requiring thirty (30) days' prior written notice (ten (10) days for non-payment of premiums) from the insurance company to the Parking Garage Owner and City and any additional insured or lender before cancellation or change in the coverage, scope, or amount of any policy. Each policy or a certificate of the policy shall be deposited with the other party on or before the effective date of this Easement Agreement, and as reasonably available upon replacement or renewal of each policy. 7. Indemnification. Parking Garage Owner shall protect, indemnify, defend and hold City harmless from and against any and all claims, debts, causes of action, demands, obligations, losses, damages, liabilities, judgments or expenses (including reasonable attorney's fees and costs with or without trial or on appeal) now or hereafter arising in connection with the design, development, construction, operation, maintenance, repair or management of the Parking Garage or arising from any act or omission of the Parking Garage Owner, its agents and employees (including, but not limited to, liability imposed by law or for breach of any statutory duty or administration rule or regulation, death or injury to any person or destruction, loss or damage to property) and all claims for personal injury or property damage suffered by persons using the Parking Garage. Upon receipt of written notice of any such claim from City, Parking Garage Owner shall defend any such claim at its expense and with counsel reasonably satisfactory to City. This indemnification shall survive the expiration or other termination of this Easement F-13 P IDRSIDRS2UB 09/14105 Agreement and is for the sole benefit of the City and shall not inure to the benefit of any third party. 8. Damage or Destruction to Parking Garage. In the event the Parking Garage shall be damaged or destroyed by fire or other casualty that renders the Parking Garage unusable, the Parking Garage Owner shall, at its sole cost and expense, repair the Parking Garage in full compliance with all legal requirements and to substantially the same condition, appearance, layout, configuration and parking capacity and at least equal value and general utility as nearly as possible to that existing prior to such damage or destruction under then applicable building code, land use, zoning and other legal requirements (collectively, the "Restoration''). This Easement Agreement will remain in full force and effect and the Parking Garage Owner shall commence and complete the Restoration with all commercially reasonable diligence and speed. The Parking Garage Owner shall notify City with the estimated dates of commencement and completion of construction of the Restoration as soon as such information is available. 9. Condemnation of Parking Garage. If all or any portion of the Parking Garage (or the entrances or exits thereto, including but not limited to the private street connecting Smith and Harrison Streets) is damaged or taken under power of eminent domain or sold to a condemning authority in lieu thereof (collectively "Condemnation") the rights and obligations of Parking Garage Owner and City shall be determined as follows: (a) Condemnation of All or Substantially all of the Parking Garage. If there is a taking or damaging of all or any portion of the Parking Garage, by the exercise of any governmental power, whether by legal proceedings or otherwise by a governmental agency with jurisdiction or a transfer by the owner under threat of condemnation or while legal proceedings for condemnation are pending (a "Condemnation'') such that there can be no reasonable use of the Parking Garage by members of the public, then this Easement Agreement shall automatically terminate on the date the condemning authority has the right to possession of the property being condemned. (b) Partial Condemnation. If only a portion of the Parking Garage shall be taken in connection with a Condemnation and the remainder of the Parking Garage not so taken can be made usable in the reasonable judgment of the City and the Parking Garage Owner, then this Easement Agreement shall continue in full force and effect as to the remainder of the Parking Garage, all of the terms and conditions of this Easement Agreement shall continue in full force and effect, there shall be no reduction in the number of Exclusive Parking Stalls and the Parking Garage Owner shall rebuild the remainder of the Parking Garage in accordance with the requirements of Section 8. (c) Condemnation Award. The Parking Garage Owner is entitled to receive and keep all damages, awards or payments resulting from or paid on account of a Condemnation of the Parking Garage in whole or in part. City is entitled to receive and keep all damages, awards or payments resulting from any loss or damage to City's rights F-14 P IDRS\ORS2UB 09114105 under the Easement Agreement, including any award payable in connection with the condemnation of City's easement· rights. City shall file a separate claim with the condemning authority for any loss of or damage to City's rights under this Easement Agreement. In the event the condemning authority does not enter separate awards for the taking of the City's rights and easements under this Easement Agreement on the one hand, and the taking of the Parking Garage on the other hand, or does not allocate the award between the City's rights and easements under this Easement Agreement and the Parking Garage on the other hand, either party shall have the right to request the court for an allocation of the award. 10. Parking Management Committee. A five (5) person parking management committee (the "Committee'') shall be formed within sixty (60) days following the recording of this Easement Agreement. The Committee shall consist of two representatives designated by City, two representatives designated by Parking Garage Owner, and one (1) representative designated by Second Avenue. The chair of the Committee shall be the parking services manager for the Parking Garage Owner or the Parking Garage Owner's designee. The Committee shall meet at least quarterly or as otherwise determined by the Committee. The purpose of the Committee is to provide guidance and direction to the Parking Garage Owner on matters related to Parking Garage operation, including signage, lighting, safety, security devices, scheduling of deliveries to the Project Springboard Improvements or Parking Garage, resolution of parking issues associated with use of the conference center, scheduling of routine and other maintenance, use of the loading dock, traffic circulation, parking enforcement and other matters relating to the Parking Garage. If requested by the Committee, the Parking Garage Owner shall engage an independent nationally recognized manager of parking garages with substantial experience operating multi-level parking garages in mixed use developments comparable to Project Springboard (the "Parking Consultant"), to advise the Parking Garage Owner and the Committee on issues relating to security, safety, utilization of parking spaces in the Parking Garage to maximize capacity and minimize conflict among users, enforcement of Short Term Parking limits, customer satisfaction, and issues relating to on-going operations, maintenance and repair of the Parking Garage. The Parking Garage Owner shall, following consultation with the Committee, adopt the recommendations of the Parking Consultant which do not violate Requirements of Law or the terms and conditions set forth in this Easement Agreement to the extent reasonably feasible. The City shall have the sole right to revise the definition of Short Term Parking, determine the rights of persons to park in the Exclusive Public Parking Stalls and matters affecting the public's rights to park in the Exclusive Public Parking Stalls. Except as expressly provided in this Easement Agreement, the Parking Garage Owner shall make all other operational decisions relating to the Parking Garage subject only to the provisions of this Easement Agreement and applicable law and shall be solely responsible for the enforcement of all parking restrictions set forth in this Easement Agreement or agreed upon by the Committee. The Parking Garage Owner shall consider the advice of the Committee before taking action on the subject about which such advice was given. F-15 P \ORS\DRS2UB 09/14105 11. Parking Garage Owner's Use of Parking Garage. The Parking Garage Owner reserves for itself all rights, associated with its ownership of the Parking Garage, including the right to grant its invitees, tenants and hotel guests of the Project Springboard Improvements the right to park in the Parking Garage so long as such rights do not interfere with the rights granted City under this Easement Agreement. The Parking Garage Owner shall have the right to grant other persons easement rights in, on, under, through and across the Parking Garage so long as such easement rights do not interfere with the rights to park in the Parking Garage set forth in Section 2 of this Easement Agreement. 12. Default and Remedies. (a) Denial of Access. If access to the Parking Garage is denied by the Parking Garage Owner to members of the general public for reasons which City believes are not permitted under this Easement Agreement, City shall provide the Parking Garage Owner with written notice of the actions that it believes constitutes a breach of its parking easement rights under this Easement Agreement. Parking Garage Owner shall have ten (10) days following receipt of written notice in which to restore such access or provide City with notice in writing why it believes its actions are permitted under the terms of this Easement Agreement. In the event Parking Garage Owner has not restored access to members of the general public within ten (10) days following Parking Garage Owner's receipt of written notice, City may petition a court of competent jurisdiction in King County, Washington for entry of an order of specific performance; provided, however, that the foregoing shall not be City's exclusive remedy and City shall be entitled to seek damages or an injunction or other equitable relief from a court of competent jurisdiction. (b) Failure to Perform Other Obligations. In the event the Parking Garage Owner fails to perform its obligation to operate and maintain the Parking Garage in accordance with its duties and obligations under this Easement Agreement and after notice and opportunity to cure, in addition to its rights to seek an order of specific performance or other equitable relief from a court of competent jurisdiction, City shall have the right, at Parking Garage Owner's cost and expense, to take such actions and expend such funds as are reasonably required to operate, maintain and repair the Parking Garage (and entrances, exits, elevators, stairs, skybridges, sidewalks, driveways and roadways providing pedestrian and vehicular access to the public and private streets adjoining the Property) in first class order, condition and repair and otherwise in accordance with the requirements of this Easement Agreement. Any amount so expended by City shall be reimbursed by the Parking Garage Owner promptly after demand together with interest at twelve percent (12%) per annum if not paid in full within thirty (30) days following receipt of an invoice for such expense. City shall have no liability to the Parking Garage Owner as a result of the performance of any such work by City. Nothing in this Easement Agreement shall imply any duty or obligation upon the part of City to do any such work or to make any such repairs and/or maintenance and the performance thereof by City shall not constitute a waiver of the Parking Garage Owner's default in failing to perform the same. F-16 P IDRS\DRS2UB 09114105 (c) Remcmes not Exclusive. The remedies set forth above and elsewhere in this Easement Agreement are not exclusive and City may pursue any other remedies now or hereafter permitted or available to City under law or equity. 13. Payment of Taxes. Liens and Other Charges. Parking Garage Owner will pay or cause to be paid when due: (a) All taxes, assessments and other governmental or public charges affecting the Property or the Parking Garage and any accrued interest, costs and/or penalties thereon and upon request by City will submit receipts therefore to City promptly following payment; (b) All premiums for all insurance policies required to be maintained in full force and effect pursuant to the provisions of Section 6; (c) All encumbrances (including any debt secured by deeds of trust), ground rents, liens and/or charges, with interest which are filed against the Property and/or the Parking Garage and all costs and expenses related thereto; and (d) All charges for utilities or services, including, but not limited to, electricity, gas, water, sewer, garbage collection and telephone service; (e) Should Parking Garage Owner fail to make any payment or do any act as provided in this Section 13, then City shall have the right, but not the obligation and upon reasonable prior notice to or demand upon Parking Garage Owner (except for monetary defaults and defaults in the payment of taxes, assessments or other governmental charges or insurance for which no prior written notice or demand shall be required) and without releasing Parking Garage Owner from any obligation therefor, make or do the same in such manner and to such extent as it may deem necessary to protect its rights under this Easement Agreement, including the right to enter upon the Property and the Parking Garage for such purpose, commence, appear in and defend any action or proceeding purporting to affect its rights under this Easement Agreement; pay, purchase, contest or compromise any encumbrance, charge or lien and in exercising any such power, incur any liability, expend reasonable amounts necessary therefore, including cost of evidence of title, employ an attorney and pay said attorney's reasonable fees. Any amount so expended by City shall be reimbursed by Parking Garage Owner promptly after demand together with interest at the rate of twelve percent (12%) per annum if not paid in full within thirty (30) days following receipt of an invoice detailing such expense. 14. Notices. All notices, demands, requests, consents and approvals which may, or are required to be given by any party shall be in writing and shall be in writing and shall be validly given or made to the other parties ·if delivered either personally, or by overnight delivery service of recognized standing, or by United States Mail, certified, registered, or express mail with postage prepaid, or by facsimile transmission with electronic confirmation of receipt. If such notice is personally delivered F-17 P IORSIORS2UB 09114105 or delivered by facsimile during ~al business hours, it shall be conclusively deemed given at the time of such delivery.'' If such notice is delivered by facsimile after normal business hours or is delivered by overnight delivery service, it shall be deemed given one (1) business day after receipt thereof (if sent by facsimile transmission) or one (1) business day after the deposit thereof with such delivery service. If such notice is mailed as provided herein, notice shall be deemed given three (3) business days after the deposit thereof in the United States Mail. Each such notice shall be deemed given only if properly addressed to the party to whom such notice is to be given as follows: To City: City of Kent 220 Fourth Avenue Kent, Washington 98030 Attn: City Clerk Fax: (253) 856-6725 With a copy to: City of Kent 220 Fourth Avenue Kent, Washington 98030 Attn: City Attorney Fax: (253) 856-6770 To Developer: Springboard Holdings, L.L.C. 1627 East Sammamish Place SE Sammamish, Washington 98075 Attn: Ben Errez Fax: (425) 369-9949 With a copy to: Plan B Development, L.L.C. 12889 Casino Drive Anacortes, Washington 98221 Fax: (425) 936-7329 With a copy to: Chairman Swinomish Indian Tribal Community P.O. Box 817 LaConner, Washington 98257 Fax: (360) 466-5309 To Second Avenue: Second Avenue Real Estate LLC 1301 Fifth A venue, Suite 2600 Seattle, Washington 98101 Attn: Ben Porter Fax: (206) 587-0579 F-18 P \DRS\DRS2UB 09/14105 Any party hereto may chqe its address for the purpose of receiving notices as herein provided by a written notice given in the manner aforesaid to the other parties hereto. 15. Miscellaneous. (a) Captions. The captions and paragraph headings contained in this Easement Agreement are for convenience of reference only and in no way limit, describe, extend or define the scope or intent of this Easement Agreement, nor the intent of any of the provisions hereof. (b) Amendments; Waivers. No modification or amendment of this Easement Agreement may be made except by written agreement or as otherwise may be provided in this Easement Agreement. No failure by City or the Parking Garage Owner to insist upon the strict performance of any covenant, duty, agreement or condition of this Easement Agreement or to exercise any right or remedy consequent upon a breach thereof shall constitute a waiver of any such breach or any other covenant, agreement, term or condition. Any party hereto, by notice and only by notice as provided in Section 14 of this Easement Agreement may, but shall be under no obligation to, waive any of its rights or any conditions to its obligations hereunder, or any duty, obligation or covenant of any other party hereto. No waiver shall affect or alter this Easement Agreement and each and every covenant, agreement, term and condition of this Easement Agreement shall continue in full force and effect with respect to any other then existing or subsequent breach thereof. (c) Merger of Prior Agreements. This Easement Agreement and the Replacement Parking Agreement and exhibits hereto and thereto constitute the entire agreement between the parties with respect to the parking easements intended to be granted by Developer in favor of City as contemplated by Section 3.4 of the Replacement Parking Agreement and supersedes all prior and contemporaneous agreements and understandings between the parties hereto relating to the subject matter hereof. (d) No Partnership or Joint Venture. It is not intended by this Easement Agreement to, and nothing contained in this Easement Agreement shall, create any partnership, joint venture or other arrangement between the Parking Garage Owner, Second A venue and City except that of parties to an easement. No term or provision of this Easement 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. (e) Termination of Easements. The easements granted in favor of City under this easement are perpetual, and can be terminated only by an agreement executed in writing by City and the Parking Garage Owner which termination agreement is thereafter recorded in the real property records. F-19 P IDRS\DRS2UB 09114105 (f) Time is of the Essence. Time is hereby expressly declared to be of the essence of this Easement Agreement and of each and every term, covenants, agreement condition and provision hereof. (g) Burden and Benefit. The easements granted under this Easement Agreement run with the land and the rights, duties, covenants, restrictions, agreements, limitations and obligations herein created shall constitute covenants running with the land, shall burden the Property and the Parking Garage, and all such easements, covenants, restrictions, agreements, limitations and obligations contained herein shall be binding upon and inure to the benefit of the successors and permitted assigns of the respective parties hereto. Developer agrees that City may transfer its rights under this Easement Agreement whether voluntarily, involuntarily, by operation of law or otherwise, to any city, county, governmental subdivision or agency or other municipal corporation. (h) Neutral Authorship. In connection with the execution and delivery of this Easement Agreement, each party has been represented by counsel. Each of the provisions of this Easement Agreement has been reviewed and negotiated, and represents the combined work product of both parties hereto. The language in all parts of this Easement Agreement shall be construed as a whole according to its fair meeting. No presumption or other rules of construction which would interpret the provisions of this Easement Agreement in favor of or against the party preparing the same shall be applicable in connection with the construction or interpretation of any of the provisions of this Easement Agreement. (i) Non Waiyer of Governmental Rights. Nothing contained in this Easement Agreement shall require City to take any discretionary action relating to development of the improvements to be constructed on the Property as part of Project Springboard, including, but not limited to, zoning and land use decisions, permitting, or any other governmental approvals or enforcement of fire or building codes or other Requirements of Law applicable to the Parking Garage. G) Priori tv of Easements granted under this Ea§ement Agreement. The public parking and other easements granted under this Easement Agreement shall have priority over any and all liens, encumbrances, leases, subleases, or other interests in the Parking Garage, including, but not limited to any condominium declaration which may be recorded against the Property. The Parking Garage Owner shall, at its sole cost and expense, obtain any and all consents and/or subordinations of other interests in the Property or the Parking Garage, including the subordination of the rights of owners under any condominium declaration, the subordination of the rights of any mortgagees, lessees, sublessees, successors and assigns as may be necessary to assure the City its rights under this Easement Agreement are and remain free and clear of all liens, exceptions, encumbrances or other interests affecting the rights of the public to park in the Parking Garage or the rights of the City under this Easement Agreement. F-20 P IORSIORS2UB 09/14105 (k) Attorneys' fees. Each party shall be responsible for payment of the legal fees of its counsel in the event of any litigation. mediation, arbitration or other proceeding brought to enforce or interpret or otherwise arising out of this Easement Agreement. (1) Governing Law. This Easement Agreement shall be governed by and construed and enforced in accordance with the laws of the State of Washington. In the event of any litigation to enforce or interpret the rights, duties and obligations of the parties set forth in this Easement Agreement, venue of any such legal action shall lie exclusively in King County Superior Court and the parties waive the right to file suit elsewhere. IN WITNESS WHEREOF, Developer, Second Avenue and City have executed this Easement Agreement as of the date and year first set forth above. DATED this __ day of ___ __, 2006. SECOND A VENUE: SECOND AVENUE REAL ESTATE LLC, a Washington limited liability company By: Name: Title: Approved as to Form: City Attorney DEVELOPER: SPRINGBOARD HOLDINGS, L.L.C., a Washington limited liability company By: _________________ _ Name:---------- Title:--------------- CITY: CITY OF KENT, a Washington municipal corporation By: ______________ ___ Name: ____________ _ Title: ------------------ F-21 P IDRS\ORS2UB 09114105 STATE OF WASHINGTON) ) ss. COUNTY OF KING ) I certify that I know or have satisfactory evidence that-------,---- is the person who appeared before me, and said person acknowledged that he signed this instrument, and on oath stated that he was authorized to execute the instrument as the of SPRINGBOARD HOLDINGS, L.L.C., a Washington limited liability company, and acknowledged it to be the free and voluntary act of said SPRINGBOARD HOLDINGS, L.L.C., for the uses and purposes mentioned in the instrument. DATED: ______________ _ STATE OF WASHINGTON ) ) ss. COUNTY OF KING ) NOTARY PUBLIC in and for the State of Washington residing at----------PrintNmne: _________________ ___ My commission expires: --------------- I certify that I know or have satisfactory evidence that------------- is the person who appeared before me, and said person acknowledged that he signed this instrument, and on oath stated that he was authorized to execute the instrument as the -:-:----:--:-:-------of SECOND AVENUE REAL ESTATE, LLC, a Washington limited liability company, and acknowledged it to be the free and voluntary act of said SECOND AVENUE REAL ESTATE, LLC, for the uses and purposes mentioned in the instrument. DATED: _______________ . NOTARY PUBLIC in and for the State of Washington residing at---------------- PrintNmne:~--~--------------- My commission expires: -------------- F-22 P \DRSIORS2UB 09114105 STATE OF WASHINGTON ) ) ss. COUNTY OF KING ) I certify that I know or have satisfactory evidence that---------- and are the persons who appeared before me and said persons acknowledged that they signed this instrument, and on oath stated that they were authorized to execute the instrument as the and ---------of CITY OF KENT, a Washington municipal corporation, acknowledged it to be the free and voluntary act and deed of said corporation for the uses and purposes mentioned in the instrument. DATED: ______________ __ NOTARY PUBLIC in and for the State of Washington residing at. _________ _ PrintNrune: _________________ ___ My commission expires:----------- F-23 P IORSIDRS2UB 09114105 EXHIBIT A Legal Description of Parking Garage [To be provided by Title Company prior to Closing.] F-A-1 P IDRS\DR52UB 09114/05 EXHIBITB Map ofParking Garage [To be provided by Developer and approved by City prior to November 15, 2005.] F-B-1 P IDRSIDRS2UB 09114105 EXH1BITC Definition of Operating Expenses Operating Expenses include all costs incurred by Parking Garage Owner either directly or through a parking operator, parking lessee or property manager in connection with the ownership, use, operation, management, maintenance or repair of the Parking Garage (and entrances, exits, elevators, stairs, skybridges, sidewalks, driveways and roadways providing pedestrian and vehicular access to the public and private streets adjoining the Property including, but not limited to the private street that connects Smith and Harrison Streets) and the restrooms located near the spa facing the Town Square Public Plaza constructed as part of Project Springboard. Operating Expenses include, but are not limited to, the following: All utility services provided to the Parking Garage and restrooms; all permits, licenses and certificates necessary to operate, manage and maintain the Parking Garage and any building elevators; all property, liability and other insurance premiums applicable to the Parking Garage including any deductible cost the Parking Garage Owner incurs in connection with any covered loss; worker's compensation insurance; the purchase or rental of supplies, tools, equipment and materials used in connection with the ownership, use, operation, management, maintenance, repair or restoration of the Parking Garage; expenses incurred in order to comply with any laws, regulations or governmental requirements of any kind; fees, if any, paid to parking operators, parking lessees or other property management companies; wages, salaries and other compensation and benefits for all persons engaged in connection with the repair, maintenance, restoration or operation of the Parking Garage, including employer's Social Security taxes, unemployment taxes or insurance, and any other taxes which may be levied on such wages, salaries, compensation and benefits; all Property Taxes (defined below); all operating costs of the Parking Garage and all Parking Garage systems and their equipment and component services, including, but not limited to, janitorial service, trash removal, lighting, security, operation and maintenance of elevators, stairs, skybridges, sidewalks, walkways, driveways, trash removal, cleaning and maintenance, drainage facilities and curbs, including resurfacing, repaving and re-striping of parking facilities, roof maintenance, repair and replacement, maintenance and repair of the Parking Garage; removal of ice and snow; and any service or maintenance contracts related to such operation, repair, maintenance and replacement and reasonable reserves for periodic maintenance and repair. "Property Taxes" means all federal, state, county or local governmental or municipal taxes, assessments, levies, fees, charges or other impositions of every kind and nature levied against the Parking Garage including, without limitation, real and personal property taxes, general and special assessments, transit taxes, water and sewer rent or other similar taxes, fees or changes in taxes assessed in lieu of any of the foregoing excluding inheritance taxes. The parties agree that Operating Expenses include the cost of acquisition, installation, operation, maintenance, upgrade or replacement of parking security and access systems. F-C-1 P IORSIORS2UB 09114105 _.,.., -~~ ~'!-!-~'4~'- EXHIBITD Parking Garage Rules All persons using the Parking Garage shall comply with the following rules: (1) Cars must be parked entirely within the stall lines painted on the floor, and only small cars may be parked in areas reserved for small cars. (2) All directional signs and arrows must be observed. (3) The speed limit is 5 miles per hour. (4) Spaces reserved for disabled parking must be used only by vehicles properly designated. (5) Parking is prohibited in all areas not expressly designated for parking, including without limitation: (a) areas not striped for parking; (b) aisles; (c) where "no parking" signs are posted; (d) ramps; and (e) loading zones. (6) Parking stickers, key-cards or any other devices or forms of identification for entry supplied by Parking Garage Owner shall remain the property of Parking Garage Owner. If parking stickers, key cards or other parking control devices are issued, they must be displayed as requested and not mutilated in any manner. The serial number of the parking identification device may not be obliterated. Devices are not transferable and any device in the possession of an unauthorized holder will be void. The use of parking stickers, key cards or other parking control devices may be required for persons using Shared Parking Stalls in excess of the applicable Short Term Parking limit. (7) Every parker is required to park and lock his or her own car. (8) Loss or theft of parking identification, key-cards or other such devices must be reported to Parking Garage Owner immediately. Any parking devices reported lost or stolen that are found on any unauthorized car will be confiscated and the illegal holder will be subject to prosecution. Lost or stolen devices should be reported to the Parking Garage Owner immediately. F-D-1 P IDRSIORS2UB 09/14105 (9) Washing, waxing. cleaning or servicing (except in an emergency) of any vehicle in the Parking Garage is prohibited. Parking spaces may be used only for parking automobiles or motorcycles. (1 0) No signs, banners or temporary signs shall be posted or placed within the Parking Garage (other than directional signs). (11) There shall be no sales conducted within the Parking Garage and no kiosks, pushcarts, advertisements or other merchandising units or obstructions placed in the Parking Garage. (12) No person shall use the Parking Garage for any illegal or immoral purpose nor shall any person allow the use, sale or distribution of any alcoholic or intoxicating beverages or controlled or illegal drugs or substances within the Parking Garage. (13) No person shall·use or permit the use of any part of the Parking Garage for the storage, handling, transportation, disposal or use of any hazardous materials or toxic substances except in strict compliance with all applicable laws. (14) Parking Garage Owner shall post copies of the Parking Garage Rules at all entrances and exits to the Parking Garage. (15) Parking Garage Owner may deny access to persons who repeatedly violate these Parking Garage Rules. Parking Garage Owner may tow vehicles at the owner's expense which are parked illegally, parked in a posted "no parking area" or block access to any entrance, exit, ramp or loading dock. (16) Parking Garage Owner reserve the right to change these Parking Garage Rules from time to time, so long as such Parking Rules do not violate any of the terms or conditions of the Easement Agreement.· F-D-2 P \ORSIDRS2UB 09114/05 .EXHJBITE Definitions For the purposes of this Easement Agreement, the following terms shall have the following meanings: "Hazardous Substances" shall include pollutants or substances defined as "hazardous waste," "hazardous substances," "hazardous materials," ''pollutants," "contaminants" or ''toxic substances" in the Comprehensive Environmental Response Compensation and Liability Act of 1980, 42 U.S.C. § 9601 et ~· ("CERCLA''), as amended by the Superfund Amendments and Reauthorization Act of 1986 (PL 99-499) ("SARA"); the Hazardous Materials Transportation Act, 49 U.S.C. Section 1801, et ~.;the Toxic Substance Control Act, 15 U.S.C. Section 2601, et ~.;the Resource Conservation and Recovery Act of 1976, as amended, 42 U.S.C. Section 6901 et ~· ("RCRA"); the Clean Water Act, 33 U.S. C. Section 1251 et ~.;the Washington State Environmental Policy Act, RCW 43.21 et ~.;the Water Pollutlon Control Act, RCW 90.48.010 et ~.;the Hazardous Waste Management Statute, RCW 70.105 et ~.; the Washington Toxic Substance Control Act, RCW 70.1 05B et ~.; and the Model Toxics Control Act, RCW 70.1050 et ~.; and in the rules or regulations adopted and guidelines promulgated pursuant to said laws and any material, waste or substance which is asbestos, petroleum, polychlorinated biphenyls, flammable explosives, radioactive materials, lead or lead-based paint, radon gas, coal combustion byproducts, urea formaldehyde foam insulation, toxic mold, or other substances which are deemed dangerous or injurious to human health. ''Release" shall mean releasing, spilling, leaking, pumping, pouring, flooding, emitting, emptying, discharging, injecting, escaping, leaching, disposing or dumping Hazardous Substances in, on, under, about or around the Property or the Parking Garage or in or into the air, soil, surface water or groundwater in, on, about or under the Property or the Parking Garage including the migration of Hazardous Substances to or from the Parking Garage and adjoining property. "Environmental Law or Laws" means, as amended from time to time, the Federal Resource Conservation and Recovery Act of 1976, 42 U.S.C. Section 6901 et seq., Federal Comprehensive Environmental Response, Compensation, and Liability Act of 1980, 42 U.S.C. Section 9601 et seq., Federal Hazardous Materials Transportation Control Act of 1980, 42 U.S.C. Section 1801 et seq., Federal Clean Air Act, 42 U.S.C. Section 7401 et seq., Federal Water Pollution Control Act, Federal Water Act of 1977, 93 U.S.C. Section 1251 et seq., Federal Insecticide, Fungicide and Rodenticide Act, Federal Pesticide Act of 1978, 7 U.S.C. Section 136 et seq., Federal Toxic Substances Control Act, 15 U.S.C. Section 2601 et seq., Federal Safe Drinking Water Act, 42 U.S.C. Section 300f et seq., Washington Water Pollution Control Act, RCW Chapter 90.48, Washington Clean Air Act, RCW Chapter 70.94, Washington Solid Waste Management Recovery and Recycling Act, RCW Chapter 70.95, Washington Hazardous Waste Management Act, RCW Chapter 70.105, Washington F-F-1 P \DRS\DRS2UB 09114105 Hazardous Waste Fees Act, RCW chapter 70.95E, Washington Model Toxics Control Act, RCW Chapter 70.1050, Washington Nuclear Energy and Radiation Act, RCW Chapter 70.98, Washington Radioactive Waste Storage and Transportation Act, RCW Chapter 70.99, Washington Underground Petroleum Storage Tanks Act, RCW Chapter 70.148, and any regulations promulgated thereunder from time to time. "Remedial Work" means all activities performed in connection with the investigation, assessment, cleanup, removal, mitigation, monitoring or containment of Hazardous Substances in, on, about or under the Property, the Parking Garage, or the Project Springboard Improvements (collectively, the "Affected Property'') or any portion thereof to meet the requirements of any Environmental Laws (including common law) relating to the cleanup or remediation of Hazardous Substances (in light of the reasonably intended use of the Affected Property or any portion thereof at the time the Remedial Work commences) or as ordered by any court or any other federal or state governmental agency. Remedial Work includes all costs reasonably necessary to comply with then applicable Environmental Laws in connection with the presence, suspected presence, release or suspected release of a Hazardous Substance in or into the air, soil, groundwater, surface water or soil vapor, at, on or within the Affected Property or any portion thereof. The term "Remedial Work" also includes the defense or prosecution of any proceedings before a federal or state court, administrative judge or tribunal or federal or state governmental agency, and any and all negotiations with any federal or state governmental agency or its employees or consultants, relating to the foregoing activities and any fines or penalties assessed against the Parking Garage Owner or City, as applicable, in connection therewith. F-F-2 P \DRSIDRS2UB 09/14105 AFTER RECORDING RETURN TO PRESTON GATES & ELLIS LLP 925 Fourth Avenue, Suite 2900 Seattle, WA 98104-1158 Attention: Diane R. Stokke, Esq. Exhibit G Citv Mortgage DEED OF TRUST, SECURITY AGREEMENT, ASSIGNMENT OF LEASES AND RENTS AND FIXTURE FILING GRANTOR: SPRINGBOARD HOLDINGS L.L.C., a Washington limited liability company GRANTEES: Legal Description: Abbreviated legal: Additional legal on Exhibit A Assessor's Tax Parcel ID No(s): (1) CITY OF KENT, a Washington municipal corporation (Beneficiary) (2) WASHINGTON ADMINISTRATIVE SERVICES, INC. (Trustee) G-1 P \DRSIDRS2UB 9114105 ARTICLE I COVENANTS TABLE OF CONTENTS 1.01. Performance of Replacement Parking Agreement and Deed of Trust .......... 7 1.02. Warranty ofTitle ........................................................................................... 7 1.03. Tax Deposits [Intentionally Deleted] ............................................................ 8 1.04. Taxes, Liens and Other Charges ................................................................... 8 1.05. [Intentionally Deleted] .................................................................................. 9 1.06. lnsurance ....................................................................................................... 9 1.07. Restoration .................................................................................................. 11 1.08. Condemnation ............................................................................................. 13 1.09. Care ofthe Property .................................................................................... 13 1.10. Further Assurances ...................................................................................... 14 1.11. Leases and Other Agreements Affecting the Property ................................ 14 1.12. Expenses ...................................................................................................... 15 1.13. Inspection of Property ................................................................................. 15 1.14. Performance by Grantor .............................................................................. 15 1.15. Assignment of Rents ................................................................................... 16 1.16. Collection ofRents ...................................................................................... 16 1.17. Suits to Protect Property ............................................................................. 17 1.18. Beneficiary's Right to Defend Action and Cure Certain Defaults .............. 17 ARTICLETI DEFAULTS AND REMEDIES 2.01. Events ofDefault. ........................................................................................ 18 2.02. Discontinuance ofProceedings ................................................................... 20 2.03. Beneficiary Statement ................................................................................. 20 2.04. Remedies Upon Default .............................................................................. 20 2.05. Foreclosure Sale .......................................................................................... 21 2.06. Sale of Property Pursuant to a Foreclosure ................................................. 22 2.07. Appointment of Receiver ............................................................................ 22 ARTICLE III GENERAL COVENANTS 3.01. No Waiver ................................................................................................... 22 3.02. Remedies Cumulative ................................................................................. 22 3.03. Plats, Easements and Other Agreements ..................................................... 22 3.04. Recordation ................................................................................................. 23 3.05. Substitution of Trustee ................................................................................ 23 3.06. Notices ......................................................................................................... 23 G-2 P"\ORSIDRS2UB 9/14105 3.07. Heirs and Assigns; Tennino1ogy ................................................................. 24 3.08. Severability ................................................................................................. 24 3.09. Time is of the Essence ................................................................................. 25 3.10. Captions ...................................................................................................... 25 3.11. Irrevocable Trust ......................................................................................... 25 3.12. Conveyance ofProperty; Change of0wnership ......................................... 25 3.13. Secondary Financing ................................................................................... 25 3.14. Effect of Security Agreement. ..................................................................... 26 3.15. Covenants Regarding Environmental Compliance ..................................... 28 3.16. Non-Agricultural Use .................................................................................. 29 3.17. Commercial Purposes; Time ofEssence ..................................................... 29 3.18. Washington State Law Govems .................................................................. 30 Exhibit A Legal Description G-3 P \DRS\DRS2UB 9114/05 DEED OF TRUST, SECURITY AGREEMENT, ASSIGNMENT OF LEA$ES AND RENTS AND FIXTURE FILING THIS DEED OF TRUST, SECURITY AGREEMENT, ASSIGNMENT OF LEASES AND RENTS AND FIXTURE FILING (''Deed of Trust") is made as of the _day of November, 2005, by SPRINGBOARD HOLDINGS L.L.C., a Washington limited liability company as grantor and debtor ("Grantor"), whose address is 1627 East Sammamish Place SE, Sammamish, Washington 98075, Attention: Ben Errez, to WASHINGTON ADMINISTRATIVE SERVICES, INC., as trustee ("Trustee"), whose address is 925 Fourth Avenue, Suite 2900, Seattle, Washington 98104, for the benefit of CITY OF KENT, a Washington municipal corporation, ("City" or "Beneficiary"), whose address is 220 Fourth Avenue, Kent, Washington 98030, Attention: City Attorney. WITNESSETH GRANTOR HEREBY IRREVOCABLY GRANTS, BARGAINS, SELLS, CONVEYS, TRANSFERS AND ASSIGNS: A. To Trustee, in trust, with power of sale and right of entry and possession, all of its present and future estate, right, title and interest in and to that certain real property located in the County of King, State of Washington, as more particularly described in Exhibit A attached hereto and made a part hereof, including all easements and rights used in connection therewith or as a means of access thereto, together with all right, title and interest that Grantor now has or may hereafter acquire in: 1. All income, rents, royalties, revenue, issues, profits and proceeds from any and all of such real property, subject, however, to the right, power and authority hereinafter conferred upon Beneficiary or reserved to Grantor to collect and apply such income, rents, royalties, revenue, issues, profits and proceeds. 2. All deposits or other security or advance payments, including rental payments, made by or on behalf of Grantor to others with respect to (i) utility service for all or any part of said property or any improvements thereon, (ii) insurance policies relating to said property or any improvements thereon, and all claims or demands relating to insurance, (iii) cleaning, maintenance, repair or similar services for said property or any part thereof or any improvements thereon, and (iv) rental of equipment used in the operation of any part of said property or any improvements thereon. 3. All fixtures now or hereafter affixed to such real property, including all buildings, structures and improvements of every kind and description now or hereafter erected or placed thereon, and any and all machinery, motors, elevators, skybridges, boilers, equipment (including, without limitation, all equipment for the generation or distribution of air, water, heat, electricity, light, fuel or refrigeration or for ventilating or air-conditioning purposes or for sanitary or drainage purposes or for the removal of dust, G-4 P IDRSIORS2UB 9/14105 refuse or garbage), partitions, building service equipment, building materials, supplies, electronic audio/visual equipment, eomputers, software, awnings, carpeting and other floor coverings, lobby furnishings, conduit, wiring, cabling, plumbing, sprinklers and sprinkler equipment, safety systems and equipment, alarms, control devices, security systems, intercoms, any and all trees, plants, shrubs and other landscaping, trash compactors, garbage dumpsters, incinerators and other property of every kind and description now or hereafter placed, attached, affixed or installed in such buildings, structures or improvements, and all replacements, repairs, additions, accessions or substitutions or proceeds thereto or therefor; all of such fixtures, whether now or hereafter placed thereon, being hereby declared to be real property and referred to hereinafter as the "Improvements." 4. All damages, royalties and revenue of every kind, nature and description whatsoever that Grantor may be entitled to receive from any person or entity owning or having or hereafter acquiring a right to the oil, gas or mineral rights and reservations of such real property, with the right in Beneficiary to receive and receipt therefor and apply the same to the indebtedness secured hereby either before or after any default hereunder, and Beneficiary may demand, sue for and recover any such payments but shall not be required so to do. 5. All proceeds and claims arising on account of any damage to or taking of any part thereof, and all causes of action and recoveries for any loss or diminution in the value of such real property or the Improvements. 6. All licenses (including but not limited to any operating licenses or similar matters) contracts, management contracts or agreements, franchise agreements, permits, authorizations or certificates required or used in connection with the ownership of, or the operation or maintenance of, the Improvements. 7. All governmental permits relating to construction, all names under or by which the Improvements or other real property may at any time be operated or known, and all rights to carry on business under any such names or any variant thereof. 8. All of Grantor's rights further to encumber said property for debt. All of the property conveyed or intended to be conveyed to Trustee in Paragraph A. above is hereinafter referred to as the "Real Property." B. To Beneficiary, as secured party, a security interest in any portion of the Real Property owned by Grantor which may be construed to be personal property and in all other personal property of every kind and description, whether now existing or hereafter acquired and owned by Grantor, now or at any time hereafter attached to, erected upon, situated in or upon, forming a part of or appurtenant to and which is used or useful in the construction or operation of or in connection with, or arising from the use or enjoyment of all or any portion of, or from any lease or agreement pertaining to, the Real Property, G-5 P \ORS\DRS2UB 9/14105 including: 1. All water rights appurtenant to the Real Property, all water permits and applications together with all pumping and distribution equipment, plants, pipes and flumes, all shares of stock or other evidence of ownership of any part of the Real Property that is owned by Grantor in common with others, and all documents of membership in any owners' or members' association or similar group having responsibility for managing or operating any part of the Real Property. 2. All plans and specifications prepared for construction of the Improvements and all studies, data and drawings related thereto; and also all contracts and agreements of Grantor relating to the aforesaid plans and specifications or to the aforesaid studies, data and drawings, or to the construction of Improvements. 3. All equipment, machinery, fixtures, inventory, keys and other access devices, plants, decorations, art of any medium, tools, cleaning supplies and equipment, and telephone systems, goods, accounts, investment property, as defined in the Washington Uniform Commercial Code, general intangibles, documents, instruments and chattel paper, and all other personal property of every kind and description. 4. All records and data related to any property herein described, whether in the form of a writing, photographs, microfilm, microfiche, or electronic media, together with all of Grantor's right, title and interest in and to all computer software required to utilize, create, maintain and process any such records or data or electronic media. 5. All substitutions, accessions, additions and replacements to any of the foregoing. 6. All proceeds of any of the foregoing property, including, without limitation, proceeds of any voluntary or involuntary disposition or claim respecting any such property (pursuant to judgment, condemnation award or otherwise) and all goods, documents, general intangibles, chattel paper and accounts, wherever located, acquired with cash proceeds of any of the foregoing or proceeds thereof. All of the property assigned or transferred or intended to be assigned or transferred to Beneficiary in Paragraph B. above is hereinafter referred to as the "Personal Property." All of the Real Property and the Personal Property is referred to herein collectively as the ''Property." TO HAVE AND TO HOLD said Property bargained and described, together with all and singular the lands, tenements, privileges, water rights, hereditaments and appurtenances thereto belonging or in anywise appertaining, and the reversion and reversions, remainder and remainders, rents, issues and profits thereof, and all of the estate, G-6 P IORS\DRS2UB 9114/05 right, title, claim and demands whatsoever of Grantor, either in law or in equity, of, in and to the above-bargained Property forever, as security for the faithful perfonnance of the obligations of Grantor under the Replacement Parking Agreement (defined below) secured hereby and as security for the faithful perfonnance of each and all of the covenants, agreements, tenns and conditions of this Deed of Trust, FOR THE PURPOSE OF SECURING: ONE: Perfonnance of each agreement of Grantor herein contained or contained in any other agreement given by Grantor to Beneficiary, including, without limitation, that certain Replacement Parking Agreement of even date herewith (the "Replacement Parkmg Agreement") executed by Grantor and Beneficiary. TWO: Payment of such sums as Grantor or any successor in ownership hereafter may borrow from Beneficiary when evidenced by note or notes reciting it is secured by this Deed of Trust, payable to Beneficiary or order and made by Grantor or any successor in ownership together with all extensions, renewals, modifications, amendments and replacements thereto. THREE: Payment of all other moneys herein or in the Replacement Parking Agreement agreed or provided to be paid by Grantor and such further sums as may be advanced or loaned by Beneficiary to Grantor pursuant to the tenns hereof. GRANTOR REPRESENTS, ALLEGES, WARRANTS, COVENANTS AND AGREES AS FOLLOWS: ARTICLE I COVENANTS 1.01. Performance ofRCJ,'Ilacement Parking Agreement and Deed of Trust. Grantor will perform and comply with each and every term, covenant and condition hereof, and of the Replacement Parking Agreement. All capitalized terms not otherwise defined herein shall have the definition set forth in the Replacement Parking Agreement. 1.02. Warranty of Title. Grantor represents and warrants that at the time of the delivery of this Deed of Trust, (i) Grantor is lawfully possessed and is the owner in fee simple of the Property; (ii) the Property is free and clear of any deed of trust, mortgage, lien, charge or encumbrance thereon or affecting the title thereto prior to this Deed of Trust, and none will be created by Grantor during the term of this Deed of Trust except upon such terms and conditions as may be satisfactory to Beneficiary; (iii) Grantor has good right to make this Deed of Trust; (iv) Grantor has good and absolute title to all existing Personal Property, and has good right, full power and lawful authority to convey and encumber the same in G-7 P IORSIDRS2UB 9114/05 the manner and form conveyed and encumbered hereby; that the same is free and clear of all liens, charges, and encumbrances whatsoever, including, as to the Personal Property and fixtures, security agreements, conditional sales contracts and anything of a similar nature and none superior to this Deed of Trust will be created or suffered to be created by Grantor; (v) there is no financing statement covering the Property, or any part thereof, on file in any public office; (vi) Grantor will warrant and forever defend the title to the Property against the claims of all person whomsoever; and (vii) there is no action, litigation or proceeding pending or threatened against Grantor or the Property. 1.03. Tax De,nosits. [Intentionally Deleted] 1.04. Taxes. Liens and Other Charges. Grantor will pay when due: (a) All taxes, assessments and other governmental or public charges affecting the Property, including assessments on appurtenant water stock, and any accrued interest, cost and/or penalty thereon and upon request by Beneficiary will submit receipts therefor to Beneficiary promptly following payment; (b) All encumbrances (including any debt secured by deeds of trust), ground rents, liens and/or charges, with interest, on the Property or any part thereof which appear to be prior, superior or on a parity hereto, and all costs and fees related thereto; (c) All charges for utilities or services, including, but not limited to, electricity, gas, sewer and water; (d) All costs, fees and expenses of this Deed of Trust, including cost of evidence of title, Trustee's fees and attorneys' fees in connection with sale pursuant to Paragraph 2.01 (whether completed or not) together with interest from and after ten (10) days following demand for repayment at an interest rate equal to twelve percent (12%) per annum until paid in full, and (e) Grantor may, in good faith, contest, by proper legal proceedings, and at its own expense, the validity or amount of any such tax, assessment or governmental charge, provided that Grantor shall deposit with Beneficiary a sum which shall be at least ten percent (10%) greater than the amount so contested, (unless the contested amount has been paid in full or is not yet due) and also, from time to time, on demand of Beneficiary, such additional sums as may be reasonably required to cover interest or penalties accrued or to accrue on any such item or items, and Beneficiary may upon reasonable notice to Grantor pay such contested item or items out of any sums so deposited in case of undue delay in the prosecution of such proceedings, or if the protection of the Property or of Beneficiary's interest therein shall, in the reasonable judgment of Beneficiary, require such payment. G-8 P IORS\DRS2UB 9114/05 1.05. (Jntentiqpally Deleted]. 1.06. Insurance. (a) Grantor will at all times provide, maintain and keep in force or cause to be provided, maintained or kept in force: (i) Builder's risk insurance insuring against loss or damage from such causes of loss as are embraced by insurance policies of the type now known as "Builder's Risk" property insurance (written on an "all risk" or "open perils" basis), including, without limitation, fire and extended coverage, collapse of the improvements and earthquake coverage to agreed limits, all in form and substance acceptable to Beneficiary and (i) as to property then subject to Restoration (as defined in Section 1.07(b)) or any restoration accomplished in connection with a Condemnation, in an amount not less than the full replacement cost of such property, and (ii) as to any improvements then being constructed, in an amount not less than the completed value on a non reporting form, of the additional improvements then being constructed; provided, however, that such insurance shall be required only during any period of Restoration or any restoration accomplished in connection with a Condemnation, or any period of construction of any improvements; (ii) Policies of insurance insuring the Property against loss or damage by fire and lightning; against loss or damage by other risks embraced by coverage of the type now known as the broad form of extended coverage, including, but not limited to, riot and civil commotion, vandalism and malicious mischief; and against such other risks or hazards as Beneficiary from time to time reasonably may designate in an amount sufficient to prevent Beneficiary or Grantor from becoming a co-insurer under the terms of the applicable policies, but in any event in an amount not less than 100% of the then full replacement cost of the Improvements (exclusive of the cost of excavations, foundations and footings below the lowest basement floor) and Personal Property without deduction for physical depreciation; (iii) Policies of insurance insuring the Property against the loss of "rental value" of any building which constitutes a part of the Improvements on a "rented or vacant basis" arising out of the perils insured against pursuant to subparagraph (a) above in an amount equal to twelve months' gross "rental value" of the Improvements with co- insurance in such percentage as may be acceptable to Beneficiary. "Rental value" as used herein is defined as the sum of (a) the total anticipated gross rental income from tenant occupancy of such buildings, and (b) the amount of all charges which are the legal obligation of tenants and which would otherwise be the obligation of the Grantor, and (c) the fair rental value of any portion of such buildings which are occupied by Grantor; (iv) Flood insurance upon the Property in the event that such insurance is available pursuant to the provisions of the Flood Disaster Protection Act of 1973 or other applicable legislation (Beneficiary reserves the right to require that Grantor G-9 P IDRS\DR52UB 9114/05 secure flood insurance in excess ofthe amount provided by the Flood Disaster Protection Act of 1973 if such insurance is commercially available at a reasonable premium up to the amount provided in Paragraph 1.06(a)(i) hereof); (v) Commercial general liability insurance (full form personal injury and broad form property damage) against claims for personal injury (including, without limitation, bodily injury or death) and property damage liability with a coverage limit acceptable to Beneficiary. Such insurance coverage shall be issued and maintained on an "occurrence" basis. Beneficiary shall be named as an additional insured thereunder; (vi) Such other insurance, and in such amounts, as may from time to time be reasonably required by Beneficiary against the same or other insurable hazards which at the time are commonly insured against in the case of premises similarly situated, due regard being given to the height and type of buildings thereon and their construction, use and occupancy. (b) All policies of insurance required under this Paragraph 1.06 shall be issued by companies approved by Beneficiary, shall be subject to the approval of Beneficiary as to amount, content, form and expiration date, shall contain a Noncontributory Standard Mortgagee Clause and the Lender's Loss Payable Endorsement (Form 438 BFU NS), or their equivalents, in favor of Beneficiary, and shall provide that the proceeds thereof shall be payable to Beneficiary. Beneficiary shall be furnished with the original of each policy or certificates thereof required to be provided by Grantor hereunder, which policy shall provide that it shall not be modified or cancelled without thirty (30) days' written notice to Beneficiary. At least thirty (30) days prior to expiration of any policy required to be provided by Grantor hereunder, Grantor shall furnish Beneficiary appropriate proof of issuance of a policy continuing in force the insurance so expiring. Grantor shall furnish Beneficiary receipts for the payment of premiums on such insurance policies or other evidence of such payment reasonably satisfactory to Beneficiary. In the event that Grantor does not deposit with Beneficiary a new policy of insurance with evidence of payment of premium thereon at least thirty (30) days prior to the expiration of any expiring policy, then Beneficiary may, but shall not be obligated to, procure such insurance and pay the premiums therefor and Grantor agrees to repay to Beneficiary the premiums thereon promptly on demand, together with interest thereon at an interest rate equal to twelve percent (12%) per annum until paid in full. (c) In the event of any loss or damage to the Property, all proceeds of insurance (the "Insurance Proceeds'') shall be payable to Beneficiary, and Grantor hereby authorizes and directs any affected insurance company to make payment of the Insurance Proceeds directly to Beneficiary. The application or release by Beneficiary of any Insurance Proceeds shall not cure or waive any default or notice of default hereunder or invalidate any act done pursuant to such notice. (d) In the event of the foreclosure of this Deed of Trust or other transfer of the title to the Property in extinguishment, in whole or in part, of the indebtedness G-10 P IORSIDRS2UB 9/14/05 secured hereby, all right, title and interest of Grantor in and to any insurance policy, or premiums or payments in satisfdon of claims or any other rights thereunder then in force, shall pass to the purchaser or grantee notwithstanding the amount of any bid at such foreclosure sale. 1.07. Restoration. (a) After the happening of any casualty to the Property whether or not required to be insured against under the policies to be provided by Grantor hereunder, Grantor shall give prompt written notice thereof to Beneficiary generally describing the nature and cause of such casualty and the extent of the damage or destruction to the Property. (b) Grantor hereby assigns to Beneficiary all Insurance Proceeds which Grantor may be entitled to receive. In the event of any damage to or destruction of the Improvements, Grantor shall commence and diligently pursue to completion in accordance with this Section 1.07 the repair, restoration and rebuilding of any portion of the Property that has been partially damaged or destroyed in full compliance with the requirements set forth in the Replacement Parking Agreement and in full compliance with all legal requirements and to the same condition, character and at least equal value and general utility as nearly as possible to that existing prior to such damage or destruction (the "Restoration''), and Beneficiary shall hold and disburse the Insurance Proceeds (less the cost, if any, to Beneficiary of recovering and paying out such proceeds (including, without limitation, attorneys' fees and expenses, adjuster's fees, and fees incurred in Beneficiary's performance of its obligations hereunder)) (the "Net Insurance Proceeds") in the manner hereinafter provided to the Restoration. (c) Prior to disbursement of any Net Insurance Proceeds for any work in connection with the Restoration (the "Work"), Grantor shall deliver or furnish to Beneficiary (i) complete plans and specifications for the Work which (A) have been approved by all governmental authorities whose approval is required, (B) bear the signed approval of an architect satisfactory to Beneficiary (the "Architect") and (C) are accompanied by Architect's signed estimate of the total estimated cost of the Restoration. Such plans and specifications shall be subject to Beneficiary's approval, which approval shall not be unreasonably withheld (the "Approved Plans and Specifications"); (ii) the amount of money which, as determined by Beneficiary, will be sufficient when added to the Net Insurance Proceeds, if any, to pay the entire cost of the Restoration (all money as held by Beneficiary is referred to herein as the "Restoration Funds"); (iii) copies of all permits and approvals required by law in connection with the commencement and conduct of the Restoration; and (iv) a contract for construction executed by Grantor and a contractor satisfactory to Beneficiary (the "Contractor'') in form, scope and substance satisfactory to Beneficiary (including the customary retention) for performance of the Work. (d) After commencing the Work, Grantor shall perform or cause G-11 P \DRS\DRS2UB 9114105 Contractor to perform the Work diligently and in good faith in accordance with the Approved Plans and Specifications approved by Beneficiary. So long as Grantor is not in default under the Replacement Parking Agreement, Beneficiary shall disburse the Restoration Funds in increments to Grantor or as Grantor may direct, from time to time as the Work progresses, to pay (or reimburse Grantor for) the costs of the Restoration, but subject to the following conditions, any of which Beneficiary may waive in its sole discretion: (i) Beneficiary shall make such payments only upon not less than ten (10) days' prior written notice from Grantor to Beneficiary and Grantor's delivery to Beneficiary of (A) Grantor's written request for payment (a "Request for Payment") accompanied by a certificate by Architect in form, scope and substance satisfactory to Beneficiary which states that all of the Work completed to that date has been done in compliance with the Approved Plans and Specifications and in accordance with all provisions of law, that the amount requested has been paid or is then due and payable and is properly a part of the cost of the Restoration and that when added to all sums, if any, previously paid out by Beneficiary, the requested amount does not exceed the value of the Work done to the date of such certificate; (B) evidence satisfactory to Beneficiary that there are no construction or similar liens for labor or material supplied in connection with the Work to date or that any such liens have been adequately provided for to Beneficiary's satisfaction; and (C) evidence satisfactory to Beneficiary that the balance of the Restoration Funds remaining after making the payments shall be sufficient to pay the balance of the cost of the Restoration not completed to date (giving in such reasonable detail as Beneficiary may require an estimate of the cost of such completion). Each Request for Payment shall be accompanied by waivers of liens satisfactory to Beneficiary covering that part of the Work previously paid for, if any, and by a search prepared by a title company or by other evidence satisfactory to Beneficiary that no construction liens or other liens or instruments for the retention of title in respect of any part of the Work have been filed against the Property and not discharged of record and that no encumbrance exists on or affecting the Property other than encumbrances, if any, which are set forth in the title policy issued to Beneficiary insuring the lien of this Deed of Trust; and (ii) Any Request for Payment after the Restoration has been completed shall be accompanied by a copy of any certificate or certificates required by law to render occupancy of the Improvements legal. (e) Upon Beneficiary's receipt of the certificate of occupancy for the Improvements and other customary evidence requested by Beneficiary that the Restoration has been completed and the costs thereof paid in full, and satisfactory evidence that no mechanic's or similar liens for labor or material supplied in connection with the Restoration are outstanding against the Property and Beneficiary's disbursement under the final Request for Payment. Beneficiary shall pay any remaining Restoration Funds then held by Beneficiary to Grantor. G-12 P \DRSIORS2UB 9114/05 1.08. Condemnatj.ml. Should the Property or any part thereof be taken or damaged by reason of any public improvement, condemnation proceeding, or conveyance in lieu thereof, or in any other manner, Beneficiary shall be entitled to all compensation, awards and other payments or relief therefor, and shall be entitled, at its option, to commence, appear in and prosecute in its own name any action or proceeding. Grantor shall have the right, with the prior written consent of the Beneficiary, to make a compromise or settlement in connection with such taking or damage. All such compensation, awards, damages, rights of action and proceeds (the "Condemnation Proceeds") are hereby assigned to Beneficiary, who shall, after deducting therefrom all its reasonable expenses, including attorneys' fees, apply or release the Condemnation Proceeds with the same effect as provided in Paragraph 1.07 above with respect to disposition of insurance proceeds; provided, that if such Condemnation Proceeds are to be utilized for restoration of the Property and there are any excess Condemnation Proceeds after application thereof to the restoration of the Property, Beneficiary shall be entitled to apply such excess as provided in the Replacement Parking Agreement. If the Condemnation Proceeds are not applied to the restoration of the Property, the Condemnation Proceeds shall be paid to Beneficiary as provided in Section 22 of the Replacement Parking Agreement. Grantor agrees to execute such further assignments of the Condemnation Proceeds as Beneficiary may require. 1.09. Care of the Property. Grantor will: (a) Keep the Property in good condition and repair and not commit or permit any waste or deterioration of the Property; (b) Not remove, demolish or substantially alter any portion of the Property, except as approved in writing by Beneficiary and except such alterations as may be required by laws, ordinances or regulations of governmental authorities; (c) Comply with all laws, ordinances, rules, regulations and orders of governmental authorities now or hereafter affecting the Property or requiring any alterations or improvements to be made thereon, and perform all of its obligations under any covenant, condition, restriction or agreement of record affecting the Property; (d) Complete promptly and in good and workmanlike manner any portion of the Property which may be constructed hereafter, and promptly restore in like manner as obligated in Paragraph 1.07, any portion of the Property which may be damaged or destroyed, and pay, when due, all costs incurred and claims for labor performed and materials furnished therefor; (e) Not commit, suffer or permit any act to be done in, upon or to the Property in violation of any law or ordinance or any covenant, condition or restriction G-13 P \DRS\OR52UB 9/14/05 affecting the Property; (f) Do any and all acts which, from the character or use of the Property, may be reasonably necessary to protect and preserve the security of Beneficiary, the specific enumerations herein not excluding the general; (g) Not permit any construction liens against the Property; (h) Not take or permit to be taken any actions that might invalidate any insurance carried on the Property; 1.1 0. Further Assurances. If required by Beneficiary at any time during the term of this Deed of Trust, Grantor will execute, acknowledge and deliver to Beneficiary, in form satisfactory to Beneficiary, such chattel mortgages, security agreements or other similar security instruments, in form and substance satisfactory to Beneficiary, covering all property of any kind whatsoever owned by Grantor or in which Grantor has any interest which, in the sole opinion of Beneficiary, is required to perfect the security interests intended to be created in the real and personal property described in this Deed of Trust or which is essential to the operation of the Real Property covered by this Deed of Trust. Grantor shall further, from time to time, within 15 days after request by Beneficiary, execute, acknowledge and deliver any financing statement, renewal, affidavit, certificate, continuation statement or other document as Beneficiary may request in order to perfect, preserve, continue, extend or maintain the security interest under, and the priority of, this Deed of Trust and the priority of such chattel mortgage or other security instrument as a first lien. Grantor farther agrees to pay to Beneficiary on demand all costs and expenses incurred by Beneficiary in connection with the preparation, execution, recording, filing and refiling of any such instrument or document including the charges for examining title and the attorney's fee for rendering an opinion as to the priority of this Deed of Trust and of such chattel mortgage or other security instrument as a valid first and subsisting lien. However, neither a request so made by Beneficiary nor the failure of Beneficiary to make such request shall be construed as a release of such Property, or any part thereof, from the conveyance of title by this Deed of Trust, it being understood and agreed that this covenant and any such chattel mortgage, security agreement or other similar security instrument, delivered to Beneficiary, are cumulative and given as additional security. Any breach of such security agreement shall constitute an Event of Default under this Deed of Trust. 1.11. Leases and Other Agreements Affecting the Property. (a) Grantor shall not lease all or any portion of the Property or the Improvements without the prior written consent of Beneficiary. (b) Grantor shall at no time file or record a Condominium Declaration against the Real Property or permit any part of the Real Property to be converted to, or G-14 P'\DRS\DRS2UB 9/14/05 operated as, a cooperative whereby the tenants or occupants thereof participate in the management or control of the Real Property, as tenants, stockholders or otherwise without the prior written consent of the Beneficiary in accordance with the provisions of the Replacement Parking Agreement. (c) Save and except for taxes and assessments provided to be paid by Grantor as specified in Paragraph 1.04 hereof, Grantor will not create or suffer or permit to be created, subsequent to the date of the execution and delivery of this Deed of Trust, any lien or encumbrance affecting the Real Property except such as have been disclosed to and approved by Beneficiary in writing upon such terms and conditions as may be satisfactory to Beneficiary. 1.12. Expenses. (a) Upon election of either Beneficiary or Trustee so to do, employment of an attorney is hereby authorized and Grantor shall pay all attorneys' fees, costs and expenses, including expenses of retaking, holding, preparing for sale or selling (including cost of evidence or search of title) in connection with any action or actions which may be brought for the foreclosure of this Deed of Trust and/or for possession of the Property and/or for the protection of or the defense of the priority of the lien provided for by this Deed of Trust and/or for the appointment of a receiver and/or for the enforcement of any and all covenants or rights contained in or secured by this Deed of Trust and/or any case or proceeding under Chapters 7, 11, or 13 of the Bankruptcy Code or any successor statute thereto. (b) Grantor will pay immediately following demand all sums expended or expenses incurred by Trustee and/or Beneficiary, including, without limitation, attorneys' fees, under any of the terms of this Deed of Trust, with interest from date of expenditure at an interest rate equal to twelve percent (12%) per annum until paid in full. 1.13. Inspection ofPropertv. Beneficiary is authorized, by itself, its agents, employees or workmen, to enter at any reasonable time upon any part of the Property for the purpose of inspecting the same upon reasonable prior notice (except in the case of an emergency for which no prior notice need be given), and for the purpose of performing any of the acts it is authorized to perform under the terms of this Deed of Trust. Grantor agrees to cooperate with Beneficiary to facilitate such inspections. 1.14. Performance by Grantor. Grantor will faithfully perform each and every covenant to be performed by Grantor under any lien or encumbrance, including, without limiting the generality hereof, mortgages, deeds of trust, leases, declarations or covenants, conditions and/or restrictions and other agreements which affect the Property, in law or in equity, which Beneficiary G-15 P IDRSIDRS2UB 9114105 reasonably believes may be prior or superior to or on a parity with the lien or charge of this Deed of Trust. Grantor shall not.~ without first obtaining Beneficiary's prior written consent, change the general nature of the occupancy or initiate or acquiesce in any zoning reclassification or suffer any act or thing which would impair the security for Grantor's performance of its obligations under the Replacement Parking Agreement or Beneficiary's lien upon the Property. A breach of or a default under any such lien or encumbrance, or a breach of any requirement of this Paragraph 1.14 shall constitute an event of default under this Deed of Trust. 1.15. Assignment of Rents. Grantor hereby absolutely and unconditionally assigns and transfers to Beneficiary all the income, rents, royalties, revenue, issues, profits and proceeds of the Property, whether now due, past due or to become due, and hereby gives to and confers upon Beneficiary the right, power and authority to collect such income, rents, royalties, revenue, issues, profits and proceeds. Grantor irrevocably appoints Beneficiary its true and lawful attorney at the option of Beneficiary at any time to demand, receive and enforce payment, to give receipts, releases and satisfactions, and to sue, either in the name of Grantor or in the name of Beneficiary, for all such income, rents, royalties, revenue, issues, profits and proceeds. It is understood and agreed that neither the foregoing assignment of income, rents, royalties, revenue, issues, profits and proceeds to Beneficiary nor the exercise by Beneficiary of any of its rights or remedies under this Paragraph 1.15 or under Paragraph 2.04 hereof shall be deemed to make Beneficiary a "mortgagee-in-possession" or otherwise responsible or liable in any manner with respect to the Property or the use, occupancy or enjoyment or operation of all or any portion thereof, unless and until Beneficiary, in person or by agent, assumes actual possession thereof; nor shall appointment of a receiver for the Property by any court at the request of Beneficiary or by agreement with Grantor or the entering into possession of the Property or any part thereof by such receiver be deemed to make Beneficiary a "mortgagee-in-possession" or otherwise responsible or liable in any manner with respect to the Property or the use, occupancy, enjoyment or operation of all or any portion thereof. The foregoing assignment is intended to be specific, perfected and choate upon the recording of this Deed of Trust as provided in RCW 7.28.230(3). 1.16. Collection of Rents. Notwithstanding anything to the contrary contained herein or in the Replacement Parking Agreement secured hereby, so long as there is no Event of Default by Grantor in the payment of any indebtedness secured hereby or in the performance of any obligation, covenant or agreement contained herein, in the Replacement Parking Agreement, or in any other agreement given as security for the performance of Grantor's obligations under the Replacement Parking Agreement, Grantor shall have the right to collect all income, rents, royalties, revenue, issues, profits and proceeds from the Property and to retain, use and enjoy the same. G-16 P.\ORSIDRS2UB 9114105 1.17. Suits to ProtFt Property. Grantor covenants and agrees to appear in and defend any action or proceeding purporting to affect the security of this Deed of Trust, and/or any additional or other security for the obligations secured hereby, the interest of Beneficiary or the rights, powers and/or duties of Trustee hereunder; and to pay all costs and expenses, including cost of evidence of title and attorneys' fees in a reasonable sum, in any action or proceeding in which Beneficiary and/or Trustee may appear or be made a party, including, but not limited to, foreclosure or other proceeding commenced by those claiming a right to any part of the Property under subordinate liens, in any action to partition or condemn all or part of the Property, whether or not pursued to fmal judgment, and in any exercise of the power of sale contained herein, whether or not the sale is actually consummated. 1.18. Beneficiary's Right to Defend Action and Cure Certain Defaults. Beneficiary may appear in and defend any action or proceeding at law or in equity or in bankruptcy purporting to affect the Property or the security hereof, and in such event (except where the purported defect affecting the security hereof arises or results from any act or omission of Beneficiary), Beneficiary shall be allowed and paid all Beneficiary's costs, charges and expenses, including cost of evidence of title and attorneys' fees incurred in such action or proceeding in which Beneficiary may appear. Should Grantor fail to make any payment or to do any act as herein provided, then Beneficiary or Trustee, but without obligation so to do and upon reasonable prior notice to or demand upon Grantor (except for monetary defaults or defaults in the payment of taxes or insurance for which no prior written notice or demand shall be required) and without releasing Grantor from any obligation hereof, may: make or do the same in such manner and to such extent as either may deem necessary to protect the security hereof, Beneficiary or Trustee being authorized to enter upon the Real Property for such purposes; commence, appear in and defend any action or proceeding purporting to affect the security hereof or the rights or powers of Beneficiary or Trustee; pay, purchase, contest or compromise any encumbrance, charge or lien which in the judgment of either appears to be prior or superior hereto; and, in exercising any such power, incur any liability, expend whatever amounts in its absolute discretion it may deem necessary therefor, including cost of evidence of title, employ an attorney, and pay said attorneys' reasonable fees. Grantor hereby agrees to pay immediately following demand, together with interest from and after ten (10) days following demand for payment at an interest rate equal to twelve percent (12%) per annum until paid in full, all of Beneficiary's costs, charges, expenses and accounts referred to above in this Paragraph 1.18, including cost of evidence of title and reasonable attorneys' fees incurred in such action or proceeding in which Beneficiary may appear. All costs, charges and expenses so incurred, together with interest thereon as aforesaid, shall be secured by the lien of this Deed of Trust. G-17 f>IDRSIORS2UB 9114/05 ARTICLE II DEFAULTS AND REMEDWS 2.01. Events of Default. If any of the following events shall occur ("Event or Events of Default"): (a) If Grantor shall fail to perfonn any material obligation under the Replacement Parking Agreement; or (b) If Grantor has abandoned construction of the Parking Garage for a period of twenty (20) consecutive days (except for Unavoidable Delay as defmed in the Replacement Parking Agreement); or (c) If any pennit required for construction of the Parking Garage shall be revoked or canceled; or (d) If Grantor shall have assigned, pledged or encumbered its rights, duties or obligations under the Replacement Parking Agreement in violation of the Replacement Parking Agreement; or (e) If Grantor has not commenced construction of the Parking Garage on or before March 31, 2006; or (t) If Substantial Completion of the Parking Garage has not occurred for any reason except for Unavoidable Delay, on or before September 30, 2006 (the Substantial Completion Date); or (g) If Substantial Completion of the Parking Garage has not occurred for any reason whatsoever including Unavoidable Delay on or before March 31, 2007 (the Outside Completion Date); or (h) Grantor applies for or consents to the appointment of a receiver or trustee for it or any portion of its property, or if such receiver or trustee is appointed for Grantor, or Grantor admits in writing its inability to pay its debts as they become due, or Grantor becomes insolvent, or a petition is filed by or against Grantor, pursuant to any of the provisions of the United States Bankruptcy Code, as amended; or (i) A petition is filed against Grantor pursuant to any of the provisions of the United States Bankruptcy Code, as amended, or there is an attachment or sequestration of any of the property of Grantor and the same is not discharged or bonded within ninety (90) days; or (j) Grantor shall cause or institute or there shall be instituted against Grantor any proceeding for the dissolution or tennination of Grantor; or G-18 P IDRS\ORS2UB 9114105 (k) Any representation or disclosure made to Beneficiary by Grantor proves to be materially false or misleading on the date when such representation or disclosure was made, whether or not that representation or disclosure appears in this Deed of Trust; or (1) The occurrence of any of the events described in Paragraphs 3.12 or 3.13 below; or (m) Any judgment or decree in an amount in excess of $10,000 against the Grantor or against the Property shall remain unpaid, unstayed on appeal, undischarged, unbonded or undismissed for a period of 30 days; then and in any such event, the Beneficiary shall be entitled to exercise all rights, and shall have the benefit of all remedies provided by law or set forth in this Deed of Trust or in the Replacement Parking Agreement. No waiver of Beneficiary of any default on the part of Grantor shall be construed as a waiver of any subsequent default hereunder. In the event of any such Event of Default and upon written request of Beneficiary, Trustee shall sell the Property in accordance with the Deed of Trust Act of the state of Washington (RCW Chapter 61.24 as existing now or hereafter amended) and the Uniform Commercial Code of the state of Washington, where applicable, at public auction to the highest bidder. Any person except Trustee may bid at Trustee's sale. Trustee shall apply the proceeds of the sale as follows: (i) to the expenses of sale, including a reasonable Trustee's fee and attorneys' fee; (ii) to the payment and performance of the obligations set forth in the Replacement Parking Agreement and all other indebtedness secured by this Deed of Trust or any other instrument; (iii) the surplus, if any, shall be distributed in accordance with said Deed of Trust Act. Trustee shall deliver to the purchaser at the sale its deed, without warranty, which shall convey to the purchaser the interest in the property which Grantor had or had the power to convey at the time of its execution of this Deed of Trust and such as it may have acquired thereafter. Trustee's deed shall recite the facts showing that the sale was conducted in compliance with all the requirements of the law and of this Deed of Trust, which recital shall be prima facie evidence of such compliance and conclusive evidence thereof in favor of bona fide purchasers and encumbrances for value. The power of sale conferred by this Deed of Trust and by the Deed of Trust Act of the state of Washington is not an exclusive remedy, and when not exercised Beneficiary may foreclose this Deed of Trust as a mortgage. Trustee is not obligated to notify any party hereto of pending sale under any other deed of trust or of any action or proceeding in which Grantor, Trustee or Beneficiary shall be a party, unless such action or proceeding is brought by Trustee. Beneficiary may proceed as to the Personal Property in accordance with Beneficiary's rights and remedies in respect to the Property or sell the Personal Property. separately and without regard to the remainder of the Property in accordance with Beneficiary's rights and remedies provided by the Washington Uniform Commercial Code G-19 P·IORS\DRS2UB 9114105 as well as other rights and remedies available at law or in equity. 2.02. Discontinuance of Proceedings. Beneficiary, from time to time before the Trustee's sale pursuant to Paragraph 2.01, may rescind any notice of default or notice of sale by executing and delivering to Trustee a written notice of discontinuance of Trustee's sale, which notice, when recorded, shall also constitute a cancellation of any prior notice of default and notice of sale. The exercise by Beneficiary of such right of rescission shall not constitute a waiver of any breach or default then existing or subsequently occurring, or impair the right of Beneficiary to execute and deliver to Trustee, as above provided, other notices of default and notices of sale, nor otherwise affect any provision, covenant or condition of the Replacement Parking Agreement and/or of this Deed of Trust or any of the rights, obligations or remedies of the parties thereunder or hereunder. 2.03. Beneficiary Statement. Trustee, upon presentation to it of an affidavit signed by or on behalf of Beneficiary setting forth any fact or facts showing a default by Grantor under any of the terms or conditions of this Deed of Trust, is authorized to accept as true and conclusive all facts and statements in such affidavit and to act hereunder in complete reliance thereon. Upon written request by Grantor, Beneficiary will confirm the status of Grantor's performance under the Replacement Parking Agreement. 2.04. Remedies Upon Default. Grantor covenants and agrees that, should Grantor fail or refuse to make any payment or do any act which it is obligated hereunder to make or do at the time and in the manner herein provided, then Beneficiary, or Trustee upon written instructions from Beneficiary (the legality thereof to be determined solely by Beneficiary), may, without demand upon Grantor, without releasing Grantor from any obligation hereunder and without waiving its right to declare a default as herein provided, or impairing any declaration of default or election to cause the Property to be sold or any sale proceeding predicated thereon: (a) Make or do the same in such manner and to such extent as either Beneficiary or Trustee may deem necessary to protect the security hereof, Beneficiary and Trustee being authorized to enter upon and take possession of the Property for such purposes, and any sums expended for such purposes shall be secured hereby; (b) Commence, appear in and/or defend any action or proceedings purporting to affect the security hereof, and/or any additional or other security therefor, the interest, rights, powers and/or duties of Trustee and/or Beneficiary hereunder, whether brought by or against Grantor, Trustee or Beneficiary; G-20 P \ORS\DRS2UB 9114106 (c) Pay, purchase, contest or compromise any claim, debt, lien, charge or encumbrance which, in the judgment of either, may affect or appear to affect the security of this Deed of Trust, the interest of Beneficiary or the rights, powers and/or duties of Trustee and/or Beneficiary hereunder, and any sums expended for such purposes shall be secured hereby; and (d) Beneficiary is authorized, either by itself or by its agent to be appointed by it for that purpose or by a receiver appointed by a court of competent jurisdiction, to enter into and upon and take and hold possession of any portion or all of the Property, both real and personal, and exclude Grantor and all other persons therefrom; to operate and manage the Property and rent and lease the same; to perform such reasonable acts of repair or protection as may be reasonably necessary or proper to conserve the value thereof; and collect any and all income, rents, issues, profits and proceeds therefrom, the same being hereby assigned and transferred to Beneficiary, for the benefit and protection of Beneficiary, and from time to time apply and/or accumulate such income, rents, issues, profits and proceeds in such order and manner as Beneficiary or such receiver, in its sole discretion, shall consider advisable, to or upon the following: the expenses of receivership, if any; the proper costs of upkeep, maintenance, repair and/or operation of the Property; the repayment of any sums theretofore or thereafter advanced pursuant to the terms of this Deed of Trust, the taxes and assessments upon the Property then due or next to become due, and/or the amount required to perform Grantor's obligations under the Replacement Parking Agreement. The collection and! or receipt of income, rents, issues, profits and/or proceeds from the Property by Beneficiary, its agent or receiver, after notice of default and notice of sale shall not affect or impair such default or notice of default or notice of sale or any sale proceedings predicated thereon, but such proceedings may be conducted and sale effected notwithstanding the receipt and/or collection of any such income, rents, issues, profits and/or proceeds. Any such income, rents, issues, profits and/or proceeds in the possession of Beneficiary, its agent or receiver, at the time of sale and not theretofore applied as herein provided, shall be applied in the same manner and for the same purposes as the proceeds of the sale. Neither Trustee nor Beneficiary shall be under any obligation to make any of the payments or do any of the acts referred to in this Paragraph 2.04, and any of the actions referred to in this Paragraph 2.04 may be taken by Beneficiary after an Event of Default has occurred irrespective of whether any notice of default or notice of sale has been given hereunder and without regard to the adequacy of the security for the performance of Grantor's obligations under the Replacement Parking Agreement. 2.05. Foreclosure Sale. In the event that this Deed of Trust is foreclosed as a mortgage and the Real Property sold at a foreclosure sale, the purchaser may, during the statutory redemption period, make such repairs or alterations on the Real Property as may be reasonably necessary for the proper operation, care, preservation, protection and insuring thereof. Any P IDRS\DRS2UB 9/14/05 sums so paid, together with interest thereon from the time of such expenditure at an interest rate equal to twelve percent (12%) per annum until paid, shall be added to and become a part of the amount required to be paid for redemption from such sale. 2.06. Sale of Property Pursuant to a Foreclosure. In case of a sale pursuant to a foreclosure of this Deed of Trust, the Property, real, personal or mixed, may be sold as an entirety or in parcels, by one sale or by several sales held at one time or at different times, all as Trustee, in its unrestricted discretion, may elect, and Grantor, for and on behalf of itself and all persons claiming by, through or under Grantor, waives any and all right to have the property and estates comprising the Property marshalled upon any foreclosure sale and agrees that, upon foreclosure, the Property may be sold as an entirety and not in parcels. 2.07. Appointment of Receiver. The holder of this Deed of Trust, separately or in any action to foreclose it, shall be entitled (without regard to the adequacy of any security for said debt) to the appointment of a receiver of the income, rents, issues, profits and proceeds of the Property who shall have, in addition to all the rights and powers customarily given to and exercised by such receiver, all the rights and powers granted to Beneficiary by the covenants contained in Paragraph 2.04 hereof. ARTICLE Til GEWRAL COVENANTS 3.01. No Waiver. No failure by Beneficiary to insist upon strict performance of any term, covenant or condition hereof, nor failure to exercise any right or remedy hereunder, shall constitute a waiver of any such breach of such term, covenant or condition or of the later exercise of such right or remedy. All waivers shall be in writing. 3.02. Remedies Cumulative. No remedy herein conferred upon or reserved to Trustee or Beneficiary is intended to be exclusive of any other remedy herein or by law provided or permitted, but each shall be cumulative and shall be in addition to every other remedy given hereunder or now or hereafter existing at law or in equity or by statute. 3.03. Plats. Easements and Other Agreements. At any time upon written request of Beneficiary, payment of its fees and presentation of this Deed of Trust, (in case of full reconveyance, for cancellation and retention) without affecting the liability of any person for the performance of Grantor's G-22 P \DRSIDRS2UB 9114/05 obligations under the Reimbursement Agreement or the effect of the Deed of Trust upon the remainder of the Property, Trustee may (i) consent to the making of any map or plat of said Real Property; (ii) join in granting any easement or creating any restriction thereon; (iii) join in any subordination or other agreement affecting this Deed of Trust or the lien or charge thereof; or (iv) reconvey, without warranty, all or any part of the Real Property. The grantee in any reconveyance may be described as the "person or persons legally entitled thereto", and the recitals therein of any matters or facts shall be conclusive proof of the truthfulness thereof. Grantor agrees to pay a reasonable Trustee's fee for full or partial reconveyance, together with a recording fee, if Trustee, at its option, elects to record said reconveyance. 3.04. Recordation. Trustee accepts this Trust when this Deed of Trust, duly executed and acknowledged, is made a public record as provided by law. 3.05. Substitution of Trustee. Beneficiary may, from time to time, by a written instrument executed and acknowledged by Beneficiary and recorded in the county or counties where the Property is located, and by otherwise complying with appropriate statutory provisions, substitute a successor or successors for the trustee named herein or acting hereunder. Upon the recording of such appointment in the mortgage records ofthe county or counties in which the Property is situated, the successor trustee shall be vested with all the powers of the original trustee. 3.06. Notices. (a) All notices hereunder shall be deemed to have been duly given if mailed by United States registered or certified mail, with return receipt requested, postage prepaid, to the parties at the following addresses (or at such other addresses as shall be given in writing by any party to the others), and shall be deemed complete upon receipt, refusal of delivery or attempted delivery: To Beneficiary: With a copy to: CityofKent 220 Fourth Avenue Kent, Washington 98030 Attn: City Clerk CityofKent 220 Fourth Avenue Kent, Washington 98030 Attn: City Attorney G-23 P IDRSIDRS2UB 9114105 To Grantor: With a copy to: With a copy to: Springboard Holdings, L.L.C. 1627 East Sammamish Place SE Sammamish, Washington 98075 Attn: Ben Errez Plan B Development, L.L.C. 12889 Casino Drive Anacortes, Washington 98221 Chairman, Swinomish Indian Tribal Community P.O. Box 817 LaConner, Washington 98257 (b) In the event of any strike or occurrence of another similar event which interrupts mail service, notices may be served personally upon an individual, partner or an officer or director of a corporation which is or is part of the party being served hereunder. (c) Grantor requests that a copy of any notice of default and of any notice of sale hereunder be mailed to Grantor at the address set forth above. (d) Unless otherwise provided by applicable law, Trustee shall be under no obligation to notify any party hereto of any action or proceeding of any kind in which Grantor, Beneficiary and/or Trustee shall be a party, unless brought by Trustee, or of any pending sale under any other deed of trust. 3.07. Heirs and Assigns: Terminology. (a) This Deed of Trust applies to, inures to the benefit of, and binds all parties hereto, their heirs, legatees, devisees, administrators, executors, successors and assigns. The term "Grantor'' shall mean both the original Grantor and any subsequent owner or owners of any of the Property. The term "Beneficiary'' shall mean the City and any assignee of the City under the Replacement Parking Agreement, whether or not named as Beneficiary herein. In this Deed of Trust, whenever the context so requires, the masculine gender includes the feminine and/or neuter, and the singular number includes the plural. (b) The term "and/or" as used herein means one or the other or both, or any one or all, or any combination of the things or persons in connection with which the words are used. 3.08. Severability. If any provision hereof should be held unenforceable or void, then such provision G-24 P'\ORSIORS2UB 9114105 shall be deemed separable from the remaining provisions end shall in no way affect the validity of this Deed of Trust. 3.09. Time is of the Essence. Time is of the essence hereof in connection with all obligations of Grantor herein or in the Replacement Parking Agreement. 3.10. Captions. The captions are inserted only as a matter of convenience and for reference, and in no way define, limit or describe the scope or intent of this Deed of Trust nor in any way affect this Deed of Trust. 3 .11. Irrevocable Trust. The Trust created hereby is irrevocable by Grantor unless and until the Property is reconveyed to Grantor as provided herein. 3.12. Conveyance of Property: Change of Ownership. In the event that (i) all or any part of or any interest in the Property shall be sold, transferred, leased, further encumbered, conveyed, or a contract of sale or other conveyance entered into with respect thereto, or (ii) there is any change in the existing ownership interests of the existing members of Plan B Development, L.L. C. ("Plan B"), or (iii) Plan B ceases to have a controlling interest in Grantor, or (iv) Plan B ceases to be the managing member of Grantor, without the prior written consent of Beneficiary, then, Beneficiary may declare an Event of Default by Grantor under the Replacement Parking Agreement and this Deed of Trust. The execution and delivery by the Grantor of any joint venture agreement, partnership agreement, declaration of trust or option agreement whereunder any other person or corporation may become entitled, directly or indirectly, to the possession or enjoyment of the Property, or the income or other benefits derived or to be derived therefrom shall in each case be deemed to be a conveyance or assignment of the Grantor's interest in the Property for the purposes of this section, and shall require the prior written consent of the Beneficiary. 3.13. Secondary Financing. Grantor agrees that should the Property or any part thereof at any time be or become subject to the lien of any other mortgage or deed of trust or subject to any other encumbrance, pledge, hypothecation or security interest (except with the prior written consent of Beneficiary), Beneficiary may declare an Event of Default by Grantor under this Deed of Trust. G-25 P IORS\ORS2UB 9114/05 3 .14. Effect of Security Agreement. This Deed of Trust creates a lien on the Property, and to the extent the Property is not real property under applicable law this Deed of Trust constitutes a security agreement under the Washington Uniform Commercial Code and any other applicable law and is filed as a fixture filing. Grantor authorizes Beneficiary to file financing statements covering all personal property and fixtures described herein. If required by Beneficiary, at any time during the term of this Deed of Trust, Grantor will execute and deliver to Beneficiary, in form satisfactory to Beneficiary, additional security agreements, financing statements and/or other instruments covering all Personal Property or fixtures of Grantor which may at any time be furnished, placed on, or annexed or made appurtenant to the Real Property or used, useful or held for use, in the operation of the Improvements. Beneficiary may commingle any Personal Property which comes into its possession; repledge such Personal Property upon terms which impair Grantor's right to redeem such; and require Grantor to assemble the Personal Property and make it available to Beneficiary at a place to be designated by Beneficiary which is reasonably convenient to both parties. To the extent Beneficiary is required for any reason to provide commercially reasonable notice to Grantor, Grantor agrees that notice mailed by first class mail ten (1 0) days before the event of which notice is given, is commercially reasonable notice. Grantor shall notify Beneficiary in writing within 30 days of any change in name of Grantor or its legal structure or state of organization. Nothing herein shall be construed as a consent by Beneficiary to a change in legal structure or state of organization otherwise prohibited hereby. Grantor hereby irrevocably constitutes and appoints Beneficiary the attorney-in-fact of Grantor, to execute, deliver and file with the appropriate filing officer or office such security agreements, financing statements or other instruments as Beneficiary may request or require in order to impose and perfect the lien and security interest hereof more specifically on the Personal Property or any fixtures. If Grantor enters into a separate security agreement with Beneficiary relating to any of the Personal Property or fixtures, the terms of such security agreement shall govern the rights and remedies of Beneficiary in the event of default thereunder. Any breach of or default under any such security agreement shall constitute an Event of Default under this Deed of Trust. It is understood and agreed that, in order to protect Beneficiary from the effect of RCW 62A.9-313, as amended from time to time, in the event that (i) Grantor intends to purchase any goods which may become fixtures attached to the Property, or any part thereof, and (ii) such goods will be subject to a purchase money security interest held by a seller or any other party: (a) Grantor shall, before executing any security agreement or other document evidencing such security interest, obtain the prior written approval of G-26 P \DRS\ORS2UB 9/14/05 Beneficiary, and all requests for such written approval shall be in writing and contain the following information: (i) a description of the fixtures to be replaced, added to, installed or substituted; (ii) the address at which the fixtures will be replaced, added to, installed or substituted; and (iii) the name and address of the proposed holder and proposed amount of the security interest, and any failure of Grantor to obtain such approval shall be a material breach of Grantor's covenant under this Deed of Trust, and shall, at the option of Beneficiary, entitle Beneficiary to all rights and remedies provided for herein upon default. No consent by Beneficiary pursuant to this subparagraph shall be deemed to constitute an agreement to subordinate the right of the Beneficiary in fixtures or other property covered by this Deed of Trust. (b) If at any time Grantor fails to make any payment on an obligation secured by a purchase money security interest in the Personal Property or any fixtures, Beneficiary, at its option, may at any time pay the amount secured by such security interest and the amount so paid shall be (1) secured by this Deed of Trust and shall be a lien on the Property having the same priorities as the liens and security interests created by this Deed of Trust, and (2) payable on demand with interest at the default rate specified in the Replacement Parking Agreement from the time of such payment. If Grantor shall fail to make such payment to Beneficiary within ten (1 0) days after demand, the entire principal sum secured hereby with all unpaid interest accrued thereon shall, at the option of Beneficiary, become due and payable immediately. (c) Beneficiary shall have the right to acquire by assignment from the holder of such security interest any and all contract rights, accounts receivable, negotiable or non-negotiable instruments, or other evidence of Grantor's indebtedness for such Personal Property or fixtures, and, upon acquiring such interest by assignment, shall have the right to enforce the security interest as assignee thereof, in accordance with the terms and provisions of the Washington Uniform Commercial Code then in effect, and in accordance with any other provisions oflaw. (d) Whether or not Beneficiary has paid the indebtedness secured by or taken an assignment of such security interest, Grantor covenants to pay all sums and perform all obligations secured thereby, and if Grantor at any time shall be in default for a period of ten (10) days under such security agreement, it shall be a material breach of Grantor's covenants under this Deed of Trust, and Beneficiary may, at its option, declare the principal sum secured hereby immediately due and payable, time being of the essence. G-27 P IDRS\ORS2UB 9114105 (e) The provisions of subparagraphs (b), (c) and (d) above shall not apply if the goods which may become fixtures are of at least equivalent value and quality as any property being replaced and if the rights of the party holding such security interest have been expressly subordinated, at no cost to Beneficiary, to the lien of this Deed of Trust in a manner satisfactory to Beneficiary, providing to Beneficiary a satisfactory opinion of counsel to the effect that this Deed of Trust constitutes a valid and subsisting first lien on such fixtures which is not subordinate to the lien of such security interest under any applicable law, including without limitation, the provisions ofRCW 62A.9-313. 3.15. Covenants Regarding Environmental Compliance. (a) Grantor hereby represents, warrants, covenants and agrees to and with Beneficiary that all operations or activities upon, or any use or occupancy of the Property, or any portion thereof, by Grantor, is presently and shall hereafter be in all respects in compliance with all state, federal and local laws and regulations governing or in any way relating to the generation, handling, manufacturing, treatment, storage, use, transportation, spillage, leakage, dumping, discharge or disposal (whether legal or illegal, accidental or intentional) of any Hazardous Substance; and that except as disclosed in writing to and approved by City, Grantor has not at any time placed, suffered or permitted the presence of any such Hazardous Substances at, on, under, within or about the Property or any portion thereof in violation of applicable law. In no event shall Grantor install or maintain on the Property any underground storage tank or similar facility for the storage of any Hazardous Substances. (b) Grantor shall keep and maintain the Real Property in compliance with, and shall not cause or permit the Real Property to be in violation of any Environmental Law (as defined herein). "Environmental Laws" shall mean any federal, state or local law, statute, ordinance, or regulation pertaining to health, industrial hygiene or the environmental conditions on, under or about the Real Property, including without limitation the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 ("CERCLA"), 42 U.S. C. Section 9601, et ~ .• as amended by the Superfund Amendments and Reauthorization Act of 1986 (PL 99-499), the Hazardous Materials Transportation Act, 49 U.S.C. Section 1801, et ~ .• the Toxic Substance Control Act, 15 U.S.C. Section 2601, et ~ .• and the Resource Conservation and Recovery Act of 1976, as amended ("RCRA"), 42 U.S.C. Section 6901, et ~- The term "Hazardous Substance" shall include without limitation: (a) Those substances included within the definitions of "hazardous substances," "hazardous materials," ''toxic substances," or "solid waste" in CERCLA, RCRA, the Hazardous Materials Transportation Act, 49 U.S.C. Section 1801, et seq., and the Toxic Substance Control Act, 15 U.S. C. Section 2601 et ~ .• and in the regulations promulgated pursuant to said laws; G-28 P IDRSIDRS2UB 9/14/05 (b) Those substances defined as "dangerous wastes," "hazardous wastes" or as "hazardous substances" under the Water Pollution Control Act, RCW 90.48.010 et ~ .• the Hazardous Waste Management Statute, RCW 70.105.010 et seq., the Washington Toxic Substance Control Act RCW 70.105B.010 et ~-· the Washington Model Toxics Control Act, RCW 70.105D.010 et seq., and the Toxic Substance Control Act, 15 U.S.C. Section 2601 et ~ .• and in the regulations promulgated pursuant to said Jaws; (c) Those substances listed in the United States Department of Transportation Table (49 C.F.R. 172.101 and amendments thereto) or by the Environmental Protection Agency (or any successor agency) as hazardous substances (40 C.F.R. Part 302 and amendments thereto); (d) Storm water discharge regulated under any federal, state or local law, ordinance or regulation relating to storm water drains, including, but not limited to, Section 402(p) of the Clean Water Act, 33 U.S.C. Section 1342 and the regulations promulgated thereunder; {e) Such other substances, materials and wastes which are or become regulated under applicable local, state or federal law, or the United States government, or which are classified as hazardous or toxic under federal, state or local laws or regulations; (f) Any material, waste or substance which is (A) petroleum, (B) asbestos, {C) polychlorinated biphenyls, (D) designated as a "hazardous substance" pursuant to Section 311 ofthe Clean W~<rter Act, 33 U.S.C. Section 1251, et ~-(33 U.S.C. Section 1321) or listed pursuant to Section 307 of the Clean Water Act (33 U.S.C. Section 1317); (E) flammable explosives; (F) radioactive materials; {G) lead-based paint; or {H) radon gas; (I) coal combustion byproducts; (J) area formaldehyde foam insulation; (K) toxic mold; or other substances which are deemed dangerous or injurious to human health. 3.16. Non-Agricultural Use. The Real Property which is the subject of this Deed of Trust is not used principally for agricultural purposes. 3 .17. Commercial Pumoses: Time of Essence. The obligations evidenced by the Replacement Parking Agreement were incurred primarily for commercial, investment or business purposes and not for personal, family or household purposes. Time is of the essence hereof in connection with all obligations of Grantor herein or in the Replacement Parking Agreement. P IDRSIORS2UB 9/14105 3.18. Washington $tate Law Governs. This Deed of Trust is to be governed by and construed in accordance with the laws of the state of Washington. At the option of the Beneficiary, the venue of any action to enforce the provisions hereof may be laid in King County, Washington. IN WITNESS WHEREOF, Grantor has executed this Deed of Trust, Security Agreement, Assignment of Leases and Rents, and Fixture Filing as of the date first written above. STATE OF WASHINGTON COUNTY OF KING ) ) ss. ) SPRINGBOARD HOLDINGS L.L.C., a Washington limited partnership By: ______________________ __ Name: -------------------------Its: ---------------------------- I certify that I know or have sattsfactory evidence that IS the person who appeared before me, and said person acknowledged that he signed this mstrument, on oath stated that he was authorized to execute the mstrument and acknowledged it as the authonzed member of Sprmgboard Holdtngs, L.L.C. to be the free and voluntary act of such party for the uses and purposes mentioned in the mstrument. Dated: ----------------- Notary Pubhc PrintNwne ___________________________ __ My comnnsston expires--------------------- (Use flus space fur ootanals....,.Wseal) G-30 P IDRSIDRS2UB 9114/05 EXHIBIT A LEGAL DESCRIPTION Certain real property situated in King County, Washington and more particularly described as follows: G-A-1 P IDRSIDRS2UB 09/14/05 ExhibitH Bargain and Sale Deed Replacement Parking Site AFTER RECORDING RETURN DOCUMENT TO: Spnngboard Holdings, L.L.C. 1627 East Lake Sammamish Place S.E. SannnaliiiSh, WA 98075 Attn: Ben Errez BARGAIN AND SALE DEED Grantor(s): City of Kent, a Washington municipal corporation Grantee(s): Springboard Holdings, L.L.C., a Washington limited liability company Abbreviated Legal Description: Additional Legal Description is on Page Exhibit 1 of Document Assessor's Property Tax Parcel or Account No.: H-1 PIORSIORS2UB 09/14/05 BARGAIN AND SALE DEED THE GRANTOR, CITY OF KENT, a Washington municipal corporation ("City"), for and in consideration of all of the terms, covenants, conditions and provisions set forth in that certain Replacement Parking Agreement dated as of September 30, 2005 (the "Replacement Parking Agreement"), TEN DOLLARS and other good and valuable consideration, in hand paid, bargains, sells and conveys to SPRINGBOARD HOLDINGS, L.L.C., a Washington limited liability company, as GRANTEE, the following described real estate, situated in the County of King, State of Washington: See Exhibit l attached hereto and incorporated herein by this reference ("Property"). TOGETHER WITH all and singular the tenements, hereditaments and appurtenances hereunto belonging or in anywise appertaining, SUBJECT however, to all existing interests, including but not limited to the current non-delinquent general and special taxes for the fiscal year of the transfer of title, all reservations, rights of way and easements of record or otherwise and further subject to the matters described in Exhibit 2 attached hereto and by this reference made a part hereof. Grantee has been allowed to make an inspection of the Property and has knowledge as to the past use of the Property. Based upon this inspection and knowledge, Grantee is aware of the condition of the Property and GRANTEE ACKNOWLEDGES THAT, PURSUANT TO THE PROVISIONS OF SECTION 8.4 OF THE REPLACEMENT PARKING AGREEMENT BETWEEN CITY AND GRANTEE, THE TRANSFER OF THE PROPERTY IS MADE ON AN "AS IS" CONDITION AND BASIS WITH ALL FAULTS AND CITY HAS NO OBLIGATION TO MAKE REPAIRS, REPLACEMENTS OR IMPROVEMENTS TO THE PROPERTY. IN PARTICULAR, BUT WITHOUT LIMITATION, CITY MAKES NO REPRESENTATIONS OR WARRANTIES WHATSOEVER WITH RESPECT TO THE PHYSICAL CONDITION OR VALUE OF THE PROPERTY, THE PRESENCE OR ABSENCE OF HAZARDOUS SUBSTANCES ON THE PROPERTY, SOILS CONDITIONS, OR OTHER PHYSICAL CHARACTERISTICS OF THE PROPERTY OR THE SUITABILITY OF THE PROPERTY FOR GRANTEE'S INTENDED DEVELOPMENT. CITY MAKES NO REPRESENTATION WHATSOEVER REGARDING THE FINANCIAL FEASIBILITY OF GRANTEE'S PROPOSED DEVELOPMENT OR THE PARKING GARAGE AS DEFINED IN THE REPLACEMENT PARKING AGREEMENT. UPON CLOSING AND RECORDING OF THIS DEED TO THE PROPERTY, GRANTEE DOES HEREBY WAIVE AND RELEASE CITY, ITS OFFICIALS, OFFICERS, EMPLOYEES AND AGENTS FROM ANY AND ALL DAMAGES, LOSSES, LIABILITIES, COSTS AND EXPENSES WHATSOEVER (INCLUDING, WITHOUT LIMITATION, REASONABLE ATTORNEYS' FEES H-2 P \ORS\DRS2UB 09114105 AND COSTS) AND CLAIMS THEREOF, 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 PROPERTY OR THE PRESENCE OF ANY HAZARDOUS SUBSTANCES WHICH MAY EXIST ON THE PROPERTY OR ANY REQUIREMENT OF LAW APPLICABLE THERETO. The term "Environmental Law" means any federal, state or local statute, regulation, code, rule, ordinance, order, judgment, decree, injunction or common law pertaining in any way to the protection of human health or the environmental including without limitation, the Resource Conservation and Recovery Act, the Comprehensive Environmental Response, Compensation and Liability Act, the Toxic Substance Control Act, the Model Toxics Control Act and any similar or comparable federal, state or local law. The term "Hazardous Substance" means any hazardous substance, toxic, radioactive or infectious substance, material or waste as defined listed or regulated under any Environmental Law, and includes, without limitation, petroleum oil and any of its fractions. This Deed is granted on the express condition that Grantee design, develop, construct and complete the Parking Garage and grant City the Public Parking Easement on the terms and conditions set forth in the Replacement Parking Agreement, which by this reference are incorporated herein and made a part hereof. By acceptance of this Deed, Grantee and its legal representatives, heirs, successors and assigns, does hereby accept and agree to all of the terms, conditions, provisions, reservations, restrictions, releases and indemnities contained herein and in the Replacement Parking Agreement. Dated this __ day of ____ ,, 2005. APPROVED AS TO FORM: CITY ATTORNEY By:. _________________ _ Name: Tom Brubaker GRANTOR: CITY OF KENT, a Washington municipal corporation B~·----------------------Name: _____________ _ Title: H-3 p IDRS\DRS2UB 09114105 STATE OF WASHINGTON) ) ss. COUNTY OF KING ) On this __ day of , 2005, before me personally appeared ----,--------------' to me known to be the --,---,-----.,----,- of the CITY OF KENT, a Washington municipal corporation, the corporation that executed the within and foregoing instrument, and acknowledged the said instrument to be the free and voluntary act and deed of said corporation, for the uses and purposes therein mentioned, and on oath stated that he was authorized to execute said instrument and that the seal affixed, if any, is the corporate seal of said corporation. WITNESS my hand and official seal hereto affixed the day and year first above written. Notary Public in and for the State of Washington, resirungm _______________ __ My commission expires:--------- [Type or Print Notary Name] (Use This Space for Notarial Seal Stamp ACCEPTED this __ day of __ ___, 2005 GRANTEE: H-4 SPRINGBOARD HOLDINGS, L.L.C., a Washington limited liability company B~-------------Name:, _________ __ Title: P\ORS\DRS2UB 09114/05 STATE OF WASHINGTON) ) ss. COUNTY OF KING ) On this __ day of 2005, before me personally appeared --,.---,------,,----,,------=-:--=-=--=-------' to me known to be the --:-:---:---:--:-:--:-:-:::-------=-- of SPRINGBOARD HOLDINGS, L.L.C., a Washington limited liability company, the limited liability company that executed the within and foregoing instrument, and acknowledged the said instrument to be the free and voluntary act and deed of said limited liability company, for the uses and pwposes therein mentioned, and on oath stated that he was authorized to execute said instrument. WITNESS my hand and official seal hereto affixed the day and year first above written. (Use Thos Space for Notanal Seal Stamp Notary Public in and for the State of Washington, resiwngru.~---~------------ My commission expires:--------- [Type or Print Notary Name] H-5 f>IDRSIDRS2UB 09/14/05 EXHIBIT 1 TO BARGAIN AND SALE DEED LEGAL DESCRIPTION [To follow.] H-Exhibit 1-1 p-\DRS\ORS2UB 09/14105 EXHffiiT2 TO BARGAIN AND SALE DEED EXCEPTIONS [To be finalized following delivery of title report.] REPLACEMENT PARKING AGREEMENT AND TERMS AND CONDITIONS THEREOF: BETWEEN: AREA AFFECTED: DISCLOSED BY: RECORDING NO: -------~'iL CITY OF KENT AND SPRINGBOARD HOLDINGS, L.L.C. PROPERTY DESCRIBED ON EXHffiiT 1 MEMORANDUM OF REPLACEMENT PARKING AGREEMENT H-Exhibit 2-1 P"\DRS\ORS2UB 09/14105 Exhibit I Definitions The following terms shall have the definitions set forth below or are defined in the section of the Agreement listed below: "Agreement" "Anderson" "Anderson Property'' "Certificate of Substantial Completion" "City'' "City Loan Policy'' "City Mortgage" "City Property'' "City's Permitted Exceptions" "City's Title Commitment" "City's Title Policy'' "claims" "Closing" "Closing Date" "Construction Drawings" Opening paragraph Recital B Recital C Section 19.1.1 Opening paragraph Section 6.4 Section 4.2 Recital A Section 7.3.1 Section 7.3 Section 7.2 Section 17.1 Section 13.1 Section 13.1 Section 5.2 "Construction Lender'' means any bank, mortgage company, financial institution or other person that provides a loan to finance or refinance construction of all or any portion of the Project Springboard Improvements. "Construction Loan" means a loan made by a Construction Lender from time to time to finance or refinance construction of the Project Springboard Improvements. "Construction Mortgage" means a mortgage, deed of trust, security agreement or other lien recorded from time to time against the Project Site or any of the Project Springboard Improvements, including the Parking Garage, to secure payment and performance of a Construction Loan. 1-1 P \DRSIDRS2UB 09114105 "Deed" Section 6.1 "Detailed Specifications" means all written detailed requirements for materials, equipment, construction systems, standards and workmanship for the construction of the Parking Garage. "Developer" "Developer Agreements" ''Developer's Title Policy'' ''Due Diligence Period" "Escrow Agent" ''Default" or "Event(s) of Default" "Exclusive Public Parking Stalls" "Final Completion" Opening paragraph Section 12.1 Section 6.2 Section 8.1 Section 4.5 Section 25.1 Section 3.4 Section 19.2 "Governmental Authority'' means any court or any foreign, federal, state, municipal or local department, commission, board, bureau, agency, public authority, instrumentality or government regulator with jurisdiction over Developer, the Contractor or the Parking Garage. "Harrison" Recital B "Harrison Exchange Property" Recital A "Harrison Property'' RecitalB "Hotel Improvements" Section 2.1 "Indemnification Claim Notice" Section 17.2 "Indemnified Party'' Section 17.2 "Intervening Lien" Section 7.4 "Land Speculation" Section 12.5 "Liens" Section 15.9 "Material Adverse Effect" means a material adverse effect upon (a) the business or operations of Developer, Plan B or the general contractor for construction of the Parking Garage ("Contractor"), (b) the legal existence, power of financial condition of the Developer, Plan B or any member or manager of Developer or Plan B or the Contractor, (c) the validity or enforceability of this Agreement, (d) the rights and remedies of City under this Agreement, or (e) the timely payment of the contractor and the timely performance of the obligations of the 1-2 P'IORS\ORS2UB 09/14105 if, Contractor, the Developer or Plan B wider this Agreement. ''Meeker Street" RecitalB "Notices" Section 28 "Opening Date" Section 19.2.7 "Outside Completion Date" Section 15.3 "Parking Garage" Section 2.2 "Parking Garage Construction Documents" Section 5.3 "Parking Garage Schematic Design Documents" Section 5.1 "Permitted Exceptions" Section 6.3.1 "Phase One" means construction of the Parking Garage and related retail spaces including the private road that will connect Smith and Harrison Streets. "Plan B" Section 23.1 "Pooling Agreement" Recital C "Private Land" RecitalB "Private Owners" Recital B "proceeding" Section 17.2 "Project Site" Recital C "Project Springboard" Section 2.1 "Project Springboard Improvements" Section 2.1 "Property'' Recital C "Property Permitted Exceptions" Section 6.4 "Public Parking Easement Acceptance Date" Section20 "Public Parking Easement" Section 3.4 and Exhibit F "Replacement Parking Site" Recital A "Requirements of Law" means all requirements relating to land and building construction including, without limitation, building, planning, zoning, subdivision, health, environmental, air 1-3 P IDRSIORS2UB 09114/05 1c;~ ' quality, flood hazard, fires safety, accessibility and other governmental approvals, pennits, 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 restrict which apply to or affect the design, construction, existence, intended use, operation and/or occupancy of the Parking Garage, the Project Site, the Project Springboard Improvements or any part thereof. "Schematic Design Documents" are the initial drawings and specifications for the Parking Garage. "Second Avenue'' "Short Term Parking" "SPf' "SPI Contribution Agreement" "SPI Land" "Substantial Completion" "Substantial Completion Date" "Substantially Completed" "Title Commitment" "Title Company'' "Town Square Plaza Site" "transfer" "Unavoidable Delay'' 1-4 -~~----~ Opening paragraph Section 2.2 (defmed in Public Parking Easement (Exhibit F)) Recital B Section 3.1 Recital C Section 19.1 Section 12.5 Section 19.1.2 Section 6.3 Section4.5 Recital A Section 23.3 Section 15.3 P IORS\DRS2UB 09/14/05