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HomeMy WebLinkAbout1990-10-15 Council Packet - Special Meeting, Carr-GottsteKenai City Council Special Council Meeting October 25, 1990 Carr-Gottstein Lease RENAI CITY COUNCIL - SPECIAL MEETING OCTOBER 25, 1990 A. CALL TO ORDER 1. Pledge of Allegiance 2. Roll Call 3. Agenda Approval B. OLD BUSINESS 1. Discussion/Approval - Carr-Gottstein Lease R. �\ 0 LETTER OF AGREEMENT October 25, 1990 RE: Lease Tracts B1 and B2, Cook Inlet Industrial Air Park, Kenai, Alaska THIS LETTER OF AGREEMENT is entered into October 25, 1990 between CARR-GOTTSTEIN ACQUISITION CO. d/b/a CARR-GOTTSTEIN FOODS (CGF) and the CITY OF KENAI (City). CGF and the City recognize.that apparent toxic contaminates have been found in the soil and groundwater under the neighboring site known as the Dowell Schlumberger site, and agree as follows: 1) CGF and the City will enter into the ground lease agreement which is hereby amended to entitle CGF to rescind the lease in the event that further environmental testing and analysis demonstrates a reasonable potential for presence or potential presence of contaminants in the soils and/or ground water underlying the subject parcels. 2) CGF and the City will undertake further environmental analysis of Tracts B1 and B2; the cost of which shall be shared evenly by the City and CGF. 3) CGF and the City pledge their best efforts to agree to a mutually acceptable environmental analysis program. CGF and the City will cooperate to limit the total cost of the analysis to $15,000.00. 4) CGF acknowledges that the City's obligation to pay for the analysis is subject to the approval of the Kenai City Council. 5) The City agrees not to assert any claims against CGF for environmental damage or loss arising from contaminants migrating onto Tracts B1 and B2 not caused by CGF. AGREED this day of October, 1990. CITY OF KENAI CARR-GOTTSTEIN ACQUISITION CO. d/b/a CARR GOTTSTEIN FOODS by by Wm. J. Brighton its City Manager Page 1 of 1 Timothy J. Rogers City Attorney CITY OF KENAI 210 Fidalgo Kenai, Alaska 99611 LEASE OF AIRPORT LANDS This Agreement, entered into this day of , 1990, by and between the CITY OF KENAI, City Hall, 210 Fidalgo Avenue, Kenai, Alaska, 99611, a home -rule municipal corporation, (hereinafter the "City") and Carr-Gottstein Foods Co., 6411 A Street, Anchorage, Alaska 99501, a Delaware corporation (hereinafter "Lessee"), is as follows: That in consideration of the mutual performance of the covenants herein described, the City hereby demises and leases to the Lessee and the Lessee hereby leases from the City the following described property in the Kenai Recording District, State of Alaska: Tracts B-1 and B-2, Cook Inlet Industrial Air Park Subdivision, Kenai, Alaska The land described above, which is subject to the terms of this Lease, in the state in which it exists immediately prior to the execution of the Lease, shall be referred to as the Leased Property. It is the intent of the parties that Lessee be permitted to develop part or all of the Leased Property consistent with the uses described below. The improvements placed upon the Leased Property by Lessee shall be referred to as the Project. I. TERM The term of this lease is for 99 years, commencing on the day of , 1990, through the day of , 2089. II. RENT Subject to the terms of subsection (h) below, rent for the Property shall be payable as follows: a. Right of entry and occupancy is authorized as of the first day of 1990, and the first rent shall be computed from such date. b. The Minimum Annual Rent shall be determined as follows: 1. The Minimum Annual Rent shall be six percent (6%) of the fair market value as determined according to the terms of this Article II. 1 - Lease Lessor: Lessee: 283-3441 FAX 283-3014 Timothy J. Rogers City Attorney CITY OF KENAI 210 Fidalgo Kenai, Alaska 99611 2. The parties have determined the fair market value of Leased Property at the date of execution hereof to be Nine dred ninety-six thousand eight hundred dollars ($996,800). c. Minimum Annual Rent for the fiscal year beginning July 1 and ending June 30 shall be payable in advance on or before the first day of July of each year. However, Lessee may exercise an option at the execution hereof and/or at the beginning of each new Lease year to pay rent in equal monthly installments, payable in advance on or before the first business day of July and on or before the first business day of each month thereafter. Any rental payments delinquent for more than ten business days shall bear interest from the due date(s) thereof at the rate of eight percent (8%) per annum. d. Late Fee - If any rental payment remains delinquent for more than ten (10) business days, Lessee shall pay to City a late fee calculated as ten percent (10%) of the amount becoming so delinquent. e. Minimum Annual Rent for any period of time which is less than one full year shall be prorated based on the rate of the last full year. f. In addition to the Minimum Annual Rent, the Lessee shall pay to the appropriate taxing authority the following lawful levies, assessments and charges: 1. Taxes pertaining to the leasehold interest of Lessee not otherwise included in the calculation of taxes and assessments provided for in subparagraph (3) of this paragraph (f). 2. Any sales taxes levied upon the transfer of Minimum Annual Rent, based upon monthly payments whether rent is paid on a monthly or annual basis. 3. All ad valorem taxes and assessments levied upon the Leased Property by a governmental authority, as if Lessee was considered the legal owner of record of the Leased Property. g. Lessee shall have the right to contest or review any and all taxes, assessments or similar levies by legal proceedings or in such manner as Lessee in its reasoned opinion shall deem advisable, which proceedings or other steps taken by Lessee, if instituted, shall be conducted diligently at its own expense and free of expense to the City in its role as Lessor. No such contest shall defer or suspend Lessee's obligations to pay any sum provided for herein pending the contest if nonpayment would affect or impair the City's title to the Leased Property, but if by law it is necessary that such payment be suspended to preserve or perfect Lessee's contest, then the contest shall not be undertaken 2 - Lease Lessor: Lessee: 283-3441 FAX 283-3014 Timothy J. Rogers City Attorney CITY OF KENAI 210 Fidalgo Kenai, Alaska 99611 without there being first deposited in escrow a sum of money equal to the amount which is the subject of the contest, to be held as an indemnity fund to pay such amount upon conclusion of the contest. h. Payment of rent made by check, bank draft, or money order, shall be made payable to the City of Kenai and delivered to the City Administration Building in Kenai, Alaska. i. Beginning five years from the first July 1 following the execution of this Lease and at five year intervals upon July 1 thereafter, the Minimum Annual Rent may, at the option of either party, be subject to redetermination for increase or decrease based on the percentage rate (set in Section b(1) above) of fair market value of the Leased Property exclusive of any improvements to or upon the property after the effective date of this lease. In order to exercise this option, a party must give written notice to the other of its intent to do so no later than May 1 (or the first business day thereafter) of the year in question. Any increase or decrease in Minimum Annual Rent shall take effect as of July 1 of the year in question. The method of re -determination of Minimum Annual Rent shall be as follows: 1. Upon giving notice of its intent to seek re- determination of the Minimum Annual Rent, the party(s) seeking such redetermination shall submit to the other an appraisal of the fair market value of the Leased Property performed by a qualified, independent MAI appraiser who is familiar with the Kenai area. For purposes of this section, fair market value shall be defined as the highest price estimated in terms of money which a property will bring if exposed for sale on the open market allowing a reasonable time to find a knowledgeable buyer. The fair market value of the Leased Property will be based upon the condition of the land as it existed on the date of the execution of this Lease. 2. If the other party disputes the amount of the appraisal as described above, it shall, prior to July 1 (or the first business day thereafter) of the year in question, obtain and serve upon the other party its own appraisal of the leased lands by a qualified, independent MAI appraiser familiar with the Kenai area. 3. If the parties are unable to agree before July 1 upon a fair market value for the leased lands as defined above, the determination of fair market value shall be submitted to arbitration according to the provisions of section (j) below. The determination of this arbitration shall be binding and retroactive to July 1 of the year in question. Pending resolution of the dispute, the Minimum Annual Rent shall be paid by Lessee at the same rate as during the prior year. Upon resolution of the dispute, the City will refund or the Lessee will pay the 3 - Lease Lessor: Lessee: 283-3441 FAX 283-3014 Timothy J. Rogers City Attorney CITY OF KENAI 210 Fidalgo Kenai, Alaska 99611 ditional amount to make the agreed -upon rate effective as of ly 1 of the year in question. j. If the parties are unable to agree upon a determination of Fair Market Value, they shall submit the question to arbitration as follows: 1. Either party may request arbitration by giving written notice to the other. In addition to such notice, the party requesting arbitration shall deliver written designation of an arbitrator. Within thirty (30) days of receipt of such notice and designation, the other party shall either give notice of its designation of arbitrator or consent to arbitration by the individual named by the requesting party. Failure to respond within thirty (30) days shall be deemed consent to arbitration by the individual named by the requesting party. If the second party designates an arbitrator, the two designated arbitrators shall agree upon the designation of a third arbitrator. All arbitrators designated must be qualified, disinterested individuals knowledgeable of the Kenai area. 2. The arbitration shall be conducted, to the extent consistent with this Lease, in accordance with the rules of the American Arbitration Association (or any organization successor thereto). The arbitrators shall have the right to retain and consult experts and competent authorities, but any such consultation shall be made in the presence of both parties with full rights on the part of both parties to cross-examine such experts and authorities. The arbitrators shall issue their award, upon the concurrence of at least two of their number, not later than 30 days after appointment of the third arbitrator. The decision shall be in writing with copies delivered to each party. 3. Each party shall pay the fees and expenses of the one of the two original arbitrators appointed by such party, unless the second party consents to arbitration by the single arbitrator first chosen. In this case, the fees and expenses of such single arbitrator will be borne equally by the parties. If a third arbitrator is chosen, his fees and expenses shall be borne equally by the parties. General fees and expenses of the arbitration shall be borne equally by the parties. Each party shall bear the expense of its own counsel, if any, experts and preparation and presentation of proof. III. USE OF THE PROPERTY Lessee may use the Leased Property for (i) one or more retail supermarket, drug or variety stores or any combination thereof, (ii) a shopping center, or (iii) any combination thereof. If such usage of the Property becomes uneconomic, inappropriate, or unsuitable due to new or changed circumstances, the Property may 4 - Lease Lessor: Lessee: 283-3441 FAX 283-3014 Timothy J. Rogers City Attorney CITY OF KENAI 210 Fidalgo Kenai, Alaska 9%1 t e used for any lawful purpose permissible under applicable zoning nd governmental land use requirements. IV. CONSTRUCTION AND OWNERSHIP OF THE PROJECT a. Lessee shall commence construction of the Project as described below on or before August 1, 1992. Lessee shall substantially complete construction on or before August 30, 1993. For the purposes of this Lease, substantial completion shall occur when Lessee's construction of the Project has been completed to such an extent and all governmental permits, approvals and conditional occupancy certificate(s) necessary have been obtained so that the Project may be opened for business, notwithstanding that minor or insubstantial details of construction, mechanical adjustment or decoration remain to be performed, the non - completion of which would not materially interfere with the opening of the Project for business. b. The Project will consist of one or more independent buildings erected wholly within the boundary lines of the Leased Property which generally follow the lines of the site plan previously submitted by Lessee to the City. Following completion of construction and upon request, the Lessee will provide to the City a survey of the Leased Property, prepared by a licensed surveyor, showing the location of the Project in relation to the perimeter of the Leased Property. It is agreed that the Lessee may from time to time expand the Project to cover part or all of the Leased Property so long as the structures and improvements constructed by Lessee comply with the permitted uses of the Leased Property as described in Article III and the construction standards described in Article V of this Lease. c. It is the intent of the parties that the Project shall be a supermarket, retail shopping center, or combination thereof. As such, it is contemplated that premises within the Project may be subleased to tenants for the purpose of operating retail sales and service businesses thereon. It is agreed that due to the long term of this Lease, the uses of the Leased Property by Lessee may change in response to changes in the surrounding area. It is also agreed that due to the length of the term of the Lease, structures and improvements on the Leased Property may from time to time require modification, repair, and reconstruction, including demolition and replacement. Accordingly, the Lessee shall have the right, without prior notice or approval of the City, to modify, re -construct, expand or replace portions of the Project, including exterior areas and signage, so long as the work is consistent with the permitted uses of the Leased Property and the standards described in Article V below. 5 - Lease Lessor: Lessee: 283-3441 FAX 283-3014 Timothy J. Rogers City Attorney CITY OF KENAI 210 Fidalgo Kenai, Alaska 99611 d. Lessee shall own the Project, any subsequent odifications or expansions of the Project and any improvements it laces on the Leased Property as such improvements are built. pon termination of this Lease, title to the Project, and ubsequent modifications or expansions, and any fixtures then ituated on the Leased Property shall pass automatically to the ity. . CONSTRUCTION STANDARDS Buildings and improvements shall be constructed in a good and orkmanlike manner. They shall be kept neat and presentable in a anner compatible with their use and surroundings. Buildings and mprovements to the Leased Property shall be constructed and aintained in a manner consistent with all applicable laws, egulations and codes. Lessee shall obtain and keep in force all ecessary permits for such construction. . CONDITION OF THE LAND Subject to the provisions of Article VII, the land described erein is leased by the City to Lessee without representation or arranty as to its fitness for any particular use. I. HAZARDOUS MATERIAL a. If Lessee introduces or causes the introduction of azardous material onto the Leased Property, the presence of which esults in contamination of the Leased Property, and such ontamination gives rise to liability of the City for removal of he contamination, the Lessee shall indemnify, defend, and hold he City harmless for any and all claims, judgments, damages, osts, or losses, including, but not limited to reasonable ttorneys', engineers' and consultants' fees, which arise during r after the term to the extent such damages or liabilities are a irect result of such contamination. b. To the extent any hazardous material or waste is present n or on the Leased Property at the time of the execution of this ease including, but not limited to, contaminants in the soil or round water arising or caused in any manner by the activities onducted on Lot 4, Block 4, Cook Inlet Industrial Air Park, enai, Alaska, also known as the Dowell Schlumberger site or to he extent the City introduces or allows any such material to be ntroduced into or onto the Leased Property, the City will ndemnify, defend, and hold the Lessee harmless for any and all laims, judgments, damages, costs or losses, including, but not imited to, reasonable attorneys', engineers' and consultants' ees, which arise during or after the term of this Lease to the - Lease Lessor: Lessee: 283-3441 FAX 283 3014 Timothy J. Rogers City Attorney CITY OF KENAI 210 Fidaigo Kenai, Alaska 99611 !extent such damages or liabilities are a direct result of such contamination. c. As used herein, "hazardous material" means any hazardous or toxic substance which is or becomes regulated by the State of Alaska or the federal government. d. The obligations described in this Article VII shall survive the termination of this lease. IVIII. LIENS Lessee will not permit any liens including, but not limited to, mechanics' laborers' or materialmen's liens obtainable or available under the then existing laws, to stand against the Leased Property for any labor or material furnished to Lessee or claimed to have been furnished to Lessee or to Lessee's agents or contractors, in connection with work of any character performed or claimed to have been performed on the Leased Property or improvements thereon, provided, however, Lessee shall have the right to provide a bond as contemplated by applicable law or otherwise contest the validity or amount of any such lien or claimed lien. On final determination of such lien or such claim for lien, Lessee will promptly pay any judgment rendered with all proper costs and charges and shall have such lien released or judgment satisfied at Lessee's own expense. IX. RIGHT OF INSPECTION The City shall have the right to show the Leased Property at all reasonable times during business hours of Lessee to any prospective purchasers, lessees, or mortgagees of the same, and may enter upon the Leased Property for the purpose of ascertaining the condition of the Leased Property or whether Lessee is observing and performing -the obligations assumed by it under the Lease, all without hinderance or molestation from Lessee. These rights of entry shall be exercisable upon request made on reasonable advance notice to Lessee (except that no notice shall be required in the event of an emergency.) X. AIRCRAFT OPERATIONS a. The City reserves for the use and benefit of the public a right of flight for the passage of aircraft in the airspace above the surface of the Leased Property, together with the right to cause in said airspace such noise as may be inherent in the operation of aircraft used for navigation of or flight in the air, using said airspace for landing at, taking off from, or operating on the Kenai Airport. (When plans for improvements pursuant to Article IV are approved by the City, the City to the extent of those improvements releases the easement here expressed. 7 - Lease Lessor: Lessee: 283-3441 FAX 283-3014 Timothy J. Rogers City Attorney CITY OF KENAI 210 Fidalgo Kenai, Alaska 99611 b. The Lessee agrees that it will not erect or permit the erection of any structure of object, nor permit the growth of any trees on the Leased Property, which would be an airport obstruction within the standards of applicable Federal Aviation Administration regulations. JXI. COMPLIANCE WITH LAW a. Lessee shall observe, obey and comply with all applicable laws, ordinances, rules, and regulations of the federal, state, borough, or city government, or of any other public authority now or hereinafter affecting the Leased Property or any improvements thereto, whether or not any such laws, ordinances and regulations which may hereinafter be enacted involve a change of policy on the part of the governmental body enacting the same. b. Lessee agrees to hold the City financially harmless: i) from the consequences of any violation of such laws, ordinances, and/or regulations by the Lessee; and ii) from all claims for damages on account of injury, death, or property damage resulting from such violation by Lessee. c. Lessee agrees it will not permit any unlawful occupation, business, or trade to be conducted on the Leased Property or any use to be made thereof contrary to any law, ordinance, or regulation as aforesaid with respect thereto, including zoning regulations, rules and ordinances. XII. NON-DISCRIMINATION The Lessee as a part of the consideration hereof, agrees as a covenant running with the land that: a. No person shall be excluded on the grounds of race, color, or national origin from participation in, denied benefits of, or be otherwise subjected to discrimination in the use of public facilities operated on the Leased Property; b. In the construction of any improvements on, over or under the Leased Property and the furnishing of services thereon, no person shall be excluded on the grounds of race, color or national origin from participation in, denied benefits of, or otherwise be subjected to discrimination; 8 - Lease Lessor: Lessee: 283-3441 FAX 283-3014 Timothy J. Rogers City Attorney CITY OF KENAI 210 Fidalgo Kenai, Alaska 99611 C. The Lessee shall use the Leased Property in compliance with the requirements imposed pursuant to Title 49, Code of (Federal Regulations, Department of Transportation Subtitle A, Office of the Secretary, Part 21, Nondiscrimination in Federally - assisted Programs of the Department of Transportation - Effectuation of Title VI of the Civil Rights Act of 1964 and as said regulations may be amended; d. In the event facilities are constructed, maintained, or otherwise operated on the Leased Property, the Lessee shall maintain or operate such facilities in compliance with all requirements imposed, pursuant to Title 49, Code of Federal Regulations, Department of Transportation, Subtitle A, Office of the Secretary, Part 21, Nondiscrimination in Federally -assisted programs of the Department of Transportation - Effectuation of Title VI of the Civil Rights Act of 1964, and as said regulations may be amended. XIII. PROTECTION OF SUBTENANTS To protect the position of any subtenant hereafter obtaining any interest in the leasehold estate granted Lessee hereunder, the City agrees that in the event of the cancellation, termination, expiration, or surrender of this Lease, the City will accept the Subtenant as its lessee for a period equal to the full unelapsed portion of the term.of the sublease, including any extensions or renewals thereof, not exceeding the term of this Lease, upon the same covenants and conditions therein contained, to the extent said covenants and conditions are not inconsistent with any of the terms and conditions of this Lease, provided such subtenant shall make full and complete attornment to the City for the balance of the term of its sublease so as to establish direct privity of estate and contract between the City and the subtenant with the same force and effect as though such sublease was originally made directly between City and subtenant. XIV. INDEMNIFICATION AND INSURANCE a. Except to the extent caused by the negligence or culpable conduct of the City, Lessee covenants to save the City harmless from all actions, suits, liabilities, or damages resulting from any act or omission by the Lessee, its agents or employees and which arises from or out of the Lessee's occupation or use of the Leased Property. This right to indemnity shall include reasonable costs and attorneys' fees incurred by the City in defense of such claims. This section shall not apply to indemnification for liabilities due to contamination by hazardous substances, the obligations for which are specifically described in Article VII. 9 - Lease Lessor: Lessee: 283-3441 FAX 283-3014 Timothy J. Rogers City Attorney CITY OF KENAI 210 Fidalgo Kenai, Alaska 9%11 b. Lessee, at its own expense, shall keep in force during the term of this Lease, insurance in the following types and amounts: i) Public liability insurance in common use for commercial structures covering the Leased Property and Lessee's use thereof against claims for personal injury, death, and property damage occurring upon, in or about the Leased Property, such insurance to afford protection to the combined single limit of not less than $500,000; ii) Workers' compensation insurance covering Lessee's employees in form and amounts in compliance with Alaska statute; C. All such policies shall name the City as Additional Insured. Lessee agrees that any insurance coverage furnished hereunder shall in no way limit its responsibility to indemnify the City as described in section (a) above. d. Lessee may provide the coverage described in section (b) above through an adequately funded and commercially reasonable self-insurance program. To the extent the required coverage is obtained through third -party carriers, Lessee shall provide to the City Certificates of Insurance evidencing such coverage as attachments hereto. 1XV. SURRENDER AT TERMINATION a. Lessee shall, on the last day of the term of this Lease, ,quit and surrender the Leased Property, together will all improvements, in good condition and repair, normal wear and tear excluded, free and clear of occupancies, unless expressly permitted by the City in writing, and free and clear of all encumbrances and liens except those created by and for the City. b. At the expiration of the term of the Lease or earlier termination thereof, title to the buildings and improvements constructed on the Leased Property by Lessee shall, without compensation to Lessee, then become the City's property without requirement of deed, conveyance, or bill of sale. However, if the City shall require any document in confirmation of this transfer, Lessee shall execute, acknowledge, and deliver the same. C. Lessee shall retain ownership of all trade fixtures and business equipment and furnishings installed in the Project by Lessee or its contractors. Lessee may remove any of such trade fixtures, equipment, or furnishings at any time during the Term and shall remove all thereof prior to expiration of the Term. Any such property not removed within thirty (30) days of the expiration of the Term of the Lease shall, at the election of the 10 - Lease Lessor: Lessee: 283-3" 1 FAX 283-3014 Timothy J. Rogers City Attorney CITY OF KENAI 210 Fldalgo Kenai, Alaska 99611 (City, become the City's property without payment, or be deemed abandoned and removed by City, at Lessee's expense. IXVI. DEFAULT a. If Lessee shall fail to pay any part of the rent or other sum agreed to be paid hereunder on the date due, the City shall by written notice give Lessee thirty (30) days after receipt of such notice to cure such deficiency. If Lessee fails to cure the deficiency within this time, it shall be in default under the Lease. b. If Lessee fails in the observance or performance of any of its other covenants or obligations provided for in this Lease on Lessee's part to be observed or performed, the City shall by written notice give Lessee sixty (60) days after receipt of such notice to cure such deficiency. If Lessee fails to cure the deficiency within this time, it shall be in default under the Lease. Notwithstanding the above, if the deficiency is such that it is not reasonably capable of cure within sixty (60) days, Lessee shall not be in default so long as it begins work to cure the deficiency within the sixty (60) day period and diligently prosecutes such work in good faith to completion. c. If the City fails in the observance or performance of any of its other covenants or obligations provided for in this Lease on the City's part to be observed or performed, the Lessee shall by written notice give City sixty (60) days after receipt of such notice to cure such deficiency. If City fails to cure the deficiency within this time, it shall be in default under the Lease. Notwithstanding the above, if the deficiency is such that it is not reasonably capable of cure within sixty (60) days, City shall not be in default so long as it begins work to cure the deficiency within the sixty (60) day period and diligently prosecutes such work in good faith to completion. d. In the event of a default, including the applicable grace periods defined above, the aggrieved party may give notice of its intent to terminate the Lease unless cure is effected within five days thereafter and may proceed with any other rights or remedies it may have at law or equity. XVII. TRANSFER OF INTERESTS a. It is the intent of the parties that part or all of the Leased Property be developed as a retail shopping area. As part of such development or operation, Lessee may seek to assign its rights hereunder to a developer or property manager in exchange in part for a long-term agreement of Lessee to operate an anchor supermarket on the Leased Property. In this or any other case, Lessee, with City's written consent, which shall not be 11 - Lease Lessor: Lessee: 283-3441 FAX 283-3014 Timothy J. Rogers City Attorney CITY OF KENAI 210 Fidalgo Kenai, Alaska 99611 unreasonably withheld or delayed, may assign for other than collateral purposes, in whole or in part, its rights as Lessee hereunder. Any assignee of part or all of the Leased Property shall assume the duties and obligations of the Lessee as to such part or all of the Leased Property. No such assignment, however, will discharge Lessee from its duties and obligations hereunder. b. For the purpose of obtaining interim or permanent (financing or refinancing from time to time of the improvements to be placed upon the Leased Property, and for no other purpose, Lessee, after giving written notice thereof to the City, may from time to time encumber by mortgage, deed of trust, assignment or other appropriate instrument, Lessee's interest in the Leased Property and in and to this Lease, provided such encumbrance pertains only to such leasehold interest and does not pertain to or create any interest in City's title to the Leased Property. If such mortgage, deed of trust, or assignment shall be held by a bank or other established lending or financial institution (which terms shall include an established insurance company and qualified pension or profit sharing trust) and such institution shall acquire the Lessee's interest in the Lease as a result of a sale under said encumbrance pursuant to a foreclosure or other remedy of the secured party or through any transfer in lieu of foreclosure, or through settlement of or arising out of any pending or contemplated foreclosure action, such lending institution shall have the privilege of transferring its interest in the Lease to a nominee or a wholly -owned subsidiary corporation without the prior consent of the City, provided however, such transferee shall assume all of the covenants and conditions required to be performed by the Lessee, whereupon such lending institution shall be relieved of any further liability under such Lessee from any default after such transfer. Such lending institution or the nominee or wholly -owned subsidiary corporation Ito which it may have transferred the Lease, or any other lending institution which may at any time acquire the Lease shall be relieved of any further liability under such Lease from and after a transfer of the Lease. c. A leasehold mortgagee, beneficiary of a deed of trust or security assignee shall have and be subrogated to any and all rights of the Lessee with respect to the curing of any default hereunder by Lessee. d. If the holder of any mortgage, or the beneficiary of any such deed of trust, or the security assignee shall give the City written notice containing the name and post office address of such holder, the City shall thereafter give the holder a copy of any notice of default by the Lessee at the same time as any notice of default shall be given by the City to the Lessee, and the City will not thereafter accept any surrender of the Lease or enter into any modification of the Lease without prior written consent 12 - Lease Lessor: Lessee: 283-3441 FAX 283-3014 Timothy J. Rogers City Attorney CITY OF KENAI 210 FIdalgo Kenai, Alaska 99611 of the holder of any mortgage, beneficial interest under a deed of trust, or security assignee in this Lease. e. If, by reason of any default of the Lessee, either this Lease or any extension thereof, shall be terminated at the election of the City prior to the stated expiration therefor, the City will enter into a new Lease with the leasehold mortgagee, deed of trust beneficiary or security assignee for the remainder of the term, effective as of the date of the termination, at the rent and additional rent, and on the terms herein contained, subject to the following conditions: (1) Such mortgagee, beneficiary, or security assignee shall make written request to the City for such new Lease within forty (40) days after the date of such termination and such written request shall be accompanied by a payment to the City of all sums then due to the City under the Lease. (2) Such mortgagee, beneficiary, or security assignee shall pay to the City, at the time of the execution and delivery of such new Lease, any and all sums due thereunder in addition to those which would at the time of the execution and delivery thereof be due under this Lease but for such termination, and in addition thereto, any reasonable expenses, including legal and attorneys' fees, to which the City shall have been subjected by reason of the default. (3) Such mortgagee, beneficiary, or security assignee jshall, on or before the execution and delivery of such new Lease, perform all other conditions required to be performed by the Lessee to the extent that the Lessee shall have failed to perform such conditions. f. If a lending institution or its nominee or wholly -owned subsidiary corporation shall hold a mortgage, deed of trust, or similar security interest in and to this Lease and shall thereafter acquire a leasehold estate, derived either from such instruments or from the City, and if such institution, nominee, or corporation shall desire to assign this Lease or any new Lease obtained from the City (other than to a nominee or to a wholly - owned subsidiary corporation as permitted by the above provisions) to an assignee who will undertake to perform and observe the conditions of the Lease required to be performed by the Lessee, the City shall not unreasonably withhold or delay its consent to such assignment and assumption, and any such lending institution, nominee, or subsidiary shall be relieved of any further liability under the Lease from and after the assignment. If the proposed assignor shall assert that the City is unreasonably withholding or delaying its consent to any such proposed assignment, such dispute shall be resolved by arbitration pursuant to the Uniform Arbitration Act as enacted in Alaska. 13 - Lease Lessor: Lessee: 283-3441 FAX 283-3014 Timothy J. Rogers City Attorney CITY OF KENAI 210 Fidalgo Kenai, Alaska 99611 g. Notwithstanding anything above, in the event an assignee for security purposes enforces its security interest against the leasehold interest of the Lessee and the assignee succeeds to the Lessee's rights hereunder, such assignee shall not be liable for the payment of Minimum Annual Rent in excess of the amount determined in Article II (b) during the initial five years of the lease term. This clause is intended to provide a partial subordination of the ground rent payment so that any increase in ground rent does not reduce the lenders' security. Nothing herein revises Lessee's obligation to pay the ground rent described in Article II. 1XVIII. TITLE/NON DISTURBANCE a. The City warrants that it has good and clear title to the Leased Property and that it has the right and capacity to transfer this leasehold interest to Lessee and that such leasehold interest is not subject to any existing liens, mortgages, security interests or similar encumbrance. b. The City agrees that the Lessee or its successors in interest, upon paying rent and performing other covenants, terms and conditions of this Lease, shall have the right to quietly and peacefully hold, use, occupy and enjoy the Leased Property without hinderance or molestation, including, but not limited to, claims by anyone alleging paramount title or alleging claims through the City. For the purposes of this section, insubstantial inconvenience due to public works projects in or about the Leased Property shall not be construed as a denial of the right to quiet and peaceable possession. XIX. NO PARTNERSHIP OR JOINT VENTURE CREATED It is expressly understood that the City shall not be construed or held to be a partner or joint venturer of Lessee in the conduct of business on the Leased Property; and it is agreed that the relationship between the parties is, and shall at all times remain, landlord and tenant. XX. BANKRUPTCY To the extent permitted by law, if the Lessee shall make an assignment of its interests hereunder for the benefit of creditors or shall be adjudged bankrupt, or if a receiver is appointed for the Lessee's assets and if the appointment is not vacated within thirty (30) days, or if a voluntary petition is filed under the Bankruptcy Act, then and in any event, the City may, upon giving the Lessee sixty (60) days written notice and opportunity to cure, terminate this Lease. 14 - Lease Lessor: Lessee: 283-3441 FAX 283-3014 Timothy J. Rogers City Attorney CITY OF KENAI 210 Fidalgo Kenai, Alaska 99611 PARTIAL INVALIDITY If any term, provision, condition, or part of this Lease is declared by a court of competent jurisdiction to be invalid or unconstitutional, the remaining terms, provisions, conditions, or parts shall continue in full force and effect as though such declaration was not made. I. MODIFICATION AND AMENDMENT a. This Lease may not be modified or amended orally or in any manner except by an agreement in writing, signed by the parties or their successors in interest. b. Notwithstanding anything to the contrary, in order to aid the Lessee in the financing of the improvements to be situated herein, the City agrees that in the event the proposed mortgagee, beneficiary, or security assignee in any interim or permanent loan on the security of the leasehold interest of the Lessee and improvements to be situated thereon so requires, the City will make a reasonable effort to amend this Lease in order to satisfy such requirements upon the express condition and understanding that such variance in language will not materially prejudice the City's rights hereunder nor be such as to alter in any way the rental obligations of the Lessee hereunder nor its obligations to comply with all existing laws and regulations of the City relating to the leasing of airport lands, and to all applicable federal statutes and regulations. XXIII. EMINENT DOMAIN a. In the event the Leased Property or any part thereof shall be condemned and taken for a public or quasi -public use, then upon payment of any award or compensation arising from such condemnation, there shall be such division of the proceeds, abatement of rent payable during the term or any extension of the term, and such other adjustments as the parties may agree upon as being just and equitable under all the circumstances. If the City and Lessee are unable to agree within thirty (30) days after such an award has been paid into court, upon what division, annual abatement in rent, and other adjustments are just and equitable, the dispute shall be determined by arbitration according to the provisions of Article II (j). b. If title to the whole or materially all of the Leased Property shall be taken, this Lease shall terminate and all rent and other charges under this Lease shall be apportioned as of the date of vesting of title in such taking or proceeding. For purposes of this Article, a taking of "materially all" of the Leased Property as distinguished from a taking of the whole of the 15 - Lease Lessor: Lessee: 283-3441 FAX 283-3014 Timothy J. Rogers City Attorney CITY OF KENAI 210 Fidaigo Kenai, Alaska 99611 Leased Property, means a taking of such scope that the untaken portion of the property is insufficient to permit the restoration of the then -existing improvements thereon so as to constitute a complete, rentable project capable of producing a proportionately fair and reasonable net annual income, taking into consideration the payment of all operating expenses, including but not limited to, the rent, and all other charges under the Lease and after performance of all covenants, agreements, and provisions herein provided to be performed by Lessee. The determination of what constitutes a fair and reasonable net annual income shall be governed by reference to the average net annual income produced by the Leased Property during the five years immediately preceding the taking. C. In the event of a taking of less than materially all of the Leased Property, this Lease shall nonetheless continue, but the rent to be paid by Lessee shall be reduced in the ratio that the rental value of the portion taken bears to the rental value of the entire Leased Property. d. Should the taking of less than materially all of the Leased Property result in rendering the remaining part of the Leased Property unsuitable for the purposes for which the Project was designed, then Lessee in either event at its option upon thirty (30) days notice to the City, given at a time within sixty ,(60) days after the vesting of title in the condemnor, may terminate this Lease. Upon that termination, the rent and other charges under this Lease shall be apportioned as of the date of termination. XXIV. SUCCESSORS IN INTEREST This Lease shall be binding upon and shall inure to the benefit of the respective successors and assigns of the parties hereto. XXV. CHOICE OF LAW This Lease and the respective rights and obligations of the parties hereunder shall be interpreted in all respects according to the laws of the state of Alaska. XXVI. NOTICES a. Any notice required to be given by the terms of this Lease shall be in writing and shall be deemed to be duly given only if delivered personally or mailed by certified or registered mail in a prepaid envelope addressed to the parties at the addresses set forth below. Any notice so mailed shall be deemed delivered on the date five (5) days after the date it is deposited in a U.S. general or branch post office. The addresses for notice 16 - Lease Lessor: Lessee: 283-3441 FAX 283-3014 Timothy J. Rogers City Attorney CITY OF KENAI 210 Fidalgo Kenai, Alaska 99611 to the parties may be changed by giving notice in writing of such change to all parties affected by the same means as described above, at least fifteen (15) days prior to the effective date of the change. b. The City shall also mail a copy of any notice to be given to the Lessee, by certified or registered mail, to any leasehold lender (mortgagee, beneficiary of a deed of trust, or security assignee) who shall have given the City notice of such mortgage, deed of trust, or security assignment. c. Notices shall be sent to the following addresses: To City: City of Kenai Office of the City Manager 210 Fidalgo St. Kenai, AK 99611 To Lessee: Carr-Gottstein Foods Co. 6411 A Street Anchorage, Alaska 99518 attn: Mark Williams, Vice President XXVII. WAIVER The receipt of rent by the City with knowledge of any breach of the Lease by Lessee, or any default on the part of the Lessee in observance or performance of any of the conditions or covenants of the Lease shall not be deemed to be a waiver of any provisions of the Lease. No failure on the part of a party to enforce any covenant or provision of this lease, nor any waiver of any right thereunder by a party, unless in writing, shall discharge or invalidate such covenants or provisions, or affect the right of the party to enforce the same in the event of subsequent breach or default. The receipt by City of any rent or any other sum of money after the termination of the term of this Lease or after the giving by the City of any notice to effect such termination shall not reinstate, continue or extend the term of this Lease or destroy or impair the efficacy of such notice of termination as may have been given thereunder by the City to the Lessee prior to the receipt of any such sum of money or other consideration, unless so agreed to in writing by the City. XXVIII. ESTOPPEL CERTIFICATE - RECORDING a. Each party shall, at any time and from time to time as requested by the other party, upon not less than ten days prior written notice, execute, acknowledge, and deliver to the other a statement in writing certifying that this Lease is unmodified and in full force and effect (or if there have been modifications, that the same is in full force and effect as modified and stating 17 - Lease Lessor: Lessee: 283-3441 FAX 283-3014 Timothy J. Rogers City Attorney CITY OF KENAI 210 Fidalgo Kenai, Alaska 99611 the modifications), certifying the dates to which the Rent and other charges, if any, have been paid, and stating whether or not, to the best knowledge of the signer, the other party is in default beyond any applicable grace periods provided herein in performance of any of its obligations under this Lease, and if so, specifying each such default of which the signer may have knowledge, it being intended that any such statement delivered pursuant hereto may be relied upon by others with whom the requesting party may be dealing. b. From time to time, at the request of the City, Lessee, at its expense, will record such documents, file such continuation statements, pay such fees, and comply with such laws and regulations as are necessary to preserve and protect the rights of the City as Lessor under this Lease. A memorandum of this Lease setting forth all easements shall be executed by the City and Lessee and recorded in the Kenai Recording District, Alaska. IXXIX. OPTION TO PURCHASE a. After this lease has been in effect for a period of two years, or after the Lessee has completed the development schedule as outlined in the site plan submitted to the City, or whichever is sooner, Lessee shall have an option to purchase the Leased Property at the fair market value exclusive of any improvements to or on the property after the effective date of this Lease and developable to its highest and best use under the law as in force on the date the option is exercised. If the Lessee exercises its option to purchase, a new determination of fair market value shall be made according to the methods described in Article II. Lessee may, within sixty (60) days of the final determination of fair market value, withdraw its exercise of option to purchase, which it may then exercise at any future time during the term of the lease. b. Lessee may exercise this Option by giving the City notice, in writing, of the Lessee's intent to exercise and by submitting its appraisal of fair market value. Within sixty (60) days of the final determination of fair market value according to Section II, Lessee shall either withdraw its exercise or notify the City of its present ability to deliver full payment of the purchase price to the City, payable in cash in lawful money of the United States. City shall deliver to Lessee, in exchange for the purchase price an executed quit claim deed in recordable form conveying the Leased Property. 18 - Lease Lessor: Lessee: 263-3441 FAX 263.3014 Timothy J. Rogors City Attorney CITY OF KENAI 210 Fidalgo Kenai, Alaska 99611 IXXX. MULTIPLE LEASES a. It is contemplated that, from time to time, Lessee may find it desirable to develop, use, sublet, and/or mortgage the Leased Property in separate parcels. If the Lessee so requests in writing, the City shall agree to terminate this Lease and to contemporaneously execute up to five leases for portions of the Leased Property, which multiple leases will contain all the provisions hereunder, with the exception that each lease may contain additional provisions which provide, in effect, that the respective lessees and persons designated by them may use certain portions of the Property in common with each other. b. Should, in the reasonable opinion of the Lessee, it become desirable that the Property be subdivided or otherwise re - platted to accomplish the purposes described above, the parties agree to cooperate to accomplish said subdivision or re -platting, including the execution of any necessary documents in a timely manner. Nothing in this agreement shall be interpreted as a commitment by the City to abrogate any of its legal duties to review any such subdivision in the normal course of the governmental regulatory process. C. If some or all of the lessees under the multiple leases given written notice to the City that they desire their respective leaseholds to be governed by a single lease, the City shall agree to terminate the applicable leases and contemporaneously execute a single lease for the property involved, which lease shall contain all the provisions hereunder. XXXI. FORCE MAJEURE If the City or Lessee is delayed, hindered, or prevented from performing any act required hereunder by reason of strikes, lockouts, labor troubles, inability to procure materials, failure of power, earthquake, restrictive government laws or regulations, riots, insurrection, criminal act of a third party, war, contamination, the act, failure or default of the other party, or any other reason beyond its control, then performance of the act shall be excused for the period of the delay. In that event, the period for performance of an act shall be extended for a period equivalent to the period of the delay. XXXII. VENUE This agreement shall be governed by, construed and enforced in accordance with the laws of the State of Alaska. Venue for any litigation between the parties arising from this lease shall be in the State of Alaska, Third Judicial District, at Kenai. 19 - Lease Lessor: Lessee: 283-3441 FAX 283-3014 Timothy J. Rogers City Attorney CITY OF KENAI 210 Fidalgo Kenai, Alaska 99611 IXXXIII. INTERPRETATION This Lease embodies the entire agreement between the parties. It may not be modified or terminated except as provided herein or by other written agreement between the parties. If any provision is invalid, it shall be considered deleted from this Lease and such invalidity shall not invalidate the remaining provisions of this Lease. IXXXIV. AGREEMENT IN EFFECT This Lease shall be in effect as of the date it is executed by the authorized representatives of both parties. If the parties execute the agreement on different dates, the effective date shall be the date the second party signs the Lease. IN WITNESS WHEREOF, the parties hereto have hereunto set their hands, the day and year stated in the individual acknowledgments below. LESSOR: LESSEE: STATE OF ALASKA ) ss THIRD JUDICIAL DISTRICT CITY OF KENAI By Wm. J. Brighton, City Manager CARR-GOTTSTEIN FOODS CO. By Mark Williams Vice President THIS IS TO CERTIFY that before me the undersigned Notary Public, on the day of , 1990, WM. J. BRIGHTON, being personally known to me, appeared before me and acknowledged the voluntary and authorized execution of the foregoing Lease for the municipal corporation named and in the capacity indicated in the execution thereof. 20 - Lease NOTARY PUBLIC for State of Alaska My Commission Expires: Lessor: Lessee: 283-3441 FAX 283-3014 STATE OF ALASKA ) )ss THIRD JUDICIAL DISTRICT ) THIS IS TO CERTIFY that before me the undersigned Notary Public, on the day of , 1990, personally appeared Mark Williams, known to be the Vice President of Carr-Gottstein Foods Co., a Delaware corporation, and acknowledged to me that he signed the foregoing Lease for and on behalf of said corporation, done by the authority of its Board of Directors, for the uses and purposes therein mentioned. Timothy J. Rogers 21 - Lease City Attorney CITY OF KENAI 210 Fidalgo Kenai, Alaska 99611 283-3441 FAX 283-3014 NOTARY PUBLIC for State of Alaska. My Commission Expires: Lessor: Lessee: CITY OF KENAI Cate Wecs3vqd Y2D P.O. 80X S80 • XIMAI. ALASKA • PHONI 213-763S �gnatur,e tttl�) LEASE APPLICATION Name of Applicant Carr Gnt t-pin Tnr- Addre.0 6401 A Street AnchnragA Alas;ca ggS1 R � r Business Name and Address Carr Gottstein Inc. 6401 A Street Anchorage, Alaska 99518 Kenai Peninsula Borough Sales Tax No. �0 ( if applicable) State Business License No. 011143 (if applicable) Telephone _ 564-2424 Lot Description Tracts B-2 .T_T_A D 4A Desired Length of Lease 99 years Property to be used for Commercial Food/RPt�,•i _QmI -c Description of Developments (type, constru::ion, size, etc.) Attach development plan to scale (1" 0 50''), Showing all hUildinos planned. Time Schedule for Proposed Development: Beginning Date Construction - Fall 1992 Proposed Completion Date Spring 1993 Estimated Vllue of Construction $5. million Dates April 4, 1990 Signeds er o s ei Oats: Signed: 1 CI TY OF KENAI CHECK LIST FOR SITE PLANS ALL DTEMS MUST BE COMPLETED BEFORE APPLICATION CAN aE ACCEPTED Drawings should be drawn to scale 111- 50 ft.*, and must show layout of the lot applied for and the location of all improve- ments proposed. Drawings must show: I. Existing buildings W 2. Proposed buildings See Site Plan 3. Parking facilities (how many spaces and where located) Stl.-z Sj to Plan 4. Site improvements Phase Iclearin a. Areas to be cleared and method of disposal g com P complete, b. Proposed gravel or paved areas SeSite Plan C. Landscaping plan (retention of natural vegetation and/or proposed plant_ng areas) See Site Plan 5. Building set backs See Site Plan 6. Drainage plan and method of snow removal On Site 7. Circulation plan (all entrances, exits and on -site access) See Site Plan 8. Location of sign(s) - sign permit required None At Present i 9. Fencing NONE 10. Curb cuts (where applicable) Sa.-Site Plan 11. Building height 25' 12. Buildings on or near the airport on airport lands must complete FAA form 7460-1 NA *This does not have to be drawn by an architect or engineer. 2 i BUILDING INFORMATION On this sheet submit a drawing of building planned, drawn to scale. Scale t.° 1" = 60 ft . Construction Materials (wood frame, steel building, etc.) Concrete block - c1PPt-�a, nii aDD1i Ahl p building ram_ THIS DRAWING SHOULD BE AS COMPLETE AS POSSIBLE SEE ATTACHED Notes If a prepared drawing is submitted, attach to this app ication and disregard this peg@, filling in construction materials only. 3 Description of Property CONDITIONS OF ACCEPTANCE (To be completed by the City) Annual rent rate or cost Zoned for Permits required x.G' 9 Assessments ;%dwe Insurance requiredd,4 Apz� Construction must begin by ,"Z Completion date for major construction THIS APPLICATION WILL BE MADE A PART OF THE LEASE Planning Commission Approval: By: �Q �- , Date of Approval IgQo Chairman City Council Approval: By: , Date of Approval City Clerk f 4 i i 0 a a m �y Y 0 a -e -- `, d • �iww` 60,E AI�' �••• 30 ti r ` so 4a 00 O. w• O AIR 00 � h t +� fl 'a so 7 er J ♦ t ° - �eQoo _ UTfE,TYNt � r ♦ p _ �' �EME r� Oo - %?o, po h t _ 1/� c 32 E •!4.0o Ups SU3D. , .� 00. q N \A 3 S n 4�0 i0 0 F e90 00%00 "F/ HEA powerl�ine 10 esm,t oo 1 each skis. f t : N6i°� chi A '10sw` ��VC TRACT /.� • (per B . U /� B_) `\ u G) co' 10.54 Acres H ati >a0 F � 8 2 �p i ,y TRACT B- 2 �. %C mQ 13. 93 Acres 1 4 3 r— ra � r Section Une r 32 33 n ,t, 5 4 / ?e KENAll O J SPUR AiRRORT LEAS` PROP aA 0 /�X SPUR SUoD. No. i CURVE DATA his survey) survey) its survey) :Set this survey) D 82-32 RECORD I FOUND NO C OI O O O ZS 37020'00" 14017'07" 8058*04" 1804d47" 14026'17" 7041'46'* 0°35'30" RAO 360.12' '582.40' 1532.40' 710.33' 1565.79' 1576.94' 1576.94' ARC 234.65' 394.5S 239.85' 231.58' 394.57' 211.82' 25.46' TAN 121. 66' 198.29 120.17' 116.83' 198.33' 106.07, 12.73' CHO 230.52' 393.51' 239.60 230.56' 393.52' 211.66' 25.46' CB N42036'18W N63°34'27"E N52°t022 E N47°5141�E I MOVE TO CONVENE IN AN EXECUTIVE SESSION OF THE COUNCIL OF THE CITY OF KENAI, CONCERNING MATTERS: (circle one or more appropriate reasons below) 1. THE IMMEDIATE KNOWLEDGE OF WHICH WOULD CLEARLY HAVE AN ADVERSE EFFECT UPON THE FINANCES OF THE CITY OF KENAI. 2. THAT TEND TO PREJUDICE THE REPUTATION AND CHARACTER OF ANOTHER. 3. WHICH BY LAW, MUNICIPAL CHARTER, OR ORDINANCE, ARE REQUIRED TO BE CONFIDENTIAL. I REQUEST THAT THE REMAIN AVAILABLE FOR ATTENDANCE. AND AUTHORITY: AS 44.62.310(b), (c) KMC 1.15.030 Kenai Charter Section 2-6 Additional Authority: , Smith v. Anderson, 676 S.W.2d 328 (Tenn. 1984) C �A 1791-1991 CITY OF KENAI Capdal 4 4�a 11 210 FIDALGO KENAI, ALASKA 99611 TELEPHONE 283 - 7535 FAX 907-283-3014 MEMORANDUM TO: The Kenai City Council FROM:(�,-e� Cary R. Graves Deputy City Attorney DATE: October 22, 1990 RE: Carr-Gottstein Lease This morning I spoke by telephone with Michael Moxness, staff counsel for Carr-Gottstein, regarding the lease on the old Fred Meyer property. I recommended some changes in the version of the lease sent to the city last week. Those changes reflected some concerns which the administration had regarding Carr's proposal. Mr. Moxness and I appear to have agreed to a version of the lease to submit to council and Carr's for final approval. I have telefaxed Mr. Moxness a copy of the lease which will be considered for council's approval on Thursday evening. A copy of the lease is attached. It is my understanding that a representative of Carr's will be at the meeting on Thursday. There are two sections of the lease which need some discussion, as they are not ordinarily included in our leases. Article VII deals with hazardous material on the site. In paragraph (b), the City agrees to indemnify Carr's from any damages due to hazardous waste on the leased property at the time of the execution of the lease. In particular, the paragraph refers to contamination of the groundwater from the "Dowell- Schlumberger" site. Should the City have to indemnify Carr's for any such hazardous contamination, the City could pursue legal action seeking compensation from the responsible party. In paragraph (a) of Article VII, Carr's agrees to indemnify the City for damages should it introduce any hazardous waste on the property. Page 2 - Council Memorandum Re: Carr-Gottstein Lease October 22, 1990 Article XVII, paragraph (g) was inserted at the request of Carr's. They indicated it is needed in order to secure financing for the construction project. It deals with a security assignment of the lease. Under this provision a bank or other entity which took a security assignment of Carr's leasehold and later foreclosed on that leasehold interest would not be responsible for any amount of minimum annual rent in excess of that charged during the first five years of the lease. Any minimum rental amount over that charged during the first five years would remain the responsibility of Carr's. Following is a hypothetical example illustrating the potential operation of this provision. In this hypothetical the minimum annual rent for the first five year period was $1,000.00. The minimum annual rental for the second five year period was $1,500.00. During the second five year period a security assignment of the lease is given to a bank. The bank then forecloses on the leasehold interest of Carr's. Under this section of the lease, the bank would be liable for no more than $1,000 of the minimum annual rental and Carr's would be responsible for the remaining $500.00 of the rent. Should the bank then assign the lease to a third party, that party would be responsible for the entire $1,500.00 of minimum annual rent. This provision allocates who will be responsible for payment of the minimum annual rent following a default on a security assignment by Carr's. It does not relieve Carr's of any liability to pay rent under the lease. As I indicated at the last meeting, I will be in Washington, D.C. during the council's special session. If council has any questions regarding this lease, the legal secretary has the phone number of my hotel. I will make it a point to be in my room and available during the council meeting. CRG:dc Attachment/Lease LEASE OF AIRPORT LANDS This Agreement, entered into this - day of , 1990, by and between the CITY OF KENAI, City Hall, 210 Fidalgo Avenue, Kenai, Alaska, 99611, a home -rule municipal corporation, (hereinafter the "City") and CG Acquisition Co., Inc., d/b/a Carr- sottstein Foods Co., 6401 A Street, Anchorage, Alaska 99501, a Delaware corporation (hereinafter "Lessee"), is as follows: That in consideration of the mutual performance of the ovenants herein described, the City hereby demises and leases to he Lessee and the Lessee hereby leases from the City the ollowing described property in the Kenai Recording District, tate of Alaska: Tracts B-1 and B-2, Cook Inlet Industrial Air Park Subdivision, Kenai, Alaska The land described above, which is subject to the terms of this Lease, in the state in which it exists immediately prior to the execution of the Lease, shall be referred to as the Leased Property. It is the intent of the parties that Lessee be permitted to develop part or all of the Leased Property consistent with the uses described below. The improvements placed upon the Leased Property by Lessee shall be referred to as the Project. II. TERM The term of this lease is for 99 years, commencing on the day of , 1990, through the day of , 12089. III. RENT Subject to the terms of subsection (h) below, rent for the Property shall be payable as follows: a. Right of entry and occupancy is authorized as of the first day of , 1990, and the first rent shall be computed from such date. b. The Minimum Annual Rent shall be determined as follows: 1. The Minimum Annual Rent shall be six percent (6%) of the fair market value as determined according to the terms of this Article II. Timomy J. Rogers City Attorney 1 - Lease CITY OF KENAI 210 Fidalgo Kenai, Alaska 99611 283-3" 1 FAX 283-3014 Tim_ .y J. Rogers City Attorney CITY OF KENAI 210 Fidalgo Kenai, Alaska 99611 2. The parties have determined the fair market value of he Leased Property at the date of execution hereof to be Nine undred ninety-six thousand eight hundred dollars ($996,800). c. Minimum Annual Rent for the fiscal year beginning July 1 nd ending June 30 shall be payable in advance on or before the irst day of July of each year. However, Lessee may exercise an ption at the execution hereof and/or at the beginning of each new ease year to pay rent in equal monthly installments, payable in dvance on or before the first business day of July and on or efore the first business day of each month thereafter. Any ental payments delinquent for more than ten business days shall ear interest from the due date(s) thereof at the rate of eight ercent (8%) per annum. d. Late Fee - If any rental payments remain delinquent for ore than ten (10) business days, Lessee shall pay to City a late ee calculated as ten percent (10%) of the amount becoming so elinquent. e. Minimum Annual Rent for any period of time which is less than one full year shall be prorated based on the rate of the last full year. f. In addition to the Minimum Annual Rent, the Lessee shall pay to the appropriate taxing authority the following lawful levies assessments.and charges: 1. Taxes pertaining to the leasehold interest of Lessee not otherwise included in the calculation of taxes and assessments provided for in subparagraph (3) of this paragraph (f). 2. Any sales taxes levied upon the transfer of Minimum Annual Rent, based upon monthly payments whether rent is paid on a monthly or annual basis. 3. All ad valorem taxes and assessments levied upon the Leased Property by a governmental authority, as if Lessee was considered the legal owner of record of the Leased Property. g. Lessee shall have the right to contest or review any and all taxes, assessments or similar levies by legal proceedings or in such manner as Lessee in its reasoned opinion shall deem advisable, which proceedings or other steps taken by Lessee, if instituted, shall be conducted diligently at its own expense and free of expense to the City in its role as Lessor. No such contest shall defer or suspend Lessee's obligations to pay any sum provided for herein pending the contest if nonpayment would affect or impair the City's title to the Leased Property, but if by law it is necessary that such payment be suspended to preserve or perfect Lessee's contest, then the contest shall not be undertaken without there being first deposited in escrow a sum of money equal 2 - Lease 283-3441 FAX 283-3014 Timo,oy J. Rogers City Attorney CITY OF KENAI 210 Fidalgo Kenai, Alaska 99611 o the amount which is the subject of the contest, to be held as n indemnity fund to pay such amount upon conclusion of the ontest. h. Payment of rent made by check, bank draft, or money er, shall be made payable to the City of Kenai and delivered to City Administration Building in Kenai, Alaska. i. Beginning five years from the first July 1 following the execution of , this Lease and at five year intervals upon July 1 thereafter, the Minimum Annual Rent may, at the option of either party, be subject to redetermination for increase for increase or decrease based on the percentage rate (set in Section b(1) above) of fair market value of the Leased Property exclusive of any improvements to or upon the property after the effective date of this lease. In order to exercise this option, a party must give written notice to the other of its intent to do so no later than May 1 (or the first business day thereafter) of the year in question. Any increase or decrease in Minimum Annual Rent shall take effect as of July 1 of the year in question. The method of re -determination of Minimum Annual Rent shall be as follows: 1. Upon giving notice of its intent to seek re- determination of the Minimum Annual Rent, the party(s) seeking such redetermination shall submit to the other an appraisal of the fair market value of the Leased Property performed by a qualified, independent MAI appraiser who is familiar with the Kenai area. For purposes of this section, fair market value shall be defined as the highest price estimated in terms of money which a property will bring if exposed for sale on the open market allowing a reasonable time to find a knowledgeable buyer. The fair market value of'the Leased Property will be based upon the condition of the land as it existed on the date of the execution of this Lease. 2. If the other party disputes the amount of the appraisal as described above, it shall, prior to July 1 (or the first business day thereafter) of the year in question, obtain and serve upon the other party its own appraisal of the leased lands by a qualified, independent MAI appraiser familiar with the Kenai area. 3. If the parties are unable to agree before July 1 upon a fair market value for the leased lands as defined above, the determination of fair market value shall be submitted to arbitration according to the provisions of section (j) below. The determination of this arbitration shall be binding and retroactive to July 1 of the year in question. Pending resolution of the dispute, the Minimum Annual Rent shall be paid by Lessee at the same rate as during the prior year. Upon resolution of the dispute, the City will refund or the Lessee will pay the additional amount to make the agreed -upon rate effective as of July 1 of the year in question. 3 - Lease 283-3441 FAX 283-3014 TImv,ny J. Rogem City Attorney CITY OF KENAI 210 Fldaigo Kenai, Alaaka N611 j. If the parties are unable to agree upon a determination of Fair Market Value, they shall submit the question to arbitration as follows: 1. Either party may request arbitration by giving written notice to the other. In addition to such notice, the party requesting arbitration shall deliver written designation of an arbitrator. Within thirty (30) days of receipt of such notice and designation, the other party shall either give notice of its designation of arbitrator or consent to arbitration by the individual named by the requesting party. Failure to respond within thirty (30) days shall be deemed consent to arbitration by the individual named by the requesting party. If the second party designates an arbitrator, the two designated arbitrators shall agree upon the designation of a third arbitrator. All arbitrators designated must be qualified, disinterested individuals knowledgeable of the Kenai area. 2. The arbitration shall be conducted, to the extent consistent with this Lease, in accordance with the rules of the American Arbitration Association (or any organization successor thereto). The arbitrators shall have the right to retain and consult experts and competent authorities, but any such consultation shall be made in the presence of both parties with full rights on the part of both parties to cross-examine such experts and authorities. The arbitrators shall issue their award, upon the concurrence of at least two of their number, not later than 30 days after appointment of the third arbitrator. The decision shall be in writing with copies delivered to each party. 3. Each party shall pay the fees and expenses of the one of the two original arbitrators appointed by such party, unless the second party consents to arbitration by the single arbitrator first chosen. In this case, the fees and expenses of such single arbitrator will be borne equally by the parties. If a third arbitrator is chosen, his fees and expenses shall be borne equally by the parties. General fees and expenses of the arbitration shall be borne equally by the parties. Each party shall bear the expense of its own counsel, if any, experts and preparation and presentation of proof. III. USE OF THE PROPERTY Lessee may use the Leased Property for (i) one or more retail supermarket, drug or variety stores or any combination thereof, (ii) a shopping center, or (iii) any combination thereof. If such usage of the Property becomes uneconomic, inappropriate, or unsuitable due to new or changed circumstances, the Property may be used for any lawful purpose permissible under applicable zoning and governmental land use requirements. 4 - Lease 283.3" 1 FAX 2M301< JIV. CONSTRUCTION AND OWNERSHIP OF THE PROJECT a. Lessee shall commence construction of the Project as described below on or before August 1, 1992. Lessee shall substantially complete construction on or before August 30, 1993. For the purposes of this Lease, substantial completion shall occur when Lessee's construction of the Project has been completed to such an extent and all governmental permits, approvals and conditional occupancy certificate(s) necessary have been obtained so that the Project may be opened for business, notwithstanding that minor or insubstantial details of construction, mechanical adjustment or decoration remain to be performed, the non - completion of which would not materially interfere with the opening of the Project for business. b. The Project will consist of one or more independent buildings erected wholly within the boundary lines of the Leased Property which generally follow the lines of the site plan previously submitted by Lessee to the City. Following completion of construction and upon request, the Lessee will provide to the City a survey of the Leased Property, prepared by a licensed surveyor, showing the location of the Project in relation to the perimeter of the Leased Property. It is agreed that the Lessee may from time to time expand the Project to cover part or all of the Leased Property so long as the structures and improvements constructed by Lessee comply with the permitted uses of the Leased Property as described in Article III and the construction standards described in Article V of this Lease. c. It is the intent of the parties that the Project shall be a supermarket, retail shopping center, or combination thereof. As such, it is contemplated that premises within the Project may be subleased to tenants for the purpose of operating retail sales and service businesses thereon. It is agreed that due to the long term of this Lease, the uses of the Leased Property by Lessee may change in response to changes in the surrounding area. It is also agreed that due to the length of the term of the Lease, structures sand improvements on the Leased Property may from time to time require modification, repair, and reconstruction, including demolition and replacement. Accordingly, the Lessee shall have the right, without prior notice or approval of the City, to modify, re -construct, expand or replace portions of the Project, including exterior areas and signage, so long as the work is consistent with the permitted uses of the Leased Property and the standards described in Article V below. Tirnway J. Rogers City Attorney 5 - Lease CITY OF KENAI 210 Fldalgo Kenai, Alaska 99811 283-3441 FAX 283-3014 d. Lessee shall own the Project, any subsequent modifications or expansions of the Project and any improvements it places on the Leased Property as such improvements are built. Upon termination of this Lease, title to the Project, and subsequent modifications or expansions, and any fixtures then situated on the Leased Property shall pass automatically to the City. CONSTRUCTION STANDARDS Buildings and improvements shall be constructed in a good and workmanlike manner. They shall be kept neat and presentable in a manner compatible with their use and surroundings. Buildings and improvements to the Leased Property shall be constructed and maintained in a manner consistent with all applicable laws, regulations and codes. Lessee shall obtain and keep in force all necessary permits for such construction. IVI. CONDITION OF THE LAND Subject to the provisions of Article VII, the land described herein is leased by the City to Lessee without representation or warranty as to its fitness for any particular use. VII. HAZARDOUS MATERIAL a. If Lessee introduces or causes the introduction of hazardous material onto the Leased Property, the presence of which results in contamination of the Leased Property, and such contamination gives rise to liability of the City for removal of the contamination, the Lessee shall indemnify, defend, and hold the City harmless for any and all claims, judgments, damages, costs, or losses, including, but not limited to reasonable attorneys', engineers' and consultants' fees, which arise during or after the term to the extent such damages or liabilities are a direct result of such contamination. b. To the extent any hazardous material or waste is present in or on the Leased Property at the time of the execution of this Lease including but not limited to, contaminants in the soil or ground water arising or caused in any manner by the activities conducted on Lot 4, Block 4, Cook Inlet Industrial Air Park, Kenai, Alaska, also known as the Dowell Schlumberger site or to the extent the City introduces or allows any such material to be introduced into or onto the Leased Property, the City will indemnify, defend, and hold the Lessee harmless for any and all claims, judgments, damages, costs or losses, including, but not limited to, reasonable attorneys' and consultants' fees, which arise during or after the term of this Lease to the extent such damages or liabilities are a direct result of such contamination. Tlmumy J. Rogers City Attorney 6 CITY OF KENAI 210 Fldalgo Kenai, Alaska 99611 283-3441 FAX 283-3014 - Lease TI n ,,ny J. Rogers City Attorney CITY OF KENAI 210 Fidelgo Kenai, Alaska 99611 c. As used herein, "hazardous material" means any hazardous r toxic substance which is or becomes regulated by the State of laska or the federal government. d. The obligation described in this Article VII shall ive the termination of this lease. IVIII. LIENS Lessee will not permit any liens including, but not limited to, mechanics' laborers' or materialmen's liens obtainable or available under the then existing laws, to stand against the Leased Property for any labor or material furnished to Lessee or claimed to have been furnished to Lessee or to Lessee's agents or contractors, in connection with work of any character performed or claimed to have been performed on the Leased Property or improvements thereon, provided, however, Lessee shall have the right to provide a bond as contemplated by applicable law or otherwise contest the validity or amount of any such lien or claimed lien. On final determination of such lien or such claim for lien, Lessee will promptly pay any judgment rendered with all proper costs and charges and shall have such lien released or judgment satisfied at lessee's own expense. IX. RIGHT OF INSPECTION The City shall have the right to show the Leased Property at all reasonable times during business hours of Lessee to any prospective purchasers, lessees, or mortgagees of the same, and may enter upon the Leased Property for the purpose of ascertaining the condition of the Leased Property or whether Lessee is observing and performing the obligations assumed by it under the Lease, all without hinderance or molestation from Lessee. These rights of entry shall be exercisable upon request made on reasonable advance notice to Lessee (except that no notice shall be required in the event of an emergency.) X. AIRCRAFT OPERATIONS a. The City reserves for the use and benefit of the public a right of flight for the passage of aircraft in the airspace above the surface of the Leased Property, together with the right to cause in said airspace such noise as may be inherent in the operation of aircraft used for navigation of or flight in the air, using said airspace for landing at, taking off from, or operating on the Kenai Airport. (When plans for improvements pursuant to Article IV are approved by the City, the City to the extent of those improvements releases the easement here expressed. 7 - Lease 283-3441 FAX 2833014 Tln._,ny J. Rogers City Attorney CITY OF KENAI 210 Fidalgo Kenai, Alaska 99611 b. The Lessee agrees that it will not erect or permit the rection of any structure of object, nor permit the growth of any rees on the Leased Property, which would be an airport bstruction within the standards of applicable Federal Aviation dministration regulations. XI. COMPLIANCE WITH LAW a. Lessee shall observe, obey and comply with all applicable laws, ordinances, rules, and regulations of the federal, state, borough, or city government, or of any other public authority now or hereinafter affecting the Leased Property or any improvements thereto, whether or not any such laws, ordinances and regulations which may hereinafter be enacted involve a change of policy on the part of the governmental body enacting the same. b. Lessee agrees to hold the City financially harmless: i) from the consequences of any violation of such laws, ordinances, and/or regulations by the Lessee; and ii) from all claims for damages on account of injury, death, or property damage resulting from such violation by Lessee. c. Lessee agrees it will not permit any unlawful occupation, business, or trade to be conducted on the Leased Property or any use to be made thereof contrary to any law, ordinance, or regulation as aforesaid with respect thereto, including zoning regulations, rules and ordinances. XII. NON-DISCRIMINATION The Lessee as a part of the consideration hereof, agrees as a covenant running with the land that: a. No person shall be excluded on the grounds of race, color, or national origin from participation in, denied benefits of, or be otherwise subjected to discrimination in the use of public facilities operated on the Leased Property; b. In the construction of any improvements on, over or under the Leased Property and the furnishing of services thereon, no person shall be excluded on the grounds of race, color or national origin from participation in, denied benefits of, or otherwise be subjected to discrimination; 8 - Lease 283-3441 FAX 283 3014 Timothy J. Rogers City Attorney CITY OF KENAI 210 Fidalgo Kenai, Alaska 99611 C. The Lessee shall use the Leased Property in compliance with the requirements imposed pursuant to Title 49, Code of Federal Regulations, Department of Transportation Subtitle A, Office of the Secretary, Part 21, Nondiscrimination in Federally - assisted Programs of the Department of Transportation - Effectuation of Title VI of the Civil Rights Act of 1964 and as said regulations may be amended; d. In the event facilities are constructed, maintained, or otherwise operated on the Leased Property, the Lessee shall maintain or operate such facilities in compliance with all requirements imposed, pursuant to Title 49, Code of Federal Regulations, Department of Transportation, Subtitle A, Office of the Secretary, Part 21, Nondiscrimination in Federally -assisted programs of the Department of Transportation - Effectuation of Title VI of the Civil Rights Act of 1964, and as said regulations may be amended. XII. PROTECTION OF SUBTENANTS To protect the position of any subtenant hereafter obtaining any interest in the leasehold estate granted Lessee hereunder, the City agrees that in the event of the cancellation, termination, expiration, or surrender of this Lease, the City will accept the Subtenant as its lessee for a period equal to the full unelapsed portion of the term of the sublease, including any extensions or renewals thereof, not exceeding the term of this Lease, upon the same covenants and conditions therein contained, to the extent said covenants and conditions are not inconsistent with any of the terms and conditions of this Lease, provided such subtenant shall make full and complete attornment to the City for the balance of the term of its sublease so as to establish direct privity of estate and contract between the City and the subtenant with the same force and effect as though such sublease was originally made directly between City and subtenant. XIV. INDEMNIFICATION AND INSURANCE a. Except to the extent caused by the negligence or culpable conduct of the City, Lessee covenants to save the City harmless from all actions, suits, liabilities, or damages resulting from any act or omission by the Lessee, its agents or employees and which arises from or out of the Lessee's occupation or use of the Leased Property. This right to indemnity shall include reasonable costs and attorneys' fees incurred by the City in defense of such claims. This section shall not apply to indemnification for liabilities due to contamination by hazardous substances, the obligations for which are specifically described in Article VII. 9 - Lease 2833441 FAX 283 3014 Timothy J. Rogers City Attorney CITY OF KENAI 210 Fidalgo Kenai, Alaska 99611 b. Lessee, at its own expense, shall keep in force during term of this Lease, insurance in the following types and 'Its: i) Public liability insurance in common use for commercial structures covering the Leased Property and Lessee's use thereof against claims for personal injury, death, and property damage occurring upon, in or about the Leased Property, such insurance to afford protection to the combined single limit of not less than $500,000; ii) Workers compensation insurance covering Lessee's employees in form and amounts in compliance with Alaska statute; c. All such policies shall name the City as Additional Insured. Lessee agrees that any insurance coverage furnished hereunder shall in no way limit its responsibility to indemnify the City as described in section (a) above. d. Lessee may provide the coverage described in section (b) above through an adequately funded and commercially reasonable self-insurance program. To the extent the required coverage is obtained through third -party carriers, Lessee shall provide to the City Certificates of Insurance evidencing such coverage as attachments hereto. IXV. SURRENDER AT TERMINATION a. Lessee shall, on the last day of the term of this Lease, quit and surrender the Leased Property, together will all Improvements, in good condition and repair, normal wear and tear excluded, free and clear of occupancies, unless expressly permitted by the City in writing, and free and clear of all encumbrances and liens except those created by and for the City. b. At the expiration of the term of the Lease or earlier termination thereof, title to the buildings and improvements constructed on the Leased Property by Lessee shall, without compensation to Lessee, then become the City's property without requirement of deed, conveyance, or bill of sale. However, if the City shall require any document in confirmation of this transfer, Lessee shall execute, acknowledge, and deliver the same. C. Lessee shall retain ownership of all trade fixtures and business equipment and furnishings installed in the Project by Lessee or its contractors. Lessee may remove any of such trade fixtures, equipment, or furnishings at any time during the Term and shall remove all thereof prior to expiration of the Term. Any such property not removed within thirty days of the expiration of the Term of the Lease shall, at the election of the City, become the City's property without payment, or be deemed abandoned and removed by City, at Lessee's expense. 10 - Lease 2833441 FAX 283.3014 Timothy J. Rogers City Attorney CITY OF KENAI 210 Fidalgo Kenai, Alaska 99611 I. DEFAULT a. If Lessee shall fail to pay any part of the rent or other um agreed to be paid hereunder on the date due, the City shall by ritten notice give Lessee thirty days after receipt of such otice to cure such deficiency. If Lessee fails to cure the eficiency within this time, it shall be in default under the ease. b. If Lessee fails in the observance or performance of any of its other covenants or obligations provided for in this Lease on Lessee's part to be observed or performed, the City shall by written notice give Lessee sixty (60) days after receipt of such notice to cure such deficiency. If Lessee fails to cure the deficiency within this time, it shall be in default under the Lease. Notwithstanding the above, if the deficiency is such that it is not reasonably capable of cure within sixty (60) days, Lessee shall not be in default so long as it begins work to cure the deficiency within the sixty (60) day period and diligently prosecutes such work in good faith to completion. c. If the City fails in the observance or performance of any of its other covenants or obligations provided for in this Lease on the City's part to be observed or performed, the Lessee shall by written notice give City sixty (60) days after receipt of such notice to cure such deficiency. If City fails to cure the deficiency within this time, it shall be in default under the Lease. Notwithstanding the above, if the deficiency is such that it is not reasonably capable of cure within sixty (60) days, City shall not be in default so long as it begins work to cure the deficiency within the sixty (60) day period and diligently prosecutes such work in good faith to completion. d. In the event of a default, including the applicable grace periods defined above, the aggrieved party may give notice of its intent to terminate the Lease unless cure is effected within five days thereafter and may proceed with any other rights or remedies it may have at law or equity. XVII. TRANSFER OF INTEREST a. It is the intent of the parties that part or all of the Leased Property be developed as a retail shopping area. As part of such development or operation, Lessee may seek to assign its rights hereunder to a developer or property manager in exchange in part for a long-term agreement of Lessee to operate an anchor supermarket on the Leased Property. In this or any other case, Lessee, with City's written consent, which shall not be unreasonably withheld or delayed, may assign for other than collateral purposes, in whole or in part, its rights as Lessee hereunder. Any assignee of part or all of the Leased Property shall assume the duties and obligations of the Lessee as to such 11 - Lease 283-3441 FAX 283-3014 Timothy J. Rogers City Attorney CITY OF KENAI 210Fidalgo Kenai, Alaska 99611 art or all of the Leased obligations of the Lessee as to such art or all of the Leased Property. No such assignment, however, ill discharge Lessee from its duties and obligations hereunder. b. For the purpose of obtaining interim or permanent financing or refinancing from time to time of the improvements to be placed upon the Leased Property, and for no other purpose, Lessee, after giving written notice thereof to the City, may from time to time encumber by mortgage, deed of trust, assignment or other appropriate instrument, Lessee's interest in the Leased Property and in and to this Lease, provided such encumbrance pertains only to such leasehold interest and does not pertain to or create any interest in City's title to the Leased Property. If such mortgage, deed of trust, or assignment shall be held by a bank or other established lending or financial institution (which terms shall include an established insurance company and qualified pension or profit sharing trust) and such institution shall acquire the Lessee's interest in the Lease as a result of a sale under said encumbrance pursuant to a foreclosure or other remedy of the secured party or through any transfer in lieu of foreclosure, or through settlement of or arising out of any pending or contemplated foreclosure action, such lending institution shall have the privilege of transferring its interest in the Lease to a nominee or a wholly -owned subsidiary corporation without the prior consent of the City, provided however, such transferee shall assume all of the covenants and conditions required to be performed by the Lessee, whereupon such lending institution shall be relieved of any further liability under such Lessee from any default after such transfer. Such lending institution or the nominee or wholly -owned subsidiary corporation to which it may have transferred the Lease, or any other lending institution which may at any time acquire the Lease shall be relieved of any further liability under such Lease from and after a transfer of the Lease. c. A leasehold mortgagee, beneficiary of a deed of trust or security assignee shall have and be subrogated to any and all rights of the Lessee with respect to the curing of any default hereunder by Lessee. d. If the holder of any mortgage, or the beneficiary of any such deed of trust, or the security assignee shall give the City written notice containing the name and post office address of such holder, the City shall thereafter give the holder a copy of any notice of default by the Lessee at the same time as any notice of default shall be given by the City to the Lessee, and the City will not thereafter accept any surrender of the Lease or enter into any modification of the Lease without prior written consent of the holder of any mortgage, beneficial interest under a deed of trust, or security assignee in this Lease. 12 - Lease 283-3441 FAX 283.3014 Timothy J. Rogers City Attorney CITY OF KENAI 210 Fidalgo Kenai, Alaska 99611 283-3441 FA X 283.3014 e. If, by reason of any default of the Lessee, either this ease or any extension thereof, shall be terminated at the lection of the City prior to the stated expiration therefor, the ity will enter into a new Lease with the leasehold mortgagee, eed of trust beneficiary or security assignee for the remainder f the term, effective as of the date of the termination, at the ent and additional rent, and on the terms herein contained, ubject to the following conditions: (1) Such mortgagee, beneficiary, or security assignee shall make written request to the City for such new Lease within forty days after the date of such termination and such written request shall be accompanied by a payment to the City of all sums then due to the City under the Lease. (2) Such mortgagee, beneficiary, or security assignee shall pay to the City, at the time of the execution and delivery of such new Lease, any and all sums due thereunder in addition to those which would at the time of the execution and delivery thereof be due under this Lease but for such termination, and in addition thereto, any reasonable expenses, including legal and attorneys' fees, to which the City shall have been subjected by reason of the default. (3) Such mortgagee, beneficiary, or security assignee shall, on or before the execution and delivery of such new Lease, perform all other conditions required to be performed by the Lessee to the extent that the Lessee shall have failed to perform such conditions. f. If a lending institution or its nominee or wholly -owned subsidiary corporation shall hold a mortgage, deed of trust, or similar security interest in and to this Lease and shall thereafter acquire a leasehold estate, derived either from such instruments or from the City, and if such institution, nominee, or corporation shall desire to assign this Lease or any new Lease obtained from the City (other than to a nominee or to a wholly - owned subsidiary corporation as permitted by the above provisions) to an assignee who will undertake to perform and observe the conditions of the Lease required to be performed by the Lessee, the City shall not unreasonably withhold or delay its consent to such assignment and assumption, and any such lending institution, nominee, or subsidiary shall be relieved of any further liability under the Lease from and after the assignment. If the proposed assignor shall assert that the City is unreasonably withholding or delaying its consent to any such proposed assignment, such dispute shall be resolved by arbitration pursuant to the Uniform Arbitration Act as enacted in Alaska. 13 - Lease Timothy J. Rogers City Attorney CITY OF KENAI 210 Fioaigo Kenai, AlaSka 99611 g. Notwithstanding anything above, in the event an assignee for security purposes enforces its security interest against the leasehold interest of the Lessee and the assignee succeeds to the Lessee's rights hereunder, such assignee shall not be liable for the payment of Minimum Annual Rent in excess of the amount determined in Article II (b) during the initial five years of the lease term. This clause is intended to provide a partial subordination of the ground rent payment so that any increase in ground rent does not reduce the lenders' security. Nothing herein revises Lessee's obligation to pay the ground rent described in Article II. III. TITLE/NON DISTURBANCE a. The City warrants that it has good and clear title to the Leased Property and that it has the right and capacity to transfer this leasehold interest to Lessee and that such leasehold interest is not subject to any existing liens, mortgages, security interests or similar encumbrance with the exception of those listed below: b. The City agrees that the Lessee or its successors in interest, upon paying rent and performing other covenants, terms and conditions of this Lease, shall have the right to quietly and peacefully hold, use, occupy and enjoy the Leased Property without hinderance or molestation, including, but not limited to, claims by anyone alleging paramount title or alleging claims through the City. For the purposes of this section, insubstantial inconvenience due to public works projects in or about the Leased Property shall not be construed as a denial of the right to quiet and peaceable possession. XIX. NO PARTNERSHIP OR JOINT VENTURE CREATED It is expressly understood that the City shall not be construed or held to be a partner or joint venturer of Lessee in the conduct of business on the Leased Property; and it is agreed that the relationship between the parties is, and shall at all times remain, landlord and tenant. XX. BANKRUPTCY To the extent permitted by law, if the Lessee shall make an assignment of its interests hereunder for the benefit of creditors or shall be adjudged bankrupt, or if a receiver is appointed for the Lessee's assets and if the appointment is not vacated within thirty days, or if a voluntary petition is filed under the Bankruptcy Act, then and in any event, the City may, upon giving the Lessee sixty days written notice and opportunity to cure, terminate this Lease. 14 - Lease 2833441 FAX 2833014 Timothy J. Rogers City Attorney CITY OF KENAI 210 Fidalgo Kenai, Alaska 9%l i 283.3441 FAX 283-3014 . PARTIAL INVALIDITY If any term, provision, condition, or part of this Lease is declared by a court of competent jurisdiction to be invalid or unconstitutional, the remaining terms, provisions, conditions, or parts shall continue in full force and effect as though such declaration was not made. I. MODIFICATION AND AMENDMENT a. This Lease may not be modified or amended orally or in any manner except by an agreement in writing, signed by the parties or their successors in interest. b. Notwithstanding anything to the contrary, in order to aid the Lessee in the financing of the improvements to be situated herein, the City agrees that in the event the proposed mortgagee, beneficiary, or security assignee in any interim or permanent loan on the security of the leasehold interest of the Lessee and improvements to be situated thereon so requires, the City will make a reasonable effort to amend this Lease in order to satisfy such requirements upon the express condition and understanding that such variance in language will not materially prejudice the City's rights hereunder nor be such as to alter in any way the rental obligations of the Lessee hereunder nor its obligations to comply with all existing laws and regulations of the City relating to the leasing of airport lands, and to all applicable Federal statutes and regulations. XXIII. EMINENT DOMAIN a. In the event the Leased Property or any part thereof shall be condemned and taken for a public or quasi -public use, then upon payment of any award or compensation arising from such abatement of rent payable -during the term or any extension of the term, and such other adjustments as the parties may agree upon as being just and equitable under all the circumstances. If the City and Lessee are unable to agree within thirty (30) days after such an award has been paid into court, upon what division, annual abatement in rent, and other adjustments are just and equitable, the dispute shall be determined by arbitration according to the provisions of Article II (j). b. If title to the whole or materially all of the Leased Property shall be taken, this Lease shall terminate and all rent and other charges under this Lease shall be apportioned as of the date of vesting of title in such taking or proceeding. For purposes of this Article, a taking of "materially all" of the Leased Property as distinguished from a taking of the whole of the Leased Property, means a taking of such scope that the untaken portion of the property is insufficient to permit the restoration 15 - Lease U. .,ty J. Rogers City Attorney CITY OF KENAI 210 Fldalgo Kenai, Alaska 99611 of the then -existing improvements thereon so as to constitute a complete, rentable project capable of producing a proportionately fair and reasonable net annual income, taking into consideration the payment of all operating expenses, including but not limited to, the rent, and all other charges under the Lease and after performance of all covenants, agreements, and provisions herein provided to be performed by Lessee. The determination of what constitutes a fair and reasonable net annual income shall be governed by reference to the average net annual income produced by the Leased Property during the five years immediately preceding the taking. C. In the event of a taking of less than materially all of the Leased Property, this Lease shall nonetheless continue, but the rent to be paid by Lessee shall be reduced in the ratio that the rental value of the portion taken bears to the rental value of the entire Leased Property. d. Should the taking of less than materially all of the Leased Property result in rendering the remaining part of the Leased Property unsuitable for the purposes for which the Project was designed, then Lessee in either event at its option upon thirty days notice to the City, given at a time within sixty days !after the vesting of title in the condemnor, may terminate this Lease. Upon that termination, the rent and other charges under this Lease shall be apportioned as of the date of termination. XXIV. SUCCESSORS IN INTEREST This Lease shall be binding upon and shall inure to the benefit of the respective successors and assigns of the parties hereto. XXV . CHOICE OF . LAW This Lease and the respective rights and obligations of the parties hereunder shall be interpreted in all respects according to the laws of the state of Alaska. XXVI. NOTICES a. Any notice required to be given by the terms of this Lease shall be in writing and shall be deemed to be duly given only if delivered personally or mailed by certified or registered mail in a prepaid envelope addressed to the parties at the address set forth in the opening paragraph of this Lease. Any notice so mailed shall be deemed delivered on the date five days after the date it is deposited in a U.S. general or branch post office. The addresses for notice to the parties may be changed by giving notice in writing of such change to all parties affected by the same means as described above, at least 15 days prior to the effective date of the change. 16 - Lease 2a3-3441 FAX 283-3014 TI. iy J. Rogers City Attorney CITY OF KENAI 210 Fidalgo Kenai, Alaska 99611 b. The City shall also mail a copy of any notice to be given to the Lessee, by certified or registered mail, to any leasehold lender (mortgagee, beneficiary of a deed of trust, or security assignee) who shall have given the City notice of such mortgage, deed of trust, or security assignment. IXXVII. WAIVER The receipt of rent by the City with knowledge of any breach of the Lease by Lessee, or any default on the part of the Lessee in observance or performance of any of the conditions or covenants of the Lease shall not be deemed to be a waiver of any provisions of the Lease. No failure on the part of the City to enforce any covenant or provision therein contained, nor any waiver of any right thereunder by the City, unless in writing, shall discharge or invalidate such covenants or provisions, or affect the right of the City to enforce the same in the event of subsequent breach or default. The receipt by City of any rent or any other sum of money after the termination of the term of this Lease or after the giving by the City of any notice to effect such termination shall not reinstate, continue or extend the term of this Lease or destroy or impair the efficacy of such notice of termination as may have been given thereunder by the City to the Lessee prior to the receipt of any such sum of money or other consideration, unless so agreed to in writing by the City. 1XXVIII. ESTOPPEL CERTIFICATE - RECORDING a. Each party shall, at any time and from time to time as requested by the other party, upon not less than ten days prior written notice, execute, acknowledge, and deliver to the other a statement in writing certifying that this Lease is unmodified and in full force and effect (or if there have been modifications, that the same is in full force and effect as modified and stating the modifications) , certifying the dates to which the Rent and other charges, if any, have been paid, and stating whether or not, to the best knowledge of the signer, the other party is in default beyond any applicable grace periods provided herein in performance of any of its obligations under this Lease, and if so, specifying each such default of which the signer may have knowledge, it being intended that any such statement delivered pursuant hereto may be relied upon by others with whom the requesting party may be dealing. b. From time to time, at the request of the City, Lessee, at its expense, will record such documents, file such continuation statements, pay such fees, and comply with such laws and regulations as are necessary to preserve and protect the rights of the City as Lessor under this Lease. A memorandum of this Lease setting forth all easements ;hall be executed by the City and Lessee and recorded in the :�c,iai Recording District, Alaska. 17 - Lease 283-3" 1 FAX 283-3014 Tln._.ay J. Rogers City Attorney CITY OF KENAI 210 Flaalgo Kenai, Alaska 99611 IX. OPTION TO PURCHASE a. After this lease has been in effect for a period of two years, or if the Lessee has completed the development schedule as outlined in the site plan submitted to the City, Lessee shall have an option to purchase the Leased Property at the fair market value exclusive of any improvements to or on the property after the date of this Lease and developable to its highest and best use under the law as in force on the date the option is exercised. If the Lessee exercises its option to purchase, a new determination of fair market value shall be made according to the methods described in Article II. Lessee may, within sixty (60) days of the final determination of fair market value, withdraw its exercise of option to purchase, which it may then exercise at any future time during the term of the lease. b. Lessee may exercise this Option by giving the City notice, in writing, of the Lessee's intent to exercise and by submitting its appraisal of fair market value. Within sixty (60) days of the final determination of fair market value according to Section II, Lessee shall either withdraw its exercise or notify the City of its present ability to deliver full payment of the purchase price to the City, payable in cash in lawful money of the United States. City shall deliver to Lessee, in exchange for the purchase price an executed quit claim deed in recordable form conveying the Leased Property . XXX. MULTIPLE LEASES a. It is contemplated that, from time to time, Lessee may find it 'desirable to develop, use, sublet, and/or mortgage the Leased Property in separate parcels. If the Lessee so requests in writing, the City shall agree to terminate this Lease and to contemporaneously execute up to five leases for portions of the Leased Property, which multiple leases will contain all the provisions hereunder, with the exception that each lease may contain additional provisions ::hich provide, in effect, that the respective lessees and persons designated by them may use certain portions of the Property in common with each other. b. Should, in the reasonable opinion of the Lessee, it become desirable that the Property be subdivided or otherwise re - platted to accomplish the purposs described above, the parties agree to cooperate to accomplish raid subdivision or re -platting, including the execution of any necessary documents in a timely manner. Nothing in this agi-_ enient shall be inter ro-ted as a commitment by the City to ai_. _ _ate any of its leg i . duties to review any such subdivisio:, in the normal couri,e of the governmental regulatory pr:,ce-,:. 18 - Lease 283-344/ FAX 283-3014 Tlm. my J. Rogers City Attorney CITY OF KENAI 210 Fidalgo Kenai, Alaska 99611 283-344I FAX 283-3014 C. If some or all of the lessees under the multiple leases given written notice to the City that they desire their respective leaseholds to be governed by a single lease, the City shall agree to terminate the applicable leases and contemporaneously execute a single lease for the property involved, which lease shall contain all the provisions hereunder. . FORCE MAJEURE If the City or Lessee is delayed, hindered, or prevented from performing any act required hereunder by reason of strikes, lockouts, labor troubles, inability to procure materials, failure of power, earthquake, restrictive government laws or regulations, riots, insurrection, criminal act of a third party, war, contamination, the act, failure or default of the other party, or any other reason beyond its control, then performance of the act shall be excused for the period of the delay. In that event, the period for performance of an act shall be extended for a period equivalent to the period of the delay. IXXXII. VENUE This agreement shall be governed by, construed and enforced in accordance with the laws of the State of Alaska. Venue for any litigation between the parties arising from this lease shall be in the State of Alaska, Third Judlcial District, at Kenai. IXXXIII. INTERPRETATION This Lease embodies the entire agreement between the parties. It may not be modified or terminated except as provided herein or by other written agreement between the parties. If any provision is invalid, it shall be considered deleted from this Lease and such invalidity shall not invalidate the remaining provisions of this Lease. IN WITNESS WHEREOF, the parties hereto have hereunto set their hands, the day an,l :. ar stated in the individual acknowledgments below. 19 - Lease LESSOR: CITY OF KENAI ::y Wm. J. Brighton, C.t,, Manager LESSEE: ACQUISITION CO., I_IC. u/L,/a CARR-GOTTSTEIN FOODS CO. le STATE OF ALASKA ) )ss THIRD JUDICIAL DISTRICT ) THIS IS TO CERTIFY that before me the undersigned Notary Public, on the day of , 1990, WM. J. BRIGHTON, being personally known to me, alpeared before me and acknowledged the voluntary and authorized execution of the foregoing Lease for the municipal corporation named and in the capacity indicated in the execution thereof. PIOTARY PUBLIC for State of Alaska Ply Commission Expires: STATE OF ALASKA ) )ss THIRD JUDICIAL DISTRICT ) THIS IS TO CERTIFY that before me the undersigned Notary Public, on the day of , 1990, personally appeared known to be the of CG Acquisition Co., Inc., d/b/a Carr-Gottstein Foods Co., a Delaware corporation, and acknowledged to me that he signed the foregoing Lease for and on behalf of said corporation, done by the authority of its Board of Directors, for the uses and purposes therein mentioned. I:OTARY PUBLIC for State of Alaska. IIy Commission Expires: Tlmomy J. Rogers City Attorney 20 CITY OF KENAI 210Fioalgo Kenai, Alaska 9%11 2833441 FAX 283-3014 AGENDA KENAI CITY COUNCIL - SPECIAL MEETING OCTOBER 25, 1990 A. CALL TO ORDER 1. Pledge of Allegiance 2. Roll Call 3. Agenda Approval B. OLD BUSINESS 1. Discussion/Approval - Carr-Gottstein Lease R. ADJOURNMENT 1791-1991 CITY OF KENAI %Od 62czpda� 4 4,14d," _ 210 FIDALGO KENAI, ALASKA 99611 TELEPHONE 283 - 7535 FAX 907-283-3014 MEMORANDUM TO: Councilmembers City of Kenai FROM: Carol L. Freas, City Clerk City of Kenai DATE: October 23, 1990 RE: SPECIAL COUNCIL MEETING/WORK SESSION October 25, 1990 Enclosed please find Public Meeting Notice regarding the work session set for 7:00 p.m. on October 25, 1990. Attached to that notice are copies of information sent to property owners by city administration and responses received from property owners to date. Also enclosed is a copy of the Public Meeting Notice announcing a Special Council Meeting scheduled for 6:30 p.m., October 25, 1990. Attached to that notice is a copy of the agenda for that meeting. It is my understanding that the Legal Department is mailing you separately a copy of the proposed lease with Attorney Graves' comments. clf Enclosures 1791-1991 CITY OF KENA1 „D G?apdal 4 4ia"a „ _ 210 FIDALGO KENAI, ALASKA 99611 TELEPHONE 283 - 7535 FAX 907-283-3014 PUBLIC MEETING NOTICE The Kenai City Council will be having a Special Council Meeting on Thursday, October 25, 1990 at 6:30 p.m. in the Council Chambers. The following item will be discussed: Carr-Gottstein Lease The public is invited to attend and participate. Carol L. Freas City Clerk DATED: October 19, 1990