LEASE AGREEMENT
MIXED-USE TOWNHOME UNIT
Lot 360
Unit E
Premises area: 775 square feet
Premises Percentage: 24.7%
THIS LEASE AGREEMENT (this “Lease”) is entered into as of January 1, 2018 (“Commencement Date”),
between ____________________________________, as “Landlord,” and Seabrook Land Company LLC, a
Washington limited liability company, as “Tenant.”
RECITALS
Landlord is the owner of the real property and improvements in the neighborhood of Seabrook, located
near Pacific Beach in Grays Harbor County, Washington, commonly known as the Lot and Unit identified
above, below the heading of this Lease (“Property”). The Property is legally described on Exhibit A of this
Lease.
The improvements on the Property consist of a three-story mixed-use townhome (“Building”). The interior
space of the Building is divided into a residential dwelling unit (“Dwelling Unit”) and a space for any of a
variety of commercial uses (“Premises”). The Premises is located on the ground floor of the Building, along
with the garage and entry for the Dwelling Unit. The second and third floors of the Building are exclusively
for the Dwelling Unit. The Building and the Premises are depicted on Exhibit B of this Lease.
Seabrook is a master planned community governed by a variety of documents intended to assure the
development and operation of Seabrook as a new traditional neighborhood characterized by pedestrianfriendliness and a mix of commercial, civic, and residential uses in a way that enlivens the community. The
principal governing documents are the following, as they have been amended and as they may hereafter be
amended from time to time in accordance with their terms: (i) Master Deed Restrictions recorded in Grays
Harbor County under no. 2005-01270120; (ii) Declaration of Charter, Easements, Covenants and Restrictions
recorded in Grays Harbor County under no. 2005-01270120; and (iii) Seabrook Design Code. These
documents are referred to in this Lease as the “Governing Documents” and the requirements of the
Governing Documents as they evolve over time are collectively referred to in this Lease as the “Community
Standards.”
Landlord desires to lease to Tenant, and Tenant desires to lease from Landlord, the Premises, under the
terms and subject to the conditions of this Lease.
1
AGREEMENTS
Landlord and Tenant agree as follows:
1.
Lease of Premises; Area of Premises; Share of Building. Landlord hereby leases the
commercial Premises on the ground floor of the Building to Tenant. The Premises is agreed to consist of
seven hundred and seventy-five (775) square feet of gross floor area and rentable area in the Building. The
Building is agreed to consist of a total of three thousand one hundred and thirty-three (3,133) square feet
of gross floor area, of which the gross floor area of the Premises is 24.7% (“Premises Percentage”). Neither
the agreed area of the Premises and the Building, nor the Premises Percentage, will be subject to remeasurement during the Term, except upon any alteration of the Premises that alters the dimensions of
the Premises.
2.
Term.
2.1
Initial Term. The term of this Lease will be approximately thirty (30) years,
beginning on the Commencement Date, and ending on the last day of the calendar month in which the 30th
anniversary of the Commencement Date falls (“Initial Term,” and with any Extension Period under Section
2.2, the “Term”).
2.2
Option to Extend. Tenant will have two consecutive options to extend the Term,
each for a period of thirty (30) years (each, an “Extension Period”). To exercise each extension option,
Tenant must give written notice to Landlord (“Extension Notice”) no later than one hundred eighty (180)
days before the expiration of the then-effective Term. Tenant may elect for either Extension Period to be
shorter than thirty (30) years, by designating the shorter period in the Extension Notice for that Extension
Period. If Tenant elects a shorter Extension Period for the first Extension Period, then its second option to
extend the Term will be for an Extension Period that is no longer than the first Extension Period.
Tenant will not have the right to give an Extension Notice at any time when Tenant is in Default (as defined
in Section 19) under this Lease. If Tenant is in Default under this Lease on the date that otherwise would be
the last date to give an Extension Notice, Tenant will have an additional thirty (30) days to give the
Extension Notice, provided that the subject Default has been cured and there is no new Default by Tenant.
If Tenant does not timely give an Extension Notice, the Term will expire as of the end of the Initial Term or
First Extension Period, as the case may be.
If Tenant has timely given an Extension Notice, and thereafter is in Default under this Lease on the first day
of the Extension Period, the new Extension Period will not begin until Tenant has cured the subject Default,
and the Initial Term or first Extension Period, as the case may be, will continue until the subject Default has
been cured. If Tenant has not cured the subject Default within thirty (30) days after the first day of the
Extension Period, the extension of the Term will be ineffective, and this Lease will terminate. During the
foregoing period for cure, Tenant will pay the same Rent as was payable during the last month of the Initial
Month or first Extension Period, as the case may be, and all the other terms and conditions of this Lease will
continue to apply.
All the terms and condition of this Lease will apply during an Extension Period, except for Base Rent, which
will be adjusted as provided in Section 4.
2
3.
Possession; Condition of Premises. Tenant will be entitled to possession of the Premises
from and after the Commencement Date. Tenant or one of its affiliates has developed and constructed the
Building, and accepts the Premises AS IS in its condition on the Commencement Date.
4.
Base Rent; Additional Rent. Tenant will pay to Landlord, without notice, demand,
deduction, or offset, in lawful money of the United States, the monthly Base Rent specified in this Section 4
beginning on the Commencement Date, and on the first day of each succeeding calendar month. Base Rent
for any period during the Term that is for less than one calendar month will be prorated for the actual
number of days in that period.
4.1
Lease Years. “Year 1” means the period beginning on the Commencement Date
and ending on the expiration of 12 full calendar months after the Commencement Date. Example: If the
Commencement Date were March 15, 2017, Year 1 would begin on March 15, 2017 and end on April 30,
2018. “Year 2,” “Year 3,” and subsequent years mean the successive one year periods following Year 1.
4.2
Initial Base Rent. Initially, Base Rent will be due for the following Lease Years as
follows:
Year 1
Year 2
Year 3
Year 4
Year 5
Year 6
Year 7
Year 8
Year 9
Year 10
$ 1,614.58 per month
$ 1,654.95 per month
$ 1,696.32 per month
$ 1,738.73 per month
$ 1,782.20 per month
$ 1,826.75 per month
$ 1,872.42 per month
$ 1,919.23 per month
$ 1,967.21 per month
$ 2,016.39 per month
4.3
CPI Adjustments. Base Rent will be subject to adjustment for Year 11 to reflect any
percentage increases in the CPI since the Commencement Date. “CPI” means the Consumer Price Index, AllUrban Consumers for the Seattle-Tacoma-Bremerton MSA (1982-84 = 100), published by the Bureau of
Labor Statistics of the US Department of Labor. The CPI published for the closest month before the
Commencement Date will be subtracted from the CPI published for the most recent month before the first
month in Year 11. The percentage that the resulting difference bears to the CPI for the closest month before
the Commencement Date will be the percentage by which monthly Base Rent in effect immediately before
the adjustment increases. In no event will the adjusted Base Rent under this Section 4.3 be lower than the
Base Rent in effect immediately prior to the adjustment. The adjusted Base Rent for Year 11 will increase as
of the beginning of each succeeding Lease Year by 2.5%, compounded, until the next adjustment in Base
Rent based on the CPI under this Section 4.3, or until the end of the initial Term or the Extension Period, as
the case may be.
Base Rent will be subject to adjustment for each of Years 21, 31, 41, 51, 61, 71, and 81, if the Term is
extended to include those Years, in the same manner, based on any percentage increases in the CPI since
the last adjustment.
3
If the CPI is no longer published by the Department of Labor, then a comparable index published by the
Department of Labor, as reasonably selected by Tenant, will be used, and will be the “CPI” under this Lease.
If the Department of Labor no longer publishes the CPI or any reasonably comparable index, then a
comparable index tracking changes in the cost of living, as reasonably selected by Tenant, will be used and
will be the “CPI” under this Lease.
4.4
Annual Increases. The Base Rent adjusted by CPI adjustment under Section 4.3 will
increase by 2.5% per annum as of the beginning of each succeeding Lease Year (i.e., Base Rent for Year 17
will be 102.5% of Base Rent for Year 16), until the next adjustment under Section 4.3.
4.5
Additional Rent; “Rent”. In addition to Base Rent, Tenant will be required to pay
certain other amounts to Landlord or third parties under this Lease, as “Additional Rent.” Base Rent and
Additional Rent together constitute “Rent” under this Lease.
4.6
Late Charges. If any Rent payable by Tenant to Landlord under this Lease is not
received within five (5) business days after the applicable due date, then, without limiting Landlord’s other
remedies, Tenant will pay Landlord, in addition to the amount due, (i) $100, or (ii) 5% of the delinquent
amount, whichever is greater, as a late charge, to reflect the cost to Landlord of collecting and handling the
late payment.
5.
Security Deposit. There is no security deposit under this Lease.
6.
Use of Premises. Tenant will use the Premises for any commercial use permitted by the
Community Standards, and no other use. Tenant will comply with, and will not cause or permit the
Premises to be used in any way which violates the Community Standards or any applicable law, ordinance,
or governmental regulation or order.
7.
Parking; Use of Roof.
7.1
The garage or carport in the Building is part of the residential premises and is for
the exclusive use of Landlord. As between Landlord and Tenant, any nearby parking lot spaces specifically
designated for the Building will be allocated to Tenant and its employees and guests.
7.2
If and to the extent Permitted by the Governing Documents and Community
Standards, Tenant may install antennae and other telecommunications equipment on the roof of the
Building, to serve the Premises and/or the commercial premises of any live-work townhome units in the
same block. Tenant shall comply with all applicable requirements of the Federal Communications
Commission, and any other federal, state, or local governmental authority concerning any such
installations. Landlord will have the same right to use the roof for such purposes, and Landlord and Tenant
will cooperate to the end that both may enjoy the benefits of that right. Any cabling or wiring for Tenant’s
rooftop installations will be installed on the exterior of the Building, in such a manner as is minimally visible.
If interior installation is required, then cabling and wiring will be installed in risers not visible from the
interior areas of the Dwelling Unit. Tenant will install and operate its rooftop equipment and related
equipment at its sole cost and expense, and at its sole risk. Tenant will have the right to enter the Dwelling
Unit for installation, maintenance, and rooftop access at such times as are approved by Landlord, which
approval will not be unreasonably withheld. Landlord and Tenant will use diligent efforts to cooperate in
the scheduling of such entry such that interference with or disruption of Landlord’s use and enjoyment of
the Dwelling Unit is minimized. Tenant will promptly restore any portion of the Dwelling Unit or Building
4
altered or damaged by its rooftop equipment work under this Section 7.2, and the indemnification
provisions of Section 22 will apply to Tenant’s work and activities related to the rooftop equipment.
8.
Tenant Improvements and Alterations. Tenant may make such alterations, additions, and
improvements to the Premises as may be consistent with the Community Standards and applicable law. All
work on the Premises performed by Tenant will be performed (i) at Tenant’s sole cost and expense, (ii) in a
good and workmanlike manner, (iii) in accordance with the Governing Documents and Community
Standards, and all applicable laws, ordinances, rules, and regulations, and (iv) by licensed contractors,
carrying the kinds and amounts of liability insurance as may be required by this Lease and/or applicable law.
Tenant will not make any material alterations to the Building’s structural components, to the Building
exterior, or to any Building systems or equipment shared by the Dwelling Unit and the Premises, without the
prior consent of the Landlord following a review of any plans and specifications for those alterations, which
consent will not be unreasonably withheld by the Landlord. The indemnification provisions of Section 22
will apply to Tenant’s work and activities under this Section 8.
9.
Assignment and Sublease.
9.1
Assignment by Tenant. Tenant will not have the right to assign this Lease without
the prior written consent of Landlord, which will not be unreasonably withheld, conditioned, or delayed,
provided that the assignee’s occupancy and use of the Premises will be consistent with the Governing
Documents and Community Standards. Notwithstanding the foregoing, Tenant will have the right without
the Landlord’s consent to assign this Lease (i) to any entity controlled by, controlling, or under common
control with Tenant, or (ii) to any entity that succeeds to the ownership of all or substantially all of the
assets of Tenant, or any controlled by, controlling, or under common control with any such successor.
Tenant will give Landlord prompt written notice of any assignment under the immediately preceding
sentence. In the event of any assignment under this Section 9.1, Landlord will look solely to the assignee for
the performance of the obligations of Tenant under this Lease thereafter to be performed, and the
assigning Tenant will be relieved from those obligations.
9.2
Subleasing. It is understood that Tenant intends to sublease the Premises to a retail
or commercial subtenant so that the Premises is operated and managed as part of the Seabrook Town
Center. Tenant will have the right to enter into any such sublease of all but not less than all of the Premises
without the necessity of obtaining the consent of Landlord, with such rent and under such terms and
conditions as are determined by Tenant and for Tenant’s sole account, provided that (i) the occupancy and
use of the Premises by the subtenant will be consistent with the Governing Documents and Community
Standards, and (ii) Tenant will not enter into any sublease for a term longer than the remaining Term of this
Lease, as it may be extended from time to time. Tenant will give prompt written notice to Landlord of any
such sublease. Tenant will not have the right to sublease all or any portion of the Premises except in
accordance with the foregoing. No sublease by Tenant will relieve Tenant of any of its obligations under this
Lease, including without limitation the timely payment of Base Rent and Additional Rent, and Tenant will
perform or cause the subtenant to perform all of the obligations of the Tenant under this Lease.
10.
Maintenance, Repairs and Return of Premises.
10.1 Tenant’s Obligations. Tenant will at all times keep and maintain the Premises clean
and sanitary in all respects. Tenant will be responsible for all maintenance, cleaning, painting, and repairs of
the Premises, extending out to the wallboard, paneling, or other interior surface of exterior walls, and
including without limitation the plumbing, heating, HVAC, electrical and other utility systems in the
5
Premises, interior and exterior windows and doors to the Premises, all floor coverings, and any exterior
entry area to the Premises located on the Property. Tenant will permit no waste, damage or injury to the
Premises. If Tenant does not perform or cause the performance of its maintenance and repair
responsibilities under this Section 10.1 as and when required and the failure is not cured within ten (10)
business days after Landlord’s written notice to Tenant, then Landlord, in addition to its other remedies,
will have the right (but not the obligation), to enter upon the Premises to perform the subject maintenance
and repair responsibilities. The cost so incurred by Landlord will be reimbursed by Tenant as Additional
Rent on demand, which demand will substantiate the costs incurred in reasonable detail.
10.2 Landlord’s Obligations. Landlord will be responsible for all maintenance and
repairs necessary to keep in clean, sound and operable condition and in compliance with the Community
Standards the roof of the Building, the exterior surface of exterior walls, structural load bearing elements,
foundation, and plumbing, heating, HVAC, electrical and other utility systems in the Premises located
outside the Building or within the exterior walls, ceiling or floor of the Premises, and for landscaping,
cleaning, and maintenance of exterior areas, unless such maintenance or repairs are required because of
acts or omissions of Tenant, its subtenants, or the employees, customers, contractors or agents of either of
them, in which case Tenant will pay Landlord the reasonable cost of repair. If Landlord does not perform its
maintenance and repair responsibilities under this Section 10.2 as and when required, and the failure is not
cured within ten (10) business days after Tenant’s written notice to Landlord, then Tenant will have the
right (but not the obligation) to enter upon the subject portions of the Building or Property to perform the
subject maintenance and repair responsibilities. The cost so incurred by Tenant will be reimbursed by
Landlord promptly upon demand, which demand will substantiate the costs incurred in reasonable detail,
and if not so reimbursed within ten (10) business days of demand, those costs may be offset by Tenant
against Base Rent.
10.3 Return of Premises; Removal of Trade Fixtures and Personal Property. Unless
otherwise agreed in writing, upon the expiration or termination of this Lease, all alterations, additions and
improvements to the Premises made by either Landlord or Tenant will become the property of Landlord,
with the exception of any trade fixtures. Tenant will remove or cause the removal of all personal property
and trade fixtures no later than the date of expiration or termination of this Lease. Tenant will promptly
repair all damage to the Premises caused by the removal of those items. Unless otherwise agreed in writing,
any of Tenant’s property (or property of any subtenant) left on the Premises following the date of expiration
or termination of this Lease will be deemed to be abandoned, and, at Landlord’s option, title will pass to
Landlord under this Lease as by bill of sale. If Landlord elects to remove all or any part of that property in
that event, the cost of removal, including the cost of repairing any damage to the Premises caused by such
removal, will be paid by Tenant. At the expiration or sooner termination of this Lease, Tenant will deliver
possession of the Premises to Landlord broom clean and in good condition and repair excepting ordinary
wear and tear, and damage by fire or casualty.
11.
Utilities and Other Services. All utilities and other services to the Building will be separately
metered between the Dwelling Unit and the Premises whenever reasonably possible.
11.1 Payment by Tenant to Providers. Tenant will pay or cause to be paid when due the
costs of all utility services provided to the Premises during the Term of this Lease, directly to the provider, as
Additional Rent. If any utility services are not paid as required, then, in addition to its other remedies,
Landlord will have the right (but not the obligation) to do so on Tenant’s behalf. The cost so incurred by
Landlord will be reimbursed by Tenant as Additional Rent on demand.
6
11.2 Other Services. Tenant will be responsible for providing or making arrangements
for any of the following that it desires for the Premises: (i) janitorial services for the Premises, (ii) garbage
collection and disposal and recycling, and (iii) cable television, telephone, internet and other
telecommunications services.
11.3 Interruption of Service. In the event of interruption of any utility service to the
Premises, Landlord and Tenant will cooperate and will each use reasonable efforts to restore the utility
service. Provided that it uses those reasonable efforts and cooperates, there will be no abatement of Rent,
and Landlord will not be liable under any circumstances for a loss of or injury to property, person, or
business, however occurring, through or in connection with or incidental to any interruption of any utility
service.
12.
Taxes and Community Charges
12.1 Taxes. Tenant will be responsible for and will pay or cause to be paid when due all
personal property taxes imposed upon Tenant or any of Tenant’s equipment or personal property located
at the Premises as well as any franchise, capital stock, excise, social security, unemployment, sales, use,
withholding, estate, inheritance, succession, transfer, conveyance, gift or other tax, assessment, imposition,
levy or charge imposed upon the business or assets of Tenant. In addition, Tenant will be responsible for
the Premises Percentage of all ad valorem real property taxes and governmental assessments to the
Property, as Additional Rent. Tenant will pay Landlord Additional Rent for semiannual or other periodic real
property taxes and assessments in monthly installments, with its payment of Base Rent.
12.2 Owners Association and Community Charges. Tenant will be responsible for and
will pay or cause to be paid the Premises Percentage of all dues, fees, and assessments payable under the
Governing Documents from time to time, as Additional Rent, in monthly installments, with its payment of
Base Rent.
12.3 Owners’ Association. To the extent the Governing Documents provide for
membership for commercial occupants, Tenant (or its subtenant) will have the right to participate as a
member of any owners’ association established for Seabrook as a whole, or for the Town Center or other
applicable district in which the Property is located. Otherwise, Landlord will hold all such rights allocable to
the Property.
13.
Insurance.
13.1 Landlord’s Insurance. Landlord will continuously maintain property insurance
upon the Building, in an amount reasonably determined by Landlord, but in any event not less than the
reasonable “replacement cost” of the Building, with no more than a commercially reasonable deductible,
insuring against such perils and otherwise containing such terms and conditions as are reasonable for
properties of like type in Western Washington. The policy of property insurance required to be maintained
by Landlord’s first mortgage lender, if any, will satisfy the requirements of this Section 13.1. Landlord will
furnish Tenant a certificate of insurance for such coverage, and a copy of the policy, within 10 business days
after the Commencement Date and upon each renewal and/or change of coverage. Tenant will be
responsible for and will pay or cause to be paid the Premises Percentage of all premiums for insurance
coverage under this Section 13.1, as Additional Rent, on a monthly basis together with its payment of Base
Rent, and of any deductible in the event of any loss involving the Premises.
7
13.2 Tenant’s Insurance. Tenant will, at its sole cost and expense, procure and keep in
force throughout the Term of this Lease the following insurance:
13.2.1 All Risk or Causes of Loss Special Form property insurance, including fire and
extended coverage, sprinkler leakage, vandalism, malicious mischief, wind and flood coverage, covering full
replacement value of all of Tenant’s personal property, trade fixtures and improvements and alterations in
and to the Premises, with coverages that also include “Business Personal Property” and “Business Income
Coverage” covering at least one year of anticipated income;
13.2.2 both worker’s compensation insurance to the applicable statutory limit, if
any, and employer’s liability insurance to the limit of $1,000,000 per occurrence;
13.2.3 commercial general liability insurance (occurrence based) insuring Tenant
against any liability arising out of its use, occupancy or maintenance of the Premises or Building, or the
business operated by Tenant or its subtenant pursuant to the Lease, and providing coverage for death,
bodily injury and disease, property damage or destruction (including loss of use), products and completed
operations liability, contractual liability which includes all of Tenant’s indemnity obligations under this Lease
(and the certificate evidencing Tenant’s insurance coverage shall state that the insurance includes the
liability assumed by Tenant under this Lease), fire legal liability and advertising injury liability damage, with
a combined single limit of no less than $2,000,000 (or in the alternative a primary policy combined single
limit of $1,000,000 with an Excess Limits (Umbrella) Policy in the amount of no less than $1,000,000); and
13.2.4 Builder’s Risk Insurance. Tenant or its subtenant (or its general contractor)
will, at its sole cost and expense, procure and maintain at any time when improvements are being
constructed, altered or replaced by Tenant or its subtenant upon the Premises, “Builder’s All-Risk”
insurance in an amount not less than the actual replacement value of all improvements upon the Premises,
covering the construction, alteration, or replacement.
13.2.5 Adjustment of Limits. The specific amounts of coverage required to be
maintained by Tenant under this Section 13.2 will adjust every ten (10) years during the Term by the CPI, in
the same manner as Base Rent adjusts under Section 4.3.
13.3
Insurance Policies.
13.3.1 Prior to the Commencement Date, Tenant will deliver to Landlord
acceptable evidence of all insurance policies required to be maintained by Tenant under this Lease. The
policies will provide that they will be renewed at the expiration of their respective terms and that they will
not be canceled or modified except after thirty (30) days’ prior written notice of nonrenewal or intention to
modify or cancel has been given by the insurance company to Landlord. Tenant shall take all necessary steps
to renew all insurance at least thirty (30) days prior to such insurance expiration dates and shall provide
Landlord a copy of the renewed certificate, prior to any policy’s expiration date.
13.3.2 The policy of insurance referred to in Section 13.2.1, will provide for losses
to be adjusted with and payable to Landlord and to Landlord’s mortgage lender as their respective interests
may appear, and said policies, if requested by Landlord, will be endorsed with a standard form mortgagee
loss payable endorsement in use in the State of Washington, provided that the mortgage lender agrees in
writing to release the proceeds of such insurance to Landlord for the purpose of restoration of the Premises
8
in accordance with this Lease. The policies evidencing all insurance referred to in Sections 13.2.2, 13.2.3,
and 13.2.4 will name Landlord as an additional named insured.
13.3.3 Waiver of Subrogation. Landlord and Tenant each hereby waive all rights
of recovery against the other (and against any officers, employees, agents, invitees, and representatives of
the other), on account of loss by or damage to the waiving party or its property or the property of others
under its control, to the extent that such loss is insured against under any property insurance policy that
either may have in force (or, which the party was required by this Lease to have in force) at the time of the
loss or damage.
13.3.4 Subtenants. Without reducing Tenant’s obligations, Tenant will require any
subtenant to maintain the same insurance coverage as is required to be maintained by Tenant under
Section 13.2, except that the coverage required by Section 13.2.4 will be provided by the party performing
the subject work or its general contractor.
13.3.5 Blanket Policies. Tenant may maintain the coverage that it is required to
maintain under Section 13.2 through one or more blanket policies maintained by Tenant. Any such blanket
policy will provide substantially the same protection as would a separate policy insuring only the Premises.
14.
Damage or Destruction. In the event of a partial destruction of the Premises not exceeding
forty percent (40%) of the Premises (as reasonably determined by Tenant), and provided that the Premises
is repairable within a period of not more than eighteen (18) months from the date of the casualty as
reasonably determined by Tenant), and that Landlord will receive insurance proceeds sufficient to cover the
cost of such repairs (except for any deductible under Landlord’s policy), Landlord will commence and
proceed with reasonable diligence to repair the Premises. In the event of any damage to or destruction of
the Premises other than as provided in the preceding sentence, either party may elect to terminate this
Lease upon thirty (30) days written notice.
15.
Condemnation. In the event all or part of the Premises is taken or damaged by the right of
eminent domain or purchased by the condemner in lieu thereof, then this Lease may be canceled as of the
time of the taking at the option of either party. Landlord reserves all rights to damages in connection with
the Premises for any taking, whether partial or complete, by eminent domain, including compensation for
the fee interest, for trade or other fixtures, or for the fair market value of any remaining leasehold, and
Tenant hereby assigns to Landlord any right Tenant may have to such compensation and Tenant will make
no claim against Landlord for damages for termination of the leasehold interest or interference with
Tenant’s business. Tenant will have the right, however, to claim and recover from the condemning authority
compensation for any loss which Tenant may incur for Tenant’s moving expenses and for the interruption of
or damage to Tenant’s business or the value of its leasehold and improvements, provided, that such damage
or value may be claimed only if they are awarded separately and not as part of and do not reduce the
damages recoverable by Landlord.
16.
Signage. All exterior signage of Tenant will be subject to the Seabrook Design Code and
other Governing Documents and the Community Standards, and to the requirements of any applicable laws
and legal requirements. All signage will be installed and maintained at Tenant’s sole cost and expense or the
sole cost and expense of any subtenant. Tenant will be responsible for the cost of and will pay or cause to
be paid the cost of restoration of the Premises required to restore the same to their previous condition
upon the removal of any signage.
9
17.
Hazardous Materials. “Hazardous Materials” in this Lease means any hazardous or toxic
substance, material or waste which is or becomes regulated by any federal, state, or local governmental
authority. Without the prior written consent of Landlord, Tenant will not store, use or dispose of any
Hazardous Materials in, on or about the Leased Premises or any other part of Seabrook other than such
Hazardous Materials as are necessary or useful in Tenant’s business and are used, kept, and stored in
compliance with all applicable law, statutes, ordinances and regulations. Tenant will defend and indemnify
Landlord and hold Landlord harmless from and against any and all damages, charges, cleanup costs,
remedial actions, costs and expenses, that may be imposed on, incurred or paid by, or asserted against
Landlord, or the Property, the Building, or the Premises by reason of, or in connection with any acts or
omissions of Tenant resulting in the release of any Hazardous Materials on or about the Premises or the
Property.
18.
Access and Right of Entry. Upon reasonable prior notice, not less than 36 hours, from
Landlord (except in cases of emergency, when no notice shall be required), and agreement between
Landlord and Tenant as to the time and purpose of entry, Landlord (and its agents, employees, and
contractors) will have the right to enter the Premises to make repairs or improvements required to be made
by Landlord under this Lease, or for the purpose of showing the Premises to prospective purchasers or
lenders, or their agents. Landlord will use reasonable efforts to minimize interference with Tenant’s or its
subtenant’s business operations and use and enjoyment of the Premises. Without limiting the foregoing,
Landlord and Tenant will use reasonable efforts to arrange for entry to be carried out during non-business
hours. Within one hundred eighty (180) days prior to the expiration or sooner termination of the Lease
Term, Landlord may post “for lease” signs on the exterior of the Premises, which signage will comply with
the Seabrook Design Code and other Governing Documents, and with all applicable laws and legal
requirements.
19.
Default by Tenant. Time is of the essence of this Lease. Each of the following events will be
deemed to be an “Event of Default” or a “Default” by Tenant, following any notice from Landlord to Tenant
and/or the expiration of any right to cure the same on the part of Tenant as set forth below:
19.1 If Tenant fails to pay Base Rent due under this Lease within ten (10) days of its due
date (without notice) or any other Rent due Landlord under this Lease within ten (10) days after written
notice from Landlord to Tenant.
19.2 If Tenant fails to perform any nonmonetary obligation of Tenant under this Lease
within thirty (30) days after written notice from Landlord to Tenant, provided that if the nature of Tenant’s
default is such that it is curable, but more than thirty (30) days are reasonably required for its cure, then
Tenant will not be in default if Tenant commences to cure the default within the thirty (30) day period and
thereafter diligently pursues the cure to completion.
19.3
If Tenant makes any general assignment or arrangement for the benefit of creditors.
19.4 If a petition is filed against Tenant in bankruptcy or for reorganization or
arrangement under any law relating to bankruptcy (unless, in the case of a petition filed against Tenant, the
same is dismissed within sixty (60) days of filing).
19.5 If a trustee or a receiver is appointed to take possession of substantially all of
Tenant’s assets located at the Premises or of Tenant’s interest in this Lease, where the appointment is not
discharged or dismissed within sixty (60) days after appointment.
10
19.6 If Tenant creates or allows the creation of a lien upon the Premises and such lien is
not discharged in accordance with this Lease or if any execution, levy, attachment, or other process of law
occurs upon the Tenant’s personal property or fixtures in the Premises.
20.
Landlord’s Remedies.
20.1 Upon the occurrence of an Event of Default, in addition to all other rights and
remedies that Landlord may have under this Lease, at law and in equity, Landlord will have the right to
declare this Lease terminated and to re-enter and take possession of the Premises with or without process
of law Upon termination of Tenant’s right to possession, Landlord shall have the right to recover from
Tenant: (a) the Worth of the unpaid Rent that had been earned by Landlord at the time of termination of
Tenant’s right to possession; (b) the Worth of the amount of the unpaid Rent that would have been earned
after the date of termination of Tenant’s right to possession through (i) the expiration of the Lease Term as
it may have been extended before termination, or (ii) the expiration of ten (10) years after termination of
Tenant’s right to possession, whichever is shorter, deducting from that unpaid Rent in (i) or (ii) the amount
of Rent loss that Tenant proves could reasonably be avoided; and (c) all other expenses incurred by Landlord
on account of Tenant’s Default, including without limitation any costs of reletting (including all costs and
expenses reasonably incurred by Landlord for any repairs, improvements or other matters necessary to
prepare the Premises for another tenant, and brokerage commissions, and Landlord’s attorney fees and
collection costs. The “Worth” as used for item (a) above is to be computed by allowing interest at the rate of
ten percent (10%) to accrue on all such unpaid Rent (or such lesser rate required by Law, if any). The Worth
as used for item (b) above is to be computed by discounting the amount of Rent (less the amount of Rent
loss that could reasonably be avoided) at the discount rate of the Federal Reserve Bank of San Francisco at
the time of termination of Tenant’s right of possession, plus one percent (1%) per annum.
20.2 Landlord’s remedies under this Section 20 are cumulative and Landlord’s exercise of
any right or remedy due to a default by Tenant will not be deemed a waiver of, or to alter, affect or
prejudice any right or remedy that Landlord may have under this Lease, at law or in equity. Neither the
acceptance of Rent or other payments nor any other act or forbearance of Landlord after any Event of
Default by Tenant will operate as a waiver of any past or future default or Default of the same or any other
provision of this Lease or deprive Landlord of any of its rights and remedies under this Lease, at law or in
equity.
21.
Default by Landlord. Landlord will be in default if Landlord fails to perform any obligation
to be performed by Landlord under this Lease, which default is not cured within thirty (30) days after notice
from Tenant to Landlord of the default; provided that if the nature of Landlord’s default is such that it is
curable but more than thirty (30) days are reasonably required for its cure, then Landlord will not be in
default if Landlord commences to cure the default within the thirty (30) day period and thereafter diligently
pursues the cure to completion. In the event of any default by Landlord that is not cured by Landlord within
the applicable cure period, Tenant may seek all legal and equitable remedies available to it, including
without limitation the right to terminate this Lease and the right to cure the default on Landlord’s behalf
after ten (10) days’ notice to Landlord. If Tenant exercises those self-help rights, Landlord will reimburse
Tenant for the costs reasonably incurred by Tenant, within ten (10) business days after Tenant’s request,
which will show the costs so incurred in reasonable detail. If Landlord does not make the reimbursement
within the ten (10) business day period, Tenant may offset the amount thereof against Base Rent next
coming due, until the costs are entirely recovered by Tenant.
11
22.
Release; Indemnification. Landlord will not be liable for any claims for injury or death to
person or damages to or destruction of property sustained by Tenant or by any other person in the
Premises, including without limitation, any claims caused by or arising from the condition or maintenance of
any part of the Premises, except to the extent caused by the negligence or willful misconduct of Landlord.
Tenant will indemnify and defend Landlord and hold Landlord harmless from and against any or all loss,
cost, liability, damage, third-party claim, property damage or personal injury, or expense (including
reasonable attorneys’ fees) whatsoever (collectively, “Loss”) arising out of the acts or omissions of Tenant,
or its employees, subtenants, agents or guests, in or about the Premises or Property; or out of any claims of
laborers, materialmen and employees of Tenant. The foregoing indemnification obligations will not apply,
however, to the extent the Loss arises out of or results from the negligence or willful misconduct of
Landlord, including its family members, guests, and invitees. For the sole purpose of giving effect to the
foregoing indemnification obligation with respect to claims by its employees, Tenant waives its employer’s
immunity under Washington industrial insurance laws.
23.
Subordination; Attornment; Lender Protection.
23.1 Tenant agrees that this Lease will be subordinate to the lien of any mortgage or
deed of trust now or hereafter placed against the Property or Building, and to all renewals, modifications,
and extensions thereof. Landlord reserves the right, however, with written notice to Tenant, to subordinate
or cause to be subordinated any such mortgage or deed of trust to this Lease. Upon a foreclosure or
conveyance in lieu of foreclosure under such mortgage or deed of trust, and a demand by Landlord’s
successor (“Successor”), Tenant will attorn to and recognize Successor as Landlord under this Lease,
provided such Successor agrees not to disturb Tenant’s and any subtenant’s occupancy so long as Tenant
does not Default hereunder, on a commercially reasonable form. In the event of attornment, no Successor
shall be: (i) liable for any act or omission of Landlord, or subject to any offsets or defenses which Tenant
might have against Landlord arising prior to such successor becoming Landlord under such attornment, or
(ii) liable for any security deposit or bound by any prepaid Rent not actually received by the Successor. In
addition, Tenant will execute and deliver within ten (10) business days following Landlord’s request any
instruments evidencing, effectuating, or confirming such subordination or attornment; provided that such
instruments are commercially reasonable and contain or are accompanied by what is commonly known as a
“nondisturbance” agreement, protecting Tenant’s right to possession under this Lease for so long as Tenant
complies with the terms and conditions of this Lease (“SNDA”). Upon written request by Tenant and/or any
subtenant, Landlord will use reasonable efforts to obtain an SNDA, from Landlord's then current lender on
such lender’s then current standard form of agreement. Tenant will be responsible for any fee or review
costs charged by the lender in that event.
23.2 Tenant will give any lender by certified mail, return receipt requested, a copy of any
notice of default served by Tenant upon Landlord, provided that prior to such notice Tenant has been
notified in writing of the address of such lender. In addition, if Landlord shall have failed to cure such default
within the time permitted Landlord for cure under this Lease, any such lender whose address has been
provided to Tenant will have an additional period of thirty (30) days in which to cure (or such additional
time as may be required due to causes beyond such lender’s control, including time to obtain possession of
the Property by appointment of receiver, power of sale or judicial action).
24.
Estoppel Certificates. Tenant will execute, within ten (10) business days following
Landlord’s request, a certificate in such reasonable form as may be required by Landlord or a prospective
purchaser or lender, or Landlord’s successor after a sale or foreclosure, certifying: (i) the Commencement
Date of this Lease, (ii) that the Lease is unmodified and in full force and effect (or if there have been
12
modifications hereto, that this Lease is in full force and effect, and stating the date and nature of such
modifications); (iii) that to Tenant’s knowledge there are no current defaults under this Lease by Landlord
except as specified in Tenant’s statement, (iv) the dates to which the Base Rent, Additional Rent and other
charges have been paid, and (v) any other information reasonably requested by the requesting party. Such
certificate may be relied upon by Landlord and/or such other requesting party.
25.
Legal Expenses. In the event of any litigation, arbitration, or other proceeding arising out of
this Lease or the enforcement or interpretation of this Lease, including a bankruptcy or similar proceeding
and a proceeding in probate, the prevailing party, as determined by the court or arbitrator, will be entitled
to an award of its reasonable attorneys’ fees and costs incurred in the proceeding, in the preparation
therefor, and on any appeal or rehearing therefrom.
26.
Arbitration.
26.1 Applicability of Arbitration. Any dispute between Landlord and Tenant relating to
the subject matter of this Lease, including any dispute or claim based on or arising from any alleged tort
(“Dispute”) will be subject to resolution by binding arbitration in accordance with the Commercial
Arbitration Rules of the American Arbitration Association then in effect (“AAA Rules”), as modified by this
Lease. All Disputes will be subject to the statutes of limitation that would be applicable if they were
litigated. Notwithstanding the foregoing, nothing in this Lease will prevent any party from obtaining an
injunction or other equitable relief in any court with jurisdiction, nor prevent Landlord from bringing an
unlawful detainer action or action for other similar summary relief.
26.2 Arbitration Notice. Landlord or Tenant may institute arbitration by notice
(“Arbitration Notice”) to the other at any time, even if judicial proceedings relating to the Dispute brought
by either party are pending.
26.3 Appointment of Arbitrator. If there is no readily discernible amount in
controversy, or the amount in controversy in the Dispute is less than $300,000 (increasing to $600,000 in or
after Year 20, $900,000 in or after Year 40, $1,200,000 in or after Year 60, and $1,500,000 in or after Year
80), one neutral arbitrator will preside over the arbitration and decide all issues. If the amount in
controversy is more than the above-indicated amount, three neutral arbitrators will decide all issues. If the
parties cannot agree on the amount in controversy, one neutral arbitrator will initially preside and
determine the amount in controversy. If the parties cannot agree on the identity of the arbitrator or
arbitrators within 30 days after the Arbitration Notice, the identity of the arbitrator or arbitrators,
depending on the amount in controversy as provided above, will be appointed in accordance with the AAA
Rules. Alternatively, the party giving the Arbitration Notice may designate a private dispute resolution firm,
such as Judicial Dispute Resolution Inc. or Judicial Arbitration and Mediation Services, Inc. in the Arbitration
Notice, and the arbitrator or arbitrators will be selected and the arbitration shall proceed under the
auspices of such firm. In this Agreement, “arbitrator” refers to the single arbitrator or panel of arbitrators
so appointed. All arbitrators will be active Washington State Bar members in good standing with at least 15
years of experience in the practice of law or as a judge. All arbitration hearings will be held in King County,
Washington.
26.4 Time for Hearing and Decision; Mediation. The arbitrator will take such steps as
may be necessary to hold a private hearing within 60 days of the Arbitration Notice and to conclude the
hearing within three days, unless the arbitrator decides that good cause exists to extend the conclusion of
the hearing. These time limits are not jurisdictional. At the request of a party made within 30 days after the
Arbitration Notice but in any event before the arbitration hearing, the Dispute will be submitted to
13
nonbinding mediation before a mediator selected by the parties or, if they are unable to agree, selected by
the arbitrator. The arbitrator may also order nonbinding mediation on its own motion.
26.5 Decision. The arbitrator will issue a written decision within 14 days of the
conclusion of the hearing. The decision will contain a brief statement of the Dispute and the award made
on each claim included in the Dispute. The arbitrator’s decision and award will apply this Lease and
applicable substantive law.
26.6 Discovery; Motions; Evidence. There will be no discovery or dispositive motions
practice in the arbitration except to the extent the arbitrator decides discovery is necessary to a fair
hearing; the date for hearing will be extended for the discovery, to the extent ordered by the arbitrator.
The arbitrator will not be bound by the rules of evidence or civil procedure, but may consider such
information as reasonable business people would use in the conduct of their day-to-day affairs, giving such
weight as may be appropriate to the form of such information. The arbitrator may require the parties to
submit any part of their case by written declaration or other form of presentation as the arbitrator
determines is appropriate and fair.
26.7 Powers of Arbitrator. In addition to its other powers, the arbitrator will have the
right to determine issues of arbitrability and will have the authority to issue subpoenas and grant equitable
relief. The arbitrator may award attorneys’ fees and costs to the substantially prevailing party. The
arbitrator may not award punitive damages.
26.8 Necessary Third Parties. No Dispute will be submitted to arbitration without the
consent of all parties if at the time of the proposed submission the Dispute involves a necessary third party
who has not agreed to participate in and agree to be bound by the arbitration. For avoidance of doubt, any
subtenant will be deemed to have agreed to this arbitration provision.
27.
Notices. Any notice or communication under this Agreement will be effective only if in
writing and delivered in person, by overnight courier service, by certified US mail return receipt requested,
postage prepaid to the addressee’s address below, or by email to the recipient’s email address below. All
notices and communications will be effective when received (or when delivery is refused by the recipient),
provided that receipt of any notice sent by email will be confirmed by the recipient by any reasonable
means (including by an automatic email reply confirming receipt).
If to Landlord, to:
_______________________
_______________________
_______________________
_______________________
If to Tenant, to:
Seabrook Land Company
203 Front Street, Suite A
Pacific Beach, WA 98571
Attention: Jeff Gundersen
Email: [email protected]
Landlord or Tenant may change its address for notices at any time by notice duly given in accordance with
the foregoing.
28.
Transfer of Landlord’s Interest in Property; Tenant’s Right of First Offer.
14
28.1 Transfer by Landlord. Subject to Section 28.2, Landlord will have the right to
transfer its interest in the Building and Property, and in the event of any such transfer, Landlord’s interest
in and obligations under this Lease will be transferred to and assumed by the transferee; and, provided that
the transferee assumes in writing all of Landlord’s obligations under this Lease thereafter to be performed,
the transferring Landlord will be relieved of any further liability to Tenant for those obligations.
28.2 Right of First Offer. Before listing or otherwise marketing the Property for sale,
Landlord will give Tenant notice of its intent to sell the Property, and the proposed price and other terms
and conditions of the sale (“Notice of Intent to Sell”). Within 5 business days after receiving the Notice of
Intent to Sell, Tenant will notify Landlord of its interest in purchasing the Property (“Notice of Intent to
Purchase”). If Tenant does not timely give a Notice of Intent to Purchase, Landlord will be free to list,
market, and sell the Property under such terms and condition as it sees fit; provided, however, that if the
sale of the Property has not closed within one year after the Notice of Intent to Sell, Landlord will not enter
into any new purchase and sale agreement, or list or market the Property for sale, or close any sale,
without first giving another Notice of Intent to Sell under this Section 28.2. If Tenant gives a Notice of Intent
to Purchase, Landlord and Tenant will negotiate diligently and in good faith the price and other terms and
conditions of a purchase of the Property by Tenant. If, despite those diligent and good-faith negotiations,
Landlord and Tenant have not entered into a purchase and sale agreement within 20 days after the Notice
of Intent to Purchase, Landlord will be free to list, market, and sell the Property as provided above as
though Tenant did not give a Notice of Intent to Purchase.
29.
General. This Lease: (i) represents the entire understanding of the parties with respect to
the subject matter covered; (ii) supersedes all prior and contemporaneous oral understandings with respect
to such subject matter; (iii) may only be amended in a writing signed by both parties; (iv) may be executed
in two or more counterparts all of which together will constitute one and the same instrument; (v) binds
and inures to the benefit of the parties and their respective successors, permitted assigns, agents and
representatives; and (vi) will be governed by the internal laws of Washington without reference to its
conflict of law provisions.
30.
Covenant of Good Faith; Further acts. The parties shall observe a covenant of good faith
and fair dealing in all their dealings under this Lease. Without limiting the foregoing, each party will execute
and deliver such further instruments and documents and take such other further actions as may be
reasonably necessary to carry out the intent and provisions of this Lease.
EXECUTED as of the date first written above.
LANDLORD:
Date
Date
15
TENANT:
SEABROOK LAND COMPANY, INC.
By
Name
Title
Date
16
STATE OF WASHINGTON
COUNTY OF __________
)
) ss.
)
I certify that I know or have satisfactory evidence that ______________________________ and
______________________________ are the persons who appeared before me, and said persons
acknowledged that they signed this instrument and acknowledged it to be their free and voluntary act for
the uses and purposes mentioned in the instrument.
Dated this _____ day of __________, 20__.
(print or type name)
NOTARY PUBLIC in and for the State of Washington,
residing at
My Commission expires:
STATE OF WASHINGTON
COUNTY OF __________
)
) ss.
)
I certify that I know or have satisfactory evidence that ________________________________ is the
person who appeared before me, and said person acknowledged that said person signed this instrument,
on oath stated that said person was authorized to execute the instrument and acknowledged it as the
__________________ of SEABROOK LAND COMPANY, INC., a Washington corporation, to be the free and
voluntary act of the corporation for the uses and purposes mentioned in the instrument.
Dated this _____ day of __________, 20__.
(print or type name)
NOTARY PUBLIC in and for the State of Washington,
residing at
My Commission expires:
17
EXHIBIT A
OF
LEASE AGREEMENT
LEGAL DESCRIPTION OF PROPERTY
[insert]
Exhibit A, Page 1
c:\users\ivo\google drive\seabrook\market street towhnhomes\leaseback
agreements\360-leaseback-agreementseabrook-market-st-townhomes.docxc:\users\ivo\google drive\seabrook\market street towhnhomes\leaseback
agreements\360-leaseback-agreement-seabrook-market-st-townhomes.docx
EXHIBIT B
OF
LEASE AGREEMENT
DEPICTION OF BUILDING AND PREMISES
[insert]
Exhibit B, Page 1
c:\users\ivo\google drive\seabrook\market street towhnhomes\leaseback
agreements\360-leaseback-agreementseabrook-market-st-townhomes.docxc:\users\ivo\google drive\seabrook\market street towhnhomes\leaseback
agreements\360-leaseback-agreement-seabrook-market-st-townhomes.docx