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HomeMy WebLinkAboutRes1988-082 . . . Sponsored by: Schaefermeyer CITY OF SEWARD, ALASKA RESOLUTION NO. 88-082 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SEWARD, ALASKA, AUTHORIZING A LONG TERM LEASE OF CITY OWNED PROPERTY WITHIN THE SEWARD INDUSTRIAL PARK SUBDIVISION TO ICICLE SEAFOODS, INC. WHEREAS, Icicle Seafoods, Inc., operating as Seward Fisheries, Inc., has for many years leased land and operated a major fish processing plant within the Seward Small Boat Harbor area; and WHEREAS, Icicle Seafoods, Inc., has proven itself to be a responsible corporate entity within the community and has provided jobs and services to enhance the local economy; and WHEREAS, Icicle Seafoods wishes to make a substantial plant expansion which requires an enlargement of its lease site to include a public right of way access to the boatlift dock; and WHEREAS, the lease site can be rep la tted in such a manner as to provide public access to the boatlift dock and allow for Icicle Seafood's planned expansion; and WHEREAS, the four leases covering five parcels present- ly in effect between the city of Seward as Lessor and Icicle Seafoods as Lessee can more effectively be administered through the replatting of the parcels and consolidation of the leases; NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF SEWARD, ALASKA, that: Section 1. The city manager is authorized to execute a long term lease agreement, attached and incorporated herein by reference, with Icicle Seafoods, Inc., for lands within the Seward Industrial Park. Section 2. The city manager is further authorized to mutually terminate existing long term leases known as RE-002, RE-003, RE-004, and RE-005, with Seward Fisheries, a division of Icicle Seafoods, Inc., in favor of the above referenced single lease. Section 3. This resolution shall take effect thirty (30) days following its adoption. -1- . . CITY OF SEWARD, ALASKA RESOLUTION NO. 88-082 PASSED AND APPROVED BY THE CITY COUNCIL OF THE CITY OF SEWARD, ALASKA, this 11 day of July , 19 88 . AYES: NOES: ABSENT: ABSTAIN: ATTEST: THE CITY OF SEWARD, ALASKA GIESELER, MEEHAN, NOLL, O'BRIEN & SIMUTIS NONE DUNHAM & HILTON NONE APPROVED AS TO FORM: HUGHES, THORSNESS, GANTZ, POWELL & BRUNDIN, Attorneys for the City of Seward, AK . (City Seal) 7/'VAl flI ~ Fred B. Arvidson City Attorney -2- . . GROUND LEASE BETWEEN CITY OF SEWARD, ALASKA AND ICICLE SEAFOODS, INC. CONTRACT NO. . ARTICLE ARTICLE ARTICLE ARTICLE ARTICLE ARTICLE ARTICLE ARTICLE INDEX 1. LEASED LAND 1.1 Legal Description 1. 2 Platting 1.3 Roads and utilities 2. CITY'S WARRANTY OF QUIET ENJOYMENT LEASE LAND ACCEPTED 3. 3.1. Acceptance of Land 3.2. Subsidence 4. USE OF LEASED LAND 4 . 1. Use 4.2. Assignment/Sublease 5. LEASE TERM 5.1. Commencement and Expiration 5.2. options and Extensions 5.3. Interim Right to Possession 5.4. Surrender of Possession 6. RENT 6.1. Due 6.2. Determination of Rental 6.3. Additional Rent and city's Right to Cure Lessee's Defaults 6.4. Late Payment Penalty 7. TAXES, ASSESSMENTS AND UTILITIES 7.1. Lessee to Pay Taxes 7.2. Lessee to Pay Assessments 7.3. Pro-ration of Taxes and Assessments 7.4. Contest 7.5. Lessee to Pay utility Charges 8. CONSTRUCTION BY LESSEE 8.1. Lessee's Right to Build - General Conditions a. Cost of Construction b. Kept Free of Liens c. Contractor Bonding d. Construction Diligence and Continuity i . . . ARTICLE ARTICLE ARTICLE ARTICLE ARTICLE ARTICLE ARTICLE 8.2. Lessee's Ownership of Trade Fixtures, Machinery and Equipment 8.3. Lessee's Right to Remove Improvements and Ownership Thereon 9. LIENS 9.1. Prohibition of Liens on Fee or Leasehold Interest 9.2. Removal of Liens by Lessee 9.3. Notice of Non-Responsibility 10. 11. 11. 1. 11.2. 11.3. 11.4. 11.5. 12. 12 . 1. 12.2. 12 3. 12.4 13. INDEMNITY INSURANCE AND RESTORATION Liability Insurance a. Limits b. Determination of Adequacy c. Cancellation Notice d. Waive Rights of Subrogation e. Forms f. Change of Minimum Requirements Fire and Extended Coverage Insurance Blanket Insurance Additional Named Insured; Rights of Mortgagees (Lenders) Restoration of Buildings and Improvements CARE OF LEASED LAND, ACCESS OF THE CITY Maintenance and Repairs Other Access Rights of the City Avoidance of Prescriptive Rights Small Boat Harbor Grid COMPLIANCE WITH LAWS 13.1. Compliance with Laws 13.2. Contest 14. EMINENT DOMAIN 14.1. Interest of Parties in Condemnation 14.2. Partial Taking - Continuation of Lease 15. 15.1 15.2 15.3 ARBITRATION Consent Panel Formal Arbitration Arbitration Awards ii ARTICLE 16. DEFAULT AND REMEDIES 16.1. Default and Termination a. Rents b. Covenants c. Bankruptcy d. Creditor Assignment e. Insolvency f. Abandonment 16.2. Reletting 16.3. Damages a. Equivalent Amount b. Net Proceeds 16.4. Accumulation of Remedies 16.5. Appointment of Receiver ARTICLE 17. GENERAL PROVISIONS 17.1. Estoppel Certificates 17.2. Conditions and Covenants 17.3. No Waiver of Breach 17.4. Time of the Essence 17.5. Computation of Time 17.6. Successors in Interest 17.7. Entire Agreement 17.8. Governing Law 17.9. Partial Invalidity 17.10 Relationship of Parties 17.11 Interpretation a. Number and Gender b. Mandatory and permissive c. Captions 17.12 Amendments 17.13 a. Delivery of Notices and Rent Method and Time b. Payment of Rent Address c. Notice to the City Address d. Notices to Lessee e. change of Address 17.14 Broker's commission 17.15 Attorney's Fees. 17.16 Records 17.17 Minerals 17.18 Good Faith 17.19 Election to Terminate by City 17.20 Election to Terminate by Lessee a. Notice b. Payments c. Releasing City's Fee from Encumbrances 17.21 Extent of Rights, Reservations or Covenants Hi ..---. ~_._.,,"----'---_.~ - . ARTICLE 18. RECORDING, EXECUTION, COUNTERPARTS 18.1. Recording 18.2. Counterparts 18.3. Execution . . CITY OF SEWARD, ALASKA Ground Lease - Icicle Seafoods Inc. LEASE AGREEMENT This Lease Agreement made and entered into this day of , 19 , between the CITY OF SEWARD, a home rule municipal corporation located in the Kenai Peninsula Borough, State of Alaska, LESSOR, and Icicle Seafoods Inc., P.O. Box 79003, Seattle, WA 98119 hereinafter referred to as "LESSEE." WIT N E SSE T H: WHEREAS, Lessee is currently occupying the premises described below as Lessee under four different long term lease agreements, all entered into on October 1, 1973, which leases the parties by this agreement, wish to supercede and cancel as of the effective date of this lease; and WHEREAS, Lessee wishes to expand its main fish processing plant building to accommodate additional processing capabilities; and WHEREAS, this expansion necessitates increasing the lease site to include a portion of the public access to the boatlift dock, which in turn will require a vacation of rights of way and replat of property. NOW, THEREFORE, FOR AND IN CONSIDERATION OF THE RENTS, COVENANTS, AND CONDITIONS HEREIN CONTAINED, CITY AND LESSEE AGREE AS FOLLOWS: ARTICLE 1. LEASED LAND 1.1 Leaal Descriotion. city leases to Lessee, and Lessee leases from City that certain real property herein called "Leased Land," situated in Seward, Alaska, consisting of approximately 4.56 acres , as shown on Exhibit "A" attached hereto and as more particularly described as follows: Lots 11, 12, 13, 14, and 15, Plat of Seward Industrial Park, a portion of u.S. Government Survey No. 241, Seward, Alaska, located in section 3, Tract 1 South, Range 1 West, Seward Meridian, Alaska, together with such portion of Lot 10 and the Public Access Space between Lots 10 and 11 as may be agreed upon by Lessor and needed by Lessee for the construction of plant addi tions and improvements to its processing facility located on Lot 11. ... .____....1- ." . . . CITY OF SEWARD, ALASKA Ground Lease - Icicle Seafoods Inc. Following the completion of such construction more specifically referred to in section 17.19, the City proposes to replat the Leased Land into two lots, each having approximately 2.3 acres with one lot comprising a portion of Lot 10, all of Lot 11 and the vacated portion of the public access and a second lot containing presently leased Lots 12-15. The parties agree to execute an amendment to this Lease containing the new description of the Leased Land when the replat has been completed. 1.2. Plattinq. Lessee agrees as a condition of this agreement to pay for the expenses involved in the right of way vacation, lease site replatting and survey expenses to accommodate its plant expansion and consolidation of leases. 1. 3 Roads and utilities. Lessee agrees that any pUblic road/access and/or utilities that require relocation to accommodate Lessee's proposed building expansion will be the responsibility of Lessee. ARTICLE 2. CITY'S WARRANTY OF OUIET ENJOYMENT. Lessee, upon paying the rent and other charges herein provided for and observing and keeping the covenants, conditions and terms of the Lease on Lessee's part to be kept or performed, shall peacefully and quietly enjoy possession of the Leased Land during the term of this Lease without hindrance by, from or through the City, subject, however, to any encumbrances created or caused by Lessee. ARTICLE 3. LEASED LAND ACCEPTED. 3.1. Acceptance of Land. Lessee acknowledges that he has inspected the Leased Land and accepts the same lias is" and without reliance on any representations or warranties of City, or agents of City, as to the physical condition thereof, except as expressly herein provided. Lessee, at his sole cost and expense, shall have the right to raze, tear down or remove any buildings, structures or improvements presently situated on the Leased Land. All funds and proceeds, if any, obtained by Lessee from the disposition of such buildings, structures or improvements, may be retained by Lessee. Lessee is aware of the easements as shown on the attached Exhibit "A" and agrees to lease the property subject thereto. 3.2. Subsidence. The City will not be responsible for any washout, subsidence, avulsion, settling or relictions to the leased premises, nor for any injury caused thereby to the property of the Lessee of any sublessee, or that of any other person. The City is not obligated to replace, refill or 2 CITY OF SEWARD, ALASKA Ground Lease - Icicle Seafoods Inc. improve any part of occupancy, in the event settling or reliction. the leased premises during Lessee's of such washout, subsidence, avulsion, ARTICLE 4. USE OF LEASED LAND. 4.1. Lessee may use the Leased Land for uses consistent with applicable land use regulations. City may withhold its consent as to any proposed business or activity unrelated to Lessee's fishing and marine oriented business which, in the City's discretion, reasonably exercised, is not desirable or compatible with said applicable land use regulations. 4.2. No assignment or sublease shall be permitted unless approved in writing by the City. However, such approval will not be unreasonably withheld so long as said assignment or sublease is expressly subject and subordinate to this Lease and the rights of the City hereunder, and the proposed business or activity is compatible with applicable land use regulations. City expressly recognizes the need of Lessee to assign its leasehold estate created herein to bank or institutional lenders for financing purposes, and agrees to cooperate with Lessee's lenders by consenting to reasonable notice of default and right to cure provisions. ARTICLE 5. LEASE TERM 5.1. Commencement and Expiration. Lease shall be thirty (30) years, commencing and ending the The term of this the day of day of 5.2. Options and Extensions. There are no renewal options extending to Lessee under this Lease, but by inaction of the parties, the Lease shall be deemed to continue from month to month. This Lease will not terminate until notice in writing is given by either part to the other, not later than six (6) months prior to the expiration of the Lease Term. 5.3. Interim Riaht to Possession. The parties understand and Lessee is specifically taking the risk that under the Charter and Ordinance provisions for the City of Seward, this Lease Agreement may be voided by a referendum vote of the people, and that the grant to Lessee of the right to possession of the leased premises prior to the passage of thirty (30) days from the date of approval of this lease by the City Council for the city of Seward shall in no way affect or reduce the rights of the voters to reject this Lease Agreement, in which case Lessee shall not be entitled to any damages, or 3. . . . CITY OF SEWARD, ALASKA Ground Lease - Icicle Seafoods Inc. any other recovery against City. City shall not object to Lessee's entry upon the Leased Land immediately upon approval of this lease by the City Council of the city of Seward. Permitting Lessee to occupy the land in advance of the lapse of thirty (30) days is for the convenience of Lessee only and should not be construed as granting any interest in the Leased Land should this lease be defeated in a referendum election. 5.4 Surrender of Possession. a. Subj ect to the provisions of Article 11 below with respect to restoration of buildings and improvement, s upon expiration of the Lease Term, whether by lapse of time or otherwise, Lessee shall promptly and peacefully surrender the Leased Land. b. Upon the expiration of the Lease term or any sooner termination of this Lease, Lessee agrees to execute, acknowledge and deliver to City a proper instrument in writing, releasing and quitclaiming to City all right, title and interest of Lessee in and to the Leased Land and all improvements thereto not removed by Lessee as provided herein. ARTICLE 6. RENT. The rental for the Leased Land shall be determined and paid as follows: 6.1. Any and all rental due under this Lease shall be paid in advance upon commencement of the Lease in quarterly installments on or before commencement of this Lease and on or before January 1, April 1, July 1 and October 1, of each succeeding year. 6.2. The rental shall be determined as follows: Beginning the day of , 19 , and for the succeeding five (5) years, the rental rate wi~be Not less than ninety (90) days prior to the expiration of every fifth lease year City, at its own expense, shall employ an independent MAl certified appraiser to determine the fair market rental value of the Leased Land, exclusive of Lessee's improvements, at the highest and best use of the Leased Land based upon applicable land use regulations. within forty-five (45) days after receipt of any such appraisal, City shall provide Lessee a copy of the appraiser's written appraisal report. If Lessee does not object in writing to that appraisal within ten (10) days, the stated rental rated determined by such appraisal shall apply for the next succeeding five lease years. The rental rate shall thus be adjusted every five lease years. CITY OF SEWARD, ALASKA Ground Lease - Icicle Seafoods Inc. If Lessee gives City written notice of objections to the appraised rental rate within ten (10) days of receipt of the appraisal conclusion, Lessee shall then engage a second independent MAl certified appraiser, at his sole expense, to make an appraisal of the fair market rental value of the Leased Land at its highest and best use, exclusive of Lessee's improvements. Lessee shall furnish city a copy of the second appraisal report within ten (10) days of its receipt by Lessee. If the second appraisal reflects a fair market rental value which varies from the first appraisal by no more than twenty (20%) percent, then the new rental rate shall be the average of the first and second appraisal conclusions. If the second appraisal reflects a fair market value which varies from the first appraisal by more than twenty (20%) percent, then, unless City and Lessee agree on a rate among themselves, the new rental rate shall be determined in accordance with the arbitration provisions contained in Article 15. Lessee's objection to the rental rate and engagement of a second appraiser shall not postpone Lessee's obligation to pay the annual rental as described in City's notice of rental rate based on the first appraisal. Lessee shall pay City the amount of rental rate as fixed by the first appraisal until the question of rental adjustment is finally resolved, at which time an appropriate adjustment will be made, if needed. 6.3. Additional Rent and citv's Riaht to Cure Lessee's Defaults. All costs and expenses which Lessee assumes or agrees to pay pursuant to this Lease or to any mortgage or other encumbrance upon the Leased Land or Lessee's leasehold interest shall, at City's election, be treated as additional rent and, in the event of nonpayment, City shall have all rights and remedies herein provided for in the case of nonpayment of rent or of a breach of condition. If Lessee shall default in making any payment required to be made by Lessee, or shall default in performing any term, covenant or condition of this Lease or of any such mortgage or other encumbrance on the part of Lessee to be performed which shall invol ve the expenditure of money by Lessee, ci ty , at ci ty' s option, may but shall not be obligated to, make such payment or, on behalf of Lessee, expend such sum as may be necessary to perform and fulfill such term, covenant or condition, and any and all sums so expended by City with interest thereon at the maximum rate under the laws of the State of Alaska from the date of such expenditure until repaid, shall be (and shall be deemed to be) additional rent and shall be repaid by Lessee to City, on demand, but no such payment or expenditure by city shall be deemed a waiver of Lessee's default, nor shall it affect any other remedy of City by reason of such default. _ 5.. . . .CITY OF SEWARD, ALASKA Ground Lease - Icicle Seafoods Inc. 6.4. Late Payment Penaltv. Rental payment due, but not received, by the due date shall accrue interest at the rate of twelve (12%) percent per annum until paid or the maximum permitted rate under Alaska law, whichever is higher. ARTICLE 7. TAXES. ASSESSMENTS AND UTILITIES. 7. 1. Lessee to Pav Taxes. Lessee agrees to pay prior to delinquency and directly to the taxing authorities in which the Leased Land is located all real property taxes (plus all personal property taxes on personal property situate on the Leased Land and placed thereon by Lessee or under Lessee I s authority), sales taxes, or other business or use taxes levied or assessed upon or against the Leased Land or any improvements thereon or Lessee I s business during the Lease Term. Lessee agrees to indemnify and hold City harmless from liability for any other tax, charge, or assessment of any kind or nature, attributable to Lessee I s occupancy or use of the Leased Land, Lessee shall, within sixty (60) days after any such tax assessment or other charge constituting a lien on the Leased Land becomes due and payable, produce and exhibit to City satisfactory evidence of payment. 7.2. Assessments. Lessee and ci ty agree that improvements to subsurface utilities shall be deemed an improvement to the fee and shall not be assessed against the leasehold. In the event the improvement to subsurface utilities increases the appraised fair market value of the Leased Land, Lessee agrees to bear any increase in rent caused by such improvements, in accordance with Article 6 of the Lease. Lessee, during the Lease Term, agrees to pay directly to the public authorities charged with collection all the costs of all other public works or improvements assessed according to the benefit found by the levying authority to accrue therefrom the Leased Land. If an option is given to pay such assessment(s) in installments, Lessee may elect to pay the same in installments, and, in such case, Lessee shall be liable only for such installments as shall accrue during the Lease Term. At the expiration of each fifth (5th) year of this Lease, the appraised fair market rental value of the Leased Land shall be reduced by the amount of assessments actually paid by the Lessee during the Lease Term, for purposes of determining the rental rate for each succeeding five (5) year period of the Lease in accordance with Article VI of the Lease. 7.3. Pro-ration of Taxes and Assessments. If Lessee I s obligation to pay taxes or assessments commences or ends during a tax year, such obligation shall be appropriately CITY OF SEWARD, ALASKA Ground Lease - Icicle Seafoods Inc. prorated, with City bearing the remaining cost (or its pro-rata share) thereof. 7.4. Contest. Lessee shall have the right to contest or review any tax, assessment, levy, fee, water or sewer charges or rents, or any other governmental charges which Lessee is obligated to pay. Such proceedings shall, if insti tuted, be conducted promptly at Lessee's own expense and free from all expense to City. Before instituting any such proceedings, Lessee shall pay under protest such tax, assessment, levy, fee, water or sewer rents or charges or any other governmental charges, or shall furnish to City a surety company bond in a company acceptable to City, or other security reasonably satisfactory to City, sufficient to cover the amount of the contested item or items, wi th interest for the period which such proceedings may be reasonably expected to take, and costs securing the payment of such contested item or items with interest and costs in connection therewith when finally determined. Notwithstanding the furnishing of any such bond or security, Lessee shall pay all such items at least twenty (20) days before the time when the Leased Land or any part thereof might be forfeited. The legal proceedings herein referred to shall include appropriate certiorari proceedings and appeals from any orders and judgments therein, but all such proceedings shall be begun as soon as reasonably possible after the imposition or assessment of any contested items and shall be prosecuted to final adjudications with reasonable dispatch. In the event of any reduction, cancellation or discharge, Lessee shall pay the amount that shall be finally levied or assessed against the Leased Land or adjudicated to be due and payable and, if there shall be any refund payable by the governmental authority with respect thereto, Lessee shall be entitled to receive and retain the same, subject, however, to apportionment as provided in Paragraph 3 above during the first and last years of the Lease Term. City, at City'S option, may, but shall not be obligated to, contest or review by legal proceedings, or in such other manner as may be legal, and at ci ty' s own expense any tax, assessment, levy, fee, water or sewer rents or charges, or any other governmental charge aforementioned, which shall not be contested or reviewed as aforesaid, and, unless Lessee shall promptly join in such contest or review and pay all cost therein, City shall be entitled to receive and retain any refund payable by the governmental authority with respect thereof. 7.5. Lessee to pav utilitv Charqes. Lessee shall payor cause to be paid all charges for water, heat, gas, electricity, sewers, and any and all other utilities used upon the Leased Land throughout the Lease Term, including any connection fees. 7 .CITY OF SEWARD, ALASKA Ground Lease - Icicle Seafoods Inc. . . ARTICLE 8. CONSTRUCTION BY LESSEE. 8.1. Lessee's Riaht to Build-General Conditions. Lessee shall have the right at any time and from time to time during the Lease Term to erect, maintain, alter, remodel, reconstruct, rebuild and replace building(s) and other improvement(s) on the Leased Land, subject to the following conditions: (a) The cost of any construction, reconstruction, demolition, or of any change, alteration or improvements, shall be borne and paid for by Lessee. (b) The Leased Land shall, free of mechanic's, materialmen's and hereinafter more specifically provided. at all times, be kept any other liens, as (c) Any building contractors employed by Lessee or its sublessees shall be appropriately bonded for one hundred (100%) percent of the contract amount{s) by use of performance and labor and material payment bonds in the customary form when cost of the work is over $10,000.00 Copies of all such bonds shall be furnished to ci ty prior to commencement of construction. (d) Lessee, building or construction continue such activities and continuity. upon commencement of permissible activities on the Leased Land, shall through to completion with diligence 8.2. Lessee's Ownership of Trade Fixtures. Machinerv and Eauipment. It is expressly understood and agreed that any and all trade fixtures, machinery and equipment of whatsoever nature at any time constructed, placed or maintained upon any part of the Leased Land by Lessee shall be and remain the property of Lessee or its tenants as their interests may appear and may be removed or replaced at any time during the lease term, provided Lessee or its tenants repair any and all damage to the Leased Land resulting from such removal or replacement. 8.3. Lessee's Riaht to Remove Improvements and Ownership Thereof. Lessee shall have the right to remove any buildings or improvements constructed or placed upon the Leased Land by Lessee, prior to the expiration of the Lease. Any buildings or improvements not removed prior to expiration of the Lease shall become the property of City without the payment of any compensation to Lessee. ARTICLE 9. LIENS. CITY OF SEWARD, ALASKA Ground Lease - Icicle Seafoods Inc. 9.1. Prohibition of Liens on Fee or Leasehold Interest. Lessee shall not suffer or permit any liens to be filed against the fee of the Leased Land, nor against Lessee's leasehold interest in the Leased Land, nor against any buildings or improvements on the Leased Land by reason of any work, labor, services or materials supplied or claimed to have been supplied to Lessee or anyone holding the Leased Land or any part thereof through or under Lessee. 9.2. Removal of Liens bv Lessee. If any lien shall be recorded against the Leased Land, or any improvements thereof, Lessee shall cause the same to be removed, or, in the alternative, if Lessee in good faith desires to contest the same, Lessee shall be privileged to do so, but in such case Lessee hereby agrees to provide a surety bond, from a surety licensed to do business in Alaska, in a penal sum equal to one and one-half times the amount of the claim of lien, which bond shall guarantee the payment of the sum which the lien claimant has claimed, together with the lien claimant's reasonable cost of suit in the action. Lessee further agrees to indemnify, defend, and save City harmless from all liability for damages occasioned thereby and shall, in the event of a judgment of foreclosure upon said lien, cause the same to be discharged and removed prior to the execution of such judgment. 9.3. Notice of Non-resDonsibilitv. City may, as contemplated by Alaska Statute 34.35.065 (as now enacted or hereinafter amended) give notice of non-responsibility for any improvements constructed or made by Lessee on the Leased Land. ARTICLE 10. INDEMNITY. Except for claims arising out of acts caused by the negligence of City or it; representatives, Lessee agrees to protect, indemnify, defend and save harmless City from and against any and all liability arising from acts or omissions of any nature whatsoever of Lessee's officers, servants, employees, contractors, tenants, agents or invitees causing injury to or death of persons, or loss of or damage to property during the Lease Term, and from any expense incident to defense of and by City therefrom. If any action or proceeding is brought against City by reason of any such occurrences, City shall notify Lessee in writing of such action or proceeding, whereupon Lessee, at Lessee's expense, may elect to resist or defend such action or proceeding by counsel approved in writing by City, such approval not to be withheld unreasonably. ARTICLE 11. INSURANCE AND RESTORATION. 9 -_._----- . . . CITY OF SEWARD, ALASKA Ground Lease - Icicle Seafoods Inc. 11.1. Liabilitv Insurance. become effective until such times as received the following: This Lease will not the city of Seward has A. A policy or policies of insurance with the following coverage limits: B. 1. General Liability................$300,OOO 2. Workmen's Compensation...........STATUTORY A determination by the City of Seward's Insurance Broker that the insurance offered by the Lessee is of such type and has such provisions as will permit it to serve as the underlying coverage for any City Excess Policy and an acknowledgement from the Broker that the City Excess Policy or policies will be in effect during the term of the Lease. NOTE TO LESSEE: This means that a Binder for insurance is NOT sufficient to obtain this permit. You will need to coordinate your insurance coverages with the City's broker. All insurance policies shall provide for thirty (30) days' notice of cancellation and/or material change to be sent to the City. All insurance policies shall contain the following or equivalent clauses: C. 1. The City, its officers, employees and agents are added as additional insureds as respects operations of the named insured performed under the terms of this Lease with the city. D. 2. It is agreed that any insurance maintained by the City shall apply in excess of, and not contribute to, insurance provided by this policy. All of the required insurance policies shall provide that the insurers waive their rights to subrogation against the City and the Lessee and their respective officers, servants, agents or employees. Lessee further agrees to waive, and agrees to have its insurers waive, any rights of subrogation with respect to deductibles under such policies and with respect to damage to equipment, including the loss of use thereof, whether insured or not. 10 CITY OF SEWARD, ALASKA Ground Lease - Icicle Seafoods Inc. E. The general 1 iabil i ty endorsement, and Workers' Compensation/Employer's Liability Endorsement shall be in substantially the form available from the City. F. The minimum requirements in this section may be increased from time to time by ci ty l.n accordance with customs and usage for comparable property in the Seward metropolitan area. 11.2. Fire and Extended Coveraae Insurance. Lessee, during the Lease Term, shall keep all buildings and improvements insured, at his expense, against loss or damage by fire and such other risks as may be included in the customary form of broad form extended coverage (which may exclude earthquakes), in an amount, over and above any deductibles in the governing policies, of not less than the unpaid balance(s) due under any existing deed(s) of trust or mortgagees) encumbering the buildings or improvements or City's fees. 11. 3. Blanket Insurance. Lessee may provide any insurance required by this Lease in the form of a blanket pOlicy, provided Lessee furnishes evidence satisfactory to City, indicating the coverage thereunder is at least equal to the coverage obtainable under a separate policy covering the Leased Land only. 11.4. Additional Named Insured: Riahts of Mortaaaees (Lenders): Waiver of Subroaation. All insurance policies required to be maintained by Lessee shall name Lessee and City as the insureds, as their respective interests may appear. All policies shall contain an agreement by the insurers that such policies shall not be cancelled without at least thirty days' prior written notice to city, and certificates or copies of all such insurance policies shall be furnished to City promptly after the assurance thereof. 11.5. Restoration of Buildinas and Improvements. In the event of damage to, or destruction of, any of the buildings or improvements situated on the Leased Land, then from the insurance proceeds payable to Lessee, Lessee shall either: A. within ninety (90) days after payment of the insurance proceeds, commence restoration of the buildings and improvements to their condition prior to such damage, provided, however, that Lessee's obligation to restore will be limited to the insurance proceeds available to Lessee: or B. Apply such insurance proceeds first to the cost of removal of the damaged or destroyed buildings, including any debris or other nuisance occasioned by the damage or 11 . . . CITY OF SEWARD, AIASKA Ground Lease - Icicle Seafoods Inc. destruction, and restore the Leased Land to a grade and condition similar to its grade and condition prior to the construction of the buildings or improvements thereon. Insurance proceeds remaining after the removal of damaged or destroyed buildings and other improvements, and restoration of the Leased Land to grade and condition satisfactory to the City may be applied to any indebtedness owed by Lessee to any lender which financed construction of the leasehold buildings or improvements. In either event, all insurance proceeds shall be deposited and held in trust with such bank having offices in Seward and/or Anchorage, Alaska, as Lessee may designate, or with Lessee's mortgagee of the damaged property, and shall be made available to Lessee for its use in either restoring or repairing any damaged or destroyed buildings or improvements on the Leased Land, or removing the damaged or destroyed buildings or improvements and restoring the Leased Land to a grade and condition of reasonable satisfaction to the City. The proceeds of insurance shall be paid out by such trustee of mortgagee from time to time, on certifications, by the person having supervision of the work, that the amount certified is being applied to the payment of the reasonable costs of such work. Should the Lessee elect not to restore and repair damaged buildings and improvements on the Leased Land, all insurance proceeds remaining after removal of damaged and destroyed buildings and improvements, and restoration of the Leased Land, may be applied to any indebtedness by Lessee to the lender which financed construction of the leasehold buildings or improvements, after receipt of written satisfaction from the City of the restoration of the Leased Land. In the event Lessee elects not to restore and repair when damaged or destruction has occurred to the buildings and improvements, this Lease shall terminate, and all Lessee's obligations hereunder shall expire, upon the date that the City certified in writing its satisfaction with the restoration of the Leased Land. ARTICLE 12.CARE OF LEASED LAND. ACCESS OF CITY. 12.1. Maintenance and Repairs. After the commencement of construction and during the entire remaining term of this lease and every renewal or extension hereof Lessee shall, at Lessee's sole cost, risk and expense, maintain the leased land including any improvements placed thereon by Lessee or City in a neat, sanitary, and safe condition. City may periodically inspect the leased land and facilities constructed thereon in order to ascertain the condition of the premises but the exercise of this right shall not imply any obligation to do so nor any obligation to do so in any particular way. 12 CITY OF SEWARD, AIASKA Ground Lease - Icicle Seafoods Inc. City may notify Lessee in writing of any deficiencies in the performance of Lessee's maintenance responsibilities which constitute a threat or danger to health, safety, or any property of the City of adjacent land owners, and Lessee shall promptly within 15 days of receipt of such notice advise City in writing of its proposed schedule for performance of any work necessary to cure such deficiencies. Should Lessee dispute the necessity of any such maintenance work as being necessary or advisable or reasonable to protect the public facilities on the leased land or on adjacent land facilities, it may submit the matter to arbitration provided, however, that pending the decision of the arbitrators it shall fully comply with the maintenance requests. If an arbitration award (which shall include costs, interest and attorneys' fees) should ultimately find that the repairs were not necessary then Lessee may deduct from future rental payments the cost of such repairs. In deciding whether repairs requested by City are necessary the arbitration panel is to give primary consideration to the safety and welfare of the Seward port facilities and the citizens of Seward such that the highest standards of industrial and environmental safety are achieved. 12 . 2 . Other Access Riahts of ci tv. ci ty and its agents or representatives shall have the right to enter into and upon the Leased Land during reasonable hours for the purpose of inspecting the Leased Land and all buildings and improvements thereon. 12.3. Avoidance of Prescriptive Riahts Lessee shall take such action as may be necessary to preserve City's title and ownership of the Leased Land free and clear of any public or private rights-of-way, easements or other interests acquired by prescriptive use or otherwise than as permitted under this Lease, including, but not limited to, the posing of thoroughfares, walkways and parking areas so as to preserve the right of private ownership therein and prevent any adverse rights thereto accruing through prescriptive use or otherwise than as permitted hereunder. 12.4. Small Boat Harbor Grid. Lessee shall refrain, at all times, from obstructing or fouling the grid of the Small Boat Harbor, and will clean such obstruction of fouling, if any, at Lessee's expense and pay the Ci ty for any damages suffered thereby. ARTICLE 13. COMPLIANCE WITH IAWS. 13 . . . CITY OF SEWARD, ALASKA Ground Lease - Icicle Seafoods Inc. 13.1. Comoliance with Laws. Lessee shall comply with all applicable laws, ordinances and regulations of duly constituted public authorities now or hereafter in any manner affecting the Leased Land or any buildings, structures or improvements situated thereon, whether or not any such laws, ordinances or regulations which may be hereafter enacted involve a change of policy on the part of the governmental body enacting the same. Lessee further agrees it will not permit any unlawful occupation, business or trade to be conducted on said premises or any use to be made thereof contrary to any law, ordinance or regulation as aforesaid with respect thereto. 13.2. Contest. Lessee may, by appropriate proceedings conducted at Lessee's own expense, contest in good faith the validity or enforcement of any law, ordinance or regulation, provided Lessee diligently pursues such contest to a final determination by a court, department of governmental authority or body having jurisdiction thereof; provided that, if City may become liable in any manner for damages, penalties, fines or costs by reason of Lessee's failure to comply with any such law, ordinance or regulation during Lessee's contest thereof, then, as a condition precedent to the commencement and continuation of such proceedings, Lessee shall furnish City such bond with corporated surety as City shall reasonably request to save harmless and indemnify City against liability for any such damages, penalties, fines of costs. At the option of City, it may, at its expense, contest the validity or enforcement of any such law, ordinance or regulations. ARTICLE 14. EMINENT DOMAIN. 14.1. Interest of Parties in Condemnation. In the event the Leased Land or any part thereof shall be taken for public purposes by condemnation as a result of any action or proceeding in eminent domain, or shall be transferred in lieu of condemnation to any authority entitled to exercise the power of eminent domain, the interests of City and Lessee in the award of consideration for such transfer and the effect of the taking or transfer upon this Lease shall be as provided by law. In the event the extent of the taking makes impracticable the continued operation of a business compatible with applicable land use regulations, upon written notification by Lessee, this Lease and all of the right, title and interest thereunder of Lessee shall cease on the date title to such Land so taken or transferred vests in the condemning authority. 14.2. Partial Takinq -- Continuation of Lease. In the even the taking or transfer of a part of the Leased Land leaves the remainder of the accessible as to be effectively and practicably usable in the opinion of the Lessee and City for 14 CITY OF SEWARD, AlASKA Ground Lease - Icicle Seafoods Inc. the purpose of operation thereon of Lessee's business, this Lease shall terminate and end as to the portion of the Leased Land so taken or transferred as of the date title to such portion vests in the condemning authority and the condemning authority enters into possession, but shall continue in full force and effect as to the portion of the Leased Land not so taken or transferred, with appropriate abatement of rental for the portion of Leased Land so taken. ARTICLE 15. ARBITRATION. Any dispute between City and Lessee with respect to any provision of this lease or the rights and obligations of the parties hereunder shall be decided by arbitration, in accordance with the provisions of this paragraph. 15.1. Consent Panel. The party desiring arbitration of a dispute shall give written notice to that effect to the other party specifying in such notice the name and address of a person to serve as an arbitrator on its behalf. within fifteen (15) days after receipt of such notice the other party shall give written notice to the first party specifying the name and address of a person designated to serve as an arbitrator on its behalf. If neither party has objected to the other's designation within fifteen (15) days of the notice by the second party of its representative of an arbitrator, then the two chosen arbitrators (called the IIconsent pane111) shall select a third person agreeable to both to become the third member of the consent panel. The consent panel may utilize informal techniques and hold informal hearing without reference or adherence to the rules or procedures of the American Arbitration Association. Promptly and within thirty (30) days of concluding any proceeding the consent panel shall render its written decision of the majority thereof. It is the intent of this subparagraph to provide for a speedy and inexpensive resolution of disputes provided the parties agree to such a procedure. 15.2. Formal Arbitration. If either party objects, within fifteen (15) days of the second party's designation of an arbitrator to the other's choice of an arbitrator pursuant to paragraph (a) above, or the first party initially decides not to use the consent panel procedure, then the matter shall be promptly referred to the American Arbitration Association in accordance with the then existing rules of the American Arbitration Association. 15. 3 . Arbi tration Awards. Any award by either a consent panel or as a result or proceedings before a panel 15 . . . CITY OF SEWARD, ALASKA Ground Lease - Icicle Seafoods Inc. pursuant to the rules of the American Arbitration Association shall be enforceable in accordance with Alaska Statutes. Any award shall include an award of costs, interest and attorney fees. ARTICLE 16. DEFAULT AND REMEDIES. 16.1. Default and Termination. a. If the rent or any charge shall be in arrears for a period of thirty (30) days; or b. If Lessee fails to take reasonable steps to keep and perform any of the covenants on conditions of this Lease within thirty (30) days after written notice of default; or c. If Lessee files a voluntary petition in bankruptcy, or for reorganization under the bankruptcy laws, or is adjudged a bankrupt by a court of competent jurisdiction; or d. If Lessee makes an assignment for the benefit of its creditors; or e. If a receiver is appointed by a court of competent jurisdiction for Lessee's business and it be established in the receivership proceedings that Lessee is insolvent; or f. If the leasehold interest hereunder is abandoned by Lessee, then City may, at City's option, at once, without further notice to Lessee or any other person, terminate this Lease. Upon termination of the Lease as aforesaid, or at the expiration of this Lease and upon the termination of said Lease by its terms, Lessee shall at once surrender possession of the Leased Land to City and remove all Lessee's effects therefrom, and may remove all Lessee's buildings and other improvements, and Lessee shall have no further rights hereunder or with respect to the Leased Land. If such possession be not immediately surrendered, City may forthwith enter into and upon and repossess the Leased Land and expel Lessee, or those claiming under Lessee, without being deemed guilty in any manner of trespass and without prejudice to nay remedies which might otherwise be used for arrears of rent or preceding breach of covenant, and in such event Lessee expressly wai ves the service of notice of any intention so to terminate this Lease or to retake the Leased Land and waives service of any demand for payment of rent, or for possession, and for any and every other notice or demand prescribed by any law, and hereby waives any claim for damages by reason of such repossession. CITY OF SEWARD, ALASKA Ground Lease - Icicle Seafoods Inc. 16.2. Relettinq. At any time, or from time to time, after any such expiration or termination, City may relet the Leased Land, or any part thereof, and any unleased buildings and improvements, for such term or terms (which may be greater or less than the period which would otherwise have constituted the balance of the term of this Lease) and on such conditions (which may include concessions or free rents) as City may, in its discretion, determine and may collect and receive the rents therefore. city shall in no way be responsible or liable for any failure to relet the Leased Land, or any part thereof, or for any failure to collect any rent due upon any such reletting. 16.3. Damaqes. No such expiration or termination of the Lease shall relieve Lessee of his liability and obligations under the Lease, and such liability and obligations shall survive any such expiration or termination. In the event of any expiration or termination, whether or not the Leased Land, or any part thereof, shall have been relet. Lessee shall pay to City the net rent and all other charges required to be paid by Lessee up to the time of such expiration or termination of this Lease, and thereafter Lessee, until the end of what would have been the term of this Lease in the absence of such expiration or termination, shall be liable to City for, and shall pay to City, as and for liquidated and agreed current damages for Lessee's default; a. the equivalent of the amount of the rent and charges which would be payable under this Lease by Lessee if this Lease were still in effect, less b. the net proceeds received by City from leasing or reletting the Leased Land and improvements thereon after deducting all of City's expenses in connection with such leasing and reletting, including, without limitation, all repossession costs, brokerage commissions, legal expenses, reasonable attorney fees, alteration costs, and expenses of preparation for such reletting. Lessee shall pay such current damages (herein called "deficiency") to City monthly, and City shall be entitled to recover from Lessee each monthly deficiency as the same shall arise. At any time after any such expiration or termination, whether or not City shall have collected any monthly deficiencies as aforesaid, City shall be entitled to recover from Lessee, and Lessee shall pay to City, on demand, as and for liquidated and agreed final dam, ages for Lessee's default, an amount equal to the difference between all rent reserved hereunder for the unexpired portion of the Lease Terms and the then-fair-and-reasonable net rental value to City of the Leased Land for the period for which such installment was payable shall be discounted to the date of termination at the rate of 17 . . . CITY OF SEWARD, ALASKA Ground Lease - Icicle Seafoods Inc. six (6%) percent per annum. If the Leased Land, or any part thereof, be leased or relet by City for the unexpired portion of the Lease Term, or any part thereof, before presentation of proof of such liquidated damages to any court, commission or tribunal, the amount of rent reserved upon such leasing or reletting shall be prima facie evidence of the fair and reasonable rental value for the part of the whole of the premises so leased or relet during the term of the leasing or reletting. Nothing herein contained shall limit or prejudice the right of City to prove and obtain as liquidated damages by reason of such termination an amount equal to the maximum allowed by any statute or rule of law in effect at the time when, and governing the proceedings in which such damages are to be proved, whether or not such amount be greater, equal to, or less than the amount of the difference referred to above. 16.4. Accumulation of Remedies. Each right and remedy of City provided for in this Lease shall be cumulative and shall be 1n addition to every other right or remedy provided for in this Lease, or now or hereafter existing lat law, or in equity or by statute or otherwise, and the exercise or beginning of the exercise by City of anyone or more of the rights or remedies provided for in the Lease, or now or hereafter existing at law or in equity or by statute or otherwise, shall not preclude the simultaneous or later exercise by City of any or all other rights or remedies provided for in this Lease or now or hereafter existing at law or in equity or by statute or otherwise. 16.5. Appointment of Receiver. Upon commencement of any suit or action by City against Lessee, pursuant to any remedy available to City upon Lessee's default hereunder, or at any time hereafter and during the pendency of such suit or action, any court of competent jurisdiction, upon the application of City, may at once appoint a receiver to collect the rents and profits arising out of the Leased Land, the buildings and improvements thereon and the subleases pertaining thereto and apply such rents and profits to the payment and satisfaction of Lessee's obligations under this Lease, including, without limitation, the payment of the rent due City hereunder, first deducting all proper charges and expenses attending the execution of such trusts, and to have any balance remaining held by such receiver for disposition in accordance with any judgment or decree entered therein, or as may be from time to time directed by said court. ARTICLE 17. GENERAL PROVISIONS. 17.1. Estoppel Certificates. Either any time and from time to time, upon not less days' prior written request by the other party shall, at than thirty (30) party, execute, 18 CITY OF SEWARD, ALASKA Ground Lease - Icicle Seafoods Inc. acknowledge, and deliver to such party or to its designee, a statement in writing certifying that this Lease is unamended and in full force and effect (or, if there has been any amendment thereof, that the same is in full force and effect as amended and stating the amendment or amendments), that there are no defaults existing (or, if there is any claimed default, stating the nature and extent thereof), and stating the dates to which the rent and other charges have been paid in advance. It is expressly understood and agreed that any such statement delivered pursuant to this section may be relied upon by any prospective assignee or tenant of the Leasehold Estate, or estates, or Lessee of any prospective purchaser of the estate of City, or any lender or prospective assignee of any lender on the security of the Leased Land or the fee estate, or any part thereof, and any third person. 17.2. Conditions and Covenants. All the provisions of the Lease shall be deemed as running with the Land, and shall be construed to be "conditions" as well as "covenants," as thought the words specifically expressing or imparting covenants and conditions were used in each separate provision. 17.3. No Waiver of Breach. No failure by either City or Lessee to insist upon the strict performance by the other of any covenant, agreement, term or condi tion of the Lease or to exercise any right or remedy consequent upon a breach thereof, shall constitute a waiver of any such breach or of such covenant, agreement, term or condition. No waiver of any breach shall affect or alter this Lease, but each and every covenant, condition, agreement and term of the Lease shall continue in full force and effect with respect to any other then-existing or subsequent breach. 17.4. Time of Essence. this Lease and of each provision. 17.5. Computation of Time. The time in which any act provided by this Lease 1S to be done is computed by eXCluding the first day and including the last, unless the last day is a Saturday, sunday or a holiday, and then it is also excluded. The term "holiday" shall mean all holidays as defined by the statutes of Alaska. Time is of the essence of 17.6. Successors in Interest. Each and all of the covenants, conditions and restrictions in this Lease shall inure to the benefit of, and shall be binding upon, the successors in interest of city and the authorized assignees, transferees, tenants, licensees and other successors-in- interest of Lessee. 17.7. Entire Aareement. This Lease contains the entire agreement of the parties with respect to the matters 19 . . . CITY OF SEWARD, ALASKA Ground Lease - Icicle Seafoods Inc. covered by this Lease, and promise made by any party, agent of any party, which is be binding or valid. 17.8. Governinq Law. This Lease shall be governed by, construed and enforced in accordance with the laws of the State of Alaska. no other agreement, statement or or to any employee, officer, or not contained in this Lease shall 17.9. Partial Inval idi tv. I f any term, covenant, condition or provision of this Lease is held by a court of competent jurisdiction to be invalid, void or unenforceable, the remainder of the provisions shall remain in full force and effect and shall in no way be affected, impaired or invalidated. 17.10. Relationship of Parties. Nothing contained in this Lease shall be deemed or construed by the parties, or by any third person, to create the relationship of principal and agent or of partnership or of joint venture of any association between City and Lessee; and neither the method of computation of rent nor any other provisions contained in the Lease nor any acts of the parties, shall be deemed to create any relationship between City and Lessee, other than the relationship of lessor and lessee. 17.11. Interpretation. The language in all parts of this Lease shall in all cases be simply construed according to its fair meaning, and not strictly for or against City or Lessee. Unless otherwise provided in this Lease, or unless the context otherwise requires, the following rules of construction shall apply to this Lease: a. Number and Gender. In this Lease, the neuter gender includes the masculine and the feminine, and the singular number includes the plural; the word "person" includes corporation, partnership, firm or association wherever the context so requires. b. Mandatorv and Permissive. "Shall", "will" and "agrees" are mandatory; "may" is permissive. c. Captions. Captions of the Articles, sections and subsections of this Lease are for convenience and reference only, and the words contained therein shall in no way be held to explain, modify, amplify or aid in the interpretation, construction or meaning of the provisions of this Lease. 17.12. Amendment. This Lease is not subj ect to amendment, except in writing executed by all parties hereto. CITY OF SEWARD, ALASKA Ground Lease - Icicle Seafoods Inc. 17. 13 . a. Del i verY of Notices and Rent -- Method and Time. All notices, demands or requests from one party to another shall be delivered in person or be sent by mail, certified or registered, postage prepaid, to the addresses stated in this Section, and shall be deemed to have been given at the time of delivery or making. b. pavment of Rent. All rents and other sums payable by Lessee to City shall be by check, payable to City, delivered in person or mailed to City at the following address: CITY CLERK CITY OF SEWARD P. O. Box 167 Seward, AK 99664 and shall be deemed to have been paid when received at such address. c. Notices to citv. All notices, demands and requests from Lessee to City shall be given to City at: CITY CLERK CITY OF SEWARD P. o. Box 167 Seward, AK 99664 and to such other persons at such additional addresses as City may specify, but not exceeding four in the aggregate. d. Notices to Lessee. All notices, demands or requests from City to Lessee shall be given to Lessee at: ICICLE SEAFOODS, INC. P. O. Box 79003 Seattle, WA 98119 COPY: SEWARD FISHERIES P. O. Box 8 Seward, AK 99664 e. Chanae of Address. Each party shall have the right, from time to time, to designate a different address by notice given in conformity with this Section. 17.14. Broker's commission. Each of the parties represents and warrants that there are no claims for brokers' commissions of finders' fees in connection with the execution of this Lease. ?, -- ---.-.".. . . . CITY OF SEWARD, ALASKA Ground Lease - Icicle Seafoods Inc. 17.15. Attornevs I Fees. If either party hereto institutes any suit, action or arbitration proceeding to collect the rent reserved, or to enforce any covenant or agreement hereof, or to obtain any of the remedies herein provided, the prevailing party shall be entitled to such sum of money as the court or the arbitration board may adjudge reasonable as costs and attorney fees in such suit, action or arbitration proceeding, including any appeal taken by either party in such suit, action or arbitration proceeding. 17.16. Records. Lessee shall, at all times, keep or cause to be kept proper books of record and account in which full, true and correct entries will be made of all dealings or transactions of, or in relation to, the Leased Land. 17.17. Minerals. Nothing in this Lease shall authorize Lessee to exercise any rights in regard to oil, oil rights, minerals, mineral rights, natural gas, natural gas rights, and/or other hydrocarbons by whatsoever name that may be within or under the Leased Land. City reserves the right to whipstock, or directionally drill, and mine from land other than the Leased Land oil or gas wells, tunnels and shafts into, through or across the subsurface of the Leased Land, and to bottom such shipstocked or directionallyu drilled wells, tunnels and shafts under and beneath or beyond the exterior limi ts thereof, and to re-drill, retunnel, equip, maintain, repair, deepen and operate any such wells or mines, without, however, the right to disturb the use of the surface or to drill or mine through the upper 500 feet of the subsurface of the Leased Land. 17.18. Good Faith. The terms of this Lease impose an obligation of good faith on City and Lessee in the performance and enforcement thereof. 17.19. Election to Terminate bv ci tv. Lessee as partial consideration for this Lease, expressly undertakes to complete construction of a major processing plant expansion on the unimproved portion of the Leased Land not later than October 1, 1988, and to substantially complete construction by April 30, 1989. If Lessee fails to timely meet any of these requirements as a result of its failure to proceed in good faith and with due diligence, the City may , by giving written notice to Lessee, elect to terminate this Lease. 17.20. Election to Terminate bv Lessee. If an earthquake occurs during the term hereof, making the construction, financing, maintenance or operation of an improvement(s), building(s) or other structure(s) on the Leased Land impractical or impermissible, then in such event, provided CITY OF SEWARD, ALASKA Ground Lease - Icicle Seafoods Inc. the Lessee be in good standing hereunder, Lessee may, in his uncontrolled discretion, elect to terminate this Lease upon: a. giving written notice to City: and b. making payment to City of a sum. equal to fifty (50%) percent of the rents payable to City for the twelve calendar months immediately preceding the notice under (a): and c. satisfying or otherwise releasing City's fee from any encumbrance(s) created as the result of Lessee's actions. All further rights, duties and obligations cease upon receipt by city of such notice terminate and the fulfilling conditions (b) and hereunder shall of election to (c) . 17.21. Extent of Riahts. Reservations or Covenants. The granting of this lease does not in and of itself carry with it any rights, reservations or covenants regarding the use of dock facilities of the City which are now in existence or will, during the term of this lease, be constructed or put into use. ARTICLE 18.RECORDING. EXECUTION. COUNTERPARTS. 18.1. Recordina. The parties may, concurrently with the execution of this Lease, execute, acknowledge and record a memorandum of lease. FOllowing recording, the memorandum lease shall be attached to this Lease. 18.2. CounterParts. This Lease has been executed by the parties in two counterparts, each of which shall be deemed to be an original. 18. 3 . Execution. This Lease has been executed by the parties on the day and year first above written. LESSOR: LESSEE: CITY OF SEWARD, ALASKA Darryl Schaefermeyer, City Manager 23 - . 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