Loading...
HomeMy WebLinkAboutRes1988-106 . . . Sponsored by: Schaefermeyer CITY OF SEWARD, ALASKA RESOLUTION NO. 88-106 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SEWARD, ALASKA, AUTHORIZING THE LEASE OF LAND FROM THE ALASKA RAILROAD CORPORATION FOR UTILITY POLE STORAGE WHEREAS, in 1983, the city of Seward entered into negotiations with the Alaska Railroad for the acquisition of land for use as a utility pole storage yard in order to relocate stored poles from the waterfront park area of the city; and WHEREAS, the Alaska Railroad granted the city a right of entry to a x2.5 acre parcel of land at the extreme north end of the Alaska Railroad Terminal Reserve for storage of utility poles; and WHEREAS, in August 1983, the Resolution No. 83-52, authorizing Alaska Railroad; and City Council approved a draft lease with the WHEREAS, the city made certain improvements to the agreed upon parcel and has used that parcel for utility pole storage for the past five years; and WHEREAS, appraisal because of the transfer to state ownership; and of the parcel has been delayed of the Alaska Railroad from federal WHEREAS, the Alaska Railroad completed an appraisal of the fair utility pole storage site; and Corporation has market value of now the WHEREAS, the city continues to have need for the utility pole storage yard; NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF SEWARD, ALASKA, that: Sec tion 1. The city manager is hereby authorized to enter into a lease agreement, attached and incorporated herein by reference, with the Alaska Railroad for a x2. 5 acre lease parcel located at the North end of the Alaska Railroad Terminal Reserve for use as a utility pole storage yard. Section 2. This resolution shall take effect thirty (30) days following passage and posting as required by law. -1- . . CITY OF SEWARD, ALASKA RESOLUTION NO. 88-106 PASSED AND APPROVED BY THE CITY COUNCIL OF THE CITY OF SEWARD, ALASKA, this ~ day of September 19 88. AYES: NOES: ABSENT: ABSTAIN: ATTEST: THE CITY OF SEWARD, ALASKA ~. ~ ~~ H E. G~LER, MAYOR DUNHAM, GIESELER, HILTON, MEEHAN, O'BRIEN & SIMUTIS NONE NOLL NONE APPROVED AS TO FORM: HUGHES, THORSNESS, GANTZ, POWELL & BRUNDIN, Attorneys for the City of Seward, AK . (City Seal) ?~ flP~ Fred B. Arv~ son City Attorney -2- Rev 6/88 . . GROUND LEASE BETWEEN ALASKA RAILROAD CORPORATION AND C!TY OF SEWARD CONTRACT NO. 5582 . WPRE1267 ARTICLE 1 1.01 1.02 1.03 1.04 1.05 ARTICLE 2 2.01 2.02 2.03 Rev 6/88 INDEX LEASED PREMISES AND TERM Leased Premises Reservation of Minerals Improvements Owned by Lessor Improvements Owned by Lessee Lease Term RENTS Basic Rents Determination of Fair Market Value Rent Absolutely Net Rent ARTICLE 3 QUIET ENJOYMENT ARTICLE 4 LESSEE'S COVENANTS 4.01 4.02 4.03 4.04 4.05 4.06 4.07 4.08 4.09 4.10 4.11 4.12 4.13 4.14 ARTICLE 5 5.01 5.02 5.03 5.04 ARTICLE 6 6.01 6.02 6.03 Real Property Taxes and Assessments Improvements Required by Law Construction or Removal of Improvements, Additions and Alterations Repair and Maintenance Observance of Laws Inspection and Repair by Lessor Waste and Wronqful Use Setback Liens Indemnification Costs and Expenses of Lessor Holdover Lessee's Improvements as security for Obliqations to Lessor Permits from Corps of Enqineers and Others , INSURANCE Liability Insurance Property Insurance Policy Provisions Proof of Insurance EMINENT DOMAIN Effect of Eminent Domain on Lease Disposition of Proceeds Temporary Takinq i . Rev 6/88 ARTICLE 7 ASSIGNMENTS, MORTGAGES, SUBLEASES AND SUBDIVISION 7.01 Limitations on Assignment 7.02 Lessee's Right to Assign 7.03 Conditions Precedent to Assignment 7.04 Lessee's Nonliability after Assignment 7.05 Arbitration of Lessor's Disapproval of Assignment 7.06 Mortgage of Leasehold Interest 7.07 Right to Sublet 7.08 Subdivision of Leased Premises ARTICLE 8 ARBITRATION AND APPRAISAL PROCESS 8.01 8.02 8.03 Appointment of Arbitrators and Conduct of Arbitration Special Qualifications of Arbitrators Judicial Review of Arbitration Decision ARTICLE 9 DEFAULT AND DEFEASANCE . 9.01 9.02 9.03 9.04 9.05 9.06 9.07 Events of Default Notice and Right to Cure Nonwaiver Right of Lessor to Protect Against Default Lessor's Remedies Assignment of Subrents Application of Sums Collected by Lessor ARTICLE 10 GENERAL PROVISIONS 10.01 10.02 10.03 10.04 10.05 10.06 10.07 10.08 10.09 10.10 Lessor's Right to Entry, Inspection and Repair Notices Covenants and Conditions Integration and Amendments Approvals of Lessor Survival and Severability Binding Effect Lessor's Authority to Convey Fee Title Powers of Lessor as PUblic Corporation Captions ARTICLE 11 DUTIES UPON TERMINATION OR EXPIRATION 11.01 11.02 11.03 11.04 Surrender of Leased Premises Removal of Improvements upon Termination Abandonment of Lessee's Property Liability for Cleanup Expenses ARTICLE 12 EXECUTION AND MEMORANDUM OF LEASE . 12.01 12.02 Execution and Counterparts Recordation of Memorandum of Lease ii Rev 6/88 GROUND LEASE THIS GROUND LEASE (herein called "this Lease") is made this day of , 19 , by and between the ALASKA RAILROAD CORPORATION (herein called "Lessor"). a pUblic corporation created pursuant to AS 42.40, whose mailinq address is P.O. Box 107500, Anchoraqe, Alaska 99510-7500, and CITY OF SEWARD, a(n) (Check as appropriate) Individual Partnership ( General or Limited) Corporation (State of incorporation: ) x Governmental Entity (Type: City) (herein called "Lessee"), whose mailinq address is P.O. Box 167, Seward. Alaska 99664. RECITALS A. The Lessor has aqreed to lease to Lessee a parcel of land containinq 110,000 square feet within the Seward Terminal Reserve. B. The value as PERCENT oriqinal rental rate to be mUltiplied against the fee simple determined in accordance with paragraph 2.02 is EIGHT (8.0') and is to remain constant throughout the lease term of Three (3) Years. , (REMAINDER OF THIS PAGE IS BLANK) .1E Page - 1 . . . Rev 6/88 ARTICLE 1 LEASED PREMISES AND TERM 1.01 Leased Premises. Lessor. for and in consideration of the rents. covenants and conditions hereinafter specified to be paid, performed and observed by Lessee, hereby leases to Lessee, and Lessee hereby leases from Lessor. the vacant. unimproved (except as noted in paragraph 1.03 below) land situated in the Seward Recording District, Third JUdicial District. State of Alaska, more particularly described on Schedule 1 attached to and for all purposes made a part of this Lease. together wi th all rights. easements. pr i vi leges. both subter ranean and ver t ica 1. and appurtenances attaching or belonging to the described land, but sUbject to the reservation contained in paragraph 1.02 hereof (herein called the "Leased Premises"). 1.02 Reservation of Minerals. All oil. gas, coal, geothermal resources and minerals of whatever nature in or under the above-described land are excluded from the Leased premi ses and reserved to Lessor; provided, however, (I) Lessee shall have the unencumbered right. subject to the terms of this Lease. to use all earth materials on or in the above-described land to a depth not to exceed 100 feet below the surface. and to move and recontour such materials on the Leased Premises; (2) during the term of this Lease. Lessor shall not have the right to enter on the surface of the Leased Premises for the purpose of mining and/or extracting such oil. gas, coal, geothermal resources. or other minerals and shall not mine and/or extract the same by any means at a depth less than 500 feet below the surface of the Leased Premises; and (3) if Lessor mines and/or extracts such oil, gas, coal. geothermal resources, or other minerals. the mining and/or extraction shall not interfere with Lessee's business and activities on the Leased Premises, parking or access to the Leased Premises. 1.03 Improvements described improvements on and are a part of remain throughout the Lessor: Owned bv Lessor. The following ("Lessor's Improvements") are situated the Leased Premises and are and shall term of this Lease the property of the All fill. drains. retaining walls. berms. earth contours, pavements. utility pipes and lines (not owned by a municipality or utility) and all other at-surface or below-surface improvements situated on the Leased Premises on the date of this Lease. Page - 2 Rev 6/88 Any subsurface improvements to the Leased Premises during the Lease Term shall become the property of Lessor (and included within the term "Lessor's Improvements") immediately upon installation. 1.04 Improvements Owned bv Lessee. The fOllowing described improvements ("Lessee's Improvements") are situated on and are a part of the Leased Premises and are and shall remain throughout the term of this Lease the property of the Lessee: Lessee's surface Premises None. Improvements shall also include any additional above improvement constructed or placed on the Leased by Lessee during the term of this Lease. 1.05 Lease Term. This Lease shall be and continue in full force and effect for a term of Three (3) Years commencing on October 1. 1988 and terminating on SeDtember 30. 1991 unless earlier terminated as provided in this Lease. ARTICLE 2 RENTS 2.01 Rents. I A. Basic Rents. Lessee shall pay the fOllowing rents (herein called "Basic RentS") to Lessor in legal tender of the United States of America. without deduction and without notice or demand, net of all real property taxes. assessments, rates, and other charges required to be paid by Lessee under this Lease with respect to the Leased Premises, and in equal annual installments in advance on or before the first day of each calendar year during the Lease Term. with partial periods prorated on a daily basis. Annual 1. Lease years 1 - 3 inclusive. sa.800 page - 3 Rev 6/88 . 2.02 Determination of Fair Market Value Rent. market value rent upon which Lessee's obligation to Rent under paragraph 2.01 above is based. shall be as follows: The fair pay Basic determined A. Appraisal of Fair Market Value of Fee Simple Interest. Lessor shall select an appraiser from a list of qualified appraisers compiled by Lessor and kept available for public inspection at Lessor's office. The appraiser shall determine. as of the date of the beginning of the applicable rent period, the fair market value of the fee simple interest in the Leased Premises, unencumbered by this Lease, and including improvements owned by Lessor (identified in paragraph 1.03 of this Lease). and excluding improvements owned by Lessee (identified in paragraph 1.04 of this Lease). B. Fair Market Value Rent. The fair market value rent shall be the product derived from multiplying the fair market value of the. Leased Premises (established in accordance with subparagraph 2.02.A) by EIGHT PERCENT (8.0\). . C. Arbitration. In the event Lessee disagrees with an appraisal of fee simple value made by Lessor pursuant to subparagraph 2.02.A of this Lease. Lessee may refer the matter to arbitration in accordance with the procedures contained in Article 8 of this Lease by notifying Lessor in writing of its demand for arbitration within ten (10) days of receiving Lessor's notice of change in rent. Otherwise. Lessee shall have no right to refer a rent dispute to arbitration and shall be bound by Lessor's determination of rent under this Lease. D. Retroactive Rent. Until a change in Basic Rent is determined. Lessee shall pay the same Basic Rent as in the previous year. When the adjusted Basic Rent has been determined. and Lessee notified, such Basic Rent as so determined shall be due and payable to Lessor retroactive to the commencement of the lease year for which such rent adjustment is made, and any deficiency reSUlting from such rent adjustment shall be payable within thirty (30) days after the giving of such notice to Lessee. However, at no time will the Lessee be responsible for more than ninety (90) days of unbilled retroactive rent at the increased level. . Page - 4 Rev 06/88 2.03 Absolutely Net Rent. When a Basic Rent becomes effective under this Lease. such rent shall not thereafter be reduced for any reason. except in the event of condemnation. 1 t is the purpose and intent of Lessor and Lessee that the Basic Rents established under this Lease shall be absolutely net to Lessor so that this Lease shall yield, net to Lessor, the rent specif ied herein during the term of this Lease, and that all' costs, expenses and obligations of every kind and nature' whatsoever relating to the Leased Premises, which may arise or become due during the Lease Term, except as otherwise expressly provided in this Lease. and except costs, expenses, and obligations (other than those to be borne by Lessee as herein provided) incurred by Lessor in connection with the sale or mortgaging of the Leased Premises, shall be paid by Lessee, and that Lessor shall be indemnified and held harmless by Lessee from and against the same. ARTICLE 3 QUIET ENJOYMENT Upon timely payment by Lessee of all of such rents and other payments required to be paid by Lessee under this Lease, and upon full and faithful observance and performance by Lessee of all of its covenants contained in this Lease, and so long as such observance and performance continues, Lessee shall peaceably hold and enjoy the Leased Premises during the Lease Term without hindrance or interruption by Lessor or anyone lawfully claiming by. through. or under Lessor. III ARTICLE 4 LESSEE'S COVENANTS 4.01 Real Property Taxes and Assessments. A. Lessee shall pay, not less than ten (10) days before they become delinquent, all real property taxes and assessments of every description for which the Leased Premises, or any improvement thereon or any use thereof, are now or during the Lease Term may be assessed or become liable, whether assessed to or payable by Lessor or Lessee. Such taxes and assessments include, but are not limited to, any increased real property Page - S . . . Rev 06/88 tax resulting from any classification of the Leased Premises durinq the Lease Term to a higher use (other than a classification occurring at the initiative of Lessor or its aqents), for which classification Lessee shall be deemed to be the petitioner and upon request by Lessor shall so notify the appropriate governmental authorities. Such real property taxes and assessments shall be prorated as of the dates the Lease Terti beqins and ends. Upon request by Lessor, Lessee shall promptly deposit with Lessor true and complete copies of receipts for such real property taxes and assessments evidencinq their timely payment. B. If at any time durinq the Lease Term any new or additional taxes (other than federal or state net lncome taxes or any other taxes existinq on the effective date hereof) are assessed against the Leased Premises. or any improvement thereon, or any rents payable to Lessor under this Lease, or aqainst Lessor with respect thereto, Lessee shall pay to the taxing author i ty or Lessor. not less than ten (10) days before they become delinquent and as additional rents. all of such new taxes. C. Nothing contained in this Lease shall prevent Lessee from contestinq in good faith the validity or the amount of such real property taxes or assessments by appropriate proceedinqs commenced before such real property taxes or assessments become delinquent; provided, however. that (1) Lessee shall not commence such proceedings without first giving written notice to Lessor of Lessee's intention to do so not less than ten (10) days before such real property taxes or assessments become delinquent; (2) concurrently with such written notice, Lessee shall provide and continue to provide Lessor with security approved by Lessor as to quality and quantity to assure full payment of all of such real property taxes or assessments and all interest and penalties which may accrue or be assessed thereon or with respect to such taxes; and (3) Lessor, as long as Lessee so provides Lessor wi th such security. shall not be entitled to pay such real property taxes or assessments for the account and at the expense of Lessee. D. Lessee shall pay, not less than ten (10) days before they become delinquent. all rates and other charges of every description for which the Leased Premises or any improvement on it or any use of it. may be assessed or become liable during the Lease Term. whether made by governmental authocity or by any public ut 11 i ty or communi ty service company and whether assessed to or payable by Lessor or Lessee. page - 6 Rev 06/88 E. Lessor may elect, in its sole discretion and after qivinq written notice to Lessee and any Qualified Mortqagee (as defined in subparaqraph 7.06.8. below), to pay any delinquent tax. assessment or charqe for which Lessee is liable under this paraqraph 4.01 for the account and at the expense of Leue., and may further elect. upon such payment: (1) to terminate tllit Lea.e under Article 9, alter qivinq thirty (30) day.' writt.n notic. and allowinq an opportunity for cure a. provided ther.in. and brinq an appropriate action again.t Lesse. for recovery of the sum pa id; (2) to cont inue this Lease in force and charqe the Lessee with the payment a. additional rent; or (3) to continue this Lease in force and brinq an appropriate action against Lessee for recovery of the sum paid. The above-enumerated elections are not in derogation of. and do not limit. any other rights or remedies Lessor may have under this Lea.e or applicable law. Nothinq in this subparagraph 4.01.E requires Lessor to pay any delinquent tax, assessment. or charge for which Lessee is liable. 4.02 Improvements ReQuired bv Law. Lessee. at Lessee's own expense. durinq the Lease Term and subject to the requirements of paragraph 4.05 of this Lease, shall mak.. build. maintain and repair all fences, sewers. drains. roads, ~ road wideninq. driveways, sidewalks, water. und.rqround .l.ctric and telephone lines, curbs, qutters and other installations which may be required by law to be mad., built, maintained. or repaired upon, or adjoining and in connection with, or for us. of the Leased Premises or any part of it. and reqardless of whether the same were erected by Lessor or in existence at the inception of this Lease. In case any such installations required by law shall be made, built, maintained or repaired by Lessor. Lessee shall reimburse Lessor for the reasonable cost thereof plus fifteen percent (lS\) to cover Lessor's overhead. upon presentation of a bill therefor, as additional rent. 4.03 Construction or Removal of ImDrovements. Additions and Alterations. A. "Significant Work." as used in this paraqraph 4.03. m.an. all work which (1) involves the excavation. filling. or oth.r alteration of the qrad. or drainage of the Lea.ed Pr..i.... or (2) involve. the construction. demolition. or removal on or from the Leased Premises of any improv.m.nt, any addition or alteration, or (3) if the fees or other charqes th.r.for are not timely paid. will subject the Leased Premises or the interest of Lessor or Lessee therein to any 1 ien or other encumbrance. Paqe - 7 . . . Rev 06/88 B. Lessee shall not begin any Significant Work on the Leased premises costing more than $25.000.00. or which will occur or have an effect within twenty (20) feet of the centerline of Lessor's railroad traclt, without first obtaining the prior written approval of Lessor with respect to such work and to the prel iminary plans for such work, if any, and to the final plans and specifications for such work. The preliminary plans and the final plans and specifications shall be prepared by a licensed architect or engineer and shall include, but not be limited to, a detailed plot plan. a landscaping plan, appropriate cross sections. elevations, and floor plans indicating building heights. bulk. density, functions, materials, and utility systems, an itemized estimate of the total cost of such work, and a timetable for completion. No approval by Lessor or by its archi tects or engineers of such preliminary plans or: final plans and specifications shall be deemed a warranty or other representation by any of them that the improvements, additions. alterations. or other work contemplated thereby are legal, safe. or sound or constitute the highest and best use of the Leased Premises. All of such work by Lessee on the Leased Premises shall be supervised by a licensed architect or engineer. Lessee hereby acknowledges that, except as provided in paragraph 4.02 wi th respect to improvements required by law and paragraph 11.02 with respect to removal of improvements upon expiration of the Lease Term or earlier termination of this Lease, Lessor has not authorized or required and does not authorize or require Lessee to improve the Leased Premises in any manner that permits Lessor's interest in and title to the Leased Premises to become subject to the liens of Lessee's mechanics and materialmen. 4.04 Reoair and Maintenance. Lessee shall. at Lessee's expense and without notice from Lessor at.all times during the Lease Term, keep all improvements now or hereafter built on the Leased Premises (inCluding but not limited to exterior building walls, windows. doors, fences, signs, landscaping and yard areas, refuse disposal equipment and facilities, pavement, curbs, gutters, exterior lighting, and drainage facilities), in good order, condition. maintenance. operability, and repair and of a neat, clean, and pleasing appearance satisfactory to Lessor. page - 8 Rev 06/88 4.05 Observance of Laws. A. Lessee, at all times during the Lease Term, at its own expense, and with all due diligence, shall observe and comply with all laws, ordinances, rules, and regulations which are now in effect or may later be adopted by any governmental authority, incLuding the Alaska Railroad Corporation, and which may be applicable to the Leased Premises or any improvement OD it or any use of it, and shall promptly furnish such evidence of compliance with such laws, ordinances, rules and regulations as Lessor may request from time to time. B. In furtherance, and not in limitation, of the foreqoinq subparaqraph 4.05.A, Lessee must, at its own expense, comply with all laws, ordinances, requlations and administrative agency or court orders relating to health, safety, noise, environmental protection, waste disposal, hazardous or toxic materials, and water and air quality. In the event any discharge, leakaqe, spillage, emission or pollution of any- type occurs upon or from the Leased Premises during the Lease Term or any holdover thereafter, Lessee, at its own expense, must clean and restore the Leased Premises to the satisfaction of Lessor and any qovernmental body or court having juriSdiction of the matter. " C. Lessee aqrees to indemnify, hold harmless and defend Lessor against all liability, cost and expense (including, without limitation, any fines, penalties, clean-up costs, judgments, litiqation costs and attorneys' fees) incurred by or levied aqainst Lessor as a result of Lessee's breach of this paragraph 4.05, or as a result of any discharge, leakaqe, spillage, emission or pOllution on or discharged from the Leased Premises, without regard to whether such liability, cost or expense arises during or after the Lease Term; provided, however, that Lessee shall not be required to indemnify Lessor under this subparagraph 4.05.C if the parties aqree or a court of competent jurisdiction deter.ines that suell liability, cost or expense is caused directly and solely by the active negligence of Lessor. Lessee shall pay all amounts owed Lessor under this paragraph 4.05 within ten (10) days after any such amount becomes due. Page - 4) . . . Rev 06/88 4.06 InsDection and ReDair bv Lessor. Lessee shall repair, maintain and maKe good all conditions required under the provls10ns of this Lease to be repaired or maintained within (1) three (3) days from the date of written notice from Lessor with reqard to removal of trash or debris, landscape or yard maintenance. pavement or sidewalk sweepinq, snow removal or cleaninq, or parking lot lighting replacement and repair. and (2) thirty (30) days from the date of written notice from Lessor with regard to all other matters. If Lessee refuses or neglects to repair or maintain the Leased Premises as required under the terms of this Lease to the reasonable satisfaction of Lessor after written demand, then Lessor. without prejudice to any other right or remedy it has under this Lease or otherwise. may perform such maintenance work or make such repairs without liability to Lessee for any loss or damaqe that may accrue to Lessee I s merchandise or other property or Lessee I s business by reason thereof. Upon completion of any such repair or maintenance. and no later than ten (10) days after presentation of a bill therefor. Lessee shall pay as additional rent Lessor's costs for making such repairs or performing such maintenance plus fifteen percent (15\) to cover its overhead. 4.07 Waste and Wronqful Use. Lessee shall not commit or suffer any strip or waste of the Leased Fremises or any unlawful. unsafe. improper. or offensive use thereof or any public or private nuisance thereon. 4.08 Setback. Lessee shall observe all setback lines applicable to the Leased Premises and shall not construct. or maintain any building or other structure whatever between any street boundary of the Leased Premises and any setback a long such boundary. except for fences or walls approved by Lessor. 4.09 Liens. Lessee shall not commit or suffer any act or neglect whereby the Leased Premises or the interest of Lessor or Lessee therein at any time durinq the Lease Term may become subject. to any attachment, execution. lien. charqe, or other encumbrance. other than a statutory lien for nondelinquent real property taxes or assessments or a mortgage approved by Lessor. and shall indemnify and hold Lessor harmless against all losses, costs, and expenses, inCluding reasonable attorneys' fees, paid or incurred by Lessor in connection therewith. Lessee shall not incur any cost or expense with respect to the Leased Premises which. if not. timely paid, may subject the Leased Premises or the interest of Lessor or Lessee therein to any lien or other encumbrance. without first complying with the requirements of paragraph 7.06 of this Lease. Page - 10 Rev 06/88 4.10 Indemnification. A. Lessee snall indemnify and hold Lessor harmless from and aqainst any and all claims arising from (1) Lessee's use of the Leased Premises, or from the conduct of Lessee I s business. or from any activity, work or things done, permitted or suffered by Lessee in or about the Leased Premises or elsewhere: (2) any breacn or default in the performance of any obligation on Lessee's part to be performed under the terms of thi. Lease; (3) any negligence of Lessee, or any of Lessee's agents, contractors. customers, employees, or any person claiming by, through or under Lessee; and (4) any accident on or in connection with the Leased Premises, or the sidewalks adjacent thereto, or any fire thereon. or any nuisance made or suffered tnereon. Lessee shall furtner indemnify and hold Lessor harmless from and against all costs, attorneys' fees, expenses and liabilities incurred in the defense of any proceeding brought against Lessor by reason of any such claim. Lessee. upon notice from Lessor. shall defend any of the above-described claims at Lessee's expense by counsel satisfactory to Lessor. Lessee. as a material part of the consideration to Lessor. hereby assumes all risk of damage to property or injury to persons. in. upon or about the Leased Premises, arising from any cause and Lessee hereby waives all claims in respect tnereof against Lessor. ~ B. Lessee acknowledges that, before entering tnis Lease, it has fully inspected or been provided with an opportunity to fully inspect the Leased prellises and a 11 documents in the possession of Lessor relating to the condition of tne Leased Premises, and to test or examine all conditions of or on the Leased Premises. Lessee further acknowledges that. at the time this Lease is entered into and on the basis of the foregoing inspection or opportunity to inspect. Lessee is as knowledgeable about tne physical condition of the Leased Preaises as Lessor and, on tnat basis, assumes all risks relating to the condition of tne Leased Premises, inCluding but not limited to latent defects that may be unknown both to Lessee and Lessor at the time tnis Lease is entered into. Lessor represents and warrants tnat it has provided Lessee with an opportunity to inspect all documentation maintained by L.ssor in its records concerning the condition of tne Leased Preaises. Page - 11 . . . Rev 06/88 4.11 Costs and Expenses of Lessor. Lessee shall forthwith pay to Lessor all costs and expenses, including reasonable attorneys' fees, which are (1) paid or incurred by Lessor but are required to be paid by Lessee under any provlSlon of this Lease; (2) paid or incurred by Lessor in enforcing any covenant of Lessee contained in this Lease, in protecting itself against or remedying any breach thereof, in recovering possession of the Leased Premises or any part thereof, or in cOllecting or causing to be paid any delinquent rents. real property taxes. assessments. or rates; (3) incurred by Lessor in reviewing any matter for which Lessor's approval is sought and in processing such approval; or (4) incurred by Lessor in connection with any action in any respect related to this Lease, the Leased Premises, or Lessee's actions or omissions on the Leased Premises, other than a condemnation action filed by or against Lessee, to and in which Lessor is made a party but not adjudicated to be at fault. The term "costs and expenses" as used in this Lease shall include but not be limited to all of Lessor's out-of-pocket expenditures attributable to the matter involved. Except as otherwise expressly provided herein, all costs and expenses of Lessor shall be payable by Lessee to Lessor forthwith after mailing or personal delivery of statements therefor to Lessee and shall bear interest from the date which is ten (10) days after the date of such mailing or personal delivery at the rate of ten and one-half rercent (10 1/2\) per annum. Such Obligations and interest shall constitute additional rents. 4.12 Holdover. If Lessee remains in possession of the Leased Premises after expiration of the Lease Term without the execution of a new lease or of an extension of this Lease, and in such a manner as to create a valid holdover tenancy, and if no notice of termination has been delivered by Lessor to Lessee, Lessee c;hall be deemed to occupy the Leased Premises only as a tenant at will from month-to-month, upon and subject to all or the provisions of this Lease which may be applicable to a month-to-month tenancy, including but not limited to the provisions of Article 2 and of paragraph 11.02 of this Lease. 4.13 Lessee's Improvements as Security for Obliqations to Lessor. Lessor and Lessee covenant and agree that all of Lessee's Improvements, as identified in paragraph 1.04 of this Lease, in any way affixed or attached to the Leased Premises or to a structure thereon (including, but not limited to, buildings, fill, drains. walls, fences, pavement, roadways, sign8, and maChinery) are real property. Lessee hereby grants to Lessor a security interest in all improvements and fixtures Page - 12 Rev 06/88 owned by Lessee and in any way affixed or attached, whether now or later, to the Leased Pcemises. Such secucity interest is qranted and made as security for the payment of rent and all other payments of whatever nature for which Lessee lIIay be or becollle obliqated to Lessor under the terlll. of this Lease. without reqard to whether such obligation arises before or after the termination of this Lease. The security interese shall expire and be released only (1) upon recordation of Lessor'. relea.e of such interest to Lessee or a person claiming under Lessee. or (2) removal of such improvements and fixtures fro. the Leased Prelllises upon termination of the Lease with the prior consent of Lessor. 4.14 Permits from Corps of EnQineers and Others. Lessee shall obtain all necessary permits from the COCDS of Enqineerl and any other qove-rnmental entity with authority over the occupancy or construction of improvements on or adjacent to naviqable waters and tidelands or wetlands. Lessee shall give Lessor notice of its proposed application for any such permit thirty (30) days before submission of the appl ication to the governmental entity and obtain Lessor I s approval of the proposed work as provided in paragraph 4.03 of this Lease. If Lessor fails to respond to the notice of pcoposed application qiven by Lessee within the thirty (30) day period. it shall be deemed to have approved the proposed work. ARTICLE 5 INSURANCE 5.01 Liability Insurance. Curinq the entire Lease Term, and durinq any holdover thereafter. whether or not authorized by Lessor. Lessee shall keep in full force and effect a pOlicy or policies of general liability insurance which includes bodily injury~ property damage. and personal injury acceptable to Le.sor with respect to the Leased Premises and the business operated by Le..ee in which the limits for each shall be not leu than ON. MILLION DOLLARS per occurrence or such hiqhec liaies as L.asor may specify froll time to time consistent with prudent busine.. practice then prevailing in the State of Alaska; provided, however, that no such limit shall in any way liait Le....'. liability or be construed as a representation of SUfficiency to rully protect Lessee or Lessor. The policy or policies purchased pursuant to this paragraph shall na.e both Lessor and Lessee a. insureds. with respect to the Leased Premisea and the business operated by Lessee on the Leased Premises. Page - 13 . . . Rev 06/88 5.02 ProDerty Insurance. A. During the Lease Term and any holdover thereafter, whether or not authorized by Lessor. Lessee shall keep all improvements now or hereafter erected or placed on the Leased Premises insured against loss or damage on an all risk basis in an amount equal to the full replacement cost of all such improvements and shall pay all premiums thereon at the time and place the same are payable. Every pOlicy shall be made payable in case of loss or damage to the Lessee and Lessor jointly and shall be distributed according to their interests in the improvements unless otherwise specified by this paragraph. All compensation, indemnity or other monies paid on account of any loss or damage. other than rental value insurance. shall with all convenient speed be paid out in rebuilding, repairing or otherwise reinstating the same improvements in a good and substantial manner according to the plan and elevation of the improvements so destroyed or damaged. or according to such modified plan as shall be previously approved by Lessor in writing, and in the event such proceeds are inadequate, Lessee shall make up such deficiency from Lessee's own funds. B. If at any time during the last two (2) years of the Lease Term a building or improvements situated on the Leased Premises are destroyed or damaged by fire or other casualty to the extent that the cost of rebui lding, repairing or reinstating such buildings or improvements equals or exceeds the unearned aggregate rent payable to Lessor for the remainder of the Lease Term, then within ninety (90) days after such destruction or damage. in lieu of rebuilding. pursuant to subparagraph 5.02.A abcve, Lessee shall have the right to cancel this Lease upon giving written notice to Lessor and by tendering to Lessor both (1) the tota I va lue of the rema ining rents due under this Lease. discounted at the rate of interest then charged for prime, short-term commercial loans by the National Bank of Alaska in Anchorage. Alaska. or its successor; and (2) the entire proceeds of the insurance payable in respect of Lessee's destroyed building or improvements. If Lessee elects to cancel this Lease under this paragraph 5.02.8, and after receipt by Lessor of the remaining rents and the proceeds of the insurance as provided by this paragraph, Lessee shall be discharged of any Obligation to remove the damaged structure or improvements from the property. page - 14 Rev 06/88 5.03 POlicy Provisions. Eacn pOlicy of comprehensive general liability or ~ro~erty insurance described in paragraphs 5.01 and 5.02 of this Lease shall: A. Provide that the liability ot the insurer thereunder shall not be attected by, and that the insurer shall not clai., any right ot setott, counterclaim, apportionment, proration, or contribution by reason ot any other insurance obtained by or tor Lessor, Lessee, or any person Claiming by, through, or under any ot thell; B. Provide that such policy requires thirty (30) days notice to Lessor of any proposed cancellation, e<piration, or change in matecial terms thereof and that sucll pelicy may not be cancelled, whether or not requested by Lessee, unless the insurer first gives not less than thirty (30) days' prior written notice thereof to Lessor; and C. Contain a waiver by the insurer subrogation to proceed against Lessor or Claiming by, through, or under Lessor. S .04 Proot ot Insurance. Lessee sha 11 deliver to Lessor certificates ot insurance on or before the effective date ot II this Lease or at another date as agreed to in writing by Lessor. Additionally, Lessee shall deliver to Lessor photocopies of the policy or pOlicies of insurance, certificates of insurance, or copies of endorsements as requested by the Lessor from time to time. of any right of against any person ARTICLE 6 EMINENT DOMAIN 6.01 Effect ot Eminent Domain on Lease. A. The terms "taking" and "to take" (in any ot its forms) a. used in this paragraph refer to any competent authority'. acquisition by the power ot eminent domain. including inverse condemnation. of all or any part ot the Leased Premises or an intere.t therein. at any time during the Lease Ter.. The tranlfer of title eftecting the taking may be either a transter resulting froll the recording of a final order in condellnation or a voluntary transter or conveyance to the condemning agency or entity under threat ot condellnation in avoidance ot an exercise ot eminent domain, made before or while condemnation proceedings are pending. The time of taking shall be determined by application of the law of the State of Alaska. Page - 15 . . . Rev 06/88 B. In the event of a taking of all or materially all of the Leased Premises. this Lease shall terminate on the earlier of vesting of title in, or the taking of possession by. the condemnor. C. If less than materially all of the Leased Premises are taken (herein called a "partial taking"), this Lease shall continue in effect except as to the portion so taken or condemned. but the rent to be paid by Lessee shall thereafter be reduced by a percentage equal to the proportion that the number of square feet in the net usable area of the Leased Premises so taken bears to the number of square feet of the net usable area of the Leased Premises before taking. If no portion of the net usable area of the Leased Premises is taken. or if the portion thereof so taken is subterranean or aerial and does not interfere with the use of the surface. then Lessee shall not be entitled to any adjustment of rent hereunder. If Lessor and Lessee disagree as to whether a taking is a partial taking, either of them may submit the matter to the court before which the condemnation action. if any, is pending for determination of the question. D. If a partial taking renders the remaining Leased Premises unsuitable for the purposes for which Lessee's improvements were designed or occurs during the last five (5) years of the term of this Lease or any extension thereof, then Lessee. upon sixty (60) days' written notice to Lessor and subject to the rights of any Qualified Mortgagee. may terminate this Lease after vesting of title in the condemnor or taking of possess ion by the condemnor. I f Lessee does so, the rent and other charges under this Leas'! shall be apportioned as of the date of termination. 6.02 DisDosition of Proceeds. A. Except as expressly provided otherwise in this paragraph 6.02, in the event of a total or partial taking, the rights of Lessor and Lessee (and any party claiming by, through or under either of them) with respect to the Lease Term, the rent, and the award shall be determined in accordance with the law of the State of Alaska in effect at the time of the taking; provided, however. that if the taking occurs during the last five (5) years of the Lease Term, compensation for the taking of Lessee's Improvements shall be reduced by twenty percent (20\) for each full year (and in proportion for a fraction of a year) that elapses from the first day of the five-year periOd to the date of such vesting of title or taking of possession, and the remaining award balance and interest thereon. as well as the award for the land value and interest thereon. shall belong to Lessor. Page - 16 Rev 06/88 8. If the values of the respective interests of Lessor and Lessee shall have been separately determined in the proceeding under which the Leased Premises sha 11 have been taken, the values so determined shall be conclusive upon Lessor and Lessee. If the values shall not have been so determined, the values shall be determined by agreement of the parties or, if they are unable to agree, by arbitration under Article 8 of this Lease. C. In the event of a partial takinq and regardless of the amount of such award, Lessee shall apply any compensation awarded to it first to the restoration of Lessee's Improvements as nearly as reasonably possible to their condition before such taking, unless Lessee terminates this Lease as provided in subparagraph 6.01.D, above. O. Notwithstanding anything in this Lease to the contrary, if Lessee exercises its right to terminate the Lease under subparagraph 6.01.0, above, the award balance attributable to Lessee's Improvements other than the principal balance, if any, and other proper charges o-f a Qualified Mortgagee shall belong to Lessor free of any claim of Lessee. In no event shall Lesse. be entitled to any compensation for its improvements if the taking occurs after expiration of the Lease Term or termination of this Lease. - 6.03 Temporarv TakinQ. If the whole or any part of the Leased Premises, or of Lessee's interest under this Lease, is taken by any competent authority for its temporary use or occupancy, this Lease shall not t~~minate by reason thereof and Lessee shall continue to pay all rental payments and other charqes payable by Lessee hereunder, and to perform all othe~ terms, covenants, and conditions contained herein, except to the extent Lessee is prevented from so doing by the terms of the order of the taking authority. In the event of a temporary taking, Lessee shall be entitled to receive the entire amount of the award and sha 11 be ob1iga ted, at its so le expens., to restor. the Leased Premises as nearly as may be reasonably possible to the condition in which they existed immediately prior to such taking: provided, however, that if the periOd of temporary us. or occupancy extends beyond the expiration of the Lea.. Ter., the award shall be apportioned between Lessor and L..... as of said date of expiration, aft.r Lessor shall have r.c.iv.d the entire portion of the award attributable to physical damage to the Leased Premises and any improvements th.r.on and to the restoration thereof to the condition existing immediately prior to the taking or condemnation. Page - 17 . . . Rev 06/88 ARTICLE 7 ASSIGNMENTS. MORTGAGES, SUBLEASES AND SUBDIVISION 7.01 Limitations on AssiQnment. Lessee shall not voluntarily or by operation of law assiqn, transfer, mortqage. sublet, or otherwise transfer or encumber a 11 or any part of Lessee's interest in this Lease or in the Leased Premises. except in strict compliance with this Article 7. Any attempted assignment, transfer. mortqaqe. encumbrance or subletting without such compliance sh'all be void, and shall constitute a breach of this Lease. 7.02 Lessee's RiQht to Assian. Lessee shall have the right to assign or otherwise transfer Lessee's interest in this Lease and the estate created by this Lease to a Qualified Assignee. upon compliance with the provisions of paragraph 7.03 below. A Qualified Assignee is any person or entity. including a corporate successor of Lessee. whose net worth on the date of assignment is equal to or greater than the Lessee's net worth at the commencement of this Lease or who can otherwise demonstrate to Lessor. in the exercise of prudent business judgment. that he or it is financially capable of meeting Lessee's obliqations under this Lease. Net worth shall mean the amount by wtlictl the total of all assets of the person or entity exceeds the total of all his or its liabilities as determined by an independent, certified pUblic accountant. in accordance with qenerally accepted accountinq principles. For the purposes of this paraqraph. the sale, assignment. transfer. or other disposition of any of the issued and outstanding capital stock of the Lessee. or of the interest of a general partner or joint venturer or syndicate member or co-tenant, if Lessee is a partnership or joint venture or syndicate or co-tenancy, whicb shall result in Changing the control of Lessee, shall be consttued as an assiqnment of this Lease. Control, in the ptovisions of this Lease relatinq to assignment. means fifty petcent (50\) or more of the voting powet of the entity. 7.03 Cond i t ioils Precedent to Ass iQnment. The following are conditions ptecedent to Lessee's riqht of assignment: A. Lessee shall give Lessor reasonable notice of the proposed assignment with appropriate documentation as evidence that the proposed assignee qualifies as a Qualified Assiqnee. Paqe - 18 Rev 06/88 Such documentation shall include, at the request of Lessor. a certified financial statement prepared independently and in accordance with qenerally accepted accounting principles fairlY representinq the existing financial condition of the proposed assignee. Prior years' income tax returns may be an acceptable substitute for the certified financial statement. B. Th. proposed assiqnee shall, in recordable form. expressly assu.. all the covenants and conditions at this Leas.. C. Lessee shall pay Lessor th.e sum of Two Hundred Dollars ($200.00) to enable Lessor adequately to investiqat. the proposed assiqnee's qualifications as a Qualified Assiqnee. Lessor shall not be required to account for the use of the sum paid. D. Lessee shall not be in default on any obligation owed to Lessor under this Lease. 7.04 Lessee's Nonliabilitv after Assianment. Upon an assignment made in accordance with the provisions and conditions of this Lease, Lessee shall have no furth.r obliqation under this Lease and, as between Lessor and Lessee. shall be considered to have assiqned to the Qualified Assi9n.e _ all claims a9ainst Lessor arising under this Lease; provided. however. that. absent written consent of Lessor. an as.i9nment doe. not release Lessee of any obliqations that may have accrued before the assignment, includinq but not li.ited to an obliqation to pay delinquent rent. Upon assiqnment. the Qualified Assignee shall assume all riqhts and Obligations of Lessee under this Lease, inClUding unsatisfied Obligations to cure any delinquency in rent or other charqes under this Lease or to perform any repairs or other work or action required by Lessor before the assignment. The Qualified Assiqnee's satisfaction of any of Lessee's obliqations to Lessor that accrued prior to assiqnment shall subrogate the Qualified Assiqnee to Lessor's cause of action aqainst Lessee with respect to .uch satisfied obliqation. 7. OS Arbitration of Lessor I s Disapproval of Assianment. The effective date of the assignment shall be sixty (60) days after L.....'. notice of the proposed as.ignment, unles.. within that ti.e. Lessoe gives notice of a valid Objection that a proposed a.signee is not a Qualified Assign.e. L...or's failure to give notic. within that time shall constitute a waiver of Objection to the assignment. Pro.ptly after Lessor gives notice of Objection. unless Lessee yields to Lessor I s Objection. the issue shall be arbitrated pursuant to Article 8 Page - 19 . . . Rev 06/88 ot this Lease. If the arbitration award is in favor of Lessee, the assignment shall be effective as if the Lessor had not objected. If the award is in favor of Lessor, the assignment shall not be permitted (or any attempted assignment shall be a nullity) and Lessee shall remain bound by and liable under this Lease. 7.06 Mortqaqe of Leasehold Interest. Lessee shall have the right at any time, and from time to time. to subject the leasehold estate and any or all of Lessee's Improvements si tuated on the Leased Premises to one or more mortgages or assignments as security for a loan or loans or other Obligation of Lessee (each of which instruments is herein called a "Leasehold Mortgage"). provided that: A. The Leasehold Mortgage and all rights acquired under it shall be subject and subordinate to each and all the covenants, conditions, and restrictions stated in this Lease. and to all rights and interests of Lessor except as otherwise provided in this Lease. B. Lessee shall give Lessor prior notice of any such Leasehold Mortgage, and shall accompany the notice with a true copy of the note and the Leasehold Mortgage as proposed for execution. Upon Lessor's written consent to the Leasehold Mortgage and upon execution of the Leasehold Mortgage by all parties, the mortgagee shall become a Qualified Mortgagee as that term is used in this Lease. C. In the event the Qualified Mortgagee forecloses the Leasehold Mortgage, any subsequent assignee or transferee of the leasehold estate proposed by the Qualified Mortgagee must be a Qualified Assignee. as defined in paragraph 7.02 above. 7.07 Riqht to Sublet. Lessee shall have the right durinq the Lease Term to sublet all or any part or parts of the premises or the improvements, or both, and to assign, encumber, extend. or renew any sublease, providinq the followinq provisions are complied with: A. Each sublease shall contain a provision satisfactory to Lessor requiring the sublessee to attorn to Lessor if Lessee defaults under this Lease and if the sublessee is notified of Lessee's default and is instructed to make sublessee'. rental payments to Lessor. Page - 20 aev 06/88 B. Lessee shall, promptly after execution of each sublease, notify Lessor of the name and mailinq addresses of the sublessee and shall provide Lessor with photocopies of all executed subleases. No sublease shall relieve Lessee of any of it. covenants oe obliqations under this Lease, and any provilion of a sublease purport in9 to do so sha 11 be deemed a nullity as between Lessor and Lessee notwithstandinq Lessor'. failure to object to the sublease. C. Le.... shall not accept, directly or indirectly, more than two (2) months' prepaid rent froll any sublessee. D. A Qualified Subtenant is a subtenant in possession under an existinq sublease as to which the foreqoinq conditions have been met. 7.08 Subdivision of Leased Premises. Lessee shall not, under any circumstances whatsoever, subdivide the Leased Premises or any part thereof. ARTICLE 8 ARBITRATION AND APPRAISAL PROCESS , 8.01 Appointment of Arbitrators and Conduct of Arbitration. If Lessor and Lessee fail to aqree upon (1) the appraisal of a fee simple interest under Article 2; (2) whether the remainder of the Leased Premises after condemnation can be restored as an economic unit, whether apart ia 1 takinq has occurred, or how a condemnation award should be allocated, absent judicial allocation in a condemnation action under Article 6; or (3) the Qualification of a proposed assiqnee under Article 7; the matter of disaqreement, upon the election of either of theil, shall be submitted to and determined by a sinqle arbitrator, mutually appointed by them, whose decision and award shall be final, conclusive, and bindinq upon both of the.. If Lessoe and Lessee fail to Ilutually appoint a sinqle arbitrator. the matter shall be submitted to and determined by three (3) arbitrators, in which event either Lessor or Lessee may qive to the other written notice of election to have the matter of disaqreement so arbitrated and shall appoint therein on. of the arbitrator.. The other puty shall, within twenty (20) day. after the receipt of such written notice. appoint a second arbitrator. It he tails to do so, the party who has already appointed an arbitrator may have the second arbitrator appointed by any judqe of the Superior Court of Alaska resident paqe - 21 . . . Rev 06/88 in the district where the Leased Premises are situated. The two (2) arbitrators so appointed in either manner shall appoint the third arbitrator. and if the first two (2) arbitrators fail to appoint a third arbitrator within twenty (20) days after the appointment of the second arbitrator, either Lessor or Lessee may have the third arbi trator appointed by any jUdge of the Superior Court of Alaska resident in the district where the Leased Premises are situated. The three (3) arbitrators so appointed shall thereupon proceed to arbitrate the matter of dlsa9reement. upon such rules of procedure as they lIay adopt, and shall render a written decision containing their findings and conclusions. Each of the arbitrators so appointed shall possess the professional qualifications provided in paragraph 8.02 hereof. 8.02 Special Qualifications of Arbitrators. Each arbitrator appointed pursuant to paragraph 8.01 shall be a person who (1) has not less than five (5) years appraisal experience in the State of Alaska prior to his appointment; (2) has been a practicing real estate appraiser or counselor for not less than ten (10) consecutive years next preceding his appointment; (3) has appraised similar classes of property throughout the State of Alaska; and (4) is a member (MAl (but not RM)) of the American Institute of Real Estate Appraisers. a Senior Real Estate Analyst (SREA), or a Senior Real Property Appraiser (SRPA) of the Society of Real Estate Appraisers, or a member (CR!) of the American Society of Real Estate Counselors. It is understood and aqreed that if any of sucll institutes or societies is merged or otherwise consolidated with another duly qualified appraisal or counseling organization, and thereby loses its name or designation. ttie arbitrator may be appointed from among the members of sucll other organization. 8.03 Judicial Review of Arbitration Decision. The decision of the arbitrator or arbitrators shall be final and unreviewable by any court. except to the extent authorized by Alaska Statutes 09.43.110. .120 and .130. If the court deteraine. that the arbitration decision should be set aside on one of the qrounds enumerated in such statutes, it may proceed to decide the merits of tile matter at the instance of either party to the Lease and neither party shall be required to subait to rearbitration of tile matter. Page - 22 Rev 06/88 ARTICLE 9 DEFAULT AND DEFEASANCE 9.01 Events of Default. Each of the followinq events shall be a default by Lessee and breach of this Lease: A. Fai lure to Perforll Lease Covenants. Lessee IS abandonment or surrender of the Leased preaises or of the leasehold estate, or failure or refusal to pay when due any installment of rent or any other sum required by this Lease to b. paid by Lessee, or to perfora as required by any other covenant or condition of this Lease. B. Appointment of Receiver. The appointment of a receiver or trustee to take possession of the Leased Premises or improvements or of the Lessee's interest in the leasehold estate or of Lessee's operations on the Leased Premises for any reason. C. Insolvency, Bankruptcy. An assignment by Lessee for the benefit of creditors or the filing of a voluntary or involuntary petition by or against Lessee under any provision of the U. S. Bankruptcy Code. _ 9.02 Notice and Riaht to Cure. A. Notices. As a precondition to pursuing any remedy for an alleged default by Lessee, Lessor shall, before pursuing any remedy, give notice of default to Lessee. Each notice of default shall state the alleged event of default and the intended remedy, but the identification of the intended remedy shall not limit Lessor's right to seek or use any other available remedy not identified in the notice. B. Method of Givino Notice. Lessor shall give notic. of default in accordance with subparagraph 9.02.A by: (1) mailing by certified mail (return receipt requested), a copy of the notice to each party required to receive it at the last addre.. provid.d by that party to Lessor: and (2) mai ling by tirst class mail. a copy of the same notice to each such party at the sa.. addres.. C. Lesse.'. Riaht to Cure Defaults. If the alleged d.fault i. nonpay.ent of rent. taxe., or other sum. to b. paid by L..... as provided in Article. 2 and 4 or elsewhere this L.a.. directed to be paid as rent, Lessee shall have thirty (30) days aft.r the notice is given to cure the default. For the cure of any other default, Lessee shall promptly and diligently after the notice commence curing the default and .hall have sixty (60) days after notice is given to complete the cur.. Paqe - 23 . . . Rev 06188 9.03 Nonwaiver. Acceptance by Lessor or its aqents of any rents. whether basic or additional, shall not be deemed to be a waiver by it of any breach by Lessee of any of its covenants contained in this Lease or of the riqht of Lessor to reenter the Leased Premises or to declare a forfeiture for any such breach. Waiver by Lessor of any breach by Lessee shall not operate to extinquish the covenant the breach of which is so waived, nor be deemed to be a waiver of the riqht of Lessor to declare a forfeiture for any other breach thereof or ot any other covenant. 9.04 Riqht of Lessor to Protect Aqainst Default. It Lessee fails to observe or perform any of its covenants contained herein. Lessor, at any time thereafter and without notice. shall have the riqht but not the obliqation to observe or perform such covenant for the account and at the expense of Lessee. and shall not be 1 iable to Lessee or anyone claiminq by, throuqh. or under it for any loss or damaqe by reason thereof to the occupancy, business, or property of any of them. All costs and expenses paid or incurred by Lessor in observinq or performinq such covenant shall constitute additional rents. which Lessee shall forthwith pay to Lessor upon statements therefor. 9.05 Lessor's Remedies. If any default by Lessee shall continue uncured, fOllowinq notice of default as required by this Lease. for the period applicable to the default under paraqraph 9.02 of this Lease. Lessor has the followinq remedies in addition to all other riqhts and remedies provided by law or equity or other provisions of this Lease. to which Lessor may resort cumulatively or in the alternative. The election of one remedy for anyone default shall not foreclose an election of any other remedy for another default or for the same default at a later time. A. Termination. Lessor may, at Lessor's election, terminate thi. Lease by qivinq Lessee notice of termination in accordance with the procedures specified in paraqraph 9.02 of this Lea.e. On the qivinq of the notice. all Lessee's riqhts in the Leased Premises and in a 11 improvements thereon shall terminate, unless Lessor expressly and in writinq requires Lessee to remove specified improvements as are removed. Promptly after notice of terlllination. Lessee shall surrender and vacate the Leased Premises and all improvement. not required to be removed in a brooa-clean condition. and LelSor aay reenter and take possession of the Leased Premises and all re.aininq improvements and eject all parties in possession. or eject some and not others, or eject none. Termination under thi. paraqraph shall not relieve Lessee, or any of its qu.rantors, insurers. or sureties, froll the payment of any sum then due to Lessor or froll any claill for damaqes previOUSly accrued or then accruinq against Lessee. Paqe - 24 Rev 06/88 B. Reentry Without Termination. Lessor may. at Lessor's election. reenter the Leased Premises. and. without terminating thil Lease, at any time and from time to time relet the Leased Prellises and improvements, or any part or parts of theil, for the account and in the name of Lessee or otherwise. Lessor may. at Lessor's election. eject all persons or eject so.e and not others or eject none. Any reletting may be for the re.ainder of the Lease Ter. or for a longer or shorter ter.. Lessor may execute any leases made under this provision either in Leslor's name or in Lessee's name, and shall be entitled to all rents froll the use, operation. or occupancy of the Leased Premises or improvements or both. Lessor shall apply all rents from reletting as provided in paraqraph 9.07 of this Lease. Lessee shall nevertheless pay to Lessor on the due dates specified in this Lease. the equivalent of all sums required of Lessee under thil Lease, plUS Lessor's expenses. lesl the proceeds of any relettinq. No act by or on behalf of Lessor under this provision shall constitute a termination of this Lease unless Lessor gives Lessee notice of termination. C. Recovery of Rent. Lessor shall be entitled, at Lessor's election. to each installment of rent or to any combination of installments for any periOd before ter.ination. plus interest ~t the rate of ten and one-half percent (10 1/2\) per annu. fro. the due date of each installment. If Lessor elects to relet the Leased Premises without terminatinq this Lease. the proceeds of such relettinq shall be applied, when received. as provided in paraqraph 9.07 of this Lease. 1/1 D. Lessee's Personal Property. Lessor may, at Lessor's election, use Lessee's personal property and trade fixtures on the Leased Premises. or any of such property and fixtures, without compensation and without liability for use or damaqe. or store them for the account and at the cost of Lessee. E. Damaqes. Lessor shall also be entitled, at Lessor's election. to damages in the following sums: (1) all amounts that would have fallen due as rent between the time of ter.ination and the ti.e the property is relet: provided that Lessor shall exert reasonable efforts to relet the property at puvailinq market value: and (2) the amount, if any, by which the Basic Rents under this Lease exceed the rents under any subsequent leas. upon relettinq calculated over the Leas. Tera: and (3) all adainistrative. marketinq. brokerag.. repair. Cleaning and sillilar costs incurred by Lessor and necessary or useful to relettinq the Leased Premises or placing it in good and marketable condition. paqe - 25 . . . Rev 06/88 9.06 AssiQnJnent of Subrents. Lessee assigns to Lessor all subrents and other sums falling due from subtenants. licensees and concessionaires (referred to as "Subtenants" in this paragraph 9.06) during any periOd in which Lessor has the right under this toease, whethee exercised oe not. to reenter the Leased Premises for Lessee's default, and Lessee shall not have any right to such sums during that period. Lessor may at Lellor's election reenter the peemisea and improvements with or without peocess of law. without terllinating this Lease. and either. ot both. collect these sums or bring action for the recovery of the sums directly from Subtenants. Lessor shall apply all luch collected subrents as provided in paragraph 9.07. Lessee shall nevertheless pay to Lessor on the due dates specified in this Lease the equivalent of all sums required of Lessee undee this Lease. plus Lessor's expenses. les8 the avails of the sums assigned and actually collected under this paragraph 9.06. Lessor may proceed to collect either the assigned sums or Lessee's balances. or both, or any installment or installments of them, ei ther before or after expiration of the Lease Terll. but the periOd of limitations shall not begin to run on Lessee's payments until the due date of the final installment to Which Lessor is entitled under this Lease, nor shall it begin to run on the payments of the sums assigned under this paragraph 9.06 until the due date of the final installment due froll the respective Subtenantl. 9.07 ADDlication of Sums Collected by Lessor. Lessor shall apply all subrents and proceedS of reletting as followl: first, to the payment of reasonable expenses (inclUding attorneys' fees and bro~ers' commissions or both) paid or incurred by or on behalf of Lessor in recovering possession. placing the premises and improvements in good condition, and preparing or altering the premises or improvements for reletting; second, to the reasonable expense of aecueing new lesseel; third. to the fulfillment of Lessee's covenants to the end of the Lease Term; and fourth, to Lessee's usel and purposes. ARTICLE 10 GENERAL PROVISIONS 10.01 L.ssor's RiGht to Entry. InsDection and Reoair. Lessor a.y enter and inspect the Leased pre.ises at any time during ceqular business houcs. with or without the pcesence of Lesse. or its authorized cepresentative. after giving twenty-four (24) houri' advance notice to Lessee of such page - 26 Rev 06/88 inspection. In the event of an emergency, Lessor may enter and inspect the Leased Premises on reasonable not ice (including no notice to Lessee it the circumstances warrant) and make such repairs or institute such measures, on the account and at the expense of Lessee, as may be necessary to avert or terminate the emergency. An emerqency is any action, event, or condition, either extant or imminent, that threatens siqnificant damaqe to property or injury to persons on or near the Leased pr..ise., and includes but is not limited to flood, fire. explosion, avalanche, earthquak., uncontroll.d or danqerous discharq. or release of water or other fluids. unauthor ized or i lleqa 1 placement of hazardous or toxic materials on the Leased Premises, and shiftinq, settlinq or loss of earth or support on the Leased Premises. 10.02 Notic.s. Any notice. other than notice of default under subparaqraphs 9.02.A and 9.02.8 of this Lease, or demand to Lessor or Lessee provided for in this Lease may be qiven sUfficiently for all purposes in writinq, mailed by reqistered or certified mail, return receipt requested, and addressed to such party or its agent at its mailinq address specified herein or at the last such address specified by such party in writinq to the other, or may be delivered personally within the State of Alaska to such party or its agent. Except as oth.rwise expressly provided herein, such notice shall be conclusively d....d to have b.en qiven on the date of such mai11n9 or p.rsonal delivery. If at any time durinq the Leas. Term Lessee is more than one person or entity, any notice given by Lessor to any of them shall constitute notice to all of them, and any agreement or approval with or in favor of Lessor made or given by any of them shall bind all of them. .. 10.03 Covenants and Conditions. Every provision in this Lease which imposes an Obligation upon Lessee or invests an option, power, or riqht in Lessor shall be deemed to b. a covenant of L.ssee in favor of Lessor, and the ti.e of observance and p.rformanc. by Lessee of each such covenant shall be of the essence. Full and faithful observance and p.rformanc. by L.sse. of each of its covenants contained in this Lease shall be a condition hereof. 10.04 Intearation and Amendments. Except as otherwise expr.ssly provid.d in this Lease and except for the provisions of the Memorandua of Lease, thi. L.ase is a co.plete inte9ration of .v.ry aqreem.nt and representation made by or on behalf of L..sor and L.sse. with respect to the Leas.d Pre.ises, and no implied covenant or prior oral or written Page - 27 . . . Rev 06181 aqreellent shall be held to vary the provisions of this Lease, any law or custom to the contrary notwithstandinq. In the event of any confl ict between this Lease and the MemorandulI of Lease, the provisions of the MemorandulI of Lease shall control. No amendment or other modification of the provisions of this Lease shall be effective unless incorporated in a written instrument duly executed and acknowledqed by Lessor and Le..e., 10.05 Aoorovah of Lessor. Except as otherwise expressly provided in this Lease and except for amendments or 1I0dification. of this Lease, Lessor shall neither unreasonably, capriciously, nor arbitrarily withhold any approval required to b. obtained by Lessee hereunder, nor require any consideration therefor a. a condition thereof other than payment forthwith by Less.. to Lessor of all costs and expenses paid or incurred by Lessor in connection with the review of the matter for which such approval is souqht and the processinq of such approval, 10.06 Survival and Severability. The rights and obliqat ion. of Lessor and Lessee provided in paraqraphs 4.10 through 4.14 of this Lease, and in the Memorandum of Leas., except to the extent expressly varied or superseded by a sub.equent instrument executed by Lessor ind Lessee. shall survive the expiration or earlier termination of this Lease. If any provision of this Lease is held to be void or otherwi.e unenforceable by any court or other tribunal of co.petent jurisdiction, other than at the initiative or with the support of Lessor, within thirty (30) days after receipt of written notice of such holdinq Lessor shall have the riqht and option, exercisable by written notice thereof to Lessee, to terminate this Lease effective as of the date of such written notice of exercise. It is understood and aqreed that otherwise this Lease, except for such provision so held to be void or otherwise unenforceable, shall remain in futl force and effect. 10.07 BindinG Efhct. This Lease shall be binding upon and shall inure to the benefit of Lessor and Lessee and their respective .ucces.ors and assl<)ns. The designation. "Lessor" and "Le.see" include their respective successors and assiqns anel shall b. .0 construed that the use of the sinqular nUllber includ.. tb. plural number, and vice versa, and the use of any qend.r inclUde. the other qenders. If at any tim. durin9 the Leas. T.r. L..... is 1I0r. than on. p.rson or entity, includinq p.r.ons who are partner. and operate Lessee a. a partnership, tb.ir liability hereund.r Ihall b. joint and several. Page - 28 Rev 06/88 10.08 Lessor's Authority to Convey retains the absolute and unconditional r: ti' e in the Leased Premises, or an intereat. su ,ect to this Lease and the interest Mortgagee or Subtenant under this Lease. ~~~\.tle. Lessor lt to convey fee or estate therein. of any Qualified 10.09 Powers of Lessor as PUblic Corporation. Nothing in this Lea.e restricts or limits the authority of Lessor, the Alaska Railroad Corporation. in the exercise of governmental authority d.legated to it by the Alaska Railroad CorporatioR" Act, AS 42.40, or by any other applicable law or regulation. 10.10 CaPtions. The captions of the articles and par~graphs hereof are for convenience only, are not an operative part hereot. and neither limit nor amplify in any way the provisions hereof. ARTICLE 11 DUTIES UPON TERMINATION OR EXPIRATION 11. 01 Surrender of Leased Premises. tTpon expiration or early termination of this Lease, Lessee shall surrender to Lessor the pos.ession of the Leased Premises. Lessee shall III leave the surr.ndered Leased Premises and any improvements in a broom-clean condition. as noted in paragraph 11.02. If Lessee tails to surrender the Leased Premises at expiration or termination, Lessee shall defend and indemnify Lessor from all liability and expense resulting from the delay or failure to surr.nder, including but not limited to claims made by any succeeding tenant founded on or resulting from Lessee's failure to surrender. In the event of failure or refusal of Lessee to surrender possession of the Leased premises, Lessor shall have the right to reenter the Leased Premises and remove theretrom Le.see or any person, firm or corporation claiming by, through or under Lesse. and to obtain damages for trespass from Lesse.. 11.02 Removal of Improvements upon Termination. A. Upon the expiration or termination of this Lease or any extension th.reof, including termination reSUlting trom L....... breacb ("termination"), Lesse. shall leave the Leased pr..i.e. in a broom-clean and lea.abl. condition. which .hall include removal of all improvements, building., toundation. and tooting. to building., personal property, trash, vehicles, and equipment, except as noted in subparagraphs 11.02.8, .C and .0 below. Any excavation on the property. including ~xcavation to remove Lessee'. Improvements, shall be filled .d compacted with material approved by Lessor. Page - 29 . . . Rev 06/88 8. L.aaor .ay. at its option. allow Lessee to leave sam. or all of L.....'. Improvement. on the Leased Premise. upon ter.ination. If Lessor so elect.. such improvements shall b.co.. the prop.rty of Lessor upon termination. C. pursuant to the security interest granted under paragraph 4.13 of this Leas., Lessor may, at it. option, require Le.... to leave some or all of Lesse.'s Improvements on the Lea..d pr..ises upon termination, with Lessor becoming the own.r of such improvements. wh.n at the tilD. of t.rmination, L..... has failed to make all payments to Lessor required under this Lu.e. D. Any improvements owned by Lessor and identified in paragraph 1.03, or added to the Leased Premises by L.ssor after execution of this Lease. shall not b. removed by Lessee. 11.03 Abandonment of Lessee's ProDertv. All property that L.sse. is not required or allowed to leave on the L.ased pr..ises shall. on the tenth (10th) day following ter.ination. be conclusively deemed abandoned. Abandoned property shall, at the el.ct ion of Lessor. become the property of Lessor or be destroyed or removed by Lessor. 11.04 Liabilitv for CleanuD EXDenses. Lesse. shall b. liable for all co.ta and expens.s incurred by Lessor to re.ove or d..troy abandoned property and improvements not required or allowed to b. left on the Leased Premises. and tor the removal of trash or other debris left thereon. In addition. nothing in this Leas. shall relieve Les.ee of any Obligation or liability tor re.oval at hazardous substances (inCluding wa.te.) or inappropriate fill material placed on the Leased Premises during the t.r. ot th. Lease, r.gardles. of wh.n such hazardous .ub.tanc. (including waste) or inappropriate fill lIIaterlal 18 di.covered. ARTICLE 12 EXECUTION AND MEMORANDUM OF LEASE 12.01 Execution and counterDarts. This Lease ia executed in two or .or. counterpart., .ach of which .hall b. an original, and all of which shall con.titute on. and the sam. in.tru..nt. Page - 30 Rev 6/88 12.02 Recordation of Memorandum of Lease. This Lease ShCll1 not be recorded. The parties shall execute in sui table f, n for recordation a memorandum of this Lease ("Memorandum of L, ,e"). which shall be recorded. The Memorandum of Lease sndll be the Lessor's standard form Memorandum of Lease or. wi th the agreement of Lessor. a Memorandum of Lease in a form proposed by a title insurance company insuring Lessee's leasehold interest or the interest of any Qualified Mortgagee sufficient to give constructive notice of this Lease to subsequent purchasers and mortgagees. IN WITNESS WHEREOF. Lessor and Lessee have duly executed and acknowledged this Ground Lease. ALASKA RAILROAD CORPORATION Dated: By: F. G. Turpin President and Chief Executive Officer Dated: By: Larry J. Houle Director, Real Estate CITY OF SEWARD /I DateC:: By: Its: page - 31