EXHIBIT A
SUBSURFACE LEASE
THIS LEASE (referred to herein as “Lease” or “Subsurface Lease”) made and entered into this day of 2005, by and between the City of Portland, a municipal corporation of the State of Oregon (hereinafter referred to as the "City"), and Fox Tower, LLC, an Oregon limited liability company (hereinafter referred to as the "Lessee").
WITNESSETH
WHEREAS, Lessee desires to lease subsurface space under SW Park Avenue, between SW Taylor and SW Yamhill_for parking purposes in connection with the construction of the parking structure on abutting property;
WHEREAS, Lessee has made significant contributions to public improvements being made in the vicinity of this Lease;
WHEREAS, the City Engineer has reviewed the proposed encroachment into the public right-of-way and, subject to Lessee complying with certain conditions provided for herein, has determined it to be consistent with approval criteria and policies as outlined in the City Policy “Encroachments in the Public Right-of-Way, ” adopted in 1982; and
WHEREAS, the City Council has determined the proposed encroachment into the public right-of-way subsurface space beneath the street will not be needed for public use within the period of this Lease and the subsurface facilities will not unreasonably interfere with the public use and utility use of the street area; and, will give the best return to the City of use of such area
NOW THEREFORE IT IS MUTUALLY AGREED AS FOLLOWS:
1. Lease. The City does hereby lease, demise, and let unto Lessee, its successors and assigns, the subsurface space as depicted in Exhibit "A" attached hereto and incorporated herein by reference (hereinafter referred to as the "Subsurface Space"). The surface area above the Subsurface Space contains ________ square feet, more or less. The Subsurface Space is located adjacent to Blocks ____ and ____, _____________, in the City of Portland, Oregon (the “Blocks”). For purposes of this Subsurface Lease, “Owner” means a fee owner or ground lessee of all or any portion of the Blocks.
2. Authority. This Subsurface Lease is executed pursuant to the authority granted by Ordinance No. _________, adopted by the City Council of the City of Portland, Oregon, on the __th day of ______ , 200_. The City Council, in accordance with ORS 271.430, has notified the owners of the property abutting the street property and has given them an opportunity to be heard with respect to this Subsurface Lease, and has determined that the use of the Subsurface Space will not unreasonably interfere with public use and utility use of the city streets and sidewalks, as provided by law. It is understood that this Subsurface Lease shall not affect the prior dedication or grant of the street property for street and sidewalk purposes.
3. As-Built Survey. Within ninety (90) days after the date of the issuance of the temporary Certificate of Occupancy (the TCO) for the parking structure, Lessee shall cause the architect or engineer of the Subsurface Space to prepare "as-built" drawings to determine the actual square footage of the surface area above the Subsurface Space and the actual City of Portland datum elevations of the Subsurface Space (the “’as-built’ drawings”). Lessee will provide a copy of said “as-built” drawings to the City. The actual square footage as shown in the "as-built" drawings shall be the basis for the calculation of the annual rent (Rent), with the as-built survey to be prepaid by a qualified profession.
4. Rent
A. The "Initial Rent" for the Subsurface Space is $ 34.75 per square foot per year, for a total Initial Rent of $18,700, based upon estimated Lease area of 5,382 square feet . The date of issuance of the TCO is the rent commencement date. In the event that the final constructed square footage of the Subsurface Space is more or less than provided in 1.A. above, Initial Rent will be adjusted accordingly.
B. Lessee shall pay to the City, in advance on or before the tenth (10th) day of January of each calendar year during the term of this Subsurface Lease, annual rent in an amount equal to the Initial Rent then in effect as provided in Section 4.A. hereof. If, during the Initial Term (as defined in Section 6 below) of this Subsurface Lease or any renewal term, the period in which annual rent is due is less than a calendar year, the amount due shall be prorated based upon a calendar year containing 360 days.
C. All Rent to be paid by Lessee to City shall be in lawful money of the United States of America and shall be paid without deduction or offset at such place or places as may be designated from time to time by City. While City intends to invoice Lessee annually, delayed invoicing does not relieve Lessee of its obligation to pay rent on time.
D. No payment by Lessee or receipt by City of a lesser amount than any installment or payment of rent or other charges or fees shall be deemed to be other than on account of the amount due, and no endorsement or statement on any check or payment of rent or other charges or fees shall be deemed an accord and satisfaction. City may accept such check or payment without prejudice to City’s right to recover the balance of such installment or payment, or pursue any other remedies available to City. Payments received shall be credited to the oldest outstanding amount due.
E. In addition to all of the remedies provided by this lease, if any rent or other charge required by this lease is not received by City within ten (10) days after it is due, Lessee shall pay a late fee of $50.00. Lessee shall pay any late charges immediately upon billing by City. The imposition by City and/or the payment by Lessee of any late charges shall not waive or cure Lessee’s default hereunder. Failure to impose a late charge on one occasion does not effect a waiver of City’s right to impose a late charge on subsequent delinquent payments.
F. All amounts not paid by the Lessee when due shall bear interest at the rate of one percent (1%) per month.
5. Rent Adjustment.
A. Commencing at the beginning of the eleventh (11th) full calendar year following the rent commencement date and thereafter on the last day of each succeeding five (5) year period throughout the remainder of the Initial Term and any renewal term (hereinafter "Rent Adjustment Date"), rent shall be adjusted to equal the rent at the beginning of the previous period for which rents were fixed, increased by the lesser of (i) any percentage increase in the most recently available CPI as of such Rent Adjustment Date over the CPI as of the beginning of the previous period for which rents were fixed, or (ii) five percent (5%) per year. For example, if the CPI as of the date of this Subsurface Lease were 300.2 and the CPI as of the fifth anniversary of the rent commencement date were 321.2, annual rent for the succeeding five-year period would be determined by multiplying the Initial Rent by 1.07. For purposes of this Section 5, the term "CPI" means the Consumer Price Index for All Urban Consumers (1982-84 equal to 100), Portland, Oregon for All Items, or a comparable Index published by the United States Bureau of Labor Statistics if such Consumer Price Index be discontinued.
B. At no time during the Initial Term or any renewal term, shall a rent adjustment result in an annual rent that is less than the annual rent for the previous period for which rents were fixed.
6. Term
A. The “Initial Term” shall commence upon the date of issuance the TCO and shall expire 20 years after said date, unless extended pursuant to Section 7 below.
B. Notwithstanding anything to the contrary herein, this Subsurface Lease will terminate:
1) Five years from the effective date if construction of the parking garage has not commenced by that date
2) One hundred eighty (180) days after the improvements built or caused to be built by Lessee or an Owner on the Blocks and the street property are substantially destroyed, unless prior to expiration of said 180 day period Lessee has given notice to the City of its intention to rebuild, or cause to be rebuilt, the improvements. If Lessee gives the City its notice within the 180 day period then this Subsurface Lease shall not terminate and thereafter Lessee shall commence, within 120 days from the date of such notice, to rebuild the improvements and shall diligently pursue the same unto completion. Except as otherwise provided in this Subsurface Lease, if Lessee fails to commence to rebuild or cause to be rebuilt the improvements within the 120 day period or fails to diligently pursue the same, City may notify Lessee that it is in default of such obligations as provided for under Section 16 of this Subsurface Lease.
C. When used in this Subsurface Lease, "term" shall mean the Initial Term of this Subsurface Lease or the Initial Term of this Subsurface Lease as renewed pursuant to Section 7.
7. Renewal. Lessee shall have the option to renew this Subsurface Lease for two successive terms of twenty (20) years each and three additional terms of ten (10) years each on the same terms and conditions as contained herein, provided that, as of the date of the commencement of each successive term, there shall be no default under the terms of this Subsurface Lease and the Subsurface Space is being used for the same or substantially similar purposes as the Subsurface Space was used during the Initial Term of this Subsurface Lease. Each renewal option shall be deemed automatically exercised, subject to Lessee providing City written notice of its intent to renew this Subsurface Lease not less than one (1) year nor more than five (5) years prior to the last day of the expiring term.
8. Net Lease. It is the intention and purpose of the City and Lessee that this Subsurface Lease shall be a “net lease” to City, all cost or expense of whatever character or kind, general and special, ordinary and extraordinary, foreseen and unforeseen and of every kind and nature whatsoever that may be necessary in or about the operation of the Subsurface Space and Lessee’s authorized use thereof during the entire term, or its extension(s), to be paid by Lessee including but not limited to taxes, utilities, security insurance, and/or property assessments, if applicable. All provisions of this Subsurface Lease relating to expenses are to be construed in light of such intention and purpose to construe this Subsurface Lease as a “net lease”.
9. Permitted Uses. Lessee is authorized to use the Subsurface Space for parking (including bicycle parking), pedestrian facilities, storage facilities, locker rooms, car wash, mechanical facilities, electrical facilities, chilled water facilities, telecommunication facilities, utilities, foundation footings, soldier piles, piles, pile caps, and shoring, other structural purposes in connection with the parking structure and above ground improvements, and uses related to the operation of a parking garage (“Permitted Uses”). In the event that at Lessee’s request the City Council shall approve use of the Subsurface Space for additional purposes in the manner hereinafter provided, the rent payable by Lessee shall be renegotiated between the Lessee and the City to a reasonable rate in accordance with the then current rental rates for comparable facilities and uses.
10. Encroachment Approval Conditions. Notwithstanding terms and conditions to the contrary herein, Lessee will comply with the following requirements of the City Engineer, as provided for in that certain Report to City Council, dated _______:
A. A minimum of 5.0 feet will be maintained between the roof of the garage and the gutter grades of all streets.
B. Lessee shall construct the parking structure to accommodate existing structural demands of the public roadways built above the Subsurface Space in a manner acceptable to the City Engineer.
C. The garage and all access points from the public right-of-way shall be open to the public and clearly signed.
D. A headway of at least seven (7) feet will be maintained under structural beams and eight(8) feet elsewhere.
11. Use, Nuisance, Waste, Hazard. Lessee shall use Subsurface Space for Permitted Uses and no other use whatsoever without the prior written approval of the City, which consent shall not be unreasonably withheld or delayed. Lessee shall at all times keep Subsurface Space in a clean and sanitary condition to the reasonable satisfaction of the City and shall comply with any laws, ordinances, and regulations relating to use of the Subsurface Space. Lessee shall refrain from any use which is unlawful or interferes with or obstructs the rights of the City or other owners, users, or occupants of nearby surface and/or subsurface space. Lessee shall not create a nuisance or damage the reputation of the Subsurface Space, commit or suffer any strip or waste of the Subsurface Space or create or permit to be created any condition which would constitute a fire hazard, impair the strength or durability of the parking structure, or be dangerous to persons or property. Lessee shall not sell or consume or permit the sale or consumption of alcohol or illegal drugs of any kind on the Subsurface Space. No use may be made of, on, or from the Subsurface Space relating to the handling, storage, disposal, transportation, or discharge of hazardous or toxic wastes, substances, pollutants, or contaminants as those terms are defined by Federal, State, or local law or regulation over time, provided however, nothing herein shall prohibit the use and parking of vehicles in the Subsurface Space for the Permitted Uses. City acknowledges that vehicles in the Subsurface Space for the Permitted Uses may contain petroleum products and may have incidental leakage of such petroleum products, and such shall not be a violation of this Lease. Lessee shall, however, be responsible for appropriate clean up of any such leakage. Lessee shall maintain the Subsurface Space in compliance with all applicable laws and shall be responsible for making any notification or report concerning the Subsurface Space to the appropriate government authority. In the event of violation of any of the above conditions, the Lessee shall be solely responsible for all costs of compliance, removal or restoration, and at the sole discretion of the City, this lease may be terminated, following the notice and cure rights provided in Section 16.
12. Acknowledgments and Covenants of the City. The City hereby acknowledges and covenants that:
A. Lessee shall at all times during the Subsurface Lease term and the optional renewal periods, if exercised, peaceably and quietly enjoy the Subsurface Space without any disturbance from the City, except only such disturbance as shall be reasonably required for maintenance and repair of the surface of public street areas adjacent to and above the Subsurface Space, and for maintenance and repair of any City utilities, such as water mains, sewer lines, cable conduit and the like within or adjacent to the Subsurface Space. City shall, however, have the right to inspect the Subsurface Space at any time, upon reasonable notice to Lessee, to verify the safety of the structures therein and the uses to which the Subsurface Space is being put. City shall cooperate with Lessee with respect to the relocation and abandonment of public utilities in the Subsurface Space.
B. The City hereby consents to any mortgage, grant of a security interest, pledge and/or assignment by Lessee or any Owners of their right, title and interest in and to this Subsurface Lease and leasehold estate in the Subsurface Space to one or more Lending Institutions (as defined below), and all additional replacement, refinancing, consolidation, or substitution leasehold mortgages, trust deeds, security assignments, pledges, sale-leaseback instrumentation, and similar security instruments hereafter given by Lessee or any Owner thereon in favor of the Lending Institutions. Any mortgage, grant of a security interest, pledge, assignment or any other security instruments described above made pursuant to this Section is referred to as a “Permitted Mortgage” and the holder of or secured party under a Permitted Mortgage is referred to as a “Permitted Mortgagee”. Lessee or Permitted Mortgagee shall give notice to the City within 30 days of creation of any Permitted Mortgage.
13. Acknowledgments and Covenants of Lessee. Lessee hereby acknowledges and covenants that:
A. Each individual executing this Subsurface Lease on behalf of the Lessee is duly authorized to execute and deliver this Subsurface Lease and Lessee warrants and represents that this Subsurface Lease is binding on Lessee.
B. Lessee has examined the Subsurface Area and accepts it in “as is” condition. No representations or warranties as to the condition of the said area have been made by City or its officers, agents or employees. City shall have no liability to Lessee for any damage or injury caused by the condition of the Subsurface Area.
C. Lessee accepts the Subsurface Area subject to any and all valid interests of record, including, but not limited to existing permits, licenses, leases, easements, franchise agreements, railroad facilities, pipelines, telephone, telegraph, communication, power and signal lines or any other similar facilities.
D. Lessee shall cause to be performed, without expense to City, all utility abandonment or relocation, including, but not limited to, storm and sanitary sewer facilities, water mains and services, street lights, traffic signals and fire hydrants, electrical, gas, telephone or other utilities necessitated by Lessee's construction of facilities in the Subsurface Space and shall cooperate with the City in the incorporation, at no expense to the City, of traffic control and signing systems in the construction of the facilities. Plans and specifications for the relocation of City owned utilities shall be subject to the reasonable approval of the City and if the utility facilities are within the Lessee's improvements constructed in the Subsurface Space, Lessee will make arrangements reasonably acceptable to all utilities to provide them access for maintenance of said relocated utilities after the completion of construction, including twenty-four (24) hour access to such relocated utilities for repair and maintenance purposes. In the event that City cannot cause any private utility or utilities to permanently relocate at the utilities' own expense, Lessee shall indemnify and hold harmless City for all expenses reasonably incurred by it in connection with said relocation, and will pay on an ongoing basis for all expenses of said relocation work. In the event that a judgment is entered against City for reimbursement of costs incurred by private utilities in the relocation or abandonment of private utility facilities, Lessee shall indemnify and hold harmless City for the amount of such judgment, provided, however, that City shall, prior to responding to such claim, notify Lessee of any such claim made against City for reimbursement of relocation costs by a private utility, and Lessee shall have the option of paying such claim or paying City's reasonable costs of contesting such Claim, including reasonable costs of appeal. Lessee covenants and agrees to pay for any temporary relocation or improvements required to accommodate existing private utility networks necessitated by the project. Lessee covenants and agrees to pay for all relocation, abandonment or improvement costs of all public utility networks to the extent necessitated by the project.
E. The construction of facilities in the Subsurface Space shall be subject to such City ordinances and license and permit requirements as are generally applicable to such construction. In particular, all structural plans, materials to be used, and methods of installation relating to said facilities shall be subject to such approvals of the City Engineer, Environmental Services Engineer, water engineer, traffic engineer, building bureau, and fire marshal as would ordinarily apply to similar construction. Lessee shall provide for vehicular and pedestrian traffic during construction in a manner approved by the City Engineer and traffic engineer.
F. Lessee shall release and hold harmless the City and its officers, agents and employees from and shall assume all risks of damage to the subsurface structures constructed by Lessee or to any personal property located in said structures resulting directly or indirectly from the failure of water lines or sewers or other utilities occurring during or resulting from the construction, reconstruction or maintenance of the street surface above or adjacent to the Subsurface Space, or any utilities in the Subsurface Space, except for liability arising solely out of the acts or omissions [this is consistent with Oregon Tort Claims Act] of City, its officers, agents and employees. This Section is not intended to increase the City's liability beyond the maximum limits contained in the Oregon Tort Claims Act, ORS 30.260 to 30.300, as presently in effect or hereafter modified, and nothing in this Section is intended to limit any recourse Lessee may have against third parties causing the damage to such subsurface structures or personal property therein.
G. When used in this Subsurface Lease, "private utilities" shall include, but not be limited to, natural gas, electrical, steamlines, chilled water systems from any district cooling facility, telephone and television cable facilities.
H. When used in this Subsurface Lease, "public utilities" shall include, but not be limited to, water mains and services, storm and sanitary sewers, light rail facilities, street lights, traffic signals, and fire hydrants.
14. Indemnity
A. Lessee shall indemnify, defend and hold harmless City, its officers, agents and employees from any and all liability, damage, expenses, attorney’s fees, causes of actions, suits, claims or judgments, arising out of or connected with (1) use, occupancy, management, or control of the Subsurface Area, (2) any failure of Lessee to comply with the terms of this lease or any violation of law or ordinance and (3) the acts or omission of Lessee, its agents, officers, directors, employees, or invitees; provided, however that Lessee shall not be liable for claims caused by the sole negligence of City, its officers, agents or employees. Subject to the City providing Lessee written notice of the claim, demand, action or suit, Lessee shall, at its own cost and expense, defend any and all claims, demands, actions or suits which may be brought against Lessee, or City or its’ officers, agents or employees, either alone or in conjunction with others upon any such above mentioned cause or claim, and shall satisfy, pay, and discharge any and all judgments; including attorney fees and costs, that may be recovered against Lessee, or City or its’ officers, agents, and employees, in any such action or actions in which they may be party defendants.
B. Lessee shall give City prompt written notice in case of casualty or accident on the Subsurface Area. Lessee, as a material part of the consideration to City, hereby assumes all risk of damage to property or injury to persons, in, upon or about the Subsurface Area from any cause other than City’s sole negligence,
C. City and its officers, agents, and employees shall not be liable for any latent defect in the Subsurface Area. In addition to the indemnity provided above, Lessee agrees to indemnify, defend and hold harmless City, and its’ officers, agents and employees, from and against all damages, costs, liabilities, and expenses caused by, arising out of, or in connection with, the use, generation, release, manufacture, refining, handling, processing, storage, transportation, or disposal of Hazardous Substances as defined in by ORS 465.200(16)(2003 Ed) or as it may be amended including asbestos. Damages, costs, liabilities and expenses shall include any amounts claimed to be owed by any regulatory or administrative agency.
15. Insurance. Lessee shall maintain and file with the City Auditor, in a form and with a company to be reasonably approved by the City Attorney, a public liability and property damage insurance policy or self-insurance plan with limits of not less than the maximum limits of liability of municipal bodies or their officials set forth in ORS 30.270, as such statute shall be amended or replaced from time to time. Present maximum limits under such statute are as follows:
A. $50,000.00 to any claimant for any number of claims for damage to or destruction of property, including consequential damages, arising out of a single accident or occurrence.
B. $200,000.00 to any claimant for all other claims arising out of a single accident or occurrence.
C. $500,000.00 for any number of claims arising out of a single accident or occurrence. Lessee will not be required to amend such limits unless City has given Lessee written notice of the changes in such limits. Such insurance shall be for the protection of the City, its officers and employees for any claim or claims for personal injury or property damage asserted against the City, its officers or employees due to the construction, maintenance or use of the facilities constructed in the Subsurface Space. If Lessee already has a policy of insurance meeting the above provisions as to amount, a certificate of insurance or certified copy of such policy may be furnished provided that a rider, endorsement or other provision is supplied making such insurance available to the City. Lessee shall maintain or cause to be maintained such insurance in force and effect during the term of this Subsurface Lease. Said policy shall carry an endorsement providing that the policy may not be cancelled without thirty (30) days' prior notice to City. Coverage shall include the City and its officers, agents and employees as additional insureds.
16. Maintenance, Taxes and Assessments
A. Lessee agrees to maintain the facilities, other than relocated utilities, constructed by it in the Subsurface Space at its own expense, and to pay any taxes and assessments (subject to applicable exemptions) that are or may be levied upon the Subsurface Space and the facilities other than relocated utilities constructed therein, and shall be responsible for proper control of drainage and for waterproofing of such facilities. Lessee agrees to restore, to the reasonable satisfaction of the City Engineer, any portion of the right of way which may be disturbed during construction of facilities in the Subsurface Space and agrees to maintain the surface of the right of way against settlement caused by the construction or existence of Lessee's subsurface facilities, provided said settlement is not caused by use of the surface of said right of way in excess of the load capability shown on Lessee's final plans and specifications approved by the Lessee and the City. If Lessee’s use of the Subsurface Space causes an immediate hazard in the street area, Lessee must make immediate repairs and if such repairs are not made in a responsive manner as determined by the City Engineer, then the City, upon providing Lessee with notice of its finding and reasonable opportunity to repair, may cause such repairs to be made and bill Lessee for such cost. Failure to make payment within 90 days of billing shall constitute default in accordance with Section 16. The amount of such cost, if not paid to the City, shall become a lien on the interest of Lessee, or any successors or assigns of Lessee's interest in this Subsurface Lease, in said Blocks.
B. If Lessee objects in good faith to the validity or amount of any tax or assessment that is or may be levied upon the Subsurface Space, Lessee, at Lessee's sole expense, may contest the validity or amount of the tax or assessments levied upon the Subsurface Space provided that City's interest in the Subsurface Space is not jeopardized.
17. Default.
A. The following shall be events of default:
1) Lessee fails (i) to pay rent as required pursuant to Section 4 hereof, (ii) to maintain insurance as required pursuant to Section 14 hereof, (iii) to maintain the facilities constructed in the Subsurface Space as required pursuant to Section 10 hereof, (iv) to comply with the use limitations provided for in Section 9; (v) to rebuild the improvements in the Subsurface Space as provided for in Section 6.B. hereof, or (v) to pay any taxes and assessments levied upon the Subsurface Space and the facilities constructed therein or to reimburse the City for repairs as required pursuant to Section 15.A. hereof.
2) Lessee making an assignment for the benefit of creditors, filing a petition in bankruptcy, petitioning or applying to any tribunal for the appointment of a custodian, receiver or any trustee for it or a substantial part of its assets, or commencing any proceedings under any bankruptcy, reorganization, arrangement, dissolution or liquidation law or statute of any jurisdiction, whether now or hereafter in effect; or Lessee by any act or omission indicating its consent to, approval of or acquiescence in any such petition, application or proceeding or order for relief or the appointment of a custodian, receiver or any trustee for it or any substantial part of any of its properties, or suffering any such custodianship, receivership or trusteeship to continue undischarged for a period of sixty (60) days or more.
B. In the event that an event of default continues for more than 90 days after written notice specifying the nature thereof (except for failure under A.1.(iv) above, in which case such failure need only continue for sixty (60) days after written notice specifying the nature thereof and except for failure under A.1.(ii) above, in which case failure need only continue for twenty (20) days after written notice specifying the nature thereof), such failure shall constitute an "Event of Lessee's Default" hereunder; provided, however, that if such failure be of such a nature as cannot be completely remedied within said 90-day, 60-day or 20-day period, as the case may be, no default shall occur so long as Lessee begins correction of the default within the said 90-day, 60-day or 20-day period and thereafter proceeds with reasonable diligence and in good faith to remedy the failure as soon as practicable.
18. Rights of Owners and Permitted Mortgagees.
A. If an Event of Lessee's Default described in Section 16 occurs, the City shall provide Lessee with notice as set forth in Section 23, and that if such notice is given by the City to Lessee, the following provisions shall apply:
1) Except as expressly provided otherwise herein, there shall be no cancellation, termination, surrender, acceptance of surrender, amendment, or modification of this Lease without written notice to Permitted Mortgagees, nor shall any merger result from the acquisition by, or devolution upon, any one entity of the interests of Lessee in this Lease.
2) In the event of any default by Lessee under this Lease each Owner and Permitted Mortgagee shall have the same period as Lessee has, plus thirty (30) days, after service of notice on it of such default, to remedy or cause to be remedied or commence to remedy and complete the remedy of the default complained of and City shall accept such performance by or at the instigation of any Interested Parties as if the same had been done by Lessee. Each notice of default given by Lessor will state the amounts of whatever Rent are then claimed to be in default.
3) If Lessor elects to terminate this Lease by reason of any default of Lessee, each Owner and each Permitted Mortgagee, in addition to the rights granted under the preceding Section, shall also have the right to postpone and extend the specified date for the termination of this Lease as fixed by Lessor in its notice of termination, for a period of six (6) months, provided that such Owner or Permitted Mortgagee shall cure or cause to be cured any then-existing defaults in payment of Rent and meanwhile pay the Rent, and provided further that the Owner or Permitted Mortgagee shall forthwith take steps to acquire Lessee’s interest in this Lease and shall prosecute the same to completion with all due diligence. If, at the end of the six-month period, the Owner or Permitted Mortgagee is actively engaged in steps to acquire Lessee’s interest, the time of the Owner or Permitted Mortgagee to comply with the provisions of this Section shall be extended for such period as is reasonably necessary to complete such steps with reasonable diligence and continuity.
4) Nothing contained in this Lease requires the Owner or Permitted Mortgagee or the Entity to cure any default that occurs as a result of the status of Lessee, such as Lessee’s bankruptcy or insolvency, or to discharge any lien, charge, or encumbrance against Lessee’s interest in this Lease junior in priority to the lien of the Permitted Mortgage.
5) Any Owner or Permitted Mortgagee (collectively sometimes referred to herein as “Interested Parties”) may notify the City of Interested Parties’ election to proceed with due diligence to foreclose the Permitted Mortgage (if the Blocks are all subject to one Permitted Mortgage) or otherwise to proceed promptly to acquire possession of the Subsurface Space; and
(1) During the period that such Permitted Mortgagee (if the Blocks are all subject to one Permitted Mortgage) or Interested Parties or entity formed by the Interested Parties (any of which are referred to herein as “Entity”, as applicable) shall be in possession of the Subsurface Space and/or during the pendency of any such foreclosure or other proceedings and until the interest of Lessee in this Subsurface Lease shall terminate, as the case may be, the Entity will pay or cause to be paid to the City all sums from time to time becoming due under this Subsurface Lease for Rent pertaining to such time period; and
(2) If delivery of possession of the Subsurface Space shall be made to such Entity, or successor to or purchaser of such interest (hereinafter “Acquirer”), whether voluntarily or pursuant to any foreclosure or other proceedings or otherwise, such Acquirer shall, promptly following such delivery of possession, perform or cause such successor to or purchaser of such interest to perform, as the case may be, all the covenants and agreements herein contained on Lessee's part to be performed to the extent that Lessee has failed to perform the same to the date of delivery of possession, as aforesaid, except such covenants and agreements which cannot with the exercise of due diligence be performed by such Acquirer; then the City shall postpone any termination of this Subsurface Lease and postpone any other action as a consequence of such default for such additional period or periods of time as may be necessary for such Acquirer, with the exercise of due diligence, to acquire Lessee's interest in this Subsurface Lease, as aforesaid, and to perform or cause to be performed all of the said covenants and agreements herein contained, as aforesaid. Upon such acquisition of Lessee's interest in this Subsurface Lease and such performance by such Acquirer pursuant to any foreclosure proceeding or other proceeding to acquire the Subsurface Lease, the City's right to declare this Subsurface Lease terminated or to take any other action based upon the occurrence of any uncured default or the existence of any uncured default which cannot with the exercise of due diligence be remedied by such Acquirer, shall be, and be deemed to be, waived. In the Event of Lessee's Default under this Subsurface Lease or under the loan instruments with a Permitted Mortgagee or other agreements with Owners, the Entity may, so long as such party takes the steps specified in Section 17.A. 1) and 2), exercise such rights as the Entity may have against Lessee, including the right to take possession of the Subsurface Space and exercise Lessee's rights under this Subsurface Lease, foreclose or otherwise acquire Lessee's interest in this Subsurface Lease as permitted by law, and reassign, sell, and/or sublet Lessee's interest in this Subsurface Lease, subject to the terms and provisions of this Section 17 and the limitation in Section 20 that any transfer of this Subsurface Lease must be in conjunction with and to the transferee in connection with the transfer of the fee interest in said Blocks. Nothing herein contained shall be deemed to require the Acquirer to continue with any foreclosure or other proceedings or, in the event such Acquirer shall otherwise acquire possession of the Subsurface Space, to continue such possession, if the default in respect of which the City has given notice is remedied. If prior to any sale pursuant to any proceeding brought to foreclose a mortgage, or if prior to the date on which Lessee's interest in this Subsurface Lease is otherwise extinguishable, the Event of Lessee's Default in respect of which the City gives notice is remedied and possession of the Subsurface Space is restored to Lessee, the obligation of the Acquirer pursuant to the instrument referred to in this subparagraph shall be null and void and this Subsurface Lease shall continue in full force and effect.
B. In addition to the agreement of the City to forbear as set forth in Section 17.A. hereof, and notwithstanding that Interested Parties may not have acted during such period of forbearance, if, by reason of the occurrence or continuance of an uncured Event of Lessee's Default, this Subsurface Lease is terminated, the City shall immediately notify Lessee (as set forth in Section 23) of such termination. On written request of the Acquirer made at any time within thirty (30) days after the Interested Parties have received a copy of the City's written notice of termination of this Subsurface Lease, the City shall enter into a new lease of the Subsurface Space with such Acquirer within twenty (20) days after receipt of such request. The new lease shall be effective as of the date of such termination of this Subsurface Lease for the remainder of the term of this Subsurface Lease, at the same Rent and upon the same terms, covenants, conditions and agreements as are herein contained; provided that such Acquirer shall (i) contemporaneously with the delivery of such request pay to the City all the installments of Rent which Lessee was obligated but failed to pay through the date of such termination; (ii) pay to the City at the time of the execution and delivery of said new lease any and all sums for Rents which would have been due hereunder from the date of termination of this Subsurface Lease (had this Subsurface Lease not been terminated) to and including the date of the execution and delivery of said new lease, together with all expenses, including reasonable attorneys' fees incurred by the City in connection with the termination of the Subsurface Lease and with the execution and delivery of such new lease, less the net amount of all sums received by the City from any sub-lessees in occupancy or licensees of any part or parts of the Subsurface Space up to the date of commencement of such new lease; and (iii) on or prior to the execution and delivery of said new lease, agree in writing that promptly following the delivery of such new lease, the Acquirer shall, with due diligence and within a reasonable time, perform or cause to be performed all of the other covenants and agreements herein contained on Lessee's part to be performed to the extent that Lessee shall have failed to perform the same to the date of delivery of such new lease, except such covenants and agreements which cannot with the exercise of due diligence be performed by such Acquirer. In that event, the performance of these covenants by the Acquirer shall be postponed and extended by the time period that the Acquirer is unable to perform. Such new lease shall have the same relative priority in time and in right as this Subsurface Lease and shall have the benefit of, and shall vest in such Acquirer all of the right, title, interest, powers and privileges of the Lessee hereunder in and to the Subsurface Space, including specifically assignment of the Lessee's interest in and to all then existing subleases, automatic vesting of the Lessee's right, title and interest in and to the improvements and appurtenances in the Subsurface Space, as well as furnishings, appliances, equipment, fixtures and machinery therein, until expiration of the term as the same may be extended.
C. If at any time there shall be more than one Permitted Mortgage constituting a lien on the entire Blocks, and more than one such Permitted Mortgagee shall request in writing a new lease of the Subsurface Space pursuant to Section 17.B., the Permitted Mortgagee most senior in lien as shown in the deed records of Multnomah County, to all other Permitted Mortgagees who have requested a new lease, pursuant to the list of Permitted Mortgagees provided pursuant to Section 17.B., shall be vested with the rights (and thereby subject to the requirements) under this Section 17 to the exclusion of any junior Permitted Mortgagee; provided, however, that such senior Permitted Mortgagee shall take such action as may be necessary to maintain and preserve the liens of all junior Permitted Mortgagees in their respective order of priority.
19. Remedies for Default
A. In the event of failure on the part of Lessee described in Section 16.A., which failure has continued for more than 90, 60 or 20 days, as the case may be, after written notice specifying the nature thereof or, if such failure be of such nature as cannot be completely remedied within said 90, 60 or 20 day period, and Lessee has not begun correction of the default or is not diligently pursuing such cure to completion within said 90-, 60- or 20-day period, as the case may be, and subject to the rights of the Interested Parties as set forth in Sections 16 and 17, City may, upon 60 days' written notice, terminate this Lease. During the pendency of any such default hereunder, Lessee shall continue to perform its duties and obligations hereunder, including, without limitation, its obligation to maintain the Subsurface Space, and, in the event that Lessee or any Interested Parties shall fail to perform such duties and obligations, City may, but shall not be obligated to perform any or all of such duties or obligations, at Lessee's expense.
B. If Lessee or any Interested Party shall fail to pay required insurance premiums when due and City deems it necessary, City may, at any time prior to or after actual default, after ten days' written notice to Lessee and any Interested Party, purchase insurance coverage with the limits required by Section 14 hereof, or any lesser limits determined by the City Engineer in his or her discretion to provide City and its officers, agents, and employees adequate coverage, at Lessee's expense.
C. City shall have such other remedies, not inconsistent with the provisions of this Lease, as may be available to City at law or in equity.
D. In the event of termination of the Subsurface Lease with Lessee, the City will negotiate in good faith with the Owners for the purposes of agreeing on a replacement lease for the Subsurface Lease. During such period of negotiation (not to exceed 180 days), City agrees that it shall not interfere with access to the Subsurface Space necessary for the structural elements of the Blocks.
E. In the event the City shall default in the performance of any of its obligations under this Subsurface Lease and City shall fail to cure the default within thirty (30) days after receiving written notice from Lessee, Lessee shall be entitled to seek remedies, not inconsistent with the provisions of this Subsurface Lease, as may be available to Lessee at law or in equity.
20. Surrender. Upon the termination of this Subsurface Lease whether by expiration of the term hereof, or by an Event of Lessee's Default, Lessee shall surrender and deliver up possession to the City of the Subsurface Space and the improvements constructed therein in a safe and well maintained condition and free and clear of any liens and encumbrances, other than (i) the rights of any Interested Parties under Section 17 of this Subsurface Lease, (ii) liens or encumbrances created by the City, (iii) the lien of taxes not yet due and payable and (iv) liens and encumbrances of record at the time of commencement of the Initial Term of this lease. In the event that adjacent subsurface improvements are removed or abandoned, subsurface improvements in the Subsurface Area shall be removed by Lessee, with said area returned to a condition satisfactory to the City.
21. Assignment; Subletting. Lessee may assign its interest in this Lease as follows:
A. Except as provided in Sections 11.B. and 20.B. through 20.D., Lessee shall not assign its interest in this Lease without the written consent of City.
B. Lessee may assign all of its interest in this Lease, without obtaining City's prior written consent, to an Owner, provided said assignee executes an instrument whereby the assignee assumes the rights and obligations of Lessee under this Lease from and after the effective date of assignment, and Lessee sends a notice thereof to the City before the effective date of the assignment.
C. If there has been a transfer under Subsection B above, Lessee may also assign its interest in this Lease, without obtaining City's prior written consent, to a transferee simultaneously with a transfer of Lessee's ownership in one or more (but not all) of the Blocks to said transferee, provided (i) the transferee and the owners of all other blocks abutting the Subsurface Space enter into an easement agreement allowing transferee use of the Subsurface Space and specifying the rights and obligations of the parties with respect to the use, maintenance and other rights and obligations of Lessee under this Lease, and (ii) said transferee executes an instrument whereby the transferee assumes all the rights and obligations of Lessee under this Lease from and after the effective date of assignment; provided in the case of either such assignment, Lessee sends a notice thereof to City prior to the effective date of the transfer.
D. Lessee may assign its interest in this Lease without obtaining City's prior written consent to (i) any Permitted Mortgagee contemplated in Section 11.B.; (ii) any wholly owned subsidiary of Lessee, or any corporation or other entity controlling, controlled by, or under common control with Lessee; provided that in case of any such assignment, Lessee sends a notice to City prior to the effective date of the transfer, and any such subsidiary, corporation, partners or individuals meet the requirements set forth in Sections 20.B. or 20.C. above. In the event of an assignment to a Permitted Mortgagee resulting from a deed in lieu of foreclosure or foreclosure proceedings, Permitted Mortgagee may execute the instruments required by Sections 20.B. or 20.C. immediately prior to the time of the foreclosure or transfer in lieu of foreclosure.
E. If any assignment is made as described in this Section, City agrees to join in a written instrument relieving Lessee from any further obligations under the Lease from and after the date of such assignment, provided that the transferee agrees to assume all of Lessee's obligations under the Lease from and after the effective date of such assignment.
F. Lessee may sublease or license any portion of the Subsurface Space without approval by the City. Lessee will provide notice of any such sublease or license to the City prior to the effective date of such sublease or license; provided, however, Lessee shall not be obligated to provide notice of rental of parking spaces.
22. Liens. Lessee shall keep the Subsurface Space free from all liens, including mechanics liens, arising from any act or omission of Lessee or those claiming under Lessee. Lessee shall pay as due all claims for work done, for services rendered or material furnished to the Premises at its request. If Lessee fails to pay any claims or to discharge any lien, City may do so and collect all costs of discharge, including its reasonable attorney’s fees. Such action by City shall not constitute a waiver of any right or remedy City may have on account of Lessee’s default. Lessee may withhold payment of any claim in connection with a good faith dispute over the obligation to pay, so long as City’s property interests are not jeopardized. If a lien is filed as a result of nonpayment, Lessee shall, within ten (10) days after knowledge of filing, provide City with an executed copy of a discharge of the lien, or deposit with City cash or a sufficient corporate surety bond or other security satisfactory to City in an amount sufficient to discharge the lien plus any costs, attorney’s fees or other charges that could accrue as a result of any foreclosure sale or sale under the lien.
23. Modifications for Permitted Mortgagees. If any Permitted Mortgagee shall require any modification(s) of this Subsurface Lease, City shall, at Lessee's request, promptly execute and deliver to Lessee such instruments effecting such modification(s) as Lessee shall require, provided that such modifications do not adversely affect in any material respect any of City's rights under this Subsurface Lease.
24. Notices. All notices or other communications required to be given by this Subsurface Lease shall be in writing and shall be effective three (3) days after deposited as registered or certified mail, postage prepaid, return receipt requested directed to the following addresses or to such other addresses as the City, Lessee or their assigns may specify by notice to the others from time-to-time.
To City: City of Portland - Right-of-Way Acquisition
1120 S.W. Fifth Avenue, Room 800
Portland, Oregon 97204
To Lessee:
25. Unavoidable Delay. Each party hereto shall be excused from performing any of its obligations or undertakings provided in this Subsurface Lease (except any of its obligations to pay any sums of money under the applicable provisions hereof) for so long as the performance of such obligation is prevented or delayed by any cause which is beyond the control of such party, including but not limited to such of the following: Acts of God; acts of the other party; fire; earthquake; flood; explosion; action of the elements; war; invasion; insurrection; riot; mob violence; sabotage; malicious mischief; inability to procure or general shortage or rationing or regulation of labor, equipment, facilities, sources of energy (including, without limitation, electricity, gas, gasoline or steam), materials or supplies in the open market; failure of transportation; strikes; lockouts; action of labor unions; condemnation; requisition; or order of government or civil or military or naval authorities; or any other cause, whether similar or dissimilar to the foregoing, not within the control of such party; provided, however, that no party shall be entitled to relief under this Section by reason of any event unless such party shall have given the other parties notice of such event and the nature of such event within a reasonable time after the occurrence of such event.
26. Estoppel Certificates.
A. Each party agrees that at any time and from time to time at reasonable intervals, within fifteen (15) days after request by the other party, it will execute, and deliver to the requesting party, or to any prospective Permitted Mortgagee, assignee or subLessee, designated by such requesting party, a certificate stating (i) that this Subsurface Lease is unmodified and in force and effect (or if there have been modifications, that this Subsurface Lease is in force and effect as modified, and identifying the modification agreements, or if this Subsurface Lease is not in force and effect the certificate shall so state); (ii) whether or not there is any existing default by the requesting party in the performance of any of its obligations under this Subsurface Lease and whether or not there is any other existing default by either party under this Subsurface Lease with respect to which notice of default has been served, and if there is any such default, specifying the nature and extent thereof; and (iii) whether or not there are any setoffs, defenses or counterclaims against enforcement of the obligations of the requesting party. In the event that an estoppel certificate request is broader than what is provided for herein, then deadlines contained in this Section will be extended to thirty (30) days.
B. Before the expiration or termination of this Subsurface Lease, title to the Improvements and equipment and any other property of Lessee from time to time located in the Subsurface Space shall not vest in the City by reason of its property interest in the public right-of-way but title to such improvements shall remain in Lessee. If this Subsurface Lease terminates before the expiration of the term hereof, and if, at that time any Interested Parties shall exercise its option to obtain a new lease of the remainder of the term of this Subsurface Lease, then title to the improvements shall automatically pass to, vest in and belong to such Interested Parties or any successor to or purchaser of any Interested Parties’ interest permitted hereunder, until the expiration or sooner termination of the term of such new lease. The City and Lessee covenant that to confirm the automatic vesting of title as provided in this Section, each will execute and deliver such further assurances and instruments of assignment and conveyance as reasonably may be required by the other or by Interested Parties for that purpose.
27. General.
A. Headings. Any titles of the several parts and sections of this Subsurface Lease are inserted for convenience of reference only and shall be disregarded in constructing or interpreting any of its provisions.
B. Partial Invalidity. Any section of this lease which shall prove to be invalid, void, or illegal shall in no way affect, impair, or invalidate any other section of the Subsurface Lease and other sections shall remain in full force and effect.
C. Waivers. No waiver made by either party with respect to the performance, or manner or time thereof of any obligation of the other party or any condition of its own obligation under this Subsurface Lease shall be considered a waiver of any rights of the party making the waiver with respect to the particular obligation of the other party or condition of its own obligation beyond those expressly waived and to the extent thereof, or a waiver in any respect in regard to any other rights of the party making the waiver or any other obligations of the party. No waiver by the Lessee or the City of any provision of this Subsurface Lease or any breach thereof, shall be of any force and effect unless in writing and no such waiver shall be construed to be a continuing waiver.
D. Attorneys Fees. In the event of suit to construe or enforce a provision of this Subsurface Lease the losing party shall pay the prevailing party's reasonable attorney's fees and costs including those incurred in the course of appeal.
E. Choice of Law. This Subsurface Lease shall be interpreted, construed, and enforced in accordance with, and governed by, the laws of the State of Oregon without regard to any conflict of laws provisions that would require the application of the law of any other jurisdiction.
F. Consent of City. Whenever consent, approval or direction by City is required under the terms contained herein, all such consent, approval or direction shall be in writing from the City Engineer, Office of Transportation and such approval, consent or direction shall not unreasonably be withheld or delayed.
G. Recordation. A short form memorandum of lease will be recorded in lieu of recording the Subsurface Lease in its entirety, with a copy of said memorandum of lease to be provided to the Office of the County Assessor by City.
H. Time of Essence. Time is of the essence of this Subsurface Lease. All obligations of the Lessee and the City to each other shall be due at the date specified by this Subsurface Lease.
I. Americans With Disabilities Compliance. Lessee shall comply, at Lessee’s sole expense, with all applicable sections of the Americans With Disabilities Act of 1990 (ADA), as it may be amended, including any duty the ADA may impose on City or Lessee as a result of Lessee’s use, occupation, or alteration of the Premises.
J. Calculation of Time. If the time for execution or completion of any action required in this Subsurface Lease falls on a Saturday, Sunday or holiday, the period shall be extended to include the next day that is not a Saturday, Sunday or holiday.
K. Construction. In construing this Subsurface Lease, if the context so requires, the singular pronoun shall be taken to mean and include the plural, and the masculine shall include the feminine and the neuter. All provisions of this Subsurface Lease have been negotiated at arms length, and this Subsurface Lease shall not be construed for or against any Party by reason of the authorship or alleged authorship of any provision of this Subsurface Lease.
L. Entire Agreement. This Subsurface Lease and the attachments hereto are the entire agreement between the parties and there is no other oral or written agreement between the parties with regard to this subject matter.
M. Modifications. Any modifications to this Subsurface Lease shall be made in writing executed by both parties, and approved by ordinance of the City Council if required.
N. Place of Enforcement. Any action or suit to enforce or construe any provision of this Subsurface Lease by any party shall be brought in the Circuit Court of the State of Oregon for Multnomah County, or the United States District Court for the District of Oregon.
O. No Partnership. Neither anything in this Subsurface Lease contained nor any acts of the parties hereto shall be deemed or construed by the parties hereto, or any of them, or any third person, to create the relationship of principal and agent, or of partnership, or of joint venture, or of any association between any of the parties to this Subsurface Lease, other than City and Lessee.
P. Non Waiver of Governmental Rights. Subject to the terms and conditions of this Subsurface Lease, by making this Subsurface Lease the City is specifically not obligating itself or any other agency with respect to any discretionary action relating to development or operation of the improvements to be constructed on the blocks or the street property, including, but not limited to, re-zonings, variances, environmental clearances or any other governmental agency approvals or permits which are or may be required. The City specifically reserves all of its rights to exercise its police power for the benefit of the public, including, but not limited to, its right to enter, inspect, or order the Subsurface Space vacated, for the public health, safety or welfare. In the event that the Subsurface Space becomes unavailable to Lessee under this provision for thirty consecutive days, or more, through no fault of Lessee, then rent shall be abated for that period time and said amount shall be credited to rents due the following year, except that rent abated for the final year of the lease shall be refunded to Lessee no later than sixty (60) days after the lease has terminated. This Section grants to the City no greater or lesser rights than City has by virtue of its municipality status.
Q. Non Exclusive Remedies. The rights and remedies expressly afforded under the provisions of this Subsurface Lease shall not be deemed exclusive, except where otherwise indicated, and shall be in addition to and cumulative with any and all rights otherwise available at law or in equity, and the exercise by either party of any one or more of such remedies shall not preclude the exercise by it, at the same or different times, of any other such remedies for the same default or breach or of any of its remedies for any other default or breach by the other party.
IN WITNESS WHEREOF, ________________, a corporation duly organized and incorporated under the laws of the State of __________, has caused these presents to be signed below, this _________ day of , 200__.
[Corporation Name Here]
By: _____________________________
Its: _____________________________
STATE OF OREGON )
) ss.
County of Multnomah )
This foregoing instrument was acknowledged before me on this ____ day of __________________, 2004, by , who is ________________ of __________________, a corporation duly organized under the laws the state of __________.
Notary Public for Oregon
My Commission expires
CITY OF PORTLAND
By:
Sam Adams
Commissioner of Public Utilities
By:
Gary Blackmer
Auditor
STATE OF OREGON )
)
County of Multnomah )
Personally appeared Sam Adams, who being duly sworn, did say that he is the Commissioner of Public Utilities of the City of Portland, a municipal corporation, and that said instrument was signed in behalf of said corporation by authority of its City Council and acknowledged said instrument to be its voluntary act and deed.
Before me
Notary Public for Oregon
My Commission expires
STATE OF OREGON )
)
County of Multnomah )
Personally appeared Gary Blackmer, who being duly sworn, did say that he is the Auditor of the City of Portland, a municipal corporation, and that said instrument was signed in behalf of said corporation by authority of its City Council and acknowledged said instrument to be its voluntary act and deed.
Before me
Notary Public for Oregon
My Commission expires
Approved as to form:
City Attorney
Approved:
City Engineer