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HomeMy WebLinkAbout4705 RESOWTION NO. 4 7 0 5 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF AUBURN, WASHINGTON, AUTHORIZING THE MAYOR AND CITY CLERK TO NEGOTIATE AND EXECUTE A CONTRACT WITH WAL-MART FOR SETTLEMENT OF THE PENDING CONTRACT DISPUTE UTIGATION AND CODE ENFORCEMENT ACTION WHEREAS, the City of Auburn is engaged in various municipal functions, including land use and zoning regulation enforcement; and WHEREAS, in connection therewith, pursuant to Auburn Resolution No. 4080, passed and signed in 2006, the City entered into a Development Agreement between the City of Aubum, Glimcher SuperMall Venture, LLC, Glimcher Development Corporation and Wa1-Mart Stores Inc., for development of the new Wal-Mart Superstore in Auburn; and WHEREAS, in the Development Agreement, the City gave certain concessions in exchange for certain perFormance measures related to the use and re-development of the former Wal-Mart site in Auburn; and - WHEREAS, a dispute arose in connection with the performance measures, prompting the City to commence litigation to seek compliance with the performance measures of the Development Agreement and to initiate code enforcement actions related thereto; and WHEREAS, following the commencement of litigation and initiation of the code enforcement actions, Wa1-Mart approached the City to seek resolution of the matters in dispute; and WHEREAS, following negotiation between representatives of the City and Wal- ' Mart, terms were identified that would address the contract terms that were of concern Resolution No. 4705 April 18, 2011 Page 1 of 2 by the- City, so as to settle the pending litigation and assuage the need for continuation . of the code enforcement actions. . NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF AUBURN, WASHI,NGTON, HEREBY RESOLVES as follows: Sectiort 1. That the Mayor is authorized to negotiate a Settlement Agreement. with Wal-Mart Stores Inc., consistent with the term sheet attached herefo, marked as Exhibit "A" and incorporated herein by this reference, and the Mayor and the City Clerk are authorized to execute such agreement as negotiated . consistent with said parameters. Section 2. That the Mayor is authorized to implement such administrative procedures as may be necessary to carry out the directives of this legislation. Section 3. That this Resolution shall take effect and be in full force upon passage and signatures hereon. % Dated and Signed this ~ day of ` , 2011. CI OF AU . _f PETER B. LE S, MAYOR ATTEST: Dan' le E. Daskam, City Clerk ~ AP ~ E R : Daniel B. Heid, City Attomey Resolution No. 4705 April 18, 2011 Page 2 of 2 EXHIBIT "A" Settlement Terms for Lawsuit/Code Enforcement Action Ci_ty of Auburn V. Wal-Mart Stores, Inc. - This is a list of proposed, terms for settlement of the pending litigation and zoning enforcement matter between the City of Auburn, Washington (the "City") and Wal-Mart Stores, Inc. ("Wa1-Mart"). These terms would be embodied in a Settlement Agreement between the parties (the "Agreement"). The parties desire to establish a new and more . eomplete understanding as to the disposition of the former Wal-Mart store site in Auburn (the "Former Site") and the building located thereon (the "Existing Building"). 1. Performance Terms. a. Glimcher, Black `Equity Group (BEG) and Hawkins Edwards, Inc. (HE) are all approved developers for the Former Site. o , b. The Due Diligence period for Black Equity Group (BEG) under its existing purchase and sale agreement for the Former Site expires on June 10, 2011. This Due Diligence period shall not be further extended beyond that date; without the prior written consent of the City. c. If BEG proceeds to closing following due diligence, Wal-Mart will obtain BEG's formal joinder in the requirements ofthe Agreement. d. If BEG proceeds to closing following due diligence, then the transaction will close on or. about July 10, 2011. Wal-Mart may grant limited extensions of this closing date, but will not extend such closing date beyond July 31, 2011, without the prior written consent of the City. e. Not later than July 31, 2011, Wal-Mart will provide the City with one of the following: (i) a copy of the recorded deecl for the BEG transaction, evidencing the sale of the Former Site to BEG; or (ii) notice that Wal-Mart has executed a purchase and sale agreement for the Former Site with HE or with Glimcher, together witli written conf rmation from that party it agrees to abide by .the terms of the Agreement; or (iii) notice that Wal- Mart desires to execute a purchase and sale agreement for the Former Site with a developer other than HE or Glimcher (such proposed developer being subject thereafter to the approval process set forth in Section 4 , below), together with written confirmation from such proposed developer that it will agree to abide by the terms of the Agreement; or (iv) notice that Wal-Mart will proceed itself to re-tenant the Existing Building on the scfiedule set forth in the Agreement: For the purposes of option (iv) above, the City approves Wal-Mart as the party responsible for re-use of the Former Site under the Agreement. If Wal Mart elects (iv), Wal-Mart may April 18, 2011 ' Page 1 of 5 thereafter seek approval to bring a developer into the transaction, subject to the City's approval of the Developer under Section 4 below. f. If BEG does not close and Wal-Mart enters into a purchase and sale agreement with another developer, Wal-Mart shall, as a condition of the purchase and sale agreement, require the developer/purchaser to comply with the terms and conditions of this Agreement, as a co-obligor with Wal-Mart to ensure compliance with all of the conditions of this Agreement. g. Not later than October 27, 2011, Wal-Mart and/or the Developer shall provide the City with Letters of Intent from one or more tenants for the Former Site. Within ten working days of receiving notice of the identity of the tenants, the City shall provide written notice to Wal-Mart arid/or the Developer of the acceptability of the proposed tenants, which approval shall not be unreasonably withheld. Wa1-Mart shall remain in compliance as long as such Letter(s) of Intent remain in force and Wal-Mart and such tenant(s) proceed to a lease or sale relating to the Former Site. h. If Wa1-Mart does not provide the City with such Letter(s) of Intent by October 27, 2011 (as that date may be extended, as set forth below), Wal- Mart shall nevertheless continue to market the Former Site to prospective tenants. i. Final compliance by Wal-Mart will be achieved as set forth below. 2. Former Site Re-use Options. Wal-Mart and/or the Developer may elect one of the following re-use options for the Former Site, wluch election may change from time to time: a. Re-tenanting the Existine BuildinR (130,000 s.f. gross building area). This option contemplates re-use of the Existing Building with no more than minor reconstruction and without retail pads or outparcels. Final compliance by Wal-Mart will be achieved upon leasing the Existing Building to one or more tenants, or as set forth below. b. Reconstruction and Re-tenanting the_ExistinQ Building (minimum 120,000 s.f. gross building area). In working with City-approved tenants for the Former Site, Wa1-Mart or the approved tenants may determine that the needs of those tenarits will be best served by demolishing and rebuilding all of.the Existing B,uilding (the "Reconstructed Building"). In such event, following demolition.and reconstruction of all of the Existing Building; the re-tenanting of the Former Site shall include an aggregate gross building area of at least 120,000 s.f for at least two such approved tenants , and no retail pads or outpazcels shall be required. Final compliance by April 18, 2011 Page 2 of 5 Wal-Mart will be achieved upon leasing 120,000 s.f, gross building area in the Reconstructed Building to two or more tenants, or as set forth below. c. Site Redevelopment (minimum 100,000 s.f, gross building area): Alternatively, Wal-Mart and/or the Deyeloper may demolish the Existing Building and redevelop the Former Site with some combination of retail buildings, including at least two retail pads, with an aggregate gross building area of at least 100,000 s.f. :(the "Redeveloped Site"). Final compliance by Wal-Mart will be achieved upon leasing 1 00,000 s.f. gross building area in the Redeveloped Sife to.multiple tenants, or as set forth below. d. If Wal-Mart elects to use Options a or b, above, then the Tenant or Tenants shall be acceptable to the City, including tenants no less desirable to the City than the existing SuperMall Anchor Tenants. 3. Marketiniz. The parties will cooperate in marketing the Former Site to prospective tenants. Wal-Mart (or the Developer) will identify to the City those tenants which, from time to time, ` are prospects for leases at the Former Site (the "Tenant Prospects"). The City will reasonably cooperate, as requested by Wal-Mart, in, marketing communications to the Tenant Prospects. If independently eontacted by a Tenant Prospect, the City shall be entitled to advise such party of the functional aspects of the development process in the City of Auburn. The City shall notify Wal-Mart of any contacts with a Tenant Prospect. In addition, the City will inform Wal-Mart of retail tenants of which the City becomes aware that have an interest in locating in Auburn. Other than as requested by Wa1-Mart, the City will not independently contact the Tenant Prospects or support efforts by others to locate any Tenant Prospect at a site in Auburn other than the Former Site, until any such Tenant Prospect is no longer considering the Former Site for leasing. 4. Developer Approval. If Wa1-Mart desires to seek the City's approval of a developer of the Former Site, Wal-Mart shall submit such request in writing to the City. As part of the request, Wal-Mart sha11 attempt to obtain for the City from the proposed developer the information listed in Attachment A(attached). If Wal- Mart cannot provide the information listed in Attachment A because the proposed developer is unwilling to provide such information, Wal-Mart shall so advise the City. The City shall respond within ten working days as to whether the proposed developer is approved, or whether the City requests additional information regazding the proposed developer. If additional information is requested, the City shall respond within ten working days of the submittal of such additional information. 5. Extensions. No extension of these dates shall be permitted without separate written approval by the City, and no extensions will be granted unless the City receives from Wal-Mart andlor the Developer evidence reasonably satisfactory to the City of substantial progress in meeting the requirements of the Agreement. If April 18, 2011 Page 3 of 5 Wal-Mart desires an extension of any performance date, it will request such extension in writing at least 10 working days before the performance date in question (except in cases of emergency, when such notice as is possible shall be given), including the reasons for the extension and a description of the substantial progress made towazd compliance to that date. In addition, Wal-Mart may reguest to meet with the City regarding any such written request for extension. The Mayor is authorized to approve extensions for reasonable durations, based on a showing by Wal-Mart of substantial progress towazd compliance, which showing sfiall be acceptable to the City. "Substantial progress" means that Wal-Mart has made consistent, commercially-reasonable efforts toward compliance and has satisfied prior compliance dates (unless extensions of those dates were previously approved), and that achievement of the subject compliance date is not reasonably possible because Wa1-Mart is awaiting actions or determinations by other parfies. 6. Liquidated Damages. If Wal-Mart (and/or the Developer) has not fully complied with the performance measures 1(b) through 1(h) above by October 27, 2011, Wal-Mart (and/or the Developer) shall pay to the City thereafter (i) the sum of $50,000 as a one-time liquidated damages payment, and (ii) the sum of $10,000 per month for so long as such liquidated damages remain in force. The liquidated damages shall not be due or payable during the time when Wal-Mart achieves compliance with the performance measures under Sections 1 and 2 above, and shall be reinstated during such time as Wa1-Mart thereafter falls out of compliance (if at all). In addition, the liquidated- damages may otherwise be suspended if agreed to by the City. If liquidated damages are due hereunder, Wal-Mart shall make such 'payments timely, or in the alternative, may establish an assigned account with the City in an amount not less than $40,000 (representing four monthly payments of $10,000 each), with direction that the City may withdraw funds from such account to satisfy the liquida.ted damages obligation under the Agreement. Wal-Mart shall replenish the account on a quarterly basis to ensure the account has a total of $40,000. Payment of liquidated damages shall constitute compliance with the terms of the Agreement. Alternatively, so long as Wal-Mart meets fifty-percent of the square footage requirements of the former site re-use option of Section 2 being used by Wal-Mart (e.g., letters of intent for 65,000 s.f. for option (a), 60,000 s.f. for option (b) and 50,000 s.f. for option (c)) and Wa1- Mart is otherwise making substantial progress towazd compliance with the - remaining square footage requirements (with the substantial progress toward compliance being acceptable to the,City), liquidated damages shall not be due hereunder. Review and acceptability of the substantial progress toward compliance, and notices of deficiencies (if any) and opportunities to cure, shall be made by the City on a quarterly basis. 7. Building Demolition. If after 18 months of payment of liquidated damages under Section 6, the Existing Building has not been re=tenanted, then Wal-Mart at its option may give notice to the City that it will proceed to demolish the Existing Building (the "Demolition Notice"). Wa1-Mart will file an application for demolition of the Existing Building within 30 days of the date of the Demolition April 18, 2011 Page 4 of 5 ~ Notice and will commence demolition of the Existing Building within 90 days of the issuance of the demolition' permit. The li_quidated damages under Section 6 shall terminate as of the date of tYie Demolition Notice, and Wal-Mart's obligations under the Agreement shall terminate upon completion of demolition of the Existing Building and payment by Wal-Mart to the City of the additional sum of $100,000. 8. Standstill and Dismissal. Pending the drafting and execution of the Agreement incorporating these terms, the City shall continue to stay any action in its lawsuit - pending in King County Superior Court and in its.code enforcement action.-Upon execution of the Agreement, the City shall dismiss its lawsuit and shall withdraw its code enforcement action, both without prejudice. The purpose of the settlement is to avoid litigation, and neither party admits any liability or violation under the 2006 Development Expansion Agreement, the Code, or otherwise. 9. Wa1-Mart's Optional Sale to a Developer. As an alfernative to the performance and compliance provisions of this Agreement, Wal-Mart may, at any time, sell the Former Site to a"Qualified Developer." A"Qualified Developer" shall be a developer approved by the City with a development plan (including development ' assurances and a development time-table) acceptable to the City. Upon sale of the Former Site to a Qualified Developer, Wa1-Mart and the Qualified Developer shall be relieved from any liquidated damages or further obligations under the Agreement or its predecessor contract(s). , 10. Boilerplate Provisions. The Agreement shall include terms acceptable to the parties, including boilerplate provisions similar to those in the 2006 Development Expansion Agreement. 11. Confidentialitv. During negotiations and pending the execution of the Agreement, the parties shall maintain the. substance of these settlement discussions in confidence. The parties may indicate that settlement discussions are in process and that actions under the lawsuit and enforcement matter are stayed pending a final agreement. . 12: Modifications or Amendments. This Settlement Agreement or any of its terms may be modified or amended upon agreement of the parties. April 18, 2011 Page 5 of 5 QDRAFT Attachment "A" ' Far infarmation purposes only, the following is the mintmum information that the City wauld have , expeated to receive for Black Equities Group and Hawkins Edwartls: 1: The names, addresses, teiephone numbers, e-mail and fax numbers of each principal, partner, and/or co-venturer•participating on #he developer's team and the name of the representative authorized #o act on behaif of the ieam. ' 2. Identification of any affiliation or o#her relationship between any of developer's team members and any development company, parent company, or subsidiary. 3. A description of the developer's status (whether a corpara.tion, a nonprofit or charitable institufion, a partnership, a limited 6ability company, a 6usiness association, or a joint venture) mdicating jurisdicfian underwhose law devetoper is organized and operating, and a briefi History of devetopei's organ'►zation and its princapals, 4: Date and location of establishmerrt and the date of incorporatian or formation under the , present name. 5. Whefher the developer - or any financial or other equity partner it may bring in - has ever been terminated for defaulf, noncompliance, or non-performance on a contract or lease. Provide a defafled deseripfton; and whether the developer or partner have been within the pa5t ten (10) years, in Jitiga#ion, arbitration, or have had any judgmerrts against the develaper or par[ner. - 6. Deta'iletl demonstration af experience in ptanning, developtng, owning and managing commercial refail develapment projec#s of similar size, scope and.nafure. 7. If the devetoper proposes to team ot otherwise bring in addfianal partners, provide an brganization chart idenfifying atl partners and their respective roles. For each par#ner, provide a s#atement of it5 ezperience, bactcground and pertinent accomplishments. in parEiculat; highlighted refenence shoulti be made to any Wistory af woric with retievelopment of exisiing big box'retail sites. ~ ` 8: For the developer and any partners, provide three (3) to five (5) semple prajects, each with a minimum of 130,000 gross square feet of improvemerits: Each sample should indude: a. Project Name b. ` Project Size (acreage, SF, FAR) and Total Development Costs c. Praject Location d. Project Completian Date e. Project Owner Name f._ Project Description g. A brief narrafive that describes the deve}oper's s ro[e on the project addresses how the - developer's experience is applicabie to the r+edevelopmertt of the original Wal-Mart site/structure in Aubum, WA; and addresses haw the Aubum oommunity wiil benefrt from - said experience. . 9. Three (3) business references in,the fotm of name, title; phone number and email address . 10. Key personnel for developer and any partners. Key personnel are defined as those individuals, empioyed ar contraded by the developer, and who are to be directly engaged in the management, design plannmg and execution of the redevelopment of the original Wal- Marf sitelsfructure in Auburn, WA. Submittal requirements are as follows: a. A resume far each individual oonsidered Key Personnei. b. A past perfoi-mance mafrix that identifies which Key Personnei have werked on the submitted sample projects: c. A paragraph for each Key Personnel describing the indiViduaPs role on projects submitted as sampte projects. 11. INritten evidence thai the devefoper has the finanaal, capability and institutional relationships necessary to oommit equity+ and obtain fnancing#or the redeve(opment of the original Wal- , Mart site/structure in Aubum, WA, and the ability to manage the variable cash flow assaciated with such a project: Submittal requirements are as follows: a. Evidence of strong financial standing b. Demonstrated net worth c. Pian for financing the develnpment d. CapabiC~ty to obtain financing e. Sources and amounts of cash availa6le to meet equity requirements of the proposed undertaking . f. Abi(ity to manage variable cash flows associated with such a project ~ ` g. Financial Stafemen#s for past two (2) years - should haVe been prepared in accordance with Generally Accepfed Accounfing Prinap[es (GAAP) and financial suditor should be -an independenf, well-recognized fitm in the accourrting industry. . h. Two <xedit references from financing firms and/or oc underwriters identifying and acknowledging theicconfidence in the credit quality afthe developer. 12. Project financial data showing: a. Estimated total,development,costs - h. Proposed saurces and uses c: Any associated phasing or property take dawn assumptions d. Financing assumptions to include: all-in cflst of debt, anticipated lender's required coverage ratio, and the ability to replace construcfion (ending with permanent fmancing upon stabil'ization e. Developer's equity contributions and intemal rate of [etum (tRR) for each phase of the project. , SETTLEMENT AGREEMENT This Settlement Agreement is made as of this day of June, 2011, between tlie Cify of Auburn, a Washington municipal corporation (the "City") and Wal-Mart Stores Inc., a Delaware corporation and Wal-Mart Re_alty Company (collectively, "Wal- Mart" - Whereas, Wal-Mart and Ciry entered into an agreement on or about October 26, 2006 (the "2006 AgreemenY'), to promote, the successful re-use and/or redevelopment of ~ the then-existing Wal-Mart store property in the City of Auburn (the "Former Site"); and Whereas, Wal-Mart entered into an agreement with Glimcher Development ("Glimcher") dated on or about August 21, 2006, which gave Glimcher the right to purcliase the Former Site after Wal-Mart ceased operations at the discount store (the "Existirig Building") at the Former Site; and Whereas; mazketing and economic conditions and retail-tenant growth have _ ch_anged significantly since Wal-Mart entered into the above-mentioned agreements with ttie City and Glimcher, sucH that retail vacancy rates have tripled in the City since the end of 2006, and increased six-fold during the past 5 years in, the greater. Puget Sound region; and Whereas, following Wa1-1Vlart's cessation of operations in the Existing Building in late 2010, Glimcher declined its option to purchase the Former Site in January 2011; and Whereas, the City and Wal-Mart recognize their strong common interest in providing for the re-use and/or redevelopment of the Former Site and the need to amend the 2006 Agreement to allow for the current mazket conditions; and Whereas, the CiTy and Wal-Mart recognize that an amended agreement will continue to provide opportunity for positive redevelopment of the Rroperty, for the good of the parties and of the City of Auburn as a whole; and Whereas, the City and Wal-Mart are parties to that certain lawsuit entitled City of Auburn:v. Wal-Mart Stores, Inc., King County Superior Court Cause No. 11-2-11747-2 KNT (the "Litigation"); and . Whereas, in the mutual. spirit of cooperation, the parties now wish to formalize a more detailed process for the re=tenanting; redevelopment and/or re-use of the Former Page 1 of 14 Site and the Existing Building, and to incorporafe it into this Agreement for the purpose of settling the Litigation; and Whereas, the parties intend that this Agreement supersede the 2006 Agreement and provide for the re-tenanting, redevelopment and/or re-use of the Former Site and the _ Existing Building either by Wal-Mart or by an "Approved Developer" (as that term is defined below). NOW THEREFORE, the parties agree as followsr 1. Performance Terms. This Section 1 sets forth the process and timetable for performance by Wal-Mart under this Agreement. Section 2 below' identifies the alternative re-use options that may be used by Wal-Mart in its performance under this Section l. Sections 7 and: 8 below set forth substitute methods of compliance by Wa1- Mart that are in alternative to the provisions of Sections 1 and 2. 1.1 Performance under BRG Proverties, LLC Agreement. The Former Site of the Auburn, Washington Wa1-Mart Store, located at 1425 SuperMall Way, Auburn, Washington (the "Former Site), is presently under contract for sale to BRG Properties, LLG (BRG) (an affiliate of Black Equities Group), under a purchase and sale agreement dated January 24, 2011 (fhe "BRG'PSA"). a. The due diligence contingency period. for BRG under the BRG PSA expires on June 10, 2011. This due diligence contingency period shall not be further extended beyond June 10, 2011, without the prior written . consent of the City. b. If BRG proceeds to closing following the end of the due diligence contingency period, then the transaction is scheduled to close on or about July 11, 2011. Wal-Martmay grant BRG extensions of this closing date, but will not extend such closing date beyond July 31, 2011, without the prior written consent of the City. Prior written consent for such extension shall' be requested of the City not less than forty-eight (48) hours prior to the date specified herein: Prior-to such closirig, Wal-Mart sha11 obtain BRG's formal joinder in the requirements of this Agreement, and shall provide the City witli written evidence of said joinder. Upon . such closing, Wal-Mart will provide the City with a copy of the recorded deed for the BRG transaction, evidencing the sale of the Former Site to BRG. 1.2 Performance under Ageement with _Another Approved Developer. If BRG does not close on the purchase of the Former Site,I then Wa1-Mart ma.y undertake performance with another Approved Developer (including another Black Equities affiliate), or by itself. Page 2 of 14 a. If BRG does not close on the purcliase of the Former Site, then not later than July 31, 2011, Wal-Mart will provide the City with one of the following: (i) written notice that Wal-Mart has executed a purchase and sale agreement for the Former Site with Hawkins Edwards, Inc. (HE) or with Glimcher Development Corporation (Glimcher), together with written confirmation from that party it agrees to abide by the terms of this Agreemerit if it closes on the purchase of the Former Site; or (ii) written . notice that Wal-Mart desires to execute a purchase and sale agreement for ' the Former Site with a developer other than HE or Glimcher (such , proposed developer being subject thereafter to the approval process set _ forth in Section 4 below), together with written confirmation from such proposed developer that it will agree to abide by the terms of this Agreement if it closes on the purchase of the Former Site; or (iii) written notice that Wal-Mart will underta.ke performance of this Agreement . without an Approved Developer. For the purposes of option (iii) above, the City hereby approves Wal-Mart as the party responsible for re-use of = the Former Site under the Agreement. If Wal-Mart.elects option (iii), Wal- Mart Mart may still thereafter seek designation of an Approved Developer, • - subject to the City's approval of the developer under Section 4 below. b. If BRG does not close on the purchase of the Former Site and Wal-Mart enters' into a purchase and sale agreement with, another Approved Developer, Wal-Mart " shall, as a condition. of the purchase and sale agreement, require the developer/purchaser to comply with the terms and conditions of this Agreement, as a co=obligor with Wal-Mart to ensure . compliance-with a11 of the conditions of this'Agreement. 1.3 Letters of Intent. - a. Not later than October 27, 2011, Wal-Mart and/or the Approved Developer (if any) shall provide the City with Letters of Intent from one or more tenants for the Former Site under one of the Former Site Re-use Options identified in Section 2 below. If Wal-Mart intends to proceed with Option 1 or Option 2. under Section 2 beTow, then within ten (10) business days, of receiving notice of the identity of the tenant(s), the City sha11 provide notice to Wal-Mart and/or the Approved Developer (if any) of the acceptability of the proposed tenant(s), which approval shall not be unreasonably withheld. Wal-Mart and/or the Approved Developer (if any) , sha11 remain in compliance under this .Agreement as long as such Letter(s) of Intent remain in force and Wa1-Mart and such tenant(s) proceed to a lease or sale relating to the Former Site. b. If Wal-Mart does not provide the City with such Letter(s) of Intent by October 27, 2011 (as that date may be extended, as set forth below), Wal- Mart sha11 nevertheless continue to market the Former Site to prospective tenants. Page 3 of 14 1:4 References to Wa1=Mart in this Agreement sha11 also include an Approved Deyeloper, if one exists. Ferformance of the terms of this Agreement by an Approved Developer, shall coristitute performance by Wal-Mart; and vice-versa. 2. Former Site Re-use Options. Wal-Mart andlor the Approved Developer (if any) shall pursue one of the following re-use options for the Former Site (each, a . "Former Site Re-use Qption"). Wal-Mart shall notify the City which Former Site Re-use Option it is pursuing, upon request of the City or if Wa1-Mart elects to pursue a new Former Site Re-use Option. 2.1. Option 1: Re-tenanting the Existing Building (Use of substantially all of - the Existing Building). This option contemplates re-use of the Existing Building with no more than minor reconstruction and without developinent of :retail pads or outparcels on the Former Site. Fina1 compliance with this Agreement by Wa1-Mart and/or the Approved Developer (if any) under Option 1 will be aclueved upon lease and/or sale : of the Existing Building to one or more tenants for a project utilizing substantially all of the Existing Building (which project includes leased premises, common areas, management areas and unused areas at the rear of the building, including areas for possible . future tenant expansion, though no such expansion is required); or as otherwise set forth in this Agreeinent. 2.2. Option 2: Reconstruction and Re-tenanting the Existing Building (minimum 120,000 s.f. gross building area). This option contemplates the demolition of the Existing Building and redevelopment of a new retail building generally on the footprint of the Existing Building (the "Reconstructed Buildirig") and without development of retail pads or outparcels on the Former Site. Final compliance with this Agreement by Wa1-Mart and/or the Approved Developer (if any) under Option 2 will be achieved upon lease and/or sale of the Reconstructed.Building to one or more tenants for a project utilizing 120,000 s.f.. of gross building area (which project includes leased piemises, common- areas, management areas and unused areas at the rear of the building, including areas for possible future teriant expansion, though no such expansion is required), or as otherwise set forth in this Agreement. 2:3 Option 3: Site Redevelopment (minimum 100,000 s.f. gross building area, including pads). . This option contemplates demolition of the Existing Building and redevelopment of a new retail center on the Former Site with some comb'ination of retail buildings, including at least two retail pads (the "Redeveloped Site"). Fina1 compliance with this Agreement by Wal-Mart and/or the Approved Developer (if any) under Option 3 will be achieved upon lease and/or sale of the Redeveloped Site to one or more tenants for a . Page 4 of 14 project utilizing 100,000 s.f. of gross` building area, or as otherwise set forth in this Agreement. 2.4 Approved Tenants: If Wal-Mart elects to use Option 1 or Option 2 above, . then the tenant or tenants to occupy the Former Site shall be acceptable to the City, as indicated in a written statement of acceptability issued by the City to Wal-Mart under Section 1.3(a) above. The group of acceptable tenants sha11 include tenants no less desirable to the City than the existing SuperMall Anchor Tenants, as well as other retail, family enterta.inment, lodging and commercial uses acceptable to the City. 2.5 Pernutting. T'he City acknowledges and agrees that the Former Site Re- Use Options described in this Section 2 cio not require any rezone of the Former Site, nor any amendment or modification to tHe SuperMall Zoning - Ordinances (including Ordinance No. 4627, as amerided by Ordinance Nos. 4649; 4704, 4742, 5001, 5002 and 5003), nor any further environmental review under SEPA; provided that if Wal-Mart or an Approved Developers seeks approval to exceed the respective square footage threshold for a Former Site Re-Use (or in the case of Option 1, to substantially exceed the footprint of the Existing Building), the City reserves the right to review such proposal under its zoning and SEPA authority. 3. Marketiris. The City and Wal-Mart will cooperate in marketing the Former Site to . prospective tenants. Wal-Mart will identify to the City those tenants which, from time to time, are prospects as users at the Foriner Site (the "Tenant Prospects"). The City will reasonably cooperate, as requested by Wa1-Mart, in marketing communications to the Tenant Prospects. If independently contacted by a Tenant Prospect, the City shall be entitled to advise such party of the functional aspects and benefits of the development process in the City of Auburn. The City shall endeavor to notify Wal-Mart of any contacts with a Tenant Prospect. In addition, the City shall endeavor to inform Wal Mart of retail tenants of which the City , becomes awaze that have an interest in locating in Auburn; so long as the City is not otherwise restricted by confidentiality or similaz agreements. Other than as requested by Wal-Mart, the City will' not independently contact the Tenant Prospects or support efforts by others to locate any Tenant Prospect, at a site in Aubum other than the Former Site, until any such Tenant Prospect is no 'longer considering the Former Site for use. 4. Developer Approval. Glimcher, BRG and HE are each designated as an Approved Developer 'for the Former Site. If Wal-Mart desires. to seek the designation of a. different Approved Developer for the Former Site, Wa1-Martshall submit such . request in writing to the City. As part of the request, Wal-Mart shall attempt to obtain for the City from the proposed developer the information listed in Attachment A, attached hereto. If Wal-Mart cannot provide the information listed in Attachment A because the proposed developer is unwilling to provide such Page 5 of 14 information, Wal-Mart shall so advise the City, and shall advise the City of information indicating what can be shared about the Developer to the extent that it does not unreasonably intrude-into the restrictions of the proposed developer who is unwilling to provide such infoimation. The Gity sha11 respond within ten (10) business days as to whethe"r-the proposed developer is approved, or whether the City requests additional information regarding the proposed developer. If additional information is requested, the City shall respond within ten (10) business days of the submittal of such additional information. 5. Extensions. No extension of the compliance dates in this Agreement shall be permitted without separate written approval by the City, and no extensions will be granted unless the City receives from Wal-Mart evidence reasonably satisfactory to the City of substantial progress in meeting the requiremerits of the Agreement. If Wal-Mart desires an extension of any performance date, it will request such extension in writing at least ten (10) business days before the performance date in " question (except in cases of emergency or immediately following execution of this Agreement, when such notice as is possible sha11 be given), including the reasons for the extension and a description of the substantial progress made toward complian ce to that date. In addition, Wal-Mart may request to meet with the City regazding any * such written request for extension. The Mayor is authorized to approve extensions for reasona.ble durations; based on a showing by Wal-Mart of substantial progress toward compliance, which showing shall be acceptable to the City. "Substantial progress" means that: (i) Wal-Mart has made consistent, commercially-reasonable efforts toward compliance; (ii) Wal-Mart has satisfied prior compliance dates (unless extensions of those dates were previously approved) or is otherwise in compliance under this Agreement; and (iii) achievement of the subject compliance date is not reasonably possible because Wal-Mart is awaiting actions or determinations by other parties. 6: Liquidated Damages: . 6.1 Performance Default Notice. If Wal-Mart has not fully complied with the performance measures under. Section 1 above by Qctober 27, 2011, as such da.te may be extended hereunder (or such later date. on which the City 'completes its review and disapproval, of tenants proposed by Wa1-Mart) (a "Performance Default"), the City shall give written notice of such Performance Default to Wal- Mart (the "Performance Default Notice"). 6.2 Liquidated Damages. Upon issuance of a.Performance Default Notice, Wal- Mart Mart shall pay to the Gity liquidated damages as follows: (i) the sum of $50,000, as a one-time liquidated damages payment, due on or before fourteen (14) days following receipt by Wal-Mart of the Performance Default Notice; and (ii) the sum of $10,000 pe"r month, beginning fourteen (14) calendar days following receipt by Wal-Mart of the Performance Default Notice, and continuing until Wal-Mart resumes compliance with the performanee measures under Section 1 above. Liquidated damages shall not be due or payable during the time when Wal- Page 6 of 14 Mart achieves compliance; with the performance measures under Sections 1 and 2 above, and shall be reinstated during such time as Wal-Mart thereafter falls out of compliance (if at all). In addition, the liquidated damages may otherwise be suspended if agreed to by the City. 63 Esta.blishment of PaYrrient Account. If liquidated damages are due hereunder, Wal-Mart shall make such payments timely, or in the alternatiye, may esta.blish an assigned account with the City in an amount not less than $40,000 at any time (representing four monthly payments of $10,000 each) (the "Payment Account"), with direction that the City.may withdraw funds from the Payment Account to satisfy any liquidated dainages due under this Agreement, During any period in which Wal-Mart is not in compliance with the Agreement and liquida.ted damages are due and payable, Wal-Mart shall replenish the Payment Aecount on a quarterly basis to ensure the account has a fotal of $40,000. Upon request by Wal-Mart, the City shall release to Wal-Mart any funds remaining in the Payment Account when Wal-Mart resumes compliance with the performance measures of Sections 1 and 2 above. 6.4 Payment Constitutes Compliance. . Payment of liquidated damages shall constitute compliance with the performance measures hereunder. 6.5 Partial Compliance. So long as Wal-Mart meets fifty-percent of the square footage requirements of the respective Former Site Re-use Option of Section 2 being used by Wal-Mart (e.g., letters of intent for 65,000 s:f. for Option 1, 60,000 s.f. for Option 2 and 50,000 s.f. for Option 3) and Wal-Mart is otherwise making substantial progress toward compliance with the remaining square footage requirements (with.the substantial progress toward compliance being acceptable to the City), liquidated damages shall not be due hereunder. Review and _ acceptability of the substantial progress toward compliance, and notices of deficiencies (if any) and opportunities to cure, shall be made by the City on a quarterly . basis. If any, information (or additional information) relating to substantial progress is requested by the City to aid the City in its determination . hereunder, Wal-Mart sha11 forthwith provide the same; unless such information is deemed by Wal-Mart to be proprietary or confidential. Wa1-Mart's election to withhold proprietary or confidential information hereunder shall not relieve Wal- Mart of the obligation to demonstrate substantial progress under this Section 6. : 7. Building Demolition. If, following the two-year anniversary of the Effective Date . of this Agreement, or payment by Wal-Mart of 18 months of liquidated damages under Section 6(if sooner), the Existing Building has not been re-tenanted, then Wal-Mart at its option may give writteri notice to the City that it will proceed to demolish the Existing Building (the "Demolition Notice"); provided that until the Existing Building is fully demolished, the terms of this Agreement shall remain in effect: Wal-Mart will file an application for demolition of the Existing Building within thirty (30) days of the date of the Demolition Notice and will commence demolition of the Existing Building withiri ninety (90) days of the issuance of the ~ Page 7 of 14 . demolition permit. Wa1-Mart's liquidated damages obligations under Section 6 _ - shall terminate as of tlie da.te of the Demolition Notice, and Wal-Mart's remaining obligations under this Agreement shall terminate uporn 'completion of demolition - of the Existing Building and payment by Wal-Mart to the City of an additional sum equa.l to (i) the amount necessary to bring the total of a11 monthly liquidated damages paid by Wal-Mart to $180,000, plus (ii) $100,000. 8. Wa1-Mart's Optional Sale to a Developer. .As an alternative to the performance ' _ and conipliance provisions of this Agreement, Wal-Mart may; at an y time; sell the ` Former Site to a"Qualified Developer" or otherwise enter into a venture with a "Qua.lifed Developer" for the redevelopment of the Former Site. A"Qualified - Developer" shall be a-developer approved by the City with a development plan (e.g., a scaled conceptual site development plan and conceptual elevation drawings for the Existing Building or new buildings, as proposed), development assurances (e.g:, a market-based construction, finance and tenanting plan) and a development time-table acceptable to the City. The development plan proposed. by the developer may rely on any one of the.Former Site Re-use Options set forth in Section 2 above, or may rely upon an new re-use option not identified in Section 2 above, subject to approval of tlie City. Upon sale of the Former Site to a Qualified Developer (or commencement of a venture with a Qualified Developer for the redevelopment of the Former Site), Wa1-Martand the Qualified Developer shall -be relieved from any liquidated damages or other obligations - under this Agreement. 9. Relationship to 2006 Agreement. From and after tlie date hereof, this' Agreement supersedes and replaces in its entirety.the 2006 Agreement. 10. Dismissal of Litipation arid Other Actions. Within five (5) business days of the Effective Date of this Agreement, the City shall sign and provide to counsel for Wal-Mart a Stipulation and Order of Dismissal without Prejudice for the Litigation, in the form attached hereto as Exhibit B, to be filed by Wal-Mart in King County Superior- Gourt. In addition, within five (5) business days of the Effective Date of this Agreement, the City sha11 formally withdraw the Notice to Correct and termina.te a11 proceedings associated therewith and provide Wal-Mart with written notice of such withdrawal. 11. Construction of Aueement. The rule of contract law holding that ambiguities are - to be construed against the drafter shall not apply to the interpretation or construction of this Agreement. 12. Compromise of Claims. The purpose of the settlement is to avoid litigation, and neither party admits any liability or violation under the 2006 Agreement, the Code, or otherwise..The Parties understand and. agree that this Agreement is the compromise of disputed claims and the execution and performance of this . Agreement does not constitute and shall not be construed as an admission of liability, fault, breach of contract or responsibility of any Party. Except with Page8of14 : respect to tlie Parties' right to enforce the terms . and obligations of this Agreement,, no Party's actions in settlement of this dispute sha11 be used against any Party in any future matter 13. Notices. Any notices required herein sha11 be in writing and shall be deemed to have been duly given 'if delivered personally, sent by nationally recognized overnight delivery service, or if mailed or deposited in.tlie United States mail and . sent by registered or certified mail, return receipt requested, postage prepaid to the parties at the addresses listed below: TO CITY: TO WAL-1VIART: Auburn Nlayor Jo Kaye Bandy 25 West.Main Street Wal-Mart Stores, Inc. Auburn, WA 98001 2001 SE lOth Dept. 9569 : Bentonville, AR 72716 WITH A COPY TO: WITH A COPY TO: Auburn Planning Director Brad Rogers . 25 West Main Street Wa1-Mart Stores, Inc. Auburn, WA 98001 2001SE lOtn . Dept. 5560 Auburn City Attorney Bentonville, AR 72716 25 West Main Street Auburn, WA 98001 AND TO: McCullough Hill, PS Columbia Center. 701 Fifth Avenue, Suite 7220 _ Seattle, WA 98104 Attnc John C. McCullough Faac: 206-812-3389 or to such other addresses as ~ either party may from time to time designate in writing and deliver in a like manner: Notices may also be given by facsimile transmission (provided the fax machine has printed a, confirmation of receipt and . notice is given by one other form of notice hereunder). All notices that are mailed sha11 be deemed received ttiree (3) business day5 after mailing. All notices sent . by overnight delivery shall be deemed received one (1) business days after deposit with the overnight deliyery service. All other notices shall be deemed complete upon actual receipt or refusal to accept delivery.. Page 9 of 14 14. Dispute Resolution Proeess: Prior to seeking relief or enforcement of this Agreement through legal.or administrative means, the parties shall use their best ' efforts to resolve disputes arising out of or related to this Agreement using good faith negotiations by engaging in the following dispufe escalation process should any such disputes arise:, 14.1 Level One. A Senior Director Realty of Wa1-Mart and the City Planning Director (together with other personnel representing the parties, as each desires) - shall meet to discuss and attempt to resolve the dispute in a timely manner. If they cannot resolve the dispute within thirty (30) calendar days after referral of that dispute,to Level One, either party may refer the dispute to Level Two. 14.2 Level Two. A Vice President Realty of Wa1-Mart (or designee) and the . Mayor (or designee) of the City (together with other personnel representing the parties, as each desires) shall meet to discuss and attempt to resolve the dispute in a timely manner. _ 14.3 Except as otherwise specified in this Agreement, in the event the dispute is not resolved at Level Two within thirty (30) caleridar days after referral of that dispute to Level Two, either party may thereafter seek its available legal remedies. 15. Agxeement Not to Cliallenge. By the signatures of their representatives hereon, the parties agree not to challenge any of the provisions hereof in any court or legal forum. 16. Severabilitv. If any provision of this Agreement`sha11. be held illegal or invalid by any court, this Agreement shall be construed and enforced as if such illegal or invalid provision had not been contained herein and this Agreement shall be deemed an agreement of the Parties hereto to the full extent permitted by law. If any provision shall be declared invalid or unenforceable because of its breadth, scope or duration, such provision shall be deemed modified to the extent necessary to make it valid `and enforceable . and shall remain in full force and effect as so modified, or if not so :modified, sha11 be severable from the rest of this Agreement. 17. Entire Agxeement: Modifications. The terms of this Agreement constitute the entire agreement between the parties regarding the subject matter described herein. This Settlement Agreement or any of its terms may be modified or amended upon agreemerit of the parties. 18. Successors. This Agreement is binding=on and inures to the benefit of the Parties and their successors and assigns. 19. Waiver. The failure of eitlier Party at any time to require performance of . any provision hereof by any other Party shall not be deemed a waiver and thereafter Page 10 of 14 : shall not deprive that Party of its full right to require such performance in the particular instance or at any other time. Any waiver must be in writing and signed by the waiving Party. 20. Governing Law; Venue. This Agreement shall be governed by and construed in accordance with the laws of the State of Waslungton. Venue shall be in King County, Washington. 21. Reasonableness. Whenever the consent or approval of a Pariy is required under this Agreement, it shall be given in a timely manner and shall not be unreasonably withheld, conditioned or delayed. 22. Authori. Each individual executing this Agreement represents and warrants that (s)he is duly authorized by all necessary action of the Party on whose behalf (s)he is acting to execute and deliver this Agreement on behalf of that Party, and that : this Agreement is binding upon such Party in accordance with its terms. 23. Further Assistance. The Parties shall execute such further documents and take such other further actions as may reasonably necessary to carry out the intent and provisions of this Agreement. 24. Counterparts: Facsimile. This Agreement may be executed in two or more counterparts, each of whicli shall be deemed an original and all of which together shall constitute the same Agreement, whether or . not a.ll Parties execute each counterpart. Signatures transmitted by facsimile shall have the same effect as original ink signatuies. IN W[TNESS WHEREOF, the'Parties have executed this Agreement as of the day and date first above written. City-of Auburn, a Washington M rati ~ ~ By: Peter B. Lewis, Mayor Attest: Danie le E. Daskam, City Clerk ~ . Page 11 of 14 ApProve to F ' B. Heid, Ci 'Atto ey Wal-Mart Stores, ,Inc:, a Delaware corporation B y:~D Wa1-Mart Realty Company, an Arkansas corporation By: . Its: ~ Oc- "n nft_ej Page 12 of 14 Attachment "A" For information purposes only, the following is the information that the City would request in review of a new Approved Developer (other than Glimcher, Black. Equities Group and Hawkins Edwards): 1. The names, addresses telephone numbers, e-mail, and fax numbers of each principal, partner, arid/or co-venturer participating on the developer's team and the name of the representative authorized to act on behalf of the team. 2. Identification of the any affiliation or other relationship between any of the . developer's team members and any development company, parent company, or subsidiary. _ 3. A description of the developer's status (whether a corporation, a nonprofit or . charitable institution, 'a partnership, a limited liability company, a business association, or a joint venture) indicating jurisdiction under whose law developer is organized and operating, and a brief history of developer's organization and its . principals. - 4. Date and location of establishment and the date of incorporation or formation under the present name. 5. Whether the developer - or any financial ar other equity partner it may bring in - has ever been terminated for default, noncompliance, or non-performance on a contract or lease.Provide a detailed description; and whether the developer or partner have been. within. the past ten (10) years, in litigation, azbitration, or have had any judgments against the developer or partner. 6. ; Detailed demonstration of experience in planning, developing, owning and managing commercial retail development projects of similaz size, scope and ' nature. 7. If the developer proposes to team or otherwise bring in additional partners, , provide an organization chart identifying all partners and their respective roles. For each partner, provide a statement of its experience, background and pertinent accomplishments: In particulaz, highlighted reference should be made to any history of work.with redevelopment of existing big box retail sites. 8. For the developer and any partners, provide three (3) to fve (5) sample projects, ' each with a minimurii `of 100,000 gross square feet of improvements. Each sample should include: a. Project Name b. Project Size (acreage, SF, FAR) and Total Development Costs c. Project Location d. Project Completion Date. e. Project Owner Name f. Project Description g. A brief narrative.that describes the developer's role on the project addresses how the developer's experience is applicable to the redevelopment of the original Wal-Mart site/structure in Auburn, WA; and addresses how the Auburn community will benefit from said experience. Page13of14 9. Three (3) business references in the form of name, title, phone n umber and email address. 10. Key personnel for deyeloper and any partners. Key persorinel are defned as those individuals, employed or contracted by the developer, and- who are to be directly engaged in the managernent, design planning and execution of the redevelopment of the original Wa1-Nlart site/structure in Auburn, WA. Submittal requirements aze as follows: a. A resume for each individual considered Key Personnel. b. A past performance matrix that identifies which Key Personnel have worked on the submitted sample projects. c. A paragraph for each Key Personnel describing the individual' role on projects submitted as sample projects. 11. Written evidence that the developer has the financial capability and institutional 'relationships necessary to commit equiry and obtain fmancing for the , redevelopment of the original Wal-Mart site/structure in Auburn, WA, and the - ability to manage the variable cash flow associated with such a project. Submittal requirements are as follows: a. Evidence of strong financial standing b. Demonstrated net worth c. Plan for financing the development d. Capability to obtain financing e. Sources and amounts of cash available to meet, equity requirements of the proposed undertaking f. Ability to manage yariable cash flows associated with such a project g. Einancial Statemenfs for past two (2) yeazs - should have been prepared in accordance with Generally Accepted Accounting Principles (GAAP) and financial auditor should be an independent, well-recognized firm in the . accounting industry. h. Two credit references from financing fums and/or underwriters identifying and acknowledging their confidence in the credit.quality of the developer. 12. Project financial data showing: a. Estimated total development costs b. Proposed sources and uses c. Any associated phasing or property take down assumptions d. Financing assumptions to include: a11-in cost of debt, anticipated lender's required coverage ratio, and the ability to replace construction lending with permanent financing upon stabilization e. Developer's equity contributions and internal rate of return (IRR) for each phase of the project. Page 14 of 14