Item No.: 5e_attach
Meeting Date: March 27, 2012
SETTLEMENT AGREEMENT AND MUTUAL RELEASE
This Settlement Agreement and Mutual Release (hereafter, “Agreement”) is made and
entered into by and between the Port of Seattle, a Washington municipal corporation (the
“Port”), and Cruise Terminals of America, LLC, a Washington limited liability company
(“CTA”).
WHEREAS, the Port and CTA are parties to that certain Cruise Terminal Lease
Agreement dated December 21, 2005 (the “Lease”); and
WHEREAS, the Port’s Internal Audit Department conducted an audit of CTA’s
financial reporting under the Lease and identified a discrepancy in the way Gross Revenues and
Allowable Expenses (as those terms are defined in the Lease) associated with parking were
reported by CTA under the Lease (the “Audit Finding”); and
WHEREAS, the Port conducted a detailed examination of the Audit Finding for the
period from the commencement of the Lease through December 31, 2011 and calculated that
CTA underpaid certain amounts for (i) Percentage Rent and Savings Rent (as those terms are
defined in the Lease) and (ii) leasehold excise tax under Chapter 82.29A of the Revised Code of
Washington. In addition, the Port asserted it was also entitled to certain additional amounts for
late fees, interest and audit costs; and
WHEREAS, CTA disputes that it underpaid Percentage Rent and Savings Rent as
calculated by the Port or that the Port is due any late fees, interest or audit costs; and
WHEREAS, the parties wish to avoid the expense and risk of litigation and desire to
settle the dispute related to the payment of amounts related to the Audit Issue;
NOW, THEREFORE, in consideration of the mutual agreements set forth, the parties
agree as follows:
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1. Payment. CTA shall pay to the Port the total sum of seven hundred seventy three
thousand eight hundred fifteen dollars and no cents ($773,815.00) within thirty days of full
execution of this Agreement. This amount is in addition to any amounts previously paid by CTA
under protest for calendar year 2011, and by this Agreement CTA further withdraws the protest
as to such amount. For purposes of accounting under Section 458-29A-200 of the Washington
Administrative Code, the amount set forth in this paragraph consists of $718,419 in Percentage
Rent and Savings Rent (as calculated in that certain spreadsheet prepared by the Port dated
February 14, 2012), $30,443 of leasehold excise tax and $24,953 in audit fees.
2. Future Reporting. For the period January 1, 2012 through the end of the Lease (as
the same may be extended), the parties agree that Gross Revenues and Allowable Expenses
associated with parking shall be reported separately (i.e. on a “gross” rather than “net” basis as
identified in the Audit Finding) and Percentage Rent and Savings Rent calculated accordingly.
3. Release. The Port and CTA hereby release and discharge each other from any
other claims relating to the Audit Finding for the period from the Lease’s effective date through
December 31, 2011, specifically including (but not limited to) any potential claim by the Port for
late fees and/or interest associated with the amounts paid by CTA under this Agreement.
4. No Admission of Liability. It is expressly understood and agreed that this
Agreement is entered into as, and represents a compromise of, disputed claims, and that the
acceptance of this Agreement and settlement shall not be construed as an admission of liability
on the part of any party.
5. Entire Agreement. This Agreement represents the entire agreement and
understanding of the Parties relative to its subject matter. The Parties agree that, in entering into
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this Agreement, they are not relying upon any representations other than those expressly set forth
herein.
6. Washington Law. This Agreement shall be construed in accordance with the laws
of the State of Washington without regard to any rules or principles of conflict of laws that might
otherwise have required the application of the law of another jurisdiction.
7. Fair Interpretation. The Parties acknowledge that each party has participated in
the drafting of this Agreement. For purposes of interpreting this Agreement, each provision will
be deemed to have been jointly drafted by the Parties. The Parties intend for this Agreement to
be construed and interpreted neutrally, in accordance with the plain meaning of its language, and
not presumptively construed against any actually or purported drafter of any specific language
contained in it.
8. Counterparts. This Agreement may be executed in counterparts and when the
parties have signed and delivered to each other at least one such counterpart, each counterpart
shall be deemed an original and, when taken together with other signed counterparts, shall
constitute one agreement that shall be binding upon and effective as to all Parties. Facsimiles
shall constitute originals and proof of valid execution.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
following dates, the latter of which shall constitute its Effective Date:
PORT OF SEATTLE CRUISE TERMINALS OF
AMERICA, LLC
By: By:
Its: Its:
Dated: Dated
