EXHIBIT 10.26
Lease and Project Participation Agreement between City of Grants, a New Mexico
municipal corporation (the "Landlord"), and Colorado Greenhouse, Inc., a
Delaware corporation (the "Tenant")
Dated as of May 14, 1998
TABLE OF CONTENTS
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Page
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1. Basic Definitions............................................... -1-
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2. Lease of Land................................................... -3-
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3. Agreements of Landlord.......................................... -3-
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4. Term............................................................ -3-
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5. Rent............................................................ -3-
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6. Project Participation Agreement................................. -5-
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7. Taxes and Charges............................................... -7-
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8. Use............................................................. -8-
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9. Maintenance and Repair.......................................... -10-
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10. New Construction................................................ -10-
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11. Insurance Terms................................................. -14-
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12. Condemnation Provisions......................................... -18-
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13. Assignment or Subletting........................................ -20-
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14. Indemnity....................................................... -20-
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15. End of Term..................................................... -21-
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16. Default of Tenant; Remedies of Landlord......................... -21-
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17. Default of Landlord; Remedies of Tenant......................... -22-
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18. Right to Charge................................................. -23-
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19. Development Cooperation......................................... -24-
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20. Leasehold Mortgages............................................. -24-
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A. Leasehold Mortgages Authorized............................... -24-
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B. Notice to Landlord........................................... -24-
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C. Consent of Leasehold Mortgagee Required...................... -24-
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D. Default Notice............................................... -24-
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E. Procedure on Default......................................... -25-
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F. Substitute Lease................................................. -26-
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G. Legal Actions.................................................... -27-
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H. Future Amendments................................................ -27-
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I. Estoppel Certificate............................................. -28-
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21. Bankruptcy; Insolvency.............................................. -28-
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22. Recording; Documents Affecting Title and Interest................... -29-
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23. General Provisions.................................................. -29-
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A. Use of "Will or May"............................................. -29-
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B. Expense.......................................................... -29-
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C. Approval......................................................... -29-
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D. Computation of Time.............................................. -29-
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E. Notices.......................................................... -30-
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F. Waiver; Remedies................................................. -31-
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G. Time of Essence.................................................. -31-
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H. Binding Effect................................................... -31-
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I. Entire Agreement................................................. -32-
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J. Headings and Use of Terms........................................ -32-
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K. Partial Invalidity............................................... -32-
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L. Paragraphs, Articles and Exhibits................................ -32-
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M. Further Assurances............................................... -32-
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N. Governing Law.................................................... -32-
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O. Survival......................................................... -32-
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P. Construction..................................................... -32-
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Q. Attorneys' Fees.................................................. -33-
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EXHIBITS:
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A. The Land
A-1 Water and Wastewater Provisions
A-2 Permitted Encumbrances
B. Specifications in Connection with Buildings and Site Plans
C. "As-Built" Survey Checklist
D. Memorandum of Lease
E. Hazardous Materials
F. Easement Agreement
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LEASE AND PROJECT PARTICIPATION AGREEMENT
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Pursuant to the Local Economic Development Act, (S)5-10-1 to 5-10-13
▇▇▇▇ ▇▇▇▇ and the City of Grants Economic Development Plan, the City of Grants,
a municipal corporation (the "Landlord"), and Colorado Greenhouse, Inc., a
Delaware corporation, (the "Tenant"), agree:
1. Basic Definitions. For the purpose of this Lease:
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A. "City" means the City of Grants, New Mexico and "County"
means the County of Cibola, New Mexico.
B. "Buildings Transfer Obligation" means the obligation of the
Tenant, upon the end or any earlier termination of this Lease, to transfer the
Buildings (as defined in paragraph 10(A) to the City, in reasonable working
condition for the Permitted Use. The boilers and all piping (including effluent
piping) are expressly included in the obligation to transfer Buildings. The
boilers and all piping will be in working condition upon transfer. The Buildings
so transferred will be free of any liens or other claims, and any Leasehold
Mortgage will have been previously satisfied. The transfer documents will be
reasonably satisfactory in form to the City.
C. "Departure Obligation" means the obligation of the Tenant,
upon the end or any earlier termination of this Lease for any reason, to elect
to perform either the Buildings Transfer Obligation or the Reclamation
Obligation. The Tenant will give the City written notice within ten days after
expiration or any earlier termination of this Lease that the Tenant will perform
either the Buildings Transfer Obligation or the Reclamation Obligation. If
Tenant does not give the written notice, Landlord may, after written notice to
the Tenant of the intention of the Landlord to do so within a reasonable period
of time, elect either the Buildings Transfer Obligation or the Reclamation
Obligation on behalf of the Tenant, and the Tenant will then perform that
obligation. Within 30 days after end or any earlier termination of this Lease,
the Tenant will prepare and execute all documents necessary to complete the
Buildings Transfer Obligation, if Tenant has so elected, or will submit written
plans, which will be subject to the written approval of the City, detailing the
specifics of how the Reclamation Obligation will be performed. The Reclamation
Obligation will be fully performed with 180 days after the end or any earlier
termination of the Term. The Landlord is entitled to a lien upon the Buildings,
equipment and other personal property of the Tenant located on the Land to
ensure performance of
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the Departure Obligation.
D. "Lease" means this Lease and Project Participation Agreement
between the Landlord and the Tenant and all amendments, modifications,
extensions and renewals to or of this Lease and Project Participation Agreement.
E. "Leasehold Estate" means the interest of the Tenant in the
Premises created by this Lease.
F. "Leasehold Mortgage" means one or more mortgages, deeds of trust,
or other security instruments by which the Leasehold Estate is mortgaged,
conveyed, assigned, or otherwise transferred, to secure a debt or other
obligation.
G. "Leasehold Mortgagee" means one or more holders of a Leasehold
Mortgage.
H. "Mortgage," whether or not used in combination with other
qualifying words, includes a mortgage, or a deed of trust to a trustee, to
secure an issue of bonds, debentures, notes or other obligations; and
"mortgagee," and "holder," when used with reference to a mortgage, includes a
mortgagee or a holder of a mortgage or the trustee under a deed of trust and,
when appropriate, the holder or holders of the bonds, debentures, notes or other
obligations secured by the mortgage or deed of trust.
I. "Premises" means the land described on attached Exhibit A (the
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"Land"), and any building or improvement that may be later built by the Tenant
on the Land.
J. "Project" means the acquisition, construction and equipping of a
greenhouse facility.
K. "Reconstruction Obligation" means the obligation of the Tenant to
use insurance proceeds or other funds to reconstruct the Buildings to the
reasonable equivalent of those structures previously on the Land, after any
Occurrence as defined in Section 11(G).
L. "Reclamation Obligation" means the obligation of the Tenant upon
the expiration or any earlier termination of this Lease to remove all of the
structures and debris on the Land, including foundations and supporting posts,
(but not main sewer or water lines, or other lines providing utility service or
underground piping) and to leave the Land in reasonably buildable condition. The
Tenant may remove the Buildings, signs, personal property and the trade assets
as provided in this Lease from the Premises. The site will be restored by Tenant
to a reasonably buildable condition, including removal of all concrete pads,
posts, docks, foundations and storage units, except as expressly waived by
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Landlord in writing. Any personal property or trade assets not removed will be
deemed to be abandoned. The Reclamation Obligation does not include restoring
the original topography of the Land.
M. "Water". The Landlord and the Tenant have separately addressed
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the furnishing by the Landlord to the Tenant of water and wastewater for the
business of the Tenant and the cost to the Tenant of water and wastewater
services as provided in attached Exhibit A-1.
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Other definitions are included in the General Provisions paragraph
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of this Lease, or within the body of this Lease.
2. Lease of Land. The Landlord leases and lets the Land to the Tenant,
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subject to (i) any ad valorem real estate taxes for 1998 and later years, and
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(ii) the exceptions to title listed on attached Exhibit A-2 (the "Permitted
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Encumbrances"), and (iii) the provisions of this Lease.
3. Agreements of Landlord. On (i) payment and performance of Rent
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and other payments provided for in this Lease, and (ii) performance by the
Tenant of all obligations as provided in this Lease, the Tenant will peaceably
and quietly have the exclusive use and enjoyment of the Premises during the
Term, and may exercise all of the rights of the Tenant as provided in this
Lease, subject to (a) the provisions of this Lease, (b) applicable laws,
ordinances, decisions, and governmental rules and regulations (the "Governmental
Rules"), and (c) the Permitted Encumbrances.
4. Term. The initial Term of this Lease is 60 years, beginning May 15,
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1998 the "Initial Term"). The "Term" of this Lease includes the Initial Term
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and any renewal or extension of the Initial Term that may be later agreed upon
in writing by the Tenant and the Landlord.
5. Rent. Instead of monetary rent, the Tenant will strictly perform
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during the Term promptly, punctually and without notice, all of the obligations
of the Tenant as provided in this Lease. The prospect of the opportunity for
employment of an augmented workforce in the City by the Tenant is a substantial
and material inducement to the Landlord to enter into this Lease, and the
performance by the Tenant of the Employment Standard (defined below) will be
measured by good faith and fair dealing and is a very substantial part of the
consideration to Landlord for entering into this Lease (the "Rent"). The Tenant
will specifically construct and operate a greenhouse operation on the Land, and
will meet the following Employment Standard at all times during the Term:
A. Employees who meet the Employment Standard will be full
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time employees working not less than 35 hours a week at the greenhouse or any
packing house constructed on the Land, and working or anticipated to be working
at least 48 weeks of the calendar year in permanent or long-term positions
("Qualified Employees"). Qualified Employees who meet the Employment Standard
will include persons to whom the Tenant has outsourced certain tasks, provided
those persons are occupied full-time in permanent or long-term positions in the
business of the Tenant at the Land, and receive pay and benefits substantially
similar to those employees of the Tenant performing similar functions, but will
not include vendors, merchants, or providers of intermittent labor through
contracts. Employees employed by the Tenant on management, administrative or
supervisory duties primarily directed toward the greenhouse operation located at
the Land and working at the Land not less than 35 hours a week on those duties,
at least 48 weeks of the calendar year, will be "Qualified Employees."
B. During the first 12 months of the Term, the Tenant will have no
obligation to have Qualified Employees or to meet any Employment Standard.
C. During the next 48 months of the Term (through the end of year
five of the Term) Tenant will have the following Employment Standard: Tenant
will have employees working not less than a cumulative total of 2,400 hours per
week, 52 weeks a year, on an average basis calculated every six months beginning
with the six-month period that commences on the date Tenant begins commercial
greenhouse operations, and at all times (other than as permitted under Paragraph
4.E) during such 42-month period Tenant will employ not less than 50 Qualified
Employees.
D. During the remaining months of the Term (all months after the
sixtieth month) the Tenant will have the following Employment Standard: Tenant
will have employees working not less than a cumulative total of 4,400 hours per
week, 52 weeks a year, on an average basis calculated every six months beginning
with the first day of the 60th month of the Term, and at all times (other than
as permitted under Paragraph 4.E) after such 60th month Tenant will employ not
less than 100 Qualified Employees.
E. After the first eighteen months of the Term, the Tenant may
furlough employees for up to eight weeks every other year without being in
violation of the Employment Standard. During the Term, the Tenant will have a
one-time option to suspend operations and furlough or terminate employees at the
Land for up to eight months, provided the Tenant's decision to do so is in
compliance with all other laws and regulations, the Tenant gives the Landlord
written notice at least six months before starting the suspension, and, before
the suspension, the Tenant is current and remains current on
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all required payments to the State of New Mexico Employment Security Division
for payment of the Tenant's unemployment compensation obligations.
The Tenant will pay and perform the Rent, including meeting the
Employment Standard to the Landlord on an absolutely net basis, free of any
charges, assessments, impositions or deductions of any kind, and without
abatement, deduction or set-off. Tenant will provide true and accurate monthly
reports to Landlord showing the total number of employees, and the total hours
worked by each employee. Qualified Employees will be identified by Tenant on the
reports provided to Landlord. The Landlord may examine such other employment or
accounting records of the Tenant as the Landlord deems necessary to determine or
confirm that the Tenant is in fact in compliance with the Employment Standard.
The Landlord will give the Tenant reasonable written notice before an
examination and will conduct the examination during reasonable business hours.
The Tenant consents to a release to the Landlord of records provided to state or
federal agencies or divisions to the extent those records relate to or evidence
the number of employees employed or maintained by the Tenant at the Land. The
Landlord is not and will not be construed or held to be a partner, joint
venturer or associate of the Tenant in the conduct of the business of the
Tenant. The Landlord will not be liable for any debts incurred by the Tenant in
the conduct of the business of the Tenant. The relationship between the Landlord
and the Tenant is, and will remain, solely that of landlord and tenant.
6. Project Participation Agreement. This Lease will serve as a Project
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Participation Agreement as required by Section 5-10-10 ▇▇▇▇ ▇▇▇▇ and by
Section 10 of the Landlord's Economic Development Plan (the "Plan").
A. Economic Development Goals. Section 10(A)(1) of the Plan requires
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the lease to clearly state the economic development goals of the project. The
purpose of the project is to provide business and community development
opportunities in the Cibola County area by creating jobs, reducing unemployment
and retaining or re-employing the local labor force. The project is intended to
diversify and expand the local economic base and develop and optimize the
quality of life in the community.
B. Contributions of the Parties. Section 5-10-10(C)(1) ▇▇▇▇ ▇▇▇▇ and
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Section 10(A)(2) of the Plan require the Lease to set out the contributions to
be made by each party to the lease. In order to contribute to the success of the
business of the Tenant, the Landlord will lease the Land to the Tenant under
this Lease for the Term. The Tenant will continue to operate the business of the
Tenant as a going concern and will maintain the Employment Standard as provided
in Section 5 of this Lease.
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C. Performance Objectives. Section 10(A)(3) of the Plan requires the
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Lease to provide specific measurable objectives upon which the Landlord will
evaluate the performance of the Tenant under the Lease. The Landlord will review
the performance of the Tenant under the Lease based upon the ability of the
Tenant to meet and maintain the Employment Standard as provided in Section 5 of
this Lease as well as upon the ability of the Tenant to meet the project
development schedule as provided in Subsection D below.
D. Project Development Schedule. Section 5-10-10(C)3 ▇▇▇▇ ▇▇▇▇
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requires the lease to establish a schedule for project development and
completion, including measurable goals and time limits for those goals. In
addition, Section 10(A)(4) of the Plan requires a schedule for project
development and goal attainment. The Tenant will construct two greenhouses of
approximately 20 acres each as provided on attached Exhibit B, a packing house
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between the two greenhouses and various parking and administrative facilities.
As provided in Section 10 of this Lease, the Tenant will start construction on
the first greenhouse on or about June 15, 1998 and will complete construction on
the first greenhouse no later than June 15, 1999. The Tenant will possess,
occupy and start the conduct of the business of the Tenant in the first
greenhouse on or before March 15, 1999. The Tenant will begin construction on
the second greenhouse on or before June 15, 2002, and will complete construction
on the second greenhouse no later than June 15, 2003. The Tenant will possess,
occupy and start the conduct of the business of the Tenant in the second
greenhouse on or before March 15, 2003.
E. Security. Section 5-10-10(C)(2) ▇▇▇▇ ▇▇▇▇ and Section 10(A)(5) of
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the Plan require the lease to include the security provided to the Landlord by
the Tenant. In addition, Section 5-10-10(C)(2) requires the Tenant to pledge
the Tenant's financial or material participation and cooperation to guarantee
the performance of the Tenant as provided in the lease. In addition, the Tenant
pledges to cooperate fully with the Landlord and to remain in compliance the
terms of this Lease, including the terms and conditions of the Employment
Standard, at all times. If the Tenant is in Default as defined in Section 16 of
this Lease, the Landlord may take steps the Landlord deems appropriate pursuant
to the rights of the Landlord as provided in this Lease.
F. Performance Review. Section 5-10-10(C)(4) ▇▇▇▇ ▇▇▇▇ requires the
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lease to contain provisions for performance review and actions to be taken upon
a determination that project performance is unsatisfactory. In addition, Section
10(A)(6) of the Plan requires the lease to include the procedure by which a
project may be
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terminated and the Landlord's investment in the project recovered. The Landlord
will evaluate the performance of the Tenant as provided in this Lease on an
annual basis. If the Landlord determines that the performance of the Tenant as
provided in the Lease is unsatisfactory as evidenced by an Event of Default as
defined in Section 16 of this Lease, the Landlord may take steps the Landlord
deems appropriate pursuant to the rights of the Landlord as provided in this
Lease.
G. Sunset. Section 10(A)(7) of the Plan requires the lease to
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include the period of time during with the Landlord will retain an interest in
the project. The Landlord will retain an interest in the project and will
continue oversight of the project until the end or any earlier termination of
this Lease.
7. Taxes and Charges.
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A. The Tenant will pay before delinquency all ad valorem property
taxes and all personal property taxes levied or assessed against the Premises by
any governmental authority (the "Taxes") although the Landlord will not be
liable for the Taxes on the Land. The Tenant will not claim exemption from the
imposition of Taxes on any Buildings (as defined below) because the Landlord
owns the Land. Both parties anticipate that there will be no Taxes imposed on
the Land, but should Taxes be imposed on Tenant's Leasehold Estate, Tenant will
promptly pay the Taxes, but may thereafter contest the imposition of the Taxes
as provided below.
B. The Tenant will pay before delinquency all charges for Water
(subject to the terms of attached Exhibit A-1), electricity, gas, telephone,
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sewer, rubbish and garbage removal, cable television and all other charges with
respect to the Premises.
C. The Tenant will furnish to the Landlord, within 30 days before the
date when Taxes become delinquent, official receipts or other evidence from the
taxing authority satisfactory to the Landlord evidencing the payment of the
Taxes.
D. The Tenant may seek a reduction in the tax valuation of the
Premises, and may contest in good faith by appropriate proceedings the amount or
validity of any Taxes (the "Contested Taxes"), and a deferment of payment of the
Taxes, if the Tenant first pays the Contested Taxes.
E. The Landlord will not be required by the Tenant to join in any
action of the Tenant with respect to Taxes. If the provisions of any law, rule
or regulation require that an action proposed by the Tenant be brought by or in
the name of the Landlord as owner of the fee of the Land, or that the owner of
the fee of the Land be joined in the action, the Tenant may request in writing
that the Landlord join in the action or permit the
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action to be brought in the name of the Landlord, and the Landlord will
cooperate subject to such reasonable conditions as the Landlord might impose to
insure that the protections of the following sentence are satisfied. The
Landlord will not be liable for payment of any costs or expenses with respect to
the action brought by the Tenant, and the Tenant will indemnify, hold harmless
and defend the Landlord from any costs and expenses with respect to the action
including reasonable fees of lawyers and expenses of any action.
8. Use.
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A. The Premises may be used only for a greenhouse operation (including
construction, handling, sorting, picking, packing and other processing
activities), and associated office and storage space, in compliance with all
Governmental Rules, and for no other purpose (the "Permitted Use").
B. The Tenant will:
(1) conduct the business of the Tenant in the Premises under the
trade name of the Tenant;
(2) not use, or permit the use of any sound broadcasting or
amplifying device which can be heard outside or beyond the Premises;
(3) not use, or permit the use of, any portion of the Premises as
living quarters, sleeping apartments or lodging rooms except as required to
conduct the Permitted Use;
(4) not perform any act or carry on any practice which may damage
the Premises or the Buildings, cause any offensive odors or loud noises, or
constitute a nuisance or a menace;
(5) at all times, continuously and uninterruptedly (i) use, occupy,
and operate the Premises for the Permitted Use, (ii) use any storage and office
space only with respect to the Permitted Use, and (iii) open and keep open the
Premises for operation as a greenhouse with adherence to the Employment
Standard.
(6) not use any portion of the Premises for services except as
customary for the business and operations of the Tenant with respect to the
Permitted Use;
(7) keep the Premises free of pests or vermin by periodic pest
control treatment;
(8) comply with all governmental laws, rules, and regulations
applicable to the Permitted Use and obtain and maintain in force all
governmental permits and licenses necessary for the lawful conduct of the
business of the
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Tenant.
(9) not suffer, permit or cause any waste to occur within the
Premises, and will not cause or permit any Hazardous Material to be brought
upon, kept or used in or about the Premises, except such as are normally used in
the operation of a greenhouse, and in strict compliance with all laws,
ordinances or regulations. As used in this Lease, the term "Hazardous Material"
is defined as any hazardous or toxic substance, material or waste that is now or
becomes regulated or restricted by any local governmental authority, New Mexico,
or the United States Government. The term "Hazardous Material" includes, without
limitation, any petroleum products or by-products, asbestos (in any form),
chemicals, gases or any other material or substance that upon exposure or
ingestion may reasonably be anticipated to pose a hazard to the health or safety
of the anticipated occupants of, or visitors to the Premises. If the Tenant, in
the normal course of operation of the business of the Tenant in the Premises, as
stated in this Section, is required to use certain substances that may be
considered Hazardous Material as provided in this Lease, the Tenant may, in such
event and despite the foregoing provisions, use the substances in the business
operations of the Tenant provided, however, the Tenant will be solely
responsible for the proper use and disposal of the substances in accordance with
all applicable laws and Tenant will indemnify the Landlord and the Premises with
respect to the use and disposal of the substances (both during and after the
term of this Lease) and will permit the Landlord to conduct inspections of the
Premises at reasonable times to confirm that the Tenant is in compliance with
all laws, ordinances or regulations. A list of Hazardous Materials that the
Tenant proposes to use in the business operations of the Tenant is attached as
Exhibit E.
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C. The provisions of subparagraph B. of paragraph 8 of this Lease
are a material part of the consideration which induced the Landlord to sign this
Lease with the Tenant.
D. If the Tenant breaches any provision of this paragraph 8 of this
Lease more than once during any calendar year, the Landlord may, instead of
exercising any other remedies available to the Landlord for each breach, give
notice to the Tenant of a breach, and, if the Tenant fails to cure the breach
within 10 days, elect to receive from the Tenant liquidated damages of 500
dollars a day for each calendar day during which a breach occurs and continues.
The failure of the Tenant to operate the Premises in adherence with paragraph 8
of this Lease will cause great harm to the Landlord and the Buildings. To
specify or determine exactly the amount of damages resulting to the
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Landlord and the Buildings from the failure of the Tenant to operate the
Premises as provided in this paragraph of the Lease is difficult. The daily
liquidated damages provided for in this paragraph of the lease is a reasonable
amount and bears a rational relationship to the damages that the Landlord could
suffer. The Landlord also will be entitled to terminate this Lease as provided
in paragraph 16 of this Lease in addition to receiving liquidated damages. The
Tenant will pay the liquidated damages to the Landlord within 5 days of demand
for payment as provided in this Lease, and failure to timely pay the liquidated
damages to the Landlord will constitute a breach of this Lease without further
notice.
9. Maintenance and Repair. The Tenant will maintain the Premises in
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a clean, orderly, sanitary, and safe condition, in good repair and in compliance
with all Governmental Rules. The standard of repair will be at least equal the
condition of the repaired item immediately before the event which created the
circumstance requiring the repairs to be made. The Tenant will give notice to
the Landlord of any material alterations or additions by the Tenant to the
Buildings. The Tenant will comply with all Governmental Rules enforced from time
to time which require repairs, replacements or alterations to be made to the
Buildings and with respect to any improvements constructed by the Tenant on the
Land.
10. New Construction.
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A. As set forth in subparagraph 6.D, the Tenant will start
construction of a new building or buildings and other improvements and fixtures
on the Land as provided on attached Exhibit B (collectively, the "Buildings")
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and will use the best and diligent good faith continuous efforts of Tenant to
complete the construction, and, upon completion of construction, will possess
and occupy and start the conduct of the business of the Tenant as soon as
reasonably practicable. "Buildings" includes any additions, replacements, and
fixtures that may be later constructed or installed on the Land or the Premises
when the context of this Lease allows. The Buildings will be constructed in a
good and worker-like manner in accordance with (i) all requirements of City and
County ordinances, (ii) all applicable rules, regulations and requirements of
all departments, boards, bureaus, officials and authorities having jurisdiction
of the construction of the Buildings, and (iii) the requirements of the City and
County fire insurance ratings. All necessary permits for the Buildings will be
obtained by the Tenant. The Tenant will deliver to the Landlord for approval by
the Landlord before any construction is started copies of all final plans,
specifications and vertical elevations which will be prepared as if for
architectural
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review, for the Buildings (the "Plans").
B. The Tenant will not permit any mechanics' lien or other liens
(collectively, the "Liens") to be recorded against the Premises before, during
or after the Term. If Liens are recorded against the Premises, the Tenant will
cause the Liens to be discharged of record by payment, deposit, bond, order of
court, or otherwise, within 30 days after the Tenant has received actual notice
of any Lien which is filed in the records of the County.
C. The Tenant will provide a notice to the Landlord as provided in
paragraph 23 of this Lease (the "Notice") of any construction, grading,
installation, or improvements on the Land (the "Work") no later than 10 days
before the start of the Work. The Tenant will post on the Premises, as provided
by New Mexico law, two "Notices of the Landlord's Non-Responsibility" before
starting any Work (the "Non-Responsibility Notices"), and will maintain the Non-
responsibility Notices on the Premises until all costs of the Work, including
all costs of architectural, surveying, and engineering fees, and all other
liabilities for which Liens could be recorded as provided by the statutes of New
Mexico, are fully paid and satisfied. The Landlord may post the Non-
responsibility Notices if the Tenant fails to post the Non-responsibility
Notices.
D. If Liens are recorded against the Premises and not discharged
within thirty days after the Lien is filed in the County records as provided in
subparagraph B above and the Tenant has received at least 90 days actual notice
of the Liens, the Landlord may pay the Liens after reasonable inquiry as to the
validity of the Liens. Any amounts so paid, including the fees of lawyers and
title companies, expenses and interest, will be additional Rent due from the
Tenant to the Landlord, and will be paid to the Landlord with interest at the
rate of eighteen percent a year within five days after a Notice from the
Landlord to the Tenant of a ▇▇▇▇ for the amount is given. The Tenant will
indemnify the Landlord against all costs and charges, including lawyer fees,
reasonably incurred in the defense of any action to discharge the Premises from
Liens. The Tenant may contest Liens in good faith, with due diligence, if the
Liens are discharged of record while contests are pending.
E. Before starting the Work, the Tenant will obtain public
liability, builder's risk and other insurance as provided in this Lease, and
will maintain the insurance in full force and effect during the course of
construction.
F. Before starting the Work, the Tenant will obtain and deliver to
the Landlord waivers of lien from any surveyor, architect or engineer that has
performed
-11-
any pre-grading construction or installation Work with respect to the Premises.
G. Ownership of the Buildings (including fixtures) will remain in
the Tenant during the Term or until any earlier termination of this Lease,
subject to the rights of any Leasehold Mortgagee, and the requirements of this
Lease. At the end of the Term or any earlier termination of this Lease, the
Tenant will perform the Departure Obligation, as defined in paragraph 1(C). If,
pursuant to the Departure Obligation, the Tenant elects to assume and perform
the Reclamation Obligation, title to and ownership of all the buildings,
personal property and trade assets will remain the property of the Tenant and
may be removed from the Premises if removed within 180 days after the end of the
Term or earlier termination of this Lease; provided, however, the Tenant will
pay the Landlord $10,000 per month as monetary additional Rent for each month
after the end of the Term or earlier termination of this Lease in which the
property is not removed. If, pursuant to the Departure Obligation, the Tenant
elects to assume and perform the Buildings Transfer Obligation, title and
ownership to the Buildings, including the boilers and piping (including effluent
piping), will automatically vest in the Landlord free and clear of any liens or
encumbrances without signing of any further instrument and without any payment
by the Landlord. The Tenant will, on demand by the Landlord, sign and
acknowledge any further assurance of title and ownership to the Buildings as the
Landlord may request. The Buildings and all personal property and trade assets,
and fixtures will remain subject to the liens provided in this Lease in favor of
the Landlord. As security for the payment and performance of the Rent or other
obligations required to be paid or performed by this Lease by the Tenant, the
Tenant grants to the Landlord a lien upon the Buildings, all personal property
and trade assets of the Tenant now or later located upon the Premises. Subject
to the provisions of Paragraphs 16 and 20, if the Tenant abandons or vacates any
substantial portion of the Premises or is in default of the payment or
performance of the Rent, or other obligations required to be paid or performed
by this Lease, the Landlord may enter upon the Premises, by force if necessary,
and take possession of all or part of the Buildings, personal property and
trade assets, and may sell all or part of the Buildings, personal property and
trade assets at public or private sale, in one or successive sales, with or
without notice, to the highest bidder for cash and on behalf of the Tenant, sell
and convey all or part to the bidder, delivering to the bidder all of the title
and interest of the Tenant in the Buildings, personal property and trade assets
sold to the bidder. The proceeds of the sale will be applied by the Landlord
toward the cost of the sale and then toward the payment of all sums then due by
the Tenant to the Landlord
-12-
as provided in this Lease. The statutory lien of the Landlord for Rent is not
waived. The express contractual lien granted in this Lease is in addition to the
statutory lien. This Lease is intended as, and constitutes a security agreement
within the meaning of the New Mexico Uniform Commercial Code and, the Landlord,
in addition to the rights of the Landlord as provided in this Lease, will have
all of the rights, titles, liens and interests in the property of the Tenant
now or later located upon the Premises that are granted a secured party, as that
term is defined under the New Mexico Uniform Commercial Code, to secure the
payment to the Landlord of the Rent and obligations of the Tenant provided in
this Lease and in compliance with this Lease. Tenant will execute a financing
statement in favor of Landlord. At the request of the Tenant, the Landlord will
subordinate any lien and the rights and remedies of the Landlord to enforce any
such lien granted to the Landlord by law or by this Lease to the first lien of a
Leasehold Mortgage as to the Buildings and to any purchase money lender as to
any personal property and trade assets, subject to the Landlord's right to
reasonably approve the form and substance of any requested subordination.
10. The Tenant will deliver to the Landlord within a reasonable
period of time after the completion of the Work but not over 30 days, an actual
field survey (the "Survey") of the perimeter boundary of the Land and any
related easement property containing a plat or map showing all buildings and
related improvements (if any). The Survey will (i) state that the Survey is
prepared for the Landlord, the Tenant and any title insurer selected by the
Tenant if the Tenant wants to obtain a lessee's policy of title insurance at the
sole cost and expense of the Tenant, (ii) contain a narrative legal description
and the courses and distances legal description of the Land and any related
easement property, (iii) be certified as of a date then current by a land
surveyor licensed in New Mexico acceptable to the Landlord, and (iv) show the
items listed on Exhibit C. Upon the completion of the construction and fixturing
Work of the Tenant of and within the Premises, (1) the Tenant will deliver to
the Landlord a copy of a properly executed certificate of occupancy from all
governmental entities having jurisdiction, (2) furnish the Landlord with a
complete set of reproducible "as-built" drawings, including "as-built" for all
underground utilities and piping (including effluent piping), and (5) copies of
lien waivers from all parties performing labor or supplying equipment and
materials with respect to the Work of the Tenant.
11. Insurance Terms.
----------------
A. The Tenant will provide and maintain during the Term, for
the
-13-
mutual benefit of the Landlord and the Tenant, fire and extended coverage
insurance with respect to the Buildings. The insurance protection will be
against fire and the other risks are covered by the standard form of extended
coverage insurance generally available from time to time in the City (the "Fire
Insurance"). The Fire Insurance will include in the coverage, loss or damage in
aggregate amounts not less than one hundred percent of the full replacement cost
of the Buildings, foundations excluded, and will be underwritten by an insurance
company acceptable to the Landlord. The Tenant will provide and maintain a steam
boiler, air conditioning equipment, pressure vessels or similar apparatus, and
machinery insurance (the "Boiler Insurance"). The Tenant will furnish the
Landlord a certificate of insurance evidencing the Fire Insurance and the Boiler
Insurance (collectively, the "Insurance") coverages and will furnish the
Landlord a copy of all policies of insurance. During the Term, the Landlord will
be entitled to any insurance in an amount sufficient to avoid being a co-
insurer. While the Buildings are under construction, the Insurance will be
carried by the Tenant in builder's risk form, which will be reviewed and
approved by the Landlord. The insurance policy will name the Tenant and the
Landlord as their interests may appear.
B. During the Term, the Tenant will provide and maintain at all
times broad form comprehensive general public liability insurance, and elevator
insurance (if applicable), as appropriate (the "Comprehensive Insurance"), that
names the Landlord as an additional insured, protecting both the Landlord and
the Tenant against claims of all persons, firms and corporations for personal
injury, death and property damage, with minimum limits of liability with respect
to personal injury of five million dollars for each occurrence, one million
dollars for each individual, and, in connection with property damage, a broad
form policy with minimum limits of five hundred thousand dollars for each
occurrence, or higher coverage as may be required by law, to protect the
Landlord from liability as provided in the New Mexico Tort Claims Act, or any
comparable future statute, or otherwise.
C. The Tenant will provide and maintain for the mutual benefit of
the Landlord and the Tenant any other insurance, in amounts required by the
Landlord, in the reasonable discretion of the Landlord and consistent with
ordinary business practices, against any other insurable hazards insured against
with respect to commercial real estate.
D. All policies of insurance obtained by the Tenant as provided in
this Lease (the "Policies") will be obtained from insurance companies qualified
to do business within New Mexico that have an S&P rating of A+ or better (or
comparable
-14-
ratings if S&P ratings are modified or discontinued). If this lease is ever
allowably assigned by the Tenant, any new insurance companies and the Policies
will also be subject to the approval of the Landlord. All Policies will include
a waiver of subrogation by the insurance company. All Policies will provide for
30 days Notice to the Landlord before cancellation. Before the effective date of
this Lease, the Tenant will deliver to the Landlord certificates of insurance
evidencing all required Policies. At least 30 days before the expiration date of
any Policies, the Tenant will deliver to the Landlord, certificates of insurance
evidencing renewal. All Policies will provide that no act or omission by the
Tenant will impair or affect the rights of the Landlord to receive and collect
the Insurance proceeds, and that the coverage provided by the Policies will not
be affected by the performance of any Work in or about the Premises.
E. Nothing in this Lease will prevent the Tenant from acquiring and
maintaining insurance of the kind in the amounts as provided in this paragraph
under a blanket insurance policy or policies (collectively, the "Blanket
Policy") which includes other properties as well as the Premises if the Blanket
Policy (i) will specify in the policy the amount of the total insurance
allocated to the Premises that will not be less than the amounts required by
this Lease, (ii) the amounts specified will be sufficient to prevent any one of
the assureds from becoming a co-insurer, and (iii) the Blanket Policy will
comply as to endorsements and coverage with the terms of this Lease.
F. If the Tenant fails to obtain or fails to maintain any insurance
required by this Lease, the Landlord may procure the insurance and the Tenant
will reimburse the Landlord for all expenses incurred by the Landlord.
G. If any Building is destroyed or damaged in whole or in part by
fire or other casualty (the "Occurrence"), this Lease will continue in full
force and effect and the Rent and other obligations payable or to be performed
by the Tenant as provided in this Lease will not ▇▇▇▇▇ or be reduced because of
an Occurrence except as provided in Paragraph 11.H.
(1) Subject to the terms of any Leasehold Mortgage: all
insurance policies with respect to damage to or destruction of the Buildings
will provide that any Insurance proceeds to be paid will be adjusted solely by
the Landlord and the Tenant, as their interests may appear. The net proceeds, if
less than $200,000, will be paid to the Tenant. The net proceeds, if over
$200,000, will be handled as follows, at the option of Tenant:
(a) The proceeds may be paid to and deposited with
-15-
a bank jointly selected by the Landlord, the Tenant, and any Leasehold
Mortgagee, as insurance trustee (the "Insurance Trustee"), that will hold, apply
and make the proceeds available as provided in this Lease; or
(b) The Tenant will furnish a bond or letter of credit for the
benefit of Landlord, in a form satisfactory to Landlord in the amount of the
Insurance proceeds, or such lesser amount as set forth below, and upon receipt
by Landlord of such bond or letter of credit the insurance proceeds will be
released to Tenant. Five days prior to the time that Tenant makes its election
regarding handling of the Insurance proceeds, Tenant will notify Landlord in
writing whether Tenant has elected the Reconstruction Obligation or the
Reclamation Obligation. If Tenant elects the Reconstruction Obligation, Tenant
will proceed to restore the Buildings to at least the reasonable equivalent of
the previous condition of the Buildings. If applicable, either the Insurance
Trustee will make the proceeds available upon completion of and payment for the
Reconstruction or Reclamation Obligation, or, upon satisfactory completion of
and payment for completion of the Reconstruction or Reclamation Obligation, the
bond or letter of credit will be canceled. If Tenant elects the Reclamation
Obligation, then Tenant will, within 30 days thereafter, provide Landlord with
a written plan for completion of the Reclamation Obligation, including a
reasonable engineer's estimate of probable cost. When the Landlord has indicated
in writing that the Landlord approves the reclamation plan and approves the
engineer's estimate of estimated cost, 125% of the probable cost of reclamation
will be retained by the Insurance Trustee from the Insurance proceeds (or the
letter of credit or bond need only be in that amount), and the Tenant will
proceed to complete the Reclamation Obligation within 180 days of the date of
election of the Reclamation Obligation using the Insurance proceeds to do so.
The remainder of the Insurance proceeds may be released to Tenant and any
Leasehold Mortgagee. If the Tenant elects the Reclamation Obligation, provided
all other obligations of Tenant as provided in this Lease are satisfied,
Landlord will have no other claim on the Insurance proceeds, and the Lease will
terminate upon completion of the Reclamation Obligation.
(2) The Tenant will give prompt notice of any Occurrence to the
Landlord if the damage or loss is or may be over $50,000, and the Tenant,
regardless of the dollar amount of an Occurrence, will promptly repair, replace
and rebuild the Buildings to the extent of the value and as nearly as
practicable to the character of the Buildings existing immediately before the
Occurrence. If the Occurrence is over $200,000, as provided in paragraph 11
(G)(1) above, the Tenant will elect either the Reconstruction or
-16-
Reclamation Obligation, and will thereafter proceed as follows:
(a) Before starting any reconstruction or reclamation work (the
"Insurance Work"), Plans will be filed with and approved by all City and other
governmental authorities having jurisdiction of the Insurance Work (the
"Governmental Approvals"), and a fixed fee estimate for all costs of the
Insurance Work will be obtained by the Tenant and furnished to the Landlord.
(b) Before starting any Insurance Work, the Tenant will deliver to
the Landlord a certificate of insurance evidencing a Comprehensive Insurance
policy as provided in this Lease and a Builder's Risk insurance policy covering
the Work.
(c) The Insurance Work will start within 90 days after settlement
is made with the Insurance companies and the Insurance proceeds are paid to the
Insurance Trustee or the Tenant, as provided in this Lease, and the Governmental
Approvals are obtained. The Reconstruction Obligation will be completed within a
reasonable time, free and clear of all liens and encumbrances, except any
Leasehold Mortgage, as provided in the Plans. The Reclamation Obligation will be
completed within 180 days, free and clear of all liens and encumbrances, and the
lien of the Leasehold Mortgagee will be fully released. The Reclamation
Obligation will be completed as provided in the Plans.
(d) At least 10 days before starting the Reclamation or
Reconstruction Obligation, the Tenant will notify the Landlord if increased
Insurance premiums will be charged, and the Tenant will pay the increased
premiums, if any, charged by the Insurance companies carrying Insurance on the
Buildings to cover the additional risk during the course of the Insurance Work.
(e) The Insurance Trustee or the Tenant, as the case may be, will
apply the net proceeds of any Insurance to the payment of the cost of the
reconstruction or reclamation Insurance Work, as the Insurance Work progresses.
If the net proceeds are held by an Insurance Trustee (1) payments will be made
against properly certified vouchers of a competent architect and general
contractor in charge of the Insurance Work that are selected by the Tenant and
(2) the Insurance Trustee will advance out of the Insurance proceeds toward each
payment, to be made by or on behalf of the Tenant, an amount that bears the same
proportion to the payment as the whole amount received by the Insurance Trustee
bears to the total estimated cost of the Insurance Work, except that the
Insurance Trustee will withhold 10 percent from each amount paid until the
Insurance Work is completed, and proof is furnished that no lien or liability
has attached or
-17-
will attach to the Premises with respect to the Insurance Work. If the total
estimated cost of the Insurance Work is over the amount of the net Insurance
proceeds received by the Insurance Trustee, the Insurance Trustee will require
the Tenant, before the Insurance Work is started, to secure the Insurance
Trustee by surety bond, letter of credit or cash deposit equal to the amount of
the excess of the estimated cost over the net Insurance proceeds as security for
the due completion, within a reasonable time, subject to force majeure, of the
Insurance Work, and the cash deposit will be deemed to be part of the net
Insurance proceeds for the purpose of this paragraph. If the Insurance proceeds
exceed the cost of the Insurance Work, the balance remaining after payment of
the cost of the Insurance Work will be paid over and belong to the Tenant.
H. This Lease will not terminate (unless Tenant elects and properly
completes the Reclamation Obligation) or be affected in any manner because of
the Occurrence, or because of the untenantability of the Premises or of the
Buildings, and the Tenant will pay or perform the Rent and all other obligations
as provided in this Lease without abatement or reduction, except that Tenant
will be relieved of the "continuous operation" requirement and of the
requirement to meet the Employment Standard, so long as the Tenant starts and
promptly completes repairs and resumes the business operations of the Tenant as
soon as repairs are complete, but in any event not later than 12 months from the
date the business operations of the Tenant were suspended as the result of an
Occurrence.
12. Condemnation Provisions.
------------------------
A. If title to the whole or substantially all of the Premises is
taken or condemned by any competent authority (save for the City of Grants) for
any public or quasi-public use, at the option of the Tenant to be exercised by
the Tenant giving written notice to the Landlord within 30 days of the taking or
condemnation, this Lease will cease and terminate, all monetary obligations
payable or performable by the Tenant as provided in this Lease will be prorated
as of the date of vesting title in the condemnation proceedings, and the total
award made with respect to the Premises less all expenses incurred with respect
to the condemnation action (the "Net Award"), will be apportioned between the
Landlord and the Tenant as provided in this Lease subject to the rights of any
Leasehold Mortgagee. The amount of the damages to which the Tenant is entitled
will first be used by the Tenant to obtain a complete release of any Leasehold
Mortgage.
B. If title to less than the whole or substantially all of the
Premises is taken or condemned by any competent authority for any public or
quasi-public
-18-
use, and the portion of the Premises not taken is sufficient for the continued
operation of the Premises as contemplated by this Lease, the Rent and the other
obligations payable and performable by the Tenant as provided in this Lease for
the remainder of the Term will be reasonably reduced by the Landlord, in
Landlord's reasonable discretion.
C. The rights of the Landlord and the Tenant to the Net Award on a
taking or condemnation will be determined as follows and in the following order
of priority:
(1) If a taking, partial, whole or substantially all, as the case
may be, occurs, the Landlord will be entitled to receive that portion of the
award, with interest on the award, representing compensation for the value of
the Land taken, including consequential damage to any part of the Premises not
taken, and damages measured by the difference in value of the Land immediately
before and after the taking. The Land will be considered as vacant unimproved
land, unencumbered by this Lease.
(2) If the whole or any part of the Premises is taken, the balance
of the award after payment of the portion specified in the preceding subsection
to the Landlord will be paid to the Tenant, except that if any Buildings
existing on the Premises are damaged or partially destroyed by a partial taking
of less than the whole or substantially all of the Premises, and this Lease is
not surrendered and terminated by the Tenant as provided in this paragraph, the
Tenant will rebuild, repair or replace the Buildings, (the "Repair") subject to
the following provisions:
(a) If infrastructure site improvements other than Buildings
are taken or damaged, the Tenant will Repair the infrastructure site
improvements within portions of the Premises not taken but needed for the
business of the Tenant.
(b) If the Buildings are damaged or partially destroyed by a
partial taking and the remaining portion of the Buildings can reasonably be
restored as a complete building capable of producing a fair and reasonable
proportionate return, the Tenant will repair, replace or rebuild the Buildings
in a reasonable manner.
(C) If the Buildings are damaged or partially destroyed by a
partial taking, and the Buildings cannot reasonably be Repaired as provided in
this paragraph, the Tenant will demolish the remaining portion of the Buildings
and clear and reclaim the Land. The Tenant will Repair the Buildings with
Buildings of comparable quality and characteristics to the extent that the
remaining portion of the Premises can reasonably accommodate the Buildings.
D. The Tenant will not be required to spend sums in the Repair of
-19-
the Buildings over the sums paid to the Tenant as provided in this paragraph.
E. If the values of the respective interests of the Landlord and
the Tenant are determined as provided in this paragraph in the condemnation
action, the values so determined will be conclusive upon the Landlord and the
Tenant. If the values are not separately determined, the values will be
determined by the Landlord and the Tenant.
F. The Landlord, the Tenant, and any person or entity having an
interest in the award or awards will have the right to participate in any
condemnation action for the purposes of protecting their interests. Each party
so participating will pay its own expenses.
G. If the whole or any part of the Premises is taken or condemned
by any competent authority solely for the temporary use or occupancy of the
authority, this Lease may be terminated by the mutual agreement of Landlord and
Tenant.
13. Assignment or Subletting.
-------------------------
Subject to the Leasehold Mortgage paragraph of this Lease, the
------------------
Tenant will not sell, assign, mortgage, pledge or transfer any interest in this
Lease and will not sublet all or any part of the Premises or permit anyone to
use or occupy the Premises without the prior written approval of the Landlord,
which approval may be unreasonably and arbitrarily delayed, deferred or denied.
14. Indemnity.
---------
A. The Tenant will indemnify and defend the Landlord against any
expense, loss or liability, resulting from:
(1) Liens;
(2) Claims and awards of damage for death, injury or property
damages with respect to the Premises;
(3) Delay by the Tenant in surrendering the Premises,
including claims made by any succeeding tenant because of delay;
(4) Failure of the Tenant to perform any obligation to be
performed by the Tenant as provided in this Lease;
(5) Failure of the Tenant to protect the Landlord and the
Premises against Hazardous Materials as provided in Section 813(9) of this
Lease; and
(6) Actions or demands with respect to any of the foregoing
(the "Indemnities").
However, if Section 56-7-1 NMSA 1978 is applicable to this
Lease, the Indemnities will not extend to liability, claims, damages, losses or
expenses,
-20-
including fees of lawyers, relating to the construction, installation,
alteration, modification, repair, maintenance, servicing, demolition,
excavation, drilling, reworking, grading, paving, clearing, site preparation or
development of any real property or any improvement of any kind on, above or
under real property and arising out of (1) the preparation or approval of maps,
drawings, opinions, reports, surveys, change orders, designs or specifications
by the Landlord, or the agents or employees of the Landlord, or (2) the giving
of or the failure to give direction or instructions by the Landlord, or the
agents or employees of the Landlord, where the giving or failure to give
directions or instructions is the primary cause of bodily injury to persons or
damage to property.
B. The Tenant will reimburse the Landlord on demand for any payment
made by the Landlord to which the Indemnities relate, including the reasonable
lawyer fees and costs incurred by the Landlord in establishing the right of the
Landlord to indemnity as provided in this Lease.
C. The Tenant may contest the validity of, defend, settle and
compromise any matter to which the Indemnities relate.
D. The Landlord may post on the Premises at any time any reasonable
notices to protect the rights of the Landlord.
15. End of Term.
-----------
A. At the end of the Term, if Tenant is not then in default, the
Tenant will assume the Departure Obligation as defined in paragraph 1(C), and
will elect either the Building Transfer Obligation or the Reclamation
Obligation, and will promptly start to perform the obligation elected.
B. If the Tenant holds over beyond the end of the Term, the Tenant
will be a tenant-at-will at an annual Rent of $120,000, payable in twelve equal
monthly payments, and will vacate the Premises on demand of the Landlord or be
deemed to be in forcible detainer of the Premises.
16. Default of Tenant; Remedies of Landlord.
---------------------------------------
A. The Tenant will be in default on the happening of any of the
following (the "Default of Tenant"):
(1) The failure of the Tenant to make timely payment of any
monetary obligations of the Tenant payable to the Landlord as provided in this
Lease within 30 days after Notice from the Landlord is given to the Tenant.
(2) The failure of the Tenant to perform within 30 days after
Notice from the Landlord is given to the Tenant with respect to any other
obligation of
-21-
the Tenant as provided in this Lease that can be performed within the 30-day
period.
(3) The failure of the Tenant to start, within 30 days after
Notice from the Landlord, to perform any other obligation of the Tenant as
provided in this Lease that by the nature of this lease cannot be performed
within 30 days, and to complete correcting the failure to perform without
interruption and with diligence, such that the default will be fully cured
within ninety days.
(4) Failure to meet the Employment Standard for a period of
more than 45 days after written notice has been given to Tenant by Landlord.
However, Tenant shall have a period of 45 days in which to reestablish
compliance with the Employment Standard in which event the default shall be
cured and the Lease shall remain in full force and effect, provided, however,
that the benefit of such notice and cure period shall not apply more often than
once in any two year period.
B. On the Default of Tenant, subject to the Leasehold Mortgage
------------------
paragraph of this Lease, the Landlord will have all cumulative remedies
available to the Landlord at law or equity in New Mexico for the breach or
default of this Lease by the Tenant, including, without limitation, termination
of this Lease, retaking possession of the Premises with or without termination
of this Lease, and proceeding to recover any damages, including any unpaid
monetary obligations of the Tenant payable to the Landlord, or the value of any
unperformed obligations of the Tenant to be performed by the Tenant as provided
in this Lease.
17. Default of Landlord; Remedies of Tenant.
---------------------------------------
A. The Tenant will look solely to the estate of the Landlord in
the Land for the collection of any judgment or order requiring payment of money
by the Landlord if the Landlord defaults in or breaches this Lease; no other
assets of the Landlord will be subject to levy, execution or other judicial
process for the satisfaction of any claim of the Tenant; and the Landlord will
not be liable for any default or breach or for any indirect, special or
consequential damages except to the extent of the estate of the Landlord in the
Land.
B. If this Lease provides that the exercise of any right by
the Tenant or the performance of any obligations of the Tenant is subject to the
prior written consent of the Landlord and that the consent of the Landlord will
not be unreasonably withheld or delayed, then in any case in which the Landlord
withholds or delays the consent of the Landlord, the determination and action by
the Landlord will be final and conclusive upon the Tenant unless, however,
within 30 days after notice from the Landlord
-22-
of the determination of the Landlord, the Tenant files an action for declaratory
judgment or equitable relief in the appropriate court in Cibola County, New
Mexico, seeking declaratory or injunctive relief from the determination of the
Landlord, which declaratory or injunctive relief will be the sole remedy of the
Tenant for any withholding or delaying of consent by the Landlord. If any action
for declaratory or injunctive relief is filed by the Tenant as provided in this
Section, the sole issue will be the determination if the withholding or delaying
of consent by the Landlord was reasonable or unreasonable, and if a
determination is made that the withholding or delaying of consent by the
Landlord was unreasonable, then the decision will annul the withholding or
delaying of consent, the annulment being the sole remedy of the Tenant, the
Tenant and the Landlord intending (as to which the Tenant and the Landlord are
conclusively bound) no withholding or delaying of consent by the Landlord, or
any decision of any court with respect to the consent (i) will not impose any
financial liability upon or result in any damages being recoverable from the
Landlord; or (ii) create any right cognizable or remedy enforceable in favor of
the Tenant and against the Landlord in law or equity or under any special
statutory proceeding or at all (except as provided in this Section).
C. The obligations of the Landlord as provided in this Lease will
be deemed covenants, not conditions. The Landlord will not be in default as
provided in this Lease until the Landlord has failed to start performance within
30 days, or such additional time as is reasonably required, to correct the
default, after delivery of Notice by the Tenant to the Landlord specifying the
failure of the Landlord to perform any obligation as provided in this Lease.
D. The Tenant expressly waives any right to a trial by jury in any
action to enforce or defend any rights as provided in this Lease or as provided
in any amendment, instrument, document or agreement delivered, or later
delivered with respect to this Lease or arising from any landlord and tenant
relationship existing between the Landlord and the Tenant with respect to this
Lease. The Tenant agrees that any such action will be tried before a court of
competent jurisdiction and not before a jury.
18. Right to Charge.
---------------
If the Tenant fails to pay or perform any obligation to be paid or
performed by the Tenant as provided in this Lease with respect to ad valorem
property taxes or to any other obligation non-payment or non-performance of
which could give rise to a Lien against the Land, the Landlord may make the
payment or perform the obligation, and the Tenant on demand will pay the
Landlord as additional Rent the amount reasonably
-23-
paid, or the reasonable cost of the performance, plus interest at the rate of
eighteen percent a year from the date of the payment or performance of the
Landlord, and reasonable fees of lawyers.
19. Development Cooperation.
-----------------------
The Landlord and Tenant will grant to public entities or public
service or utility corporations, for the purpose of serving the Premises and
adjacent real property owned, leased or otherwise controlled by the Tenant,
reasonable rights-of-way or easements on, under or over the Premises consistent
with ordinary business practices for vehicular access, for telephone,
electricity, water, sanitary or storm sewers and other utilities and municipal
or special district services.
20. Leasehold Mortgages.
--------------------
A. Leasehold Mortgages Authorized. The Tenant may mortgage the
------------------------------
Leasehold Estate to one Leasehold Mortgagee or to a syndicate of Leasehold
Mortgagees, provided the loan is serviced by a single entity. All of the rights
of the Landlord reserved or granted in this Lease will be subject to the rights
of any such Leasehold Mortgage as provided below.
B. Notice to Landlord.
-------------------
The Tenant will provide notice to the Landlord of any Leasehold
Mortgage, and will provide a copy of the Leasehold Mortgage, any changes with
respect the Leasehold Mortgage during the term of the Leasehold Mortgage, and
the name, telephone and fax numbers and mailing and surface address of the
Leasehold Mortgagee.
C. Consent of Leasehold Mortgagee Required. No cancellation,
-----------------------------------------
surrender or modification of this Lease will be effective as to any Leasehold
Mortgagee unless first approved in writing by the Leasehold Mortgagee.
D. Default Notice. The Landlord, on providing the Tenant the
--------------
Notice of (i) Default of Tenant as provided in this Lease, or (ii) any act or
omission of the Tenant on which the Landlord may claim a default, will provide a
copy of the Notice to any Leasehold Mortgagee. If, because of the Default of
Tenant, the Landlord elects to terminate this Lease, the Notice of the Landlord
to the Tenant will include the date on which the Landlord intends to terminate
this Lease. No Notice by the Landlord to the Tenant will be deemed to have been
given unless a copy of the Notice has been given to the Leasehold Mortgagee.
When the Notice has been given to a Leasehold Mortgagee, the Leasehold Mortgagee
will have 20 days to remedy any Default of Tenant or acts or omissions provided
for in the Notice, and in each instance the additional periods of time
-24-
provided for in this Leasehold Mortgages paragraph of this Lease (the "Grace
--------------------
Period"), to remedy, start remedying, or cause to be remedied the Defaults of
Tenant or acts or omissions provided for in the Notice. The Landlord will accept
performance by a Leasehold Mortgagee as if the performance were done by the
Tenant. The Landlord will not terminate this Lease if during the Grace Period
the Leasehold Mortgagee:
(1) Gives Notice to the Landlord of the desire of the Leasehold
Mortgagee to pay and perform, and does in fact pay and perform before the end of
the Grace Period, all the Rent (including the Employment Standard) and the other
obligations of the Tenant payable to the Landlord as provided in the Notice of
default and which may become due during the Grace Period, and
(2) using the diligent best efforts of the Leasehold Mortgagee,
complies in good faith with reasonable diligence all other obligations of the
Tenant as provided in this Lease.
E. Procedure on Default.
---------------------
(1) If despite payment and performance of the Leasehold Mortgagee
as provided in the preceding subparagraph, the Landlord elects to terminate this
Lease by reason of the Default of Tenant, the specified date for the termination
of this Lease as fixed by the Landlord in the Notice of Default of Tenant will
be extended for a period of 90 days (the "Additional Grace Period") if the
Leasehold Mortgagee during the 90-day period:
(a) Pays and performs the Rent, including the Employment
Standard, and any other obligations of the Tenant payable to the Landlord as
provided in this Lease as the Rent and other obligations become due, and
continues the diligent good faith best efforts of the Leasehold Mortgagee to
perform all of the other obligations of the Tenant as provided in this Lease;
and
(b) If not enjoined or stayed, takes steps to acquire or sell
the Leasehold Estate by foreclosure of the Leasehold Mortgage or other
appropriate means and prosecutes the foreclosure to completion with due
diligence.
(2) If, at the end of the Additional Grace Period, the Leasehold
Mortgagee is complying with this Leasehold Mortgages paragraph of this Lease,
-------------------
this Lease will not then terminate and the time for completion by the Leasehold
Mortgagee of the foreclosure proceedings of the Leasehold Mortgagee will
continue so long as the Leasehold Mortgagee is enjoined or stayed and later
for so long as the Leasehold Mortgagee proceeds to complete steps to acquire or
sell the Leasehold Estate by
-25-
foreclosure of the Leasehold Mortgage or by other appropriate means with
reasonable diligence and continuity. If the Default of Tenant is cured and the
Leasehold Mortgagee discontinues the foreclosure action, this Lease will
continue in full force and effect as if the Tenant had not defaulted.
(3) If a Leasehold Mortgagee is complying with this Leasehold
---------
Mortgages paragraph of this Lease, on acquisition of the Leasehold Estate by the
---------
Leasehold Mortgagee or any other acquirer, this Lease will continue in full
force and effect as if the Tenant had not defaulted, subject to the reasonable
prior approval by Landlord of the acquirer.
(4) For the purpose of this Leasehold Mortgages paragraph of this
-------------------
Lease, any acquirer of the Leasehold Estate will be deemed to have agreed to
perform all of the obligations of the Tenant to be performed as provided in this
Lease only for so long as the acquirer is the owner of the Leasehold Estate. If
the Buildings have been or become materially damaged on, before or after the
date of the purchase and assignment of the Leasehold Mortgage, the Leasehold
Mortgagee or the acquirer will be obligated to Repair the Buildings only to the
extent of the net insurance proceeds received by the Leasehold Mortgagee or the
acquirer by reason of the damage. The Landlord will have the right to reasonably
approve any acquirer of the Leasehold Estate other than the Landlord, and the
Landlord will have reasonable discretion with respect to the decision to approve
or not approve such an acquirer of the Leasehold Estate. In exercising such
reasonable discretion of the Landlord, the Landlord may take the ability of the
acquirer of the Leasehold Estate to pay and perform the Rent, including the
Employment Standard, in consideration.
F. Substitute Lease. If the Landlord terminates this Lease because
----------------
of a Default of Tenant, the Landlord will, in addition to providing the notices
of default and termination as required by this Leasehold Mortgages paragraph
-------------------
of this Lease, provide the Leasehold Mortgagee with (i) a Notice that the Lease
has been terminated (ii) a statement of all sums which would at that time be due
as provided in this Lease except for the termination, and (iii) a statement of
all other defaults, if any, known to the Landlord. The Landlord will enter into
a Substitute Lease (the "Substitute Lease") of the Premises with the Leasehold
Mortgagee for the remainder of the Term, effective as of the date of termination
of this Lease, at the Rent (including the Employment Standard) and the other
obligations of the Tenant payable and performable to the Landlord and on the
terms of this Lease, if the Landlord approves the acquirer of the Leasehold
Estate as provided in this
-26-
Lease, and:
(1) The Leasehold Mortgagee gives a Notice to the Landlord
requesting the Substitute Lease within 30 days after the date the Leasehold
Mortgagee receives the termination Notice from the Landlord; and
(2) The Leasehold Mortgagee pays to the Landlord at the time of
the signing and delivery of the Substitute Lease any and all sums which would be
due but for the termination; and
(3) The Leasehold Mortgagee agrees to remedy any of the Default of
Tenant of which the Leasehold Mortgagee was notified by the termination Notice
of the Landlord and which are reasonably susceptible of being so cured by the
Leasehold Mortgagee.
The new tenant as provided in the Substitute Lease will have the
same right, title and interest in and to that portion of the Premises subject to
the Substitute Lease as the Tenant had. The new tenant as provided in the
Substitute Lease will be liable to perform the obligations imposed on the new
tenant by the Substitute Lease (including the Employment Standard) only during
the period the new tenant has ownership of the Leasehold Estate.
G. Legal Actions. The Landlord will give the Leasehold Mortgagee
-------------
prompt Notice of any legal action between the Landlord and the Tenant
or between the Landlord, the Tenant and any condemning authority involving
obligations as provided in this Lease. The Leasehold Mortgagee will have the
right to intervene in the action and become a party to the action, and the
Landlord and the Tenant will approve the intervention. If the Leasehold
Mortgagee elects not to intervene or become a party to the action, the Landlord
will give the Leasehold Mortgagee or other acquirer Notice of, and a copy of,
any award or decision made in the action.
H. Future Amendments. If any Leasehold Mortgagee to which the Tenant
-----------------
proposes to make a Leasehold Mortgage on the Leasehold Estate requires as a
condition to making any loan secured by the Leasehold Mortgage that the Landlord
agree to amendments of this Lease, the Landlord will enter into an agreement
with the Tenant in recordable form making the amendments that are requested by
the Leasehold Mortgagee only if the changes are reasonable in the sole and
absolute discretion of the Landlord. However, the Landlord will not be required
to make any agreement that changes the Premises; decreases the Rent (including
the Employment Standard or other obligations of the Tenant payable or
performable to the Landlord as provided in this Lease; enlarges the
-27-
Term; requires spending funds by the Landlord which the Landlord is not
obligated to spend as provided in this Lease; or in any way enlarges the
obligations of the Landlord as provided in this Lease. The foregoing enumeration
is not intended as a limitation on the right of the Landlord to refuse to
consent to an amendment if the Landlord acts reasonably. All expenses incurred
by the Landlord with respect to any amendment will be paid by the Tenant or
reimbursed by the Tenant to the Landlord.
I. Estoppel Certificate. The Landlord will, without charge, at
--------------------
any time after the date of this Lease, but not more frequently than twice in any
12-month period, within 30 days after Notice of a written request from the
Tenant to the Landlord, certify as to the status of the Lease and consent to the
assignment by the Tenant of this Lease as additional collateral for the benefit
of any Leasehold Mortgagee.
21. Bankruptcy; Insolvency. The Tenant will be deemed to be in
----------------------
default as provided in this Lease (without the Landlord giving any notice
declaring the default), if all or substantially all of the assets of the Tenant
are placed in the hands of a receiver or trustee, or if the Tenant files a
voluntary petition in bankruptcy, makes an assignment for the benefit of
creditors, admits in writing that the Tenant cannot pay the debts of the Tenant
as the debts become due, or is finally adjudicated a bankrupt, or if the Tenant
petitions or institutes any proceedings under the United States Bankruptcy Code
or under any other similar law.
If a receiver, trustee or debtor-in-possession seeks to assume this
Lease under the provisions of the Code or under some similar bankruptcy or
insolvency statute, then this Lease or any interest in and to the Premises will
not become an asset in any of the proceedings, will not be assumed and will not
be assignable by the receiver, trustee or debtor-in-possession, unless the
receiver, trustee or debtor-in-possession, within the time provided under the
Code or statute cures all outstanding defaults and gives adequate assurances of
future performance, including without limitation, assurances with respect to the
payment and performance of the Rent (including the Employment Standard) and the
other obligations of the Tenant as provided in this Lease, including the use and
operation provisions of this Lease. In any such event as provided in this Lease
in which the cures are not made or the adequate assurances are not given within
the time provided, this Lease will be deemed rejected and the Landlord may, in
addition to any and all rights or remedies of the Landlord as provided in this
Lease or at law, but subject to the rights of any Leasehold Mortgagee, reenter
the Premises and take possession of the Premises and remove all persons and
contents from the Premises and neither the Tenant, nor any
-28-
guarantor of this Lease, nor any such receiver, trustee, debtor-in-possession,
committee of creditors or other legal entity created by such bankruptcy laws
will have further claim as provided in this Lease or any further interest in the
Premises.
As used in this Lease, the phrase "adequate assurances" means clear
and convincing evidence that the Tenant obligations as provided in this Lease
and as provided in the Code are likely to be timely performed during the entire
remaining balance of the term of this Lease and the person or entity which is to
render the performance has demonstrated to the satisfaction of the Landlord
substantial experience (for the use permitted in this Lease), has specifically
assumed the obligations of the Tenant as provided in this Lease, and is
contractually bound directly to the Landlord, taking into consideration that
full performance of the Lease, including continued satisfaction of the
Employment Standard, was a material inducement for the Landlord to enter into
this Lease.
22. Recording; Documents Affecting Title and Interest. The Tenant will
-------------------------------------------------
not do any act which may encumber the interest or title of the Landlord in and
to the Land.
23. General Provisions. For the purpose of this Lease:
------------------
A. Use of "Will or May". "Will" is a mandatory word denoting an
--------------------
obligation to pay or perform. "May" is a permissive word denoting an option.
B. Expense. Any action, either required or optional, taken by
-------
either the Landlord or the Tenant as provided in this Lease, is taken at the
expense of the actor unless otherwise specifically provided in this Lease. If
the Tenant requests anything of the Landlord that requires preparation of, or
review of, documents by the lawyers of the Landlord and if the Landlord accedes
to such request, the Tenant will reimburse the Landlord on demand any reasonable
legal fees and expenses incurred by the Landlord incident to the preparation or
review as additional Rent as provided in this Lease.
C. Approval. Except with respect to the Assignment and Subletting
-------- -------------------------
section of this Lease, the response to any request for approval as provided in
this Lease will not be unreasonably or arbitrarily withheld, delayed or
deferred.
D. Computation of Time. In computing any period of time by days
-------------------
as provided in this Lease, the date of the act, event or default from which the
designated period of time starts to run will not be included. The last day of
the period so computed will be included unless the day is a Saturday, Sunday or
a New Mexico or federal legal holiday, in which event the period will run until
the end of the next regular business day which is not a Saturday, Sunday or a
New Mexico or federal legal holiday.
E. Notices. All notices, requests, demands, waivers and other
-------
-29-
communications given as provided in this Lease will be in writing, and, unless
otherwise specifically provided in this Lease, will be deemed to have been given
(i) if delivered in person, upon delivery, or (ii) if mailed by certified or
registered mail, postage prepaid, and addressed to the Landlord or the Tenant at
the addresses provided below on the second business day after deposit in the
United States mail if addressed to an address located within the same state in
which the notice is being mailed or on the third business day after deposit in
the United States mail if addressed to an address located within a state other
than the state in which the notice is being mailed, or (iii) if sent by
overnight express delivery service, enclosed in a prepaid envelope and addressed
to the Landlord or the Tenant at the addresses provided below, on the first
business day after deposit with the service, or (iv) if sent by tested telex,
telegram, telecopy or other form of rapid transmission confirmed by mailing (as
provided in this paragraph), at substantially the same time as the rapid
transmission. Either the Landlord or the Tenant may change their respective
address as provided in this paragraph by giving written notice of the change to
the other (the "Notice") as provided in this paragraph. The addresses for notice
are:
(1) Notice to Landlord:
------------------
City of Grants
P. ▇. ▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: City Manager
With copy to:
Sutin, Thayer & ▇▇▇▇▇▇
A Professional Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
P. O. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
(2) Notice to Tenant:
-----------------
Colorado Greenhouse, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ #▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
-30-
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Chief Executive Officer
With copies to:
Holme ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq
F. Waiver; Remedies. No waiver of any default as provided in this
----------------
Lease or delay or omission in exercising any right or power of the Landlord or
the Tenant will be considered a waiver of any other default as provided in this
Lease. No exercise or failure to exercise any right or power of the Landlord or
the Tenant as provided in this Lease will be considered to exhaust that right or
power. The exercise of or failure to exercise any one of the rights and remedies
of the Landlord or the Tenant as provided in this Lease will not be deemed to be
instead of, or a waiver of, any other right or remedy as provided in this Lease.
The Tenant may waive any of the terms or conditions precedent to the obligations
of the Tenant as provided in this Lease. Failure on the part of the Landlord to
complain of any action or nonaction on the part of the Tenant, no matter how
long the action or nonaction on the part of the Tenant may continue, will not be
deemed to be a waiver by the Landlord of any of the rights of the Landlord as
provided in this Lease. Further, no waiver at any time of any of the terms of
this Lease by the Landlord will be construed as a waiver of any of the other
terms of this Lease and a waiver at any time of any of the terms of this Lease
will not be construed as a waiver at any later time of the same provisions. The
consent by the Landlord to or of any action by the Tenant requiring the consent
of the Landlord will not be deemed to waive or render unnecessary consent of the
Landlord to or of any later similar act by the Tenant.
G. Time of Essence. Time is of the essence in the performance
---------------
of all the terms of this Lease.
H. Binding Effect. This Lease is binding upon, and inures to the
--------------
benefit of, the Landlord or the successors, successors-in-interest, assigns,
transferees and nominees of Landlord and the Tenant and the successors,
successors-in-interest, assigns, transferees, and nominees of the Tenant.
I. Entire Agreement. Subject to the terms of attached Exhibit A-1,
---------------- -----------
this Lease constitutes the entire agreement of the Landlord and the Tenant and
supersedes all previous agreements, written or oral, between the Landlord and
the Tenant. No statement, promise, or inducement made by the Landlord or the
Tenant, or the agent of
-31-
the Landlord or the Tenant, either written or oral, which is not provided in
this Lease, is binding upon the Landlord or the Tenant.
J. Headings and Use of Terms. The section and paragraph
-------------------------
headings to this Lease are for convenience and reference only. The words as
provided in the section and paragraph headings will not be held to explain,
modify, amplify or aid in the interpretation, construction or meaning of the
terms of this Lease. Terms defined in this Lease have the meaning, designation,
and significance ascribed to the terms defined in this Lease.
K. Partial Invalidity. If any term of this Lease, or the
------------------
application of the term to any person or circumstance is, to any extent, invalid
or unenforceable, the remainder of this Lease, or the application of the term to
persons or circumstances other than those as to which the term is held invalid
or unenforceable, will not be affected by the application, and each term of this
Lease will be valid and be enforced to the fullest extent permitted by law.
L. Paragraphs, Articles and Exhibits. All references in this
---------------------------------
Lease to paragraphs, subparagraphs and exhibits will, unless otherwise
indicated, be references to paragraphs, subparagraphs and exhibits to this
Lease.
M. Further Assurances. The Landlord and the Tenant will, without
------------------
additional consideration, sign, acknowledge, and deliver any other documents and
take any other action necessary or appropriate and reasonably requested by the
other to carry out the intent and purpose of this Lease.
N. Governing Law. The validity, meaning and effect of this Lease
-------------
will be determined as provided by the laws of New Mexico applicable to leases
made and to be performed in New Mexico.
0. Survival. The obligation of the Tenant to pay and perform any
--------
and all Rent and obligations owing by the Tenant to the Landlord as provided in
this Lease will survive the end or termination of this Lease.
P. Construction. Despite any term to the contrary in this
------------
Lease, this Lease may be modified, amended, discharged, changed or waived only
in writing, signed by the party against which enforcement of the modification,
amendment, discharge, change or waiver is sought. This sentence is intended by
the Landlord and the Tenant to override the holding of ▇▇▇▇▇▇ v. Sunstate
------------------
Realty, Inc., 119 N.M. 136, 889 P.2d 171 (1995), that a contract may be modified
-------------
by express or implied agreement of the parties to the contract as shown by the
words or conduct of the parties, even when the contract
-32-
itself specifies that all modification to the contract must be in writing. This
sentence is intended by the Landlord and the Tenant to incorporate the holding
in Board of Education, Gadsden Independent School District No. 16 ▇. ▇▇▇▇▇
--------------------------------------------------------------------------
▇▇▇▇▇▇▇▇ Construction CO., ▇▇▇ ▇.▇. ▇▇▇, ▇▇▇ ▇.▇▇ ▇▇▇ (▇▇. APP. 1994) and ▇▇▇▇▇▇
------------------------- ------
▇. ▇▇▇▇▇▇▇▇ Products Corp., 108 N.M. 643, 777 P.2d 371 (1989), that where the
--------------------------
contract requires that any modification be in writing, oral modifications are
ineffectual. Neither the Landlord nor the Tenant will ever assert or claim in
any action or arbitration with respect to this Lease that any term of this Lease
was modified in any respect, including by a "course of conduct," "course of
dealing" or by a "waiver or estoppel," except by a written amendment of this
Lease signed by the Landlord and the Tenant. Further, the language used in this
Lease will be construed according to the fair and usual meaning of the language,
and will not be' strictly construed for or against the Landlord or the Tenant.
The Landlord and the Tenant intend that the language used in this Lease means
what the language says. If a matter is specifically covered by the written terms
of this Lease, no agreement with respect to the matter will be implied on the
theory of good faith or fair dealing or any other theory.
Further, the Landlord and the Tenant intend that the rights and
remedies provided in the Lease are plain, adequate and complete and, in any
action or arbitration with respect to this Lease, no need exists for any court
or board of arbitrators to impose equitable solutions, such as judicially
imposed accountings, to meet any problem presented.
The Landlord and the Tenant have each been represented by capable
and competent counsel with respect to this Lease and no great disparity exists
in the bargaining power of the Landlord and the Tenant.
The Landlord and the Tenant also each recognize that the Lease
creates both property rights and contract rights within a sophisticated
commercial setting and that the relationship of the Landlord and the Tenant does
not create fiduciary duties or responsibilities as between the Landlord and the
Tenant.
Q. Attorneys' Fees. If the Landlord or the Tenant is required to
---------------
initiate or defend litigation or other legal action in any way with respect
to this Lease, the prevailing party in the litigation or action, in addition to
any other relief that may be granted, whether legal or equitable, will be
entitled to reasonable attorneys' fees. Attorneys' fees will include attorneys'
fees on any appeal, and, in addition, a party entitled to attorneys' fees will
also be reimbursed for all other reasonable costs for investigating the action,
taking depositions, conducting other discovery, travel, and all other necessary
costs
-33-
incurred in the litigation. All fees due as provided in this Lease will be paid
whether or not the litigation is prosecuted to judgment.
DATED: May 14, 1998.
LANDLORD: TENANT:
-------- ------
CITY OF GRANTS, COLORADO GREENHOUSE, INC.,
a municipal corporation a Delaware corporation
By [SIGNATURE ILLEGIBLE] By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------- -----------------------------
---------------- ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Its Mayor Its Chief Executive Officer
STATE OF NEW MEXICO
COUNTY OF CIBOLA
This instrument was acknowledged before me on May 15 , 1998, by
------------
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ , Mayor of City of Grants, a municipal corporation, on
--------------------
behalf of the City.
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------
Notary Public
My commission expires:
4/21/2000
-------------------------
-34-
STATE OF NEW MEXICO
COUNTY OF CIBOLA
This instrument was acknowledged before me on May 15, 1998, by ▇▇▇▇▇ ▇.
------
▇▇▇▇▇▇▇, Chief Executive Officer of Colorado Greenhouse, Inc., a Delaware
corporation, on behalf of the corporation.
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------
Notary Public
My commission expires:
4/21/2000
---------------------------
40017
-35-
THE LAND
--------
(To be Attached)
BOUNDARY SURVEY PLAT
-------------------- 70.0000 ACRES, NW1/4
SEC. 32, T.11N., R.9W.
N.M.P.M.
City of Grants
Cibola County, NM
[MAP OUTLINING PLAT OF
PROPERTY APPEARS HERE]
Note; Basis of Bearings is a Property/
---- Ownership Plat furnished by City of
Grants, prepared by ▇▇▇▇▇▇▇▇
Associates/P.A., Phoenix, AZ (Project
No. 5-90-060, Sheet No. G-4), and a
survey by ▇▇▇▇ ▇. ▇▇▇▇▇▇, NM LS
No. 9286, dated Jan. 23, 1991.
* Corners set this survey 1/2" rebars,
caps No. 6262
DESCRIPTION
A tract of land situated within the northwest quarter of Section 32,
T.11N., R.9W., N.M.P.M., in the City of Grants, Cibola County, New Mexico, and
being more particularly described as follows:
Beginning at the northeast corner of said tract, from which point the
North 1/4 Corner of said Section 32 bears N 79 (DEGREES) 02'21" W, and is 329.25
feet distant;
Thence S 01 (DEGREES) 02' W, 1834.43 feet;
Thence S 89 (DEGREES) 42' 26" W, 1660.54 feet;
Thence N 01 (DEGREES) 02' E, 581.61 feet to a point on the West line of
said tract;
Thence N 01 (DEGREES) 00' 12" E, 1254.00 feet to the northwest corner of
said tract;
Thence N 89 (DEGREES) 45' 09" E, 1338.00 feet along the South right of
way line a 60.00-foot road (Camino de Coyote) to a point on the North line of
said tract;
Thence S 89 (DEGREES) 12' E, 323.25 feet along said North line to the
place of beginning, and containing 70.0000 Acres, more or less.
I ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, certify that I conducted and am responsible for
this survey, that this survey and plat are true and correct to the best of my
knowledge and belief, and that this survey and plat meet the Minimum Standards
for Surveying in New Mexico.
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
[SEAL OF ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ --------------------------------------
NEW MEXICO REGISTERED LAND ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, R.L.S. No. 6262
SURVEYOR APPEARS HERE] dba ▇▇▇▇▇▇ Surveying, ▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (505) 287/3960
Date of Survey: April 23, 1998
Owner(s): City of Grants, ▇.▇.
▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
WATER AND WASTEWATER PROVISIONS
-------------------------------
May __, 1998
Mr. ▇▇▇ ▇▇▇▇▇
Colorado Greenhouse, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
City of Grants
--------------
Dear ▇▇. ▇▇▇▇▇:
The City of Grants, New Mexico and Colorado Greenhouse, Inc. entered into a
Lease and Project Participation Agreement (the "Lease") on __________ , 1998.
The Lease requires the Company to operate two greenhouses and related facilities
for a period of 60 years. This letter notifies you of the manner in which the
City can now furnish its water and wastewater treatment to the Company for use
by the Company in its greenhouse facilities. Water and wastewater treatment will
be furnished pursuant to City ordinances and policies on water and wastewater,
as those ordinances and policies may be modified from time to time.
The City currently owns and operates its water and wastewater systems. As long
as the City continues to own and operate its water, the City will provide water
(as opposed to wastewater) services to the Company at the same rates and on the
same terms generally made available to industrial water users under City
ordinance. We understand that the Company will not require in excess of 360 acre
feet of water per year. Because the greenhouses will discharge a high volume of
relatively clean wastewater from its greenhouse operation, the City does not
expect that the Company's wastewater use will be comparable to that of an
average commercial wastewater system user. The City anticipates that substantial
amounts of the wastewater will be able to be discharged directly to the Coyote
del Mal Pais Golf Course without treatment, for reuse as golf course irrigation.
The City will provide separate meters for domestic and greenhouse uses. The City
will only ▇▇▇▇ Colorado Greenhouse for sewage treatment on the amount of water
utilized for domestic purposes, as long as the City continues to own and operate
its own wastewater system and the Coyote del Mal Pais Golf Course.
EXHIBIT A-1
-----------
Page -1- of 2
The provisions of the City's water and wastewater ordinances will need to be
complied with by the Company, including prompt payment of all fees and charges
associated with the connection and use of the City's water and wastewater
systems.
If the City elects to sell its water and wastewater utilities (which is not
currently contemplated) or the Coyote del Mal Pais Golf Course (also not
currently contemplated), the City would be willing to work with the purchaser in
good faith in an effort to enable Colorado Greenhouse to continue to receive
water and wastewater services on the same basis as users in the same
classification.
Please indicate your acknowledgment by signing this letter in the space below
and returning a copy to us.
Sincerely,
CITY OF GRANTS
By_____________________
Its City Manager
The terms and conditions described
above are acknowledged by:
COLORADO GREENHOUSE, INC.
By_____________________
Its
EXHIBIT A-1
-----------
Page -2- of 2
PERMITTED ENCUMBRANCES
----------------------
1. Reservations as shown in Patent for State Land recorded in Miscellaneous
Book 1, Pages 7838-7839, records of Cibola County, New Mexico.
2. Easement dated August 11, 1953, given by ▇. ▇. ▇▇▇▇▇▇ to El Paso Natural Gas
Co., recorded in Book 98, Page 384, records of Valencia County, New Mexico.
3. Easement dated December 22, 1983, given by ▇▇▇ ▇▇▇▇▇, et al, to Continental
Divide Electric Coop., Inc., recorded in Miscellaneous Book 1, Page 2845,
records of Cibola County, New Mexico.
4. In no event does this policy cover any mobile home that may be locate on the
insured premises.
5. Title to oil, gas, coal and other minerals within and underlying the
premises, together with the drilling rights, privileges and easements
appurtenant thereto, and production therefrom.
EXHIBIT A-2
-----------
SPECIFICATIONS IN CONNECTION
WITH BUILDINGS AND SITE PLANS
-----------------------------
(To be Provided)
EXHIBIT B
SPECIFICATIONS IN CONNECTION WITH BUILDINGS AND SITE PLANS
----------------------------------------------------------
Facility Description
--------------------
The greenhouse project facilities will consist of two 20-acre glass greenhouses,
built in two phases, plus a support building of approximately 50,000 square
feet.
Each greenhouse will be provided with computer controlled ventilation windows,
energy screen, drip irrigation system, roof sprinkler system, and a hot water
heating system including natural gas-fired hot water boilers.
The support building will house the boilers, irrigation equipment, water
treatment equipment, water storage tanks, boilers, offices, restrooms, luncheon
and storage areas.
The facility will also include suitable roads, parking areas, and a storm water
retention pond.
"AS-BUILT" SURVEY REQUIREMENTS CHECKLIST
----------------------------------------
The following information should be included on the plat of survey:
1. Scale, Date, Location of North, and Legend.
(1) Location. The location of any and all existing
----------
improvements or structures on the Land.
(2) Encroachments. That no improvements or structures
-------------
located on, under or adjacent to the Land are the subject of any encroachments,
protrusions, overlaps or overhangs.
(3) Area. The exact area of the Land in acres and square
----
feet.
(4) Easements. The location of all existing easements on,
---------
under or above the Land.
(5) Access. The premises, if any, over which ingress to or
------
egress from the Land from a dedicated public street or highway is necessitated.
2. Adjoining streets, roads, highways, alleys, drainages, waterways,
right-of-way lines, right-of-way widths and distances to the
property. Names of streets, roads, etc.,. as applicable. Indicate
exactly how actual physical access to and from the property to and
from a public street, etc. is afforded. If driveways or other cuts
in the curbs along any street, etc. upon which the property abuts do
not exist to afford access, indicate that fact. If drainages, septic
systems, waterways or ▇▇▇▇▇▇▇ exist that affect the property,
indicate that fact.
3. All points of reference should be tied to an identifiable monument
or intersection of streets.
4. All visible buildings, improvements or structures ("improvements")
and all known or indicated sub-surface improvements in place and the
measurements of the improvements and structures should be delineated
and labeled including the following:
a. Boundaries (all property line deflection points must have an
iron pin set in place). All boundary distances should be
expressed in feet and hundredths of feet. All courses should be
expressed in degrees, minutes and seconds.
EXHIBIT C
---------
Page -1- of 4
b. Utilities and septic systems that benefit or serve the property
(including visible apparent connecting lines to the property
from public utility lines), and volume and page numbers of all
easements provided, if recorded or established by recorded
subdivision plats.
c. Pavement and paved parking area, including size and number of
regular parking spaces and handicap parking spaces (shade edges
and show and number parking space lines). If the ordinances of
the County of Cibola, or City of Grants, New Mexico, including
any applicable extraterritorial ordinances, make a distinction,
show regular vs. compact automobile parking spaces. A statement
should be included with respect to the compliance by the
property with the parking space requirements of the County of
Cibola or City of Grants, New Mexico, or, of any
extraterritorial authority.
d. Walkways (please "dot" concrete) and signs.
e. Ingress and egress (curb cuts and driveways should be delineated
and labeled).
f. Vertical elevations should be delineated and labeled for all
known or indicated sub-surface improvements.
5. Building set-back lines should be shown on the property (as defined
by the County of Cibola or City of Grants, New Mexico, or
extraterritorial zoning ordinances or regulations, plat map and
restrictive covenants) and any other building restrictions
established by protective or restrictive covenants or site
development plans, including the volume and page numbers, if
recorded.
6. Lot, block or square designation, if applicable, and written
(narrative) legal description by courses and distances (metes and
bounds) on the plat of survey.
7. Location and dimensions (with same information as boundaries) of all
easements identified in the commitment for a policy of title
insurance, including the volume and page numbers, if recorded. A
later requirement may be that certificates from utility companies
should be attached or provided that evidence agreement of all the
lines shown on the plat of survey.
8. Location and dimensions (with the same information as boundaries) of
all
EXHIBIT C
---------
Page -2- of 4
encroachments (including encroachments of all known or indicated
sub-surface improvements in place) onto easements, rights-of-way,
set-back lines, the property, or any adjoining properties, etc.
9. Identification of all abutting lot numbers or names of subdivisions
or tracts.
10. Section, township and range, if applicable.
11. Street address (of each building) should be shown on the building.
12. Area of land and area of buildings in square feet and acres, and
distance of buildings to the boundary of the property and to
building set-back lines.
13. Vicinity sketch showing closest thoroughfare intersection.
14. The point of beginning of description (labeled on the plat of
survey).
15. True point of beginning of description (labeled on the plat of
survey).
16. Surveyor's seal or stamp on the plat of survey clearly showing
registration number.
17. Date of the plat of survey and original surveyor's signature on all
copies of the plat of survey.
18. Chart of curve data information to support length of curves used on
the plat of survey.
19. Curve tangent points indicated on survey lines.
20. Note stating whether or not survey has been balanced and adjusted.
21. Note stating if commitment for policy of title insurance was used
in defining easements and other recordings.
22. Field notes on the plat of survey, if applicable.
23. Indicate on the plat of survey, at all survey line deflections,
whether the survey monument was found or set, such as, "Found Iron
Pin" or "Iron Pin set."
24. Note stating whether or not the property appears in any Flood
Insurance Boundary Map, and, if so, further state the map number,
applicable zones and whether or not the property appears to be in
the "Flood Hazard Area" shown on that map.
25. Statements in the certificate of surveyor (see below) such as
"except as shown" are not acceptable. If exceptions exist, each
exception must be separately listed and fully described in the
certificate of the surveyor.
26. Statements to the effect "this survey is not to be used for
construction
EXHIBIT C
---------
Page -3- of 4
purposes" or "this survey is only to be used for loan purposes" are
not acceptable. Any limitation in the certificate of the surveyor
that the plat of survey is prepared "to the best of the knowledge"
of the surveyor, or words of similar import, are not acceptable.
27. The certificate of the surveyor should certify to Landlord, Lender
and Tenant as to all matters specified herein.
EXHIBIT C
---------
Page -4- of 4
MEMORANDUM OF LEASE
-------------------
City of Grants (the "Landlord") and Colorado Greenhouse, Inc. (the
"Tenant"), have signed and acknowledged a Lease dated as of
_______________, 199_ (the "Lease"), concerning the premises described in
attached Exhibit A (the "Premises").
---------
The Lease provides that for good and adequate consideration the
Landlord leases the Premises to the Tenant, and the Tenant accepts the Premises
from the Landlord, on terms provided for in the Lease. The Lease is incorporated
into this Memorandum of Lease (this "Memorandum").
The term of the Lease starts on____________________, 199______, and
ends on ____________________, 20__________,.
This Memorandum is not a complete summary of the Lease. The terms in
this Memorandum will not be used in interpreting the terms of the Lease. If a
conflict arises between this Memorandum and selected provisions of the Lease,
the Lease provisions will control. Signature and acknowledgment of this
Memorandum constitutes signing and acknowledgment of the Lease.
DATED: __________________, 199____.
LANDLORD: TENANT:
-------- ------
CITY OF GRANTS, COLORADO GREENHOUSE, INC.,
a municipal corporation a Delaware corporation
By____________________ By_____________________________
_________________ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Its Mayor Its Chief Executive Officer
EXHIBIT D
---------
Page -1- of 2
STATE OF NEW MEXICO
COUNTY OF CIBOLA
This instrument was acknowledged before me on_________________, 1998,
by ________________________________, Mayor of City of Grants, a municipal
corporation, on behalf of the City.
_____________________________________________
Notary Public
My commission expires:
___________________________
STATE OF NEW MEXICO
COUNTY OF CIBOLA
This instrument was acknowledged before me on_______________, 1998, by
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Chief Executive Officer of Colorado Greenhouse, Inc., a
Delaware corporation, on behalf of the corporation.
________________________________
Notary Public
My commission expires:
____________________________
EXHIBIT D
---------
Page -2- of 2
HAZARDOUS MATERIALS,
--------------------
A E
- -
Acetalyene Epsom Salt/Magnesium Sulfate
Agrimycin 17 Ethrel
Air, Compressed Eyesaline Concentrate
Ajax All Purpose cleaner, Pine Forest Engage
Aerosol Spray paint Engage Lubricant
All-state Aluminum electrode Ethylene Glycol
Amberlite Exotherm Termil
AquaGro Ethrel (R) Brand Ethephon/Tobacco
Anionic Copolymer F
Ammonium Sulfate -
Avow Lubricant Flux Core Arc Welding
Azatin-EC Freeway Lubricant
B G
- -
Bareground 2 + 2 Genetron 22
Black Magic Green Shield, Whitemire PT 2000
Boron Glass Cleaner
Boot Hill Paraffinized Pellets H
Botanigard -
▇▇▇▇▇▇▇ Kleersight Concentrate HM-1600, Synthetic Resin based
Buffer Solution- phosphate, pH 7.00, pH adhesive
4.01 Hamp-Ene 13% Iron
C I
- -
Calcium Chloride, Dowflake 77-80% Industrial Grade Pump Oil
Calcium Chloride Pellets Sl Iron EDTA Chelate 15% Fe
Calcium Nitrate Industrial Grade Pump Oil
Captan 50W J
Carbon Dioxide -
Cardinal Just One Bit - Rat Poison
Cement, CPVC Solvent K
Chain & Wire Rope Lube Aerosol -
Copper Sulfate Kinetic
Cormatic Aire/Ultima Aire Gel Kocide 101
Cuproxat L
Core -
Carnivate Lacquer Thinner
Chain & Wire Lube Lannate Insecticide
D Latex Paint
- Liquid Steel
Dimethoate 4E Lubricants
Dipel 4L Libfer (R) SP
Dithane M-45 Liquid Steel Activator
M
-
M-Pede Insecticide
Magnesium Sulfate
Manganese Sulfate 31%
Monopotassium Phosphate
Muratic Acid
Mobil Oil
Micro-Flo Sulfur
EXHIBIT E
Page -1- of 2
N T
- -
Neemix Talstar 10 WP Insecticide/Miticide
Nitric Acid Thiodan
Nitric Acid 42(degrees) BE Tri-Flow
Naturalis-O U
-
O Urea Phosphate
-
Open & Shut Solvent V
-
P W
- -
Paint, Hard Hat Stripping - Aerosol WD-40
Paint Thinner Weld On 711 CPVC Cement Meets
Phosphate, Buffer Solution ASTM D-2565
Phosphoric Acid Weld On P-70 CPVC Primer Meets ASTM
Potassium Nitrate P-656
Potassium Sulfate XYZ
Primer, PVC & CPVC Pipe ---
Propane, Commercial Xentari
Pyrenol Zino Sulfate
Pyrenone Zoom Spout Oiler
Pyreth-it Horticultural S.E.C., ▇▇▇▇▇▇▇▇ PT
1133
Peladow (R) Premier Snow and Ice Melter
Pellets Mouse bait
Precision
Provado 1.6 Flowable
Q
-
Quadris
R
-
Resinoid Bonded Grinding Wheels
Repell Solvent
Roundup L&G Herbicide
S
-
Safer Insecticidal Soap Concentrate
Sodium Molybdate: Dihydrate
Soilgard
Stampede
Sulf-N 45, Ammonium Sulfate
Sulfur Six, Liquid
Sulphur, Red Ball EM-53 Liquid
SunSpray
Super Six Liquid Sulfur
Surflan
EXHIBIT E
Page -2- of 2
WHEN RECORDED, RETURN TO:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ESQ.
HOLME ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
EASEMENT AGREEMENT
------------------
THIS EASEMENT AGREEMENT (this "Agreement") is made this day of May, 1998,
by and between the CITY OF GRANTS, A NEW MEXICO municipal corporation ("▇▇▇
▇▇▇▇") and COLORADO GREENHOUSE, INC., a Delaware corporation ("CGI").
RECITALS
--------
A. The City is the owner of certain land (the "City Property") located in
the City of Grants, County of Cibola and State of New Mexico, as more
particularly shown on Exhibit A attached hereto and made part hereof, which
---------
includes two parcels identified on Exhibit A as the "Adjacent Property" and the
"Golf Course Property."
B. Pursuant to Lease and Project Participation Agreement (the "Lease") of
even date herewith, the City is the lessor and CGI is the lessee of certain land
(the "CGI Property") consisting of approximately 70 acres of land adjacent to
the Adjacent Property, as more particularly described on Exhibit B attached
---------
hereto and made part hereof. CGI intends to construct two 20-acre greenhouse
facilities (the "Greenhouses") on the CGI Property.
C. CGI desires to obtain from the City and the City desires to grant to
CGI certain easements over, on and through the City Property in order for CGI to
construct, operate and maintain certain improvements (collectively the
"Improvements") relating to a storm water retention pond to be built on the
Adjacent Property and a pipeline designed to carry effluent from the Greenhouses
to a pond located on the Golf Course Property, all as more particularly
described on Exhibit C attached hereto. Capitalized terms not otherwise defined
---------
herein shall have the meanings set forth in the Lease.
AGREEMENT
---------
FOR GOOD AND VALUABLE CONSIDERATION, the receipt and sufficiency of which
are hereby acknowledged by both parties, the parties hereby agree as follows:
1. Grant of Easement.
-----------------
a. The City hereby grants, sells, transfers and conveys to CGI a
nonexclusive easement (the "Storm Water Easement") in and to, over and across,
under and through the real property shown and to be later described by amendment
on Part I of Exhibit D attached hereto and made a part hereof, which property is
---------
also labeled as Storm Water Easement Property (the "Storm Water Easement
Property") shown and to be later described by amendment, on Part 11 of Exhibit
-------
D, for the uses set forth in Section 3(a).
-
EXHIBIT F
---------
b. The City hereby grants, sells, transfers and conveys to CGI a
nonexclusive easement (the "Effluent Easement") in and to, over and across,
under and through the strip of real property shown and to be later described by
amendment on Part I of Exhibit D, which property is labeled as Effluent Easement
Property (the "Effluent Easement Property"), shown and to be later described by
amendment on Part 11 of Exhibit D, for the uses set forth in Section 3(b). The
Storm Water Easement and the Effluent Easement are collectively referred to as
the "Easements" and the Storm Water Easement Property and the Effluent Easement
Property are collectively referred to as the "Easement Property".
2. Term. The term of the Easements shall commence as of the date hereof
----
and shall continue until the earlier of (i) the expiration of the Lease, (ii)
the termination of the Lease, or (iii) mutual agreement by the City and CGI.
3. Use. The Easements shall be used for the following uses and purposes:
---
a. Storm Water Easement. The Storm Water Easement shall be for the
--------------------
construction, reconstruction, replacement, repair, maintenance and operation of
the storm water retention pond to be built by CGI upon the Adjacent Property, at
the sole cost and expense of CGI, as CGI from time to time may elect.
b. Effluent Easement. The Effluent Easement shall be for the
-----------------
construction, reconstruction, replacement, repair, maintenance, operation and
removal of the pipeline by CGI connecting the Greenhouses to the pond located on
the Golf Course Property, at the sole cost and expense of CGI, as CGI from time
to time may elect.
C. Access. During construction of the Improvements, CGI and its
------
agents, tenants, subtenants, employees, consultants, contractors and other
licensees and invitees shall have the right to pedestrian and vehicular access
to the Easement Property across the City Property to the extent necessary for
access to the Easement Property in connection with the construction of the
Improvements.
d. Indemnity.
---------
(1) CGI will indemnify and defend the City against any expense,
loss or liability, resulting from CGI's use of the Easements:
(a) Liens arising by, through or under CGI;
(b) Claims and awards of damage for death, injury or property
damages with respect to the Easement Property to the extent arising because of
the acts or failure to act of CGI;
(c) Delay by CGI in surrendering the Easement Property,
including claims made by any succeeding tenant because of delay;
(d) Failure of CGI to perform any obligation to be performed
by CGI as provided in this Agreement;
-2-
(e) Failure of CGI to protect the City and the Easement
Property against Hazardous Materials as provided in paragraph 8 of this
Agreement; and
(f) Actions or demands with respect to any of the foregoing
(the "Indemnities").
HOWEVER, IF SECTION 56-7-1 NMSA 1978 is applicable to this
Agreement, the Indemnities will not extend to liability, claims, damages, losses
or expenses, including fees of lawyers, relating to the construction,
installation, alteration, modification, repair, maintenance, servicing,
demolition, excavation, drilling, reworking, grading, paving, clearing, site
preparation or development of any real property or any improvement of any kind
on, above or under real property and arising out of (1) the preparation or
approval of maps, drawings, opinions, reports, surveys, change orders, designs
or specifications by the City, or the agents or employees of the City, or (2)
the giving of or the failure to give direction or instructions by the City, or
the agents or employees of the City, where the giving or failure to give
directions or instructions is the primary cause of bodily injury to persons or
damage to property.
(2) CGI will reimburse the City on demand for any payment made by the
City to which the Indemnities relate, including the reasonable lawyer fees and
costs incurred by the City in establishing the right of the City to indemnity as
provided in this Agreement.
(3) CGI may contest the validity of, defend, settle and compromise any
matter to which the Indemnities relate.
4. Restrictions; As Built Drawings. Any and all construction,
-------------------------------
maintenance, repair, replacement and reconstruction of the Improvements and
related facilities accomplished or directed by CGI shall be done: (a) upon
reasonable prior written notice to the City (provided that no notice shall be
--------
required for routine inspections and maintenance and work on the Easement
Property which does not involve more workers or equipment than routine
inspections and maintenance) and (b) in a manner so as to minimize, to the
extent reasonably possible, any inconvenience to the normal operation of the
City Property and the improvements thereon. As soon as reasonably practical
after completion of construction, CGI shall provide the City with a set of as
built drawings showing the location on the Easement Property of each of the
Improvements, at the sole cost and expense of CGI.
5. Noninterference. Subject to the rights of others under any of the
---------------
Permitted Exceptions (as defined below) and the provisions of Sections 8 and 9
below, the City shall not have, nor grant any other party, the right to use the
City Property in any manner which would materially interfere with or materially
obstruct the use of the Easements as contemplated hereunder.
6. Transferability. The Easements and the rights of CGI to the Easements
---------------
shall be for the benefit of CGI and its successors and assigns, to the extent
such successors and assigns are permitted under the provisions of the Lease.
-3-
7. Warranties of The City. The City warrants that, subject only to the
----------------------
exceptions listed on Exhibit E (the "Permitted Exceptions"), the City is the fee
---------
simple owner of the City Property free and clear of all liens and encumbrances,
subject only to the Permitted Exceptions. The City covenants to defend the
rights granted hereby, subject only to the Permitted Exceptions.
8. Environmental Indemnity by CGI. CGI at all times (i) shall comply
------------------------------
fully with all laws, rules, regulations, and ordinances of any governmental
authority having jurisdiction with respect to the storage, use or release at the
Easement Property of Materials of Environmental Concern, (ii) shall not use,
treat, store, transport or release or threaten to release any Materials of
Environmental Concern in, on, under, from or affecting the Easement Property in
any manner or quantity which may result in any remediation, clean-up obligation
or liability under any Environmental Law, and (iii) shall keep the Easement
Property free of any lien imposed pursuant to Environmental Laws, and shall pay
or cause to be paid when due any and all costs of complying with Environmental
Laws and responding to the presence, release or threatened release of Materials
of Environmental Concern, because of acts or omissions of CGI or its affiliates,
agents, employees, contractors, sublessees, successors or assigns (including
without limitation all damages, liabilities, expenses and costs of all third
party claims). If CGI fails to comply with any of the foregoing, then to the
extent that the City sustains any liability, loss, cost, damage or expense
(including attorneys' and consultants' fees and expenses) arising out of the
presence, release or threatened release by CGI or its affiliates, agents,
employees, contractors, sublessees, successors or assigns of Materials of
Environmental Concern, the City shall be held harmless from and against all such
liability, loss, cost, damage and expense. The City may, upon such prior written
notice to CGI as is reasonable under the circumstances, take any action
necessary in the reasonable judgment of such responding party, to respond to
such presence, release or threatened release, and the cost of such response
action shall be borne by CGI. For purposes of this Agreement the term "Materials
of Environmental Concern" shall mean chemicals, pollutants, contaminants,
wastes, degradation by-products, toxic substances, petroleum and petroleum
products that upon exposure or ingestion may reasonably be anticipated to pose a
hazard to the health or safety of the anticipated occupants of, or visitors or
invitees, to the Easement Property, including without limitation "hazardous
substances," "hazardous wastes," "toxic substances," and "toxic pollutants," as
such terms are defined in or identified by any Environmental Law. For purposes
of this Agreement the term "Environmental Laws" shall mean all existing or
future federal, state, local and foreign laws, statutes, ordinances, rules,
regulations, administrative orders, and final decisions of judicial bodies or
administrative agencies (to the extent the issuing governmental authority has
jurisdiction over the Easement Property), including without limitation any
common law theory of liability, in any case relating to regulation or control of
pollution, or to protection of human health or the environment from or with
respect to Materials of Environmental Concern.
9. Reservation of Rights. The City reserves the right to use and enjoy
---------------------
the Easement Property and the portion of the City Property used for access;
provided that the City shall not construct or maintain any structure on the
--------
Easement Property and the portion of the City Property used for access, or in
any manner impair or materially interfere with the exercise of any of the rights
herein granted.
-4-
10. Maintenance of Golf Course Property. The parties acknowledge that the
------------------------------------
City will use water from the pond located on the Golf Course Property for
irrigation purposes on its golf course or elsewhere. In connection therewith the
City agrees to maintain such pond and remove therefrom on a regular basis
sufficient water for the pond to adequately hold all effluent transported by CGI
to such pond on a daily basis. In addition, the City acknowledges that it has
been furnished with a projected chemical composition of the effluent water to be
so transported and agrees that for so long as the quality of such water is
within the standards set forth on Exhibit F attached hereto and made a part
---------
hereof, the City will accept such water.
11. Default: Remedies.
-----------------
a. Should the City or CGI fail to perform any covenant or comply with
any condition required to be performed under this Agreement or the Lease within
60 days after written demand by the other party (or such longer period as may be
reasonably required to cure such failure to perform or comply if such cure is
commenced within such 60-day period), the non-performing party shall be in
default of its obligations under this Agreement and under the Lease allowing the
non-performing party to pursue rights and remedies available to it under the
Lease.
b. In the event a default under this Agreement is not cured within
the applicable cure period (if any), the non-defaulting party shall be entitled
to pursue any and all remedies available to it at law or in equity, including
without limitation the remedy of specific performance, or termination of this
Agreement upon ten additional days' written notice. To the maximum extent
permitted by law, should either party be in default under this Agreement the
defaulting party covenants and agrees to pay and discharge all reasonable costs
and expenses which shall be incurred by the non-defaulting party arising out of
such default, in enforcing the covenants and agreements of this Agreement,
including without limitation reasonable attorneys' fees. Notwithstanding the
foregoing, in no event shall either party be liable for any consequential or
punitive damages, damages for lost business, lost profits, or opportunities
therefor, or business interruption, any claim or remedy therefor being
specifically waived by each of the parties.
12. No Waiver. No provision of this Agreement may be waived or
---------
relinquished except by written instrument signed by the party to be charged with
such waiver. Failure by any party to this Agreement to enforce any provision of
this Agreement shall not constitute a waiver of such provision, and no waiver by
any party to this Agreement of any provision of this Agreement on one occasion
shall constitute a waiver of any other provision or of the same provision on
another occasion.
13. Captions; Definitions. The section and subsection captions used in
---------------------
this Agreement are included for convenience only, and shall be irrelevant to the
construction of any provision of this Agreement. Capitalized terms not otherwise
defined herein shall have the meanings set forth in the Lease.
14. Amendment. The provisions of this Agreement may be abrogated,
---------
modified, rescinded, or amended in whole or in part only by the City and CGI and
their
-5-
respective successors and assigns by written instrument duly executed and
recorded in the real property records of Cibola County, New Mexico.
15. Severability. If any clause or provision of this Agreement shall be
------------
held invalid or unenforceable, the remainder of this Agreement shall not be
affected thereby.
16. Governing Law. The validity and effect of this Agreement shall be
-------------
determined in accordance with the laws of the State of New Mexico.
17. Notices. Notice shall be given as provided in the Lease.
-------
18. Legal Description. CGI And the City will amend this Agreement at a
-----------------
later date to evidence the legal descriptions, by metes and bounds as
appropriate, of the properties and easements referenced in this Agreement.
IN WITNESS WHEREOF, the undersigned have executed and delivered this
Agreement under seal as of the day and year first above written.
THE CITY OF GRANTS, NEW MEXICO
Date:______________________ By:____________________________________
Name:__________________________________
Title:_________________________________
COLORADO GREENHOUSE, INC.
Date:______________________ By:____________________________________
Name:__________________________________
Title:_________________________________
-▇-
▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇ )
)ss.
COUNTY OF CIBOLA)
This instrument was acknowledged before me on May___, 1998 by ____________
____________, ___________ of the City of Grants, New Mexico, a New Mexico
municipal corporation.
Witness my hand and official seal.
My commission expires:______________________________.
_____________________________________________
[SEAL] Notary Public
-7-
STATE OF COLORADO )
)ss.
COUNTY OF __________ )
This instrument was acknowledged before me on May__, 1998 by _____________
______________, as _______________ of COLORADO GREENHOUSE, INC., on behalf of
said corporation.
Witness my hand and official seal.
My commission expires:______________________________.
_________________________________________
[SEAL] Notary Public
216666
-8-
DESCRIPTION OF PROPERTIES
-------------------------
[MAP OF CGI PROPERTY APPEARS HERE]
[MAP OF GOLF COURSE PROPERTY APPEARS HERE]
[MAP OF ADJACENT PROPERTY APPEARS HERE]
EXHIBIT A
CGI PROPERTY GROUNDLEASE
------------------------
BOUNDARY SURVEY PLAT
-------------------- 70.0000 ACRES, NW1/4
SEC. 32, T.11N., R.9W.
N.M.P.M.
City of Grants
Cibola County, NM
[MAP OUTLINING PLAT OF
PROPERTY APPEARS HERE]
Note; Basis of Bearings is a Property/
---- Ownership Plat furnished by City of
Grants, prepared by ▇▇▇▇▇▇▇▇
Associates/P.A., Phoenix, AZ (Project
No. 5-90-060, Sheet No. G-4), and a
survey by ▇▇▇▇ ▇. ▇▇▇▇▇▇, NM LS
No. 9286, dated Jan. 23, 1991.
* Corners set this survey 1/2" rebars,
caps No. 6262
DESCRIPTION
A tract of land situated within the northwest quarter of Section 32,
T.11N., R.9W., N.M.P.M., in the City of Grants, Cibola County, New Mexico, and
being more particularly described as follows:
Beginning at the northeast corner of said tract, from which point the
North 1/4 Corner of said Section 32 bears N 79 (DEGREES) 02'21" W, and is 329.25
feet distant;
Thence S 01 (DEGREES) 02' W, 1834.43 feet;
Thence S 89 (DEGREES) 42' 26" W, 1660.54 feet;
Thence N 01 (DEGREES) 02' E, 581.61 feet to a point on the West line of
said tract;
Thence N 01 (DEGREES) 00' 12" E, 1254.00 feet to the northwest corner of
said tract;
Thence N 89 (DEGREES) 45' 09" E, 1338.00 feet along the South right of
way line a 60.00-foot road (Camino de Coyote) to a point on the North line of
said tract;
Thence S 89 (DEGREES) 12' E, 323.25 feet along said North line to the
place of beginning, and containing 70.0000 Acres, more or less.
I ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, certify that I conducted and am responsible for
this survey, that this survey and plat are true and correct to the best of my
knowledge and belief, and that this survey and plat meet the Minimum Standards
for Surveying in New Mexico.
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
[SEAL OF ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ --------------------------------------
NEW MEXICO REGISTERED LAND ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, R.L.S. No. 6262
SURVEYOR APPEARS HERE] dba ▇▇▇▇▇▇ Surveying, ▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (505) 287/3960
Date of Survey: April 23, 1998
Owner(s): City of Grants, ▇.▇.
▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
EXHIBIT B
---------
EASEMENTS
---------
[MAP]
EXHIBIT C
---------
EASEMENTS
---------
EXHIBIT D - PART I
------------------
EASEMENT PROPERTY
-----------------
(To be Provided)
EXHIBIT D - PART II
-------------------
PERMITTED EXCEPTIONS
--------------------
1. Reservations as shown in Patent for State Land recorded in Miscellaneous Book
1, Pages 7838-7839, records of Cibola County, New Mexico.
2. Easement dated August 11, 1953, given by ▇. ▇. ▇▇▇▇▇▇ to El Paso Natural Gas
Co., recorded in Book 98, Page 384, records of Valencia County, New Mexico.
3. Easement dated December 22, 1983, given by ▇▇▇ ▇▇▇▇▇, et al, to Continental
Divide Electric Coop., Inc., recorded in Miscellaneous Book 1, Page 2845,
records of Cibola County, New Mexico.
4. In no event does this policy cover any mobile home that may be located on the
insured premises.
5. Title to all oil, gas, coal and other minerals within and underlying the
premises, together with the drilling rights, privileges and easements
appurtenant thereto, and production therefrom.
EXHIBIT E
---------
WATER QUALITY STANDARDS
-----------------------
EXHIBIT F
---------
CONSTITUENT LIMIT
-------------------------------- ----------------------------------
pH 5-9
-------------------------------- ----------------------------------
Sodium 250
-------------------------------- ----------------------------------
Potassium 500
-------------------------------- ----------------------------------
Chloride 250
-------------------------------- ----------------------------------
P04-P 50
-------------------------------- ----------------------------------
Sulfate 600
-------------------------------- ----------------------------------
N03-N 500
-------------------------------- ----------------------------------
NH4-N 50
-------------------------------- ----------------------------------
TKN 50
-------------------------------- ----------------------------------
TDS 5000
-------------------------------- ----------------------------------
Iron 5.0
-------------------------------- ----------------------------------
Manganese 5.0
-------------------------------- ----------------------------------
Copper 1.0
-------------------------------- ----------------------------------
Zinc 10
-------------------------------- ----------------------------------
WATER QUALITY STANDARDS
-----------------------
CONSTITUENT LIMIT
---------------------------------- -------------------------------
pH 5-9
---------------------------------- -------------------------------
Sodium 250
---------------------------------- -------------------------------
Potassium 500
---------------------------------- -------------------------------
Chloride 250
---------------------------------- -------------------------------
P04-P 50
---------------------------------- -------------------------------
Sulfate 600
---------------------------------- -------------------------------
N03-N 500
---------------------------------- -------------------------------
NH4-N 50
---------------------------------- -------------------------------
TKN 50
---------------------------------- -------------------------------
TDS 5000
---------------------------------- -------------------------------
Iron 5.0
---------------------------------- -------------------------------
Manganese 5.0
---------------------------------- -------------------------------
Copper 1.0
---------------------------------- -------------------------------
Zinc 10
---------------------------------- -------------------------------
EXHIBIT F
---------
[CITY OF GRANTS LOGO]
May 14, 1998
------------
Mr. ▇▇▇ ▇▇▇▇▇
Colorado Greenhouse, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
City of Grants
--------------
Dear ▇▇. ▇▇▇▇▇:
The City of Grants, New Mexico and Colorado Greenhouse, Inc. entered into a
Lease and Project Participation Agreement (the "Lease") on May 14 1998. The
-------
Lease requires the Company to operate two greenhouses and related facilities for
a period of 60 years. This letter notifies you of the manner in which the City
can now furnish its water and wastewater treatment to the Company for use by the
Company in its greenhouse facilities. Water and wastewater treatment will be
furnished pursuant to City ordinances and policies on water and wastewater, as
those ordinances and policies may be modified from time to time.
The City currently owns and operates its water and wastewater systems. As long
as the City continues to own and operate its water, the City will provide water
(as opposed to wastewater) services to the Company at the same rates and on the
same terms generally made available to industrial water users under City
ordinance. We understand that the Company will not require in excess of 360
acre feet of water per year. Because the greenhouses will discharge a high
volume of relatively clean wastewater from its greenhouse operation, the City
does not expect that the Company's Wastewater use will be comparable to that of
an average commercial wastewater system user. The City anticipates that
substantial amounts of the wastewater will be able to be discharged directly to
the Coyote del Mal Pais Golf Course without treatment, for reuse as golf course
irrigation. The City will provide separate meters for domestic and greenhouse
uses. The City will only ▇▇▇▇-Colorado Greenhouse for sewage treatment on the
amount of water utilized for domestic purposes, as long as the City continues to
own and operate its own wastewater system and the Coyote del Mal Pais Golf
Course.
The provisions of the City's water and wastewater ordinances will need to be
complied with by the Company, including prompt payment of all fees and charges
associated with the connection and use of the City's water and wastewater
systems.
If the City elects to sell its water and wastewater utilities (which is not
currently contemplated) or the Coyote del Mal Pais Golf Course (also not
currently contemplated), the City would be willing to work with the purchaser in
good faith in an effort to enable Colorado Greenhouse to continue to receive
water and wastewater services on the same basis as users in the same
classification.
Please indicate your acknowledgment by signing this letter in the space below
and returning a copy to us.
Sincerely,
CITY OF GRANTS
By /s/ [SIGNATURE ILLEGIBLE]
------------------------
Its City Manager
The terms and conditions described
above are acknowledged by:
COLORADO GREENHOUSE, INC.
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------
Its Chief Executive Officer
MEMORANDUM OF LEASE
-------------------
City of Grants (the "Landlord") and Colorado Greenhouse, Inc.
(the"Tenant"), have signed and acknowledged a Lease dated as of May 14, 1998
------ -
(the "Lease"), concerning the premises described in attached Exhibit A (the
---------
"Premises" ).
The Lease provides that for good and adequate consideration the
Landlord leases the Premises to the Tenant, and the Tenant accepts the Premises
from the Landlord, on terms provided for in the Lease. The Lease is incorporated
into this Memorandum Lease (this "Memorandum").
The term of the Lease starts on May 14, 1998, and ends on May 14,
------ - ------
2058.
--
This Memorandum is not a complete summary of the Lease. The terms in
this Memorandum will not be used in interpreting the terms of the Lease. If a
conflict arises between this Memorandum and selected provisions of the Lease,
the Lease provisions will control. Signature and acknowledgment of this
Memorandum constitutes signing and acknowledgment of the Lease.
DATED: May 14, 1998.
------ -
LANDLORD: TENANT:
-------- ------
CITY OF GRANTS, COLORADO GREENHOUSE, INC.,
a municipal corporation a Delaware corporation
By /s/ {SIGNATURE ILLEGIBLE] By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------ -------------------------
------------------------ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Its Mayor Its Chief Executive Officer
STATE OF NEW MEXICO
COUNTY OF CIBOLA
This instrument was acknowledged before me on May 15, 1998, by ▇▇▇▇
------ ----
▇▇▇▇▇▇▇▇▇, Mayor of City of Grants, a municipal corporation, on behalf of the
---------
City.
/s/ [SIGNATURE ILLEGIBLE]
------------------------------------------
Notary Public
My commission expires:
4/21/2000
--------------------------
STATE OF NEW MEXICO
COUNTY OF CIBOLA
This instrument was acknowledged before me on May 15, 1998, by ▇▇▇▇▇
------
▇. ▇▇▇▇▇▇▇, Chief Executive Officer of Colorado Greenhouse, Inc., a Delaware
corporation, on behalf of the corporation.
/s/ [SIGNATURE ILLEGIBLE]
--------------------------------------------
Notary Public
My commission expires:
4/21/2000
--------------------------
BOUNDARY SURVEY PLAT
-------------------- 70.0000 ACRES, NW-1/4
SEC. 32, T.11N., R.9W.
N.M.P.M.
City of Grants
Cibola County, NM
[MAP OUTLINING PLAT OF
PROPERTY APPEARS HERE]
Note; Basis of Bearings is a Property/
Ownership Plat furnished by City of
Grants, prepared by ▇▇▇▇▇▇▇▇
Associates/P.A., Phoenix, AZ (Project
No. 5-90-060, Sheet No. G-4), and a
survey by ▇▇▇▇ ▇. ▇▇▇▇▇▇, NM LS
No. 9286, dated Jan. 23, 1991.
* Corners set this survey 1/2" rebars,
caps No. 6262.
DESCRIPTION
A tract of land situated within the northwest quarter of Section 32,
T.11N., R.9W., N.M.P.M., in the City of Grants, Cibola County, New Mexico, and
being more particularly described as follows:
Beginning at the northeast corner of said tract, from which point the
North 1/4 Corner of said Section 32 bears N 79 (DEGREES) 02'21" W, and is 329.25
feet distant;
Thence S 01 (DEGREES) 02' W, 1834.43 feet;
Thence S 89 (DEGREES) 42' 26" W, 1660.54 feet;
Thence N 01 (DEGREES) 02' E, 581.61 feet to a point on the West line of
said tract;
Thence N 01 (DEGREES) 00' 12" E, 1254.00 feet to the northwest corner of
said tract;
Thence N 89 (DEGREES) 45' 09" E, 1338.00 feet along the South right of
way line a 60.00-foot road (Camino de Coyote) to a point on the North line of
said tract;
Thence S 89 (DEGREES) 12' E, 323.25 feet along said North line to the
place of beginning, and containing 70.0000 Acres, more or less.
I ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, certify that I conducted and am responsible for
this survey, that this survey and plat are true and correct to the best of my
knowledge and belief, and that this survey and plat meet the Minimum Standards
for Surveying in New Mexico.
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
[SEAL OF ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ --------------------------------------
NEW MEXICO REGISTERED LAND ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, R.L.S. No. 6262
SURVEYOR APPEARS HERE] dba ▇▇▇▇▇▇ Surveying, ▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (505) 287/3960
Date of Survey: April 23, 1998
Owner(s): City of Grants, ▇.▇.
▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇