EXHIBIT 10.29
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CONSTRUCTION LOAN SUPPLEMENT
BETWEEN
COLORADO SPRINGS PRODUCTION CREDIT ASSOCIATION
AND
COLORADO GREENHOUSE, INC.
DATED
AS OF
JANUARY 24, 1997
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CONSTRUCTION LOAN SUPPLEMENT
THIS SUPPLEMENT to the Master Loan Agreement dated the 24th day of January,
1997 (the "MLA"), is entered into as of the 21st day of January, 1997, between
COLORADO SPRINGS PRODUCTION CREDIT ASSOCIATION, (the "Lender"), and COLORADO
GREENHOUSE, INC. ("CGI").
ARTICLE 1
DEFINITIONS, INTERPRETATIONS
SECTION 1.1 DEFINITIONS. In addition to the definitions set out in the
MLA, which are incorporated herein to the extent there is no conflict with
terms defined herein, the capitalized terms set forth herein shall have the
following meanings:
ACSM shall have the meaning provided in Section 7.1(c) of Article 7 of this
Supplement.
ALTA shall have the meaning provided in Section 7.1(c) of Article 7 of this
Supplement.
BUILDER'S RISK shall have the meaning provided in Section 7.1(e) of Article
7 of this Supplement.
CHANGE ORDER REQUEST shall have the meaning provided in Section 10.1 of
Article 10 of this Supplement, and shown at Exhibit "A."
COMPLETION DATE shall have the meaning provided in Section 7.1(b) of
Article 7 of this Supplement.
CONSTRUCTION CERTIFICATE shall have the meaning provided in Section 7.2(b)
of Article 7 of this Supplement and shown at Exhibit "B."
CONSTRUCTION COMMITMENT shall have the meaning provided in Section 2.1 of
Article 2 of this Supplement.
DISBURSEMENT SCHEDULE shall have the meaning provided in Section 7.1(b) of
Article 7 of this Supplement.
DISCLOSURE SCHEDULE shall have the meaning provided in Article 8 of this
Supplement and shown at Exhibit "F."
EVENT OF DEFAULT shall have the meaning provided in Article 8 of the MLA
and Article 13 of this Supplement.
IMPROVEMENTS shall have the meaning provided in Section 2.2 of Article 2 of
this Supplement.
MATURITY shall have the meaning provided in Section 3.2 of Article 3 of
this Supplement.
MORTGAGE shall mean the first purchase money mortgage liens on the
Property, whether such document is characterized as a mortgage or deed of
trust, and shall refer to the plural or the singular, as the case may be.
PLANS shall have the meaning provided in Section 2.2 of Article 2 of this
Supplement.
PRIME RATE shall have the meaning provided in Section 5.1 of Article 5 of
this Supplement.
PROJECT APPROVALS shall have the meaning provided in Section 7.1(b) of
Article 7 of this Supplement.
PROJECT BUDGET shall have the meaning provided in Section 7.1(b) of Article
7 of this Supplement.
PROJECT SCHEDULE shall have the meaning provided in Section 7.1(b) of
Article 7 of this Supplement.
PROMISSORY NOTE shall have the meaning provided in Section 3.1 of Article 3
of this Supplement and shown on Exhibit "C."
PROPERTY shall have the meaning provided in Section 2.2 of Article 2 of
this Supplement, and more particulary described in the Mortgage and on
Exhibit G.
REQUEST FOR CONSTRUCTION LOAN ADVANCE shall have the meaning provided in
Section 7.2(a) of Article 7 of this Supplement, and shown at Exhibit "D."
RETAINAGE shall have the meaning provided in Section 4.1(b) of Article 4 of
this Supplement.
SPECIAL CONSTRUCTION ACCOUNT shall have the meaning provided in Section
7.1(a) of Article 7 of this Supplement.
SCHEDULE OF PAYMENTS shall have the meaning provided in Section 3.2 of
Article 3 of this Sup plement, and shown at Exhibit "E."
U.S. TREASURY RATE shall have the meaning provided in Section 5.2 of
Article 5 of this Supplement.
SECTION 1.2 INTERPRETATION. Whenever this Supplement calls for the
approval of an act, change, omission, or the like of CGI by Lender, such
approval shall not be interpreted or construed to mean that such act, change,
omission or the like has any intrinsic value or worthiness to CGI or Lender.
Such approval shall only mean that Lender will consider such act, change,
omission or the like as not being an Event of Default and will continue to make
Advances otherwise provided for under the Construction Commitment in the
presence of such act, change, omission or the like.
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ARTICLE 2
CONSTRUCTION COMMITMENT
SECTION 2.1 THE CONSTRUCTION LOAN FACILITY. On the terms and conditions
set forth in the MLA and this Supplement, Lender agrees to make Advances for
construction to CGI from time to time during the period set forth below in an
aggregate principal amount not to exceed FIFTEEN MILLION DOLLARS
($15,000,000.00) (the "Construction Commitment"). Under the Construction
Commitment, amounts borrowed and later repaid may not be reborrowed.
SECTION 2.2 PURPOSE. The purpose of the Construction Commitment is to (i)
finance CGI's acquisition of real property and attendant water rights in New
Mexico and Colorado, as is more particularly described in Exhibit "G," hereof
(the "Property"); (ii) the construction of two new twenty-acre (20-acre)
greenhouse facilities thereon (the "Improvements") identified in the plans and
specifications provided to and approved by Lender pursuant to Section 7.1(b)
hereof (as the same may be amended pursuant to Section 10.1), (the "Plans");
(iii) the installation of necessary Fixtures and Equipment for the effective
operation of the greenhouse facilities; and (iv) to capitalize interest during
the construction and start-up phase in accordance with GAAP; and CGI agrees to
utilize the proceeds of the Construction Commitment for these purposes only.
SECTION 2.3 EXPIRATION OF CONSTRUCTION COMMITMENT. Lender's obligations
to make Advances on the Construction Commitment shall expire on September 30,
1997, or such later date as Lender may in its sole discretion authorize in
writing.
ARTICLE 3
PROMISSORY NOTE
SECTION 3.1 PROMISSORY NOTE. CGI promises to repay the Advances in
accordance with the Promissory Note in the form of note attached as Exhibit "C,"
which Exhibit is incorporated herein by this reference. If any installment due
date is not a Business Day, then such installment shall be due and payable on
the next Business Day. In addition to the above, CGI promises to pay interest
on the unpaid principal balance hereof at the times and in accordance with the
provisions set forth in Article 3.3 hereof.
SECTION 3.2 PRINCIPAL REPAYMENT AND MATURITY. The Promissory Note, this
Supplement and the balance of all Advances outstanding on the expiration of the
Construction Commitment shall be due and payable in equal monthly installments
of principal repayment, with the first such installment being due on the 1st day
of January, 1998. The principal balance shall amortize in accordance with the
Schedule of Payments to be attached hereto as Exhibit "E" upon the expiration of
the Construction Commitment, and shall mature on December 31, 2006 ("Maturity").
3.3 PAYMENT OF INTEREST. Interest accruing during construction and start-
up shall be capitalized pursuant to Section 2.2 hereof, and thereafter the
interest accruing on the outstanding balance of the Advances at the rate
provided in Article 5 hereof shall be paid monthly in arrears, with
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the first such payment due on the 1st day of November, 1997, and on the 1st day
of each month thereafter until the entire amount shall have been paid in full.
ARTICLE 4
DISBURSEMENT OF PROCEEDS
SECTION 4.1 DISBURSEMENT PROCEDURES.
(a) FUNDING ORDER. Disbursement of funds to pay acquisition and
construction costs on each greenhouse shall be for each greenhouse first from
funds placed by CGI in the Special Construction Account held by Lender until
CGI's equity committed to each greenhouse of FOUR MILLION FIVE HUNDRED THOUSAND
DOLLARS ($4,500,000) shall have been disbursed, then from Advances on the
Construction Commitment.
(b) LIMITS ON ADVANCES. Lender shall not be required to Advance
funds (i) for any category or line item of acquisition or construction cost an
amount greater than the amount specified therefor in the Project budget; or (ii)
for any services not yet performed or for materials or goods not yet
incorporated into the Improvements or delivered to and properly stored on the
Property. No Advance hereunder shall exceed ninety percent (90%) of the
aggregate costs actually paid or currently due and payable and represented by
invoices accompanying a Request for Construction Loan Advance submitted pursuant
to Section 7.2 (the remaining percentage of such costs is hereinafter referred
to as "Retainage"). Advances shall be in the minimum amount of $1,000,000, and
not more frequently than the 5th day and the 20th day of each month during the
term of the Construction Commitment.
(c) ADVANCE OF RETAINAGE. The Retainage (and in no case greater than
the unused bal ance of the Construction Commitment allocated for construction)
will be Advanced by Lender to CGI upon satisfaction of the following conditions:
(i) The proper and timely filing for recordation of a notice
of completion;
(ii) Expiration of the appropriate time periods allowed by law
for the filing of mechanics' liens and receipt of verification from CGI that no
liens have been filed prior to or dur ing such period or receipt from CGI of
lien waivers from all subcontractors and releases of any such liens which have
been filed; and
(iii) The issuance to Lender of an ALTA mortgagee's policy of
title insurance with appropriate endorsements reflecting the aggregate amount
advanced hereunder and insuring the property to be free and clear of any and all
materialmen's and mechanics' liens, all in form and con tent satisfactory to
Lender.
SECTION 4.2 PAYMENTS TO THIRD PARTIES. At its option and without further
authorization from CGI, Lender is authorized to make Advances under the
Construction Commitment by paying, directly or jointly with CGI, any person to
whom Lender in good faith determines payment is due and any such Advance shall
be deemed made as of the date on which Lender makes such payment and shall be
secured under the Mortgage securing the Construction Commitment and any other
loan documents securing the Construction Commitment as fully as if made directly
to CGI. Lender shall comply with the disbursers notice provisions of the Laws
of Colorado, C.R.S. (S) 00-00-000 and any equivalent provision of New Mexico
Law.
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ARTICLE 5
INTEREST
SECTION 5.1 PRIME RATE OPTION. Except as CGI may elect from time to time
in accordance with Section 5.2 hereof, Advances shall bear and CGI agrees to pay
interest equal to the Prime Rate. Prime Rate shall mean for any day, the rate
defined as the "prime rate" as published from time to time in the Eastern
Edition of The Wall Street Journal as the average prime lending rate for
seventy-five percent (75%) of the United States' thirty (30) largest commercial
banks, or if The Wall Street Journal shall cease publishing the "prime rate" on
a regular basis, such other regularly published average prime rate application
to such commercial banks as is acceptable to CGI in its reasonable discretion.
SECTION 5.2 U. S. TREASURY RATE OPTION. At the request of CGI, the rate
of interest charged on the Advances may be fixed at a rate per annum equal to
two and one-half percent (2.5%) above the U. S. Treasury Rate. For purposes
hereof, U. S. Treasury Rate shall mean the yield to maturity of U. S. Treasury
instruments having the same maturity date as the Advances, as indicated by
Telerate (page 5) at approximately 9:30 a.m. Eastern Time on the date the rate
is fixed. If, however, no yield is available for the period selected, then the
rate shall be interpolated based on the rates quoted for the next longest and
shortest period of time. In the event Telerate ceases to provide such
quotations or materially changes the form or substance of page 5 (as reasonably
determined by Lender), the Lender will notify CGI and the parties hereto will
agree upon a substitute basis for obtaining such quotations. Notwithstanding
the foregoing, if the spread between Lender's costs of funds (as reasonably
determined by Lender according to its methodology) and the U. S. Treasury Rate
should widen (or lessen) from the spread in effect for the same period of time
on the date hereof, then the spread over the U. S. Treasury Rate shall be
automatically adjusted upward (or downward) to reflect any such change.
However, the first such adjustment may not be made until January 1, 2000, and no
adjustment shall be applied retroactively to any Advances made prior to the date
of such adjustment. Under this option, individual amounts may be fixed for
periods ranging from one (1) year to Maturity, and the minimum amount that may
be fixed at any one time for any single period shall be One Million Dollars
($1,000,000). Rates may only be fixed for periods which expire on a Business
Day and may not be fixed in such a manner as to require CGI to have to prepay
any fixed rate balance in order to pay any installment of principal. Upon the
expiration of any fixed rate period, interest shall automatically accrue at the
rate set forth in Section 5.1 above, unless the amount fixed is repaid or CGI
fixes the rate pursuant to this Section 5.2 for a new period.
SECTION 5.3 FEES. CGI agrees to pay fees:
(a) ORIGINATION FEE. At the closing of this Supplement, CGI shall
pay a fee to the Lender equal to one and one-half percent (1.5%) of the total
Construction Commitment. CGI shall be credited at closing for the ten percent
(10%) of the origination fee paid in advance on the 21st day of November, 1996,
in the amount of $22,500.
(b) COMMITMENT FEE. At the end of each quarter in which there has
been any unused Construction Commitment, CGI shall pay to Lender an unused
commitment fee of twenty-five (25) basis points on such unused Construction
Commitment.
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SECTION 5.4 PREPAYMENT. The loans may be prepaid in whole or in part as
provided in the MLA. Unless otherwise agreed, all prepayments will be applied
to principal installments in the inverse order of their maturity.
ARTICLE 6
SECURITY
SECTION 6.1 COLLATERAL. In addition to the Collateral described in the
MLA, the Security Agreement, the Guarantee, the Holdings Pledge, and the CG
Member Pledge, Advances on the Construction Commitment shall be secured by the
assignment of the construction contracts, Plans, Approvals and the like, and the
Mortgages.
ARTICLE 7
ADDITIONAL CONDITIONS PRECEDENT
SECTION 7.1 INITIAL ADVANCE. Lender's obligation to make the initial
Advance hereunder is subject to satisfaction of each of the following additional
conditions precedent on or before the date of such Advance:
(a) MINIMUM EQUITY. CGI certifies that a minimum of Twelve Million
Dollars ($12,000,000) in new equity capital has been raised, and that a minimum
of Ten Million Dollars ($10,000,000) of the net proceeds of the equity offering
will be placed in a Special Construction Account with Lender for future
construction disbursements. Notwithstanding the foregoing, not more than Nine
Million Dollars ($9,000,000) will be used for construction disbursements.
Immediately after the Final Payment (as that term is defined in the construction
contracts) is made on both new greenhouses, and if no Event of Default has
occurred and is continuing, Lender shall release all sums remaining in the
Special Construction Account to CGI, however, after the Final Payment is made on
the first greenhouse completed, CGI may request release of funds (other than
funds needed for construction) based upon the percentage of completion of the
second greenhouse. Upon such request Lender will, in good faith, consider and
grant so much of the request, which in Lender's reasonable discretion is
warranted.
(b) PROJECT BUDGET AND SCHEDULE, CONTRACTS AND PLANS. That Lender
receive and approve for each of the New Mexico and Colorado greenhouses (i) a
budget setting forth the total estimated direct and indirect costs for the
construction of the Improvements, including line item cost breakdowns for all
direct costs by trade, job, and subcontractor, and a schedule of all sources of
funds to pay such costs (the "Project Budget"); (ii) a schedule setting forth,
by trade, job, and subcontractor, the estimated dates of commencement and
completion of construction of the Improvements (the "Project Schedule"); (iii) a
schedule of the amounts and times of Advances anticipated to be requisitioned by
CGI from time to time during the term of construction of the Improvements (the
"Disbursement Schedule"); (iv) a list of all subcontractors and materialmen who
have been or, to the extent then determined by CGI, will be supplying labor,
materials or goods for the Improvements; (v) two sets of the Plans with a
certification from CGI and from CGI's architect or engineer, or with other
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evidence satisfactory to Lender, as to the following matters: (a) that the
Improvements on each greenhouse can be completed by the same day of the month
six months after the date of the Notice to Proceed (as defined in the
Construction Contracts) for each greenhouse (the "Completion Dates"); (b) that
the Project Budget, Project Schedule, Disbursement Schedule and the Plans
satisfactorily provide for the construction of the Improvements; and (c) that
the Improvements upon completion will comply with all Laws (as defined in the
MLA), including, without limitation, all Laws relating to the environment, and
all approvals, consents, permits and licenses required under such Laws (the
"Project Approvals") which have been obtained or are to be obtained by CGI
relating in any way to the acquisition, construction or the contemplated
operation of the Improvements (including, without limitation, those relating to
zoning, building, use and occupancy, fire prevention and health); and (vi) a
list of the Project Approvals indicating those Project Approvals obtained and to
be obtained (and a schedule for obtaining such Project Approvals).
(c) SURVEY. That Lender receive a plat of survey of the Property by
a licensed surveyor satisfactory to Lender and complying with the 1988 Minimum
Standard Detail Requirements for ALTA/ACSM Land Title Surveys, as adopted by the
American Land Title Association ("ALTA") and the American Congress on Surveying
& Mapping, including, without limitation, showing through the use of course
bearings and distances, the following: (i) all foundations of the Improvements,
including driveways and fences, if any, in place or to be constructed; (ii) all
easements and roads or rights of way and setback lines, if any, affecting the
Improvements, and showing that the same are unobstructed; (iii) the dimensions,
boundaries and square footage of the Improvements; (iv) no encroachments by any
improvements on the Property onto adjoining property; and (v) such other
information as may be reasonably be required by Lender.
(d) UTILITIES; ACCESS. That Lender receive a certificate from CGI or
CGI's architect, or other evidence satisfactory to Lender, as to the methods of
access to and egress from the Property and the availability of water supply,
electricity and other utilities, all in locations and capacities sufficient to
meet the reasonable requirements of the Property and the Improvements and
otherwise satis factory to Lender.
(e) INSURANCE. That Lender receive certificates from the insurance
carrier for the general contractor or contractors (and if CGI is not adequately
insured therein, from CGI's insurance carrier) evidencing worker's compensation
and liability insurance (including contractual liability) carried during the
course of construction, naming Lender as an additional insured, with liability
insurance limits for death of or injury to persons of not less than One Million
Dollars ($1,000,000) and for damages to property of not less than Five Million
Dollars ($5,000,000) or such other limits if any are established under the
construction contract(s). Without limiting the provisions in the MLA or the
foregoing, CGI agrees to obtain Builder's Risk casualty insurance covering fire
and other casualty with extended coverage including vandalism and malicious
mischief.
(f) TITLE INSURANCE. That prior to any Advances under the
Construction Commitment, CGI shall furnish to Lender an ALTA lender's form of
title insurance on the Property in the aggregate face amount of Fifteen Million
Dollars ($15,000,000.00) insuring the Mortgage as first purchase money mortgage
liens on the Property, subject only to exceptions approved in writing by Lender
in its reasonable discretion. In the event any construction of the Improvements
has commenced prior to issuance of such title policy, CGI will obtain any and
all indemnification agreements and/or lien waiver agreements required by the
title insurer for issuance of such title insurance policies.
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(g) APPRAISAL. That Lender receive appraisals performed by a duly
certified appraiser acceptable to Lender demonstrating that the Construction
Commitment is less than or equal to eighty-five percent (85%) of the value of
the collateral offered to Lender.
(h) CONTRACTS AND REPORTS. That prior to any Advance on the
Construction Commit ment, Lender receive copies of the construction contracts,
supervising engineer's reports, environmental inspection reports, and other
reports contemplated for construction in the Loan Documents.
SECTION 7.2 ADVANCES GENERALLY. Lender's obligation to make each
Advance hereunder, including the initial Advance, is subject to the satisfaction
of each of the following additional condi tions precedent on or before the date
of such Advance:
(a) REQUEST FOR CONSTRUCTION ADVANCE. That Lender receive an executed
Request for Construction Advance from CGI in the form of Exhibit "D" attached
hereto (the "Request for Con struction Advance"), together with all items
called for therein, not later than five (5) days prior to the date the Advance
is desired, subject to Section 4.1(b) hereof.
(b) CONSTRUCTION CERTIFICATE. That Lender receive from the Project
Manager (as that term is defined in the construction contracts) or, if an
independent inspector has been employed by Lender pursuant to Section 12.3, a
certificate or report of such inspector to the effect that the construction of
the Improvements to the date thereof has been performed in a good and
workmanlike manner and in accordance with the Plans, stating the estimated total
cost of construction of the Improvements, stating the percentage of in-place
construction of the Improvements, and stating that the remaining non-disbursed
portion of the loan is adequate to complete the construction of the
Improvements, in the form attached hereto as Exhibit B.
ARTICLE 8
REPRESENTATIONS AND WARRANTIES
In addition to the representations and warranties contained in the MLA
subject only to those exceptions set forth in the Disclosure Schedule, CGI
represents and warrants as follows.
SECTION 8.1 PROJECT APPROVALS; CONSENTS; COMPLIANCE. CGI has obtained
all Project Approvals relating to the construction and operation of the
Improvements. All such Project Approvals heretofore obtained remain in full
force and effect and CGI has no reason to believe that any such Project Approval
not heretofore obtained will be obtained by CGI in the ordinary course during or
following completion of the construction of the Improvements. No such Project
Approval will terminate, or become void or voidable or terminable, upon any
sale, transfer or other disposition of the Property or the Improvements,
including any transfer pursuant to foreclosure sale under the Mortgage. No
consent, permission, authorization, order, or license of any governmental
authority is necessary in connection with the execution, delivery, performance,
or enforcement of the Loan Documents to which CGI is a party, except such as
have been obtained and are in full force and effect. CGI is in compliance in all
material respects with all Project Approvals having application to the Property
or the Improvements,. Without limiting the foregoing, there are no unpaid or
outstanding
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real estate or other taxes or assessments on or against the Property or the
Improvements or any part thereof (except only real estate taxes not yet due and
payable). CGI has received no notice nor has any knowledge or any pending or
contemplated assessment against the Property or the Improvements.
SECTION 8.2 ENVIRONMENTAL COMPLIANCE. Without limiting the provisions of
the MLA, all property owned or leased by CGI, including, without limitation, the
Property and the Improvements, and all operations conducted by it are in
compliance in all material respects with all Laws and all Project Approvals
relating to environmental protection, the failure to comply with which could
have a material adverse effect on the condition, financial or otherwise,
operations, properties, or business of CGI, or on the ability of CGI to perform
its obligations under the Loan Documents.
SECTION 8.3 FEASIBILITY. Each of the Project Budget, the Project Schedule
and the Disbursement Schedule is realistic and feasible.
ARTICLE 9
AFFIRMATIVE COVENANTS
In addition to the affirmative covenants contained in the MLA, CGI agrees
to:
SECTION 9.1 REPORTS AND NOTICES.
(a) REGULATORY AND OTHER NOTICES. Promptly after receipt thereof,
furnish to Lender copies of any notices or other communications received from
any governmental authority with respect to the Property, the Improvements, or
any matter or proceeding the effect of which could have a material adverse
effect on the condition, financial or otherwise, operations, properties, or
business of CGI, or the ability of CGI to perform its obligations under the Loan
Documents.
(b) NOTICE OF NONPAYMENT. Promptly after the filing or receipt
thereof, furnish to Lender a description of or a copy of any lien filed by or
any notice, whether oral or written, from any laborer, contractor, subcontractor
or materialman to the effect that such laborer, contractor, subcontractor or
materialman has not been paid when due for any labor or materials furnished in
connection with the construction of the Improvements.
(c) NOTICE OF SUSPENSION OF WORK. Furnish to Lender prompt notice of
any suspension in the construction of the Improvements, regardless of the cause
thereof, in excess of five (5) days and a description of the cause for such
suspension.
SECTION 9.2 CONSTRUCTION LIENS. Pay or cause to be removed, within five
(5) days after notice from Lender, any Lien on the Improvements or Property,
provided, however, that CGI shall have the right to contest in good faith and
with reasonable diligence the validity of any such lien or claim upon furnishing
to the appropriate title insurance company such security or indemnity as it may
require to induce said title insurance company to issue its title insurance
commitment or its mortgage title insurance policy insuring against all such
claims or Liens, and provided further that Lender will not be required to make
any further Advances of the proceeds of the Construction Commitment until
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any mechanic's lien claims shown by the title insurance company or interim
binder have been so insured against by the title insurance company.
SECTION 9.3 IDENTITY OF CONTRACTORS; ETC. Furnish to Lender from time to
time on the request of Lender, in a form acceptable to Lender, correct lists of
all contractors, subcontractors and suppliers of labor and material supplied in
connection with the construction of the Improvements and true and correct copies
of all executed contracts, subcontracts, and supply contracts. Lender may
contact any contractor, subcontractor, or supplier to verify any facts disclosed
in the lists and contracts. All contracts and subcontracts relating to
construction of the Improvements must contain provisions authoriz ing such
contractor, subcontractor or supplier to provide to Lender the listed
information and copies of contracts, and to disclose to Lender any information
regarding the performance of the contract.
SECTION 9.4 LIEN WAIVERS. Furnish to Lender, at any time and from time to
time upon the request of Lender, lien waivers bearing a then current date and
prepared on a form satisfactory to Lender from such contractor, subcontractor,
or supplier as Lender shall designate.
ARTICLE 10
NEGATIVE COVENANTS
In addition to the negative covenants contained in the MLA, CGI will not:
SECTION 10.1 CHANGE ORDERS. Allow any substantial deviation, addition,
extra, or change order to the Plans, Project Budget or Project Schedule and will
not make any material change in any contract or subcontract (including, but not
limited to, those with any contractor, subcontractor, architect or engineer)
without Lender's prior written approval. All requests for substantial changes
shall be made using a Change Order Request in the form of Exhibit "A" attached
hereto. For the purposes hereof, the term "substantial" shall mean an addition
or extra which exceeds One Hundred Thousand Dollars ($100,000) in the aggregate
for each greenhouse, or for any particular item if such change would increase
the cost for such item by five percent (5%) or greater. Lender will have a
reasonable time to evaluate any requests for its approval of any changes
referred to in this covenant, and will not be required to consider approving any
changes unless all other approvals that may be required have been obtained.
Lender may approve or disapprove changes in its sole discretion. All contracts
and subcontracts relating to the construction of the Improvements must contain
provisions satisfactory to Lender implementing the above provisions of this
covenant. CGI shall promptly provide to Lender copies of all change orders
that, pursuant to the above described procedures, did not require Lender's prior
written approval.
SECTION 10.2 MATERIALS. Purchase or install any materials, equipment,
fixtures, or articles of personal property for the Improvements if such shall be
covered under any security agreement or other agreement where the seller
reserves or purports to reserve title or the right of removal or repossession,
or the right to consider them personal property after their incorporation into
the Improvements.
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ARTICLE 11
CASUALTIES
SECTION 11.1 RIGHT TO ELECT TO APPLY PROCEEDS. In case of material loss
or damage to the Property or the Improvements by fire or other casualty, by a
taking by condemnation for public use or the action of any governmental
authority or agency, or the transfer by private sale in lieu thereof, either
temporarily or permanently, or otherwise, if in the sole judgment of Lender
there is reasonable doubt as to CGI's ability to complete construction of the
Improvements on or before the Completion Date by reason of such loss or damage
or because of delays in making settlements with governmental agencies or
authorities or with insurers, Lender may terminate its obligations to make
Advances hereunder and elect to collect, retain and apply to the outstanding
balance all proceeds of the taking or insurance after deduction of all expenses
of collection and settlement, including attorneys' and adjusters' fees and
charges. In the event such proceeds are insufficient to pay the outstanding
balance in full, Lender may declare the balance remaining unpaid on the
outstanding balance to be due and payable forthwith and avail itself of any of
the remedies afforded hereby as in case of any Event of Default.
SECTION 11.2 ELECTION NOT TO APPLY PROCEEDS. In case Lender does not
elect to apply such proceeds to the outstanding balance, CGI will:
(a) SETTLE. Proceed with diligence to make settlement with the
governmental agencies or authorities or the insurers, as the case may be, and
cause the proceeds to be paid to CGI.
(b) RESUME CONSTRUCTION. Promptly proceed with the resumption of
construction of the Improvements, including the repair of all damage and
restoration to its former condition.
SECTION 11.3 USE OF PROCEEDS. All such proceeds shall be fully used
before the disbursement of any further proceeds of the Construction Commitment.
ARTICLE 12
OTHER RIGHTS OF LENDER
SECTION 12.1 RIGHT TO INSPECT. Lender or its agent may enter on the
Property at any time and inspect the Improvements. If the construction of the
Improvements is not satisfactory to Lender, Lender may stop the construction and
order its replacement or the correction thereof or additions thereto, whether or
not said unsatisfactory construction has been incorporated in the Improvements,
and withhold all Advances hereunder until such construction is satisfactory to
Lender. Such construction shall promptly be made satisfactory to Lender.
SECTION 12.2 NO OBLIGATION OF LENDER. Neither Lender nor any inspector
hired pursuant to Section 12.3 below is obligated to construct or supervise
construction of the Improvements. Inspection by Lender or such inspector
thereof is for the sole purpose of protecting Lender's security and is not to be
construed as a representation that there will be compliance on anyone's part
with the Plans or that the construction will be free from faulty material or
workmanship. Neither Lender nor such in-
11
xxxxxxx shall be liable to CGI or any other person concerning the quality of
construction of the Improvements or the absence therefrom of defects. CGI will
make or cause to be made such other independent inspections as it may desire for
its own protection.
SECTION 12.3 RIGHT TO EMPLOY INDEPENDENT ARCHITECT OR ENGINEER. Lender
reserves the right to employ an independent construction architect or engineer,
among other things, to review the Project Budget, the Project Schedule and the
Plans, inspect all construction of the Improvements and the periodic progress of
the same, and review all Requests for Construction Loan Advances and change
orders, the cost therefor to be the sole responsibility of CGI and shall be paid
by CGI upon demand by Lender.
SECTION 12.4 INDEMNIFICATION AND HOLD HARMLESS. CGI shall indemnify and
hold Lender harmless from and against all liability, cost or damage arising out
of this Supplement or any other Loan Document or the transactions contemplated
hereby and thereby, including, without limitation, (i) any alleged or actual
violation of any Law or Project Approval relating to the Property or the
Improvements and (ii) any condition of the Property or the Improvements whether
relating to the quality of construction or otherwise and whether Lender elects
to complete construction upon an Event of Default or discontinues or suspends
construction pursuant to this Section, except for any liability, cost or damage
arising from Lender's own gross negligence or willful misconduct. Lender may
commence, appear in or defend any such action or proceeding or any other action
or proceeding purporting to affect the rights, duties or liabilities of the
parties hereunder, or the Improvements, or the Property, or Advances of the
Construction Commitment, and CGI agrees to pay all of Lender's costs and
expenses, including its reasonable attorneys' fees, in any such actions. The
obligations of CGI under this Subsection shall survive the termination of this
Agreement.
ARTICLE 13
EVENTS OF DEFAULT
In addition to the events of default set forth in the MLA, each of the
following shall constitute an "Event of Default" hereunder:
SECTION 13.1 CESSATION OF CONSTRUCTION. Any cessation at any time in
construction of the Improvements for more than fifteen (15) consecutive days,
except for strikes, acts of God, or other causes beyond CGI's control, or any
cessation at any time in construction of the Improvements for more than thirty
(30) consecutive days, regardless of the cause.
SECTION 13.2 INSUFFICIENCY OF LOAN PROCEEDS. Lender, in its sole
discretion, shall determine that the remaining undisbursed portion of the
Construction Commitment is or will be insufficient to fully complete the
Improvements in accordance with the Plans.
12
ARTICLE 14
REMEDIES UPON DEFAULT
In addition to the remedies set forth in the MLA, upon the occurrence of
and during the contin uance of each and every Event of Default:
SECTION 14.1 COMPLETION. Lender may (but shall not be obligated to) take
over and complete construction of the Improvements in accordance with the Plans
approved by Lender with such changes as Lender may, in its sole discretion, deem
appropriate, all at the risk, cost, and expense of CGI. Lender may assume or
reject any contracts entered into by CGI in connection with the Improvements,
and may enter into additional or different contracts for services, labor, and
materials required, in the sole judgment of Lender, to complete the construction
of the improvements. All sums, including reasonable attorneys' fees, charges or
fees for supervision and inspection of the construction, and for any other
necessary purpose in the discretion of Lender, expended by Lender in completing
the construction of the Improvements (whether aggregating more or less than the
amount of this Construction Commitment) shall be deemed Advances made by Lender
to CGI under this Construction Commitments, and CGI shall be liable to Lender
for the repayment of such sums, together with interest on such amounts from the
date of their expenditure at the Default Interest Rate specified above. Lender
may, in its sole discretion, at any time, abandon work on the construction of
the Improvements after having commenced such work, and may recommence such work
at any time, it being understood that nothing in this Section shall impose any
obligation on Lender to complete or not to complete the construction of the
Improvements. In the event Lender elects to complete the construction, it may
demand such additional sums from CGI as may be necessary to complete
construction, which sums CGI shall promptly pay to Lender. For the purposes of
carrying out the provisions of this section upon an Event of Default and for so
long as an Event of Default continues, CGI irrevocably appoints Lender its
attorney-in-fact, with full power of substitution to execute and deliver all
such documents, pay and receive such funds, and take such action as may be
necessary, in the judgment of Lender, to complete the construction of the
Improvements. This appointment of attorney-in-fact is coupled with an interest
and given as security and is irrevocable.
ARTICLE 15
MISCELLANEOUS
SECTION 15.1 NOTICE OF COMPLETION. CGI appoints Lender as CGI's attorney-
in-fact to file of record any notice of completion, cessation of labor or any
other notice that Lender deems necessary to file to protect any of the interests
of Lender. Lender, however, shall have no duty to make such filing. This
appointment is coupled with an interest and given as security, and is
irrevocable.
SECTION 15.2 SIGNS AND PUBLICITY. CGI will allow Lender to post signs on
the Property at the construction sites for the purpose of identifying Lender as
the construction lender, and will use its best efforts to identify Lender as the
construction lender in publicity concerning the Project.
13
SECTION 15.3 COOPERATION. CGI will cooperate at all times with Lender in
bringing about the timely completion of the Improvements, and CGI will resolve
all disputes arising during the work construction in a manner which will allow
work to proceed expeditiously.
SECTION 15.4 TERMINATION. This Supplement shall terminate when the
indebtedness evidenced by the Promissory Note is paid in full and all
obligations, covenants, conditions, and agreements of CGI contained herein and
in the Loan Documents are performed and discharged, and, in such event, upon the
request of CGI and at the cost of CGI, Lender shall execute and deliver to CGI
instruments effective to evidence the termination of the Supplement.
IN WITNESS WHEREOF, CGI has caused this Agreement to be executed, attested,
and sealed and Lender has caused this Agreement to be executed by their duly
authorized officers as of the date shown above.
(THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.)
14
CONSTRUCTION LOAN SUPPLEMENT
SIGNATURE PAGE
COLORADO SPRINGS PRODUCTION
CREDIT ASSOCIATION COLORADO GREENHOUSE, INC.
By: /s/ signature illegible By: /s/ Xxxxxx Xxxxxxxxx
--------------------------- ---------------------------
Title: SR. V.P. - CREDIT Title: CEO
------------------------ ------------------------
14
EXHIBIT A
TO
CONSTRUCTION LOAN SUPPLEMENT
CHANGE ORDER REQUEST
Date:_________________________
Change Order Request Number:_________________________
To: Colorado Springs Production Credit Association ("Lender")
FROM: Colorado Greenhouse, Inc. ("CGI")
Loan Agreement No.: 2406649
Dated: January _____, 1987
Project Description:____________________________________________________________
Project Location:_______________________________________________________________
In accordance with the terms of the above referenced Construction Loan
Supplement, the undersigned hereby requests that Lender approve the change
orders more particularly described in the scheduled attached hereto as Exhibit
"A" and incorporated herein.
The undersigned hereby certifies that:
1. There have been no changes in the Plans and/or contracts except those
permitted in the Construction Loan Supplement and/or approved in writing by
Lender; and
2. Copies of the proposed changes to the Plans and/or contracts are attached
hereto as Exhibit "A" and that all such documents are complete and fully comply
with all applicable permits and approvals, subject to the written approval of
Lender.
COLORADO GREENHOUSE, INC. ENGINEER:
By:___________________________ By:___________________________
CONTRACTOR:
By:___________________________
CHANGE ORDER APPROVED:
LENDER: COLORADO SPRINGS PRODUCTION
CREDIT ASSOCIATION
By:___________________________ Date:___________________________
EXHIBIT B
TO
CONSTRUCTION LOAN SUPPLEMENT
CONSTRUCTION CERTIFICATE
This certificate is given pursuant to Section 7.2(b) of that certain
Construction Loan Supplement, dated as of ___________________________, 19___ by
and between Colorado Greenhouse, Inc., and Lender.
I hereby certify that based upon a review of the Work, the construction contract
and Plans:
1. The construction of the Improvements to this date has been performed in a
good and xxxxxxx like manner in accordance with the Plans;
2. The estimated total construction costs of construction of the Improvements
is _____________.
3. The percentage of in-place construction of the Improvements is ___________.
4. The remaining non-disbursed portion of the construction commitment is
adequate to complete the construction of the Improvements.
IN WITNESS WHEREOF, the undersigned has executed this Certificate on
_________________, 19___.
______________________________
Engineer
Raytheon Engineers & Constructors, Inc.
0000 Xxxxxxxxx Xxxxx Xxxxxxxxx
Xxxxx 000
Xxxxxxxxx, XX 00000
EXHIBIT C TO CONSTRUCTION LOAN SUPPLEMENT
PROMISSORY NOTE
FIFTEEN MILLION DOLLARS January 24, 1997
$15,000,000.00 Loan No. 2406649
FOR VALUE RECEIVED, the undersigned, Colorado Greenhouse, Inc., a Delaware
corporation doing business in Colorado ("Maker"), hereby promises to pay to the
order of Colorado Springs Production Credit Association ("Lender"), a federally
chartered association of the Farm Credit System, ("Payee"), at its offices, at
Maturity as defined in the Construction Loan Supplement, in lawful money of the
United States of America, the principal amount of FIFTEEN MILLION DOLLARS
($15,000,000.00) or so much thereof as may have been Advanced and is outstanding
hereunder, together with interest on the outstanding principal balance from day
to day remaining, at the rates provided in the Construction Loan Supplement.
Interest accruing during construction and start-up shall be capitalized pursuant
to the Construction Loan Supplement, and thereafter the interest accruing hereon
shall be due and payable monthly in arrears, with the first such payment due on
the 1st day of November, 1997, and on the 1st day of each month thereafter, and
at Maturity. All unpaid principal balances of the Advances on this Promissory
Note shall be due and payable in equal monthly installments of principal
repayment, with the first such installment being due on the 1st day of January,
1998, and monthly thereafter in accordance with the Schedule of Payments
attached hereto and to the Construction Loan Supplement as Exhibit E, with the
final payment on December 31, 2006 ("Maturity"). All past due principal shall
bear interest at the Default Rate.
This Promissory Note has been given to Payee pursuant to the Master Loan
Agreement dated as of the 24th day of January, 1997, and the Construction Loan
Supplement dated as of the 24th day of January, 1997, and all capitalized terms
used herein and not otherwise defined shall have the meaning provided therein.
Advances borrowed hereon and repaid may not be reborrowed.
Upon the occurrence of any Event of Default, the holder hereof may, at its
option, declare the entire unpaid principal of and accrued interest on this
Promissory Note immediately due and payable without notice, demand or
presentment, all of which are hereby waived, and upon such declaration, the same
shall become and shall be immediately due and payable, and the holder hereof
shall have the right to foreclose or otherwise enforce all liens or security
interests securing payment hereof, or any part hereof, and offset against this
Promissory Note any sum or sums owed by the holder hereof to Maker. Failure of
the holder hereof to exercise this option shall not constitute a waiver of the
right to exercise the same upon the occurrence of a subsequent Event of Default.
If the holder hereof expends any effort in any attempt to enforce payment
of all or any part of any sum due the holder hereunder, or if this Promissory
Note is placed in the hands of an attorney for collection, or if it is collected
through any legal proceedings, Maker agrees to pay all costs, expenses and
reasonable fees incurred by the holder, including reasonable attorney's fees.
This Promissory Note shall be governed by and construed in accordance with
the Laws of the State of Colorado and the applicable Laws of the United States
of America.
Maker and each surety, guarantor, endorser and other party ever liable for
payment of any sums of money payable on this Promissory Note jointly and
severally waive notice, presentment, demand for payment, protest, notice of
protest and non-payment or dishonor, notice of acceleration, notice of intent to
accelerate, notice of intent to demand, diligence in collecting, grace, and all
other formalities of any kind, and consent to all extensions without notice for
any period or periods of time and partial payments, before or after maturity,
and any impairment of any collateral securing this Promissory Note, all without
prejudice to the holder. The holder shall similarly have the right to deal in
any way, at any time, with one or more of the foregoing parties without notice
to any other party, and to grant any such party any extensions of time for
payment of any of said indebtedness, or to release or substitute any such party
or part or all of the collateral securing this Promissory Note, or to grant any
other indulgences or forbearances whatsoever, without notice to any other party
and without in any way affecting the personal liability of any party hereunder.
Maker hereby authorizes the holder hereof to record in its records all
Advances made to Maker hereunder and interest accruing thereon and all payments
made on account of the principal hereof and interest accruing hereon, which
records shall be prima facie evidence as to the outstanding principal amount of
and interest accrued on this Promissory Note; provided, however, any failure by
the holder hereof to make any records shall not limit or otherwise affect the
obligations of Maker under the Agreement or this Promissory Note.
COLORADO GREENHOUSE, INC.
By:_____________________________________
2
EXHIBIT D
TO
CONSTRUCTION LOAN SUPPLEMENT
REQUEST FOR CONSTRUCTION LOAN ADVANCE
Request No.________________________ Date:________________
(Number sequentially)
TO: Colorado Springs Production Credit Association ("Lender")
FROM: Colorado Greenhouse, Inc. ("CGI")
Construction Loan Supplement No. 2406649
Dated: January ____, 1997
Project Description:____________________________________________________________
________________________________________________________________________________
In accordance with the terms of the above-referenced Construction Loan
Supplement (capitalized terms used herein but not defined herein shall have the
meanings ascribed to such terms in such Construction Loan Supplement), you are
hereby authorized and requested to make an Advance in the amount of
$____________ for the construction items set forth in the request schedule
attached hereto as Schedule A and incorporated herein.
The undersigned hereby certifies that:
1. The requested Advance (a) is to pay for labor, services, equipment,
fixtures, personal property, and materials (i) which have been performed upon or
incorporated into the Improvements or delivered to and properly stored on the
Property, and (ii) which are accurately described in the supporting invoices
attached to Schedule A, each of which invoice has been paid or is currently due
and payable and has not been the subject of any previous Request for
Construction Loan Advances, and (b) does not exceed ninety percent (90%) of the
aggregate amount of the supporting invoices attached to Schedule A.
2. No amount requested hereby for any category or line item of acquisition or
construction cost is more than the amount specified therefor in the Project
Budget, and there has been no change in the Project Budget previously supplied
to and approved by Lender except as expressly permitted by the Construction Loan
Supplement or as has been approved in writing by Lender;
3. All construction completed as of the date hereof has been performed in a
good and workmanlike manner and in accordance with the Plans, and there has been
no change in the Plans except as expressly permitted by the Construction Loan
Supplement or as has been approved in writing by Lender, and descriptions or
copies of all deviations, additions, extras, or change orders to date to the
Plans, the Project Budget and all other Project Documents have been provided to
Lender.
4. There has been no change in the Project Schedule except as has been
approved in writing by Lender;
5. The payments to be made with the requested Advance will pay all presently
due and payable bills and invoiced received to date, less any required
withholds, for labor, services, equipment, fix tures, personal property, and
materials furnished in connection with the construction of the Improve ments;
6. All amounts previously advanced by Lender for labor, services, equipment,
fixtures, personal property, and materials furnished in connection with the
construction of the Improvements pursuant to previous Requests for Construction
Loan Advances have been paid to the parties entitled thereto in the manner
required in the Construction Loan Supplement;
7. All conditions to advances set forth in the Construction Loan Supplement
have been fulfilled, no Default or Event of Default under the Construction Loan
Supplement has occurred and is continu ing, and all warranties and
representations contained in the Loan Documents are true and correct on the date
of this Requests for Construction Loan Advance.
8. Excluding the funds requested in this Request for Construction Loan
Advance, CGI has requested and received the sum of $_______________ under the
Construction Commitment;
9. No Liens have been filed or claims made against the Property or the
Improvements for unpaid labor, services, equipment, fixtures, personal property,
or materials; and
10. CGI has no offset, counterclaim, or defense against the Loan or any other
amount due under the Loan Documents.
COLORADO GREENHOUSE, INC.
By:___________________________
APPROVED FOR PAYMENT:
COLORADO SPRINGS PRODUCTION
CREDIT ASSOCIATION
By:___________________________
Date:_________________________
2
EXHIBIT E
TO
CONSTRUCTION LOAN SUPPLEMENT
Schedule of Payments:
To be provided by Lender upon expiration of the
construction commitment.
EXHIBIT F TO
CONSTRUCTION LOAN SUPPLEMENT
----------------------------
between
COLORADO GREENHOUSE, INC.
and
COLORADO SPRINGS PRODUCTION CREDIT ASSOCIATION
Section 8.1 Project Approvals; Consents
----------------------------------------
CGI has obtained all Project Approvals and all other necessary consents,
permissions, authorizations, order and licenses of applicable governmental
authority, except as follows:
A. Estancia. New Mexico Greenhouse:
-------------------------------
1. Groundwater Discharge Permit. Application submitted to NMED.
2. Building Permit. Application to be submitted [Torrance County, NM]
B. Ft. Xxxxxx, Colorado Greenhouse
-------------------------------
1. Subdivision Application and Request for Variance. Application and
request submitted to City of Ft.Xxxxxx, CO on January 17, 1997.
2. Air Permit. Application submitted to Colorado Department of Health
on January 17, 1997.
3. Building Permit. Application to be submitted to City of
Ft. Xxxxxx, CO]
Section 8.2 Environmental Matters
----------------------------------
1. Phase I Environmental Site Assessment for East 1/2 of Xxxxxxx 00, Xxxxxxxx
0 Xxxxx, Xxxxx 0 Xxxx, Xxxxxxxx Xxxxxx, Xxx Xxxxxx prepared by Xxxxxx X.
Xxxxxxxx & Associates, Inc. for Colorado Greenhouse LLC, dated November
20, 1996.
2. Phase I Environmental Site Assessment for 00 Xxxx Xxxxxxxxxxx Xxxxxx, Xxxx
Xxxxxx, Xxxxxxxx, prepared by ERM-Rocky Mountain, Inc. for Colorado
Greenhouse, Inc., dated January 17,1997.
7
Exhibit G
to
Construction Loan Supplement
Description of Real Property on which crops are growing or are to be grown and
on which fixtures are located.
Xxxxx #0, Xxxxxxxx, Xxxxxxxx Xxxxxx, Xxx Xxxxxx:
The Northeast Quarter (NE1/4) of Section Ten (10), Township Five (5) North,
Rang Eight (8) East, N.M.P.M., Torrance County, New Mexico.
AND
Tracts letter "A" and "B" situate within the Southeast Quarter (SE1/4) of
Section Ten (10), Township Five (5) North, Range Eight (8) East, N.M.P.M., as
the same are shown and designated on that certain Plat entitled "Lands of Xxxxxx
X. and Xxxxx X. Xxxxxx", prepared by Xxxxx Xxxxxxx, N.M.P.L.S. #6256, filed for
record on March 2, 1994 at 4:20 o'clock, P.M., as document number 4045, and
filed in Cabinet C, Slide 68, Plat Records of Torrance County, New Mexico.
Xxxxx #0, Xx. Xxxxxx, Xxxx Xxxxxx, Xxxxxxxx:
THAT PART OF THE NORTHWEST 1/4 OF SECTION 34, TOWNSHIP 2 NORTH, RANGE 00
XXXX XX XXX 0XX XXXXXXXXX XXXXXXXX, XXXXXX OF WELD, STATE OF COLORADO, BEING
MORE PARTICULARLY DESCRIBED AS:
BEGINNING AT THE WEST 1/4 CORNER OF SAID SECTION 34; THENCE NORTH 00
DEGREES 37 MINUTES 57 SECONDS WEST ON AN BEARING BASED ON A COLORADO STATE
PLANE, NORTH ZONE, MODIFIED COORDINATE GRID AND ALONG THE WEST LINE OF SAID
NORTHWEST 1/4 SECTION 34 A DISTANCE OF 40.00 FEET;
THENCE NORTH 89 DEGREES 25 MINUTES 58 SECONDS EAST PARALLEL WITH AND 40.00 FEET
NORTHERLY OF THE SOUTH LINE OF SAID NORTHWEST 1/4 OF SECTION 34 A DISTANCE OF
1070.65 FEET TO THE TRUE POINT OF BEGINNING;
THENCE NORTH 00 DEGREES 25 MINUTES 23 SECONDS WEST PARALLEL WITH THE EAST LINE
OF SAID NORTHWEST 1/4 OF SECTION 34 A DISTANCE OF 1453.44 FEET;
THENCE NORTH 89 DEGREES 22 MINUTES 03 SECONDS EAST PERPENDICULAR TO SAID WEST
LINE OF THE NORTHWEST 1/4 OF SAID SECTION 34 A DISTANCE OF 801.51 FEET TO A
POINT 777.91 FEET WESTERLY OF SAID EAST LINE OF THE NORTHWEST 1/4 OF SECTION 34;
THENCE SOUTH 00 DEGREES 25 MINUTES 23 SECONDS EAST PARALLEL WITH AND 777.91 FEET
WESTERLY OF SAID EAST LINE OF THE NORTHWEST 1/4 OF SECTION 34 A DISTANCE
OF 1454.36 FEET TO A POINT 40.00 FEET NORTHERLY OF SAID SOUTH LINE OF THE
NORTHWEST 1/4 OF SECTION 34;
THENCE SOUTH 89 DEGREES 25 MINUTES 58 SECONDS WEST PARALLEL WITH SAID SOUTH LINE
OF THE NORTHWEST 1/4 OF SAID SECTION 34 A DISTANCE OF 801.51 FEET TO THE TRUE
POINT OF BEGINNING.
CONTAINS: 26.752 ACRES MORE OR LESS.
