EXHIBIT 10.21
GREENHOUSE OPERATION AND
MANAGEMENT AGREEMENT
This GREENHOUSE OPERATION AND MANAGEMENT AGREEMENT (this "Agreement")
is made and entered into as of July 31, 1996, to be effective January 1, 1996,
between WOLF CREEK RIFLE LLC, a Colorado limited liability company ("WCR") and
COLORADO GREENHOUSE LLC, a Colorado limited liability company ("Colorado
Greenhouse").
RECITALS
A. American Atlas # 1, Ltd., a Colorado limited partnership ("AA#1")
and Westinghouse Credit Corporation have previously entered into a Facility Site
Lease dated January 1, 1993, under which AA#1 is the developer of a 75 megawatt
gas-fired cogeneration facility consisting of an electrical generating facility
(the "Power Plant") and an approximately 13.5-acre greenhouse facility and
related packing facility (collectively, the "Greenhouse") located in Garfield
County, Colorado.
B. AA#1 and WCR have previously entered into a Greenhouse Lease
Agreement, dated as of April 15, 1993 (the "Greenhouse Lease"), a copy of which
is attached hereto as Exhibit A, pursuant to the terms of which AA#1 leased the
Greenhouse to WCR.
C. Colorado Greenhouse is in the business of managing and operating
greenhouses.
D. WCR and Colorado Greenhouse desire to enter into this Agreement in
order for WCR to engage Colorado Greenhouse to operate and manage the Greenhouse
on the terms and conditions set forth herein.
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NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
AGREEMENT
Article 1. Engagement of Colorado Greenhouse.
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WCR hereby engages Colorado Greenhouse, and Colorado Greenhouse hereby
agrees, to operate and manage the Greenhouse in accordance with the terms and
conditions of this Agreement.
Article 2. Definitions.
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Unless otherwise specifically set forth in this Agreement, the
Definitions that shall apply are as set forth in this Article 2.
"AA#1" shall have the meaning set forth in the recitals hereto.
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"Allocated Percentage" means the percentage set forth in Exhibit B
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attached hereto, as the same may be amended from time to time as provided in
Section 15.14.
"Annual Operating Budget" means an operating budget submitted by
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Colorado Greenhouse to WCR and approved by WCR for two year operating periods
beginning with the Commencement Date, showing for each month of the following
two years (or, as the case may be, for the balance of the current calendar year
and then for the following calendar year) Greenhouse Revenues and Greenhouse
Operating Expenses.
"Applicable Laws" means all laws, treaties, ordinances, judgments,
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decrees, injunctions, writs and orders of any court, arbitrator or governmental
agency or authority and rules, regulations, orders, interpretations and permits
of any federal, state, county, municipal, regional, environmental or other
governmental body, instrumentality, agency, authority, court or other body
having jurisdiction over performance of the Services to be performed hereunder,
or operation of the Greenhouse, as may be in effect and as amended from time to
time.
"Applicable Permits" means all permits, licenses and similar items
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required to be obtained or maintained in connection with performance of the
Services to be performed hereunder, or operation of the Greenhouse, as may be in
effect from time to time and as amended from time to time.
"BGP" means Brush Greenhouse Partners, a Colorado general partnership.
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"BGP Greenhouse" means the greenhouse leased to BGP and operated by
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Colorado Greenhouse.
"BGPII" means Brush Greenhouse Partners II LLC, a Colorado limited
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liability company.
"BGPII Greenhouse" means the greenhouse leased to BGPII and operated by
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Colorado greenhouse.
"Colorado Greenhouse Gross Margin" means, with respect to any calendar
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year, Net Revenues for such year minus (a) the aggregate Primary Fee for such
year and (b) the aggregate primary fees for such year paid by Colorado
Greenhouse with respect to the Other Greenhouses.
"Colorado Greenhouse Operating Expenses" mean, with respect to any
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period, the following amounts incurred (or accrued in accordance with prudent
accounting practices and the Annual Operating Budget) by Colorado Greenhouse
during such period in connection with the operation and management of the
Greenhouse and the Other Greenhouses (to the extent not reimbursed by WCR, AA#1
or a third party): (i) all greenhouse labor and general and administrative
labor expenses, including all salaries, employee benefits (including related
taxes and contributions) and other compensation paid to Colorado Greenhouse's
employees and independent contractors, (ii) all packaging and delivery expenses,
(iii) all direct costs including propagation materials, seed, fertilizer,
fungicides, insect, biological, bee and CO2 costs, (iv) all operating expenses
including utilities (including costs of water), repairs and maintenance and
equipment leases, (v) insurance premiums, (vi) fees for accounting, legal and
other professional services, (vii) general and administrative expenses, (viii)
permitting fees and expenses, (ix) payments made with respect to loans made to
Colorado Greenhouse in connection with its formation and operations, (x) sales
and marketing expenses, and (xi) all other cash expenditures relating to the
operation, management, repair and maintenance costs of the Greenhouse and the
Other Greenhouses.
"Colorado Greenhouse Revenues" mean, with respect to any period, all
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revenues and payments made to Colorado Greenhouse during such period in
connection with the operation of the Greenhouse and the Other Greenhouses,
including, without limitation, all amounts payable or owed to Colorado
Greenhouse under contracts relating to the Greenhouse and the Other Greenhouses,
all other payments received by Colorado Greenhouse from the sale of vegetables
or other produce or crops produced by the Greenhouse and the Other Greenhouses,
and proceeds received from business interruption insurance.
"Commencement Date" means January 1, 1996.
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"Facility" means the Power Plant and the Greenhouse.
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"FERC Order" means the Order Granting Application for Certification as
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a Qualifying Cogeneration Facility issued May 22, 1987, by the Federal Energy
Regulatory Commission, as the same may be amended, supplemented or replaced.
"Forced Outage" means any outage resulting from a design defect,
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inadequate construction, operator error or a breakdown of the mechanical or
electrical equipment that results in a reduction of the hot water delivered to
the Greenhouse.
"Ft. Xxxxxx Greenhouse" means the greenhouse leased to Rocky Mountain
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and operated by Colorado Greenhouse, located in Ft. Xxxxxx, Colorado.
"Good Greenhouse Practices" mean the practices, methods and acts that
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are applied by prudent operators of cogeneration facility related greenhouses in
a manner consistent with applicable industry codes, standards and regulations,
and Applicable Laws, and designed to optimize productivity, reliability, safety,
environmental protection, economy and expediency.
"Greenhouse Operating Expenses" mean, with respect to any period, the
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following amounts incurred (or accrued in accordance with prudent accounting
practices and the Annual Operating Budget) by Colorado Greenhouse during such
period in connection with the operation and management of the Greenhouse (to the
extent not reimbursed by WCR, AA#1 or a third party): (i) all greenhouse labor
and general and administrative labor expenses, including all salaries, employee
benefits (including related taxes and contributions) and other compensation paid
to Colorado Greenhouse's employees and independent contractors, (ii) all
packaging and delivery expenses, (iii) all direct costs including propagation
materials, seed, fertilizer, fungicides, insect, biological, bee and CO2 costs,
(iv) all operating expenses including utilities (including water), repairs and
maintenance and equipment leases, (v) insurance premiums, (vi) fees for
accounting, legal and other professional services, (vii) general and
administrative expenses, (viii) permitting fees and expenses, (ix) sales and
marketing expenses, and (x) all other cash expenditures relating to the
operation, management, repair and maintenance costs of the Greenhouse.
"Greenhouse Revenues" mean, with respect to any period, all revenues
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and payments made to Colorado Greenhouse during such period in connection with
the operation of the Greenhouse, including, without limitation, all amounts owed
to Colorado Greenhouse under contracts relating to the Greenhouse, all other
payments received by Colorado Greenhouse from the sale of vegetables or other
produce or crops produced by the Greenhouse and proceeds received from business
interruption insurance with respect to the Greenhouse.
"Other Greenhouses" mean, collectively, the BGP Greenhouse, the BGPII
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Greenhouse and the Ft. Xxxxxx Greenhouse (to the extent that the above are being
operated and managed by
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Colorado Greenhouse), or such other greenhouses as Colorado Greenhouse may
operate or manage during the term of this Agreement with the consent of WCR and
AA#1.
"Net Revenues" mean, with respect to any period, Colorado Greenhouse
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Revenues minus Colorado Greenhouse Operating Expenses for such period.
"Party or Parties" means WCR or Colorado Greenhouse, or both, as the
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context may require.
"Primary Fee" means an amount, payable within 30 days after the end of
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each calendar quarter during the term of this Agreement, equal to the Allocated
Percentage of Net Revenues, which amount shall not exceed the Allocated
Percentage of $3,429,092 for any calendar year.
"Primary Fee Deficiency" means an amount, to be calculated by WCR
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within 30 days after the end of each calendar year during the term of this
Agreement, equal to the amount, if any, by which the Allocated Percentage
(14.581%) of $3,429,092 exceeds the aggregate payments made on account of the
Primary Fee for such calendar year.
"Program" means the program for marketing, production and maintenance
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of the Greenhouse as prepared by Colorado Greenhouse and reviewed and approved
at least annually by WCR, which program shall cover the marketing, production
and maintenance necessary for the Greenhouse (including capital improvements
which shall be specified as such), a detailed staffing plan providing for the
necessary personnel and all other matters relevant to the operation of the
Greenhouse and Colorado Greenhouse's duties under this Agreement.
"Project Documents" mean any and all agreements, contracts and permits,
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now or hereafter existing, relating to or affecting the operation of the
Greenhouse, as the same may be amended, supplemented or replaced from time to
time. A list of Project Documents as of the date of this Agreement is attached
hereto as Exhibit C.
"Qualifying Facility" means a facility meeting all of the requirements
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for a "qualifying cogeneration facility" set forth in the regulations
implementing the Public Utility Regulatory Policies Act of 1978, as amended from
time to time, and in Part 292 of Title 18 of the Code of Federal Regulations, as
amended from time to time.
"Rocky Mountain" means Rocky Mountain Produce Limited Liability
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Company, a Colorado limited liability company.
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"Services" mean the services and work performed by Colorado Greenhouse
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according to the terms and conditions of this Agreement, including, without
limitation, the work described in Article 3 as the duties of Colorado Greenhouse
and specified in the Program.
"Subcontractor" means, in relation to Colorado Greenhouse, any
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individual, firm, organization, or supplier under contract to Colorado
Greenhouse for the performance of any part of Colorado Greenhouse's Services,
provided that any such contract under which Colorado Greenhouse has payment
obligations in excess of $250,000 in the aggregate in any one year period or
material liabilities or risks to the Greenhouse shall be subject to prior
approval by WCR.
"Uncontrollable Forces" mean any cause beyond the control of the Party
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affected, including but not limited to acts of God, flood, earthquake, storm,
fire, lightning, explosion, epidemic, war, riot, civil disturbance, sabotage,
and restraint by court order or public authority, strike or labor disturbance,
which by exercise of due foresight such Party could not reasonably have been
expected to avoid, and which by exercise of due diligence it is unable to
overcome. Neither Party shall, however, be relieved of liability for failure of
performance if such failure is due to causes arising out of its own negligence
or to removable or remediable causes which it fails to remove or remedy with
reasonable dispatch.
Article 3. Duties of Colorado Greenhouse.
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3.1 Enumeration of Duties. Colorado Greenhouse hereby agrees to
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perform the activities as generally described in this Article, and as contained
elsewhere in this Agreement related to the operation and management of the
Greenhouse consistent with the Annual Operating Budget and the Program. From
and after the Commencement Date, Colorado Greenhouse shall, subject to WCR's
discretion:
(a) Safely and efficiently operate and maintain the Greenhouse
in accordance with (i) the Annual Operating Budget, (ii) the Program and (iii)
operations and maintenance manuals and warranties and procedures provided by the
contractor for the Greenhouse.
(b) Continuously operate the Greenhouse exclusively for the
growing, processing, packaging and marketing of tomatoes and other greenhouse
vegetables as provided in the Greenhouse Lease.
(c) Assume and comply with the obligations of WCR under the
Greenhouse Lease (excluding the obligation to pay rent) including, without
limitation, utilizing the thermal heat from the Power Plant in such quantities
as are from time to time specified by AA#1 as necessary to maintain the
Qualifying Facility status of the Facility, provided, however, that such
quantities must
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be practicable without enlargement or other material alteration of the
Greenhouse or if enlargement or material alteration is required then the cost
thereof must be borne by WCR or other third parties. The parties acknowledge
that no scheduled maintenance that impacts the quantity of steam delivered or
accepted on, or temporary securing of, the Greenhouse equipment utilizing the
thermal heat or the power plant equipment generating the thermal heat shall be
made without the prior consent of WCR (with respect to the Greenhouse equipment)
or Colorado Greenhouse (with respect to the power plant equipment), as the case
may be. In addition, the parties agree that in the event of a Forced Outage,
whichever of WCR or Colorado Greenhouse that first has knowledge of such event
shall immediately notify the other party. Within 30 days after the end of each
calendar quarter during the term of this Agreement, Colorado Greenhouse shall
provide to WCR an officer's certificate certifying that Colorado Greenhouse has
complied with such lease terms.
(d) Pay, as the same become due, the Greenhouse Operating
Expenses.
(e) Use its best efforts to market the produce from the
Greenhouse.
(f) Employ, pay, train and supervise that number of personnel in
accordance with the staffing requirements set forth in the Annual Operating
Budget, and plan and administer all matters pertaining to such employed
personnel in the areas of labor relations, salaries, wages, working conditions,
hours of work, termination of employment, employee benefits, safety and related
matters. Colorado Greenhouse shall use reasonable care in the hiring of all its
employees. All employees shall be employees of Colorado Greenhouse and their
wages or other compensation shall be controlled and disbursed by Colorado
Greenhouse.
(g) Except as provided in Section 4.1(d) of this Agreement,
repair or replace, at the expense of Colorado Greenhouse, as may be necessary in
accordance with any manufacturer's directions, Good Greenhouse Practices and in
a good and workmanlike manner any Greenhouse equipment that fails or
malfunctions. If any such failure or malfunction is covered by a warranty,
Colorado Greenhouse shall submit a timely warranty claim on behalf of WCR.
(h) Subject to WCR's approval as required for a Subcontractor,
engage any independent contractors necessary for making repairs to, or
performing maintenance on, or installing improvements to the Greenhouse in the
event that Colorado Greenhouse is not available or is otherwise unable to make
or perform such repairs, maintenance or installations.
(i) Maintain accurate records of all changes to the Greenhouse
and up to date as-built drawings of the Greenhouse reflecting such changes.
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(j) Maintain regular communication with WCR, regarding the
operation and management of the Greenhouse, including monthly production and
sales reports, monthly operating costs, safety reports and other reports
reasonably requested by WCR, specifying all operations at the Greenhouse during
such period and noting any other material occurrences or operational results,
and communicate in each instance, either by telephone or in writing, material
changes in the anticipated operation of the Greenhouse or the marketing of
produce therefrom, maintenance problems related to the Greenhouse and any notice
or knowledge of violation or variance of any Applicable Law or Applicable
Permit.
(k) Make, in the name of WCR, contracts for janitorial, water,
electricity, telephone and other applicable services, or such of them as
Colorado Greenhouse shall deem advisable, and place orders for such equipment,
tools, appliances, materials and supplies as are necessary to properly maintain
and operate the Greenhouse.
(l) Maintain a system of office records, books, and accounts
with respect to the Greenhouse, which records shall be subject to examination by
WCR or authorized agents or designees of WCR during all regular business hours.
Records, books, and accounts shall be kept for a minimum of five years unless
otherwise instructed by WCR. So long as Colorado Greenhouse operates all or any
of the Other Greenhouses, Colorado Greenhouse shall allocate costs and revenues
for the Greenhouse in accordance with the Allocation Percentage set forth on
Exhibit B attached hereto.
(m) Be cognizant of and adhere to the requirements set forth in
the Project Documents insofar as they relate to the operation of the Greenhouse
and the duties of Colorado Greenhouse under this Agreement.
(n) Prior to the Commencement Date, submit to WCR a proposed
Annual Operating Budget for the year in which this Agreement commences and the
following year and cooperate with WCR to review and modify the same as necessary
to obtain the approval of WCR's Management Committee prior to the Commencement
Date; and thereafter submit to WCR a proposed Annual Operating Budget by
November 1 of each year for the following two-year period and cooperate with WCR
to review and modify the same as necessary to obtain the approval of WCR's
Management Committee by December 1 of each year. If for any reason the approval
of WCR's Management Committee is not so obtained, the Annual Operating Budget
previously approved shall, until the approval of an Annual Operating Budget for
the following two-year period, be deemed to be in force and be effective as the
Annual Operating Budget for such year.
(o) Review all federal, state and local laws and regulations
establishing compliance requirements in connection with the operation and
management of the Greenhouse.
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Advise WCR on the need to secure or renew, as necessary, appropriate permits,
licenses and approvals, and assist WCR in securing as appropriate, such permits,
licenses and renewals as required.
(p) Keep the Greenhouse free of all materialmen's, mechanics'
and other liens for materials or services furnished to the Greenhouse at
Colorado Greenhouse's direction.
(q) Pay all real estate taxes attributable to the Greenhouse (as
equitably apportioned by WCR provided that in no event shall Colorado Greenhouse
be obligated for any portion of real estate or property taxes attributable to
the heat storage units or the heat generating portions of the Facility) within
five days of receipt of an invoice submitted by WCR. In addition, Colorado
Greenhouse shall be responsible for all taxes payable to the appropriate taxing
authorities for any sales, excise or other tax levied, imposed or assessed in
the State of Colorado or by any other taxing authority in connection with the
operation of the Greenhouse and the sale of produce therefrom.
(r) By November 1 of each year, submit to WCR a proposed Program
and cooperate with WCR to review and modify the same as necessary to obtain the
approval of WCR's Management Committee.
(s) Perform other normal business functions and otherwise
operate and manage the Greenhouse in accordance with and as limited by the
Greenhouse Lease and this Agreement.
3.2 Limitations on Authority. Unless previously expressly approved in
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the Annual Operating Budget or otherwise approved in writing by WCR, Colorado
Greenhouse or any Subcontractor, or any of their respective agents or
representatives, shall not:
(a) sell, lease, pledge or mortgage, convey, or make any
license, exchange or other transfer of property or assets of WCR;
(b) make, enter into, execute, amend, modify or supplement any
contract or agreement on behalf of or in the name of WCR;
(c) make any recoverable expenditure or acquire on a recoverable
cost basis any equipment, materials, assets or other items, except for emergency
expenditures and except in substantial conformity with the Annual Operating
Budget and the Program; it being understood and agreed that Colorado Greenhouse
shall not be entitled to reimbursement for any expenditures not made in
accordance with this paragraph (c).
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(d) take or agree to take any other action that materially
varies from the applicable Annual Operating Budget, the Program or any
Applicable Law;
(e) take, agree to take or fail to take any action that would
cause a default under the Project Documents;
(f) settle, compromise, assign, pledge, transfer, release or
consent to the settlement, compromise, assignment, pledge, transfer or release
of any claim, suit, debt, demand or judgment against or due by WCR or Colorado
Greenhouse, or submit any such claim, dispute or controversy to arbitration or
judicial process, or stipulate in respect thereof to a judgment, or consent to
do the same;
(g) modify or alter the type of crop grown in the Greenhouse; or
(h) schedule maintenance or temporarily secure the Greenhouse
equipment utilizing the thermal heat.
3.3 Limitation on Other Activities. During the term of this
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Agreement, Colorado Greenhouse shall not:
(a) make any alterations, renovations, improvements or other
installations in or about any part of the Greenhouse in excess of $25,000 unless
and until Colorado Greenhouse shall cause plans and specifications therefor to
have been reviewed by WCR and shall have obtained WCR's written approval
thereof. If approval is granted, Colorado Greenhouse shall cause the work
described in such plans and specifications to be performed, at its expense,
promptly, efficiently, completely and in a good and workmanlike manner by duly
qualified or licensed persons or entities. All such work shall comply with all
applicable codes, rules, regulations and ordinances. Ordinary and customary
repairs and replacements in and on the Greenhouse shall be promptly undertaken
and promptly completed and need not have WCR's prior approval, unless such
repairs or replacements materially decrease the value of usefulness of the
Greenhouse or the Facility;
(b) without the prior written consent of WCR, agree to any
increase of the fees to be paid by Colorado Greenhouse under the greenhouse
management and operating agreements for the Other Greenhouses; or
(c) without the prior written consent of WCR and AA#1, cause any
greenhouse or other business to be treated under this Agreement as an Other
Greenhouse except the BGP Greenhouse, the BGPII Greenhouse and the Ft. Xxxxxx
Greenhouse.
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3.4 Payments by Colorado Greenhouse. During the term of this
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Agreement, Colorado Greenhouse shall pay the Primary Fee to WCR, on a timely
basis. Any amount which is not paid within ten days after the same is due shall
bear interest at a default rate equal to the rate of interest publicly announced
or as published from time to time by Bank of America NT and SA as its "reference
rate" plus six percent per annum from the first day due until paid.
Article 4. Duties of WCR.
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4.1 Enumeration of Duties. The following shall be WCR's
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responsibility to provide in support of the uninterrupted operation and
maintenance of the Greenhouse:
(a) Use reasonable efforts to maintain the Greenhouse Lease or
any replacement contracts for the supply of thermal heat in sufficient
quantities to maintain the Facility's FERC Order.
(b) Providing a liaison person(s) available to Colorado
Greenhouse twenty-four hours per day, authorized to make decisions on the part
of WCR.
(c) Enforcing diligently any claim WCR may have under insurance
policies, equipment guarantees and warranties pertaining to the Greenhouse.
(d) Paying for capital improvements as set forth in the Program.
Except as otherwise agreed by Colorado Greenhouse, WCR shall pay for all capital
improvements which (i) the Parties agree are required for continued usefulness
of the Greenhouse and (ii) are required in connection with the expansion of the
Greenhouse to maintain compliance with the FERC Order. Any other improvements
that are made at the request of Colorado Greenhouse or that, in WCR's reasonable
judgment, are to be made solely for the purpose of enhancing Colorado
Greenhouse's growing programs, shall be made at Colorado Greenhouse's cost and
expense, and may be made only with the prior written consent of WCR.
Article 5. Term.
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5.1 Term. This Agreement shall continue for a term equal to the term
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of the Greenhouse Lease, unless sooner terminated as hereinafter provided.
5.2 Termination Upon Default. If any of the following events occur,
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WCR shall have the right upon written notice to Colorado Greenhouse, to
terminate this Agreement:
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(a) If Colorado Greenhouse defaults in the performance of any
obligation under this Agreement (other than the obligations under Section 3.4 of
this Agreement) and such default is not cured by Colorado Greenhouse within 90
days after receipt of a notice specifying the default.
(b) If (i) the cumulative Primary Fee Deficiency exceeds
$250,000 at any time before December 31, 1996, (ii) the cumulative Primary Fee
Deficiency exceeds $500,000 at any time before December 31, 1997 or (iii) the
cumulative Primary Fee Deficiency exceeds $750,000 at any time after January 1,
1998.
(c) If Colorado Greenhouse is adjudicated as bankrupt or
insolvent and such adjudication is not vacated within ten days.
(d) The filing of a voluntary or involuntary bankruptcy or
insolvency petition of Colorado Greenhouse or the reorganization of Colorado
Greenhouse whether pursuant to the federal Bankruptcy Act or any similar federal
or state proceedings, unless such petition is filed by a party other than
Colorado Greenhouse and is withdrawn or dismissed within 30 days after the date
of filing.
(e) The appointment of a receiver or trustee for the business or
property of Colorado Greenhouse, unless such appointment shall be vacated within
ten days of its entry.
(f) The making by Colorado Greenhouse of an assignment for the
benefit of its creditors.
5.3 Payment of Expenses and Allocation of Crops After Termination.
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Except as set forth in this Section 5.3 and except for Colorado Greenhouse's
obligations under Article 7 and Article 11, on the effective date of a
termination, WCR and Colorado Greenhouse shall be relieved of all obligations
thereafter accruing under this Agreement. Notwithstanding such termination,
neither Party shall be relieved from any obligations or liabilities accruing
prior to the effective date of termination, including in the case of Colorado
Greenhouse, its obligation to make payment to WCR of all sums due WCR under this
Agreement. After the effective date of a termination WCR shall either grant
Colorado Greenhouse such use of the Greenhouse as is necessary to care for and
harvest any crop planted before such date or compensate Colorado Greenhouse for
the value of such crop as of the effective date of termination, subject to any
right of offset that WCR may have for amounts owed to it hereunder.
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5.4 Termination of Greenhouse Lease. In the event that the Greenhouse
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Lease is terminated for any reason whatsoever, this Agreement shall
automatically terminate without any further act or instrument.
5.5 Surrender of Greenhouse. Upon the termination of this Agreement
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but subject to the terms of Section 5.3, Colorado Greenhouse will surrender the
Greenhouse in as good condition as when received, excepting depreciation caused
by ordinary wear and tear.
5.6 Training of New Personnel. Upon termination of this Agreement,
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Colorado Greenhouse will make available to WCR one qualified employee for a
period of two months after the termination of this Agreement for the purpose of
training new personnel in the operation and management of the Greenhouse.
Article 6. WCR's Right to Audit/Inspection of Records.
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(a) WCR shall have the right, at any time and from time to time to
audit or cause an independent audit to be made of Colorado Greenhouse's books
and records for the purposes of verifying compliance with the provisions of this
Agreement. In the event that any such audit indicates that Colorado Greenhouse
underpaid any amount due to WCR under this Agreement, Colorado Greenhouse shall
pay such additional sum and such audit shall be deemed to be binding and
conclusive, unless a request is made, within fifteen days after receipt of a
copy of such audit by Colorado Greenhouse, for a consultation with such
auditors. Such audit, after consultation and modification, if any, shall be
binding and conclusive unless the consultation results in irreconcilable
differences with respect to any material item in the report. In such event, the
disputed item will be submitted to a firm of independent certified public
accountants, acceptable to WCR, for resolution, and the fees of such firm shall
be paid equally by Colorado Greenhouse and WCR, unless Colorado Greenhouse is
obligated for full payment pursuant to this Article 6. If the submission to the
independent certified public accountants results in changes in the audit report,
the report as so changed shall be binding and conclusive. In the event that the
audit indicates that there were deficiencies in the aggregate amount of $10,000
or more in the amounts which should have been paid by Colorado Greenhouse to WCR
pursuant to this Agreement, Colorado Greenhouse shall pay all costs of audits
incurred by WCR under this Article 6 together with interest on the amount of the
deficiency payable at the interest rate set forth in Section 3.4(a) of this
Agreement.
(b) In addition, WCR shall have the right, from time to time, during
normal business hours, upon 48 hours' prior notice, to inspect any equipment,
documents or other information in the possession of Colorado Greenhouse to the
extent such materials or information directly impacts the ability of AA#1 to
maintain its Federal Energy Regulation Commission Qualifying Status.
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Article 7. Exclusive Warranties; Remedies.
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7.1 Warranty. Colorado Greenhouse warrants to WCR that the Services
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performed under this Agreement shall be performed in a competent, prudent and
efficient manner, in accordance with this Agreement, Good Greenhouse Practices,
all warranties and procedures for the Greenhouse and all safety, fire protection
and other requirements of applicable insurance policies.
7.2 No Consequential Damages. In no event shall Colorado Greenhouse,
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WCR or any of their respective affiliates, owners, members, managers, employees
or agents, be liable for any consequential, incidental or special damages or any
other liabilities not expressly set forth herein, regardless of whether based on
contract, warranty, indemnity, tort, strict liability or otherwise.
7.3 No limitation on Claims Against Third Parties. Nothing contained
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in this Article 7 or any other provision of this Agreement shall be deemed to
waive, limit or impair in any way any claims that WCR may have against
Subcontractors, manufacturers of equipment or any other person.
Article 8. Insurance.
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8.1 Colorado Greenhouse's Coverage. At all times after the
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Commencement Date, Colorado Greenhouse will carry and maintain, at its expense:
(a) public liability insurance including insurance against
assumed or contractual liability under this Agreement, in such amount as WCR may
reasonably request.
(b) all-risk casualty insurance covering all of the personal
property in, on or about the Greenhouse including all improvements installed in,
on or about the Greenhouse by or on behalf of Colorado Greenhouse, in such
amounts as WCR may reasonably request;
(c) if and to the extent required by law, workers compensation
or similar insurance in form and amounts required by law; and
(d) such other insurance as WCR may require, including, but not
limited to, insurance that WCR or AA#1 is required to provide pursuant to the
terms of any applicable agreement affecting the Facility.
8.2 Subcontractor's Coverage. Colorado Greenhouse shall require all
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of its Subcontractors engaged in work at the Greenhouse to maintain insurance
coverage of the types and in
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the amounts at least equal to the insurance coverage that Colorado Greenhouse is
required to maintain in accordance with Section 8.1 above.
8.3 Umbrella Coverage. Umbrella coverage may cover any portion of the
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limits of liability required in Sections 8.1 and 8.2 above, provided it has all
the coverages and requirements for the type of coverage.
8.4 Insurance Provisions. The company or companies writing such
--------------------
insurance policies, as well as the form of such insurance shall at all times be
subject to WCR's approval. Public liability and all-risk casualty insurance
policies evidencing such insurance shall name WCR or its designee as additional
insureds, and shall contain such other provisions and endorsements as WCR may
request.
8.5 Evidence of Insurance. Before the date on which such insurance
---------------------
first is required to be carried by Colorado Greenhouse, and thereafter, at least
30 days before the effective date of any renewal of any such policy, Colorado
Greenhouse will deliver to WCR either a duplicate original of the aforesaid
policy or a certificate evidencing such insurance.
Article 9. Applicable Permits.
------------------------------
All Applicable Permits shall be obtained and maintained by Colorado
Greenhouse on behalf of WCR. WCR shall cooperate with Colorado Greenhouse in
the securing of such Applicable Permits.
Article 10. Applicable Laws.
----------------------------
10.1 Applicable Laws. Colorado Greenhouse shall operate and maintain
---------------
the Greenhouse in conformance with all Applicable Laws and Applicable Permits,
including without limitation the disposing of any hazardous waste generated by
the Greenhouse in accordance with all Applicable Laws.
10.2 Changes in Laws. Colorado Greenhouse shall comply with
---------------
applicable changes in the Applicable Laws and shall inform WCR of such changes.
To the extent that such changes require alterations in the Greenhouse
configuration, operation, maintenance procedures or other aspects of Greenhouse
operation and maintenance, the cost thereof shall be borne by WCR. The parties
acknowledge that any material alteration in the Greenhouse may necessitate a
change in the Allocated Percentage for the Greenhouse and each of the other
Greenhouses.
Article 11. Indemnification.
----------------------------
15
11.1 Indemnification by Colorado Greenhouse. (a) Colorado Greenhouse
--------------------------------------
shall indemnify and hold harmless WCR and its affiliates, officers, directors,
managers, shareholders, members, employees and agents, from any loss, liability
or damage incurred or suffered by any such person by reason of Colorado
Greenhouse's failure to perform its obligations hereunder or its negligence or
willful misconduct, including, without limitation, any judgment, award or
settlement, other costs and expenses, and reasonable attorneys' fees incurred in
connection with the defense of any actual or threatened claim or action based on
any such act or omission, unless such loss, liability or damage results from
such indemnified person's fraud, negligence or willful misconduct. Such
attorneys' fees shall be paid as incurred.
(b) Colorado Greenhouse shall indemnify and hold harmless WCR
and its affiliates, officers, directors, managers, shareholders, members,
employees and agents from any and all liability, claims, demands, actions and
causes of action whatsoever (including without limitation reasonable attorneys'
fees and expenses, and costs and expenses reasonably incurred in investigating,
preparing or defending against any litigation or claim, action, suit, proceeding
or demand of any kind or character) arising out of or related to alleged
contamination of the property underlying the Facility (the "Premises") by any
hazardous or toxic substance, pollutant or contaminant, or alleged injury or
threat of injury, to health, safety or the environment, or alleged noncompliance
with any federal, state and local environmental statutes, regulations,
ordinances, and any permits, approvals or judicial or administrative orders
issued thereunder, giving rise to liability under any federal, state or local
environmental statutes or ordinances, including without limitation the
Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C.
(S)(S) 9601 et seq., as amended from time to time, or under any common law
-- ---
claim, including claims for personal injury or property damage or for any claim
by any governmental or private party for remedial or removal costs, natural
resource damages, property damages, damages for personal injuries, or other
costs, expenses or damages or any claim for injunctive relief arising from any
alleged injury or threat of injury to health, safety or the environment relating
to the Premises.
11.2 Indemnification by WCR. WCR shall indemnify and hold harmless
----------------------
Colorado Greenhouse and its affiliates, managers, members, employees and agents,
from any loss, liability or damage incurred or suffered by any such person by
reason of WCR's failure to perform its obligations hereunder or its negligence
or willful misconduct, including, without limitation, any judgment, award or
settlement, other costs and expenses, and reasonable attorneys' fees incurred in
connection with the defense of any actual or threatened claim or action based on
any such act or omission, unless such loss, liability or damage results from
such indemnified person's fraud, negligence or willful misconduct. Such
attorneys' fees shall be paid as incurred. Any such indemnification shall be
paid only from the assets of WCR and neither Colorado Greenhouse nor any third
party shall have
16
recourse against the personal assets of any member of WCR or their respective
affiliates for such indemnification.
Any indemnification required herein to be made by WCR or Colorado Greenhouse
shall be made promptly following the determination of the loss, liability or
damage incurred or suffered by final judgment of any court, settlement, contract
or otherwise.
Article 12. Representations.
----------------------------
12.1 Representations of Colorado Greenhouse. Colorado Greenhouse
--------------------------------------
represents and warrants to WCR as follows:
(a) that it is a limited liability company duly organized,
validly existing and in good standing under the laws of the State of Colorado;
(b) that it has personnel available to it with the expertise in
connection with the management of greenhouses sufficient for it to perform its
obligations under this Agreement in a manner consistent with Good Greenhouse
Practices;
(c) that the execution, delivery and performance of this
Agreement by Colorado Greenhouse has been duly authorized by all necessary
limited liability company action and this Agreement has been duly executed and
delivered by Colorado Greenhouse and, subject to due execution and delivery by
WCR, this Agreement will be enforceable against Colorado Greenhouse in
accordance with its terms, and does not constitute a default under its operating
agreement, or any instrument to which it is a party, nor does it violate any
provision of any law, rule, regulation, order, judgment, decree, determination,
or award presently in effect having applicability to it;
(d) that it has all necessary permits, licenses, and other
governmental approvals required to perform its obligations hereunder, except for
permits WCR is required to obtain; and
(e) that there are no actions, suits, or proceedings pending or,
to its knowledge, threatened against it in any court or before any governmental
department, agency, instrumentality, or any arbitrator, in which there is a
reasonable possibility of an adverse decision which could materially and
adversely affect its ability to perform its obligations under this Agreement.
12.2 Representations by WCR. WCR represents and warrants to Colorado
----------------------
Greenhouse as follows:
17
(a) that it is a limited liability company duly organized,
validly existing and in good standing under the laws of the State of Colorado;
(b) that the execution, delivery and performance of this
Agreement by WCR has been duly authorized by all necessary limited liability
company action and this Agreement has been duly executed and delivered by WCR
and, subject to due execution and delivery by Colorado Greenhouse, this
Agreement will be enforceable against WCR in accordance with its terms, and does
not constitute a default under its operating agreement, or any instrument to
which it is a party, nor does it violate any provision of any law, rule,
regulation, order, judgment, decree, determination, or award presently in effect
having applicability to it; and
(c) that there are no actions, suits, or proceedings pending or,
to its knowledge, threatened against it in any court or before any governmental
department, agency, instrumentality, or any arbitrator, in which there is a
reasonable possibility of an adverse decision which could materially and
adversely affect its ability to perform its obligations under this Agreement.
Article 13. Colorado Greenhouse as Independent Contractor.
----------------------------------------------------------
13.1 Independent Contractor. Colorado Greenhouse shall be an
----------------------
independent contractor in the performance of this Agreement and shall have
complete charge of the Services and personnel engaged in the performance of the
Services. Nothing contained herein shall be deemed to create a relationship of
employer-employee, master-servant, partnership, or joint venture.
13.2 Subcontractors. Colorado Greenhouse's Services may be performed
--------------
by Colorado Greenhouse acting in its own name, or by Colorado Greenhouse's
subcontracting portions to other Subcontractors or suppliers.
(a) Colorado Greenhouse will assume the responsibility for, and
liability arising in connection with, negotiating with, and performance by, its
Subcontractors.
(b) Colorado Greenhouse will have authority and control over the
Subcontractors' work, including overtime and any special methods required, in
the judgment of Colorado Greenhouse, to complete the Subcontractors' work in a
correct and timely manner.
18
Article 14. Survival.
---------------------
The provisions of Articles 7 and 11 shall survive termination,
cancellation or expiration of this Agreement.
Article 15. Miscellaneous.
--------------------------
15.1 Notices. Notices and other communications with respect to this
-------
Agreement shall be in writing and shall be delivered by hand or overnight
courier service, mailed or sent by telecopy. Unless other addresses or telecopy
numbers are specified in writing pursuant to this Section 15.1 to each other
Party, such notices or other communications shall be sent to the following
addresses or telecopy numbers as the case may be.
WCR: Wolf Creek Rifle LLC
0000 Xxxxx Xxxx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxxx 00000-0000
Attention: Xxxxxx X. Xxxxxxxxx
Telephone: (000) 000-0000 FAX: (000) 000-0000
Colorado Greenhouse: Colorado Greenhouse LLC
X.X. Xxx 000
Xxxx Xxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx Xxxx
Telephone: (000) 000-0000 FAX: (000) 000-0000
15.2 Arbitration. All claims, disputes and other matters in question
-----------
arising out of, or relating to this Agreement or the interpretation or breach
thereof, shall be decided by arbitration in accordance with the Arbitration
Rules of the American Arbitration Association then in effect unless the Parties
mutually agree otherwise. Said arbitration shall be before a panel of three
arbitrators and shall be held in Denver, Colorado. This agreement to arbitrate
shall be specifically enforceable under applicable law in any court of competent
jurisdiction. Notice of the demand for arbitration shall be filed in writing
with the other Party to this Agreement and with the American Arbitration
Association. The demand for arbitration shall be made within a reasonable time
after the claim, dispute or other matter in question has arisen, and in no event
shall it be made after the date when institution of legal or equitable
proceedings based on such claim, dispute or other matter in question would be
barred by the applicable contractual or other statute of limitations. The award
rendered by the arbitrators shall be final and judgment may be entered in
accordance with applicable law and in any court having jurisdiction thereof.
Attorneys' fees and expenses may be payable to the prevailing party in such
arbitration in the discretion of the arbitrators.
19
15.3 Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
15.4 Headings. Titles and headings of the sections and subsections of
--------
this Agreement are for the convenience of reference only and do not form a part
of this Agreement, and shall not in any way affect the interpretation of this
Agreement.
15.5 Assignments. This Agreement shall not be assignable by either
-----------
Party hereto without the prior written consent of the other Party.
15.6 Inspections and Access by WCR. Colorado Greenhouse will permit
------------------------------
WCR, its agents, employees and contractors to enter all parts of the Greenhouse
during Colorado Greenhouse's business hours to inspect the same and to enable
WCR to enforce or carry out any provision of this Agreement.
15.7 Force Majeure. Neither Party hereto shall be deemed to be in
-------------
breach or in violation of this Agreement if such Party is prevented from
performing any of its obligations hereunder by reason of Uncontrollable Forces
that in fact prevent or delay performance hereunder. To the extent that any
performance of any obligation is so prevented pursuant to this Section 15.7,
such performance shall be suspended during the continuance of the Uncontrollable
Forces and during the period following the cessation of such Uncontrollable
Forces required to repair and rebuild the Facility to the extent necessary to
place it back into commercial operation in accordance with Good Greenhouse
Practices and Applicable Laws. Notwithstanding the foregoing, in the event of
the inability of Colorado Greenhouse to substantially perform the Services for a
period of 45 days or more by virtue of Uncontrollable Forces (which
Uncontrollable Forces are not of a type affecting other persons generally), WCR
may elect to terminate this Agreement upon five days' prior written notice to
Colorado Greenhouse; it being understood and agreed that if such Uncontrollable
Forces apply to, relate to or affect all persons as a general matter, then WCR
will not terminate this Agreement pursuant to the provisions of this Section
15.7, unless such Uncontrollable Forces continue for a period of 180 days.
15.8 Waiver. The waiver of any breach of any term or condition hereof
------
shall not be deemed a waiver of any other or subsequent breach, whether of like
or different nature. No failure to exercise and no delay in exercising, on the
part of either Party hereto, any right, power or privilege hereunder shall
operate as a waiver thereof; nor shall any single or partial exercise of any
right, power or privilege hereunder preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. The rights and
remedies herein provided are cumulative and not exclusive of any rights or
remedies at law.
20
15.9 Severability. If any term or provision of this Agreement or the
------------
performance thereof shall to any extent be invalid or unenforceable, such
invalidity or unenforceability shall not affect or render invalid or
unenforceable any other provision of this Agreement, and this Agreement shall be
valid and enforced to the fullest extent permitted by law.
15.10 Amendment. No modification or amendment of this Agreement shall
---------
be valid unless in writing and executed by both Parties hereto.
15.11 Governing Law. This Agreement shall be governed by and
-------------
construed under the laws of the State of Colorado. The parties hereby consent
to the jurisdiction of the courts of the State of Colorado for the purposes of
enforcing the arbitration provisions of Section 15.2.
15.12 Entire Agreement. This Agreement sets forth the entire
----------------
agreement and understanding between the Parties hereto with respect to the
subject matter hereof and supersedes and replaces all prior written agreements
and negotiations and oral understandings, if any, with respect thereto.
15.13 No Third Party Beneficiaries. Except as specifically provided
----------------------------
herein, no person or party shall have any rights or interest, direct or
indirect, in this Agreement or the Services to be provided hereunder, or both,
except Colorado Greenhouse and WCR. The Parties specifically disclaim any intent
to create any rights in any person or party as a third-party beneficiary to this
Agreement or the Services to be provided hereunder except for AA#1.
15.14 Amendment of Allocated Percentage. The Allocated Percentage may
---------------------------------
be amended at any time by mutual agreement of the Parties hereto and shall be
amended to reflect any change in size of any Other Greenhouse. If any of the
Other Greenhouses decreases in size or is increased in size by the addition of
space of like quality to its existing space then the Allocated Percentage shall
be adjusted in proportion to the ratio that the change in size bears to the
total size of the Greenhouse and the Other Greenhouses.
21
This Agreement has been executed and delivered as of the date first
above written.
WCR:
----
WOLF CREEK RIFLE LLC
By: /s/ Xxxxxxx X. Xxxxxxx
-------------------------------
Xxxxxxx X. Xxxxxxx
-------------------------------
Manager
COLORADO GREENHOUSE:
-------------------
COLORADO GREENHOUSE LIMITED LIABILITY
COMPANY
By: /s/ Xxxxxx X. Xxxxxxxxx
-------------------------------
Xxxxxx X. Xxxxxxxxx
-------------------------------
Manager
and
By: /s/ Xxxxxxx X. Xxxxxxx
-------------------------------
Xxxxxxx X. Xxxxxxx
-------------------------------
Manager
22
EXHIBIT A
---------
Greenhouse Lease
A-1
EXHIBIT B
---------
Allocation Percentage
A percentage, as the same may be modified from time-to-time, and as in
effect on the date set forth below:
Allocated
Time Period Percentage
-------------------------------------------------------------------------------
From 1/1/96 through the end of the second calendar
quarter after the completion of the BGP II Greenhouse
expansion ("Expansion Completion Date") 15.432%
After the Expansion Completion Date 14.581%
B-1
EXHIBIT C
---------
Project Documents
B-C-1
