EXHIBIT 10.1
GREENHOUSE LEASE AGREEMENT
THIS GREENHOUSE LEASE AGREEMENT, dated as of this 8th day of June,
1989, is between COLORADO POWER PARTNERS, a Colorado general partnership
("Landlord") and BRUSH GREENHOUSE PARTNERS, a Colorado general partnership
("Tenant").
RECITALS
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A. Landlord is the owner of the real property described on Exhibit A
attached, hereto (the "Project Property"). Landlord is constructing a net 50
megawatt cogeneration facility on the Project Property, consisting of an
electrical generating facility (the "Power Plant"), an approximately 18-acre
greenhouse facility, an adjacent packing facility and certain related
facilities.
B. Tenant has entered into a Greenhouse Management Agreement, dated
March 16, 1989 , as amended pursuant to an Amendment to Greenhouse Management
Agreement, dated June 8, 1989, with Spring Gardens, Inc. pursuant to which
Tenant will retain Spring Gardens, Inc. as a consultant to assist in the
construction and operation of the greenhouse facility and CPP Engineers and
Constructors will retain Spring Gardens, Inc. as a consultant to assist in
connection with the construction of the greenhouse facility and packing
facility.
C. Landlord and Tenant desire to enter into this Lease in order for
Tenant to lease the greenhouse and packing facility from Landlord and to provide
for the purchase by Tenant of the thermal output of Landlord's electrical
generating facilities for use in heating the greenhouse.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, the parties hereby covenant and agree as follows:
1. Premises. (a) Landlord hereby leases to Tenant and Tenant leases
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from Landlord a portion of the Project Property, consisting of that certain real
property depicted on the Plot Plan attached hereto as Exhibit A, and all
structures, buildings and all appurtenances, hereditaments, and easements
thereon, including the greenhouse and packing facility to be constructed
thereon (collectively, the "Premises").
(b) In addition, Landlord hereby grants Tenant a nonexclusive
easement for the Term of this Lease for the use
of the auxiliary equipment the Project building located on Property and depicted
on the Plot Plan attached hereto as Exhibit B (the "Auxiliary Building") for the
purpose of access to and repair, maintenance and replacement of the emergency
boilers, the fertilizer/irrigation system and any other equipment under the
control of Tenant relating to the operation of the Premises and located in the
Auxiliary Building.
(c) The Premises shall consist of an approximately 18-acre
greenhouse facility and an approximately 12,000 square feet packing facility
(which facility will include packing, storage and office facilities). It is the
parties' intention that the Premises consist of the greenhouse and the packing
facility to be constructed on the Project Property approximately in the location
depicted on Exhibit A attached hereto and that this Lease and the definition of
"Premises" herein shall cover all such facilities, even if not constructed in
the exact location depicted on Exhibit A attached hereto. It is also the
parties' intention that the easement to use the Auxiliary Building granted
pursuant to paragraph 1(b) above cover such building even if not constructed in
the exact location depicted on Exhibit B attached hereto. At such time as the
greenhouse facility, packing facility and Auxiliary Building have been
constructed Landlord and Tenant shall enter into an amendment to this Lease
incorporating the description of the greenhouse and packing facility set forth
on such survey as the description of the Premises and the description of the
auxiliary building set forth on such survey as the description of the Auxiliary
Building.
(d) Landlord warrants that so long as Tenant is not in default
hereunder, Tenant shall have peaceful and quiet use and possession of the
Premises, subject to any mortgage and all matters of record or other agreements
to which this Lease is or hereafter may be subordinated.
2. Term. The term (the "Term") of this Lease shall commence on the date
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specified by Landlord in a written notice from Landlord to Tenant (the date
which Landlord specifies the Term of the Lease is to commence is referred to
herein as the "Commencement Date"). The Commencement Date specified by Landlord
in such notice must be on or before July 1, 1992. Landlord may terminate this
Lease in the event of default as defined hereinafter. The Term of the Lease
shall expire(unless earlier terminated as provided elsewhere herein) upon the
earlier of (i) at the election of Landlord with the consent of Lender (as
hereinafter defined) , the expiration or termination of the Category Number 4A
On-System Power Purchase
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Agreement, dated August 29, 1988, between Landlord and Public Service Company of
Colorado (the "Power Purchase Agreement") (relating to Landlord's Power Plant
adjacent to the Premises); (ii) the fifteenth anniversary of the Commencement
Date, (iii) the data mutually agreed to in writing by the Landlord and Tenant,
with the consent of Lender, or (iv) at the option of The Prudential Insurance
Company of America, Pruco Life Insurance Company, their successors or assigns or
the holder(s) of any mortgage, deed of trust, assignment of rent or similar
instrument encumbering the Premises (collectively, "Lender") , upon the
acceleration by any Lender of the entire amount of any debt of Landlord to such
Lender secured in whole or in part by the Premises.
3. Termination. This Lease shall terminate as provided in paragraph
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2(ii) above without the necessity of any notice from either Landlord or Tenant
to terminate the same. This Lease shall terminate as provided in paragraph 2(i)
or (iv) above ten days after receipt by Tenant of written notice from the
Landlord (with respect to paragraph 2(i)) or Lender (with respect to paragraph
2(iv)). To the extent permitted by law, Tenant hereby waives notice to vacate or
quit the Premises except as expressly provided above and agrees that Landlord
shall be entitled to the benefit of all provisions of the law respecting summary
recovery of possession of the Premises from Tenant holding over to the same
extent as if statutory notice had been given.
4. Holding Over. If Tenant shall be in possession of the Premises at
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the end of the Term, with consent or permission of Landlord and Lender, the
tenancy under this Lease shall become month-to-month upon all of the terms and
conditions contained in this Lease and such tenancy shall be terminable by
either party upon thirty (30) days' notice to the other party. If Tenant shall
be in possession of the Premises at the end of the Term without the consent or
permission of the Landlord and Lender, Tenant shall pay rent in an amount equal
to twice the rental due pursuant to paragraph 6 below for the time that Tenant
holds over. Payment of such amount by Tenant or receipt of such amount by
Landlord shall not be construed as consent by Landlord to Tenant's holding over.
5. Use. Tenant agrees to promptly plant the first crop as soon as is
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reasonably practicable at a time mutually agreed upon by the parties. Use of the
Premises shall be, exclusively for the growing, processing, packaging and
marketing of tomatoes and other greenhouse products and related uses incident
thereto. Tenant agrees to use no less than 90% of the usable growing space in
the Premises for the
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growing of tomatoes. Tenant may use the remaining 10% of the usable growing
space in the Premises for growing such other crops as Tenant desires. Tenant may
not use more than 10% of the usable growing space in the Premises for growing
any crop other than tomatoes without the prior written consent of Landlord and
Lender. Landlord and Lender shall not unreasonably withhold their consent to
such growing of other crops provided that Tenant establishes to Landlord's and
Lender's reasonable satisfaction that such crops are as economically viable as
tomatoes under the projections presented as part of the Application (as defined
in paragraph (a) (i) (below) and that the growing of such crops will not violate
Landlords/ FERC Order (as defined in paragraph 22 below) . Notwithstanding the
foregoing, in the event that Landlord determines that Tenant's growing of any
crops other than tomatoes in any way jeopardizes Landlord's FERC Order, Tenant
shall immediately cease growing such crops.
6. Rental.
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a. Rental Amount. Tenant shall pay during the Term of this Lease as
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rent for the Premises, without any prior demand, setoff, counterclaim, deduction
or abatement whatsoever, the sum Eight Hundred Sixty Five Thousand Two Hundred
Dollars ($865,200) per year, payable in equal monthly installments of Seventy
Two Thousand One Hundred Dollars ($72,100) each, which installments shall
commence on the Commencement Date, and shall be due and payable in advance on
the first day of each end every month thereafter during the entire Term of this
Lease, unless Tenant elects to defer up to the first four monthly installments
of rent as provided in paragraph 6(b) below.
b. Deferral of Rent. Tenant may, at Tenant's option, defer payment
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of up to but not more than the first four monthly installments of rent due under
this Lease as set forth below. In lieu of payment of any such monthly
installment of rent, Tenant shall provide Landlord with a notice of its
intention to defer payment of such monthly installment of rent. The total amount
of monthly rent deferred in accordance with this subparagraph (b) is referred
,to herein as the "Deferred Rental Amount." The number of months that payment of
rental is deferred in accordance with this subparagraph (b) is referred to
herein as the "Deferral Period." The Deferred Rental Amount plus interest
thereon (at the rate equal to the greater of (i) two percent (2%) per annum
above the rate interest publicly announced or published from time to time by
Xxxxxx Guaranty Trust Company of New York as its "prime rate" or (ii) ten
percent (10%) per annum) shall be payable in equal monthly installments
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commencing on the first day of the month following the Deferral Period. If the
Deferral Period is one or two months, plus interest shall be payable in the
Deferred Rental Amount nine equal monthly installments. If the Deferral Period
is three or four months, the Deferred Rental Amount plus interest shall be
vavable in 18 equal monthly installments. Tenant may, at Tenant's option, prepay
all or any part of the Deferred Rental Amount at any time, on the condition the
amount of any such pre-payment, must be at least $25,000.
c. Payment of Rental. Tenant shall pay all rental when due and
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payable, without any setoff, counterclaim, abatement, deduction or prior demand
therefor whatsoever except for gas deductions as expressly provided in paragraph
7(b)(i) below. In addition, any rental (other than the Deferred Rental Amount.
to the extent that it is not yet due and payable) which is not paid within ten
days after the same is due shall bear interest, at the default rate of eighteen
percent (18%) per annum from the first day due until paid. Unless otherwise
directed in writing by Landlord and consented to by Lender, payment of rent
shall be made to Central Bank Denver, National Association for deposit in the
Revenue Account (as such term is defined in the Deposit and Disbursement
Agreement between Landlord, Lender and Central Bank Denver, National
Association). The payment of rent and all other sums due hereunder is
independent of each and every other covenant and agreement contained in this
Lease.
d. Limitation on Distributions. Tenant agrees that prior to
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making any distributions of profits or other sums to the partners of Tenant
pursuant to Tenant's partnership agreement, Tenant shall have deposited and
there shall then be on deposit in an escrow account for the benefit of Landlord
an amount equal to one year's rental under this Lease. Such account shall be
maintained in the name of Colorado Power Partners/Brush Greenhouse Partners at
Central Bank Denver, National Association or such other financial institution as
may be designated by Landlord and reasonably acceptable to Lender; and Tenant,
Landlord and Central Bank or such other financial institution designated by
Landlord and reasonably acceptable to the Lender, shall enter into an escrow
agreement acceptable to Landlord and Lender providing that in the event Tenant
fails to make any payment of rent hereunder, Landlord shall be entitled to
withdraw from such escrow account by transferring from such account to the
Revenue Account all amounts necessary to pay any rent and any other sums that
Tenant fails to pay hereunder. Tenant shall have no obligation to establish such
account unless and until Tenant desires to make a distribution of profit or
other sums to the partners of Tenant.
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e. Payment for Additional Heat. It is the parties' intention that
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Landlord provide only the amount of thermal energy set forth in paragraph
7(a)(i) below. If (i) the Landlord is operating the Power Plant in excess of the
Base Operating Level (as defined below and determined on a monthly basis) solely
for the purpose of supplying additional thermal energy to the greenhouse in
excess of the Thermal Requirement (as defined below and determined on a monthly
basis) or (ii) Lender reasonably determines that Landlord is operating the Power
Plant in excess of the Base Operating level (determined on a monthly basis)
solely for the purpose of supplying additional thermal energy to the greenhouse
in excess of the Thermal Requirement (determined on a monthly basis), then
Tenant shall pay Landlord as additional rent an amount equal to Landlord's
cumulative marginal cost of operating the Power Plant above the Base Operating
Level, less the cumulative marginal revenue generated from operating the Power
Plant above the Base Operating Level, as reasonably determined by Landlord and
reasonably approved by Lender, directly attributable to providing such
additional thermal energy in excess of the Thermal Requirement for such month.
Base Operating Level means the Power Plant, thermal energy and electrical energy
output rate (determined on a monthly basis) set forth on Table 2a. to the
Application (as defined below) , a copy of which Table is attached hereto as
Exhibit C, as such level may be adjusted upward from time to time by the
Landlord, due to increased requirements of Public Service Company of Colorado
under the Power Purchase Agreement, such adjustment to be with the consent of
Lender.
7. Net Lease.
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a. It is the intention of the parties to this Lease that all rents
reserved herein during the Term shall be a net return to Landlord and all
expenses or charges with respect to the Premises including, by way of example,
irrigation water, maintenance, landscaping, repairs remodeling or alteration of
the building, structures or improvements, utilities, and the like shall be borne
by Tenant and not Landlord, except as follows:
(i) As part of the rental being paid by Tenant to Landlord
hereunder, Tenant is purchasing thermal heat from the power plant in
such quantities as may be available to operate Tenant's greenhouse
operations in accordance with the parameters set forth in that certain
Application for a Certification of Qualifying Status as a Cogeneration
Facility (the "Application") submitted by Landlord to the
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Federal Energy Regulatory Commission ("FERC"), Docket No. QF89-7-000. Table 2a
attached to the Application (a copy of which Table is attached hereto as Exhibit
C) sets forth the amount of greenhouse heat required on a monthly basis. The
amount of greenhouse heat required set forth in Table 2a is referred to herein
as the "Thermal Requirement." For purposes of this Section 7 (a) (i) , the
Thermal Requirement shall be determined on a weekly basis by dividing the
monthly amount set forth on Table 2a by 4.33. If the Landlord fails on a weekly
basis to provide thermal energy in an amount equal to 80% of the Thermal
Requirement for such week, and Tenant is reasonably required to operate the
emergency boilers in order to heat the greenhouse, Landlord shall reimburse
Tenant for the actual cost to Tenant of natural gas required to operate the
emergency boiler to provide thermal energy in an amount equal to the difference
between 80% of the Thermal Requirement for such week and the actual output of
thermal energy from the power plant during such week. In no event shall, such
reimbursement from Landlord to Tenant in any month, exceed $25,000 even if the
actual gas cost incurred by Tenant exceeds that amount. At all times when
Landlord is providing thermal heat from the power plant in an amount equal to
80% of the Thermal Requirement, Landlord will not be liable for any gas cost
incurred by Tenant even if 80% of the Thermal Requirement does not provide
adequate thermal heat for the greenhouse;
(ii) Landlord shall provide, at no cost to Tenant, domestic water for
employees of Tenant situated on the Premises in amounts no greater than those
customarily used in similar greenhouse operations. As set forth in paragraph 13
below, Landlord shall not be required to and shall not provide any water to
Tenant for irrigating the greenhouse crops;
(iii) Pursuant to paragraph 13 below, Tenant is responsible for
arranging for and paying the cost of all electrical and similar utility service
to the Premises. However, Landlord shall use reasonable efforts to provide
Tenant emergency backup electrical power service utilizing electricity produced
from the power plant except that Landlord shall have no
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obligation to provide any such service if it would jeopardize its ability to
meet its obligation to supply power pursuant to the Power Purchase Agreement or
any replacement or successor agreement or to meet its own internal demand.
Landlord is agreeing to attempt to provide such emergency backup electrical
power to Tenant as an accommodation to Tenant and if Landlord is unable for any
reason to provide such emergency backup service to Tenant, Tenant agrees to hold
Landlord harmless from any and all claims, demands, costs, liabilities or
damages of any nature whatsoever arising out of Landlord's failure to provide
such emergency backup electrical service for any reason. In the event that
Landlord provides emergency backup electrical service to Tenant, Tenant shall,
immediately upon demand, pay Landlord an amount equal to the amount that Tenant
would have paid it's primary provider of electrical service for such amount of
electrical power;
(iv) Landlord shall be responsible for maintenance (but not the
cost) of "All Risk" casualty insurance with respect to the Premises, which
insurance may be carried at the discretion of Landlord in such amounts and with
such companies as Landlord shall determine, on the condition that Tenant shall
within 15 days after written notice from Landlord reimburse Landlord for the
cost of such insurance attributable to the Premises. Tenant shall be solely
responsible for insurance an the contents and operations of the greenhouse; and
(v) Landlord shall, on arrangements satisfactory to Landlord, permit
Tenant to use the irrigation well located on the Project Property for irrigation
of the greenhouse crops. Tenant agrees to release and hold Landlord harmless
from and against any and all claims, demands, liabilities or damages of any
nature whatsoever arising out of (A) Tenant's use of such well, (B) Landlord's
failure to make such well available for Tenant's use if Landlord is prohibited
from doing so by any federal, state or local governmental determination or law,
ordinance, rule or regulation or (C) the failure of such well to supply adequate
quantities of water to irrigate greenhouse crops.
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8. Taxes. Tenant shall pay in each tax year during the Term all real
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estate taxes, ad valorem taxes and assessments, general and special, including
taxes levied against the buildings or structures comprising part of the Premises
assessed by the taxing authorities. In the event that the Premises is taxed as a
part of the Project Property, Landlord shall make a fair and equitable
apportionment of the total taxes among the remainder of the Project Property and
the Premises. Landlord shall advise Tenant, in writing, of the amount of the
taxes reasonably apportioned to the Premises and Tenant shall tender such amount
to Landlord within 15 days of receipt of written request from Landlord. In
addition, Tenant shall be responsible for all taxes payable to the appropriate
taxing authorities for any sales, excise or other tax (not including real
property tax) levied, imposed or assessed in the State of Colorado or any other
political subdivision thereof or other taxing authority for Tenant's crops,
inventory, furniture, trade fixtures, improvements installed by Tenant or by
Landlord on behalf of Tenant and any other property of Tenant. Tenant shall,
upon request of Landlord, provide proof of payment of such taxes to Landlord
annually by providing a receipt marked "paid" for the taxes assessed, and any
failure to pay such taxes when due shall be considered a default under this
Lease.
9. Maintenance, Repairs and Alterations.
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(a) Except as provided in Section 7 above, Tenant shall be responsible for all
costs of operating and maintaining the premises and (i) all equipment and
facilities used in connection with the Premises, (ii) the emergency boilers,
(iii) the fertilizer and irrigation system, (iv) all other equipment under the
control of Tenant relating to the operation of the Premises and located in the
Auxiliary Building (v) all piping used exclusively for the discharge of heat
from the thermal storage system (any piping used jointly for the charge and
discharge of heat from the thermal storage system shall be maintained by
Landlord), (v) the irrigation well located on the Project Property, (vi) the
irrigation water storage tank located on the Project Property and (vi) pumps,
piping and similar facilities associated with the irrigation well and the
transporting of water from the irrigation well to the Premises (collectively,
the "Related Facilities") during the Term and Tenant hereby agrees to operate
and maintain the Premises and the Related Facilities in good condition,
reasonable wear and tear excepted, and to operate the Premises and the Related
Facilities in accordance with this Agreement and accepted industry standards
throughout the Term, of this Lease. Landlord shall maintain the Auxiliary
Building.
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(b) All repairs to the Premises and the Related Facilities during the
Term or any installations of equipment or facilities therein are to be made by
Tenant at its expense. Without limiting the generality of the foregoing, Tenant
shall keep all improvements comprising a part of the Premises and the Related
Facilities in good repair and shall promptly replace the same when damaged,
together with all electrical, plumbing and other mechanical installations
thereon. Tenant will make any and all replacements from time to time required
for the Premises and the Related Facilities at its expense including, by way of
example, the roofs on all improvements comprising a part of the Premises. Tenant
shall not make any repairs to the Premises and the Related Facilities in excess
of $25,000 (other than emergency repairs to protect the Premises and the Related
Facilities) unless and until Tenant shall have caused the plans and
specifications therefor to have been reviewed by Landlord and shall have
obtained Landlord's written approval thereof and shall have obtained the
reasonable consent of Lender. If approval is granted, Tenant shall cause the
work described in such plans and specifications to be performed, at its expense,
promotly, efficiently, competently and in a good and work like manner by duly
qualified or licensed persons or entities. All such work shall comply with all
applicable codes, rules, regulations and ordinances.
(c) Tenant will surrender the Premises and the Related Facilities at
the expiration of the Term or at such other time as it may vacate the Premises
in as good condition as when received, excepting depreciation caused by ordinary
wear and tear.
(d) Tenant will repair promptly, at its expense, any damage to the
Premises and the Related Facilities regardless of fault or by whom such damage
shall be caused, unless caused by Landlord or any agents, employees or
contractors in the exclusive employment of Landlord (and not the joint
employment of Landlord and Tenant).
10. Alterations bv Tenant. Tenant shall not make any alterations,
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renovations, improvements or other installations in or about any part of the
Premises in excess of $25,000 unless and until Tenant shall cause plans and
specifications therefor to have been reviewed by Landlord and shall have
obtained Landlord's written approval thereof and the reasonable consent, of
Lender. If approval is granted, Tenant shall cause the work described in such
plans and specifications to be performed, at its expense, promptly, efficiently,
competently and in a good and workmanlike manner by duly qualified or licensed
persons or entities. All such
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work shall comply with all applicable codes, rules, regulations and ordinances.
Ordinary and customary repairs and replacements in and on the Premises or to the
Related Facilities shall be promptly undertaken and promptly completed and need
not have Landlord's prior approval, unless such repairs or replacements
materially decrease the value or usefulness of the Premises, the Related
Facilities or the Project Property.
11. Mechanics' Liens. The Landlord's title is and always shall be
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paramount to the title of the Tenant and nothing in this Lease shall empower the
Tenant to do any act which can, shall or may encumber the title of the Landlord.
No work performed by Tenant pursuant to this Lease, whether in the nature of
erection, construction, alteration or repair shall be deemed to be made for the
immediate use and benefit of Landlord so that no mechanics, or other liens shall
be allowed against the Premises or the estate of Landlord by reason of any
consent given by Landlord to Tenant, to improve, alter or repair the Premises.
Tenant shall pay promptly all persons furnishing labor and/or materials with
respect to any work performed by Tenant or its contractors on or about the
Premises. If any mechanics' or other liens shall at any time be filed against
the Premises by reason of work, labor, services or materials performed or
furnished, or alleged to have been performed or furnished, to Tenant or to
anyone holding the Premises through or under Tenant, Tenant shall forthwith
cause the same to be discharged of record or bonded to the satisfaction of
Landlord and Lender.
12. Operations. (a) Subject to the limitations set forth in paragraph
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5 above, the Premises shall be used by Tenant exclusively for the growing and
marketing of greenhouse fruits and vegetables, using the thermal heat available
from, the power plant. It is agreed and understood that it is Landlord's
paramount concern that continuous production of greenhouse fruits and vegetables
be undertaken so as to continuously qualify the Landlord's cogeneration facility
for the cogeneration benefits pursuant to Landlord's FERC order, as the same may
be amended from time to time. Tenant shall continuously operate the greenhouse
facilities for the production of fruits and vegetables, and any failure to have
crops in place, and under production for a period in excess of forty-five (45)
days shall be considered an event of default under this Lease. Tenant warrants
that it will promptly pay, all of its bills, including labor costs, and any
judgments, liens, or the like which may threaten Tenant's performance of its
obligations under this Lease or the continued operation and maintenance of the
Premises or the status of the cogeneration facility as a qualifying facility
under
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Landlord's FERC Order. Any failure by Tenant to promptly pay such bills,
judgments, liens or like charges shall be considered a default by Tenant under
this Lease. Landlord may pay any such claims upon ten (10) days' notice to
Tenant, and any claims paid by Landlord on behalf of Tenant will become
immediately due and owing to Landlord and Landlord may collect such sums paid
together with interest at the default interest, rate of eighteen percent (18%)
per annum.
(b) Tenant shall, at all times, keep the Premises in a neat and
orderly condition. Specifically by way of example and not by way of limitation,
Tenant shall keep any garbage, trash, rubbish, refuse, disassembled equipment or
vehicles out of public view within containers or structures and shall provide
for the timely removal of any such garbage, trash, rubbish, refuse, disassembled
equipment or vehicles from the site at Tenant's expense.
13. Utilities. Except as set forth in paragraph 7 above with respect to
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thermal water from the Power Plant and certain domestic water for use in the
Premises, Tenant shall be responsible for providing and paying for all utilities
of any nature whatsoever used in connection with the Premises, including but
not limited to the following:
(a) Tenant shall pay for all costs associated with irrigation water
required in connection with the operation of the Premises including all costs
and expenses required in connection with the maintenance, repair or operation of
the well 1ocated on the Project Property and the treatment of the water produced
by such well.
(b) Tenant shall pay the cost of wastewater discharge to the City of
Brush from the Premises. Landlord does not currently intend to separately meter
Tenant's discharge of wastewater from the Premises. Accordingly, Landlord shall
reasonably apportion the total charges imposed by the City of Brush for the
discharge of wastewater from the Premises and the Project Property between
Landlord and Tenant based upon the amount of wastewater discharged to the City
of Brush by each party.
(c) Tenant shall be responsible for arranging for and paying for all
electrical service to the Premises.
14. Indemnity and Insurance.
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a. Indemnity by Tenant. To the extent permitted by law, Tenant
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shall and does hereby agree to
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indemnify Landlord, Lender and X.X. Xxxx and Associates (the "Independent
Engineer") and the officers, directors, employees, representatives, invitees and
agents of each (collectively, the "Indemnified Parties") and save the
Indemnified Parties harmless and, at the Indemnified Parties' option, defend the
Indemnified Parties from and against any and all claims, actions, damages,
liabilities and expenses including attorneys' fees or professional fees and
expenses, in connection with the loss of life, personal injury and/or damage to
property and any other claim arising from and out of the occupancy or use by
Tenant of the Premises or the Related Facilities occasioned wholly or in part by
any act or omission of Tenant, its officers, agents, directors, employees or
invitees.
b. Tenant Insurance. At all times after the Commencement Date, Tenant
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will carry and maintain, at its expense:
(i) public liability insurance including insurance against assumed or
contractual liability under this Lease, in such amounts as Landlord may
reasonably request;
(ii) all-risk casualty insurance covering all of Tenant's personal
property on the Premises including all leasehold improvements installed in the
Premises by or on behalf of Tenant in such amounts as Landlord may reasonably
request;
(iii) if and to the extent required by law, worker's compensation or
similar insurance in form and amounts required by law; and
(iv) such other insurance as Landlord may require, including but not
limited to insurance that Landlord is required to provide pursuant to the terms
of the Construction and Term Loan Agreement between Landlord and Lender.
c. Insurance Provisions: The company or companies writing such
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insurance, as well as the form of such insurance shall at all times be subject
to Landlord's and Lender's approval. Public liability and all-risk casualty
insurance policies evidencing such insurance shall name Landlord or its designee
and Lender as additional insured, and shall contain such other provisions and
endorsements as Landlord may request.
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15. Performance by Landlord. If Tenant shall fail to perform any of its
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obligations under this Lease, Landlord may perform the same and the cost of same
shall be charged to Tenant and Tenant agrees, upon five (5) days' written
notice, to pay Landlord promptly the cost thereof with default interest at the
rate of eighteen percent (18%) per annum until paid.
16. Condemnation. (a) If the whole or any part of the Premises shall be
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taken under the power of eminent domain, this Lease shall terminate as to the
part so taken on the date Tenant is required to yield possession thereof to the
condemning authority. Landlord may, but shall have no obligation to make such
repairs and alterations as may be necessary in order to restore the part not
taken to useful condition. If Landlord elects to make such repairs, this Lease
shall remain in full force and effect and Landlord shall make an equitable
adjustment in the rent to reflect the reduction, if any, in Tenant's ability to
utilize the Premises for greenhouse operations resulting from such taking. If
the aforementioned taking renders the remainder of the Premises unsuitable for
the permitted use and Landlord does not elect to make repairs necessary to
restore the part not taken to useful condition, either party may terminate this
Lease as of the date when Tenant is required to yield possession by giving
notice to that effect within thirty (30) days after such date nd this Lease
shall terminate upon receipt of such notice. In the event that Tenant remains in
possession of the Premises after such taking, Tenant shall continue to pay rent
through the date of termination of this Lease.
(b) All compensation awarded for any taking of the Premises or any
interest therein shall belong to and be the property of Landlord, Tenant hereby
assigns to Landlord all rights with respect thereto; provided, however, nothing
contained herein shall prevent Tenant from applying for reimbursement from the
condemning authority (if permitted by law) for moving expenses, or the expense
of removal of Tenant's trade fixtures, or loss of Tenant's business goodwill,
but only if such action shall not reduce the amount of the award or other
compensation otherwise recoverable from the condemning authority by Landlord.
17. Assignments and Subletting; Landlord's Consent Required. Tenant
-------------------------------------------------------
shall not assign, transfer or encumber this Lease in whole or in part or sublet
all of any part of the Premises without first obtaining the consent of Landlord
and Lender, which consent shall be in the sole and absolute discretion of
Landlord and Lender.
-14-
18. Default.
--------
a. Event of Default Defined. Any one or more of the following events
-------------------------
shall constitute an event of default:
(i) the sale of Tenant's interest in the Premises under attachment,
execution or similar legal process or, if Tenant is adjudicated a bankrupt or
insolvent and such adjudication is not vacated within ten days;
(ii) the filing of a voluntary or involuntary bankruptcy or
insolvency petition of Tenant or any guarantor, or the reorganization of Tenant
or any such guarantor, or any arrangement by Tenant or any such guarantor with
its creditors, whether pursuant to the federal Bankruptcy Act or any similar
federal or state proceedings, unless such petition is filed by a party other
than Tenant or any such guarantor and is withdrawn or dismissed within 30 days
after the date of filing;
(iii) admission in writing by Tenant or any such guarantor of its
inability to pay its debts when due;
(iv) the appointment of a receiver or trustee for the business or
property of Tenant or any such guarantor, unless such appointment shall be
vacated within ten days of its entry;
(v) the making by Tenant or any such guarantor of an assignment for
the benefit of its creditors, or in any other manner Tenant's interests in this
Lease shall pass to another by interests operation of law;
(vi) failure of Tenant to pay any rental or any other sum of money
within ten days after the same is due hereunder;
(vii) failure by Tenant to observe or perform any of the covenants in
respect of assignment and subletting;
(viii) failure by Tenant to cure forthwith, immediately after the
earlier of actual knowledge by Tenant or receipt of notice from Landlord, any
hazardous condition which
-15-
Tenant has created in violation of law or of this Lease;
(ix) default by Tenant in the performance or observance of any other
covenant or agreement of this Lease (other than a default involving the
payment of money or as listed above in paragraph 13(i) through (viii)),
which default is not cured within 30 days after the giving of notice
thereof by Landlord, unless such default is of such a nature that it
cannot be cured within such 30-day period, in which case no event of
default shall occur so long as Tenant shall promptly commence the curing
of the default within such 30-day period and shall thereafter diligently
prosecute the curing of same but in no event shall such 30-day period be
extended for more than a total of 90 days; and
(x) the vacating or abandonment of the Premises by Tenant at any time
during the term of this Lease, which vacation or abandonment shall
include, but not be limited to, the failure to have planted crops in
place for the production of vegetables for a period greater than forty-
five (45) consecutive days in any calendar year.
(b) Remedies. Upon the occurrence and continuance of an event of
--------
default, Landlord, without notice to Tenant in any instance (except where
expressly provided for below or by applicable law) shall have any one or more of
the following rights in addition to all other rights and remedies provided
elsewhere herein or at law or in equity;
(i) perform, on behalf and at the expense of Tenant, any obligation of
Tenant under this Lease which Tenant has failed to perform and of which
Landlord shall have given Tenant notice, the cost of which performance
by Landlord, together with interest thereon at the defau1t rate from the
date of such expenditures, shall be deemed additional rental and shall
be payable by Tenant to Landlord upon demand;
(ii) elect to terminate this Lease and the tenancy created hereby by
giving notice of such election to Tenant, and re-enter the Premises, by
summary proceedings or otherwise, and remove Tenant and all other
persons and property from the Premises, and store such
-16-
property in a public warehouse or elsewhere at the cost of and for the
account of Tenant without resort to legal process and without Landlord
being deemed guilty of trespass or becoming liable for any loss or
damage occasioned thereby;
(iii) after giving notice to Tenant, elect to terminate Tenant's right
of possession and immediately repossess the Premises by legal
proceedings, force or otherwise, without terminating this Lease and re-
enter the Premises, by summary proceedings or otherwise, and remove
Tenant and all other persons and property from the Premises, and store
such property in a public warehouse or elsewhere at the cost of and for
the account of Tenant without resort to legal process and without
Landlord being deemed guilty of trespass or becoming liable for any loss
or damage occasioned thereby;
(iv) elect to take over the management and operation of the
greenhouse facility using the trade fixtures and equipment of Tenant
which Tenant has used in operation of the greenhouse as owned by
Landlord in its own right, and continue the operation of the greenhouse
in it's own right or through some additional party, which operation may
be done without legal liability or obligation to Tenant. If this
provision of default is invoked, Landlord shall have the right to
inspect and copy all of the Tenant's record's relating to the operation
of the greenhouse including, without limitation, all customer lists and
marketing plans relating to the greenhouse and ancillary facilities and
the Related Facilities; or
(v) exercise any other legal or equitable right or remedy which it may
have.
Any costs and expenses incurred by Landlord (including, without
limitation, reasonable attorneys' fees) in enforcing any of its rights or
remedies under this Lease shall be deemed to be additional rental and shall be
repaid to Landlord by Tenant upon demand.
19. Damages. If this Lease is terminated by Landlord pursuant to the
--------
default provisions of this Lease, Tenant nevertheless shall remain liable for
any rental and any other additional sums or damages which may be due or for
which
-17-
Tenant is liable, or in respect of which Tenant has agreed to indemnify Landlord
under any of the provisions of this Lease or sustained by Landlord prior to
such termination, and all reasonable costs, fees and expenses including, but not
limited to, reasonable attorneys' fees, costs and expenses incurred by Landlord
in pursuit of its remedies hereunder, or in renting the Premises to others from
time to time (all such rental, other sums, damages, costs, fees and expenses
being referred to herein collectively as "Termination Damages"). In addition to
Termination Damages and all other damage remedies available to Landlord under
any applicable law, Tenant agrees that, at the election of Landlord, Landlord
shall be entitled to either of the following damage remedies:
a. An amount equal to the rental which, but for termination of this
Lease, would have become due during the remainder of the Term, less the amount
of rental, if any, which Landlord shall receive during such period from others
to whom the Premises may be rented, which such damages shall be computed and
payable in monthly installments, in advance, on the first day of each calendar
month following termination of the Lease and continuing until the date on which
the Term would have expired but for such termination; any suit or action brought
to collect any such damages for any month shall not in manner prejudice the
right of Landlord to collect any similar damages for any subsequent month by a
similar proceeding; or
b. An amount equal to the present value (as of the date of such
termination and discounted at the rate of 10% per annum) of rental which, but
for termination of this Lease, would have become due during the remainder of the
Term, less the fair rental value of the Premises for the remainder of the Term
(discounted at the same rate) as determined by an independent real estate
appraiser named by Landlord (the cost of which appraiser shall be borne equally
by Landlord and Tenant), in which case such damages shall be payable to Landlord
in one lump sum on demand and shall bear interest at the default rate of
eighteen percent (18%) per annum until paid.
20. Subordination and Attornment. (a) Tenant agrees that its rights
----------------------------
under this Lease are and shall remain subject and subordinate to the operation
and effect of that certain Construction Loan and Term Loan Deed of Trust,
Security Agreement and Assignment of Rents and that certain Assignment of Rents
and Leases, both given by Landlord for the benefit of Lender, dated as of June
6, 1989, and to any other mortgage, indenture, deed of trust or other
encumbrance, together with any conditions, renewals, extensions, modifications,
-18-
consolidations or replacements thereof, now or hereinafter affecting or placed,
charged or enforced against all or any portion of the Premises. This clause
shall be self-operative and no further instruments or subordination shall be
required in order to effectuate it. Nevertheless, Tenant shall execute,
acknowledge and deliver to Landlord at any time and from time to time, upon
demand oil Landlord, such documents as may be requested by Landlord or such
mortgagee or trustee to confirm or effectuate any subordination hereunder.
(b) Tenant agrees that if Lender obtains title to the Premises, or if
Lender notifies the Tenant that Landlord is in default thereunder, Tenant will
pay to Lender or Lender's designees all rent subsequently payable heraunder.
Further, Tenant agrees that in the event Lender obtains title to the Premises,
Tenant will, upon request of any such party, automatically become the Tenant of
and attorn to such successor in interest without changing the terms and
provisions of the Lease.
21. Notices.
--------
Sending of Notices. (a) Any notice, request, demand, approval or
------------------
consent given or required to be given under this Lease shall be in writing and
shall be deemed to have been given on the third day following the day on which
the same shall have been mailed bv United States registered or certified mail,
return receipt requested, with all postage charged prepaid, addressed, if
intended for Landlord, to Colorado Power Partners at 000 Xxxx 00xx Xxxxxx, Xxxxx
0000, Xxxxxx, Xxxxxxxx 00000, if intended for Tenant, to Tenant at Brush
Greenhouse Partners, 000 Xxxx 00xx Xxxxxx, Xxxxx 0000, Xxxxxx, Xxxxxxxx 00000,
or if intended for Lender at c/o Prudential Power Funding Associates, Four
Gateway Center, 000 Xxxxxxxx Xxxxxx, x0xx Xxxxx, Xxxxxx, Xxx Xxxxxx 00000,
Attention: Project Management Group.
(b) Either party may, at any time, change its address for the above
purposes by sending notice to the other party stating the change and setting
forth the new address.
22. FERC Requirement Compliance. Tenant, by the execution hereof,
----------------------------
covenants and agrees that the annual useful thermal output available from the
power plant provided by Landlord will be used by Tenant to heat the greenhouse
facility, and that Tenant shall use its best efforts to comply with the terms of
the annual thermal usage and output requirements required under that certain
Order Granting Application for Certification as a Qualifying Cogeneration
Facility ("FERC Order") issued May 8, 1989, by the Federal
-19-
Energy Regulatory Commission of the United States of America, Docket No. QF89-7-
000, and in compliance with the description of greenhouse operations contained
in the Application, a copy of which has previously been furnished to Tenant. In
the event the FERC Order is amended, Tenant agrees to comply with all requests
of Landlord to assure compliance with the FERC requirements relating to
greenhouse operations set forth in such amended FERC Order and any application
made by Landlord in connection therewith. Landlord shall have the right to
monitor Tenant's compliance with the FERC requirements described herein.
23. Miscellaneous.
-------------
a. Estoppel Certificates. At any time and from time to time, within
---------------------
ten (10) days after Landlord or any mortgagee shall request the same, Tenant
will execute, acknowledge and deliver to Landlord and to such mortgagee or such
other party as may be designated by Landlord an estoppel certificate and consent
to collateral assignment in the form furnished with respect to the matters
relating to this Lease or the status of performance of obligations of the
parties hereunder as may be reasonably requested by landlord or such mortgagee.
If Tenant fails to provide such certificate within ten days after request by
Landlord therefor, Tenant shall be deemed to have approved the contents of any
such certificate submitted to Tenant by Landlord or such mortgagee and Landlord
is hereby authorized to so certify.
b. Inspections and Access by Landlord. Tenant will permit Landlord,
----------------------------------
its agents, employees and contractors and lender and Independent Engineer to
enter all parts of the Premises during Tenant's business hours to inspect the
same and to enable Landlord to enforce or carry out any provision of this Lease
including, without limitation, any access necessary for the making of any
repairs which are Landlord's obligation hereunder.
C. Right of Access by Tenant. Tenant shall have the right to use areas
-------------------------
reasonably designated by the Landlord for ingress and egress to the Premises and
for loading and unloading operations directly related to the Premises. Tenant
shall be responsible for and agrees to immediately repair any such damage and
indemnify and hold the, Indemnified Parties harmless from any damage resulting
from Tenant's use of such areas and to hold the Indemnified Parties harmless,
from any and all claims of any nature whatsoever arising out of Tenant's use of
such areas.
-20-
d. Remedies Cumulative. No reference to any specific right or remedy
-------------------
shall preclude Landlord from exercising any other right or from having any other
remedy or from maintaining any action to which it may otherwise be entitled at
law or in equity. No failure by Landlord to insist upon the strict performance
of any agreement, term, covenant or condition hereof, or to exercise any right
or remedy consequent upon a breach thereof, and no acceptance of full or
partial rent during the continuance of any such breach, shall constitute a
waiver of any such breach, agreement, term covenant or condition. No waiver by
Landlord of any breach by Tenant under this Lease shall affect or alter this
Lease in any way whatsoever.
e. Successors and Assigns. This Lease and the covenant and conditions
----------------------
herein contained shall inure to the benefit of and by binding upon Tenant, its
successors and assigns, and shall be binding upon Tenant, its successors and
assigns and shall inure to the benefit of Tenant and only such assigns of Tenant
to whom the assignment of this Lease by Tenant has been consented to in writing
by Landlord and Lender. Upon the sale or other transfer by Landlord of its
interest in the Premises, and assumption of possession of the Premises by the
assignee, only the assignee shall be responsible for all Landlord's obligations
under this Lease occurring thereafter. The Lender shall not be deemed such a
purchaser, successor or assignee hereunder.
f. Compliance with Laws and Regulations. Tenant, at its sole cost and
------------------------------------
expense, shall comply with, shall operate and maintain the Premises and Related
Facilities in compliance with and shall cause the Premises and the Related
Facilities to comply with (i) all federal, state, county, municipal and other
governmental statutes, laws, rules, orders, regulations and ordinances and any
permits affecting any part of the Premises or the Related Facilities, or the use
thereof, including, but not limited to, those which require the making of any
structural, unforeseen or extraordinary changes, whether or not any such
statues, laws, rules, orders, regulations or ordinances which may be hereunder
enacted involve a change of policy on the part of the governmental body enacting
the same, those relating to disposal of any hazardous waste generated by the
Premises or the Related Facilities and the obtaining of any permits required for
a small quantity waste generator or otherwise, and (ii) all rules, orders and
regulations of the National Board of Fire Underwriters, Landlord's casualty
insurer(s) and other applicable insurance rating organizations or other bodies
exercising similar functions in connection with the
-21-
prevention of fire or the correction of hazardous conditions which apply to the
Premises or the Related Facilities.
g. No Joint Venture. Any intention to create a joint venture or
----------------
partnership relation between the parties hereto is hereby expressly disclaimed.
h. No Modification. This writing is intended by the parties as a final
---------------
expression of their agreement and as a complete and exclusive statement of the
terms thereof. No representations, understandings, or agreements have been made
or relied upon in the making of this Lease other than those specifically set
forth herein. This Lease can be modified only by a writing signed by the party
against whom, the modification is enforceable.
i. Severability. If any portion of any term or provision of this Lease,
------------
or the application thereof to any person or circumstances shall, to any extent,
be invalid or unenforceable, the remainder of this Lease, or the application of
such term or provision to persons or circumstances other than those as to which
it is held invalid or unenforceable, shall not be affected thereby, and each
term and provision of this Lease shall be a valid and be enforced to the fullest
extent permitted by law.
j. Applicable Law. This Lease and the rights and obligations of the
--------------
parties hereunder shall be construed in accordance with the laws of the State of
Colorado.
k. Waiver of-Jury Trial. Landlord and Tenant hereby mutually waive any
--------------------
and all rights (only pertaining to Landlord and Tenant with regard to this
Lease) which either may have to request a jury trial in any proceeding at law or
in equity in any court of competent jurisdiction.
l. Non-recourse. Notwithstanding anything to the contrary contained in
------------
this Lease, in the event of any claim, demand, cause of action or judgment
against Landlord, Tenant shall have no recourse against any of the general of
Landlord (or any of the partners of such general partners) or against any of the
assets of any of the general partners of Landlord (or any of the partners of
such general partners), except to the extent that such assets are also assets of
Landlord.
m. Representations of Tenant. Tenant represents and warrants to Landlord
-------------------------
that this Lease constitutes the valid and binding obligation of Tenant and each
and every partner of Tenant. The execution and delivery
-22-
of this Lease has been duly authorized by all necessary action Tenant and the
person executing this Lease on behalf of Tenant is duly authorized and has all
necessary power and authority to act on behalf of Tenant.
n. Delivery and Possession. If the Landlord shall be unable to give
-----------------------
possession of the Premises to Tenant on the date of the Commencement Date for
any reason, Landlord not be subject to any liability for failure to give
possession to Tenant. Under such circumstances the rent reserved and covenanted
to be paid herein shall not commence until the Premises are available for
occupancy, and no such failure to give possession on the date of commencement of
the Term shall affect the validitv of this Lease or the obligations of the
Tenant hereunder, nor shall the same be construed to extend the Term. The
Premises shall not be deemed to be unready or unavailable for Tenant's
possession or occupancy or incomplete if only minor or insubstantial details of
construction, decoration or mechanical adjustments remain to be done in the
Premises or any part thereof, or if the delay in the availability of the
Premises for occupancy shall be due to special work, changes, alterations or
additions required or made by Tenant in the layout or finish of the Premises or
any part thereof, or shall be caused in whole or in part by tenant through the
delay of Tenant in submitting plans, supplying information, approving plans,
specifications estimates, giving authorizations or otherwise, or shall be reused
in whole or in part by delay or default on the part of Tenant. In the event of
any dispute as to whether the Premises are ready for Tenant's occupancy, the
decision of Landlord's architect shall be final and binding on the parties.
o. Lender Protection. Tenant agrees to give any Lender by registered or
-----------------
certified mail, a copy of any notice or claim of default served upon the
Landlord by Tenant, provided that prior to such notice Tenant has been notified
in writing (by way of service on Tenant of a copy of an assignment of Landlord's
interests in leases, or otherwise) of the address of such Lender. Tenant further
agrees that if Landlord shall have failed to cure such default within twenty
(20) days after such notice to Landlord (or if such default cannot be cured or
corrected within that time, then such additional time as may be necessary if
Landlord has commenced within such twenty (20) days and is diligently pursuing
the remedies or steps necessary to cure or correct such default) then any Lender
shall have an additional thirty (30) days within which to cure or correct such
default (or if such default cannot be cured or corrected within that time, then
-23-
Such additional time as may be necessary if such Lender has commenced within
such thirty (30) days and is diligently pursuing the remedies or steps necessary
to cure or correct such default, including the time necessary to cure or correct
such default).
IN WITNESS WHEREOF, the parties hereto intending to be legally bound
hereby have executed this Lease as of the day and year first above written.
LANDLORD:
COLORADO POWER PARTNERS
By: /s/ Xxxxxxxx X. Xxxxxx
---------------------------
Xxxxxxxx X. Xxxxxx
Management Committee Member
TENANT:
BRUSH GREENHOUSE PARTNERS
By: /s/ Xxxxxx X. Xxxxxxxxx
---------------------------
Xxxxxx X. Xxxxxxxxx
Management Committee Member
-24-
EXHIBIT A TO
GREENHOUSE LEASE
[DRAWING OF PLOT PLAN]
EXHIBIT B TO
GREENHOUSE LEASE
[DRAWING OF PLOT PLAN]
EXHIBIT C TO
Greenhouse Lease
TABLE 2a
PHASE 1 POWER PLANT/GREENHOUSE OPERATION
MONTHLY SUMMARY
----------------------------------------
BTO/FT SQ/ GREENHOUSE
DEG DAY SIZE (ACRES)
---------- ------------
35 18
NET PLANT THERM ENERGY TOTAL
GREENHOUSE OPERATING HOURS OUTPUT (IN MW) FROM WHB ELECTRICAL ENERGY ENERGY
HEATING HEAT REQ'D ------------------ ------------------ -------- ------------------ INPUT
MONTH DEG DAYS (BTU*E-8) ON-PEAK OFF-PEAK ON-PEAK OFF-PEAK (BTU*E-9) (MWH) (BTU*E-9) (BTU*E)
----- -------- ---------- ------- -------- ------- -------- --------- ------ --------- -------
JAN 1283 35.2 294 170 50 37 37.0 20990 72 192
FEB 969 26.6 280 160 50 36 27.9 19760 67 181
MAR 874 24.0 308 180 35 35 25.2 17080 58 154
APR 516 14.2 294 0 34 0 14.9 9996 34 90
MAY 224 8.1 294 0 33 0 8.5 9702 33 87
JUN 47 1.2 294 0 50 0 X.4 14700 50 135
JUL 0 0.0 294 0 50 0 0.0 14700 50 135
AUG 6 0.2 308 0 50 0 0.2 15400 53 142
SEP 140 3.8 280 0 33 0 4.0 9240 32 83
OCT 438 12.0 308 0 34 0 12.6 10472 36 94
NOV 867 23.8 280 180 38 35 25.0 15400 63 139
DEC 1156 31.7 294 170 50 38 33.3 20820 71 190
-------- ------- ------- -------- --------- ------ --------- ----
6520 178.9 3528 840 187.9 178260 608 1622
thermal requirement thermal energy and electrical
energy output rate
