Loading...
HomeMy WebLinkAbout09670RESOLUTION NO. 9670 A RESOLUTION APPROVING AGREEMENTS BETWEEN PUEBLO, A MUNICIPAL CORPORATION, PUEBLO DEVELOPMENT FOUNDATION, AND TRANSWAVE INTERNATIONAL, INC. RELATING TO A JOB CREATING CAPITAL IMPROVEMENT PROJECT, AUTHORIZING THE PRESIDENT OF THE CITY COUNCIL TO EXECUTE SAME, APPROVING A FORM OF LEASE, AND TRANSFERRING $750,000 FROM THE 1992 -2006 SALES AND USE TAX CAPITAL IMPROVEMENT PROJECTS FUND FOR SUCH PURPOSE BE IT RESOLVED BY THE CITY COUNCIL OF PUEBLO, that SECTION 1. The City Council finds and determines that the expenditure of $750,000 for the job creating capital improvement project with TransWave International, Inc. described in the attached Agreements and Lease, meets and complies with the criteria and standards established by Ordinance No. 6381 and will create employment opportunities justifying the expenditure of public funds. SECTION 2. The following Agreements, copies of which are attached hereto, approved as to form by the City Attorney, are hereby approved, and the President of the City Council is authorized to execute and deliver the Agreements in the name of the City: (a) Agreement dated August 26, 2002 between Pueblo, a municipal corporation and Pueblo Development Foundation, and (b) Agreement dated August 26, 2002 between Pueblo, a municipal corporation and TransWave International, Inc. SECTION 3. Funds in an amount of $750,000 are hereby authorized to be transferred, expended and made available to TransWave International, Inc. out of the 1992 -2006 Sales and Use Tax Capital Improvement Projects Fund for the sole purpose of the job creating capital improvement project and in the manner described in the attached Agreements and Lease. The funds hereby authorized to be transferred and expended shall be released and paid by the Director of Finance to or for the benefit of TransWave International, Inc. after receipt (i) by the City Clerk of the documents required to be filed pursuant to paragraph 2(b) of the TransWave International, Inc. Agreement and (ii) by the Director of Finance of written requests for payment required by paragraph 2(d) of the TransWave International, Inc. Agreement. SECTION 4 The property to be acquired pursuant to the Purchase Agreement between Pueblo, a municipal corporation and Windsor Industries, Inc. approved by Resolution No. 9663 shall be acquired in the name of Pueblo Development Foundation and leased with an option to purchase to TransWave International, Inc. pursuant to a lease in substantially the same form and content as the Lease attached hereto, which Lease is hereby approved with such modifications thereto as the City Attorney shall approved. SECTION 5 The officers of the City are directed and authorized to perform any and all acts consistent with the intent of this Resolution and attached Agreements and Lease to effectuate the transactions described therein. SECTION 6 This Resolution shall become effective upon final approval and passage. INTRODUCED August 26, 2002 BY Robert Schilling Councilperson APPROVED: + resident of City Council ATTEST: City C 9&7C D U �° 0 0 0 Background Paper for Proposed RESOLUTION AGENDA ITEM # g DATE: August 26, 2002 DEPARTMENT: Law Department TITLE A RESOLUTION APPROVING AGREEMENTS BETWEEN PUEBLO, A MUNICIPAL CORPORATION, PUEBLO DEVELOPMENT FOUNDATION, AND TRANSWAVE INTERNATIONAL, INC. RELATING TO A JOB CREATING CAPITAL IMPROVEMENT PROJECT, AUTHORIZING THE PRESIDENT OF THE CITY COUNCIL TO EXECUTE SAME, APPROVING A FORM OF LEASE, AND TRANSFERRING $750,000 FROM THE 1992 -2006 SALES AND USE TAX CAPITAL IMPROVEMENT PROJECTS FUND FOR SUCH PURPOSE ISSUE Should City Council approve the job creating capital improvement project with TransWave International, Inc. described in the Agreements attached to the Resolution? RECOMMENDATION See Background. BACKGROUND Two agreements and form of lease are being presented to City Council for approval relating to the job creating capital improvement project with TransWave International, Inc. ( "Company "). Company intends to locate its business manufacturing monitoring equipment for oil and gas transcontinental pipelines atthe Pueblo Memorial Airport Industrial Park. Company has committed to employ 75 full - time employees at its facilities with the salaries set forth in Exhibit "A" to its agreement with the City. The City Council previously authorized by Resolution No. 9663 the purchase of Lot 38, Pueblo Memorial Airport Industrial Park consisting of an approximately 26,950 square foot building located on approximately 3.92 acres of land (the "Property ") for this project at a purchase price of $650,000. The Property will be titled in the name of Pueblo Development Foundation ( "PDF "). The Agreement with PDF provides that PDF will use the $750,000 to be made available to the Company to remodel the building on the Property and to lease the Property to Company under a lease in substantially the same form and content of the Lease attached to the Resolution. The Agreement with Company provides that the City will make available to Company $750,000 to remodel the Property and requires Company to employ 75 full -time employees at the salaries set forth in Exhibit "A" to its Agreement for a period of seven (7) years starting three (3) years after the commencement date of the Lease. If Company defaults in its employment commitment during the 7 -year repayment period, Company will repay to City a pro -rate share of City funds advanced to Company based upon the number of employees actually employed by Company. The Lease is without rent so long as Company meets its employment commitment. Company, at its expense, will repair and maintain the Property, insure the Property, provide liability insurance, and pay all taxes and utilities. If Company defaults in its employment commitment and City declares Company's repayment obligation due and owing, Company will thereafter pay $10,000 per month rent. If Company is not in default, it has the option to purchase the Property at the end of the 10 -year lease term for $1.7 million less $50,000 for each full year Company meets its employment commitment. The financial details of the project were negotiated by PEDCO. PEDCO evaluated the business and financial ability of Company to fulfill its employment commitment, financial and other contractual obligations under Company's Agreement and Lease, and recommended that the City Council approve Company's project and related transactions and documents. FINANCIAL IMPACT City will transfer from the one -half cent sales and use tax fund $660,000 to purchased land and approximately 26,950 square foot building and $750,000 to remodel the building for lease to TransWave International, Inc. -2- DRAFT 8114102 AGREEMENT THIS AGREEMENT entered into as of Ag U A f -7 6 , 2002_between Pueblo, a municipal corporation (the "City ") and TransWave International, Inc., 4Peh corporation (the "Company"). WHEREAS, Company has expressed a willingness to locate its business within the Pueblo Memorial Airport Industrial Park, and in furtherance thereof has through the Pueblo Economic Development Corporation made application for funds with the City, and WHEREAS, the City has approved such application and will make funds available to Company subject to and upon the terms and conditions of this Agreement. NOW, THEREFORE, in consideration of the foregoing and mutual covenants contained herein, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, City and Company agree as follows: L The following terms as used in this Agreement shall have the following meaning unless the context clearly indicates otherwise: "Employment Commitment Date" means the earlier of (i) three (3) years after the Commencement Date of the Lease, or (ii) October 15, 2005. "Facility" means the approximately 26,950 square foot building located on the Property wherein Company will conduct its business operations. "Full -Time Employee" means a person who actually performs work at the Facility for not less than thirty-two (32) hours per week in a position and at the salary set forth in the attached Exhibit "A," whether employed by Company or by an outside entity acting as an agency to provide Full - Time Employees for Company. The term "Full -Time Employee" does not include independent contractors nor employees of independent contractors except employees of an independent contractor acting as an agency to provide Full -Time Employees for Company to perform work at the Facility. "Lease" means an enforceable long -term lease of the Property between Company, as Lessee and Pueblo Development Foundation, as Lessor for a term not less than 10 years. "Property" means Lot 38, Pueblo Memorial Airport Industrial Park Subdivision, Pueblo County, Colorado, street address: 31965 United Avenue, Pueblo, Colorado, 81001. "Quarter" means three consecutive calendar months commencing January 1, April 1, July 1 and October 1 of each calendar year. "Quarterly Employees" means the sum of the aggregate number of Full -Time Employees on each business day of a Quarter, divided by the sum of the business days in such Quarter. 2. City will advance to or for the benefit of Company funds in an amount not to exceed $750,000.00 (the "City Funds "), subject to and contingent upon the following conditions and covenants which Company agrees to perform and comply with: (a) Company shall use City Funds solely for remodeling the Facility. (b) Company shall file in the office of the City Clerk copies of the following: (i) Company's certificate or other evidence of authority to transact business in the State of Colorado issued by the Colorado Secretary of State, (ii) certified copy of the resolution of the governing board of Company approving this Agreement, and authorizing its officers to execute and deliver this Agreement in the name of Company, and (iii) executed copy of the Lease, and (iv) evidence reasonably satisfactory to City that Company will commence business operations at the Facility. The date of the last to occur of the filings required under (i), (ii), (iii) and (iv) of this paragraph 2(c) shall be referred to herein as "Closing." If Closing does not occur on or before November 30, 2002, or such later date as Company and City shall mutually agree, City, at its sole option, may terminate this Agreement and City and Company shall thereafter be released and discharged from all obligations hereunder. (d) Company shall file with City's Director of Finance written request for payment certified to be true and correct by an officer of Company or its representative that the amounts included in the request for payment have not been included in any prior request for payment and are for the actual cost of remodeling the Facility, identifying the remodeling for which payment is sought, including certificates ofthe architect and contractor that the remodeling for which payment is sought has been completed. All City Funds received by Company shall be deposited in a separate account and held in trust by Company for the sole and only purpose of paying for remodeling of the Facility. 3. Company acknowledges and agrees that the primary purpose of City in entering into this Agreement and the sole benefit to the City for making City Funds available to Company hereunder is the creation of jobs. Therefore, Company represents, covenants, and agrees that it will after Commencement Date of the Lease continuously conduct its business operations and employ Full -Time Employees at the Facility as follows: (i) during the period from Commencement Date of the Lease to the Employment Commitment Date, Company shall use its best efforts in good faith to employ as many Full -Time Employees as reasonably justified by its business operations, and (ii) on and after the Employment Commitment Date, Company shall employ not less than seventy -five (75) Full -Time Employees at the Facility in the positions and at the salaries set forth in the attached Exhibit "A" (the "Employment Commitment "). 4. Notwithstanding anything contained in this Agreement to the contrary, if Company shall for any reason default in its Employment Commitment set forth in paragraph 3, Company shall repay to City a pro -rata share of the City Funds advanced by City under paragraph 2 hereof based upon the number of Full -Time Employees employed by Company at the Facility in the positions and -2- at the salaries set forth in the attached Exhibit "A" (the "Repayment Obligation "), as follows: (a) During the seven (7) year period starting on the Employment Commitment Date and ending eighty -four (84) months thereafter (the "Repayment Period ") Company shall pay to City an amount each Quarter equal to the Quarterly Employees less than seventy -five (75) Full - Time Employees in the positions and at the salaries set forth in the attached Exhibit "A," employed at the Facility by Company multiplied by $357.15 (the "Company's Quarterly Payments "). For example, if for the second Quarter of the third year after the Employment Commitment Date such Quarterly Employees is 60, the amount payable by Company to City on or before the fifteenth (15th) day of the next calendar month would be (75 - 60) x $357.15 = $5,357.25. (b) Company's Quarterly Payments, if any, shall be paid to the City without notice, demand, deduction or setoff on or before the fifteenth (15th) day of the month after the end of each Quarter during the Repayment Period and for one month thereafter at the office of the Director of Finance of City, 1 City Hall Place, Pueblo, Colorado, 81003, or such other person or location as the City may designate. All past due Company's Quarterly Payments shall bear interest at the rate of ten (10) percent per annum until paid. (c) Within fifteen (15) days after the end of each Quarter after the Employment Commitment Date and for one calendar month after the Repayment Period, Company will submit to City's Director of Finance Company's statements showing the Quarterly Employees and their respective positions and salaries for the preceding Quarter and the basis upon which Quarterly Employees and Company's Quarterly Payment, if any, were computed certified by an officer of the Company to be true and correct. For purposes of verifying such employment, City shall have access to Company's records relating to Company's employees employed at the Facility. Except in the event of any action filed by City to enforce this Agreement, City shall treat such information as confidential and shall not disclose (except pursuant to a subpoena or court order) such information to any party other than those City employees who have a need to know such information. (d) Notwithstanding anything herein to the contrary, if Company defaults in its Employment Commitment, and such default is not cured within thirty (30) days after written notice specifying the default is given by City to Company, then in such event, City may declare the entire balance of Company's Repayment Obligation due and owing together with interest thereon from the date of default at the rate of ten (10) percent per annum, and for such purpose, the entire balance of Company's Repayment Obligation shall be an amount equal to 75 times $357.15 multiplied by the remaining Quarters of the Repayment Period plus the amount of Company's unpaid Quarterly Payments, if any, but in no event more than the amount of City Funds advanced by City under paragraph 2 hereof and interest as herein provided. Company's Repayment Obligation is absolute and unconditional and shall not be abated, reduced, diminished, modified, withheld or otherwise offset for any cause or reason whatsoever. 5. All City Funds advanced to Company by City under this Agreement shall be deemed to be a debt of Company payable to City until Company performs and discharges its obligations hereunder including its Repayment Obligation contained in paragraph 4. -3- 6. (a) Prior to instituting any proceeding to enforce Company's Repayment Obligation under paragraph 4, City shall notify Company in writing of its intention to institute such proceedings. Company may request relief from its Repayment Obligation by delivering to City within twenty (20) days after date of City's notice, Company's written request for relief specifying the grounds upon which such relief is sought together with documents supporting said grounds. Within ninety (90) days after receipt of Company's request, City will schedule a meeting with the City Council at which Company may appear. City will notify Company of the time and place of the meeting. Failure of Company to timely deliver its complete written request for relief or to appear at the scheduled meeting with the City Council shall entitle City to immediately institute proceedings to enforce Company's Repayment Obligation. (b) City Council may or may not, in its sole and absolute discretion, relieve Company, in whole or in part, from Company's Repayment Obligation. Any action taken by the City Council relating to a request for relief shall be final and binding on Company, and not subject to judicial review. Any such action by City Council is, and shall constitute, a legislative measure. Nothing contained in this paragraph 6 shall grant or be construed to grant to Company any right or claim to relief from its Repayment Obligation or hearing with respect thereto. (c) No delay by the City in scheduling a meeting, or failure by City to exercise its right to enforce this Agreement, including Company's Repayment Obligation, and no partial or single exercise of that right, shall constitute a waiver of that right. 7. In the event of any litigation arising under this Agreement, the court shall award to the prevailing party its costs and reasonable attorney fees. Venue for any such litigation shall be in Pueblo County, Colorado. All such litigation shall be filed in the District Court, County of Pueblo, State of Colorado and each party submits to the jurisdiction of such District Court. To the extent allowed by law, each party waives its right to a jury trial. 8. This Agreement expresses the entire understanding of the parties and supersedes and abrogates any and all prior dealings and commitments, whether oral or written, with respect to the subject matter of this Agreement and may not be amended or modified except in writing signed by City and Company. Any waiver of any provision of this Agreement must be in writing and signed by the party whose rights are being waived. No waiver of any breach of any provision hereof shall be or be deemed to be a waiver of any preceding or subsequent breach of the same or any other provision of this Agreement. The failure of either party to enforce or seek enforcement of the terms of this Agreement following any breach shall not be construed as a waiver of such breach. 9. This Agreement shall be construed in accordance with and be governed by the laws of the State of Colorado without regard to conflict of law principles. 10. Any notices hereunder shall be sufficiently given if given in writing personally or mailed by first class, registered, or certified mail, postage prepaid, addressed: no (a) if to City, City Manager, City of Pueblo, 1 City Hall Place, Pueblo, Colorado, 81003, with copy to Thomas E. Jagger, City Attorney, 127 Thatcher Building, Pueblo, Colorado, 81003, or (b) if to the Company, TransWave International, Inc., 1551 Larimer Street, Suite 1902, Denver, Colorado, 80202, or to such other person or address as either party shall specify in written notice given to the other party pursuant to the provisions of this paragraph 10. 11. Time is of the essence hereof. This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and assigns, provided Company may not assign this Agreement or any interest herein without the express written consent of the City, which consent may be arbitrarily withheld, conditioned or delayed. Any assignment or attempted assignment of this Agreement by Company without such consent shall be null and void. 12. The persons signing this Agreement in the name of and on behalf of Company represent and warrant that they and Company have the requisite power and authority to enter into, execute, and deliver this Agreement, and that this Agreement is a valid and legally binding obligation of Company enforceable against Company in accordance with its terms. 13. Company represents and warrants that no person, entity, or organization has been employed or retained or will receive or be paid, directly or indirectly, any commission, percentage, contingent fee or any other remuneration payment or receipt of which is contingent upon approval of this Agreement or City's advancement of City Funds to Company hereunder. For breach or violation of this warranty, City shall have the right to terminate this Agreement, or recover the full amount of such commission, percentage, contingent fee or other remuneration, or to seek such other remedies legally available to City, which remedies shall be cumulative. 14. In no event shall City, its officers, agents or employees be liable to Company for damages, including without limitation, compensatory, punitive, indirect, special or consequential damages, resulting from or arising out of or related to this Agreement or the performance or breach thereof by City or the failure or delay of City in the performance of any covenant or provision under this Agreement on its part to be performed. In consideration of City entering into this Agreement, Company hereby waives and discharges City, its officers, agents and employees from all claims for any and all such damages. No breach, default, delay or failure of City under this Agreement shall be or be construed to be a waiver, discharge or release of Company's Repayment Obligation under paragraph 4 hereof with respect to the amount of City Funds actually advanced or paid by City to or for the benefit of Company pursuant to paragraph 2 hereof. 15. If any provision of this Agreement is declared by a court of competent jurisdiction to be invalid or unenforceable, such determination shall not affect the other provisions of this Agreement which shall remain in full force and effect. -5- 16. Neither party shall be, or hold itself out as, agent of the other or as joint ventures under this Agreement. 17. Each party acknowledges that this Agreement was fully negotiated by the parties and, therefore, no provision of this Agreement shall be interpreted against any party because such party or its legal representative drafted such provision. 18. The provisions of this Agreement are for the exclusive benefit of the parties hereto and their successors and permitted assigns, and no third party shall be a beneficiary, or have any rights by virtue of, this Agreement. 19. This Agreement may be executed in any number of counterparts, and each such counterpart shall be deemed for all purposes to be an original, and all such counterparts shall together constitute but one and the same original. Executed at Pueblo, Colorado, the day and year first above written. [SEAL] Pueblo, a Municipal Corporation Attest: By � City Cl • Pre "t t of the City Council [SEAL] Attest: Name: Title: [SEAL] IM AVEJNTERNATIONAL, INC., I9W:NCII:1HN&V FULL -TIME EMPLOYEES - POSITION - ANNUAL SALARIES Committed Number of Position Full -Time Employees Management 5 Professional 20 Support 20 Assembly 30 Annual Salary $100,000 to $200,000 $80,000 to $135,000 $50,000 to $80,000 $40,000 to $65,000 Total 75 DRAFT 8114102 LEASE THIS LEASE entered into as of _AU i � A( 2002 by and between Pueblo Development Foundag*gP,a Colorado nonprofit corporation (the "Lessor ") and Trans Wave International, Inc.scorporation (the "Lessee "), WITNESSETH: WHEREAS, Lessor is the owner of Lot 38, Pueblo Memorial Airport Industrial Park Subdivision, commonly known as 31965 United Avenue, Pueblo, Colorado, 81001, consisting of a building containing approximately 26,950 square feet (the `Building ") located on approximately 3.92 acres of land (the "Land ") (collectively the Land and Building are referred to herein as the "Leased Premises "), and WHEREAS, subject to the covenants and conditions of this Lease, Lessor will remodel the Building in accordance with plans and specifications therefor prepared by G.V. Design, Inc., Gregory A. Van, Architect, and approved by Lessor and Lessee, and WHEREAS, Lessee is desirous of leasing and obtaining the option to purchase the Leased Premises upon the terms and conditions hereinafter set forth; NOW, THEREFORE, in consideration of the mutual promises, covenants and conditions contained herein, Lessor and Lessee hereby agree as follows: Article 1. Leased Premises 1.01 Lessor hereby leases to Lessee and Lessee hereby leases from Lessor, subject to the covenants, provisions and conditions herein, the Leased Premises. 1.02 This Lease and Lessee's use of the Leased Premises are subject to the easements, rights -of -way, covenants, conditions, restrictions, reservations and limitations appearing of record, and all applicable zoning and land use laws, ordinances, codes and regulations governing and regulating the Leased Premises and its use. Article 2. Building Construction 2.01 Lessor shall cause the . Building to be remodeled as herein provided (the "Remodeling ") and shall pay the actual cost of Remodeling up to but not to exceed $750,000.00 (the "Maximum Construction Costs "). The Maximum Construction Costs consist ofthe $750,000.00 to be advanced by City to or for the benefit of Company to be used for Remodeling the Building pursuant to separate Agreement between Lessee. and City of Pueblo (the "City") dated as of 2002, a copy of which is attached hereto as Exhibit "A" and incorporated herein (the `City Agreement"). 2.02 All costs and expenses of Remodeling in excess ofthe Maximum Construction Costs shall be paid by Lessee. 2.03 The Remodeling shall be designed and constructed (a) in accordance with the plans, specifications thereforprepared by G.V. Design, Inc., Gregory A.. Van, Architect (the "Architect's Plans ") and the construction contract document with the General Contractor approved by Lessee and Lessor (the "Construction Documents "). The Architect's Plans and Construction Documents after approval in writing by both Lessor and Lessee shall be incorporated herein as if set out herein in full; and (b) by a general contractor selected by Lessor after competitive bidding which allow qualified local contractors to participate in the competitive bidding procedures (the "General Contractor "). 2.04 Lessor and Lessee shall cooperate in good faith to cause the Construction to be substantially completed on or before October 15, 2002. The failure for any reason to substantially complete the Construction by October 15, 2002 shall not affect the validity of this Lease nor the obligations of Lessor and Lessee hereunder, and shall not constitute a breach or default by Lessor hereunder. 2.05 All changes in the approved Architect's Plans and Construction Documents shall be approved by Lessor and Lessee. The failure of Lessor or Lessee to approve or reject any proposed change in the Architect's Plans or Construction Documents, or any modification thereto, or any proposed change in the work within the general scope of construction contemplated by the Construction Documents, within five (5) days after receipt thereof shall constitute approval thereof, provided, however, that all changes which increase the Maximum Construction Costs must be approved in writing by both Lessor and Lessee, and Lessee shall pay to Lessor the cost of such change in cash or certified funds within five (5) days after the approval of such change by Lessor and Lessee. 2.06 Whenever in this Article 2 or in any other Article of this Lease, the approval or consent of Lessor or Lessee is required, such approval or consent shall not be unreasonably withheld, conditioned or delayed. Article 3. Term The Term ofthis Lease shall be ten (10) years commencing upon the date that Lessor notifies Lessee that Construction has been substantially completed (the "Commencement Date ") and ending ten (10) years thereafter, unless sooner terminated as provided herein (the "Termination Date "). If Lessee does not agree that the Construction has been substantially completed on the date specified in the notice from Lessor, Lessee shall promptly notify Lessor of its objection to those matters which are not substantially completed. Lessor shall consider, in good faith, Lessee's objections and shall either (i) extend the Commencement Date, or (ii) respond with an explanation of why substantial completion has occurred and the Commencement Date shall be the same as previously stated in -2- Lessor's original notice. Lessor and Lessee acknowledge and agree that certain obligations under various articles of this Lease shall commence prior to Commencement Date, including but not limited to Article 2, Building Construction and Lessor and Lessee agree to and are bound by an such Articles prior to the Commencement Date. Article 4. Rent 4.01 So long as Lessee is not in default under the City Agreement and meets its Employment Commitment as therein defined, Lessee shall not be obligated to pay rent to Lessor for the Leased Premises. If Lessee fails to meet its Employment Commitment under the City Agreement, and City declares the entire balance of Lessee's Repayment Obligation due and owing pursuant to paragraph 4(d) of the City Agreement, Lessee shall pay to Lessor monthly rent for the Leased Premises in the amount of $10,000.00 each month during the balance of the ten (10) year Term of this Lease. Monthly rent, if any, is payable in advance, without notice or demand, with the first monthly payment due on the first day of the calendar month after the calendar month in which City gives notice to Lessee that City has declared the entire balance of Lessee's Repayment Obligation due and owing, and subsequent payments due on the same day of each month thereafter. All payments shall be made at or mailed by United States mail to the following address: P. O. Box 1663, Pueblo, Colorado, 81002, or such other address as Lessor may from time to time designate to Lessee in writing. 4.02 All monthly rent and other payments required to be made by Lessee hereunder which shall remain unpaid fifteen (15) days after their due dates shall bear interest at the rate often percent (10 %) per annum until paid. 4.03 Lessee's obligation to pay rent to Lessor hereunder is absolute and unconditional and rent shall not be offset, abated, reduced or withheld for any cause or reason whatsoever. 4.04 It is the intent of the parties hereto that this Lease be a "triple net" lease with Lessor incurring no obligation, monetary or otherwise, except for Remodeling under Article 2 hereof. Article 5. Use of Leased Premises 5.01 The Leased Premises shall be used and occupied by Lessee exclusively for commercial purposes associated with or incident to Lessee's business activities. 5.02 Lessee shall use the Leased Premises in a careful, safe and proper manner in compliance with all laws and regulations applicable to the Leased Premises and Lessee's use thereof. Lessee shall not cause, maintain or permit any nuisance or waste in, on, or about the Leased Premises. 5.03 Lessee shall not abandon nor cease to conduct business on the Leased Premises for any period longer than 180 consecutive days. -3- Article 6. Condition of Premises 6.01 EXCEPT AS SPECIFICALLY SET FORTH IN THIS LEASE, IT IS UNDER- STOOD AND AGREED THAT LESSOR IS NOT MAKING AND HAS NOT AT ANY TIME MADE ANY WARRANTY OR REPRESENTATION OF ANY KIND OR CHARACTER, EXPRESS OR IMPLIED, WITH RESPECT TO THE LEASED PREMISES, INCLUDING, BUT NOT LIMITED TO, ANY WARRANTY OR REPRESENTATION AS TO HABITABILITY, MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, TITLE (OTHER THAN THE COVENANT OF QUIET POSSESSION SET FORTH IN ARTICLE 20), ZONING, PHYSICAL OR ENVIRONMENTAL CONDITIONS, UTILITIES, GOVERNMENTAL APPROVALS, THE COMPLIANCE OF THE LEASED PREMISES WITH GOVERNMENTAL, LAWS, THE TRUTH, ACCURACY OR COMPLETENESS OF ANY DOCUMENT OR OTHER INFORMATION PROVIDED TO LESSEE BY ANY OTHER PERSON, OR ANY OTHER MATTER OR THING REGARDING THE LEASED PREMISES. 6.02 The taking ofpossession ofthe Leased Premises by Lessee after Commencement Date shall be conclusive evidence that the Remodeling has been completed in compliance and accordance with the approved Architect's Plans and Construction Documents, that Lessee accepts the Leased Premises in its then present condition "A s Is, Where Is, With All Faults" and that the Leased Premises are in good and satisfactory condition at the time such possession was taken. Article 7. Alterations and Improvements 7.01 Lessee shall not make any additions, alterations or improvements in or to the Leased Premises ( "Alterations ") without Lessor's prior written consent. Lessee shall not permit or allow any lien to be filed or recorded against the Leased Premises or Lessor's interest therein, and Lessee shall fully cooperate with Lessor in obtaining the protection afforded Lessor under Section 38 -22- 105, C.RS. All Alterations made in or to the Leased Premises by Lessee shall become part of the Leased Premises and be surrendered with the Leased Premises at the termination of this Lease. 7.02 All equipment, fixtures and improvements of a detachable or temporary - nature installed or placed upon the Leased Premises by Lessee, including trade fixtures, shall remain the property of Lessee, subject to Lessee's right, at its option, to remove same not later than ten (10) days after termination of this Lease. Lessee, at its expense, shall promptly repair any damage resulting from such removal. The failure of Lessee to remove its equipment, fixtures and detachable improvements within ten (10) days after termination of this Lease shall, at the option of Lessor, be deemed an abandonment of such property and Lessor may dispose of such property as the Lessor, in its sole discretion, may determine. Article 8. Repairs and Maintenance 8.01 Except for Remodeling as provided in Article 2 hereof, Lessor shall not be obligated to repair, maintain or alter the Leased Premises or any part thereof. Lessee, at its expense, shall keep -4- and maintain the Leased Premises, including, without limitation, the Building, structural components, roofs, walls, fixtures, and electrical, heating, mechanical, plumbing and air conditioning systems, in good condition and repair and in a good, clean and safe condition at all times during the effective term of this Lease and return the same to Lessor at Termination Date in as good condition and state of repair as the same were in as of Commencement Date, except for loss occasioned by ordinary wear. 8.02 If Lessee becomes obligated to make repairs which are or may be covered by any manufacturer's or General. Contractor's warranty issued to or for the benefit of Lessor, Lessor will assign and transfer to Lessee its interest in any such warranty for the purpose ofmaking such repairs. If any such warranty may not be legally assigned, Lessor, at the request and expense of Lessee, will in good faith enforce such warranty on behalf of Lessee. 8.03 If Lessee becomes obligated to make repairs caused by an occurrence covered by the insurance described in Article 12, the net proceeds of such insurance shall be made available to Lessee to offset the cost of such repairs. Article 9. Right of Entry Lessor, or Lessor's officers, employees, agents and representatives, as the case may be, may enter the Leased Premises during normal business hours upon prior written notice to Lessee, except notice shall not be required in case of emergency, such as fire. Article 10. Assi ent Lessee shall not voluntarily or by operation of law assign all or any part of the Lease or Lessee's interest therein without the express written consent of Lessor, which consent will not be unreasonably withheld. Lessor may withhold its consent if the proposed assignee's financial standing and responsibility at the time of the proposed assignment is insufficient in the Lessor's sole discretion to give assurance of performance and compliance with all terms and conditions of this Lease and the City Agreement. Upon such an assignment and consent, Lessee shall be released from all obligations arising or occurring under this Lease after the effective date of such assignment and consent, provided that such assignee shall execute, acknowledge and deliver to Lessor an assumption agreement in form and substances satisfactory to Lessor, whereby assignee agrees to observe, perform and keep all the terms, provisions, covenants and conditions required to be observed, performed and kept by Lessee hereunder and under the City Agreement. Any assignment or attempted assignment of the Lease or any interest herein by Lessee without Landlord's express written consent shall be null and void. Notwithstanding the foregoing, Lessee may not assign or transfer the purchase option under Article 17 independent or separate from an assignment or transfer of the Lease as a whole. Article 11 Insi ranee and Indemnification 511 . 11.01 Lessee shall indemnify and hold Lessor harmless from and defend Lessor against any and all claims or liability, including cost of defense and reasonable attorney fees, for any injury or damage to Lessee or its officers, agents or employees, or to Lessee's property, or to any third person, or to the property of any third person: (a) occurring in, on or about the Leased Premises or any part thereof by or from any cause whatsoever except injury or damage caused by the wrongful or intentional acts of Lessor, its officers or employees; or (b) arising out of or resulting from the Leased Premises, or any condition thereon, or from Lessee's use and occupancy of the Leased Premises, or any equipment therein or appurtenances thereto, or any activity conducted thereon. 11.02 Lessee shall secure and maintain in. full force and effect, at its expense, during the Term of this Lease, commercial liability insurance including personal injury, property damage and as an additional insured. contractual coverage a the minimum amount of $5,000,000 combined single limits naming Lessor ed. 11.03 Lessee shall secure and maintain during the Term of this Lease Colorado Workers' Compensation insurance or other similar coverage in the statutorily mandated amounts. 11.04 A copy of each insurance policy, or certificate thereof, issued by an association or company authorized to issue such policy or policies under the laws of the State of Colorado containing aprovisionprohibiting cancellation ormaterial modification ofthe insuran except after thirty (3 0) days' notice to Lessor, shall be delivered to the Lessor within thirty (30) days after date of this Lease, and thereafter the Lessee will furnish to Lessor evidence of the continuance of the insurance coverage required herein within a reasonable time after the same has been issued. Article 12. Fire and Extended Coverage Insurance 12.01 Lessee shall, at its expense, during the Term of this Lease, secure and maintain in full force and effect "All- Risk" casualty insurance (including, without limitation, fire, extended coverage and boiler insuranc)upon the Leased Premises. Such insurance shall be in an amount not less than the full replacement value of th@ Building and improvements (without deduction for physical depreciation), and issued by an insurance company or association authorizedto issue policies - under the laws of the State of Colorado and approved by Lessor, shall contain a deductible of not more than $15,000.00 and a standard Colorado mortgagee clause in favor of Lessor, and shall not be subject to cancellation, reduction or modification upon less than thirty (3 0) days' written notice to Lessor. Such insurance, by its terms or by endorsement, shall waive any right of subrogation of the insurer against Lessor, its officers, agents and employees, for any loss or damage resulting from covered perils. Lessee will Punish to Lessor evidence of such insurance and its continuance during the Term of this Lease. 12.02 Lessee shall, at its expense, secure and maintain fire and extended coverage insurance on all fixtures, equipment and improvements installed by Lessee on the Leased Premises: Such insurance, by its terms or by endorsement, shall waive any right of subrogation of the insurer against Lessor, its officers, agents and employees, for any loss or damage resulting from covered perils. o Article 13. Taxes and Assessments. 13.01 Lessee shall promptly pay and discharge as they become due and before delinquency any and all property taxes, assessments, charges, liens, levies or excises, whether general or special or ordinary or extraordinary, of every name, nature and kind whatsoever, including all governmental charges of whatsoever name, nature or kind, which may be levied, charged or imposed, or which may become a lien or charge on or against the Leased Premises or any part thereof, the leasehold interest of Lessee herein, or the improvements situated on the Leased Premises during the effective period of this Lease. Notwithstanding the provisions of the preceding sentence, Lessee shall have no responsibility to pay and/or discharge any mechanics' liens arising out of or relating to failure to pay for Remodeling made by Lessor' prior to Commencement Date. 13.02 Lessee shall pay 'before delinquency any and all property taxes levied or charged against any of the personal property belonging to it and situated on the Leased Premises or used in connection with the operation and maintenance of the Building on the Leased Premises. 13.03 Lessee shall have the right to contest or review, by legal proceedings at its own expense, and if necessary in the name of Lessor, or in such other manner as it may deem suitable, any tax, assessment, levy or charge herein agreed to be paid by Lessee under this Article 13. Lessee may defer payment of any such contested item if in connection with the proceeding instituted by Lessee there shall have been obtained a stay of the collection of the item so contested. In the event of such contest, Lessee shall give Lessor written notice prior to the commencement of any such contest which shall be at least ten (10) days prior to delinquency of the item in contest and, on request of Lessor, Lessee shall give to Lessor a good and sufficient surety bond indemnifying Lessor and the Leased Premises against any such tax, assessment, levy or other charge and from any cost, liability or damage arising out of such contest. In the event any notices of proposed increases in taxes, assessments, levies or charges which are the obligation of Lessee are received by Lessor, it shall promptly, but in no event later than 45 days after receipt thereof, forward the same to Lessee in order that Lessee may proceed with payment or contest procedures within the periods provided for such purposes. 13.04 All rebates or refunds on account of any tax assessments, levy or charge required to be paid and paid by Lessee shall belong to Lessee, and Lessor will, on request ofLessee, execute any documents which may be necessary in order to secure the recovery of any such rebates or refunds and shall promptly pay over to Lessee any such rebates or refunds that may be received by Lessor whether received before or after the end of this Lease. 13.05 Lessee shall furnish Lessor within thirty (30) days after any amount is payable by Lessee under this Article 13, official receipts of the appropriate taxing authority or lienholder or other proof satisfactory to Lessor evidencing such payments as are required under this Article 13. Article 14. Utilities. -7- Lessee shall pay before delinquent all charges for sewer, water, gas, electricity, telephone and all other utility services fiunished to or used in or supplied to the Leased Premises. Lessor shall not be obligated to furnish or provide any utilities, facilities or services of any kind. Article 15. Damage to or Destruction of Premises 15.01 If, during the Term of this Lease, the Leased Premises shall be damaged to such an extent that the repair of such damage and the restoration of the Leased Premises can be accomplished, with reasonable diligence, within one hundred eighty (180) days after such damage, Lessee shall promptly repair such damage and cause the Leased Premises to be restored to their condition prior to the event causing the damage. If, during the Term of this Lease, the Leased Premises shall be destroyed or damaged, or partially destroyed or damaged, without Lessee's fault to such an extent that the repair. of such destruction or damage and the restoration of the Leased Premises cannot be accomplished, with reasonable diligence, within one hundred eighty (180) days after destruction or damage, then Lessee shall promptly notify Lessor in writing of such fact within forty-five (45) days after the date of such destruction or damage, and Lessee shall thereafter have the right, during a period of thirty (30) days following such notification, to terminate this Lease by written notice to the Lessor, declaring this Lease to be terminated provided, however, that, as a condition precedent to such termination, all proceeds of insurance required to be maintained by Lessee under Article 12.01 shall be paid to Lessor, or, if Lessee fails to maintain the insurance required to be maintained by Lessee under Article 12.01 an amount equal to the insurance proceeds which would have been available but for such failure shall be paid by Lessee to Lessor. Unless such notice of immediate termination shall be given within such 30 -day period, this Lease shall continue in full force and effect and Lessee shall promptly repair such destruction or damage and cause the Leased Premises to be restored to their condition prior to the event causing the destruction or damage. In the event the Leased Premises are destroyed or damaged, or partially destroyed or damaged without Lessee's fault, the monthly rent payable by Lessee shall be abated proportionately according to the floor area of the Leased Premises which is useable by Lessee. Such abatement, shall continue for the period commencing with such damage or destruction and ending when Lessee completes repair work or reconstruction, provided Lessee diligently commences and expeditiously completes the repair work or reconstruction. - 15.02 Lessee shall make the repairs, restoration or rebuilding as expeditiously as possible in accordance with plans and specifications submitted to and approved in writing by Lessor and in compliance with all applicable laws, regulations and codes. Article 16. Eminent Dom . If the whole or substantial part of the Leased Premises shall be taken or condemned by any competent authority for any public or quasi - public use or purpose under any statute or by the right of eminent domain, or purchased under threat of such taking, then this Lease shall terminate on the date when the condemning authority takes possession of the Leased Premises or the substantial part thereof so taken. There shall be no apportionment of the award for taking or condemnation, the 5:11 entire award going to Lessor, provided Lessee shall have the right to recover any award which may be made for damages to or condemnation of Lessee's movable trade fixtures, equipment, furniture and furnishings or payments for relocation, if any. Article 17. Option to Purchase Leased Premises 17.01 If Lessee is not in default hereunder or under the City Agreement, has met and then meets its Employment Commitment as therein defined, Lessee shall have the option to purchase the Leased Premises at the end of the Term of this Lease, upon the terms and conditions contained in Article 18, for a purchase price of $1.7 million less $50,000 for each full year Company meets its Employment Commitment as defined in the City Agreement. 17.02 The option to purchase hereby granted shall be exercised by Lessee by delivering to Lessor written notice of Lessee's exercise of the option at lease one hundred twenty (120) days prior to the last day of the Term of this Lease. 17.03 If Lessee fails for any reason to give timely notice of its exercise of the option to purchase, the option rights granted hereby shall automatically terminate. Article 18. Conditions of Purchase Options 18.01 Upon valid exercise of the purchase option, the terms of purchase and sale shall include the following conditions and requirements: (a) Closing and payment of the purchase price to the City of Pueblo to be held and made not later than 30 days after the last day of the Term of this Lease; (b) Conveyance shall be made by special warranty deed free of liens, except those for general property taxes and those created by the acts or defaults of Lessee; subject to easements, rights -of -way, conditions, covenants, restrictions, reservations, and limitations of record and those created by acts of defaults of Lessee; any matters contained in the Subdivision Plat for Pueblo Memorial Airport Industrial Park; and standard printed exceptions 1 through 4 contained in owner's title insurance customarily issued in Pueblo County, Colorado. (c) LESSEE ACKNOWLEDGES AND AGREES THAT UPON CLOSING LESSOR SHALL SELL AND CONVEY TO LESSEE AND LESSEE SHALL ACCEPT THE LEASED PREMISES "AS IS; WHERE IS, AND WITH ALL FAULTS." LESSEE HAS NOT RELIED AND WILL NOT RELY ON, AND LESSOR IS NOT LIABLE FOR OR BOUND BY, ANY EXPRESS OR IMPLIED WARRANTIES, GUARANTIES, STATEMENTS, REPRESENTATIONS OR INFORMATION PERTAINING TO THE LEASED PREMISES OR RELATING THERETO MADE OR FURNISHED BY LESSOR, OR AGENT REPRESENTING OR PURPORTING TO REPRESENT LESSOR, TO WHOMEVER MADE OR GIVEN, DIRECTLY OR INDIRECTLY, VERBALLY OR IN WRITING. LESSEE REPRESENTS TO No LESSOR THAT LESSEE HAS CONDUCTED, OR WILL CONDUCT PRIOR TO CLOSING, SUCH INVESTIGATIONS OF THE LEASED PREMISES, INCLUDING BUT NOT LIMITED TO, THE PHYSICALAND ENVIRONMENTAL CONDITIONS THEREOF, AS LESSEE DEEMS NECESSARY TO SATISFY ITSELF AS TO THE CONDITION OF THE LEASED PREMISES AND THE EXISTENCE ORNONEXISTENCE OR CURATIVE ACTION TO BETAKEN WITH RESPECT TO ANY HAZARDOUS OR TOXIC SUBSTANCES ON OR DISCHARGED FROM THE LEASED PREMISES, AND WILL RELY UPON SAME AND NOT UPON ANY INFORMATION PROVIDED BY OR ON BEHALF OF LESSOR OR ITS AGENTS OR EMPLOYEES WITH RESPECT THERETO. LESSEE SHALL ASSUME THE RISK THAT ADVERSE MATTERS, INCLUDING BUT NOT LIMITED TO, CONSTRUCTION DEFECTS AND ADVERSE PHYSICAL AND ENVIRONMENTAL CONDITIONS, MAY NOT HAVE BEEN REVEALED BY LESSEE'S INVESTIGATIONS, AND, UPON CLOSING, SHALL BE DEEMED TO HAVE WAIVED, RELINQUISHED AND RELEASED LESSOR FROM AND AGAINST ANY AND ALL CLAIMS, DEMANDS, CAUSES OF ACTION (INCLUDING CAUSES OF ACTION IN TORT), LOSSES, DAMAGES, LIABILITIES, COSTS AND EXPENSES (INCLUDING ATTORNEYS' FEES AND COURT COSTS) OF ANY AND EVERY KIND OR CHARACTER, KNOWN OR UNKNOWN, WHICH LESSEE MIGHT HAVE ASSERTED_ OR ALLEGED AGAINST LESSOR AT ANY TIME BY REASON OF OR ARISING OUT OF ANY CONSTRUCTION DEFECTS, PHYSICAL CONDITIONS, VIOLATIONS OF ANY APPLICABLE LAWS (INCLUDING ANY ENVIRONMENTAL LAWS) AND ANY AND ALL OTHERACTS, OMISSIONS, EVENTS, CIRCUMSTANCES OR MATTERS REGARDING THE LEASED PREMISES. ' LESSOR AGREES THAT SHOULD ANY CLEANUP, REMEDIATION OR REMOVAL OF HAZARDOUS SUBSTANCES. OR OTHER ENVIRONMENTAL CONDITIONS ON THE LEASED PREMISES BE REQUIRED BY ANY GOVERNMENTAL ENTITY AFTER THE DATE OF CLOSING, SUCH CLEAN -Up, REMOVAL OR REMEDIATION SHALL, AS BETWEEN LESSOR AND LESSEE, BY THE RESPONSIBILITY OF AND SHALL BE PERFORMED AT THE SOLE COST AND EXPENSES OF LESSEE. THE COVENANTS AND REPRESENTATIONS OF LESSEE SET FORTH IN THIS ARTICLE 18.01(c) SHALL SURVIVE THE RECORDATION OF THE SPECIAL WARRANTY DEED AND CLOSING AND SHALL NOT BE MERGED INTO THE SPECIAL WARRANTY DEED UPON ITS; RECORDATION. Article 19. Holdin Over In the event that Lessee does not exercise its option to purchase under Article 17 and Lessee shall, with the consent of Lessor, retain possession of the Leased Premises after the expiration of the Term of this Lease, this Lease shall continue on a month -to -month basis at a rental equal to the fair market monthly rental value of the Leased Premises and upon all other terms, covenants and conditions herein specified, except Articles 17 and 18. Article 20. Quiet Possession Lessee shall, and may peacefully have, hold and enjoy the Leased Premises, subject to the -10- other terms hereof, provided that Lessee pays the monthly rent herein recited and performs all of Lessee's covenants and agreements contained herein and in the City Agreement. Article 21. Default 21.01 In the event of default at any time by Lessee in the payment of the monthly rent herein provided for or in the performance of any other of its covenants herein contained or contained in the City Agreement, Lessor shall have the right, after thirty (30) days' notice in writing to Lessee and Lessee's failure within said thirty (30) day period to cure said default, or if said default does not relate to the payment of money and cannot by its nature be cured within said thirty (30) day period, to undertake and diligently pursue action to cure said default, to either: and/or (a) terminate this Lease and re -enter and take possession of the Leased Premises, (b) pursue any remedy whatsoever provided by law; and/or (c) re -enter and take possession of the Leased Premises and use its best efforts to relet the same for and on account of Lessee for the then full remaining portion of the unexpired Term of this Lease or for any shorter period, and to collect and receive payment of rent therefor, but no such re -entry or re- letting shall be construed as a termination of this Lease or as a release of Lessee from Lessee's obligation to pay monthly rent provided for in this Lease, or from Lessee's obligation to perform any other covenant herein contained. It expressly being understood and agreed that in the event of any such re -entry or re- letting by Lessor such re -entry or re- letting shall not operate to terminate this Lease or alter the obligation of Lessee to perform its covenants and to pay monthly rent pursuant to the terms hereof unless Lessor expressly so elects pursuant to paragraph 22.01(a) above. Lessor shall in no way be responsible or liable for any failure to re -let the Leased Premises, or any part thereof, or for any failure to collect any rent due upon such re- letting. No notice from lessor hereunder or under a forcible entry and detainer statute or similar law constitutes an election by Lessor to terminate this Lease unless such notice specifically so states. Lessor reserves the right following any such re -entry and/or reletting to exercise its right to terminate this - Lease; and/or (d) cure the default on Lessee's behalf and at Lessee's expense, in which event, all costs, expenses and reasonable attorney's fees incurred by Lessor in curing the default together with interest thereon at the rate often (10) percent per annum shall constitute additional rent payable to Lessor by Lessee upon demand. 21.02 If Lessor does not elect to terminate this Lease but takes possession as provided for in Article 21.01(c), Lessee shall pay to Lessor the monthly rent and other charges at the times and in the manner as herein provided which would be payable if such repossession had not occurred, less the net proceeds, if any, of any Te- letting of the Leased Premises after deducting all Lessor's reasonable expenses including, without limitation, all repossession costs, brokerage commissions, -11- legal expenses, attorneys' fees, alteration and repair costs and expenses of preparation for such re- letting. 21.03 In the event the parties hereto become involved in a dispute arising out of this Lease, or the performance or breach thereof, the Court shall award costs, expenses, and attorney fees to the prevailing party. 21.04 If Lessee violates any of the terms and provisions of this Lease or defaults in any of its obligations hereunder other than the payment of monthly rent or other sum payable hereunder, such violation may be restrained or such obligation enforced by injunction at the instance and request of Lessor without the showing of any special damages or an inadequate remedy at law. Article 22. Waiver and Time of Essence No waiver of any breach or breaches of any provision, covenant or condition of this Lease shall be construed to be a waiver of any preceding or succeeding breach of such provision, covenant or condition, or of any other provision, covenant or condition. Acceptance of monthly rent or partial monthly rent by Lessor shall not constitute a waiver of any then existing or subsequent breach or default. Time is of the essence for each and every provision, covenant and condition herein contained and on the part of Lessee to be done and performed. Article 23. Assignment by Lessor Lessor shall have the right to transfer and assign, in whole or in part, all its right and obligations hereunder and in the Leased Premises, and in such event and upon Lessor's transferee assuming Lessor's obligations hereunder no further liability or obligation shall thereafter accrue against Lessor hereunder. Lessor shall give Lessee written notice of its intent to make an assignment or transfer of this Lease and a copy of the express (written) assumption agreement between Lessor. and assignee or transferor. Article 24 Subordination to Mortgage - -- This Lease shall be and is hereby made subordinate to any mortgage or deeds of trust of Lessor which may now or hereafter encumber the Leased Premises and to all renewals, modifications, consolidations, replacements and extensions thereof. This clause shall be self - operative and no further instrument of subordination need be required by any mortgagee. This clause shall be for the benefit of any mortgagee. In confirmation of such subordination, however, Lessee shall, at Lessor's request, execute promptly any appropriate certificate, subordination agreement or instrument that Lessor may request. Lessee hereby constitutes and appoints Lessor the Lessee's attorney -in -fact to execute any such certificate, subordination agreement or instrument for and on behalf of Lessee. Notwithstanding the fact that this Lease is and shall be subordinate as provided above, Lessee will as a result of the enforcement of the default or foreclosure provisions of such mortgage or deed of trust, including conveyance by deed in lieu of foreclosure, automatically become -12- the Lessee of the person or party succeeding to the interest of Lessor without change in the terms or other provisions of this Lease and Lessee agrees to attom to such party; provided, however, that such mortgagee or successor in interest shall not (i) be bound by any amendment or modification to this Lease made without the written consent of such mortgagee or such successor in interest; (ii) be liable for any previous act or omission by Lessor under this Lease; or (iii) be subject to any offset which shall theretofore have accrued to Lessee against Lessor. Lessee further agrees, upon demand, to execute such nondisturbance and attornment agreements as any such mortgagee or successor shall request. The provisions of this Article shall not alter or otherwise affect or modify the option to purchase granted by Articles 17 and 18 of this Lease nor shall the provisions of this Article operate to increase or otherwise alter the purchase price to be paid by Lessee upon exercise of the option in accordance with the provisions of Articles 17 and 18. Article 25. Estoppel Certificate At Lessor's request, Lessee will execute either an estoppel certificate addressed to Lessor's mortgagee or anyprospective successor of Lessor, or a third -party agreement among Lessor, Lessee and said mortgagee or successor, certifying to such facts (if true) regarding the status and terms of this Lease as may be requested, and agreeing to such notice provisions and other matters as such mortgagee or successor may reasonably require in connection with Lessor's financing or the conveyance of the Leased Premises. Article 26. Notices All notices, demands or communications of any kind which may be required or desired to be served given or made by Lessee upon or to Lessor, under the terms of or in connection with this Lease, shall be sufficiently served; given or made (as an alternative to personal service upon Lessor) if such notice, demand or communication is sent by certified United States mail, addressed to: Pueblo Development Foundation Post Office Box 1663 Pueblo, Colorado 81002 (or to such other person or address as may hereafter from time to time be designated for this purpose by Lessor to Lessee in writing). All notices, demands or communications of any kind which may be required or desired to be served, given or made by Lessor upon or to Lessee, under the terms of or in connection with this Lease, shall be sufficiently served, given or made (as an alternative to personal service upon Lessee) if such notice, demand or communication is sent by certified United States Mail, addressed to: TransWave International, Inc. 1551 Larimer Street, Suite 1902 Denver, Colorado 80202 -13- (or to such other person or address as may hereafter from time to time be designated for this purpose by Lessee to Lessor in writing). Article 27. Environmental Provisions 27.01 For the purpose of this Lease, "Hazardous Materials" means any hazardous or toxic substance, material or waste which is or become regulated by any local government authority, the State of Colorado or the United States government and shall include, but not be limited to (1) substances defined as "hazardous waste," "restricted hazardous waste," "hazardous substance" or "hazardous material" under any applicable federal, state or local law or regulation ("Environmental Regulations "), (2) asbestos- containing materials, (3) PCBs, (4) petroleum or petroleum based products, and (5) lead. 27.02 Lessee will comply with Environmental Regulations that are applicable to the Lessee and its use of the Leased Premises. No activity shall be undertaken by the Lessee, its employees, agents, licensees, invitees, contractors or subcontractors, on all or any portion ofthe Leased Premises which would cause or permit: (i) the presence, use, generation, release, discharge, storage or disposal of any Hazardous Material in, on, under, about, or from the Leased Premises or any part thereof in violation of any Environmental Regulations; (ii) any portion of the Leased Premises to become a hazardous waste treatment, storage or disposal facility without receiving proper governmental authorization, and in compliance with all Environmental Regulations; or (iii) the discharge of pollutants or effluents into any water source or system, or the discharge into the air of any emissions without receiving proper governmental authorization, and in compliance with all Environmental Regulations, including, without limitation, the Federal Water Pollution Control Act, U.S.C. Section 1251 PL am and the Clean Air Act, 42 U.S.C. Section 7401 et sea. 27.03 Lessee agrees to defend, indemnify and forever hold harmless the Leased Premises, City and Lessor, and their respective agents, successors, and assigns, as their interest may appear, from all claims, losses, damages, penalties, expenses and costs, including, but not limited to, attorneys' fees, remedial, and cleanup costs, incurred by reason of the use, storage, generation, release, discharge, maintenance, disposal, or removal of Hazardous Materials in, -on, under, about, or from the Leased Premises, or any part thereof, by Lessee, its employees, agents, licensees, invitees, contractors and subcontractors. The provisions of Article 27 shall expressly survive the expiration of the Term or other termination of this Lease. Article 28. Miscellaneous Provisions 28.01 Colorado Law This Lease shall be governed by the laws of the State of Colorado and shall be construed in accordance therewith without reference to such State's choice of law and/or conflict of law principles. 28.02 Writing for Waiver or Modification No provision of this Lease may be waived or modified except by an agreement i writing signed by the waiving party. A waiver of any term or -14- provision shall not be construed as a waiver of any other term or provision. 28.03 Bindin¢ Effect This Lease sets forth the entire and complete understanding and agreement of the parties hereto... Lessee acknowledges and agrees that it has not relied upon any statements, representations, agreements or warranties of Lessor except such as are expressed herein. This Lease shall be binding on the parties, their successors and approved assigns. 28.04 Construction Throughout this Lease, the singular shall include the plural; the plural shall include the singular; and the masculine and neuter shall include the feminine, wherever the context so requires. 28.05 Text to Control. The headings of sections are included solely for convenience of reference. If any conflict between any heading and the text of this Lease exists, the text shall control. J 28.06 Seve_ rability If any provisions of this Lease is declared by any court of competent jurisdiction to be invalid for any reason, such invalidity shall not effect the remaining provisions. On the contrary, suchre provisions shall be fully severable, and this Lease shall be construed and enforced as if such invalid provisions had never been inserted in the Lease. 28.07 Venue and Jury Trial Lessor and Lessee agree that the venue for all actions or causes of action relating to this Lease or the Leased Premises shall be in Pueblo County, Colorado. All such actions shall be filed in the District Court, County of Pueblo, State of Colorado and Lessor and Lessee submit to the jurisdiction of that Court. To the extent allowed by law, each party waives its right to a jury trial. 28.08 Lessee's Warranties The persons signing this Lease on behalf of Lessee represent and warrant that suchparties and Lessee have the requisite power and authority to enter into, execute and deliver this Lease and that this Lease is a valid and legally binding obligation of Lessee enforceable against Lessee in accordance with its terms. 28.09 Time of Essence. Time shall be of the essence as to the performance of all terms, conditions and obligations under this Lease. 28.10 Third Parties The provisions of this Lease are and will be for the benefit of Lessor and Lessee only and not for the benefit of any third party, and accordingly, no third party shall have any right or remedy hereunder or the right to enforce any provision of this Lease. IN WITNESS WHEREOF, Lessor and Lessee, by their duly authorized representatives, have executed this Lease on the day and year first above written. PUEBLO DEVELOPMENT FOUNDATION TRANSWAVE INTERNATIONAL, INC. -15- By Title: MP)rd 'A, r [SEAL] Attest Attest: Name: r Name: Title: S efte fi4ay Title: SEAL] -16- AMENDMENT TO LEASE This Amendment entered into as of August 26, 2002 between Pueblo Development Foundation, a Colorado nonprofit corporation ( "Lessor ") and EUPEC Risk Management Systems, Inc., a Delaware corporation ( "Lessee "), WITNESSETH RECITALS A. Lessor and TransWave International, Inc., an Ohio corporation ( "TransWave ") entered into a Lease dated August 26, 2002 for the land and building commonly known as 31965 United Avenue, Pueblo, Colorado, 81001 ( "Lease "). B. Lessee is the successor in interest to TransWave by merger and has requested certain modifications to the Lease. C. Lessor is willing to modify the Lease as herein provided. AGREEMENT 1. Lessee hereby approves, ratifies and confirms the Lease and all covenants and provisions thereof. Lessee agrees to be bound by and perform the Lease and all its covenants and provisions the same as if Lessee originally executed the Lease. 2. The first sentence of Article 7.01 of the Lease is amended by the addition of the following thereto: provided, however, Lessee shall not have to obtain Lessor's consent to any alterations or improvements to the Building that are non - structural in nature and do not adversely impact the Building's systems. All alterations and improvements shall be made in compliance with all applicable laws, codes and regulations. 3. Article 3 of the Lease is amended by the addition of the following thereto: Lessor (or the Architect on behalf of Lessor) shall obtain a certificate of occupancy for the Building upon completion of the Remodeling. 4. Article 9. Right of Entry of the Lease is amended to read: Lessor shall have entry to the Leased Premises, upon notice, during business hours, and accompanied by a representative of Lessee, to inspect the Leased Premises or to show the Leased Premises to prospective tenants during the last six (6) months of the Term. 5. Notwithstanding anything to the contrary contained in Article 10 of the Lease, if Y Lessee is not then in default under the Lease, Lessee shall have the right, without the consent of Lessor, to assign the Lease to Lessee's parent corporation or any entity to which Lessee sells or assigns all or substantially all of its assets or two- thirds or more of the issued and outstanding stock of Lessee or to any entity with which Lessee may be merged or consolidated, provided, however, in each instance, the assignee or successor of Lessee shall assume and agree to perform the Lease by instrument, and a duplicate original of which shall be delivered to Lessor within ten (10) days after the effective date of such assignment. 6. General ad valorem property taxes and assessments payable pursuant to Article 13.01 shall be prorated for partial periods falling within the Lease Term. Lessor waives its right to require Lessee to post a surety bond as provided in the third sentence of Article 13.03. 7. The insurance proceeds payable to Lessor under Article 15.01 as a condition precedent to terminate the Lease in the event of destruction or damage which cannot be repaired or restored within 180 days are limited to the insurance required to be maintained by Lessee on the Leased Premises under Article 12.01. Rent abatement shall occur as provided in Article 15.01 whether the Leased Premises are destroyed or damaged with or without Lessee's fault. 8. The subordination of the Lease to any Lessor mortgage under Article 24 is contingent on Lessee receiving a non - disturbance agreement from the lender under the mortgage stating that Lessee's rights under the Lease (including the purchase option) shall not be disturbed provided Lessee is not in default beyond the expiration of notice and applicable cure provisions under the Lease. 9. A copy of any notice given to Lessee pursuant to Article 26 shall be sent simultaneously in like manner to Morrison Cohen Singer & Weinstein, LLP, 750 Lexington Avenue, New York, NY, 10022, Attention: Lawrence B. Rodman, Esq. 10. Article 18. is amended by the addition of the following Article 18.01(d) thereto: (d) Since the purchase option is subject to all covenants, conditions and restrictions of record and other exceptions to title that may exist (collectively "CC &R" ), Lessor shall not further encumber the Leased Premises (except as provided in Article 24) or permit additional CC &R after the date of the Lease that render title to the Leased Premises unmarketable without the prior consent of Lessee. All mortgage, deed of trust or other liens placed on the Leased Premises by the Lessor shall be paid and discharged at Closing out of the purchase price to be paid by Lessee. 11. The Lease is amended by the addition of the following new Articles 28.11 and 28.12. 28.11 Brokerage Commission Lessor and Lessee each represent to the other that they have not entered into any agreement or incurred any obligation in connection with this Lease transaction which might result in the obligation to pay a brokerage commission to any brother. Each party shall indemnify and hold the other party harmless from and against any claim or demand by any broker or other person for bringing about this Lease who claims to .9 have dealt with such indemnifying party, including all expenses incurred in defending any such claim or demand (including reasonable attorney's fees). 28.12 Recordine Memorandum of Lease Lessee shall have the right to record a memorandum of the Lease and the purchase option and shall deliver to Lessor a copy of any such memorandum showing recording information thereon within ten (10) days after such recording. 12. The Lease as modified by this Amendment shall remain in full force and effect, binding upon and inuring to the benefit of Lessor and Lessee and their respective successors and assigns, subject to the limitations and restrictions of Paragraph 5 above and Article 10 of the Lease. Executed the day and year first above written. [SEAL] LESSOR Pueblo Development Foundation Attest: �— By ils Name: Robert L. Root Title: Secretary [SEAL] Attest: Name: Title: Name: Joseph A. Fortino Title: President LESSEE EUPEC ageme By N e: Allen J. Hanano Systems, Inc. -3-