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HomeMy WebLinkAbout09910RESOLUTION NO. 9910 A RESOLUTION APPROVING A RECOGNITION AGREEMENT BETWEEN THE CITY OF PUEBLO AND UNIVERSAL BOILER WORKS ACQUISITION CORPORATION RELATING TO A LEASE OF PROPERTY AT THE PUEBLO MEMORIAL AIRPORT INDUSTRIAL PARK BE IT RESOLVED BY THE CITY COUNCIL OF PUEBLO, that: SECTION 1. The Recognition Agreement dated as of July 14, 2003 between Pueblo, a municipal corporation and Universal Boiler Works Acquisition Corporation, a Tennessee corporation, relating to a lease of property at the Pueblo Memorial Airport Industrial Park, a copy of which is attached hereto, is hereby approved. SECTION 2. The President of the City Council is hereby authorized to execute and deliver the Recognition Agreement in the name of the City with such modifications thereto as the President of the City Council and City Attorney shall approve. attest same. The City Clerk is directed to affix the seal of the City thereto and INTRODUCED July 14, 2003 BY Al Gurule/Councilperson APPROVED: Bill Sova/President of City Council ATTEST: Gina Dutcher/City Clerk This instrument prepared by: Boult Cummings Conners Berry, PLC (DPC) 414 Union Street, Suite 1600 P.O. Box 198068 Nashville, TN 37219 RECOGNITION AGREEMENT THIS RECOGNITION AGREEMENT (the "Recognition Agreement") is made and entered into as of the 14th day of July, 2003 by and among PUEBLO, a municipal corporation (the "City") and UNIVERSAL BOILER WORKS ACQUISITION CORPORATION a Tennessee corporation ("Tenant") .................................. WITNESSETH: A. Under the terms of that certain Lease Agreement dated July 14, 2003 (the "Lease") a copy of which is attached hereto as Exhibit A, Tenant leases from Universal Boiler Works, Inc. (the "Landlord") that certain real property in Pueblo, Colorado and the building ("Building") and other improvements thereon located at 31841 Excellence Avenue, Pueblo, Colorado 81001 and more specifically described on Exhibit B attached hereto (the "Premises"); and B. The City is the holder of the Promissory Note (the "Note") dated September 15, 1999, in the principle amount of $250,000 from Landlord and that Agreement dated May 24, 1999, whereby the City agreed to advance to Landlord and Landlord agreed to repay $300,000 if Landlord does not meet certain employment requirements (the""Agreement"). Both the Note and the Agreement are secured by that certain, Deed of Trust ("Deed of Trust") dated September 15, 1999, between Landlord as grantor and the City as grantee conveying the' Premises to the City and recorded September 21, 1999, as. Instrument Number 1299560 in the. Records of the Pueblo County Clerk and Recorder. NOW, THEREFORE, for Ten Dollars ($10.00) paid to the City by Tenant and other good and valuable consideration, the receipt and sufficiency of which is acknowledged, the parties hereto agree as follows: 1. Definitions. (a) Foreclosure Event. A "Foreclosure Event" means: (a) foreclosure under the Deed of Trust; Co) any other exercise by the City of rights and remedies (whether under the Deed of Trust or under applicable law, including bankruptcy law) as holder of the Note, Agreement and/or the Deed of Trust as a result of which Successor Landlord becomes' owner of the Premises; or (c) delivery by Landlord to the City (or its designee or nominee) of a deed or other conveyance of Landlord's interest in the Premises in lieu of any of the foregoing. 877061 v1 - 1 - 01:2490-000 7/I0/2003 (b) Successor Landlord. A "Successor Landlord" means any party that becomes owner of the Premises.as the result of a Foreclosure Evem. Non-Disturbance and Attomment. So long as the Lease has not been terminated on account of Tenant's default, when Successor Landlord takes title to the Premises: (a) Successor Landlord shall not terminate or disturb Tenant's possession of the Premises under the Lease, except ia accordance with the terms of the Lease; (b) Successor Landlord shall be bound to Tenant under all the terms and conditions of the Lease; and (c) Tenant shall recognize and atton to Successor Landlord as Tenant's direct landlord under the Lease as affected by this Recognition Agreement; and (d) the Lease shall continue ia full force and effect as a direct lease, ia accordance with its terms (except as provided ia this Recognition 'Agreement), between Successor Landlord and Tenant. No Exercise of Mortage Remedies Against Tenant The City shall not name or join Tenant as a defendant in any.exercise of the City's rights and remedies arising.upon.a.default ander .... the Deed of Trust unless applicable law requires Tenant to be made a party thereto as a condition to proceeding against Landlord or prosecuting such rights and remedies. In the latter case, the City may join Tenant as a defendant in such action only for such purpose and not to terminate the Lease or otherwise adversely affect Tenant's rights under the Lease or this Recognition Agreement ia such action Use and Enjoyment. In exercising its rights under the Deed of Trust, the City agrees not to materially interfere with Tenant's use and enjoymem of the Premises. Propertvy Insurance. Tenant shall procure and maintain for the duration of the term of the Lease property and casualty insurance (including therein, without limitation, so-called extended coverage and coverage against vandalism and malicious mischief) with reasonable deductibles covering the full replacement value of the Building and improvements now existing or hereafter erected upon the Premises naming the Successor Landlord as insured sas related to the Lease. Notices. Any notice or communication that is required to be given hereunder or which is given by the City or Tenant shall be sent to each of the following parties at the address set forth below by: (i) hand delivery, (ii) U.S. Mail, postage pre-paid and return receipt requested, or (iii) nationally recognized overnight delivery service. City: City of Pueblo Colorado 1 City Hall Place Pueblo, Colorado 81003 Attn: City Manager With a copy to; Thomas E. Jagger 501 North Main Street, Suite 127 Pueblo, Colorado 81003 877061 vl - 2 - 012490-000 7/10/2003 Tenant: Universal Boiler Works Acquisition Corporation Suite 1250, SunTrust Building. 201 Fourth Avenue North Nashville, Tennessee 37219 With a copy to: Boult Cummings Conners Berry, PLC 414 Union Street P.O. Box 198062 Nashville, Tennessee 37219 Attn: Roger Jones Either party may change its address by giving written notice to the other party in accordance with. this provision. ....... 7. - GeneraI ,Provisions,.The. provisions hereof shall be binding, on and inure to the benefit of each of the parties hereto and its respective heirs, successors and assigns. 8. Governing Document. In the event of any conflict between the provisions of the Lease and this Recognition Agreement the provisions of this Recognition Agreement shall control.- Governing Law. This Recognition Agreement shall be governed by and construed in accordance with the laws of the State of Colorado. Venue for any action arising under this Recognition Agreement shall be Pueblo County, Colorado. [Signatures on next page] 877061 vl - 3 - 012490-000 7/10/2003 IN WITNESS WHEREOF, the parties have executed this Recognition Agreement as of the date first appearing above. PBTBLO, a m~ Title: President of the City Council Dr. Bill Sova Tenant: UNIVERSAI~ILER WORKS A~CQUISITION Title'.' ~/~ _~,~--/ 877061 vl - 4 - 012490-000 7/10/2003 STATE OF COLORADO COUNTY OF PUEBLO. Before me, Gina Dutcher, the undersigned, a Notary Public in and for the County and State aforesaid, personally appeared Bi I 1 Sova , with whom I am personally acquainted (or proved to on the basis of satisfactory evidence), and who, upon oath acknowledged to be the President of the City Council of Pueblo, a muncipal corporation, the within named bargainor, a corporation, and ihat as such, being authorized so to do, executed the foregoing instrument for the purposes therein contained by signing the name of the corporation by hisselfassuch President of the City Council · WITNESS my hand and seal at office in Pueblo Colorado, this .14th day of July ,2003. Notary P~blic My Commission Expires: August 18, 2003 STATE OF TENNESSEE ) COUNTY OF DAVIDSON ) · Before me, Tracy Y Short , the undersigned, a Notary Public in and for the County and State aforesaid, personally .appeared Andrew Byrd, with whom I am personally acquainted (or proved, to me on the basis of satisfactory evidence), and who, UPon oath, acknowledged to be the Chairman of Universal Boiler Works Acquisition COrporation, a Tennessee corporation, the within named lessee, and that as such, being authorized so to do, executed the foregoing instrument for the purposes therein contained, by signing the name of the corporation by hisself as such Chairman WITNESS my hand and seal at office in Nashville Tennessee on this 14th day of August ,2003. Notary Public My Commission Expixes: 877061 vi 012490-000 7/10/2003 - 6 - EXHIBIT A LEASE 877061 vl 012490-000 7/10/2003 LEASE AGREEMENT THIS LEASE AGREEMENT is made and entered into this 14th day of July, 2003, by and between UNIVERSAL BOILER WORKS, INC, a Missouri corporation ("Landlord") and UNIVERSAL BOILER WORKS ACQUISITION CORPORATION, a Tennessee corporation ("Tenant"). 1. DEM/SE OF PREMISES. Landlord hereby leases to Tenant and Tenant hereby leases from Landlord upon all of the conditions contained herein, certain premises ("Premises") located at 31841 Excellence Avenue, Pueblo, Colorado, 81001, consisting of a building comprised of approximately 30,000 square feet (the "Building") and the land upon which the Building is located as more completely described in Exhibit A (the "Land") and all other easements, appurtenances and rights thereto. (a) Term. The term (the "Term") of this Lease shall be for a period of ten (10) years commencing July 14, 2003 (the "Commencement Date") and expiring July 13, 2013 (the "Expiration Date"), unless sooner terminated pursuant to any provision hereof. (b) Option to Terminate. Tenant shall have the option to terminate this Lease effective as of June 30, 2004, June 30, 2005, June 30, 2007, June 30, 2009, or June 30, 2011 (collectively "Termination Dates"), by providing Landlord at least sixty (60) days notice prior to the applicable Termination Date of its exemise of this option. If Tenant exercises this option, then this Lease shall terminate as of the applicable Termination Date. (c) Options to Renew. Tenant shall have two(2) consecutive options to renew the Term of this Lease for five (5) year. terms upon the same terms and conditions of this Lease. If Tenant chooses to exercise this option it shall notify Landlord at least sixty (60) days prior to the expiration of the Term or the first renewal term, as the case may be. 3. RENT. (a) Base Rent. Tenant shall pay to Landlord as base rent (the "Base Rent") $2,509.96 per month during the Term. For any partial month during the Term, the Base Rent shail be prorated on a per diem basis. (b) Time and Manner of Payment. Payments of Base Rent are to be made to Landlord's notice address, except as otherwise set forth herein. Base Rent shall be due and payable in advance on the first (lst) day of each month. At Tenant's option, which option shall terminate if and when Mortgagee becomes Successor Landlord, Tenant may pay any installment of Base Rent directly to the applicable taxing authority to offset any Delinquent Real Property Taxes, and payment of such installment of Base Rent to the applicable taxing authority shall be deemed to satisfy Tenant's obligation to pay such installment of Base Rent hereunder. 876861 v2 - 1 - 012490-000 7/14/2003 Landlord Tenant (c) Real Property Taxes. (i) "Real Property Taxes" shall mean: (i) any fee, license fee, license tax, business license fee, commercial rental tax, levy, charge, assessment, government charge or tax imposed by any taxing authority against the Building or Land; (ii) any tax on the Landlord's right to receive, or the receipt of, rent or income from the Building or against Landlord's business of leasing the Building; (iii) any tax, or charge, or assessment, or any assessment for repayment of bonds for fire protection, streets, sidewalks, road maintenance, refuse or other services provided to the Building by any governmental agency; and (iv) any charge or fee replacing any tax previously included within the definition of real property tax. Real Property Taxes does not, however, include Landlord's federal or state income, franchise, inheritance, transfer or estate taxes. "Delinquent Real Property Taxes" shall mean all unpaid Real Property Taxes applicable to periods prior to the Commencement Date. (ii) Tenant shall pay Real Property Taxes for the Premises directly to the taxing authority applicable to periods during the Term and shall not be responsible for any Delinquent Real Property Taxes. Notwithstanding the foregoing, in the event that Mortgagee becomes Successor Landlord, Tenant shall be responsible for the payment of any Delinquent Real Property Taxes. Tenant shall pay when due all taxes charged against trade fixtures, furnishings, equipment or any other personal property belonging to Tenant 4. CONDITION OF PREMISES. Tenant accepts the Premises in its "as is" and "with all faults" condition as of the execution of this Lease, subject to all recorded matters, laws, ordinances, and governmental regulations and orders. Tenant acknowledges that neither Landlord nor any agent of Landlord has made any representation as to the condition of the Premises or the suitability of the Premises, environmentally or otherwise, for the Tenant's intended use. Tenant has not relied and will not rely on, and Landlord and Landlord's agents are not liable for or bound by, any express or implied warranties, guaranties, statements, representations or information pertaining to the Premises or relating thereto made or furnished by Landlord, or agent representing or purporting to represent Landlord, to whomever made or given, directly or indirectly, verbally or in writing. Tenant represents to Landlord that Tenant has conducted, or will conduct prior to commencement of the Lease and Closing, such investigations of the Premises, including, but not limited to, the physical and environmental conditions thereof, as Tenant deems necessary to satisfy itself as to the condition of the Premises and the existence or nonexistence or curative action to be taken with respect to any hazardous or toxic substances on or discharged from the Premises, and will rely upon the same and not upon any information provided by or on behalf of Landlord or its agents or employees with respect thereto. Tenant 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 Tenant's investigations, and, upon commencement of the Lease and Closing, Tenant shall be deemed to have waived, relinquished and released Landlord 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 Tenant might have asserted or alleged against Landlord at any time by reason or arising out of any 876861 v2 - 2 - 012490-000 7/14/2003 Landlord Tenant construction defects, physical conditions, violations of any applicable laws (including any environmental laws) and any and all other acts, omissions, events, circumstances or matters regarding the Premises. If clean-up, remediation or removal of any hazardous substances not brought on the Premises by Tenant, or other environmental conditions on the Premises not caused by the actions of Tenant are required by any governmental entity during Term, Tenant shall have the fight to terminate this Lease upon thirty (30) days notice to Landlord. If Tenant does not terminate the Lease pursuant to this Section 4, then such clean-up, removal or remediation shall, as between Landlord and Tenant, be the responsibility of and shall be performed at the sole cost and expense of Tenant. The covenants and representations of Tenant set forth in this Section 4 shall survive the recordation of the Quitclaim Deed referenced in Section 8 herein and shall not be merged into the Quitclaim Deed upon its recordation. 5. USE OF PREMISES. Tenant shall use and occupy the Premises throughout the full Term for the purpose of manufacturing, assembling, storage and distribution of boilers and related equipment or any lawful purpose. The Premises shall not be used for smelting or plating operations, or for the storage or processing of putrescible materials, or for any purpose or business which constitute a nuisance, or which exceeds the state air pollution control standards for Building. Gasoline or diesel fuel used in connection with the business conducted on the Premises, but not for sale at retail or wholesale, may be Stored on the Premises in an environmental sound manner. 6. CONTINGENCY. This Lease is expressly conditioned upon the receipt by Tenant of a recognition agreement executed by Pueblo, a municipal corporation ("Pueblo") in the form of the Recognition Agreement attached hereto as Exhibit B. If such recognition agreement has not been received by Tenant by July 20, 2003, then at Tenant's option this Lease may be terminated upon notice to Landlord. If Tenant chooses to exercise this right to terminate this Lease, the Lease shall be null and void and of no further effect as of the date of Tenant's notice. Pueblo as holder of a security interest recorded as instrument number 1299560 in the records of the Pueblo County Clerk and Recorder shall be known as "Mortgagee". 7. TRANSFERS BY LANDLORD. Upon sale or other disposition, includ'mg but not limited to a foreclosure, of the Property to a party who assumes the obligations of Landlord under this Lease, including, but not limited to, Mortgagee ("Successor Landlord"), Landlord shall be released and discharged from obligations and liabilities thereafter accruing under this Lease, and Tenant shall look solely to Successor Landlord for performance of the Lease thereafter. After such transfer Successor Landlord shall be "Landlord" for purposes of this Lease. 8. OPTION TO PURCHASE. Tenant shall have the on-going option to purchase the Land and any improvements thereon, including the Building (the "Improvements"). If Tenant chooses to exercise such option, Tenant shall do so by written notice to Landlord given on or before at least ninety (90) 876861 v2 - 3 - 012490-000 7/14/2003 Landlord Tenant days 'prior to the proposed date of closing for such purchase (''Tenant's Purchase Notice") provided that Tenant shall have a thirty (30) day due diligence period within which to terminate Tenant's option hereunder, such termination to be exercised (or, if not exercised, to be deemed waived) by notice to Landlord given no later than thirty (30) days after Tenant's Purchase Notice. The purchase price shall be equal to $512,000 less the total amount of Delinquent Real Property Taxes paid by Tenant and Base Rent paid to any Successor Landlord under this Lease. The Land and Improvements shall be conveyed by quitclaim deed free and clear of all liens and title encumbrances resulting from or caused by the actions of any Successor Landlord except those set forth on the title commitment which have been accepted by Tenant ("Quitclaim Deed"). All closing costs shall be paid by Tenant. All Base Rent amounts and other amounts due under the Lease shall be prorated as of the closing date and the Lease shall terminate as of such closing date. The closing shall occur on the date specified in Tenant's Purchase Notice· 9. COMPLIANCE WITH LAWS. Tenant covenants and agrees that it will observe and comply with all laws, orders, roles and regulations of any governmental authority relating to Tenant's use and occupancy of the Premises, and will not permit the Premises to be used for illegal purposes nor permit any nuisance to be created or maintained thereon. 10. ALTERATIONS AND BUSINESS EQUIPMENT . Tenant may make such alterations, additions and improvements to Premises as it deems necessary. All alterations, additions, and improvements shall be accomplished in a good and workmanlike manner, in conformity with all applicable laws and regulations. Tenant agrees that should it make any alterations, additions, replacements or improvements to the Premises, it will not be acting as agent or servant of Landlord in making any alterations and shall pay when due all claims for labor and material furnished to the Premises. Tenant shall provide to Landlord any as-built drawings of alterations, additions, replacements or improvements to the Premises. Landlord may elect to record and post notices of non-responsibility on the Premises. The crane which is affixed and attached to the Premises shall be considered Tenant's Property and Tenant shall have the right to remove the same at the expiration or termination of this Lease and Tenant shall repair any damage to the Building resulting therefrom. 11. MAINTENANCE AND REPAIRS. Tenant shall, at its own expense, keep and mainta'm in good order, condition and repair the entire Premises, including, without limitation, roof, structure, interior walls, floors, ceiling, heat'mg and air conditioning, electrical, and plumbing. Maintenance and repairs of all improvements made by Tenant shall be the sole responsibility of Tenant. Tenant shall keep the Premises in a good, clean, and sanitary condition and appearance. Landlord shall not be responsible for any defect in the Premises nor obligated to make any repairs, alterations or improvements thereto. If Tenant fails to maintain and repair the Premises, Landlord may, on thirty (30) days prior notice (except that no notice shall be required in case of emergency) enter the Premises and 876861 v2 - 4 - 012490-000 7/14/2003 Landlord Tenant perform such repair and maintenance on behalf of Tenant. In such case, Tenant shall reimburse Landlord for all costs so incurred within thirty (30) days upon demand. Notwithstanding the foregoing, in the event that during the six (6) months of the Term, any repairs or replacements are required to be made to: (i) the material components of any of the I-IVAC equipment serving the Premises, (ii) any other mechanical, electrical or other equipment or system serving the Premises, (iii) roof, or (iv) structural portions of the Building, to maintain the same level of service and whose useful life will extend beyond the termination of this Lease, Tenant may terminate this Lease upon thirty (30) days notice to Landlord. If Tenant terminates the Lease pursuant to this Section 11, Tenant shall not be responsible for the replacement or repairs referenced in Subsections 1 l(i)-(iv). 12. RIGHT OF ENTRY. Landlord, and its agents or other representatives, upon at least twenty-four (24) hours advance notice, shall have the right to enter into and upon the Premises, or any part thereof, at all reasonable times for the purpose of examining the same, or showing the Premises to prospective purchasers of the Building. Tenant agrees at any time within six (6) calendar months before the expiration of this Lease to allow Landlord to enter upon the Premises and to affix upon any suitable part thereof notice for reletting same, and that Tenant will not remove same and will permit all persons authorized by Landlord to view said Premises at reasonable times upon notice given at least twenty-four (24) hours in advance. 13. UTILITIES. Tenant shall be responsible for all telecommunication heat, electric current, gas, garbage, metering, or utility of any nature used on the Premises ("Utilities") and the costs of the Utilities shall be the responsibility of Tenant during the Term. Any "combined service fee" payable to Pueblo applicable to periods during the Term pursuant to Section 4(h) of that Warranty Deed recorded September 21, 1999, as Instrument Number 1299550 in the records of the Pueblo County Clerk and Recorder shall paid for by Tenant within thirty (30) days upon receipt of invoice. If Mortgagee is Successor Landlord, Tenant shall be responsible for any past due "combined service fees" related to the Premises. 14. ASSIGNMENT AND SUBLETTING. Tenant may assign this Lease or sublet the Premises, or any portion thereof, without the consent of Landlord. No transfer, assignment or subletting by Tenant shall relieve Tenant of any obligation to be performed by Tenant under this Lease, whether occurring before or after such consent, transfer, assignment or subletting, including the payment of Base Rent and all other charges required to be paid by Tenant under this Lease. 15. TENANT'S INSURANCE. Tenant agrees to provide comprehensive public liability insurance with a financially responsible insurance company, naming Landlord and Mortgagee as an additional insured as 876861 v2 - 5 - 012490-000 7/14/2003 Landlord Tenant relates to this Lease, in amounts not less than $1,000,000 per person and $1,000,000 per accident, and $500,000 for damage to property. Tenant shall also provide and maintain property and casualty insurance with extended coverage covering naming Mortgagee as loss payee the full replacement value of Building and Improvements with a responsible insurance company whose policies are valid in the State of Colorado. Tenant shall deliver to Landlord a certificate of insurance evidencing such coverages within five (5) days of the Commencement Date. Such policies shall specifically provide that they shall not be cancelable or subject to reduction of coverage except after thirty (30) days' prior written notice to Lessor. 1 6. INDEMNIFICATION. Tenant shall indemnify Landlord against and hold Landlord harmless from any and all costs, claims or liability arising from the negligence or willful misconduct of Tenant. Tenant shall defend Landlord against any such costs, claims or liabilities at Tenant's expense with counsel reasonably acceptable to Landlord or, at Landlord's election, Tenant shall reimburse Landlord for any legal fees or costs incurred by Landlord in connection with any such claim. As a material part of the consideration to Landlord, Tenant hereby assumes all risk of damage to property or injmy to persons in or about the Premises arising from any cause, and Tenant hereby waives all claims in respect thereof against Landlord, except for any claim arising out of Landlord's negligence or willful misconduct. In no event shall Tenant be liable to Landlord or anyone claiming through Landlord for any incidental, punitive or consequential damages. 17. WAIVER OF SUBROGATION. Landlord and Tenant agree, that, in the event the Premises or the fixtures, leasehold improvements, furniture, equipments, or merchandise therein, are damaged or destroyed by fire or other casualty which is covered by insurance of either the Landlord or the Tenant, the rights of either party, if any, against the other, or against the employees, agents, or licensees of any party with respect to such damage or destruction and with respect to any loss resulting therefrom, including the interruption of the business of any party, are hereby waived to the extent of the coverage of said insurance. Landlord and Tenant agree further that all policies of fire, extended coverage, business interruption, all risk or other insurance covering the Premises, or the contents, fixtures, equipment and improvements thereon, shall contain a clause or endorsement providing in substance that the insurance shall not be prejudiced by virtue of this waiver. Any additional premiums on account thereof shall be paid by Tenant. 18. DAMAGE OR DESTRUCTION; CONDEMNATION. (a) Damage to Premises. Tenant shall notify Landlord in writing immediately upon the occurrence of any damage to the Premises. If the damage can be completely repaired within one hundred twenty (120) days from the date of such damage, Tenant shall repair the Premises at its expense as soon as reasonably possible to the extent of the insurance proceeds paid to Tenant from the property and casualty insurance coverage required to be maintained by Tenant 876861 v2 - 6 - 012490-000 7/14/2003 Landlord Tenant hereunder. If the Premises is damaged or destroyed by any cause whatsoever to the extent that the Premises cannot be fully restored and repaired within one hundred twenty (120) days as reasonably determined by Tenant, Tenant may terminate this Lease as of the date the deslruction occurred. If the damage to the Premises occurs during the last six (6) months of the Lease Term, Landlord or Tenant may elect to terminate this Lease unless Tenant exercises its Option to Renew within ten (10) days of Landlord's notice to terminate the Lease, in which case, the Landlord's termination shall be void and the Premises shall be restored pursuant to the provisions of this Section. If the Lease is not terminated, Tenant shall repair and/or restore the Premises to its condition prior to the damage as reasonably possible to the extent of the insurance proceeds paid to Tenant from the property and casualty insurance coverage required to be maintained by Tenant hereunder. (b) Temporary Reduction of Rent. If the Premises is damaged and repaired pursuant to the provisions of this Section, Base Rent payable during the period of such damage, repair and/or restoration shall be reduced according to the degree, if any, to which Tenant's use of the Premises is impaired. Tenant shall not be entitled to any other compensation, reduction, or reimbursement from Landlord as a result of any damage, destruction, repair, or restoration of or to the Premises. (c) Insurance Proceeds. In the event of a termination of the Lease pursuant to this Section, Tenant shall tender to Landlord any proceeds of the property and casualty coverage received by Tenant and applicable to the Building (excluding any proceeds for any of Tenant's property) within ten (10) day of its receipt thereof. In the event that the Premises is repaired/and or replaced by Tenant, Tenant shall be entitled to all proceeds of the property and casualty insurance Any surplus insurance proceeds (from the property and casualty insurance maintained by Tenant hereunder) in excess of the cost of restoration (including customary additional costs of restoration such as the costs of permitting, architects, engineers and the like) shall be payable to Tenant. (d) Condemnation. If all or any portion of the Premises is taken through eminent domain or sold under threat of such taking (all of which are called "Condemnation"), this Lease shall terminate as to the part taken or sold on the date the condemning authority takes title or possession, whichever occurs first. Any Condemnation award or payment shall be distributed in the following order: (a) first, to any ground lessor, mortgagee or beneficiary under a deed of trust encumbering the Premises for the amount of its interest in the Premises; (b) second, to Tenant, only the amount of any award specifically designated for loss of or damage to Tenant's trade fixtures or removable personal property; and (c) third, to Landlord the remainder of such award, whether as compensation for reduction in the value of the leasehold, the taking of the fee, or otherwise. 19. DEFAULT AND REMEDIES. (a) Defaults. Tenant shall be in default under this Lease: (i) If Tenant fails to pay rent or any other charge within ten (10) days written notice that the same is past due; 876861 v2 - 7 - 012490-000 7/14/2003 Landlord Tenant (ii) If Tenant fails to perform any of Tenant's other obligations under this Lease for a period of thirty (30) days after written notice from Landlord; provided that if more than thirty (30) days are required to complete such performance, Tenant shall not be in default if Tenant commences such performance within the thirty (30) day period and thereafter diligently pursues its completion. (iii) If Tenant makes a general assignment or general arrangement for the benefit of creditors; if a petition for adjudication of bankruptcy or for reorganization or rearrangement is filed by or against Tenant and is not dismissed within thirty (30) days; if a trustee or receiver is appointed to take possession of substantially all of Tenant's assets located at the Premises or of Tenant's interest in this Lease and possession is not restored to Tenant within thirty (30) days; or if substantially all of Tenant's assets located at the Premises or of Tenant's interest in this Lease is subjected to attachment, execution or other judicial seizure which is not discharged within ten (10) days. 20. REMEDIES. On the occurrence of any default beyond any applicable cure period by Tenant, Landlord may, at any time thereafter in compliance with applicable law: (a) Terminate Tenant's right to possession of the Premises, in which case Tenant shall immediately surrender possession of the Premises to Landlord. In such event, Landlord shall be entitled to recover from Tenant all reasonable and actual damages incurred by Landlord by reason of Tenant's default, including such amounts as are necessary to compensate Landlord for the detriment caused by Tenant's failure to perform its obligations under the Lease, including, but not limited to, the cost of recovering possession of the Premises, expenses of reletting, including necessary renovation or alteration of the Promises, Landlord's reasonable attorneys' fees incurred in connection therewith, and any real estate commission paid or payable; (b) Ma'mtain Tenant's right to possession, in which case this Lease shall continue in effect whether or not Tenant shall have abandoned the Premises. In such event, Landlord shall be entitled to enforce all of Landlord's rights and remedies under this Lease, including the right to recover the Base Rent as it becomes due hereunder; (c) Pursue any other remedy now or hereafter available to Landlord under the laws or judicial decisions of the state in which the Premises is located. Landlord's exercise of any right or remedy shall not prevent it from exercising any other right or remedy; and (d) In the event of the occurrence of a default beyond any applicable cure period, Landlord shall use commercially reasonable efforts to mitigate its damages. 21. DEFAULT BY LANDLORD. Tenant shall give written notice of any failure by Landlord to perform any of its obligations under this Lease to Landlord. Landlord shall not be in default under this Lease unless Landlord fails to cure such non-performance within thirty (30) days after receipt of Tenant's notice. However, if such non-performance reasonably requires more than thirty (30) 876861 v2 - 8 - 012490-000 7/14/2003 Landlord Tenant days to cure, Landlord shall not be in default if such cure is commenced within such thirty (30) day period and thereafter diligently pursued to completion. 22. ATTORNEYS FEES AND VENUE. Should this Lease or the parties' obligations hereunder be the subject of litigation between Landlord and Tenant, it is expressly agreed that the prevailing party will have its reasonable legal fees, costs and expenses reimbursed by the other party. The venue for any litigation arising under this Lease shall be Pueblo County, Colorado. 23. NOTICES. All notices required or permitted under this Lease shall be in writing and shall be personally delivered or sent by certified or registered mail, remm receipt requested, or sent by Federal Express or other recognized delivery service. Notices shall be effective upon delivery or attempted delivery in accordance with this Section. Notices to Landlord and Tenant shall be addressed as follows: Landlord: Universal Boiler Works, Inc. 31841 Excellence Ave. Pueblo, Colorado 81001 Tenant: Universal Boiler Works Acquisition Corporation Suite 1250, SunTrust Building 201 Fourth Avenue North Nashville, Tennessee 37219 With a copy to: Boult Cummings Conners Berry, PLC 414 Union Street, Suite 1600 P.O. Box 198062 Nashville, Tennessee 37219 Attn: Roger G. Jones Telephone: (615) 252-2323 Facsimile (615) 252-6323 And a copy to: Precision Boilers, Inc. 5727 Superior Drive Morristown, Tennessee 37814 Attn: Curt Diedrick Either party may change its notice address upon written notice to the other party. 24. QUIET POSSESSION, 876861 v2 - 9 - 012490-000 7/14/2003 Landlord Tenant Upon paying the Rent and observing and performing all of the covenants, conditions and provisions on Tenant's part to be observed and performed hereunder, Tenant shall have quiet possession of the Premises for the entire Term, subject to: all of the provisions of this Lease; the Recognition Agreement between Pueblo and Tenant of even date herewith, and; all existing liens, deeds of trust, mortgages and judgments affecting the Premises, and all liens, deeds of trust, mortgages and judgments affecting the Premises to the extent that the same were the result of the actions of Universal Boiler Works, Inc. Landlord shall procure and deliver to Tenant a reasonable non-disturbance agreement from the holder of any financing instrument secured by an interest in the Premises, Improvements or Land, arising after the Commencement Date to evidence the holder of such instrument's agreement not to disturb Tenant. 25. LANDLORD'S LIABILITY. The obligations of the Landlord under this Lease do not constitute personal obligations of Landlord or the individual partners, joint venturers, directors, officers, shareholders or beneficial owners of the Landlord, and Tenant shall look solely to the Building and to no other assets of the Landlord for satisfaction of any liability in respect to this Lease. Tenant will not seek recourse against Landlord or such individuals or entities or such other assets for such satisfaction. As used in this Lease, the term "Landlord" means the current owner or owners of the fee title to the Premises or the leasehold estate under a ground lease of the Premises at the time in question. Any Landlord who transfers its title or interest is relieved of all liability with respect to the obligations of Landlord under this Lease to be performed on or after the date of transfer. However, each Landlord shall deliver to its transferee, by actual transfer or appropriate credits, all funds previously paid by Tenant if such funds have not yet been applied under the terms of this Lease. 26. SURRENDER OF PREMISES. Upon termination of the Lease, by expiration of term, or otherwise, Tenant shall redeliver to Landlord the Premises broom clean and in the same condition as of the Commencement Date, ordinary wear and tear excepted. 27. HOLDOVER. Tenant shall vacate the premises upon the expiration or earlier termination of this Lease. Tenant shall reimburse Landlord for and indemnify Landlord against all damages incurred by Landlord from any delay by Tenant in vacating the Premises. If Tenant does not vacate the Premises upon the expiration or earlier termination of the Lease and Landlord thereafter accepts rent from Tenant, Tenant's occupancy of the Premises shall be a "month-to-month" tenancy, subject to all of the terms of this Lease applicable to a month-to-month tenancy, except that the Base Rent for such tenancy shall be one hundred fifty percent (150%) of the Base Rent in effect at the expiration of the Lease. 876861v2 -10- 012490-000 7/14t'2003 Landlord Tenant 28. SEVERABILITY. A determination by a court of competent jurisdiction that any provision of this Lease or any part thereof is illegal or unenforceable shall not cancel or invalidate the remainder of such provision or this Lease, which shall remain in full force and effect. 29. INTERPRETATION. The captions of the Sections of this Lease are to assist the parties in reading this Lease and are not a part of the terms or provisions of this Lease. Whenever required by the contest of this Lease, the singular shall include the plural and the plural shall include the singular. The masculine, feminine and neuter genders shall each include the other. In any provision relating to the conduct, acts or omissions of Tenant, the term "Tenant" shall include Tenant's agents, employees, contractors, invitees, successors or others using the Premises with Tenant's expressed or implied permission. 30. INCORPORATION OF PRIOR AGREEMENT; MODIFICATIONS. This Lease is the only agreement between the parties pertaining to the lease of the Premises and no other agreements are effective. All amendments to this Lease shall be in writing and signed by all parties. Any other attempted amendment shall be void. 31. WAIVERS. All waivers must be in writing and signed by the waiving party. Landlord's failure to enforce any provision of this Lease or its acceptance of rent shall not be a waiver and shall not prevent Landlord from enforcing that provision or any other provision of this Lease in the future. No statement on a payment check from Tenant or in a letter accompanying a payment check shall be binding on Landlord. Landlord may, with or without notice to Tenant, negotiate such check without being bound to the conditions of such statement. 32. RECORDATION. Simultaneously with the execution of this Lease the parties shall execute the Memorandum of Lease attached as Exhibit C hereto and cause the same to he recorded. 33. BINDING EFFECT; CHOICE OF LAW. This Lease shall be binding upon any party who legally acquires any rights or interest in this Lease from Tenant. However, Landlord shall have no obligation to Tenant's successor unless the rights or interests of Tenant's successor are acquired in accordance with the terms of this Lease. The laws of the State of Colorado shall govern the validity, performance and enforcement of this Lease. 34. CORPORATE AUTHORITY; PARTNERSHIP AUTHORITY. 876861v2 -11- 012490-000 7/14/2003 Landlord Tenant If Tenant is a corporation, each person signing this Lease on behalf of Tenant represents and warrants that he has full authority to do so and that this Lease binds the corporation. If Tenant is a partnership, each person signing this Lease for Tenant represents and warrants that he'is a general parmer of the parmership, that he has full authority to sign for the partnership and that this Lease binds the partnership and all general parmers of the partnership. The withdrawal of a General Parmer from the Partnership shall not relieve the General Partner from liability under this Lease and all general partners added to the Partnership shall be fully liable for the Partnership's obligations hereunder. Tenant shall give written notice to Landlord of any general partner's withdrawal or addition. 35. JOINT AND SEVERAL LIABILITY. All parties signing this Lease as Tenant shall be jointly and severally liable for all obligations of Tenant. 36. FORCE MAmURE. If Landlord or Tenant cannot perform any of their respective obligations due to events beyond their control, the time provided for performing such obligations shall be extended by a period of time equal to the duration of such events. Events beyond the parties' control include, but are not limited to, acts of God, war, civil commotion, labor disputes, strikes, fire, flood or other casualty, shortages of labor or material, government regulation or restriction and weather conditions. 37. EXECUTION OF LEASE· This Lease may be executed in counterparts, and, when all counterpart documents are executed, the counterparts shall constitute a single binding instrument. 3 8. LIENS. Tenant agrees to pay promptly for any work done by Tenant (or material furnished therefor) in, on or about the Premises, and Tenant shall not permit or suffer any lien to attach to the Premises or the Building and shall promptly cause any such lien, or any claim therefor to be released; provided, however, that in the event Tenant contests any such claim, Tenant agrees to indemnify Landlord and, if requested, to deposit with Landlord cash or surety bond in form and with a company satisfactory to Landlord in an amount equal to the amount of such contested claim. If Tenant shall fail to cause any lien to be discharged or bonded immediately after being notified of the filing or claiming thereof, then, in addition to any other right or remedy of Landlord, Landlord may discharge same by paying the amount claimed to be due and the amount so paid by Landlord together with interest thereon at the Default Rate and all costs and expenses, including reasonable attorneys' fees incurred by Landlord in procuring the discharge of such lien, shall be due and payable by Tenant to Landlord as additional rental on the first day of the next following month, or may, at Landlord's election, be subtracted from any sums owing to 876861 v2 - 12 - 012490-000 7/14/2003 Landlord Tenant Tenant. Tenant's obligation to observe and perform any of the provisions of this Section 38 shall survive the expiration of the term hereof or the earlier termination of this Lease. 876861v2 - 13- 012490-000 7/14/2003 Landlord Tenant IN WITNESS WHEREOF, the parties have hereunder executed the lease the day and year above written. LANDLORD: UNIVERSAL BOILER WORKS, INC. By: Name: Title: Date: TENANT: UNIVERSAL BOILER WORKS ACQUISITION CORPORATION By: Its: Date: 876861 v2 012490-000 7/14/'2003 -1- Landlord Tenant EXHIBIT A The property, situate in the County of Pueblo, State of Colorado, to wit: Lot 40, Pueblo Memorial Airport Industrial Park Subdivision 876861 v2 - 1 - 012490-000 7/14/2003 Landlord Tenant EXItIBIT B RECOGNITION AGREEMENT 876861 v2 012490-000 7/14/2003 -2- Landlord Tenant EXHIBIT C MEMORANDUM OF LEASE 87686i v2 012490-000 7/14/2003 -1- Landlord Tenant