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HomeMy WebLinkAbout11727RESOLUTION NO. 11727 A RESOLUTION APPROVING AN AGREEMENT BETWEEN PUEBLO, A MUNICIPAL CORPORATION AND PUEBLO DEVELOPMENT FOUNDATION TRANSFERRING BY SPECIAL WARRANTY DEED LOT 38, PUEBLO MEMORIAL AIRPORT INDUSTRIAL PARK SUBDIVISION TO PUEBLO DEVELOPMENT FOUNDATION AND AUTHORIZING THE PRESIDENT OF THE CITY COUNCIL TO EXECUTE SAME BE IT RESOLVED BY THE CITY COUNCIL OF PUEBLO, that: SECTION 1 The Agreement dated October 26, 2009 between Pueblo a Municipal Corporation and Pueblo Development Foundation transferring by Special Warranty Deed Lot 38, Pueblo Memorial Airport Industrial Park Subdivision to Pueblo Development Foundation, a copy of which is attached hereto, having been approved as to form by the City Attorney, is hereby approved. SECTION 2 The President of the City Council is authorized to execute and deliver the Agreement and Special Warranty Deed in the name of the City and the City Clerk is directed to affix the seal of the City thereto and attest same. SFrTin S This Resolution shall become effective upon final passage and approval. INTRODUCED: October 26. 2009 A77TSTFD SY: CITY CLERK BY: Judy Weaver COUNCILPERSON APPR D' } �- PRESIDENTaf Cfty Council ED Background Paper for Proposed RESOLUTION AGENDA ITEM # N -8 DATE: October 26, 2009 DEPARTMENT: Law Department TITLE A RESOLUTION APPROVING AN AGREEMENT BETWEEN PUEBLO, A MUNICIPAL CORPORATION AND PUEBLO DEVELOPMENT FOUNDATION TRANSFERRING BY SPECIAL WARRANTY DEED LOT 38, PUEBLO MEMORIAL AIRPORT INDUSTRIAL PARK SUBDIVISION TO PUEBLO DEVELOPMENT FOUNDATION AND AUTHORIZING THE PRESIDENT OF THE CITY COUNCIL TO EXECUTE SAME ISSUE Should the City transfer property at the Pueblo Memorial Airport Industrial Park to Pueblo Development Foundation for lease in conjunction with a job creating capital improvement project? PEDCO recommends approval. BACKGROUND Foundation will enter into a lease of the Property with The Water Company, LLC to locate its business at the Pueblo Memorial Airport Industrial Park ( "Lease "). The Lease shall be a triple -net lease for an initial term of two years with the option to renew for three additional 1 -year terms. Rent will be $23,000 per month during the initial 2 -year term and $13,475 per month during each 1 -year renewal term. Foundation will loan The Water Company approximately $450,000 to remodel the Property and to relocate its business to the Property ( "Loan "). Foundation will retain and apply the rent to the payment of the Loan (approximately 22 months). Thereafter, all rent and other payments received by Foundation under the Lease (except general property taxes) shall be held in trust by Foundation for the benefit of the City and, immediately after receipt thereof, Foundation shall deliver and pay the rent and other payments under the Lease received by Foundation to City, less $1,150.00 of the rent to be retained by Foundation as reimbursement to Foundation for its expenses incurred in participating in this transaction and as Lessor under the Lease. City will transfer title to the Property to Foundation by special warranty deed contemporaneously with the execution of the Lease. Foundation shall not use, encumber, lease, sell, assign or otherwise transfer the Property, except for the Lease. Foundation will cause the Property to be insured against loss or other casualty for its full replacement value. The proceeds of such insurance shall be paid solely to the City. FINANCIAL IMPACT Foundation will take over property maintenance, utilities and insurance costs and release City therefrom. AGREEMENT THIS AGREEMENT entered into as of October 26, 2009 between Pueblo, a Municipal Corporation ( "City") and Pueblo Development Foundation, a Colorado Nonprofit Corporation ( "Foundation "), WITNESSETH WHEREAS, the building consisting of approximately 26,000 square feet and approximately 3.92 acres of land commonly known as 31965 United Avenue, Pueblo, Colorado, legally described as Lot 38, Pueblo Memorial Airport Industrial Park Subdivision, Pueblo County, Colorado (the "Property ") is available for lease in conjunction with a job creating capital improvement project; and WHEREAS, City is willing to transfer title to the Property to Foundation upon the terms and conditions herein set forth. NOW, THEREFORE, in consideration of the foregoing and mutual covenants contained herein, City and Foundation agree as follows: 1. Foundation will enter into a lease of the Property with The Water Company, LLC to locate its business at the Pueblo Memorial Airport Industrial Park ( "Lease "). The Lease shall be a triple -net lease for an initial term of two years with the option to renew for three additional 1 -year terms. Rent will be $23,000 per month during the initial 2 -year term and $13,475 per month during each 1 -year renewal term. Foundation will loan The Water Company approximately $450,000 to remodel the Property and to relocate its business to the Property ( "Loan "). Foundation will retain and apply the rent to the payment of the Loan (approximately 22 months). Thereafter, all rent and other payments received by Foundation under the Lease (except general property taxes) shall be held in trust by Foundation for the benefit of the City and, immediately after receipt thereof, Foundation shall deliver and pay the rent and other payments under the Lease received by Foundation to City, less $1,150.00 of the rent to be retained by Foundation as reimbursement to Foundation for its expenses incurred in participating in this transaction and as Lessor under the Lease. 2. City will transfer title to the Property to Foundation by special warranty deed contemporaneously with the execution of the Lease. Foundation shall not use, encumber, lease, sell, assign or otherwise transfer the Property, except for the Lease. Foundation will cause the Property to be insured against loss or other casualty for its full replacement value. The proceeds of such insurance shall be paid solely to the City. 3. The property will be conveyed by City and shall be accepted by Foundation in its present condition "AS IS" and "WITH ALL ITS FAULTS." Foundation understands and agrees that City has made no representations, express or implied, as to the quantity, quality or condition of the Property, environmentally or otherwise. 4. Foundation shall perform all covenants and conditions on the part of the Lessor to be performed under this Agreement and the Lease, and shall enforce all covenants and conditions on the r performed under this Agreement and the Lease, and shall enforce all covenants and conditions on the part of the Lessee to be performed under the Lease. Foundation shall give written notice to City of any of Lessee =s defaults under the Lease. Foundation =s obligations under this Agreement shall be secured by a first deed of trust on the Property and Foundation shall execute and deliver to City its deed of trust in form and content approved by the City Attorney. The deed of trust shall be recorded immediately after the recording of the special warranty deed. 5. If Foundation defaults in the performance of any covenant or provision of this Agreement or Lease, Foundation shall within ten (10) days after written demand by City, convey marketable fee simple title to the Property to City free of liens and encumbrances except liens and encumbrances existing at the time Foundation acquired title to the Property from the City and Foundation =s deed of trust securing the performance of this Agreement, and assign the Lease to the City. 6. 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. 7. The provisions of this Agreement are and will be for the benefit of City and Foundation 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 the Agreement. 8. This Agreement shall be binding up and inure to the benefit of the City and Foundation and their respective successors and assigns, provided Foundation may not assign this Agreement or any of its rights hereunder without the prior written consent of City. 9. The covenants and agreements set forth in this Agreement are covenants running with the Property, shall survive the execution, delivery and recordation of the special warranty deed, and shall not merge nor be deemed to have merged by special warranty deed. Executed at Pueblo, Colorado, the day and year first above written. Pueblo, a Municipal Corporation By_ d�J President of the City Coun it Attests_: City- Jerk Approved as to form: Pueblo Development Foundation BY `�' President l Attest: A Secr tary City A6omey 1828201 WD 12/21/2009 12:46:47 PM Page: I of 1 R 6.00 D 0.00 T 6.00 Gilbert Ortiz Clerk /Recorder, Pueblo County, Cc SPECIAL WARRANTY DEED Tile "Grantor" (whether one or more than one), Pueblo, a municipal corporation Whose legal address is 1 City Hall Place, Pueblo, Colorado, 81003 of the * County of Pueblo and State of Colorado for the consideration or Ten Dolla and Valuable Consideration in hand paid, hereby sells and conveys to Pueblo Development (whether one or more than one), the "Grantee ", whose legal address is 301 200, .Pueblo, CO 81003 ,of the State of Colorado , the following real property in the and State of Colorado, to wit: :s and Other Good >D=XK%kt$ ), Foundation N. Main Street, Suite County or Pueblo and *County of Lot 38 Pueblo Memorial Airport Industrial Park Subdivision Documentary Fee: None, consideration less than $500.00 also known by street address as: 31965 United Avenue, Pueblo, Colorado, 81001 and assessor's schedule or parcel number: 330021008 with all its a qurtenances, and warrants the title against all persons claiming under the Grantor, subject to all lie ances, easements, restrictions, reservations, co ri�r1t� a}' onditions of record. ~ s` 26th day of October 20 09 ;� 91gned this tte$t: �, „City C W : Pueb a municipal corporation By President of the City 1 69ouncil STATE OF COLORADO SS. County of Pueblo " The foregoing instrument was acknowledged before me this �L — day of October , 20 09 by Ortegon as President of the City Council and Gina— Dutcher as City Clerk of Pueblo, icipal corporation. GG pS..O / Witness my hand and official seal. ' My commission expires: 9 17 12-01l �� N •. �'uBU.. , v ••.........• *Insert "City and" where applicable. OF Nu�bliu Name and Address of Person Creating Newly Created Legal Description (S 38 -35- 106.5, C. It. S.) No. 900, Rev. 1 -06. SPECIAL WARRANTY DIED tShort Farm) V nmdford Pahlishing, 1743 Wazae St., Denver, CO Stl -'tl —(303) 292 2 — www.bmdfordpablishing.com — 1 -06 1828202 TD 1212112009 12:46:47 PM Page: 1 of 1 R 6.00 D 0.00 T 6.00 Gilbert Ortiz Clerk/Recorder, Pueblo County, Co mill V16MWAIC1`1111f+W W WitWN N,h 11111 DEED OF TRUST THIS DEED OF TRUST, Dated October 28, 2009 ,between Pueblo Development Foundation, a Colorado nonprofit corporation the rantor herein, whose address is - 361 N. Main Street, Pueblo, "CO 81003 of the 'County of Pueblo and State of Colorado, and the PUBLIC TRUSTEE of the County or City and County in which the property described below is situated, in the State of Colorado, Witness: Ir The grantor, to secure a promissory note or notes hereinafter referred to in the singular, dated fbtVX ]PAakprt4O45EktTfO1: J# XDa%X, payable,to the order of the City of Pueblo the beneficiary "herein 1 City Hall Place, Pueblo, Colorado, 81003 ' ,xidBx�6atc�e2tlactxaf. a�mmxhexotnfmua�shr�t6saeofxtxhcxnOxSc apm�a��IaP�2sX�tk does hereby grant and convey unto said Public Trustee the following described property, situate in the County of Pueblo state of Colorado, to wit: Lot 38, Pueblo Memorial Airport Industrial Park Subdivision, Pueblo County, Colorado *The purpose of this deed of trust is to secure grantor's performance of its obligations under that certain Agreement dated October 26, 2009 between grantor and City of Pueblo (the "Agreement "). Wherever the terms "promissory note," "note," or "indebtedness" are referred to herein, they shall, individually or jointly, be deemed and construed to be the Agreement. also known by street and number as 31965 United Avenue, Pueblo, CO 81001 TO NAVE AND TO HOLD the same iogdI:9 rlm"alfapplMd9As, Rr t�st iah payrrwm of said note or any part thereof or interest - thereon, or in the performance of any covenants hereinafter set forth, then upon the beneficiary (note holder) filing notice of election and demand for sale, said Public Trustee, .after advertising nonce of said sale weekly, for not ess than four weeks, in some newspaper ofgeneral circulation in said county, shall sell said property in the manner provided by law in effect at the time of filing said notice and demand, at public auction for cash, at any proper place designated in the notice of sale. Out of the proceeds of said sale said Trustee shall retain or pay first all fees, charges and costs and all moneys advanced for taxes, insurance and assessments, oron any priorencumbrance, with interest thereon, and pay the principal and interest due on said note, rendering the overplus (if any) unto the grantor; and after the expiration of the time of redemption, said Truslee shall execute and deliver to the purchaser a deed to the property sold. The beneficiary may purchase said property or any pan thereof at such sale. The rancor c pants that at the imc pf de wary of these presents, he is seized of said property in fee simple, and that said pro Fly is free of encumbrances, except easmen restrictions, covenants and conditions o record. The grantor also covenants that he will keep all buildings insured with a company approved by the beneficiary for fire and extended coverage in an amount equal to the unpaid balance of said note with loss payable to the beneficiary, will deliver a copy of the fwlicy to the beneficiary and will pay all taxes and assessments against said property and amounts due on prior encumbrances. If grantor shall fail to pay insurance premiums, taxes or amounts due on prior encumbrance, the beneficiary may pay the same and all amounts shall become additional indebtedness due hereunder; and in case of foreclosure, he will pay an attorney's feeX In a reasonable amount. Should the beneficiary hereunder be made a party to any action affecting this deed of most or the title to said property, the grantor agrees that all court costs and a reasonable attomey's fee paid by the beneficiary shall become additional indebtedness due hereunder, and the grantor does hereby release and waive all claims in said property as a homestead exemption or other exemption now or hereafter provided by law. It is agreed that in case of default in payment of said principal or interest or a breach of any of the covenants herein, then said principal sum hereby secured and interest thereon may at the option of the beneficiary become due and payable at once, anything in said now to the contrary notwithstanding and possession of said property will thereupon be delivered to the beneficiary, and on failure to deliver such possession the beneficiary shall be entitled to a receiver for said property, who may be appointed by any court of competent iursidiction. Whenever used herein the singular number shall include the plural, the plural the singular, and the use of any gender shall be applicable to all genders. All of the covenants herein shell be binding upon the respective heirs, personal representatives, successors and assigns of the parties hereto. Executed the day and year first Punic written. (SEA (� Attest: Pueblo Development Foundation Sec etar By, ilresiclerfu � STATE OF COLORADO - County of " � = December r ggotplment was acknowledged before me this /' day of ?9f 2009 " y� as President of Pueblo Development at„1 ri,.�aColorado nonprofit corporation. ion ims It ;�(c�`3 -a ! .Witness my hand and official seal. ( (� t C o "' o 'I {Ifl.l'edVer,inBeR' ' aDd . Notary Public C Namleidd Addressof Pe"oh Cell Newty Created Legal Description@ 3&35-10,5, CI '.S.) ' ' ,l,\ Ne. 923B. Rev 6-92 - DEED OF TRUST (Public Trustee) without Due an Sale Clause Bradford Publishing, 1743 Wazee SL, Denver, CO 80202 — (303) 292 -2500 — 2 -98 October 26, 2009 , LEASE !b. v-" 4vt6A THIS LEASE entered into as of 9ctel3eg,4 2009 by and between Pueblo Development Foundation, a Colorado nonprofit corporation (the "Lessor ") and The Water Co. a Delaware Limited Liability Corporation (the "Lessee "), with WITNESSETH: WHEREAS, the Lessor is or will be owner of 31965 United Ave, Pueblo, CO, consisting of a building containing approximately 23,950 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 therefore prepared by Able Consulting Services, Inc. (the "Architect ") and approved by Lessor and Lessee, and WHEREAS, Lessee is desirous of leasing the Leased Premises upon the terms and conditions hereinafter set fort; NOW, THREFORE, 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, right - of -way, covenants, conditions, restrictions, reservations and limitations appearing of record, and applicable zoning and land use laws, ordinances, codes, and regulations governing and regulating the Leased Premises and its use. 1.03 Lessee shall be Bound by and comply with the covenant and restrictions set forth in the Special Warranty Deed from the city of Pueblo to Lessee, a copy of which is attached hereto as Exhibit "A" and incorporated herein. Article 2. Building Construction 2.01 Subject to confirmation that any and all encumbrances are subordinate to the Deed of Trust executed in favor of Lessor, 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 $450,000.00 (the "Maximum Construction Costs "). 2.02 All costs and expenses of Remodeling in excess of the Maximum Construction Costs ( "Excess Construction Costs ") shall be the sole responsibility of the Lessee and shall be paid by Lessee to Lessor in cash or certified funds within five (5) days after such Excess Construction Costs are incurred. 2.03 The Remodeling shall be designed and constructed (a) In accordance with the plans, specifications therefore prepared by the Architect (the "Architect's Plans ") and the construction contract documents 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 by reference, as it set out herein in full; and (b) by general contractor selected by Lessor after competitive bidding which allow qualified local contractors to participate in the competitive bidding procedures (the "General Contractor "). The General Contractor shall to the extent feasible use local subcontractors and suppliers. The term "local" means companies having their principal places of business in the City of Pueblo. 2.04 Lessor shall cooperate in good faith to cause the Remodeling to be substantially completed on December 18, 2009 or as soon thereafter as practical. The failure for any reason to substantially complete the Remodeling by December 18, 2009 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 to the work within the general scope of construction contemplated by the construction Documents, within five (5) days after receipt shall constitute approval thereof, provided, however, that all changes which result in the construction costs to be greater than 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 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 3.01 The Term of this Lease shall be two (2) years commencing January 1, 2010 and ending two (2) years thereafter ( "Term "). If Lessee does not agree that the Remodeling has been substantially completed on the date specified in the notice from Lessor, Lessee shall promptly notify Lessor in writing of its objections 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 2.04. 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 any such Articles prior to the Commencement Date. 3.02 If not in default hereunder, Lessee shall have the option to renew this Lease for an additional three terms of one (1) year each upon the same provisions, covenants and conditions, except Lessee shall have no further option to renew thus Lease beyond the expiration of the fifth (5) year of occupancy. The option to renew shall be exercised by Lessee by delivering to Lessor written notice of Lessee's exercise of the option at least ninety (90) days prior to the last day of the Term of this Lease. If Lessee fails for any reason to give timely notice of its exercise of the option to renew, the option rights granted hereby shall automatically terminate. Article 4. Rent. 4.01 Lessee shall pay to Lessor monthly rent of $23,000.00 in advance, without notice or demand, beginning with the Commencement Date and on the same day of each month thereafter, until such time as the expense of the Remodeling has been repaid by applying the $23,000.00 paid per month. Thereafter, until the end of the Term, the monthly rent shall be reduced to $14,625.00 per month. Monthly rent shall be $14,625.00 per month for the Renewal Term, if the Lessee exercises the renewal option in 3.02. 4.03 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 of ten percent (10 %) per annum until paid. All rent and other payments shall be made at or mailed by United States mail to the following address: Pueblo Development Foundation, 301 N. Main St., Pueblo, CO 81003 or such other address as Lessor may from time to time designate to Lessee in writing. 4.04 Lessee's obligation to pay rent and other payments to Lessor hereunder is absolute and unconditional and rent or additional rent shall not be offset, abated, reduced or withheld for any cause whatsoever. 4.05 U 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 the 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. Article 6. Condition of Premises 6.01 EXCEPT AS SPECIFICALLY SET FORTH IN THIS LEASE, IT IS UNDERSTOOD 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 POSESSION SET FORTH IN ARTICLE 20), ZONING, PHYSICAL OR ENVIRONMENTAL CONDITIONS, UTILITIES, GOVERNMENTAL APPROVALS, COMPLIANCES OF THE LEASED PREMISES WITH GOVERNMENTAL LAWS, THE TRUTH, ACCURACY OR COMPLETENESS OF ANY DOCUMENT OR OTHER INFORMARION PROVIDED TO LESSEE BY ANY OTHER PERSON, OR ANY OTHER MATTER OR THING REGAWRDING THE LEASED PREMISES. 6.02 The taking of possession of the 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 "As 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 Lease 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 -19 -105, C.R.S. 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 t 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 and maintain the Leased Premises, including, without limitation, the Building, structural components, roofs, walls, fixtures, and electrical, heating, mechanical, plumbing and air conditioning systems, and adjacent sidewalks and parking area, in good condition and repair and in a good, clean and safe condition at all times and return the same to Lessor in as good condition and state of repair as the same were in as of Commencement Date, except for 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 it interest in any such warranty for the purpose of making 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 11.01, 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 written or verbal notice to Lessee, except notice shall not be required in case of emergency, such as fire. Article 10. Assignment 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 sufficient in the Lessor's sole discretion to give assurance of performance and compliance with all terms and conditions of this Lease. 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 and assumption agreement in form and substances satisfactory to Lessor, whereby assignee agrees to observe and keep all the terms, provisions, covenants and conditions to be observed, performed and kept by Lessee hereunder. 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. Article 11. Insurance and Indemnification 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 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 and Renewal Term, if applicable, of this Lease, commercial liability insurance including personal injury, property damage and contractual coverage in the minimum amount of $2,000,000.00 combined single limits naming Lessor as an additional insured. 1 1.03 Lessee shall secure and maintain during the Term of this Lease Colorado Worker's 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 law of the State of Colorado containing a provision prohibiting cancellation or material modification of the insurance except after thirty (30) 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 and renewal of this Lease, secure and maintain in full force and effect "All — Risk" property insurance (including, without limitations, fire, extended coverage and all risk perils including mechanical breakdown) upon the Leased Premises. Such insurance shall be in an amount not less than the full replacement value of the Building and improvements (without deduction for physical depreciation), and issued by an insurance company or association authorized to issue such policies under the taws of the State of Colorado and approved by Lessor, shall contain a deductable of not more than $5,000.00 and name the Lessor as the insured, with a standard Colorado mortgage clause in favor of the City of Pueblo, and shall not be subject to cancellation, reduction or modification upon less than thirty (30) days' written notice to Lessor. Such insurance, by its terms or by endorsement, shall waive any right of subrogation of the insurer against Lessor and the City of Pueblo, and their respective officers, agents and employees, for any loss or damage resulting from covered perils. Lessee will furnish to Lessor evidence of such insurance and its continuance during the Term and Renewal 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 and the City of Pueblo, and their respective officers, agents and employees, for any loss or damage resulting from covered perils. 12.03 A copy of each insurance policy, or certificate thereof, issued by an association or company authorized to issue such policy or policies under the law of the State of Colorado containing a provision prohibiting cancellation or material modification of the insurance except after thirty (30) 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 13. Taxes and Assessments 13.01 Lessee shall promptly pay 1/12 of the estimated real property taxes with the monthly rent payment. The estimated real property tax will be based upon the last known actual real property tax paid. This money will be held in trust by the Lessor to be used to pay the actual real property taxes for the year the monthly taxes were collected. Lessee will pay for any additional monies needed to pay the property tax within 30 days of notification if the monies collected during that year are short of the real property tax due. If the monies collected exceed the real property tax due, then the Lessee has the option to continue the balance towards the current year estimated real property tax or request a refund of the account balance. The account balance, if requested, shall be paid within 30 days of the written request except if the Lessee has an outstanding balance due of rent or property tax payable to the Lessor. Real property taxes shall be prorated for periods falling within the Term and Renewal Term of this Lease. Notwithstanding the foregoing, Lessee shall have no responsibility to pay and/or discharge any mechanic's liens arising out of or relating to failure to pay for Remodeling made by Lessor prior to Commencement Date, provided Lessee has paid to Lessor all Excess Construction Costs. 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 the 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 at least ten (10) days prior to the delinquency of the item in contest and, on request of the 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 the 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 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 lien holder of other proof satisfactory to Lessor evidencing such payments as are required under this Article 13. Article 14. Utilities. Lessee shall pay, before delinquent, City of Pueblo's combined service fee and all charges for sewer, water, gas, electricity, telephone and all other utility services furnished 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 or Renewal 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 (190) 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 or Renewal 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, 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 specification submitted to and approved in writing by Lessor and in compliance with all applicable laws, regulations and codes. Article 16. Eminent Domain. 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 entire award going to the 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. Quiet Possession. Lessee shall, and may peacefully have, hold and enjoy the Leased Premises, subject to the other terms hereof, provided that Lessee pays the monthly rent and additional rent herein recited and performs all of Lessee's covenants and agreements contained herein and in the City Agreement. Article 18. Default. 18.01 In the event of default at any time by Lessee in the payment of the monthly rent or additional rent herein provided for or in the performance of any other of its covenants herein contained, 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: (a) terminate this Lease and re -enter and take possession of the Leased Premises, and /or (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 re -let the same for and on account of Lessee for the then full remaining portion of the unexpired Term or Renewal Term of this Lease or for any shorter period, and to collect and receive payment of rent therefore, 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 perform any other covenant herein contained. It expressly being understood and agreed that in the event of any such re -entry or re- retting buy Lessor such re-entry shall not operate to terminate this Lease or alter the obligation of Lessee to perform its covenants and to pay monthly rent or additional rent pursuant to the terms hereof unless Lessor expressly so elects pursuant to paragraph 18.01(a) above. Lessor shall in no way be responsible or liable for any failure to re -let the Leases 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 re- letting 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 attomey's fees incurred by Lessor in curing the default together with interest thereon at the rate of ten (10) percent per annum shall constitute additional rent payable to Lessor by Lessee upon demand. 18.02 If Lessor does not elect to terminate this Lease but takes possession as provided for in Article 18.01(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 re- letting of the Leased Premises after deducting all Lessor's reasonable expenses including, without limitation, all repossessions costs, brokerage commissions, legal expenses, attorneys' fees, alterations and repair costs and expenses of preparation of such re- letting. 18.03 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. 18.04 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 19. 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 20. 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 21. 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, modification, 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 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 the 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 non - disturbance and attornment agreements as any such mortgagee or successor shall request. Article 22. Estoppel Certificate. At Lessor's request, Lessee will execute either an estoppel certificate addressed to Lessor's mortgagee or any prospective 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 connection with Lessor's financing or the conveyance of the Leased Premises, Article 23. 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 301 N. Main St., Suite 200 Pueblo, Colorado 81003 (or to such other person or address as may be 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 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: The Water Company, Inc. 31965 United Ave. Pueblo, Colorado 81001 (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 24. Environmental Provisions. 24.01 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. 24.02 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 of the 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 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 1221 et seq. and the Clean Air Act, 42 U.S.C. Section7401 et se q. 24.03 Lessee agrees to defend, indemnify and forever hold harmless the Leased Premises, City of Pueblo 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 24 shall expressly survive the expiration of the Term or other termination of this Lease. Article 25. Miscellaneous Provisions 25.01 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. 25.02 Writing for Waiver or Modification No provision of this Lease may be waived or modified except by an agreement in writing signed by the waiving party. A waiver of any term or provision shall not be construed as a waiver of any other term or provision. 25.03 Binding 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. 25.04 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. 25.05 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. 25.06 Severabilitv If any provision 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, such remaining 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. 25.07 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 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. 25.08 Lessee's Warranties Lessee and the persons signing this Lease on behalf of Lessee represent and warrant that such parties and Lessee have the requisite power and authority to enter into, execute and deliver the Lease and that this Lease is a valid and legally binding obligation of Lessee enforceable against Lessee in accordance with its terms. 25.09 Time of Essence Time shall be of the essence as to the performance of all terms, conditions and obligations under this Lease. 25.10 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, not third party shall have any right or remedy hereunder or the right to enforce any provision of this Lease. 25.11 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 the 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 claim to have dealt with such indemnifying party, including all expenses incurred in defending any such claim or demand (including reasonable attorney's fees). 25.12 Representatives Lessee designates Victoria Hauser as its representative with authority to act for and on behalf of Lessee. Lessor designates its representative with authority to act for and on behalf of Lessor, either party may, by written instrument given to the other pursuant to Article 23, change such party's designated representative. 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 /1s� 1 ',. Title: President THE WATER COMPANY By L C 3 1�t u� Name: Victoria Hauser Title: Chief Financial Officer [SEAL] Attest: Name: STATE OF COLORADO ) COUNTY OF PUEBLO )ss. [SEAL] Attest: Name: - cet 6C IC r The foregoing instrument was acknowledged before me this day of v�x 2009 by Witness my hand and official seal. My commission expires: 1 [SEAL] Notary tic