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HomeMy WebLinkAbout13320 RESOLUTION NO. 13320 A RESOLUTION APPROVING AN EMPLOYMENT AGREEMENT AND A REAL PROPERTY CONVEYANCE AGREEMENT AND A SPECIAL WARRANTY DEED BETWEEN PUEBLO, A MUNICIPAL CORPORATION AND CBD BIOSCIENCES, L.L.C., A COLORADO LIMITED LIABILITY COMPANY AND THE PUEBLO DEVELOPMENT FOUNDATION, A COLORADO NONPROFIT CORPORATION, RELATING TO A JOB CREATING CAPITAL IMPROVEMENT PROJECT, AUTHORIZING THE PRESIDENT OF CITY COUNCIL TO EXECUTE SAID DOCUMENTS AND TRANSFERRING SEVEN MILLION EIGHT HUNDRED NINETY THOUSAND DOLLARS ($7,890,000) FROM THE 1992-2016 SALES AND USE TAX CAPITAL IMPROVEMENT PROJECTS FUND THEREFOR BE IT RESOLVED BY THE CITY COUNCIL OF PUEBLO, that: SECTION 1. The City Council finds and determines that the expenditure of Seven Million Eight Hundred Ninety Thousand Dollars ($7,890,000) for a job creating capital improvement project with CBD Biosciences, LLC, a Colorado limited liability company, (“Company”) described in the attached Agreements, is for a public purpose and in furtherance of a municipal function and will create employment opportunities justifying the expenditure of public funds. SECTION 2. The City Council further finds the incentives hereby granted to the Company seemingly fail to meet the criteria and standards established by Section 14-4-85 of the Pueblo Municipal Code (PMC) because the City’s incentives are more than 50% of the total project value, contrary to PMC Sec. 14-485.3 (b) (2) (b) and the City’s incentives exceed 50% of the Company’s projected annual payroll of $8,474,000 contrary to PMC Sec. 14-485.3 (b) (2) (a). However, the City Council further finds and concludes that PMC Sec. 14-485.3 (c) of the Criteria Ordinance provides that the City Council “may grant a variance” of these requirements “if the City Council determines in its sole discretion that the project will create employment for new employees justifying the expenditure of funds.” SECTION 3. The City Council further finds and concludes that good cause exists to grant the Company a variance from the criteria and standards established by Section 14-4-85 of the Pueblo Municipal Code for three reasons. First, the addition of 163 employees to the Pueblo workforce, at salaries and benefits averaging over $50,000, will boost the local economy. Second, the sale of the former Boeing Building to the Company will relieve the City of significant projected maintenance expenses in the future. Third, the sale of the former Boeing Building to the Company will fully reimburse the half-cent sales tax fund for its prior investment in the former Boeing Building and will allow excess sales proceeds to be deposited in the City’s general fund. SECTION 4. The following Agreements between the City, the Company and the Pueblo Development Foundation (“PDF”), copies of which are attached hereto and incorporated herein by this reference, having been approved as to form by the City Attorney, are hereby approved: a. Employment Agreement dated October 26, 2015; and b. Real Property Conveyance Agreement dated October 26, 2015. City Council also hereby approves the Special Warranty Deed, dated October 26, 2015, by which the City conveys the former Boeing Building to PDF. The President of the City Council is authorized to execute and deliver said Agreements and Deed in the name of the City and the City Clerk is directed to affix the seal of the City thereto and attest same. SECTION 5. Funds in the aggregate amount of $7,890,000 are hereby authorized to be transferred, expended and made available out of the 1992 – 2016 Sales and Use Tax Capital Improvement Projects Fund for the sole purpose of the job creating capital improvement project authorized herein and in the manner described in the attached Agreements. The funds hereby authorized to be transferred and expended shall be released, disbursed and paid by the Director of Finance as specified in the attached Agreements. SECTION 6. The officers and staff of the City are directed and authorized to perform any and all acts consistent with the intent of this Resolution and attached Agreements which are necessary or desirable to effectuate the transactions described therein. SECTION 7. This Resolution shall become effective immediately upon final passage. INTRODUCED: October 26, 2015 BY: Dennis Flores City Clerk’s Office Item # Q-1 Background Paper for Proposed Resolution COUNCIL MEETING DATE: October 26, 2015 TO: President Stephen G. Nawrocki and Members of City Council CC: Sam Azad, City Manager VIA: Gina Dutcher, City Clerk FROM: Daniel C. Kogovsek, City Attorney SUBJECT: A RESOLUTION APPROVING AN EMPLOYMENT AGREEMENT AND A REAL PROPERTY CONVEYANCE AGREEMENT AND A SPECIAL WARRANTY DEED BETWEEN PUEBLO, A MUNICIPAL CORPORATION AND CBD BIOSCIENCES, L.L.C., A COLORADO LIMITED LIABILITY COMPANY AND THE PUEBLO DEVELOPMENT FOUNDATION, A COLORADO NONPROFIT CORPORATION, RELATING TO A JOB CREATING CAPITAL IMPROVEMENT PROJECT, AUTHORIZING THE PRESIDENT OF CITY COUNCIL TO EXECUTE SAID DOCUMENTS AND TRANSFERRING SEVEN MILLION EIGHT HUNDRED NINETY THOUSAND DOLLARS ($7,890,000) FROM THE 1992-2016 SALES AND USE TAX CAPITAL IMPROVEMENT PROJECTS FUND THEREFOR SUMMARY: Attached is a Resolution approving and authorizing the President of City Council to sign two (2) agreements with CBD Biosciences, L.L.C., a Colorado limited liability company (the “Company”) and the Pueblo Development Foundation, a Colorado nonprofit corporation (“PDF”):  Employment Agreement  Real Property Conveyance Agreement and a Special Warranty Deed conveying property to PDF. PREVIOUS COUNCIL ACTION: None. BACKGROUND: The Company’s business plan as it pertains to Pueblo County, is centered on the manufacture of hemp oil for distribution outside of Pueblo County. The Company has agreed to process harvested hemp plants and manufacture hemp oil at 1 McDonnel Douglas Ave., Pueblo, Colorado 81001, in the Pueblo Memorial Airport Industrial Park (the former “Boeing Building”). The building is currently owned by the City but will be transferred to PDF under the Real Property Conveyance Agreement. The Company has agreed to sign a “triple net” (Company pays utilities, taxes and insurance) lease/purchase agreement (which takes effect on November 1, 2015) and to pay rent for the building as follows:  Months 1 – 8: $0 per month  Months 9 – 14: $40,000 per month ($2.50 per square foot)  Months 15 – 120: $80,000 per month ($5.00 per square foot). All rent and other payments received by PDF under the Lease will be paid to City, less three percent (3%) thereof to be retained by PDF as reimbursement to PDF for its administrative expenses. The lease/purchase agreement gives the Company three options (at the end of years 3, 7 and 10) to buy-out the lease and purchase the building for $7,850,000 (the City’s investment of half- cent sales tax funds in the building) plus $150,000. The Company will receive a credit for 95% of the rent payments made prior to the date the purchase option is exercised. For example, if the Company exercises the purchase option after year 7, the half-cent sales tax fund will be reimbursed in full and the City will receive $267,000 which can be deposited into the general fund. FINANCIAL IMPLICATIONS: In the attached Employment Agreement, the City has agreed to transfer $7.89 million from the 1992-2016 Sales and Use Tax Capital Improvement Projects Fund, as follows:  Up to $4.89 million for the purchase of manufacturing equipment. As security, in the event of a default, the City will obtain a first lien on the manufacturing equipment purchased with City funds.  Up to $3 million to be disbursed to PDF, for the benefit of Company, for the actual costs and expenses of remodeling and renovating the Facility, including the costs of design, engineering and construction services. For its part, the Company has agreed, after a three-year “ramp up” interval, to hire 163 full-time employees whose annual salary shall average at least $41,590 without benefits and $51,998 with benefits, for a minimum of seven (7) years. The Company’s investment in the project is $5,240,000. The City’s incentives are more than 50% of the total project value, contrary to PMC Sec. 14-485.3 (b) (2) (b) of the Criteria Ordinance. Similarly, the City’s incentives exceed 50% of the Company’s projected annual payroll of $8,474,000 contrary to PMC Sec. 14-485.3 (b) (2) (a) of the Criteria Ordinance. However, PMC Sec. 14-485.3 (c) of the Criteria Ordinance provides that the City Council “may grant a variance” of these requirements “if the City Council determines in its sole discretion that the project will create employment for new employees justifying the expenditure of funds.” City staff is recommending that City Council grant the Company’s requested variance for three reasons: 1. The addition of 163 employees to the Pueblo workforce, at salaries and benefits averaging more than $50,000, will boost the local economy; 2. The sale of former Boeing Building will relieve the City of significant maintenance expenses in the future; 3. This transaction will fully reimburse the half-cent sales tax fund for its prior investment in the former Boeing Building and allow excess sales proceeds to be deposited in the City’s general fund. BOARD/COMMISSION RECOMMENDATION: Not applicable to this Resolution. STAKEHOLDER PROCESS: Not applicable to this Resolution. ALTERNATIVES: If this Resolution is not approved, the Company will not be able to begin operations in Pueblo County. RECOMMENDATION: The Pueblo Economic Development Corporation recommends approval of this Resolution. Attachments: Proposed Resolution Reception 2024957 12/28/2015 03:30:18 PM SPECIAL WARRANTY DEED THIS DEED, made this 26th day of October, 2015 between the City of Pueblo, Colorado, a Colorado municipal corporation (hereinafter referred to as "Grantor") and the Pueblo Development Foundation, a Colorado non-profit corporation and the whose legal address is 301 N. Main Street, Suite 200, Pueblo, CO 81003 (hereinafter referred to as "Grantee"): WITNESSESTH, that the Grantor, for and in consideration of the sum of TEN DOLLARS ($10.00), and other good and valuable consideration, the receipt and sufficiency,of which is hereby acknowledged, has granted, bargained, sold and conveyed, and by these presents does grant, bargain, sell, convey, and confirm, unto the Grantee, its heirs, successors and assigns forever,all the real property,together with improvements,if any, situate,lying and being in Pueblo County, State of Colorado, described as Lots 46 and 47, Pueblo Memorial Airport Industrial Park Subdivision, Pueblo County, Colorado, more commonly known as 1 McDonnell Douglas Ave., Pueblo, CO 81001, for all purposes, together with all and singular the rights, benefits, privileges, easements, tenements, hereditaments and appurtenances thereto belonging, or in anywise appertaining, and the reversion and reversions, remainder and remainders, rents, issues and profits thereof, and all the estate, right, title, interest, claim and demand whatsoever of the Grantor, either in law or equity, of, in and to the above bargained premises, with the hereditaments and appurtenances. This conveyance is made subject to and subordinate to all easements, reservations, restrictions, covenants, limitations, rights-of-way and conditions of record. This conveyance is also made subject to and subordinate to those encumbrances and exceptions (the "Permitted Exceptions") set forth on Exhibit A attached hereto and incorporated herein and made a part hereof for all purposes. TO HAVE AND TO HOLD the said premises, subject to the Permitted Exceptions, above bargained and described, with the appurtenances, unto the Grantee, its heirs, successors and assigns forever. The Grantor, for itself, its successors and assigns does covenant and agree that it shall and will WARRANT AND FOREVER DEFEND the above-bargained premises in the quiet and peaceable possession of the Grantee, its heirs, successors and assigns, against all and every person or persons claiming the whole or any part thereof,by,through or under the Grantor. IN WITNESS WHEREOF,this Special Warranty Deed is executed by Grantor to be effective the day and year first above written. GRANTOR: [S E A L] • O, A ' O viii .t ,1. o i te jr; Attest ', ., ,.,__. i Pueblo, a ►4 •nic s 7 is ration £xt"E,; erk . _ B . ,. .1;_---:::.:_j_47://ii, '------ i\ i - , 'r- .•: of the City Council b.bP COLORADO ) ) ss. COUNTY OF PUEBLO ) This instrument was acknowledged before me this a3' ' day of ndVQ444A 4 2015, by Stephen G. Nawrocki as President of the Pueblo City Council. Witness my hand and official seal. My commission expires: /o9/3,0 Ii 7 CINDY J. CABaR17TA • 4--' NOTARY PUBLIC Not y ublic STATE OF COLORADO NOTARY ID 1$9340141940 fl(PNRES DECEMBER 20,2017 2024957 WD 12/28/2015 03:30:18 PM Page: 2 of 4 R 26.00 D 0.00 T 26.00 Gilbert Ortiz Clerk/Recorder, Pueblo County, Co ill EirdPlini ',, °iI/4111146M A11:01r111El,' i Ell Exhibit A Permitted Exceptions Page 1 of 2 2 o-- L, G Eng1. Any facts,rights,interests or claims that are not shown by the Public Records but which could be '.. -. ascertained by an inspection of the Land or that may be asserted by persons in possession of the Land. Mma 2 mm es, Lx 2, Easements,liens or encumbrances,or claims thereof,not shown by the Public Records. I, _ mm2 3. Any encroachments,encumbrances,violation,variation,or adverse circumstance affecting the Title that N o would be disclosed by an accurate and complete land survey of the Land and not shown by Public N Records. N 4. Any lien or right to a lien,for services,labor or material heretofore or hereafter furnished,imposed by o law and not shown by the Public Records. ruro L"® 5. Defects, liens,encumbrances,adverse claims or other matters,if any,created,first appearing in the Public m A — Records or attaching subsequent to the effective date hereof but prior to the date the proposed Insured a a" acquires of record for the value the estate or interest or mortgage thereon covered by this Commitment. NOTE:The above exception will not appear on policies where closing and settlement has been performed by the Company. 6. (a)Unpatented mining claims;(b)reservations or exceptions in patents or in Acts authorizing the issuance thereof,(c)water rights,claims of title to water,whether or not the matters excepted under(a),(b),or(c) are shown by the Public Records. 7. (a)Taxes or assessments that are not shown as existing liens by the records of any taxing authority that levies taxes or assessments on real property or by the Public Records;(b)proceedings by a public agency that may result in taxes or assessments,or notices of such proceedings,whether or not shown by the records of such agency or by the Public Records. 8. All taxes and assessments,now or heretofore assessed,due or payable. 9. Covenants,conditions and restrictions,which do not include a forfeiture or reverter clause,set forth in the Warranty Deed recorded on June 6, 1994 in Book 2737 at Page 560. 10. Covenants,conditions and restrictions,which do not include a forfeiture or reverter clause,set forth in the Special Warranty Deed recorded on August 25,2006 at Reception Number 1690590. 11. Right of Way Easement granted to Colorado Eastern Telephone and Telegrapis Co. recorded May 7, 1908 in Book 321 at Page 477. 12. License Agreement granted to The Colorado Postal-Cable Company recorded December 30, 1913 in Book 390 at Page 188. 13. Right of Way and/or Easement granted to The Postal Telegraph-Cable Company recorded in Book 849 at Page 247. Exhibit A Permitted Exceptions Page 2 of 2 14. Right of Way and/or Easement granted to The Colorado Interstate Gas Company recorded in Book 940 at Page 63. IS. Reservation as contained in Deed from The United States of America, acting by and through the War Assets Administrator,to The City of Pueblo, a body politic under the laws of the State of Colorado, recorded July 31, 11 3 icltf74 at Page 87. 16. Right of Way and/or Easement granted to The Colorado Interstate Gas Company recorded in Book 1I k at Page 427. 17. Reservation as contained in Deed of Release from The United States of America, acting by and through the Administrator of Civil Aeronautics to The City of Pueblo,a body politic under the laws of the State of Colorado,recorded September 20, 1958 in Book 1309 at Page 146. 18. Reservation as contained in the Release from The United States acting by the Federal Aviation Administration to The City of Pueblo, a body corporate and politic, under the laws of the State of Colorado, recorded September 25, 1970 in Book 1678 at Page 155 and in Deed recorded September 25, 1970 in Book 1678 at Page 159. 19. The effect of Annexation Map recorded April 6, 1990 in Book 2492 at Page 622. 20. Terms, conditions, provisions, agreements and obligations contained in the Subdivision Improvements Agreement recorded on October 11, 1995 in Book 2836 at Page 705. 21. All notes, notices and easements as set forth on the plat of Pueblo Memorial Airport Industrial Park Subdivision recorded on October 11, 1992 in Book 2836 at Page 665 at Reception Number 1096136. 2024957 WD 12/28/2015 03:30:18 PM END OF EXCEPTIONS Page: 4 of 4 R 26.00 D 0.00 T 26.00 Gilbert Ortiz Clerk/Recorder, Pueblo County, Co IIIPAIIVA'.1118°1P4 1M di kyi 81111 =r. Reception 2024958 12/28/2015 03:30:18 PM DEED OF TRUST THIS INDENTURE, is made as of October 26, 2015, between the Pueblo Development Foundation, a Colorado non-profit corporation, whose address is 301 N. Main Street, Suite 210, Pueblo, Colorado, 81003,hereinafter referred to as"Grantor," and the Public Trustee of the County of Pueblo, State of Colorado, hereinafter referred to as Public Trustee, WITNESSETH,THAT,WHEREAS,Grantor and Pueblo,a municipal corporation,whose address is 1 City Hall Place, Pueblo, Colorado, 81003 ("Beneficiary") executed a Real Propdrty Conveyance Agreement and an Employment Agreement, of even date ("Agreements") whereby Grantor agreed to perform certain obligations therein described; and WHEREAS, the Grantor is desirous of securing payment of the Indebtedness to the Beneficiary; and WHEREAS, whenever the terms payment of the "promissory note," "note" or "indebtedness" are used herein, they shall mean and include the Grantor's obligations to perform described in the Agreements. NOW THEREFORE, the Grantor, in consideration of the premises and for the purpose aforesaid, does hereby grant, bargain, sell and convey unto the said Public Trustee in trust forever, the following described real property,together with all improvements thereon,whether now existing or hereafter constructed and installed (herein collectively the "property") situate in the County of Pueblo, State of Colorado, to wit: Lots 46 and 47, Pueblo Memorial Airport Industrial Park Subdivision, Pueblo County, Colorado also known by street and number as: 1 McDonnell Douglas Ave., Pueblo, Colorado, 81001. TO HAVE AND TO HOLD the same, together with all and singular the privileges and appurtenances thereunto belonging,in trust nevertheless,that: a)in case of default in the payment of the Indebtedness or any part thereof,or in the payment of the interest thereon according to the tenor and effect of said Promissory Note, or b) in case default shall be made or violation or breach of any of the terms, conditions, covenants or agreements herein contained, the Beneficiary may declare a violation of any of the covenants herein contained and may elect to advertise said property for sale, and demand such sale by filing a notice of election and demand for sale with the Public Trustee. Upon receipt of such notice of election and demand for sale, the Public Trustee shall cause such notice to be recorded in the recorder's office of the county in which said property is situated. 2024958 TD 12/28/2015 03:30:18 PM Page: 2 of 20 R 106.00 D 0.00 T 106.00 Gilbert Ortiz Clerk/Recorder, Pueblo County, Co 101 BII The Public Trustee shall then give public notice of the time and place of sale by advertisement to be published for four weeks (once each week for five successive weeks) in some newspaper of general circulation at that time published in Pueblo County,the county in which said property is located. A copy of such notice shall be mailed to all persons entitled to receive notice as provided by law. It shall and may then be lawful for the Public Trustee to sell said property for the highest and best price the property will bring in cash and to dispose of the said property(en masse or in separate parcels, as the said Public Trustee may think best), together with all the right, title and interest of the Grantor therein, at public auction at any place as may be specified by statute and designated in the notice of sale. The Public Trustee shall make and give to the purchaser of such property at such sal , a certificate of purchase as required by law. Unless the property is redeemed,the public trustee shall execute and record a confirmation deed to the holder of the certificate of purchase no less than fifteen business days after the date of sale or,if later,the expiration of all redemption periods and the receipt of all statutory fees and costs. The Public Trustee shall,out of the proceeds of such sale and after first paying and retaining all fees, charges and costs of making said sale, pay to the Beneficiary hereunder, the Indebtedness and interest due thereon according to the tenor and effect of the Promissory Note, and all moneys advanced by such Beneficiary for insurance,taxes and assessments,with interest thereon at eight(8) per cent per annum,rendering the overplus,if any,unto those persons entitled thereto as a matter of law. Said sale as evidenced by the confirmation deed executed and recorded by the Public Trustee shall operate as a perpetual bar, both in law and equity, against the Grantor and all other persons claiming the said property, or any part thereof, by, from, through or under the Grantor. The Beneficiary may purchase said property or any part thereof; and it shall not be obligatory upon the purchaser at any such sale to see to the application of the purchase money. The Grantor covenants with and warrants to the Public Trustee, that at the time of the ensealing of and delivery of these presents the Grantor is well seized of the said lands,tenements and property in fee simple,and has good right,full power and lawful authority to grant,bargain,sell and convey the same in the manner and form as aforesaid; hereby fully and absolutely waiving and releasing all rights and claims the Grantor may have in or to said lands,tenements and property as an exemption under and by virtue of any act of the General Assembly of the State of Colorado or of the United States Congress,now existing or which may hereafter be passed in relation thereto,and that the same are free and clear of all liens and encumbrances whatever,except those easements,rights- of-way, reservations, restrictions, covenants and conditions of record. The Grantor further warrants to the Public Trustee the quiet and peaceable possession of said property against all persons who may lawfully claim the whole or any part thereof, and that the Grantor shall and will forever defend the title to said property against such person or persons. The Grantor shall timely pay all taxes and assessments levied on the property and will keep all improvements that may be on said lands insured against any casualty loss, including extended 2 2024958 TD 12/28/2015 03:30:18 PM Page: 30 of 20 R 106.00 D 0.00 T 10 006. Gilbert Ortiz Clerk/Recorder, Pueblo County, Co mai A91 coverage,in a company or companies,meeting the net worth requirements of the Beneficiary hereof in an amount which will yield to the Beneficiary, after reduction by co-insurance provisions of the policy,if any,not less than the then total fair market value of the property.Each policy shall contain a loss payable clause naming the Beneficiary as mortgagee and shall further provide that the insurance may not be canceled upon less than ten days written notice to the Beneficiary. At the option of the Beneficiary, the original policy or policies of insurance shall be delivered to the Beneficiary as further security for the Indebtedness. Should the Grantor fail to insure and deliver the policies or to pay taxes or assessments as the same fall due, the Beneficiary may make any such payments or procure any such insurance, and all monies so paid with interest thereon at the rata of eight(8)per cent per annum shall be added to and become a part of the Indebtedness secured by this Deed of Trust and may be paid out of the proceeds of the sale of the property if not paid by the Grantor. In addition,and at its option,the Beneficiary may declare the Indebtedness secured hereby and this Deed of Trust to be in default for failure to procure insurance or make any of the payments required by this paragraph. IN CASE OF ANY DEFAULT whereby the right of foreclosure occurs hereunder, the Beneficiary or holder of the certificate of purchase shall at once become entitled to the possession, use and enjoyment of the property aforesaid, and to the rents, issues and profits thereof, from the accruing of such right and during the pendency of foreclosure proceedings and the period of redemption,if any. Such possession shall at once be delivered to the Beneficiary or the holder of the certificate of purchase on request. Upon refusal,delivery of such possession may be enforced by the Beneficiary or the holder of the certificate of purchase by any appropriate civil suit or proceeding. The Beneficiary or holder of the certificate of purchase shall be entitled to a Receiver for said property,and of the rents,issues and profits thereof,after such default,including the time covered by foreclosure proceedings and the period of redemption,if any,and shall be entitled thereto as a matter of right without regard to the solvency or insolvency of the Grantor or of the then owner Of said property and without regard to the value thereof Such Receiver may be appointed by any court of competent jurisdiction upon ex parte application and without notice, said notice being hereby expressly waived and all rents,issues and profits,income and revenue therefrom shall be applied by such Receiver to the payment of the Indebtedness hereby secured,according to the law and the orders and directions of the court. IN THE CASE OF ANY DEFAULT in the payment of the Indebtedness or any part thereof according to the tenor and effect of said Promissory Note, or of a breach of violation of any of the covenants or agreements herein by the Grantor, which default or breach shall remain uncured for thirty (30) days or more after the Beneficiary has mailed notice thereof by certified mail, postage prepaid,to Grantor at its address set forth herein or personally delivered to Grantor,the whole of said principal sum of the Indebtedness hereby secured and the interest thereon to the time of the sale may at once, at the option of the Beneficiary, without notice, notice being hereby expressly waived, become due and payable, and the said property be sold in the manner and with the same effect as if said Indebtedness had matured. If foreclosure be made by the Public Trustee,reasonable attorneys' fees for services in the supervision of said foreclosure proceedings shall be allowed by the Public Trustee as part of the cost of foreclosure; and if foreclosure be made through the courts,reasonable 3 2024958 TD 12/28/2015 03:30:18 PM e420 R ee , 0.00 GilbrtOrtiz le /RordrPubo County, Co III Ricit attorneys' fee shall be taxed by the court as a part of the cost of such foreclosure proceedings. Venue for any foreclosure made through the courts shall be Pueblo County, Colorado,and shall be filed in the District Court, County of Pueblo, State of Colorado. Grantor and Beneficiary hereby submit to the jurisdiction of said District Court. To the extent allowed by law, Grantor and Beneficiary each waive its right to a jury trial. IT IS FURTHER UNDERSTOOD AND AGREED that if a release of this deed of trust is required, the Grantor will pay the expense thereof; and that all of the covenants and agreements herein contained shall extend to and be binding upon the successors and assigns of the respective parties hereto. PUEBLO DEVELOPMENT FOUNDATION a Colorado Non-profit Corporation ATTEST:itt 4C�i1 G�• (SQ� i G/ By 414(AZ Gi Secre/ary Robert L. Root, President STATE OF COLORADO ) ) ss. COUNTY OF PUEBLO ) The foregoing instrument was acknowledged before me this //414-- S ` day of ji1*brv\_\()Q..), , 2015, by Robert L. Root as President of the Pueblo Development Foundation, a Colorado non-profit corporation. -- , Witness my hand and official seal. 7My commission expires ____,----.`' 1'L ,__„ 0. 1r �__Not• u llic STOP COLBLIC �- NOTARY ID 20114008 STqgg COMMISSION EXPIRES AUG.29 2919, 4 2024958 TD 12/28/2015 03:30:18 PM Page: 5 of 20 R 106.00 D 0.00 T 106.00 Gilbert Ortiz Clerk/Recorder, Pueblo County, Co III rigW IT detilMal• REAL PROPERTY CONVEYANCE AGREEMENT THIS AGREEMENT entered into as of October 26, 2015, between the City of Pueblo, a municipal corporation("City") and Pueblo Development Foundation, a Colorado nonprofit corporation ("PDF"), WITNESSETH: WHEREAS, City is the owner of Lots 46 and 47, Pueblo Memorial Airport Industrial Park Subdivision, Pueblo County, Colorado, consisting of approximately 11.20 acres (the "Property"); and WHEREAS, City desires to engage PDF to provide property management services with respect to such Property, including developing plans and specifications for the renovation of tl* Property, constructing the renovations and, in conjunction therewith, leasing and managing this lease throughout its term to CBD Biosciences, LLC ("Company"); and WHEREAS, in conjunction with the engagement of PDF, City has agreed to convey ownership of the Property to PDF to facilitate its management responsibilities upon the terms and conditions set forth in this Agreement; and WHEREAS, Company desires to lease the Property as a part of a new job creating capital improvement project whereby Company commits it will employ a minimum of one hundred sixty-three (163) full-time employees at the Property and Company and PDF and City have entered into a separate Agreement concerning such commitment of even date herewith; and WHEREAS, City will advance to PDF and Company funds for renovation of the Property and PDF is willing to oversee and manage such construction and, further, to lease and thereafter manage the lease of the Property by PDF to Company; and NOW THEREFORE, in consideration of the foregoing and mutual covenants contained herein, City and PDF agree as follows: Section 1. PDF Lease. PDF will enter into a lease of the Property with Company to locate its business at Pueblo Memorial Airport Industrial Park. The lease shall be for a term of ten (10) years and will include an option for Company to acquire the Property ("Lease"). Section 2. Renovation. PDF will oversee and manage the renovation of the Property in accordance with the covenants and provisions of the Lease. City will advance to PDF for the benefit of the Company funds in an amount not to exceed Three Million Dollars ($3,000,000) (the "City Funds") for such purposes, subject to and contingent upon the following conditions and covenants: (a) PDF and Company entering into a Lease in form and content approved by the City Attorney. (b) Company executing an Employment Agreement with City approved by City Council by Resolution. 2410625.1 2412659.1 2024958 TD 12/28/2015 03:30:18 PM Page: 6 of 20 R 106.00 D 0.00 T 106.00 Gilbert Ortiz Clerk/Recorder, Pueblo County, Co iii ir�pI � I� rt�� �� rl� A! ���a qat , NI HI (c) All contracts for remodeling and renovating the Property being awarded after competitive bidding which allows qualified local contractors to participate in the competitive bidding procedures. (d) All City Funds shall be spent solely on the renovation of the Property. (e) PDF shall file with City's Director of Finance written requests for payment certified to be true and correct by an officer of PDF or its representative that the amounts included in each request for payment have not been included in any prior request for payment and are for the actual cost of renovating the Property, identifying the construction work for which payment is sought has been completed. All City Funds disbursed directly to PDF shall be held in trust by PDF for the sole and only purpose of paying for renovation of the Property. Section 3. Management Fee. All rent and other payments received by PDF under the Lease shall be held in trust by PDF for the benefit of City and immediately after receipt thereof by PDF, PDF shall deliver and pay the rent and payments to City, less three percent (3%) thereof to be retained by PDF as reimbursement to PDF for its expenses incurred in participating in this transaction and as owner and property manager under the Lease. Section 4. Lease Performance. PDF, as Lessor, shall perform all covenants and conditions on the part of the Lessor to be performed under the Lease and shall enforce all covenants and conditions on the part of the Company to be performed under the Lease. PDF shall timely give written notice to City of any of Company's defaults under the Lease. Section 5. Transfer of Property. Immediately upon and in conjunction with the execution of this Agreement, City shall convey the real property and all improvements located thereon as is more particularly identified herein by Special Warranty Deed,to PDF free and clear of all liens and encumbrances of any nature except those appearing of record and as are acceptable to PDF. The Property shall be conveyed in its present"AS IS" and"WHERE IS" condition, with all its faults. City hereby disclaims any and all express or implied warranties with respect to the Property, except as to title. The warranties disclaimed include, but are not limited to, habitability, merchantability and fitness for a particular purpose. PDF shall not thereafter sell, encumber, or otherwise transfer the property except as provided and set forth herein, and as set forth in the Lease. Section 6. Security. PDF's obligations to City under this Agreement and under an Employment Agreement dated October 26, 2015, shall be secured by a first Deed of Trust on the Property and PDF shall, in conjunction with the conveyance by City, execute and deliver to City its Deed of Trust in a form and content approved by the City Attorney. Section 7. Delays. Any delays in or failure of performance by any Party of its obligations under this Agreement shall be excused if such delays or failure are a result of acts of God, fires, floods, strikes, labor disputes, accidents, regulations or order of civil or military 2024958 TD 12/28/2015 03:30:18 PM Page: 7 of 20 R 106.00 D 0.00 T 106.00 Gilbert Ortiz Clerk/Recorder, Pueblo County, Co III rCian riiir 'I S R � r° �� ''ti III 1 authorities, shortages of labor or materials,or other causes, similar or dissimilar,which are beyond the control of such Party. Section 8. Default. Time is of the essence, subject to Section 7 above. If any payment or any other material condition, obligation, or duty is not timely made, tendered, or performed by either Party, then either Party may exercise any and all rights available at law or in equity, including damages, but such damages shall be limited to the actual amount that such Party is entitled to receive or retain under this Agreement. No special or punitive damages shall be payable hereunder. Notwithstanding the foregoing, if PDF defaults in the performance of any covenant or provision of this Agreement or of the Lease PDF shall,within thirty(30)days after written derrikind is given to PDF by City, convey title to the property to City by Special Warranty Deed free of loins and encumbrances, except liens and encumbrances existing at the time PDF acquired title to the Property and excepting the Lease and PDF's Deed of Trust securing the performance of this Agreement, and, further, PDF shall assign the Lease to the City. In the event that PDF evicts the tenant for any reason in accordance with the provisions of the lease, or if the lease is otherwise terminated in accordance with the provisions of the lease,then PDF shall convey the property back to the City and the City shall accept such conveyance which shall be made by Special Warranty Deed as previously specified in this section. City shall reimburse PDF for the costs of eviction (including reasonable attorneys' fees) and the cost of taxes and insurance paid by PDF prior to conveyance to the City. The provisions of this Section may be specifically enforced. Section 9. Obligations Subject to Charter and Constitution. The covenants, duties and actions required of the parties under this Agreement shall be subject to and performed in accordance with the provisions and procedures required and permitted by the City Charter and he Colorado Constitution. Section 10. Captions. The captions of the Sections are set forth only for the convenience and reference of the Parties and are not intended in any way to define, limit, or describe the scope or intent of this Agreement. Section 11. Additional Documents or Action. The Parties agree to execute any additional documents or take any additional action that is necessary to carry out this Agreement. Section 12. Waiver of Breach. A waiver by any Party to this Agreement of the breach of any term or provision of this Agreement shall not operate or be construed as a waiver of any subsequent breach by either Party. Section 13. Governing Law. This Agreement shall be governed by the laws of the State of Colorado. Section 14. Execution in Counterparts. This Agreement may be executed in several counterparts, each of which shall be deemed an original and all of which shall constitute but one and the same instrument. 2024958 TD 12/28/2015 03:30:18 PM Page: 8 of 20 R 106.00 D 0.00 T 106.00 Gilbert Ortiz Clerk/Recorder, Pueblo County, Co III Mitif 'r i,l o«113Ir1M 'lli X1401 rf, 11111 Section 15. Third-party Beneficiaries. This Agreement is intended to describe the rights and responsibilities only as to the Parties hereto. This Agreement is not intended and shall not be deemed to confer any rights on any person or entity not named as a Party hereto. Accordingly, no third party shall have any right or remedy hereunder or the right to enforce any provision of this Agreement. Section 16. Minor Changes. The Parties executing this Agreement are authorized to make non-substantive corrections to this Agreements, if any, as the Parties mutually consider necessary. Section 17. Good Faith of Parties. In the performance of this Agreement or in considering any requested approval, acceptance, or extension of time, the Parties agree that e ch will act in good faith and will not act unreasonably, arbitrarily, capriciously, or unreasondbly withhold, condition, or delay any approval, acceptance, or extension of time required or requeSted pursuant to this Agreement. Section 18. Venue. In the event of any litigation arising under this Agreement,exclusive venue for any such litigation shall be Pueblo County, Colorado. All such litigation shall be filed in the District Court,County of Pueblo,State of Colorado and each party submits to the jurisdiction of such District Court. To the extent allowed by law, each party waives its right to a jury trial. Section 19. Notices. Any notices hereunder shall be sufficiently given if given in writing personally or mailed by first class,registered,or certified mail,postage prepaid,addressed: (a) if to City, City Manager, City of Pueblo, 200 S. Main Street, Pueblo, CO 81003 with a copy to City Attorney, 1 City Hall Place, Third Floor, Pueblo, Colorado 81003, or (b) if to the PDF, 301 N. Main Street, Suite 210, Pueblo, Colorado 81003. or to such other person or address as either party shall specify in written notice given to the other party pursuant to the provisions of this Section 19. Section 20. Authority to Sign. The persons signing this Agreement in the name of and on behalf of PDF represent and warrant that they and PDF have the requisite power and Authority to enter into, execute, and deliver this Agreement, and that this Agreement is a valid legally binding obligation of PDF enforceable against PDF in accordance with its terms. When executed by the City and PDF, this Agreement shall constitute a binding Agreement and shall be binding upon and inure to the benefit of the parties and their respective successors and permitted assigns. Section 21. Severability. 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. 2024958 TD 12/28/2015 03:30:18 PM Page: 9 of 20 R 106.00 D 0.00 T10 ;00 Gilbert Ortiz Clerk/Recorder, Pueblo County, Co III Kiregaradll 141' MIIIII IAIII IIil a i 11141 11 II Section 22. Drafters. Each party acknowledges that this Agreement was fully negotiated by the parties and,therefore,no provision of this Agreement shall be interpreted against any party because such party or its legal representative drafted such provision. Section 23. Attorneys' Fees. In the case of any litigation among the parties under this Agreement, the prevailing party will be entitled to reimbursement for its reasonable costs, including reasonable attorneys' fees, incurred in any such dispute. Section 24. Assignment. This Agreement shall be binding upon and inure to the benefit of City and PDF and their respective successors and assigns, provided PDF may not assign this Agreement or any of its rights hereunder without the prior written consent of City. EXECUTED at Pueblo, Colorado as of the day,.arid year first above written. PUEBLO, A Ni k.. ' • CO' ® :, TION 3- e ' ��3itCC. C� 4 �f�� 9 ; 'resi•- • i1 C 1t(�' o�.11' 'e' ` : , , y' s ir- ' . . awi-3;11:=(,4 2,1L -m4 Attest: •. r= ...; City ®1-rk ' • ;T-... ,w,,40 ,{ Approved as to form: --7 ". f7 - - p17,.E-i—s City Attorney PUEBLO DEVELOPMENT FOUNDATION A Colorado Non-profit Corporation BY: A//// Robert L. Root, President Attest:` Oil 2Cb��a��i Secrery 2024958 TD 12/28/2015 03:30:18 PM Page: 10 of 20 R 106.00 D 0.00 T 106.00 Gilbert Ortiz Clerk/Recorder, Pueblo County, Co Ill IP R'r iMMILK% 11 aA i', M kJ, III EMPLOYMENT AGREEMENT THIS EMPLOYMENT AGREEMENT ("Agreement") is entered into as of October 26, 2015 between Pueblo, a Municipal Corporation (the "City") and CBD Biosciences, LLC, a Colorado limited liability company (the "Company") and Pueblo Development Foundation, a Colorado nonprofit corporation("PDF"). WHEREAS, Company has expressed a willingness to locate a manufacturing facility within the Pueblo Memorial Airport Industrial Park("Industrial Park"), and in furtherance thereof has,through the Pueblo Economic Development Corporation,made application for funds and other economic incentives to the City, and WHEREAS, in connection with its application, Company has committed to invest not less than$ 4,740,000 in fixed assets in a manufacturing facility it will locate within the City of Pueblo, and to provide the employment described in Section 5 of this Agreement; and WHEREAS, the City has approved such application and will make certain funds and other economic incentives available to Company subject to and upon the terms and conditions of this Agreement; and WHEREAS, PDF is experienced in performing management services with respect to renovation and remodeling of property to be used by Company; NOW, THEREFORE, in consideration of the foregoing and the mutual covenants contained herein, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, City and Company agree as follows: 1. The following terms as used in this Agreement shall have the following meaning unless the context clearly indicates otherwise: "Effective Date" means the date of approval of this Agreement by City Council of City. "Employment Commitment Date"means November 1, 2018. "Facility" means the manufacturing facility located at Lots 46 and 47, Pueblo Memorial Airport Industrial Park Subdivision, County of Pueblo, State of Colorado, also known and numbered as 1 McDonnell Douglas Avenue, Pueblo CO 81001, wherein Company will conduct its manufacturing operations for production of goods for distribution and sale outside of Pueblo County, Colorado. "Full-Time Employee" means a person who actually performs work at the Facility for not less than thirty-five (35) hours per week whether employed by Company or by an outside entity acting as an agency to provide Full-Time Employees for Company. The term "Full-Time Employee" does not include independent contractors nor employees of independent contractors except employees performing work at the Facility who are employees of an independent contractor acting as an agency to provide Full-Time Employees for Company. 1 2024958 TD 12/28/2015 03:30:18 PM Page: 11 of 20 R 106.00 D 0.00 T 106.00 Gilbert Ortiz Clerk/Recorder, Pueblo County, Co III 111111AIM 111 117 MIA 11 III "Lease" means a lease in substantially the same form and content as the Lease attached hereto as Exhibit"A." "Quarter"means three consecutive calendar months commencing January 1,April 1,July 1 and October 1 of each calendar year. "Quarterly Employees" means the sum of the aggregate number of Full-Time Employees on each business day of a Quarter, divided by the sum of the aggregate business days in such Quarter. "Salary" means direct compensation payable to an employee including vacation Ory, bonuses,overtime compensation and the amount of any pretax benefits paid by the employee udder flexible spending or other qualified plans. The term does not include employer paid payroll takes nor benefits such as employer paid health insurance. "Security Agreement" has the meaning set forth in Section 6 of this Agreement. 2. If Company is not in default hereunder, City will, after the Effective Date: O Advance to Company Four Million Eight Hundred Ninety Thousand Dollars ($4,890,000) for the purchase of equipment to be used and installed at the Facility; ® Disburse to PDF, for the benefit of Company, funds in an amount not to exceed Three Million Dollars($3,000,000)for the actual costs and expenses of remodeling and renovating the Facility, including the costs of design, engineering and construction services. The disbursement for costs of equipment and remodeling and renovation are hereinafter referred to as the "City Funds." City, PDF and the Company agree to perform and comply with the following conditions: (a) Manufacturing Equipment. As a condition precedent to the disbursement of City Funds for the purchase of manufacturing equipment, Company shall file with the City's Director of Finance written request for payment certified to be true and correct by an officer of Company that the amounts included in the request for payment have not been included in any prior request for payment and are for the actual cost of manufacturing equipment, identifying the specific equipment for which payment is sought, including contracts for the purchase thereof and certificates of delivery and installation at the Facility,to the extent applicable. Company shall not submit requests for payment which exceed, in the aggregate, Four Million Eight Hundred Ninety Thousand Dollars ($4,890,000). The City agrees to disburse funds within thirty (30) days of submission of the Company's written request for payment, if such request is accompanied by supporting documentation as set forth herein. Following disbursement of the City funds, the Company shall acquire and install the Equipment; and, shall provide a report to the City within ninety(90) days thereafter documenting the purchase and the amounts paid therefor. 2 2024958 TD 12/28/2015 03:30:18 PM ----- Pa9e: 12 of 20 R 106.00 D 0.00 T 106.00 Gilbert Ortiz Clerk/Recorder, Pueblo County, Co III 'f frrf1Ke11111 (b) Plans and Bidding. (I) Company, in consultation with PDF shall determine its needs for remodeling and renovation of the Leased Property and PDF, in consultation with Company, shall cause plans and specifications to be prepared for the work. The plans and specifications shall be filed with the City, and work shall not be performed until and unless the same are approved by City, which approval shall not be unreasonably withheld. (II) All construction contracts for the work contemplated by the approved plans and specifications ("Construction Contracts") shall be awarded by competitive bidding. PDF shall invite general contractors holding Building Contractors-A(General Unlimited) licenses having their principal place of business in the City or County of Pueblo who are qualified and experienced to perform construction work for the Project("Local Contractors")to submit bids. PDF may invite other qualified general contractors with their principal place of business outside of Pueblo County, Colorado to submit bids. PDF shall assure that the same scope of work to be bid is timely furnished to each general contractor invited to bid. For "design-build" or other contractual arrangements, this requirement may be accomplished by a pre-bid conference or other acceptable competitive bidding procedure which allows Local Contractors a reasonable opportunity to participate in the competitive bidding procedures. All bids will be received and opened publicly. PDF will use its best efforts in good faith to award the construction contract to the lowest qualified bidder. A similar provision with respect to local subcontractors and suppliers shall be included as part of the construction contract with the general contractor who shall use its best efforts in good faith to engage local subcontractors and suppliers for such construction. If the Company, its employees or agents had negotiated with a general contractor, subcontractor or supplier with respect to a Project prior to competitive bidding, neither the Company nor PDF shall not enter into any Construction Contract with such general contractor, subcontractor or supplier for the Project. "Negotiate"means to discuss, confer upon, or arrange the terms and conditions of a Construction Contract including, without limitation, obtaining estimates of construction costs. After award, PDF shall enter into one or more Construction Contracts for the work and cause the remodeling and renovation to be expeditiously completed,and PDF shall timely pay all contractors for work upon the Facility. PDF shall not allow nor suffer any mechanics liens to be filed upon the Facility and in the event any such liens are filed, shall cause same to be promptly removed. (III) City Funds will be disbursed by City to PDF solely for the costs of design, renovation and remodeling of the Leased Property in accordance with the plans and specifications approved by City. In the event the cost of the design, remodeling and renovation exceeds $3,000,000 of available City Funds, such costs shall be promptly paid by Company and not by City. (c) Company shall file in the office of the City Clerk copies of the following: (i) Company's certificate or other evidence of authority to transact business in the State of Colorado issued by the Colorado Secretary of State, together with Company's certificate of good standing issued by the governmental jurisdiction of Company's formation, (ii) certified copy of the resolution of the governing board of Company approving this Agreement and the Lease and authorizing its officers to execute and deliver this Agreement,the Lease and related documents in the name of Company, (iii) this Agreement and the Lease executed by authorized officers of Company, and (iv) evidence reasonably satisfactory to City that Company will commence 3 2024958 TD 12/28/2015 03:30:18 PM Page: 13 of 20 R 106.00 D 0.00 T 106.00 Gilbert Ortiz Clerk/Recorder, Pueblo County, Co III FRIgN' L ,X6114 :a,rptVRIlali, III manufacturing manufacturing operations at the Facility. The date of the last to occur of the filings required under (i), (ii), (iii), and (iv) of this Section 2(c) shall be referred to herein as "Closing". If either the Effective Date or Closing does not occur on or before March 1, 2016, or such later date as Company and City shall mutually agree, the Company and the City, each, at its sole option, may terminate this Agreement and the Lease, and City and Company shall thereafter be released and discharged from all obligations hereunder. (d) As conditions precedent to the disbursement of City Funds for the renovation and remodeling of the Leased Premises, (i) Company and PDF shall have obtained City's written approval of the plans and specifications for the renovation and remodeling of the Leased Premises, (ii) Company shall file with the City Clerk the documents described.:in subsection (c) above, and (iii) PDF shall file with the City's Director of Finance periodic writfen requests for payment, certified to be true and correct by an officer of Company or PDF, representing that the amounts included in the request for payment have not been included in any prior request for payment and are for the actual cost of remodeling the Facility, identifying the specific work for which payment is sought, including paid invoices therefor and certificates of delivery and installation in the Facility. PDF shall not submit requests for payment which exceed in the aggregate $3,000,000. (e) Within thirty (30) days after the Effective Date and subject to Company's compliance with paragraph 2(c), but no later than the issuance of a building permit for the commencement of any work within the Leased Premises, Company shall execute the Lease with PDF.With respect to Company's occupancy of the Facility,during the term of the Lease,Company agrees to comply with all applicable laws, rules, regulations and ordinances of all federal, state, county and municipal authorities having jurisdiction over the Facility. 3. City and Company stipulate and agree that a portion of economic incentives provided by City to Company under this Agreement, as City Funds, in the amount of$4,890,000 (the "Economic Incentives") shall be provided subject to the terms and conditions of Section 4 below. 4. (a) Company acknowledges and agrees that the primary purpose of City in entering into this Agreement and the sole benefit to the City for making the Economic Incentives available to Company hereunder is the creation of additional jobs within the Industrial Park. Therefore, Company represents, covenants, and agrees that Company will perform as follows: (I) From the Employment Commitment Date to the seventh (7th) anniversary of the Employment Commitment Date, continuously conduct its business operations at the Facility and employ, on a quarterly average,not less than one hundred sixty-three(163)Full- Time Employees at the Facility whose annual salary shall average at least$41,590 without benefits and $51,998 with benefits (collectively, the "Employment Commitment") such quarterly average shall be calculated using the sum of the aggregate number of Full-Time Employees on each business day of a Quarter, divided by the sum of the aggregate business days in such Quarter. (b) Company will use good faith efforts in accordance with its sound business practices to (i) employ residents of the County of Pueblo as Full-Time Employees including, without limitation, engaging in reasonable programs and posting of employment openings in the 4 2024958 TD 12/28/2015 03:30:18 PM Page: 14 of 20 R 106.00 D 0.00 T 106.00 Gilbert Ortiz Clerk/Recorder, Pueblo County, Co III RI/An VAI 171 I III City of Pueblo, and (ii) engage engineers, architects, contractors and suppliers whose principal places of business are located in Pueblo County, Colorado, in all construction work for or related to the Facility. 5. Notwithstanding anything contained in this Agreement to the contrary,if Company shall for any reason default in its Employment Commitment, Company shall repay to City a pro- rata share of the Economic Incentives based upon the number of Full-Time Employees employed by Company at the Facility (the "Repayment Obligation"), as follows: (a) During the seven (7) year period starting on the Employment Commitnint Date and ending eighty-four(84) months thereafter(the"Repayment Period"), Company shall tiay to City an amount for each Quarter equal to the Quarterly Employees less than the number of F4ll- Time Employees required for such period under the Employment Commitment employed at the Facility by Company multiplied by the Adjusted Quarterly Repayment Capitation the "Company's Quarterly Payments"). The Quarterly Repayment Capitation as of the date of is Agreement shall be $1,071. For example, if for the second Quarter of the sixth year after the Employment Commitment Date the number of employees at the Facility is 150, the amount payable by Company to City on or before the fifteenth(15th)day of the next calendar month would be (163 - 150) x $1,071 = $13,923. Notwithstanding the foregoing, the Company's Quarterly Payments shall be adjusted to reflect the actual amount of the Economic Incentives disbursed to the Company, and in no event shall the total amount of Company's Quarterly Payments exceed the total amount of City Funds actually disbursed to the Company. (b) Company's Quarterly Payments, if any, shall be paid to the City without notice, demand, deduction or setoff on or before the fifteenth (15th) day of the month following the end of each Quarter during the Repayment Period at the office of the Director of Finance of City, 1 City Hall Place, Pueblo, Colorado, 81003, or such other person or location as the City may designate. All past due Company's Quarterly Payments shall bear interest at the rate of eight percent (8%) per annum ("Default Interest") until paid. Company's Quarterly Payments shall be in addition to rent and other amounts payable under the Lease. (c) Within fifteen(15)days after the end of each Quarter after the Employment Commitment Date and for one calendar month after the Repayment Period, Company will submit to City's Director of Finance Company's statements showing the Quarterly Employees for the preceding Quarter and their annual salary, together with the basis upon which Quarterly Employees and Company's Quarterly Payment, if any, were computed, certified by an officer of the Company to be true and correct. For purposes of verifying Company's employment and salary, for a period of three (3) years after receipt of a Quarterly Statement from the Company, City shall have access to and the right to audit Company's records relating to Company's employees employed at the Facility. If the City notifies the Company within such period that City disputes any specific item or items in any Company statement, and such dispute is not resolved between the City and the Company within thirty(30) days after the date such notice is given by City, either party, during the fifteen (15) day period following the expiration of the thirty (30) day period commencing on the date such notice is given, may refer such disputed item or items for determination to an independent certified public accountant or consultant selected by the disputing party and approved by the other party (to be paid on an hourly and not a contingent fee basis), 5 2024958 TD 12/28/2015 03:30:18 PM Pagge: 15 of 20 R 106.00 D 0.00 T 106.00 Gilbert Ortiz ClerkfRecorder, Pueblo County, Co • III it p P fiikiP lKhli ® rh 1111 which approval shall not be withheld unreasonably, and the determination of such accountant or consultant shall be final, conclusive and binding upon the City and the Company. (d) If Company defaults in any of its obligations under this Agreement including,without limitation,its Repayment Obligation, and such default is not cured within thirty (30) days after written notice specifying the default is given by City to Company, then in such event, and subject to the process described in Section 7, the entire balance of Company's Repayment Obligation shall become due and payable, without notice, notice being hereby expressly waived,together with Default Interest from the date of default,but in no event more than the amount of the Total Economic Incentives actually provided by City to Company, plus Default Interest from the date due until paid. Company's Repayment Obligation is absolute and unconditional and shall not be abated,reduced, diminished,modified,withheld or otherwise offset for any cause or reason whatsoever unless otherwise granted pursuant to Section 7 below. Notwithstanding the foregoing, in the event the Company fails to meet its Employment Commitment, but makes the Company's Quarterly Payments as contemplated in Section 5, such events shall not be a default by the Company of its obligations under this Agreement. 6. Company's Repayment Obligation under this Agreement shall be deemed to be a debt of Company payable to City until Company performs and discharges its obligations hereunder including, without limitation, its Repayment Obligation. Company's obligations under this Agreement including its Repayment Obligation shall be secured by a perfected first security interest in the Equipment purchased with City funds. Prior to any disbursement of funds by City for Equipment, Company shall execute and deliver to City, Company's Security Agreement, Financing Statement, and such other documents as may be reasonably required to perfect a first security interest in the Equipment all in form and content approved by City's Attorney (the "Security Agreement"); provided, however, such agreements shall not include nor require any personal guaranties or cross-collateral security agreements, and such approval shall not be unreasonably conditioned, delayed, or withheld. Company may be permitted from time to time to substitute items of replacement Equipment for items of Equipment removed from the Facility, provided that an amended Security Agreement meeting the requirements of this section is executed and delivered identifying the substitute items of Equipment and deleting the item of Equipment being replaced. Notwithstanding the foregoing, however, the City agrees that it shall not be permitted to enforce the Security Agreement (or realize on the Equipment provided as collateral pursuant thereto) unless (and to the extent that) the Company is in default under this Agreement beyond all applicable periods for cure. 7. (a) Prior to instituting any proceeding to enforce Company's Repayment Obligation, City shall notify Company in writing of its intention to institute such proceedings. Company may request relief from its Repayment Obligation by delivering to City within twenty (20) days after date of City's notice, Company's written request for relief specifying the grounds upon which such relief is sought together with documents supporting said grounds. Within ninety (90) days after receipt of Company's request, City will schedule a meeting with the City Council of City("City Council") at which meeting Company may appear. City will notify Company of the time and place of the meeting. Failure of Company to timely deliver its complete written request for relief or to appear at the scheduled meeting with the City Council shall entitle City to immediately institute proceedings to enforce Company's Repayment Obligation. 6 2024958 TD 12/28/2015 03:30:18 PM Page: 16 of 20 R 106.00 D 0.00 T 106.00 Gilbert Ortiz Clerk/Recorder, Pueblo County, Co NM FM Itilk VII I CU Mi (b) City Council may or may not, in its sole and absolute discretion, relieve Company, in whole or in part, from Company's Repayment Obligation. Any action taken by the City Council relating to a request for relief shall be final and binding on Company, and not subject to judicial review. Any such action by City Council is, and shall constitute, a legislative measure. Nothing contained in this section 8 shall grant or be construed to grant to Company any right or claim to relief from its Repayment Obligation or hearing with respect thereto. (c) No delay by the City in scheduling a meeting, or failure by City to exercise its right to enforce this Agreement, including Company's Repayment Obligation, and no partial or single exercise of that right, shall constitute a waiver of that right. (d) Nothing contained herein is intended to alter or limit any rights or remedies of either party in the event of a default under the Lease or this Agreement. 8. Company may assign all or any portion of this Agreement or its rights hereunder, or delegate all or any portion of its duties or obligations with the written consent from City. Subject to the provisions of this section, this Agreement shall be binding upon and inure to the benefit of the parties and their respective heirs, personal representatives, successors and permitted assigns. Except as specifically set forth or referred to herein, nothing herein expressed or implied is intended or shall be construed to confer upon or give to any person, other than the parties hereto and their successors or permitted assigns, any rights or remedies under or by reason of this Agreement. 9. In the event of any litigation arising under this Agreement, the court shall award to the prevailing party its costs and reasonable attorney fees. Exclusive venue for any such litigation shall be Pueblo County, Colorado. All such litigation shall be filed in the District Court in and for the County of Pueblo, State of Colorado and each party submits to the jurisdiction of such District Court. To the extent allowed by law, each party waives its right to a jury trial. 10. This Agreement together with the Lease expresses the entire understanding of the parties and supersedes and abrogates any and all prior dealings and commitments, whether oral or written,with respect to the subject matter of this Agreement and may not be amended or modified except in writing signed by City and Company. Any waiver of any provision of this Agreement must be in writing and signed by the party whose rights are being waived.No waiver of any breach of any provision hereof shall be or be deemed to be a waiver of any preceding or subsequent breach of the same or any other provision of this Agreement. The failure of any party to enforce or seek enforcement of the terms of this Agreement following any breach shall not be construed as a waiver of such breach. 11. This Agreement shall be construed in accordance with and be governed by the laws of the State of Colorado without regard to conflict of law principles. 12. Any notices hereunder shall be sufficiently given if given in writing personally or mailed by first class, registered, or certified mail, postage prepaid, addressed: (a) if to City, City Manager, City of Pueblo, 1 City Hall Place, 2nd Floor, Pueblo, Colorado, 81003; and City Attorney, City of Pueblo, 1 City Hall Place, Third Floor, Pueblo, CO 81003; 7 2024958 TD 12/28/2015 03:30:18 PM Page: 17 of 20 R/ 106.00 D 0.00 T 106.00 Gilbert Ortiz ClerklRecordpe�r,, Pueblo Coou`nty,, Co ` III lr� rai i 1 I��I����rirliY (b) if to the Company, prior to occupancy of the Leased Premises: c/o Steve Berg, 1058 Delaware Street, Denver, Colorado 80204; following occupancy of the Leased Premises: 1 McDonnell Douglas Avenue, Pueblo, Colorado 81001; (c) if to PDF, c/o Pueblo Economic Development Corporation, 301 N. Main Street, Pueblo, Colorado 81003, or to such other person or address as either party shall specify in written notice given to the other party pursuant to the provisions of this Section 11. 13. Time is of the essence hereof. This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and assigns, provided Company may hot assign this Agreement or any interest herein without the express written consent of City, which consent may be withheld, in the sole discretion of the City. Any assignment or attempted assignment of this Agreement by Company without such consent shall be null and void. No such assignment nor City's consent thereto shall release or discharge Company from any obligation or liability under this Agreement. 14. The persons signing this Agreement in the name of and on behalf of Company,PDF and City each represent and warrant that they have the requisite power and authority on behalf of their respective entity to enter into, execute, and deliver this Agreement, and that this Agreement is a valid legally binding obligation of Company, PDF and City enforceable in accordance with its terms. 15. (a) Company and PDF each represent and warrant that no person, entity, or organization has been employed or retained or will receive or be paid, directly or indirectly, any commission,percentage, contingent fee or any other remuneration,payment or receipt of which is contingent upon approval of this Agreement or City providing the City Funds, including the Economic Incentives hereunder, or any part thereof. For breach or violation of this warranty, City shall have the right to terminate this Agreement, or recover the full amount of such commission, percentage, contingent fee or other remuneration, and/or to seek such other remedies legally available to City, which remedies shall be cumulative. (b) PDF agrees to indemnify, defend and hold City, its officers, agents and employees harmless from and against all claims and actions arising from the renovation and remodeling of the Facility. 16. In no event shall City, its officers, agents or employees be liable to Company or PDF for damages, including without limitation, compensatory, punitive, indirect, special or consequential damages, resulting from or arising out of or related to this Agreement or the performance or breach thereof by City or the failure or delay of City in the performance of any covenant or provision under this Agreement on its part to be performed. In consideration of City entering into this Agreement, Company and PDF each hereby waive and discharge City, its officers, agents and employees from all claims for any and all such damages. No breach, default, delay or failure of City under this Agreement shall be or be construed to be a waiver, discharge or release of Company's Repayment Obligation. Notwithstanding the foregoing, if City defaults in any material covenant of this Agreement, Company and PDF shall have the right, without the 8 2024958 TO 12/28/2015 03:30:18 PM Page: 18 of 20 R 106.00 D 0.00 T 106,00 Gilbert Ortiz Clerk/Recorder, Pueblo County, Co III NctiVtilli100114111t L klANIM ! 64. 11111 showing or any special damages or an inadequate remedy at law, to seek specific performance or enforcement thereof, but not for damages of any type or nature. 17. 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. 18. None of the parties shall be, or hold itself out as, agent of any other party or as a joint venturer under this Agreement. 19. Each party acknowledges that this Agreement was fully negotiated by the parties and, therefore, no provision of this Agreement shall be interpreted against any party because such party or its legal representative drafted such provision. 20. The provisions of this Agreement are for the exclusive benefit of the parties hereto and their successors and permitted assigns, and no third party shall be a beneficiary, or have any rights by virtue of this Agreement. 21. This Agreement may be executed in any number of counterparts, and each such counterpart shall be deemed for all purposes to be an original, and all such counterparts shall together constitute but one and the same original. Executed at Pueblo, Colorado, the day and year first above written. [S E A L] Attest:_' 4 Pueblo, a . :: orpoo City 4 erk B President of the City Council [SEAL] CBD Biosciences, LLC a Colorado limited liability company p Y Attest:Vl, 1 e2lQ,/ ( / +,,• Name: Ma .argil A , `.0nAd By: Title: Opt;ra4-rna.4 5(- Name: a_ e L. a Title: Manager Pueblo Development Foundation, a Colorado nonprofit corporation By: Title:' Atstal.-4 9