HomeMy WebLinkAbout13496RESOLUTION NO. 13496
A RESOLUTION APPROVING AN EMPLOYMENT AGREEMENT
AND A LEASE AGREEMENT BETWEEN PUEBLO, A MUNICIPAL
CORPORATION AND FRE COMPOSITES USA, INC., A DELAWARE
CORPORTION RELATING TO A JOB CREATING CAPITAL
IMPROVEMENT PROJECT AUTHORIZING THE PRESIDENT OF
THE CITY COUNCIL TO EXECUTE SAID AGREEMENTS
BE IT RESOLVED BY THE CITY COUNCIL OF PUEBLO, that:
SECTION 1.
The City Council finds and determines that the Employment Agreement dated August 8,
2016 and the Lease Agreement dated August 8, 2016 (collectively the “Agreements”) between
Pueblo, a municipal corporation and FRE Composites USA, Inc., a Delaware corporation
(“Company”) constitute the continuation of a job creating capital improvement project and that
said Agreements meet and comply with the criteria and standards established by Ordinance No.
6381 and will provide for the continuation of existing jobs and will create future employment
opportunities justifying the expenditure of public funds. The Agreements, having been approved
as to form by the City Attorney, are hereby approved. The President of the City Council is
authorized to execute and deliver the Agreements in the name of the City and the City Clerk is
directed to affix the seal of the City thereto and attest same.
SECTION 2.
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 the attached Agreements to effectuate the
transactions described therein.
SECTION 3.
This Resolution shall become effective immediately upon final passage.
INTRODUCED August 8, 2016
BY: Ray Aguilera
City Clerk’s Office Item # Q-4
Background Paper for Proposed
Resolution
COUNCIL MEETING DATE: August 8, 2016
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 LEASE
AGREEMENT BETWEEN PUEBLO, A MUNICIPAL CORPORATION AND FRE
COMPOSITES USA, INC., A DELAWARE CORPORTION RELATING TO A JOB
CREATING CAPITAL IMPROVEMENT PROJECT AUTHORIZING THE
PRESIDENT OF THE CITY COUNCIL TO EXECUTE SAID AGREEMENTS
SUMMARY:
Attached is a proposed Resolution approving and authorizing the President of City Council to sign
an Employment Agreement and a Lease Agreement with FRE Composites USA, Inc.
(“Company”).
PREVIOUS COUNCIL ACTION:
The City and the Company entered into an Employment Agreement and a Lease Agreement on
January 25, 2011. Amendment No. 1 to the Employment Agreement was agreed to by the parties
on July 24, 2012. That Amendment approved an exchange of collateral whereby the City’s first
security interest in the Company’s equipment located in Pueblo County was replaced by cash
collateral in the amount of $240,000. Amendment No. 1 required a gradual release of cash
collateral to the Company as the Company fulfilled its employment commitment over time.
BACKGROUND:
The Company is a Delaware corporation associated with a Canadian pipe manufacturer. Since
2011, the Company has operated a fiberglass composite pipe manufacturing facility located at 60
Greenhorn Drive, Pueblo, Colorado, 81004. In 2011, economic incentives in the amount of
$1,266,800 were provided to the Company as follows:
$750,000 used for the purchase of the industrial building located at 60 Greenhorn
Drive, Pueblo, Colorado, 81004;
$5,300 for an appraisal, environmental inspection and closing costs;
$1,500 to PDF for managing the renovation of 60 Greenhorn Drive;
$510,000 distributed as follows:
- $240,000 for the acquisition of equipment;
- a lease subsidy of $240,000 applied toward the Company’s “Triple Net” Lease;
- $30,000 to remodel and renovate the building located at 60 Greenhorn Drive,
Pueblo, Colorado, 81004.
In exchange for the economic incentives from the City, the Company agreed to hire 30 full-time
employees whose annual compensation would average at least $43,000 per employee. The
Employment Commitment agreed to by the Company is from February 1, 2014 through January
31, 2021.
The Employment Agreement and Lease Agreement proposed for approval (attached hereto)
would make the following changes to the current contractual obligations of the Company and the
City:
(1) The current Lease subsidization would terminate, effective July 1, 2016. In
exchange for the eventual transfer of 60 Greenhorn Drive from the City to the
Company at the end of the lease term, the Company would pay $337,500.00 in
future Lease payments to the City. However, the City will reimburse the Company
$69,428.64 for the previously accrued but unused rent subsidy.
(2) The Company will satisfy and discharge the $510,000 in economic incentives by
continuing to employ 30 full-time employees (whose annual compensation shall
average at least $43,000) through January 31, 2021. In the event Company
defaults in its Employment Commitment, the Company will repay the remaining
balance of the $510,000 in economic incentives on a pro-rata basis.
(3) To secure the repayment of the $510,000 in economic incentives, if necessary, the
Company will grant the City a first security interest in the Company’s manufacturing
equipment situated at the Company’s manufacturing facility located at 60
Greenhorn Drive, Pueblo, CO 81004.
(4) As a result of the Company giving the City a new first secured position in the
Company’s equipment located in Pueblo, the City will release the remaining cash
collateral by making a payment of $202,582.68 to the Company. Said sum was
computed by subtracting from the current cash collateral balance of $211,439.69
the sum of $5,528.49 owed by the Company for failing to meet its employment
commitment in 2014 and the sum of $3,428.52 owed by the Company for failing to
meet its employment commitment in 2015.
FINANCIAL IMPLICATIONS:
None. No additional funds will be transferred from the 1992-2021 Sales and Use Tax Capital
Improvement Project 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 expand its operations in the
City of Pueblo.
RECOMMENDATION:
The Pueblo Economic Development Corporation recommends approval of this Resolution.
Attachments:
Proposed Resolution
Proposed Employment Agreement
Proposed Lease Agreement
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is made and entered into this 8th day of August, 2016,
by and between Pueblo, a Municipal Corporation ("City") and FRE Composites USA Inc. a Delaware
Corporation ("Company"). The City and Company are sometimes referred to herein collectively as the
"Parties" and each individually as a "Party."
WHEREAS, Company has expressed a willingness to locate a manufacturing facility within the City of
Pueblo, State of Colorado, 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 U.S.
$600,000 in fixed assets in a manufacturing facility to be located within the City of Pueblo, and to
provide the employment described in section 6 of the Original 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 the Original
Agreement; and
WHEREAS, City and Company have entered into an Agreement dated as of January 25, 2011 (the
"Original Agreement") to provide for the development of a manufacturing facility within the City of
Pueblo for Company (the "Project") and setting forth each Party's obligations; and
WHEREAS, City provided Total Economic Incentives to Company under and as defined by the Original
Agreement in the amount of U.S. $510,000. Pursuant to Section 4 of the Agreement, Company has a
Repayment Obligation to City which is based upon the amount of the Total Economic Incentives; and
WHEREAS, City disbursed to PDF, for the benefit of Company, funds in an amount not exceeding U.S.
$30,000 for the actual costs and expenses of remodelling and renovating the Facility and landscaping
the Facility, including the costs of design, engineering and construction services; and
WHEREAS, City disbursed directly to Company, solely for reimbursement for the acquisition of
Equipment by Company funds in the amount of U.S.$240,000 (collectively, the disbursement for costs of
remodelling and renovation and the reimbursement for Equipment being referred to as the "City
Funds"); and
WHEREAS, City acquired Lots 9 and 10, Minnequa Industrial Park, First Filing, Pueblo County, Colorado,
also known and numbered as 60 Greenhorn Drive, Pueblo, Colorado, 81004, at a cost of approximately
U.S. $750,000 in order to make such property available to Company under the original lease ("Original
Lease"); and
WHEREAS, City and Company executed the Original Lease on January 25, 2011; and
WHEREAS, in order to secure performance of the Agreement and payment of the Repayment Obligation
and until discharge of its other obligations under the Agreement, Company was required to grant to City
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a perfected first security interest in the Equipment as defined in the Original Agreement and as further
identified in the Security Agreement executed by Company on May 4,2011;and
WHEREAS, in the context of a corporate refinancing of the Company, the Company wanted to grant a
first security in the Equipment to a creditor of the Company other than City. In order to induce City to
release or terminate its security interest in the Equipment, and to provide alternate security to City to
secure Company's obligations to City under the Agreement, including the Repayment Obligation,
Company agreed to deposit funds in the amount of U.S.$240,000 with City to serve as alternate security
for City,which funds will be held in the name of and be under the control of City;and
WHEREAS, City accepted the funds as alternate security for the Equipment, provided that City may draw
upon such funds as necessary to fulfill Company's Obligation and other payment due and payable to the
City under the terms of the Agreement;and
WHEREAS, City and Company signed Amendment No. 1 to Agreement on July 24, 2012 (the
"Amendment")whereby the City authorized the alternate security;and
WHEREAS, Company has transferred to City, U.S.$240,000 after the execution of Amendment;and
WHEREAS, City has released a prorated amount of such alternative security funds back to Company on
or after April 15, 2015 because Company has, during the preceding four (4) quarters of 2014,
substantially met the Employment Commitment;and
WHEREAS, for the four quarters of 2014, the City has released to Company in April 2015, U.S.
$28,856.71(Total possible incentive of$34,285.20 minus penalty of$5,428,49);and
WHEREAS, for the four quarters of 2015, Company has substantially met its Employment Commitment
of 30 employees per quarter and estimate its total incentive from City for the said year of U.S.
$30,856.68(Total possible incentive of$34,285.20 minus penalty of$3,428,52);and
WHEREAS, the Creditor of the. Company agreed that City shall hold a first security interest in the
Equipment and the Company agreed to grant again a first security interest as originally stated in the
Agreement on Equipment;and
WHEREAS, provided that the Company is not in default under the Agreement, City is willing to accept a
first security interest on Equipment and to release escrow amount of U.S.$202,582.68 to Company(U.S.
$211,439.69 in escrow by June 30, 2016 statement less penalties for 2014 of $5,428.49 and 2015 of
$3,428,52);and
WHEREAS, Parties wish to supersede the Original Agreement and the amendment No. 1 to the Original
Agreement so this actual Agreement reflects their actual intent;and
NOW THEREFORE, in consideration of the foregoing and the terms and conditions set forth herein, the
Parties agree as follows:
1. The following terms as used in this Agreement shall have the following meaning unless the
context clearly indicates otherwise:
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"Effective Date" means the date of approval of this Agreement by the City Council of City.
"Employment Commitment Date"means February 1,2014.
"Equipment" means manufacturing equipment, including automated thermoset filament winding
equipment and other related machinery to be acquired, installed, maintained and used by Company
in the Facility,which Equipment shall have a useful economic life of not less than 120 months.
"Facility' means the manufacturing and warehouse facility located on Lots 9 and 10, Minnequa
Industrial Park, First Filing, County of Pueblo, State of Colorado, also known and numbered as 60
Greenhorn Drive, Pueblo, Colorado, 81004, 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.
"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 pay, bonuses,
overtime compensation and the amount of any pre-tax benefits paid by the employee under flexible
spending or other.qualified plans. The term does not include employer paid payroll taxes nor
benefits such as employer paid health insurance.
"Security Agreement" has the meaning set forth in Section 5.
2. City and Company stipulate and agree that the total economic incentives provided by City to
Company under the Original Agreement and this Agreement, including both City Funds and
the value of the rent subsidy (U.S. $240,000) under the Lease, is U.S. $510,000 (the "Total
Economic Incentives").
3.
(a) Company acknowledges and agrees that the primary purpose for City entering into this
Agreement and the sole benefit to the City for making the Total Economic Incentives
available to Company hereunder is the creation of additional jobs within the City.
Therefore,Company represents, covenants, and agrees that Company will, on and after
the Employment Commitment Date,continuously conduct its business operations at the
Facility and employnot less than thirty (30) Full-Time Employees at the Facility whose
annual salary shall average at least U.S.$43,000(the"Employment Commitment").
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(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
City of Pueblo, and (ii) engage engineers, architects, contractors and suppliers whose
principle places of business are located in Pueblo County, Colorado, in all construction
work for or related to the Facility.
4. 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 Total Economic Incentives based upon the number of Full-Time Employees
employed by Company at the Facility(the "Repayment Obligation"),as follows:
(a) Until January 31, 2021 ("Repayment Period"), Company will annually pay to City a
penalty if for a giving quarter it does not achieve its Employment Commitment.The sum
to be paid will be calculated by multiplying U.S. $285.71 by the result of 30 minus the
Quarterly Employees employed by Company at the Facility during each of the preceding
four(4) quarters ending March 31. (For example, the first quarter of 2015,$285.71 time
6 (30 Employment Commitment less 24 actual Quarterly Employees employed) for a
total penalty of $1,714.26 for the said quarter) The amount of the annual payment
under this Section 4 (a) shall not but subject to adjustment based upon changes in the
CPI-U.
(b) Company's Annually Payments, if any, shall be paid to the City without notice, demand,
deduction or setoff on or before April 15 of each year at the office of the Director of
Finance of City, 150 Central Main Street, Pueblo, Colorado, 81003, or such other person
or location as the City may designate. All past due Company's Annually Payments shall
bear interest at the rate of eight percent (8%) per annum ("Default Interest") until paid.
Company's Annually 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, City shall have access to and the right to
audit Company's records relating to Company's employees employed at the Facility.
(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)
clays after written notice specifying the default is given by City to Company,then in such
event, 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, and for such purpose,the entire balance of Company's
Repayment Obligation shall be an amount equal to thirty (30)times U.S. $285.71 or the
then applicable Adjusted Quarterly Repayment Capitation, whichever is greater,
multiplied by the remaining Quarters of the Repayment Period plus the amount of
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Company's unpaid Annually Payments, if arty, but in no event more than the amount of
the Total Economic Incentives actually provided by City to Company plus Default
Interest. Company's Repayment Obligation is absolute and unconditional and shall not
be abated, reduced, diminished, modified,withheld or otherwise offset for any cause or
reason whatsoever.
5. 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 Obligations shall be secured by a perfected first security
interest in the Equipment, which Equipment shall have a fair market value of not less than
the amount of the City Funds requested for reimbursement for Equipment at the time
placed in the Facility. Company shall execute and deliver to City Company's Security
Agreement, Financing Statement and other documents required to perfect a first security
interest in the Equipment all in the form and content approved by City's Attorney("Security
Agreement") in the fourteen (14) days of the execution of this Agreement. Company may
be permitted from time to time to substitute items of the replacement Equipment for items
of Equipment removed from Facility, provided that an amended Security Agreement
meeting the requirement of this Section is executed and delivered identifying the substitute
items of Equipment and deleting the item of Equipment being replaced.
6. City shall release and pay to Company escrow amount of U.S. $202,582.68 of U.S. (U.S.
$211,439.69 in escrow by June 30, 2016 statement less penalties for 2014 of$5,428.49 and
2015 of$3,428,52)in the fourteen (14) days from the execution of this Agreement.
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(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 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.
(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 6 shall grant or be construed to
grant to Company any right or claim to relief from its Repayment Obligation or hearing
with respect thereto.
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(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.
8. 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.
9. This Agreement expresses the entire understanding of the parties and supersedes and
abrogates Original Agreement and Amendment No 1, 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.
10. 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.
11. 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, Pueblo,Colorado,81003, or
(b) if to the Company, FRE Composites USA Inc., 75 Wales Street, Saint-André-d'Argenteuil,
Québec,Canada,JOV 1XO,Attention: Benoit Arsenault,
(c) if to PDF, c/o Pueblo Economic Development Corporation, 301 N. Main Street, Pueblo,
CO 81003,Attention:Jeff Shaw,
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 10.
12. Time is of the essence hereof.This Agreement shall be binding upon and inure to the benefit
of the parties and their respective successors and assigns, provided Company may not
assign this Agreement or any interest herein without the express written consent of City,
which consent shall not be unreasonably withheld. Any assignment or attempted
assignment of this Agreement by Company without such consent shall be null and void. No
such assignment or City's consent thereto shall release or discharge Company from any
obligation or liability under this Agreement.
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13. 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.
14.
(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 Total
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
remodelling of the Facility.
15. 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 showing or any special damages or an
inadequate remedy at law,to seek specific enforcement thereof,but not for damages of any
type or nature.
16. 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.
17. None of the parties shall be, or hold itself out as, agent of any other party or as a joint
venturer under this Agreement.
18. 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.
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19. 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.
20. 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.
ATTEST: PUEBLO Corpor•
City rk By:
ATTEST: FRE Composites U .
A Dela - •oration
By: B noit Arsenault
resident
DGCdocs-10717932 v1
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LEASE AGREEMENT
THIS LEASE (the "Lease") entered into this 8th day of August 2016 by and between Pueblo, a
Municipal Corporation (the "Lessor") and FRE Composites USA Inc., a Delaware corporation (the
"Lessee") WITNESSETH:
WHEREAS the Lessor and the Lessee entered into a lease agreement as of January 25, 2011 (the
"Original Lease") with respect to Lots 9 and 10, Minnequa Industrial Park, First Filing, Pueblo County,
Colorado, also known and numbered as 60 Greenhorn Drive, Pueblo, Colorado, 81004 (the "Building"),
consisting of approximately 5.41 acres of land together with an approximately 46,394 square foot
building and other improvements (the "Leased Premises"); and
WHEREAS, Lessor granted a lease subsidy of U.S. $240,000 to Lessee in exchange for an
Employment Commitment where details can be found in the Employment Agreement; and
WHEREAS, the Parties agreed to terminate the Lease subsidization and in exchange for the
transfer to Lessee by the Lessor of the unused part of the lease subsidy of U.S. $69,428.64; and
WHEREAS, at the end of the Term, the ownership of the Building will be transferred to Lessee by
Lessor; and
WHEREAS the parties hereto wish to terminate the Original Lease and replace it with the terms
and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the foregoing and mutual promises, covenants and
conditions contained herein, Lessor and Lessee hereby agree as follows:
DEFINITIONS:
In this Lease:
"Easements" means the Billboard, Utility and Sight Easements burdening the Leased Premises under the
Easement Agreement recorded in the records of Pueblo County, Colorado, at Reception No. 1763524.
"Effective Date" means the date that this agreement is executed by both the Lessor and the Lessee.
"City Agreement" means that certain agreement between the Lessor and the Lessee dated January 25,
2011.
"Commencement Date" means July 25, 2016.
ARTICLE 1—TERMINATION OF ORIGINAL LEASE
Lessor and Lessee acknowledge and agree that the Original Lease is hereby terminated.
ARTICLE 2-TERM
The term of this Lease shall be five (4) years and six (6) months commencing on the Commencement
Date and ending on January 24, 2021 (the "Term"), unless sooner terminated as herein provided (the
"Termination Date").
ARTICLE 3—RENT
3.1 Lessee shall pay to Lessor rent for the Leased Premises for the full Term of U.S. $337,500.00
payable in monthly instalments of U.S.$6,250.00 per month, in advance,without notice or demand due
on the same day of each month until the full amount has been paid. All payments shall be made or
mailed via United States mail to the following address: Pueblo Finance Department, Box 1427, Pueblo,
CO 81002, or to such other person or address as Lessor may from time to time designate to Lessee in
writing.
3.2 All monthly rent and other payments required to be made by Lessee hereunder which shall
remain unpaid fifteen (15) days after their respective due dates shall bear interest at the rate of ten
percent (10%) per annum until paid.
3.3 Lessee's obligation to pay rent to Lessor hereunder is absolute and unconditional and rent shall
not be offset,abated, reduced or withheld for any cause or reason whatsoever.
3.4 It is the intent of the parties hereto that this Lease is a "triple net" lease with Lessor incurring no
obligation, monetary or otherwise, hereunder.
ARTICLE 4—USE OF THE LEASED PREMISES
4.1 The Leased Premises shall be used and occupied by Lessee solely for manufacturing purposes
and office space associated with or incident to Lessee's manufacturing operations.The Lessee shall also
have the right to use the storage spaces for the storage of its products (provided such storage complies
with applicable subdivision covenants for same,if any).
4.2 Lessee shall have the right to use the parking spaces situated on the exterior of the Leased
Premises for its officers, employees, agents, representatives, customers, suppliers, and others doing
business with the Lessee.
4.3 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.
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4.4 Lessee shall not abandon or cease to conduct business at the Leased Premises for any period
longer than ninety(90)consecutive days.
ARTICLE 5—CONDITION OF LEASED PREMISES
5.1 IT IS UNDERSTOOD AND AGREED THAT THE LEASED PREMISES ARE LEASED "AS IS,
WHERE IS, WITH ALL ITS FAULTS" AS OF THE COMMENCEMENT DATE AND THAT LESSOR IS NOT MAKING
AND HAS NOT AT ANY TIME MADE ANY WARRANTY OR REPRESENTATION OF ANY KIND OR CHARACTER,
EXPRESS OR IMPLIED, WITH RESPECT TO THE LEASED PREMISES, INCLUDING, BUT NOT LIMITED TO, ANY
WARRANTY OR REPRESENTATION AS TO HABITABILITY, MERCHANTABILITY, FITNESS FOR A PARTICULAR
PURPOSE, TITLE (OTHER THAN THE COVENANT OF QUIET POSSESSION SET FORTH IN ARTICLE 14),
ZONING (OTHER THAN THAT THE BUILDING IS ZONED FOR INDUSTRIAL (1-3) USE), PHYSICAL OR
ENVIRONMENTAL CONDITIONS,SIZE, UTILITIES,GOVERNMENTAL APPROVALS,THE COMPLIANCE OF THE
LEASED PREMISES WITH GOVERNMENTAL AND ENVIRONMENTAL LAWS AND REGULATIONS,THE TRUTH,
ACCURACY OR COMPLETENESS OF ANY DOCUMENT OR OTHER INFORMATION PROVIDED TO LESSEE BY
LESSOR OR ANY OTHER PERSON,OR ANY OTHER MATTER OR THING REGARDING THE LEASED PREMISES.
5.2 The taking of possession of the Leased Premises by Lessee on the Commencement Date shall be
conclusive evidence that the Lessee accepts the Leased Premises in its then present condition "AS IS,
WHERE IS, AND WITH ALL FAULTS" and that the Leased Premises are in good and satisfactory condition
at the time such possession was taken.
5.3 Lessor has obtained an ASTM Phase I environmental report and an asbestos inspection report from
All-Phase Environmental Consultants, Inc. ("All-Phase Report") which has been made available to Lessee.
Lessor disclaims any representations whatsoever regarding the accuracy or reliability of the All-Phase Report
and Lessee relies upon same at Lessee's sole risk. Lessee has been afforded the opportunity to conduct its
own environmental investigations of the Leased Premises and has declined to do so.
ARTICLE 6—ALTERATIONS AND IMPROVEMENTS
6.1 Lessee shall not make any additions, alterations or improvements in or to the Leased Premises
("Alterations")without Lessor's prior written consent which consent shall not be unreasonably withheld or
unduly delayed. Lessee shall not permit or allow any lien to be filed or recorded against the Leased
Premises or Lessor's or Lessee's interest therein, and Lessee shall fully cooperate with Lessor in obtaining
the protections afforded Lessor under§38-22-105,C.R.S,All Alterations made in or to the Leased Premises
by Lessee with Lessor's consent shall become part of the Leased Premises and be surrendered with the
Leased Premises at the termination of this Lease. All other alterations shall, at the option of Lessor, be
removed by Lessee at its cost and expense.
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'If?
6.2 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, remove same not later than thirty (30) days after
termination of this Lease. Lessee shall repair all damage to the Leased Premises caused by such removal.
The failure of Lessee to remove its equipment, fixtures and detachable improvements within thirty (30)
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 7—REPAIRS AND MAINTENANCE
7.1 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
Buildings and the structural components,roofs,walls,fixtures,electrical,heating,mechanical,plumbing and
air conditioning systems thereof, in good working condition and repair and in a good, clean and safe
condition at all times during the Term of this Lease and return same to Lessor at the Termination Date in as
good condition and state of repair as same was in on the Commencement Date,except for loss occasioned •
by ordinary wear and tear.
7.2 If Lessee becomes obligated to make repairs caused by an occurrence covered by the insurance
described in Article 11 herein,the net proceeds of such insurance shall be made available to Lessee to
offset the cost of such repairs.
ARTICLE 8—RIGHT OF ENTRY
Lessor or Lessor's officers, employees, agents and representatives, and property management
representative, as the case may be, may enter the Leased Premises at any time during normal business
hours without prior written notice to Lessee.
ARTICLE 9—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
or unduly delayed. Lessor may withhold its consent if the proposed assignee's financial standing and
responsibility at the time of the proposed assignment is insufficient in the Lessor's sole and absolute
discretion to give assurance of performance and compliance with all terms and conditions of this Lease
and the City Agreement. Upon such an assignment and consent, Lessee shall be released from all
obligations arising or occurring under this Lease after the effective date of such assignment and
consent, provided that such assignee shall execute, acknowledge and deliver to Lessor an assumption
agreement in form and substance satisfactory to Lessor, whereby assignee agrees to observe, perform
and keep all the terms, provisions, covenants and conditions required to be observed, performed and
kept by Lessee hereunder and under the City Agreement. Any assignment or attempted assignment of
this Lease or any interest herein by Lessee without Lessor's express written consent shall be null and
void.
ARTICLE 10—INSURANCE AND INDEMNIFICATION
10.1 Lessee shall indemnify and hold Lessor, its officers, employees and agents, harmless from and
defend them against any and all claims or liability, including cost of defense and reasonable attorney fees,
4
for any injury or damage the Lessee or its officers, agents or employees, or to Lessee's property, or to any
third person,or to the property of any third person:(a)occurring in,on or about the Leased Premises or any
part thereof, by or from any cause whatsoever except injury or damage caused solely by the wrongful or
intentional acts of Lessor,its officers,employees,or agents;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 thereon or appurtenances thereto,or any activity conducted thereon.
10.2 Lessee shall secure and maintain in full force and effect,at its expense,during the Term of this Lease:(a)
commercial general liability insurance including coverage for personal injury (including death), property damage
and contractual coverage in the minimum amount of U.S. $1,000,000 combined single limit naming Lessor, its
officers,employees or agents as additional insureds,and(b)Colorado Workers'Compensation insurance or other
similar coverage in the statutorily mandated a mounts. Neither party shall be liable to the other party for any claim,
loss or casualty covered by such insurance and each party waives any claim therefor against the other party
whether by way of subrogation or otherwise.
10.3 A copy of each insurance policy, or certificate thereof, issued by an association or company
authorized to issue such policy or policies under the laws of the State of Colorado containing a provision
prohibiting cancellation or material modification of the insurance except after no less than ten (10) days'
notice to Lessor,shall be delivered to the Lessor within thirty(30) days after the Effective 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 11—FIRE AND EXTENDED COVERAGE INSURANCE
11.1 Lessee shall,at its expense,during the Term of this Lease,secure and maintain in full force and effect
"All-Risk" casualty insurance (including, without limitation, fire, extended coverage and boiler insurance)
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 laws of the State of Colorado and
approved by Lessor, shall contain a deductible of not more than U.S. $25,000.00 and a standard Colorado
mortgagee/landlord clause in favour of Lessor, and shall not be subject to cancellation, reduction or
modification upon less than the ten (10) days' written notice to Lessor. Such insurance, by its terms or by
endorsement, shall waive any right of subrogation of the insurer against Lessor, its officers, agents and
employees, for any loss or damage resulting from covered perils. Lessee will furnish to Lessor evidence of
such insurance and its continuance during the Term of this Lease.
11.2 Lessee shall, at its expense, secure and maintain fire and extended coverage insurance on all
fixtures, equipment and improvements installed by Lessee on the Leased Premises. Such insurance, by
its terms or by endorsement, shall waive any right of subrogation of the insurer against Lessor, its
officers,agents and employees,for any loss or damage resulting from covered perils.
ARTICLE 12—TAXES AND ASSESSMENTS
12.1 Lessee shall promptly pay and discharge, as they become due and before delinquency, any and
all property taxes, assessments, charges, liens, levies or excises, whether general or special or ordinary
or extraordinary, of every name, nature and kind whatsoever, including all governmental charges of
whatsoever name, nature or kind, which may be levied, charged or imposed, or which may become a
lien or charge on or against the Leased Premises or any part thereof, the leasehold interest of Lessor or
Lessee herein, or the improvements situated on the Leased Premises prior to and during the effective
period of this Lease.
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12.2 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.
12.3 Lessee shall furnish Lessor within thirty (30) days after any amount is payable by Lessee under
this Article 12, official receipts of the appropriate taxing authority or other proof satisfactory to Lessor
evidencing such payments as are required under this Article.
ARTICLE 13—UTILITIES
Lessee shall pay, before delinquent, all charges for sewer, water, gas, electricity, telecommunications
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 14—DAMAGE TO OR DESTRUCTION OF LEASED PREMISES
14.1 If, during the Term of this Lease, the Leased Premises shall be damaged to such an extent that
the repair of such damage and the restoration of the Leased Premises can be accomplished, with
reasonable diligence, within one hundred eighty (180) days after such damage, Lessee shall promptly
repair such damage and cause the Leased Premises to be restored to their condition prior to the event
causing the damage. If, during the Term of this Lease, the Leased Premises shall be destroyed or damaged
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 11.01 shall be paid to Lessor,or,
if Lessee fails to maintain the insurance required to be maintained by Lessee under Article 11.01, 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
and proceeds of insurance are paid to Lessor, 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, 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.
14.2 Lessee shall make the repairs, restoration or rebuilding as expeditiously as possible in
accordance with plans and specifications submitted to and approved in writing by Lessor and in
compliance with all applicable laws, regulations and codes.
ARTICLE 15—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 appointment of the award for taking or condemnation,the entire award going to Lessor,
provided Lessee shall have the right to recover any award which may be made for damages to or
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condemnation of Lessee's movable trade fixtures, equipment, furniture and furnishings or payments for
relocation,if any.
ARTICLE 16—HOLDING OVER
There shall be no holding over under this Lease.Upon termination,Lessee shall immediately vacatethe Leased
Premises and immediately surrender possession thereof to Lessor.
ARTICLE 17—QUIET POSSESSION
Lessee may peacefully have, hold and enjoy the Leased Premises,subject to the other terms hereof,provided
that Lessee performs all of Lessee's covenants and agreements contained herein.
ARTICLE 18—DEFAULT
18.1 In the event of default at any time by Lessee in the payment of the monthly instalments or rent of the
performance of any of its other covenants and obligations herein contained,or,in the event Lessee defaults in
its Repayment Obligation as described in the City Agreement,and such default is not cured within thirty(30)
days after written notice specifying the default is given by Lessor to Lessee, or in the case of non-pecuniary
default incapable of being cured within 30 days,not cured within ninety(90)days of such notice,provided that
the cure is commenced within thirty days and diligently pursued,then,in such event,Lessor shall have the right
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 relet the same for and on
account of Lessee for the then full remaining portion of the unexpired Term of this Lease or for any shorter
period,and to collect and receive payment of rent therefor,but no such re-entry or re-letting shall be
construed as a termination of this Lease or as a release of Lessee from Lessee's obligation to pay
monthly rent provided for in this Lease,or from Lessee's obligation to perform any other covenant
herein contained.It expressly being understood and agreed that in the event of any such re-entry or
re-letting by Lessor such re-entry or re-letting shall not operate to terminate this Lease or alter the
obligation of Lessee to perform its covenants and to pay monthly rent pursuant to the terms hereof
unless Lessor expressly so elects pursuant to paragraph 18.1(a) above. Lessor shall in no way be
responsible or liable for any failure to re-let the Leased Premises, or any part thereof, or for any
failure to collect any rent due upon such re-letting. No notice from Lessor hereunder or under a
forcible entry and detainer statute or similar law constitutes an election by Lessor to terminate this
Lease unless such notice specifically so states. Lessor reserves the right following any such re-entry
and/or reletting to exercise its right to terminate this Lease;and/or
d) Cure the default on Lessee's behalf and at Lessee's expense, in which event, all costs, expenses and
reasonable attorney's fees incurred by Lessor in curing the default together with interest thereon at
the rate of ten (10) percent per annum shall constitute additional rent payable to Lessor by Lessee
upon demand.
18.2 If Lessor does not elect to terminate this Lease but takes possession as provided for in Article
18.1(c), Lessee shall pay to Lessor the monthly rent and other charges at the times and in the mariner 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 Lessee's reasonable expenses including,
7
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without limitation,all repossession costs,brokerage commissions, legal expenses,attorneys'fees,alteration
and repair costs and expenses of preparation for such re-letting.
18.3 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 s to the
prevailing party.
18.4 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—NOTICE
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:
City Manager
City of Pueblo
•
. 1 City Hall Place
Pueblo,Colorado 81003
and to:
City Attorney
Pueblo Law Department
503 N. Main Street,Suite 203 Pueblo,
Colorado 81003
(or to such other person or address as may hereafter from time to time be designated for this purpose by Lessor
to Lessee in writing),All notices,demands or communications of any kind which may be required or desired to
be served,given or made by Lessor upon or to Lessee,under the terms of or in connection with this Lease,shall
be sufficiently served,given or made(as an alternative to personal service upon Lessee)if such notice,demand
or communication is sent by certified United States mail,addressed to:
FRE Composites USA Inc.
75 Wales Street
Saint-Andre-d`Argenteuil Québec,
Canada JOV 1X0
Attention:Benoit Arsenault
8 `�/
(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 21—ENVIRONMENTAL PROVISIONS
21.1 For the purpose of this Lease, "Hazardous Materials" means any hazardous or toxic substance,
material or waste which is or becomes 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.
21.2 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 a hazardous waste treatment,storage or disposal facility without
receiving proper governmental authorization,and in compliance with all Environmental Regulations;or(iii)the
discharge of pollutants or effluents into any water source or system, or the discharge into the air of any
emissions without receiving proper governmental authorization, and in compliance with all Environmental
Regulations,including,without limitation,the Federal Water Pollution Control Act,U.S.C.Section 1251 et seq.
and the Clean Air Act,42 U.S.C.Section 7401 et seq.
21.3 Lessee agrees to defend,indemnify and forever hold harmless the Leased Premises and Lessor,and its
officers, employees, 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, characterization,
remediation and clean-up costs, incurred by reason of the use, storage, generation, release, discharge
maintenance,disposal or removal of Hazardous Materials 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 this Article 21 and Article 10.1 shall expressly survive the expiration of the Term or other
termination of this Lease.
ARTICLE 22—BUY BACK OF THE LEASED PREMISES
22.1 If Lessee is not in default hereunder or under the City Agreement,and has maintained substantially
its Employment Commitment under the City Agreement by employing thirty(30) Full-Time employees at the
Leased Premises, Lessee shall have the right to purchase, at Termination Date,the Leased Premises upon the
terms and conditions contained in this Article for a purchase price as follows:
a) The purchase price shall be U.S. $1.00 if the Tenant doesn't send a notice to exercise its right before
Termination Date;or
b) the purchase price shall be a lump sum equal to the amount of the remaining monthly instalments of
the rent through the end of the Term; by way of example, if the Lessee gives notice to exercise the
option with 36 months of the lease remaining,the purchase price shall be U.S. $ 225,000.00 ($6250
times 36-$225,000.00).
22.2 Upon valid exercise of ownership transfer the terms of purchase and sale shall include the
following conditions and requirements:
9 1
a) Closing and payment of the purchase price to be held and made not later than ninety (90) days
following the date of Lessee's written notice to exercise the option.
b) Conveyance shall be made by special warranty deed free of liens and encumbrances, except
those for general property taxes and those created by acts or any default of Lessee,and subject
to the Easements and easement, rights-of-way, conditions, covenants, restrictions,
reservations,and limitations of record and those created by acts or any default of Lessee.
c) The Leased Premises shall be conveyed and transferred in their condition at the time of sale
"AS IS" and "WHERE IS" without any representation of warranty with respect to the Leased
Premises, including without limitation, the quantity, quality or condition of the Leased
Premises, environmentally or otherwise. Prior to closing and payment of the purchase price,
Lessee may, at Lessee's expense, conduct such inspection of the Leased Premises at it deems
prudent, and may rescind its exercise of the purchase option if it finds objectionable at its sole
discretion any condition of the Leased Premises not caused by Lessee.
ARTICLE 23—RELEASE OF SUBSIDY BALANCE
The Lessor undertakes to pay the Lessee the amount of U.S. $69,428.64 within fourteen (14) days following
closing as payment for the total unused amount of subsidy granted to the Lessor as per the City Agreement.
ARTICLE 24—MISCELLANEOUS PROVISIONS
24.1 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.
24.2 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.
24.3 Binding Effect. This Lease sets forth the entire and complete understanding and agreement of the
parties hereto with respect to the subject matter hereof.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.
24.4 Construction. Throughout this Lease, the singular shall include the plural; the plural shall
include the singular;and the masculine and neutral shall include the feminine,wherever the context so
requires.
24.5 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.
24.6 Severability. If any provision of this Lease is declared by any court of competent jurisdiction to be
invalid for any reason,such invalidity shall not affect 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.
24.7 Venue and Jury Trial. Lessor and Lessee agree that exclusive 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
10
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the District Court in and for the 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.
24.8 Lessee's Warranties.The persons signing this Lease on behalf of Lessee represent and warrant that
such persons and Lessee have the requisite power and authority to enter into, execute and deliver this Lease
and that this Lease is a valid, legally binding obligation of Lessee enforceable against Lessee in accordance
with its terms.
24.9 Time of Essence. Time shall be and is of the essence as to the performance of all terms,
conditions and obligations under this Lease.
24.10 Third Parties.The provisions of this Lease are and will be for the benefit of Lessor and Lessee only and
not for the benefit of any third Party,and accordingly, no third Party shall have any right or remedy hereunder
or the right to enforce any provision of this Lease.
IN WITNESS WHEREOF, Lessor and Lessee, by their duly authorized representatives, have executed this
Lease on the day and year first written above.
ATTEST: PUE. • - " unicipal ,rporati.
City rk By:
FRE COMPOSITES USA INC.
a Delaware Corpora -
By: B:noit Arsenault
• esident
DGCdocs-10715514 v1
- 11 -
UCC Financing Statement
•
Colorado Secretary of State
Date and Time:11/18/2016 10:55:38 AM
Master ID:20162104581
Validation Number:20162104581
Amount:$8.00
Debtor: (Organization)
Name: FRE Composites USA Inc.
Addressl: 60 Greenhorn Dr.
Address2:
City: Pueblo State: CO ZIP/Postal Code: 81003
Province: Country: United States
Secured Party: (Organization)
Name: City of Pueblo
Addressl: do City Attorney
Address2: 1 City Hall Place, 3rd Floor
City: Pueblo State: CO ZIP/Postal Code: 81003
Province: Country: United States
Collateral
Description:
Winder; Curing Station; Boiler; Tank; Compressor; Exhaust Fan/ Ductwork; Mandrels & Moulds and Forklifts
Page 1 of 5
Attachment #: 1 Security Agreement
File name: FRE - Security Agreement.pdf Uploaded: 11/18/2016 10:53:30 AM
UCC Financing Statement-20162104581 -Colorado Secretary of State-Page 2 of 5
STATE OF COLORADO
UNIFORM COMMERCIAL CODE—SECURITY AGREEMENT
Debtor:
Name: FRE Con itilS_ SA Inc. _ _._......�........ ... ........
(Exact Legal Name Requited)
Addtets:
Residence:
No. —. Street City State
Business: 60 Greenhorn Drive _.. ... _ Pueblo CO 81004
No. Street City State
Secured Party:
Name: City of PuOlo. Sg!!_f kiPal 00rPeni011_.
Address: 1 City Hall Place Puebla CC 81003
No. Street City State
Debtor,for consideration,hereby grants to Secured Party a security interest in the following property and any and all additions,
accessions and substitutions thereto or therefor(hereinafter called the"COLLATERAL"):
the equipment and other property listed in attached Exhibit A as of August 8,2016
To secure payment of the indebtedness evidenced by
the Employment Agreement dated July 13,2016 between Debtor and Secured Party and the performance of Debtor's
obligations under the Employment Agreement including the payment of U.S.$510,000.00 by Debtor to Secured Party
DEBTOR EXPRESSLY WARRANTS AND COVENANTS:
1. That except for the security interest granted hereby Debtor is,or to the extent that this agreement states that the
Collateral is to be acquired after the date hereof,will be,the owner of the Collateral free from any adverse lien,security inter-
est or encumbrances;and that Debtor will defend the Collateral against all claims and demands of all persons at anytime
claiming the same or any interest therein.
2. The Collateral is used or bought primarily for:
❑ Personal,family or household purposes;
❑ Use in fanning operations;
1 l Use in business.
3. That Debtor's residence,state of organization or chief executive office is as stated herein,and the Collateral will
be kept at
60 Greenhorn Drive Pueblo Pueblo CO 81004
No.and Street City County Serle
4. If any of the Collateral is oil,gas,or minerals to be extracted or timber to be cut,or goods which are or are to become
fixtures, said Collateral concerns the following described real estate situate in the _WA County
of N/A and State of Colorado,to wit;
No.eUCC 1205. Rev.8-01. UNICORM COMMERCIAL CODE—SECURITY AGREEMENT(Page 1 of 2) tl
Bradford Publishing,1743 Wnzee St.,Denvet,CO 80202—(303)292.2500—www hradfrndpnhlishing com—eForm
UCC Financing Statement-20162104581 -Colorado Secretary of State-Page 3 of 5
S. Promptly to notify Sccurcd Party of any change in the location of the Collateral.
6. To pay all taxes and assessments of every nature which may be levied or assessed against the Collateral.
7. Not to permit or allow any adverse lien,security interest or encumbrance whatsoever upon the Collateral and not
to permit the same to he attached or replevined.
8. That the Collateral is in good condition,and that Debtor will,at Debtor's own expense,keep the same in good
condition and from time to time,forthwith,replace and repair all such parts of the Collateral as may be broken,worn nut,or
damaged without allowing any lien to be created upon the Collateral on account of such replacement or repairs,and that the
Secured Party may examine and inspect the Collateral at any time,wherever located.
9. That Debtor will not use the Collateral in violation of any applicable statutes,regulations or ordinances.
10. The Debtor will keep the Collateral at all times insured against risk,[of loss Or damage by fire(including so-called
extended coverage),theft and such other casualties as the Secured Patty may xctrtrnnttbly require,ineltsditig collision in the ease
of any motor vehicle,all in such amounts,under such forms of policies.upon such terms,for such perinds.and written by such
companies or underwriters as the Secured Party may approve,losses in.dl cis to In payable:to the Secured Party and the
Debtor as their interest may appear.All policies of insurance shall provide ire at least tett days'prior wt`tttett ntaiec of cancel-
lation to the Secured Party:and the Debtor shall furnish the Seethed Party with certificate%of soeh insurance of other evidnare
satisfactory to the Secured Party as to compliance with the pros stuns Of dna paragraph,The Secured Party may act as attitr-
ney for the Debtor in making,adjusting and settling claims under ctr+sncelling such tn'urdwCC to.I cruirsrsiug the Debtor'S name
on any drafts drawn by insurers of the Collateral.
UNTIL DEFAULT Debtor may have possession of the Collateral and use it in any lawful manner,and upon default
Secured Party shall have the immediate right to the possession of the Collateral.
DEBTOR SHALL BE IN DEFAULT under this agreement upon the happening of any of the following events or con-
ditions:
(a) default in the payment or performance of any obligation,covenant or liability contained or referred to herein or
in any note evidencing the same;
(h) the making or furnishing of any warranty,representation or statement to Secured Party by or on behalf of Debtor
which proves to have been false in any material respect when made or furnished;
(c) loss,theft,damage,destruction,sale or encumbrance to or of arty of the Collateral,or the making of any levy
seizure or attachment thereof or thereon;
(d) death,dissolution,termination of existence,insolvency,business failure,appointment of a receiver of any part of
the property of,assignment for the benefit of creditors by,or the commencement of any proceeding under any bankruptcy or
insolvency laws of,by or against Debtor or any guarantor or surety for Debtor.
UPON SUCH DEFAULT and at any time thereafter,or if it deems itself insecure.Secured Party may declare all
Obligations secured hereby immediately due and payable and shall have the remedies of a secured party under Article 9 of the
Colorado Uttifsum Commercial ercial Crede.Secured Party may require Debtor to assemble the Collateral and deliver or make it
available to Secured Party at a place to be zlcsigtaated by Secured Party which is reasonably convenient to both parties.
Expenses of retaking,holding,preparing for sale,selling or the like shall include Secured Party's reasonable attorney's fees
and legal expenses(including the allocated feces and expenses of in-house counsel)and such portion of the Secured Party's
overhead as it may in its reasonable judgment deers allocable to and includable in such expenses.
No waives by Secured Party of any default shall operate as a waiver of any other default or of the same default on a
future occasion,The takiiag of this Security A'rrement shall ma waive or impair any other security Secured Party may have
or hereafter acquire for thepayment flf the above indebtedness,nor shall the taking of any such additional security waive or
impair this Security Agreement;but Secured Party may resort to any security it may have in the order it may deem proper,and
notwithstanding any collateral security,Secured Party shall retain its rights of set-off against Debtor.
All rights of Secured Party hereunder shall inure to the benefit of its successors and assigns;and all,promises and
duties of Debtor shall bind Debtor's heirs,executors or administrators or Debtor's successors or assigns.If there be more than
one Debtor,their liabilities hereunder sh If be joint and several,
Dated: Al j4t}Vt
_:.
Debtor: Frt USA Inc.
By; it Delotyft'_ _
—
I thior's mole of organization,or if nota rcgkic.at orbcnization.chief executive olt,cer
Benoi Arsenault
fkhlor's Sratc Idcnulicntinn No
Pratt ant
No.eUCC 1205. CPage z or 3 I •
UCC Financing Statement-20162104581 -Colorado Secretary of State-Page 4 of 5
FRE Composites USA Inc.
Exhibit A to the Security Agreement
For the benefit of the City of Pueblo
Description of Collateral Serial Number
Winder $ 205 263.28
Curing Station $310 061.94
Boiler $ 397 349.98
Tank $ 41325.29
Compressor $ 37 840.94
Exaust fan/ductwork $ 18 680.00
Mandrels& Moulds $ 374 109.96
Forklifts $ 12 767.02
UCC Financing Statement-20162104581-Colorado Secretary of State-Page 5 of 5
STATE OF COLORADO
UNIFORM COMMERCIAL CODE—SECURITY AGREEMENT
Debtor:
Name:,..EREcgn1PQSltes USA IrIC,
(Exact Legal Name Requiied)
Addiess:
Residence: ......__.__._.._....—_.--
No. Street City State
Business 60 Greenhorn Drive Pueblo CO 81004
No. Street City State
Secured Party:
Name: City of Pueblo,a nlVniciPal corporation
Address: 1 City Hall Place Pueblo CO 81003____
No. Street City State
Debtor,for consideration,hereby grants to Secured Party a security interest in the following property and any and all additions,
accessions and substitutions thereto or therefor(hereinafter called the"COLLATERAL"):
the equipment and other property listed in attached Exhibit A as of August 8,2016
To secure payment of the indebtedness evidenced by
the Employment Agreement dated July 13,2016 between Debtor and Secured Party and the performance of Debtor's
obligations under the Employment Agreement including the payment of U.S.$510,000.00 by Debtor to Secured Party
DEBTOR EXPRESSLY WARRANTS AND COVENANTS:
1. That except for the security interest granted hereby Debtor is,or to the extent that this agreement states that the
Collateral is to be acquired after the date hereof,will be,the owner of the Collateral free from any adverse lien,security inter-
est or encumbrances; and that Debtor will defend the Collateral against all claims and demands of all persons at anytime
claiming the same or any interest therein.
2. The Collateral is used or bought primarily for:
❑ Personal,family or household purposes;
❑ Use in farming operations;
® Use in business.
3. That Debtor's residence,state of organization or chief executive office is as stated herein,and the Collateral will
be kept at
60 Greenhorn Drive . Pueblo Pueblo CO 81004
No.and Street City County State
4. If any of the Collateral is oil,gas,or minerals to be extracted or timber to be cut,or goods which are or are to become
fixtures, said Collateral concerns the following described real estate situate in the -NSA County
of N/A and State of Colorado,to wit:
No.eUCC 1205. Rev.8-01. UNIFORM COMMERCIAL CODE—SECURITY AGREEMENT (Page I of 2) LL's
Bradford Publishing,1743 Wane St.,Denver,CO 80202—(303)292-2500—www.bradfordpublishing.com—eForm
5. Promptly to notify Secured Party of any change in the location of the Collateral.
6. To pay all taxes and assessments of every nature which may be levied or assessed against the Collateral.
7. Not to permit or allow any adverse lien,security interest or encumbrance whatsoever upon the Collateral and not
to permit the same to be attached or rcplevined.
8. That the Collateral is in good condition,arid that Debtor will,at Debtor's own expense,keep the same in good
condition and from time to time,forthwith,replace and repair all such parts of the Collateral as may be broken,worn out,or
damaged without allowing any lien to be created upon the Collateral on account of such replacement or repairs,and that the
Secured Party may examine and inspect the Collateral at any time,wherever located.
9. That Debtor will not use the Collateral in violation of any applicable statutes,regulations or ordinances.
10. The Debtor will keep the Collateral at all times insured against risks of loss or damage by fire(including so-called
extended coverage),theft and such other casualties as the Secured Party may reasonably require,including collision in the case
of any motor vehicle,all in such amounts,under such forms of policies,upon such terms,for such periods,and written by such
companies or underwriters as the Secured Party may approve,losses in all cases to he payable to the Secured Party and the
Debtor as their interest may appear.All policies of insurance shall provide for at least ten days'prior written notice of cancel-
lation to the Secured Party;and the Debtor shall furnish the Secured Party with certificates of such insurance or other evidence
satisfactory to the Secured Party as to compliance with the provisions of this paragraph.The Secured Party may act as attor-
ney for the Debtor in making,adjusting and settling claims under or cancelling such insurance and endorsing the Debtor's name
on any drafts drawn by insurers of the Collateral.
UNTIL DEFAULT Debtor may have possession of the Collateral and use it in any lawful manner,and upon default
Secured Party shall have the immediate right to the possession of the Collateral.
DEBTOR SHALL BE IN DEFAULT under this agreement upon the happening of any of the following events or con-
ditions:
(a) default in the payment or performance of any obligation.covenant or liability contained or referred to herein or
in any note evidencing the same;
(b) the making or furnishing of any warranty,representation or statement to Secured Party by or on behalf of Debtor
which proves to have been false in any material respect when made or furnished;
(c) loss, theft,damage,destruction,sale or encurrihrance to or of any of the Collateral,or the making of any levy
seizure or attachment thereof or thereon;
(d) death,dissolution,termination of existence,insolvency,business failure.appointment of a receiver of any part of
the property of,assignment for the benefit of creditors by,or the conunencement of any proceeding under any bankruptcy or
insolvency laws of,by or against Debtor or any guarantor or surety for Debtor.
UPON SUCH DEFAULT and at any time thereafter,or if it deems itself insecure. Secured Party may declare all
Obligations secured hereby immediately due and payable and shall have the remedies of a secured party under Article 9 of the
Colorado Uniform Commercial Code. Secured Party may require Debtor to assemble the Collateral and deliver or make it
available to Secured Party at a place to he designated by Secured Party which is reasonably convenient to both parties.
Expenses of retaking,holding,preparing for sale,selling or the like shall include Secured Party's reasonable attorney's fees
and legal expenses (including the allocated fees and expenses of in-house counsel) and such portion of the Secured Party's
overhead as it may in its reasonable judgment deem allocable to and includable in such expenses.
No waiver by Secured Party of any default shall operate as a waiver of any other default or of the same default on a
future occasion.The taking of this Security Agreement shall not waive or impair any other security Secured Party may have
or hereafter acquire for the payment of the above indebtedness,nor shall the taking of any such additional security waive or
impair this Security Agreement;but Secured Party may resort to any security it may have in the order it may deem proper,and
notwithstanding any collateral security,Secured Party shall retain its rights of set-off against Debtor.
All rights of Secured Party hereunder shall inure to the benefit of its successors and assigns; and all promises and
duties of Debtor shall bind Debtor's heirs,executors or administrators or Debtor's,successors or assigns.If there be more than
one Debtor,their liabilities hereunder shall be joint and several.
Dated: J. o 't. 2016
Debtor: F - = . •..:n•s USA Inc.
By: �� Delaware
th•ht.1 r le oft m•sI,en ,1111,01110111,U:1[1,1 0011 ,aunt.Thiel executive i'liver
Benoi'Arsenault
;k^nor' 1111,1c Idunnticalinr 'c
Presi:ent
No.eUCC 1205. (Nage 2 or 21
FRE Composites USA Inc.
Exhibit A to the Security Agreement
For the benefit of the City of Pueblo
Description of Collateral Serial Number
Winder $ 205 263.28
Curing Station $ 310 061.94
Boiler $ 397 349.98
Tank $ 41325.29
Compressor $ 37 840.94
Exaust fan/ductwork $ 18 680.00
Mandrels & Moulds $ 374 109.96
Forklifts $ 12 767.02