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Ground Lease Agreement

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GROUND LEASE AGREEMENT



DATED AS OF NOVEMBER 30, 2009



BETWEEN



EDWARD STELLA, JR.



LANDLORD



AND



ATLANTIC GREEN POWER CORPORATION



TENANT






















TABLE OF CONTENTS





Page



ARTICLE 1 - DEMISE, PREMISES, TERM, RENT 1
1.1. Demise and Premises 1
1.2. Term 1
1.3. Rent and Payments. 2
1.4. Additional Rent 3
1.5. Net Lease 3
1.6. Subdivision 3
ARTICLE 2 - USE 3
ARTICLE 3 - TAXES, UTILITIES AND ASSESSMENTS 3
ARTICLE 4 - ARTICLE - ALTERATIONS AND IMPROVEMENTS 4
ARTICLE 5 - SURRENDER AT EXPIRATION 4
ARTICLE 6 - INSURANCE 4
6.1. Casualty and Liability Insurance 4
6.2. Insurers 5
6.3. Insureds 5
6.4. Notice of Cancellation 5
ARTICLE 7 - PERFORMANCE OF TENANT'S COVENANTS 5
ARTICLE 8 - REPAIRS AND MAINTENANCE 6
8.1. Repairs to Premises 6
8.2. Waste 6
8.3. Tenant's Property 6
ARTICLE 9 - COMPLIANCE WITH LAWS AND ORDINANCES 6
9.1. Compliance with Laws 6
9.2. Compliance with Insurance Requirements 6
ARTICLE 10 - REGULATORY APPROVALS 6
ARTICLE 11 - INDEMNIFICATION 7
ARTICLE 12 - REPRESENTATIONS AND WARRANTIES 7
12.1. Landlord's Representation 7
12.2. Tenant's Representations 8
ARTICLE 13 - DEFAULT BY TENANT 8
13.1. Event of Default 8
13.2. Landlord's Remedies for Tenant's Default 8
13.3. Remedies Not Exclusive 10
13.4. Waiver of Performance 10
ARTICLE 14 - CONDEMNATION 10
ARTICLE 15 - NOTICES 11
ARTICLE 16 - QUIET ENJOYMENT 12
ARTICLE 17 - ATTORNMENT 12
ARTICLE 18 - ASSIGNMENT AND SUBLETTING 12
ARTICLE 19 - MISCELLANEOUS PROVISIONS 12
19.1. Integration 12












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19.2. Severability 13
19.3. Headings 13
19.4. Successors and Assigns 13
19.5. Time of the Essence 13
19.6. Governing Law 13
19.7. Recordation 13
19.8. Counterparts 13
19.9. Brokers 13
ARTICLE 20 - PURCHASE OPTION AND RIGHT OF FIRST REFUSAL 13
20.1. Purchase Option 13
20.2. Right of First Refusal 14



EXHIBIT A - Description of Stella Property and Premises








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GROUND LEASE AGREEMENT



THIS GROUND LEASE AGREEMENT (the " Lease ") made and executed as of this 30th day of November, 2009 (the " Effective Date "), by and between EDWARD STELLA, JR., an individual (" Landlord "), and ATLANTIC GREEN POWER CORPORATION, a New Jersey corporation ( ? Tenant ").



W I T N E S S E T H:



WHEREAS, Landlord is the owner of several parcels of land located in Upper Pittsgrove Township, Salem County, New Jersey consisting of approximately 839 acres, as more particularly described on Exhibit "A" attached hereto and made a part hereof (hereinafter, the "Stella Property ");



WHEREAS, Landlord desires to lease to Tenant and Tenant desires to lease from Landlord a portion of the Stella Property consisting of up to approximately 700 acres as cross-hatched on Exhibit "A ?, subject to adjustment (the " Premises "), in accordance with the terms and conditions and for the purposes herein set forth.



WHEREAS, Landlord shall continue to own, free of this Lease, that portion of the Stella Property that is not part of the Premises (the " Excluded Property ") which is cross-hatched on Exhibit "A".



NOW, THEREFORE, in consideration of the premises, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, and intending to be legally bound, the parties hereto agree as follows:







ARTICLE 1 - DEMISE, PREMISES, TERM, RENT



1.1. Demise and Premises . Landlord does hereby demise and let unto Tenant, and Tenant does lease and take from Landlord, the Premises, for the term and upon the covenants, terms and conditions hereinafter set forth. The parties acknowledge that the exact description and acreage of the Premises cannot be defined as of the Effective Date. Upon receipt of the Regulatory Approvals, the parties shall modify the description of the Premises to be consistent with the portion of the Stella Property that is approved for the development of a solar power system, by amending Exhibit "A" of this Lease. The parties acknowledge and agree that the Premises shall be inclusive of any buffer areas, areas used for utilities servicing the System (hereinafter defined) wetlands, transition areas, and/or setbacks imposed in connection with the approvals for the System and that all such areas, and/or setbacks shall be a part of the Premises. The parties further acknowledge that the initial Premises are estimated to be approximately 700 acres and the parties intend to maximize the size of the Premises in connection with the Regulatory Approvals. The Excluded Property shall not be part of the Premises.



1.2. Term . (a) This Lease shall be effective from the Effective Date. The initial Term of the Lease shall run for a period of twenty-five (25) years commencing on the first day of the calendar month following the Rent Commencement Date (defined in Section 1.3(a)), subject to the renewal options described below.









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(b) Provided Tenant is not in default of any of the terms of the Lease, beyond any applicable notice and cure periods, Tenant is hereby granted the option to extend the Term beyond the original twenty-five (25) years for four (4) additional successive periods of five (5) years each on the same terms and conditions as contained in this Lease. The options shall be deemed automatically exercised without any action on Tenant's behalf unless Tenant shall provide Landlord notice of termination of this Lease no later than one (1) year prior to the end of the initial Term or the extended Term period then ending.



1.3. Rent and Payments .



(a) The base rent (" Base Rent ") for the Term, shall be as follows: Based on $1,300,000 per year, paid on a monthly basis, phased-in as each ten (10) acre increment of the Premises begins producing electricity. Tenant shall provide written notice to Landlord as to the number of acres (but always in at least ten (10) acre increments) for which construction is completed and electricity is being generated (each, a " Production Notice "). From the date of each Production Notice, Base Rent will be due at the rate of $18,571.42 per year, or $1,547.61 per month for each ten (10) acres for which construction is completed and electricity is being generated. The date of the first Production Notice is the " Rent Commencement Date ." If the Rent Commencement Date occurs on a day other than the beginning of a calendar month, the Base Rent for such partial month shall be prorated. Notwithstanding the above, Tenant shall be obligated to pay Base Rent on the Premises no later than three (3) years following the Effective Date, regardless of construction and generation of electricity.



(b) Tenant shall pay to Landlord the total sum of seven million five hundred thousand dollars ($7,500,000) (the " Up-Front Payment ") within thirty (30) days of receipt of the Regulatory Approvals. If the Regulatory Approvals have not been obtained within thirty (30) months from the Effective Date (" $2M Payment Date "), Tenant shall pay $2,000,000 of the Up-Front Payment by the $2M Payment Date to Tenant, which shall be credited against the Up-Front Payment. The Up-Front Payment shall be deemed earned and non-refundable and shall not reduce amounts due for Bas e Rent or Additional Rent.



(c) Tenant shall be responsible to compensate Landlord for the loss of farming contract revenue due to this Lease. Landlord shall provide to Tenant a schedule of his farming leases, including a description of the term of the lease, the rental income and the types of crops. Tenant shall advise in writing which leases should be terminated by Landlord and at which times. Tenant shall pay Landlord for the lost rents as a result of termination of each farming lease (the " Development Fee "). The Development Fee shall not exceed ninety thousand dollars ($90,000) in any year. Tenant shall only be obl igated to pay Development Fees until Tenant is obligated to commence the payment of Base Rent.



(d) All Base Rent, Additional Rent and the amounts payable by Tenant to Landlord under the terms of this Lease shall be received by Landlord on or before the due date, at the office of Landlord set forth herein in Article 15 or at such other place or places as Landlord shall from time to time designate by written notice to Tenant, without notice or prior demand therefor, and without any deduction or offset of any amount for any reason whatsoever, except as provided in this Lease.







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1.4. Additional Rent . All sums in addition to Base Rent which Tenant assumes or agrees to pay pursuant to this Lease shall constitute and be treated as " Additional Rent ", and, in the event of any non-payment thereof, Landlord shall have all the rights and remedies provided for herein or by law in the case of non-payment of rent or of a breach of condition. For purposes of this Lease, the term " Rent " shall include Base Rent and Additional Rent.



1.5. Net Lease . Except as expressly set forth herein, it is the parties' intention that the Base Rent and Additional Rent herein specified shall be net, net, net to the Landlord in each lease year, that all costs, property taxes, rollback taxes, special taxes, maintenance costs, assessments, added assessments, utility costs, insurance costs, expenses and obligations of every kind relating to the Tenant ?s use and occupancy of the Premises which may arise during the term of this Lease shall be paid by Tenant and that Landlord shall be indemnified by Tenant against any such costs, expenses and obligations.



1.6. Subdivision . In the event that Tenant's use of the Premises or application for the Regulatory Approvals calls for a subdivision of the Premises from the Stella Property, Tenant shall cause such subdivision to be completed at its own sole cost and expense, and Landlord shall bear no costs associated with subdivision(s). In the event Landlord desires that any portion of the Stella Property be subdivided, Landlord may cause such subdivision to be completed at its sole c ost and expense and Tenant shall bear no costs associated with subdivision(s). Subject to modification of the Premises as a result of the Regulatory Approvals, no subdivision may result in the amount of Premises being altered without the consent of both parties. The parties shall cooperate with one another to cause subdivision approval to be granted, if requested.



ARTICLE 2 - USE



The Premises shall be used for the development and operation of a renewable energy system and related activities, as determined by Tenant and in accordance with the Regulatory Approvals (the " System "). Landlord and his current lessees reserve the right to continue farming operations on the portions of the Premises for which Tenant is not paying Base Rent and for which no Development Fee has been paid. The parties shall cooperate for an orderly transition from farming to development activities through a written schedule. Landlord shall have the non-exclusive right of access, including ingress, egress and regress through the Premises to the Stella Property. Such access rights may not be used to interfere with Tenant’ ;s operations. All components of the System and any personal property used by Tenant at the Premises are and shall be the sole and exclusive property of Tenant or its agents.



ARTICLE 3 - TAXES, UTILITIES AND ASSESSMENTS



Tenant shall use commercially reasonable efforts to be separately billed for and shall pay before any interest or penalty shall accrue thereon, all real estate taxes and assessments and special assessments (" Taxes ") and all charges for gas, electricity, telephone and communication services and other utility services and all connection fees incurred with respect to any such services used, rendered or consumed upon the Premises during the Term hereof (collectively " Impositions "). Tenant shall be responsible for the payment of Taxes beginning on the Rent Commencement Date. Prior to that time, Landlord shall be responsible for the payment of Taxes for the Premises. Te nant shall be responsible for any roll-back taxes resulting from cessation of farmland assessments due to Tenant' s use of the Premises regardless of the date of any new assessment resulting from Tenant's use. Tenant shall have sole control over the negotiation of the assessment for the Premises and the prosecution and defense of any tax appeals for the Premises.









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ARTICLE 4 - ARTICLE - ALTERATIONS AND IMPROVEMENTS



Tenant may construct, erect, install or demolish any buildings, structures or other improvements in, on or under the Premises, may make any other alterations or improvements to the Premises and may clear any trees or shrubbery and may store soil or materials on the Premises. In the event the installation of the System requires the removal of topsoil from the Premises, said topsoil shall be stockpiled on the Premises for use by Landlord at the end of the Term, unless the topsoil is contaminated or it is required by law to be removed.



ARTICLE 5 - SURRENDER AT EXPIRATION



Tenant shall, on the expiration date, or upon any earlier termination of this Lease, or upon any re-entry by Landlord upon the Premises pursuant to the terms hereof, surrender and deliver the Premises into the possession of Landlord in the same condition as delivered to Tenant, and with the System and all improvements removed, reasonable wear and tear and damage by casualty excepted, free and clear of all liens and encumbrances other than those caused or approved by Landlord. In the event Tenant fails to remove the System or any component thereof within one (1) year following the expiration or earlier termination of this Lease, such items will be considered to have reverted to the status of building improvements belonging to the Landlord or to have been abandoned by the Tenant. All such items shall become the property of the Landlord. Tenant shall be responsible for the payment of Rent on a pro-rated basis for that portion of the Premises it occupies following expiration.



ARTICLE 6 - INSURANCE



6.1. Casualty and Liability Insurance . During the Term, Tenant, at Tenant's sole cost and expense, shall:



(i) Maintain commercial general liability insurance against any claims for bodily injury, death or property damage, occurring on, in or about the Premises, or the improvements, and against contractual liability for any such claims, in an amount not less than $2,000,000 combined single limit with respect to bodily injury, death or property damage;



(ii) Maintain workers' compensation insurance covering all persons employed in connection with any work done on or about the Premises as required by law and in amounts not less than the statutory amounts; and



(iii) Maintain such other insurance with respect to the Premises against such additional risks which at that time are commonly insured against in the case of comparable premises and improvements of similar location.









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