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Exhibit 10.11
CITY OF FORDYCE, ARKANSAS
and
INTERNATIONAL PAPER COMPANY
LEASE AGREEMENT
Dated as of January 1, 1997
LEASE AGEREMENT
THIS LEASE AGREEMENT, dated as of January 1, 1997, by and
between the CITY OF FORDYCE, ARKANSAS, a municipality under the
laws of the State of Arkansas, as lessor (the "City"), and
INTERNATIONAL PAPER COMPANY, a corporation organized and existing
under and by virtue of the laws of he State of New York, as lessee
(the "Company").
WITNESSETH:
WHEREAS, the City is authorized and empowered under the laws of
the State of Arkansas, including particularly Title 14, Chapter
164, Subchapter 2 of the Arkansas Code of 1987 Annotated (the
"Act"), to issue revenue bonds and expend the proceeds thereof to
finance the cost of acquiring, constructing and equipping lands,
buildings or facilities for securing or developing industry;
and
WHEREAS, the City has undertaken to furnish permanent financing
of the cost of acquiring certain industrial facilities located in
Fordyce, Arkansas by the issuance of its Industrial Development
Revenue Bonds - International Paper Company Project, in the
aggregate principal amount of $1,050,000 (the "Bonds"), and in
connection therewith the City and the Company have entered into
this Lease Agreement); and
NOW, THEREFORE, for valuable consideration, receipt of which is
hereby acknowledged by the City and the Company, and in
consideration of the mutual benefits and covenants herein
contained, the City and the Company AGREE as follows:
ARTICLE I
DEFINITIONS
Section 1.1
Definitions . In addition to the words and terms
elsewhere defined in this Lease Agreement, the following words and
terms as used in this Lease Agreement shall have the following
meanings:
" Act" — Title 14,
Chapter 164, Subchapter 2 of the Arkansas Code of 1987 Annotated,
as amended and enacted from time to time.
"Bonds" — The City of Fordyce, Arkansas Industrial
Development Revenue Bonds - International Paper Company Project,
Series A and B, in the aggregate principal amount of $1,050,000,
issued pursuant to the Bond Purchase Agreement. Two Bonds
designated "Series A" shall be issued in the principal amount of
$450,000 each, and one Bond designated "Series B" shall be issued
in the principal amount of $150,000.
"Bond Purchase Agreement" — The Bond Purchase Agreement
dated as of January 1, 1997, between the City and the Purchasers,
and any amendments and supplements thereto.
"City" — City of Fordyce, Arkansas, a municipality under
the laws of the State of Arkansas, and its successors and
assigns.
"Company" International Paper Company, a corporation organized
and existing under the laws of the State of New York, and any
assign that assumes the obligations of the Company pursuant to the
provisions of this Lease Agreement.
"Environmental Laws" — Any federal, state or local law,
statute, ordinance or regulation pertaining to health, industrial
hygiene or the environmental conditions on, under or about the
Premises, now or hereafter enacted or interpreted, including,
without limitation, the Comprehensive Environmental Response,
Compensation and Liability Act of 1980 ("CERCLA’’), as
amended, 42 U.S.C. Sections 9601 et seq., and the Resource
Conservation and Recovery Act of 1976 ("RCRA"), 42 U.S.C. Section
6901 et seq.
"Event of Default" — Any event of default specified in
Section 6.1 hereof.
"Hazardous Substances" — (a) Those substances
included within the definitions of "hazardous substances",
"Hazardous materials", "toxic substances" or "solid waste" in
CERCLA, RCRA and the Hazardous Materials Transportation Act, 49
U.S.C. Sections 1801 et seq. and in the regulations promulgated
pursuant to said laws;
(b)
Those substances defined as "hazardous wastes" or "PCB" in the
applicable statutes of the State of Arkansas as amended from time
to time, and in the regulations promulgated thereunder;
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(c)
Those substances listed in the United States Department of
Transportation Tab1e (49 CFT 172.101 and amendments thereto) or by
the Environmental Protection Agency (or any successor agency) as
hazardous substances (40 CFR Part 302 and amendments
thereto);
(d)
Such other substances, materials and wastes which are or become
regulated under applicable local, state or federal law, which are
classified as hazardous, corrosive, ignitable, or toxic under
federal, state or local laws or regulations; and
(e)
Any material, waste or substance which is (i) petroleum; (ii)
asbestos; (iii) polychlorinated biphenyls; (iv) designated as
a "hazardous substance" pursuant to Section 311 of the Clean
Water Act, 33 U.S.C. Sections 1251 at seq. (33 U.S.C. 1321) or
listed pursuant to Section 3078 of the Clean Water Apt (33 U.S.C.
1317); (v) flammable explosives; or (vi) radioactive materials.
"Lease Agreement" — This Lease Agreement and any
amendments and supplements hereto.
"Mortgage" — The Mortgage dated as of January 1, 1997,
between the City and the Purchasers, and any amendments and
supplements thereto.
"Permitted Encumbrances" — (i) This Lease Agreement, the
Mortgage, and the Bond Purchase Agreement, (ii) liens for taxes and
assessments not then delinquent; (iii) any mechanic’s,
laborer’s, materialmen’s, supplier’s, or
vendor’s lien for work or services performed or materials
furnished which are not yet due and payable; (iv) utility, access
and other easements and rights of way, restrictions, reversions and
exceptions that will not interfere with or impair the operations
being conducted on the Premises, (v) such minor defects,
irregularities, encumbrances, easements, rights of way, and clouds
on title as normally exist with respect to properties similar in
character to the Premises and as do not materially impair the value
or utility of the Premises; and (vi) any other defect,
irregularity, encumbrance, easement, right of way or cloud on title
which is waived or permitted in writing by the City and
Company.
"Premises" — The land, buildings, improvements and
facilities leased by this Lease Agreement and described in Section
2.1 hereof.
"Purchasers" — Citizens First Bank, Fordyce, Arkansas
("Citizens"), Fordyce Bank & Trust Company, Fordyce, Arkansas
("FB&T"), and the Arkansas Development Finance Authority
("ADFA"). Citizens and FB&T are the original purchasers
of the Series A Bonds, and ADFA is the original purchaser of the
Series B Bond, and the references include any subsequent owners of
the Bonds.
"State" — The State of Arkansas.
Section 1.2
Use of Words and Phrases . "Herein", "hereby",
"hereunder", "hereof", "hereinabove", "hereinafter", and other
equivalent words and phrases refers to this Lease Agreement and not
solely to the particular portion thereof in which any such word is
used. The definitions act forth In Section 1.1 hereof include
both singular and plural. Whenever used herein, any pronoun shall
be deemed to include both singular and plural and to cover all
genders.
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ARTICLE II
DEMISING CLAUSES; DURATION OF LEASE TERM;
RENTAL PROVISIONS
Section 2.1
Lease of Premises . Subject to the tarns and
provisions hereinafter set forth, and in consideration of the rent
to be paid by the Company and in consideration of the covenants and
agreements herein contained to be kept and performed by the
Company, the City does hereby lease, demise and let unto the
Company, subject to Permitted Encumbrances, and the Company does
hereby hire and take from the City, subject to Permitted
Encumbrances, for the uses and purposes hereinafter set out, a
parcel of property and all improvements, located in the City of
Fordyce, Dallas County, Arkansas, with the specific premises
outlined on Exhibit "A", which is attached hereto and made a part
hereof (the "Premises") .
TO HAVE AND TO HOLD the Premises unto the Company for the team
of this Lease Agreement as hereafter set forth.
Section 2.2
Term . (a) Initial Term . Unless
sooner terminated or extended as hereinafter provided, this Lease
Agreement shall be for a period of twenty (20) years, commencing on
January 10, 1997 (the "Commencement Date") and ending an January
10, 2017.
(b)
Option Terms . Provided the Company is not then in
default, the City hereby grants to the Company the option to extend
the term of this Lease Agreement for two (2) additional
periods. The Company may exercise the first option for five
(5) years ("First Option Term") by giving the City written notice
not later than twelve (12) months before the expiration of the is
initial term. The Company may exercise the second option for
four (4) years ("Second Option Term") by giving the City written
notice not later than twelve (12) months before the expiration of
the First Option Term. Time is of the essence with respect to
the Company’s exercise of those options. Such renewals
shall be on the same terms and conditions as contained herein
except that the annual base rent for both Option Terms shal1 be
Nine Thousand Nine Hundred Eighty-Four and 00/100 ($9,984.00),
payable in equal monthly installments of Eight Hundred Thirty
- Two and 00/100 Dollars
($832.00).
Section 2.3
Rent . (a) The Company agrees to pay to the
City, without demand, deduction or set-off, except as provided in
this Lease Agreement, an initial annual base rental at the rate of
One Hundred Thirteen Thousand One Hundred Ninety-six and 00/100
Dollars ($113,196.00) per annum, payable in equal monthly
installments on the tenth day of each calendar month, commencing
February 10, 1997, during the term of this Lease Agreement in the
amount of Nine Thousand Four Hundred Thirty-Three Thousand and
00/100 ($9,433.00).
(b)
Upon the seventh (7th) anniversary of the commencement date, the
annual rent shall be adjusted to reflect the then current interest
rate on the Series A Bonds (the interest on which shall be Two
Hundred (200) basis points over the interest rate of similar eight
(8) year U.S. Treasury Notes, in no event exceeding nine percent
(9%) per annum, determined as provided in the Bond Purchase
Agreement). The adjusted annual rent shall not exceed One
Hundred Sixteen Thousand Nine Hundred Forty and 00/100 Dollars
($116,940.00), payable in
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monthly installments of Nine Thousand Seven
Hundred Forty-Five and 00/100 Dollars ($9,745.00).
(c)
Upon the fifteenth (15th) anniversary of the Commencement Date the
annual base rent shall be Nine Thousand Nine Hundred Eighty-Four
and 00/100 ($9,984.00), payable in equal monthly installments of
Eight Hundred Thirty-Two and 00/100 Dollars ($832.00).
(d)
Each payment made pursuant to this Section 2.3 shall be made in
immediately available funds directly to the Purchasers for the
account of the City at the address of the Purchasers set forth
herein or, in the case of each subsequent owner of the Bonds, at
the place designated in the notice of assignment of the Bonds
provided in Section 2.09 of the Bond Purchase Agreement, or at such
other place as shall from time to time be designated by the
Purchasers or such subsequent owner of the Bonds in each case after
notice in writing to the City and the Company.
(e)
In the event the Company should fail to make, or cause to be made,
any of the payments required in this Section, the item or
installment so in default shall continue as an obligation of the
Company until the amount in default shall have been fully paid.
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ARTICLE III
USE OF PREMISES
Section 3.1
Use of Premises . The Premises shall be used by the
Company for general office and warehouse use, manufacturing of
paper products and uses incidental thereto.
The City represents that the Company’s use as set forth
herein complies with all zoning ordinances and covenants and
restrictions of record applicable to the Premises.
Section 3.2
Compliance with Laws . During the term of this Lease
Agreement, the Company shall, at the Company’s own cost and
expense, comply with all laws, ordinances, orders, rules,
regulations and requirements of all federal, state and municipal
governments and appropriate departments, commissions, boards and
officers thereof relating to the Premises, whether or not the same
require repairs or alterations to the Premises. The Company
shall have the right to contest by appropriate legal proceedings,
without cost or expense to the City, the validity of any law,
ordinance, order, rule, regulation or requirement, applicable to
the Premises, if no lien, charge or liability shall be imposed
against the Premises or the City’s interest therein by reason
thereof, and in such event, the Company may postpone compliance
therewith until the final determination of any such proceeding.
Section 3.3
Services and Utilities . The City shall furnish, at
its own cost and expense, sewer, water, electric, gas and telephone
connections into the Premises.
The Company shall pay all utility bills, including, but not
limited to water, sewer, gas, electricity, telephone, fuel, light,
and heat bills, for the Premises which services shall be separately
monitored for the Premises.
Section 3.4
Maintenance and Repairs . The Company shall, at all
times during the term and at is own cost and expense, keep and
maintain the Premises in good order and condition, except as such
repairs are rendered necessary by the negligence of the City, its
agents, employees, or invitees.
Section 3.5
Damage and Destruction . (a) In the event of the
total destruction of the Premises by fire or other casualty during
the term hereof, including any casualty attributable to any
condition of the Premises which pre-exists the Commencement Data of
this Lease Agreement or in the event of such partial destruction
thereof as to render the Premises untenantable or unfit for
occupancy, therein either event, unless such damages can, in the
reasonable opinion of the City and the Company, be repaired within
one hundred eighty (180) days after the occurrence, this Lease
Agreement and the term hereby created shall cease from the date of
such damage or destruction and the Company shall upon written
notice from the City surrender the Premises to the City and the
Company shall pay rent within said term only to the time of such
damage or destruction.
If, however, in the reasonable opinion of the City and the
Company, the damage as aforesaid can be repaired within one hundred
eighty (180) days from the occurrence thereof, the City shall
repair the Premises with all reasonable speed, and this Lease
Agreement shall continue in full force and effect.
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(b)
In the event or the partial destruction of the Premises by fire or
other casualty during the term hereof, including any casualty
attributable to any condition of the Premises which pre-exists the
Commencement Date of this Lease Agreement, which partial
destruction does not render the Premises untenantable or unfit for
occupancy, the City shall repair the damage with all reasonable
speed within Sixty (60) days thereafter, and this Lease Agreement
shall continue in full force and effect.
(c)
If the City does not restore the Premises or the affected portion
to tenantability within the periods set forth in subsections (a)
and (b) above, the Company may then terminate this Lease Agreement,
retroactive to the date of casualty by written notice delivered to
the City within fifteen (15) days after the end of those
periods.
(d)
All insurance money paid on account of such casualty shall be paid
to the City and used to repair or restore the damaged or destroyed
property. It requested by the Company, all insurance proceeds
delivered to the City pursuant to the terms of this Lease Agreement
shall be held in a separate account in any bank or trust company
selected by the City and acceptable to the Company. The
Company shall have the right to audit the expenditure and handling
of such proceeds.
(e)
The City’s obligation to repair or restore the Premises
pursuant to this Section 3.5 shall be limited to the insurance
proceeds received by the City for such purpose. If the
insurance money shall he insufficient to pay all coats of such
repair or restoration, the City shall not be liable for the
deficiency. Any balance of the insurance proceeds remaining
over and above the cost of such repair or restoration shall be used
to prepay or redeem the outstanding principal of the Bonds, in
accordance with the provisions of the Bond Purchase Agreement, and
the rent payable under Section 2.3 hereof shall be adjusted
downwards accordingly.
Section 3.6
Building Alterations . The Company may, at its own
cost and expense, with the City’s prior written consent,
which consent shall not be unreasonably withheld, make alterations,
additions, or improvements in or to the Premises providing (i) the
structural integrity and market value of the Premises are not
materially lessened by reason thereof, (ii) such work is completed
in a good and workmanlike manner and in compliance with all
applicable laws, rules, regulations and ordinances, and (iii) the
specifications for such work equals or exceeds the specifications
for the original construction of the Premises, taking into
consideration any changes in construction practices and technology
which may exist at the time of such alterations.
All alterations, additions, and improvements which may be
erected, installed or affixed on or in the Premises during the term
are and shall be deemed to be and immediately become part of the
realty and the sole and absolute property of the City and shall be
deemed to be part of the Premises, except that all furniture, trade
fixtures or demountable partitions installed by the Company shall
be and remain the property of the Company.
The Company may, at its own cost and expense, without the
City’s consent, install, replace or remove any of the
Company’s trade fixtures, furniture, demountable partitions
and equipment (all hereinafter referred to as "Trade
Fixtures"). Any or all such Trade Fixtures shall be and
remain the property of the Company, and may, at the Company’s
option and
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expense, be removed by the Company at any time
during the term of the Lease Agreement or at the Lease Agreement
expiration date. Thu Company shall be liable for damaged to
the Premises caused by the Company’s removal of its Trade
Fixtures.
Section 3.7
Signs . The Company shall not attach or erect or
permit anyone to attach or erect any signs, symbols, lettering of
any kind on the walls or roof of the Premises without the prior
written consent of the City, which consent shall not be
unreasonably withheld.
Section 3.8
Access and Inspection . The Company shall have access
to the Premises twenty-four (24) hours a day, cloven (7) days a
week.
The City and the Purchasers shall have the right to enter upon
the Premises during reasonable business hours for the purpose of
inspection or for maintenance work or repairs in accordance with
the provisions hereof, provided that prior notice shall be given to
the Company. The City and the Purchasers shall also have the
right to enter at any time without notice in the event of fire,
explosion or other emergency, for the purposes of controlling,
extinguishing or abating the same.
Section 3.9
Insurance . The Company shall, at the Company’s
sole cost and expense, keep the Premises and improvements thereon
covered by Fire and Extended Coverage insurance against the perils
of fire, flood, lightning, windstorm, hurricane, hail, explosion,
radioactive contamination, riot, civil commotion, vandalism,
malicious mischief, smoke, aircraft or land vehicle, sonic shock
wave, molten material, liquid and leakage of fire protection
equipment, i
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