EXECUTION COPY
LEASE AGREEMENT
This LEASE AGREEMENT (the "
Lease
") is made and entered into as of the
15th day of December, 2008 (the "
Commencement Date
"), by and between BUNGE NORTH
AMERICA, INC., a New York corporation ("
Landlord
"), and SOUTHWEST IOWA RENEWABLE
ENERGY, LLC, an Iowa limited liability company ("
Tenant
").
WITNESSETH:
WHEREAS, Landlord is the owner of the real property
located in Council
Bluffs, Iowa, as more particularly described on
Exhibit A
attached hereto and
incorporated herein by reference (the "
Property
"); and
WHEREAS, Landlord desires to lease to Tenant, and
Tenant desires to
lease from Landlord, the Property, on the terms and conditions set
forth herein.
AGREEMENTS
:
NOW, THEREFORE, for and in consideration of the
mutual agreements
contained herein and for other good and valuable consideration,
the receipt and
sufficiency of which are hereby acknowledged, Landlord and
Tenant agree as
follows:
1.
Lease of Property
. Landlord, for and in consideration of the rents,
covenants and agreements herein reserved, mentioned and contained
on the part of
the Tenant to be paid, kept and performed, does hereby demise
and lease to
Tenant, upon and subject to the conditions herein expressed, and
Tenant hereby
accepts from Landlord, the Property, including without limitation
the two grain
elevators and any and all other fixtures, alterations, improvements
or additions
located on the Property (the "
Improvements
").
2.
Term
. The term of this Lease (hereinafter referred to as the "
Term
")
shall commence on the Commencement Date and shall end on the
date which is
twelve (12) months thereafter, provided however that if the
Commencement Date is
a date other than the first day of a calendar month, then the Term
shall end on
the final day of the month in which the twelve-month
anniversary of the
Commencement Date falls (said date of termination being known
herein as the
"
Termination Date
"), unless sooner terminated or extended as herein provided.
The period from the Commencement Date through the Termination
Date shall be
referred to herein as the "
Initial Term
." Notwithstanding the foregoing, the
Termination Date shall be extended at the end of the Initial
Term and each
Additional Term for one (1) additional year (the "
Additional Term(s)
") if, on or
before the date which is ninety (90) days prior to the Termination
Date, both
Landlord and Tenant shall agree in writing to said extension. The
Initial Term
and any Additional Term(s) shall constitute the "
Term
" for purposes hereof. As
used herein, the term "
Lease Year
" shall mean each consecutive twelve-month
period beginning on the Commencement Date; provided, however,
that if the
Commencement Date is a date other than the first day of a calendar
month, then
the first Lease Year shall be the period commencing on the
Commencement Date and
ending on the final day of the month in which the twelve-month
anniversary of the Commencement Date falls, and each subsequent
Lease Year shall
be the twelve-month period immediately following the prior Lease
Year.
3.
Base Rent
. Tenant agrees that it shall pay base rental in the amount
of Sixty-Six Thousand Six Hundred Sixty-Six and 67/100 Dollars
($66,666.67) per
month ("Base Rent") during the Term, such amount being pro-rated
for any partial
month.
4.
Additional Rent
. All payments to Landlord required by Tenant
hereunder which are not Base Rent shall be deemed "
Additional Rent
" for purposes
hereof and may be collected in the same manner as Base Rent
hereunder. Base Rent
and Additional Rent shall together be referred to as "Rent."
5.
Payments of Rent
. All payments of Base Rent shall be due and payable
by Tenant to Landlord on or before the first day of each calendar
month during
the Term, and all payments of Additional Rent shall be due and
payable by Tenant
to Landlord on or before the date therefor required hereunder, in
each case in
lawful money of the United States of America at Landlord's address
set forth in
the introductory paragraph above, or at such place as Landlord may,
from time to
time, designate in writing. If requested by Landlord in writing,
Tenant shall
arrange for all payments of Rent to be made via automatic transfer
of funds into
a bank account designated by Landlord. In the event that Tenant
fails to make
any payment of Rent in a timely manner, Tenant shall be obligated
to pay a late
fee of $500 for each such late payment, and each and every
installment of Rent
accruing under the covenants of this Lease which shall not be
paid when due,
shall bear interest at the rate of eighteen percent (18%) per
annum, or at the
rate which is the highest rate which is at the time lawful in the
state in which
the Property is located, whichever is less, beginning on the date
such payment
is due, until the same shall be paid ("
Interest
").
6.
Utilities
. Upon Tenant's request, Landlord shall use reasonable
efforts to arrange for the following utilities to be furnished to
the Property
at Landlord's sole cost and expense: water, electricity, telephone,
sewer, trash
and rubbish removal, and any other utility service desired by
Tenant and used on
the Property. Notwithstanding the foregoing, Landlord's total
out-of-pocket
expenses incurred in connection with this paragraph,
including without
limitation any monthly or periodic service fees, taxes, penalties,
surcharges,
tap-on or connection fees or similar charges relating to such
utilities and any
charges associated with establishing utility service at
the Property
(collectively, "
Utility Charges
") shall not in any event exceed One Hundred
Fifteen Thousand and No/100 Dollars ($115,000.00) per Lease Year
(the "
Utility
Charges Cap
"). If at any time Landlord is invoiced for or otherwise incurs
any
such Utility Charges in excess of the Utility Charges Cap,
Tenant shall
reimburse Landlord for one hundred percent (100%) of all such
charges and costs
incurred by Landlord in excess of the Utility Charges Cap. To
the extent that
Tenant fails to reimburse Landlord for any such Utility Charges
due hereunder
within ten (10) days following written demand therefor: (a)
Tenant shall be
liable for Interest on any unpaid amounts from the date paid by
Landlord until
the date that the full amount to be reimbursed plus all Interest
accrued thereon
has been paid to Landlord, and (b) Landlord shall be entitled to
discontinue
utilities at the Property until all such amounts owed by Tenant,
including all
Interest accrued thereon, has been paid to Landlord. Tenant agrees
that Landlord
shall not be liable for damages, direct or indirect, by
abatement of Rent or
otherwise, for any failure, delay, diminution or interruption of
any utilities
or services for any reason, except
when such delays, diminutions or interruptions are caused
by the gross
negligence or willful misconduct of Landlord. Tenant shall
have no right to
terminate this Lease as a result of any such interruption or
failure of utility
services and no such interruption or failure of utility services
shall be deemed
to constitute a constructive eviction of Tenant.
7.
Taxes and Assessments
. Landlord shall pay before delinquency all
real property taxes levied, assessed, confirmed or imposed upon
the Property.
Notwithstanding the foregoing, Landlord may contest any such taxes
in any manner
allowed by law as long as such contest does not place the
Property in imminent
danger of sale or forfeiture. Tenant shall be solely responsible
for payment of
all personal property taxes or similar taxes and assessments
associated with any
personal property, inventory, equipment or other items owned
by Tenant and
stored on the Property.
8.
As Is
. Except as otherwise specifically set forth herein, Tenant
acknowledges and agrees that Landlord shall not be required to
alter, remodel,
decorate, clean or improve the Property or to demolish
and/or remove any
improvements, equipment or property located in the Property
(or to provide
Tenant with any credit or allowance for any of the foregoing),
and Tenant
further acknowledges and agrees that no representation or warranty
regarding the
condition of the Property has been made by or on behalf of
Landlord or relied
upon by Tenant, it being agreed that Tenant shall accept the
Property in an
"as-is" "where-is" condition. Tenant, at its expense, shall
obtain any and all
certificates of occupancy, special use permits, business
licenses and other
permits, licenses, approvals, waivers and the like which may be
required by
applicable law for Tenant's use and occupancy of the Property.
The failure of
Tenant to obtain any such certificate, permit, license, approval,
waiver or the
like shall not be a condition precedent to Tenant's obligation to
pay Rent or to
perform any of its other obligations hereunder or affect the
validity of this
Lease.
9.
Maintenance
.
(a) Landlord shall keep, maintain, and repair the
Property and
any part thereof, including, without limitation, the
Improvements, in good
condition and repair; provided, however, that Tenant shall be
responsible at its
sole cost and expense for all maintenance, repairs or
replacements which are
necessary to keep the Property or any part thereof in good
condition and repair
which arise as a result of (i) the gross negligence or willful
misconduct of
Tenant, its employees, agents, contractors, licensees or
invitees, or (ii) the
failure of Tenant to report any such maintenance, repairs or
replacements
pursuant to Section 9(c).
(b) Notwithstanding the foregoing,
Landlord's total
out-of-pocket expenses incurred in connection with this Section 9
shall not in
any event exceed Ninety Thousand and No/100 Dollars ($90,000.00)
per Lease Year
(the "
Maintenance Expense Cap
"), and Landlord shall not be required to (i) make
any expenditure in excess of the Maintenance Expense Cap or
(ii) perform any
maintenance, repairs or replacements if the cost of said
maintenance, repairs or
replacements would exceed the Maintenance Expense Cap. Landlord
may, in its sole
discretion and upon Tenant's request, perform or cause to be
performed such
maintenance, repairs or replacements in excess of the Maintenance
Expense Cap.
All maintenance, repairs and replacements on the Property or
Improvements shall
be performed by and at the direction of Landlord and with
contractors and
subcontractors approved by Landlord in its sole discretion.
To the extent that any maintenance, repairs and replacements
are at Tenant's
cost and expense, Tenant shall reimburse Landlord within ten
(10) days of the
completion of said maintenance, repair or replacement for all
costs incurred by
Landlord, plus Interest from the date such expense was incurred
by Landlord to
the date that the full amount to be reimbursed plus all Interest
accrued thereon
has been paid to Landlord.
(c) Tenant shall promptly inform Landlord of all
maintenance,
repairs or replacements which are required to the Property during
the Term and
Landlord shall have no liability to Tenant for the failure to
make any repairs
to the extent Tenant has not provided such notice to Landlord.
(d) For the avoidance of doubt, Tenant
shall be solely
responsible for all of Tenant's operations at the Facility and
Landlord shall
have no obligation to provide any labor or services in
connection with such
operations.
10.
Insurance
.
(a) At all times during the Term of this Lease,
Tenant, at
Tenant's sole cost and expense, shall maintain the following types
of insurance:
(1) Automobile liability insurance
covering owned,
hired, and non-owned vehicles against claims for bodily
injury, death
and property damage, with a combined single limit of
not less than
$1,000,000, or equivalent coverage using split limits;
(2) Commercial General Liability
insurance, including
contractual liability and products/completed operations,
for claims for
bodily injury, death and property damage, with limits of
not less than
$1,000,000 for each occurrence and $1,000,000 in the
General and
Products/Completed Operations Aggregates, and such
insurance shall be
written on an occurrence basis;
(3) Excess or Umbrella liability
policy with limits
of not less than $4,000,000 per occurrence and
$4,000,000 aggregate;
such Excess or Umbrella liability policy shall follow
form with the
primary liability policies and contain a drop-down
provision in case of
impairment of underlying limits;
(4) Worker's Compensation
insurance providing
statutory benefits for injury or disease in the State
of Iowa, and
Employer's Liability with limits of at least $500,000
for individual
injury or disease, with an aggregate of $500,000 for
disease; and
(5) Business interruption insurance in
such amount as
required to insure the payment of all Rent required
to be paid by
Tenant to Landlord for a period of twelve (12) months.
(b) The parties acknowledge and agree that
Landlord shall have
the right to increase the foregoing limits of insurance, or the
type or scope of
such insurance coverage, from time to time, in its sole
but reasonable
discretion.
(c) Tenant shall deliver to Landlord, prior to
the expiration
date of each policy, certificates of insurance, evidencing
the insurance
coverage herein required to be maintained by Tenant and
specifying the insured
parties as required herein. All policies of insurance which
Tenant is required
to maintain pursuant to this Lease shall: (1) provide that they
shall not be
cancelled or non-renewed without at least thirty (30) days prior
written notice
to Landlord and Mortgagee (if applicable), except ten (10)
days notice for
non-payment of premium; (2) name Tenant as the insured and
Landlord and any
holder of a mortgage or deed of trust encumbering the Property from
time to time
(a "
Mortgagee
") as lender loss payable on property policy, and as additional
insured to general liability and automobile liability, as
their respective
interests may appear; (3) if the Landlord so requests in writing
at any time,
shall indicate any Mortgagee as loss payee, as the interest of
such Mortgagee
may appear; and (4) be valid and enforceable policies issued
by insurers of
recognized responsibility, properly licensed in the State of Iowa,
with an A.M.
Best's Rating of A- or better and Class VII or better. Tenant
shall provide
Landlord and Mortgagee with at least thirty (30) days prior
written notice of
any material amendment to any policy of insurance which Tenant
is required to
maintain pursuant to this Lease.
(d) At all times during the Term of this Lease,
Landlord, at
Landlord's sole cost and expense, shall maintain property
insurance on an "all
risks" of physical loss or damage basis in an amount equivalent
to the full
replacement cost of the Improvements.
(e) Whenever (1) any loss, cost, damage or
expense resulting
from fire, explosion or any other casualty or occurrence is
incurred by either
of the parties to this Lease in connection with the
Property or the
Improvements, and (2) such party is then covered in whole
or in part by
insurance with respect to such loss, cost, damage or expense, then
the party so
insured hereby releases the other party from any liability
it may have on
account of such loss, cost, damage or expense to the extent
of any amount
recovered by reason of such insurance and waives any right of
subrogation which
might otherwise exist in or accrue to any person on account
thereof, provided
that such release of liability and waiver of the right of
subrogation shall not
be operative in any case where the effect thereof is to
invalidate such
insurance coverage. Each policy of insurance required to be
maintained by either
party pursuant to this Lease shall contain an express waiver of
any right of
subrogation by the insurance company against the other party, any
Mortgagee, and
their respective directors, officers, agents, employees, successors
and assigns.
(f) To the extent that Tenant fails to insure
the Property in
accordance with this
Section 10
, Landlord may, at its option, elect to pay for
and/or procure such insurance on Tenant's behalf, in which case
Tenant shall be
responsible to reimburse Landlord upon written demand for all
costs incurred by
Landlord in doing so, plus Interest from the date paid by
Landlord to the date
that the full amount to be reimbursed plus all Interest accrued
thereon has been
paid to Landlord. All such amounts shall be "Insurance Costs"
for purposes
hereof.
11.
Use
. The Property may be used and occupied solely for receiving,
warehousing, and distributing corn and milo as feedstock for
Tenant's operation
of that certain ethanol processing plant located near Council
Bluffs, Iowa which
is under development by Tenant as of the Commencement Date. Any
other or further
use of the Property shall require Landlord's prior written consent.
12.
Environmental
.
(a) Tenant will fully comply with all Hazardous
Materials Laws
(defined below) and agrees that Tenant, its employees, agents,
contractors,
licensees and invitees shall not use, manufacture, release, store
or dispose of
any Hazardous Materials (defined herein) in, on, under or about
the Property.
However, the foregoing shall not prohibit de minimis quantities
of cleaning
solvents and other materials which qualify as Hazardous Materials
but which are
used and handled in accordance with good property management
practices and in
compliance with all Hazardous Materials Laws and without
disposal, leaking,
spillage or other contamination of or to the Property or the
property of any
third party. At any time Landlord is notified or otherwise
suspects that
Hazardous Materials, or any other dangerous, illegal or improper
conditions,
exist with respect to the Property, Landlord may enter upon the
Property in
order to conduct inspections, tests or studies. In the event
Landlord discovers
the existence of any such Hazardous Materials or any breach of the
provisions of
this Lease due to fault or other act of Tenant or its
agents, employees,
contractors, invitees or licensees, Tenant shall reimburse
Landlord upon demand
for the costs of all inspection, sampling and analysis, plus
Interest from the
date of Landlord's demand to the date that the full amount to be
reimbursed plus
all Interest accrued thereon has been paid to Landlord.
(b) Tenant hereby agrees to indemnify,
defend and save
harmless Landlord, its agents and all Mortgagees and their
respective successors
and assigns, from and against any loss, cost, damage or
expense (including
reasonable attorneys' fees) arising out of or in any way
connected with the
existence, use, manufacture, storage, disposal or other handling
of Hazardous
Materials on, under or about the Property, except to the extent
(i) caused by
Landlord, Landlord's employees or agents, or contractors or
tenants under
contract or lease with Landlord or (ii) that Tenant proves
said Hazardous
Materials existed on the Property on or before the
Commencement Date. The
indemnity obligations of Tenant under this clause shall survive
the expiration
or any termination of this Lease.
(c) For purposes hereof, "
Hazardous Materials
" includes,
without limitation, any flammable explosives, radioactive
materials, hazardous
materials, hazardous wastes, hazardous or toxic substances, or
related materials
defined in the Comprehensive Environmental Response, Compensation,
and Liability
Act of 1980, as amended (42 U.S.C. Sections 9601, et seq.),
the Hazardous
Materials Transportation Act, as amended (49 U.S.C. Sections 1801,
et seq.), the
Resource Conservation and Recovery Act, as amended (42 U.S.C.
Sections 6901, et
seq.), and in the regulations adopted and publications
promulgated pursuant
thereto, or any other federal, state or local environmental law,
ordinance, rule
or regulation (collectively, "
Hazardous Materials Laws
").
13.
Alterations
. Tenant shall not, without the prior written consent of
Landlord, make any alterations, improvements or additions to
the Property or
employ any person or contractor to
provide such services to the Property. Such consent may be
conditioned upon such
matters as Landlord reasonably deems appropriate, including
submission to and
review and approval by Landlord of complete plans and
specifications for such
work, Landlord's approval and/or employment of the
contractor and/or
subcontractors, the terms of their contracts, the maintenance of
builder's risk
and other appropriate insurance, the terms and procedures for
payment for such
work by Tenant and the terms and procedures pertaining to the
delivery of
mechanic's lien waivers in connection therewith. Tenant shall
promptly pay to
Tenant's contractors, when due, the cost of all such work, such
that no lien is
filed against the Property. All work done by Tenant or its
contractors pursuant
hereto shall be done in a good and workmanlike manner and shall
comply with all
applicable laws and ordinances and rules and regulations of
governmental
departments or agencies. All such alterations, additions or
improvements
constructed or installed by or on behalf of Tenant shall become
the property of
the Landlord upon the expiration or other sooner termination
of this Lease,
except that Landlord may, by written notice to Tenant, given at
least thirty
(30) days prior to the expiration or termination of this Lease,
require Tenant
to remove any and all such alterations, additions or
improvements and Tenant
shall repair any damage to the Property arising from such
removal or, at
Landlord's option, shall pay to Landlord all of Landlord's costs of
such removal
and repair. The provisions of this
Section 13
shall survive the expiration or
termination of this Lease.
14.
Surrender
. Subject to Landlord's obligations to keep, maintain and
repair the Property and the Improvements as set forth in
Section 9, Tenant
agrees that at the termination or expiration of this Lease,
either by lapse of
time or otherwise, Tenant will surrender up possession of the
Property in as
good condition and repair as the same shall be in upon
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