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HomeMy WebLinkAbout12421OF:LiI�'ANCE NO„ 12,421 AN ORDINANCE AUTHORIZING A LEASE y \TD AGREEMENT BY AIVD BETWEEN THE CITY OF LITTLE: ROC;-:, ARKANSAS, AS LESSOR, AND MERICO, INC. , AS LESSEE, IN SUBSTANTIALLY THE FORM AND WITH SUBSTANTIALLY T E CONTENTS SET FORTH IN AND MADE A PART OF THIS ORDINANCE; AUTHORIZ- ING THE EXECUTIOI AND DELIVERY OF SAID LEASE AND AGREE- MENT; PRESCRIBING OTHER MATTERS RELATING THERETO; AND DECLARING AN EiV.,ERGENTCY. BE IT ORDAINED by the Board of Directors of the City of Little Rock, Arkansas: Section I. That there be, and there is hereby, authorized the execution and delivery of a Lease and Agreement wherein the City of Little Rock, Arkansas ( "City ") is Lessor and Merico, Inc. , a Texas corporation ( "Merico ") is Lessee, in substantially the form and with substantially the contents hereafter set forth, and the Mayor and City Clerk be, and they are hereby, authorized to execute, acknowledge and deliver said Lease and Agree- ment for and on behalf of th'a City. The form and contents of said Lease and Agreement which are hereby approved and which are made a part hereof, shall be substantially as follows: Cop -7� A -t 4 J LEASE AND AGREEMENT between CITY OF LITTLE ROCK, ARKANSAS LESSOR and MERICO , INC. LESSEE c LEASE AND AGREEMENT TABLE OF CONTENTS ARTICLE I Pace Constructing and Equipping of Project Section 101 Obligation of Lessor to Construct Improvements and Purchase and Install Machinery and Equipment and Maintain Insurance Thereon 3 Section 102 Insurance to be Maintained on Project During Construction 5 Section 103 Itemization of Project Costs; Bond Proceeds to be Deposited in Construction Fund; Authorized Disbursements From Construction Fund 5 Section 104 Lessee to Have Access to Project During Construction and to Occupy Immediately After Completion; Lessee to Have Peaceful and Quiet Enjoyment 6 Section 105 Lessor Covenants to Enforce Contracts and Correct Defective Work with Expenses Incurred Constituting Part of Project Costs; Lessee Has Enforcement Rights; Lessor to Assign to Lessee Warrants 7 ARTICLE II Demising Clauses, Duration of Lease Term and Rental Provisions Section 201 Demise of Leased Premises 8 Section 202 Term of Lease and Agreement 9 Section 203 Basic Rent; Additional Rent; Absolute and Unconditional Obligation to Pay Basic Rent and Additional Rent 9 Section 204 Method of Payment of Basic Rent and Additional Rent 13 ARTICLE III Taxes and Assessments (Impositions) Section 301 Taxes and Assessments (Impositions) 15 Section 302 Leased Premises Exempt From Ad Valorem Taxes; Contest of Attempted Levy Authorized 15 ARTICLE IV Insurance Section 401 Insurance Required 17 c ARTICLE V Page Repairs and Maintenance of Premises and Alterations Section 501 Lessee Obligated to Maintain Buildings and Improvements 20 Section 502 Lessee Has Right to Make Additions, Alterations and 20 Changes Section 503 Lessor; Machinery, Equipment pme property nt and Other Property of Le of Le , Installed at Lessee's Expense Remain Its Property With 20 Right of Removal Section 504 Property on Leased Premises at Sole Risk of Lessee 21 Section 505 Lessee Obligated to Maintain Lessor's Machinery and 21 Equipment ARTICLE VI Use of Premises, Compliance with Orders, Etc. Section 601 Permitted Use of Leased Premises and Compliance with 22 Laws, Etc. Section 602 Lessor's Covenant Not to impose Burdensome Laws, Etc. 22 ARTICLE VII Work Performed by Lessee Section 701 Obligations of Parties Concerning Work on Leased Premises 23 and Obtaining Necessary Permits ARTICLE VIII Mechanics' Liens Section 801 Lessee to Keep Leased Premises Free of Construction Liens ARTICLE IX Indemnification of Lessor and Trustee Section 901 Indemnification of Lessor and Trustee ARTICLE X Lessor May Perform Lessee's Obligations Section 1001 Lessor e May Lessoorrfor Costs 'a d E penses' o Perfm Reimburse incurred in Doing So ARTICLE XI Public Utilities and Charges Section 1101 Lessee to Pay Public Utility Charges 24 25 27 (4� 4 ARTICLE XII Page Inspection of Premises by Lessor Section 1201 Lessor and Trustee to Have Right of Inspection Subject to Certain Restrictions 28 ARTICLE XIII Damage and Destruction Section 1301 Lessee to Restore in Event of Damage or Destruction; Application of Insurance Moneys 29 Section 1302 No Diminution in Lessee's Obligation to Pay Basic Rent and Perform Other Covenants 31 Section 1303 Lessee Not Obligated to Restore if Purchase Option Exercised or All Outstanding Bonds Paid 31 ARTICLE XIV Condemnation Section 1401 Rights of Parties in Event of Condemnation; Bonds Protected in Any Event 32 Section 1402 Lessee Obligated To Continue Basic and Additional Rental Payments Until Condemnation Award Available 35 Section 1403 Lessee's Right to Exercise Options Continues in Force Notwithstanding Condemnation Proceedings 35 Section 1404 Right of Lessee to Participate in Condemnation Proceedings 36 Section 1405 Lessor's Covenant Not To Condemn 36 ARTICLE XV Assignment Section 1501 Assignment and Subletting Permitted but Lessee Not Relieved of Obligations; Assignment to Trustee Permitted 37 ARTICLE XVI Priority of Lease Section 1601 Lease and Agreement Superior and Prior :, ARTICLE XVII Remedies are Cumulative, No Implied Waiver Section 1701 Specific Relief; Remedies are Cumulative; No Implied Waiver • 39 V 0 ARTICLE XVIII Page Default Provisions Section 1801 Events of Default 40 Section 1802 Remedies 42 Section 1803 Remedies not exclusive 43 Section 1804 Rental, Damages and Reletting Go Into Bond Fund 43 Section 1805 Lessee's Covenants With Respect to Capital Expenditures Under Section 103 (c) (6) (D) of Internal Revenue Code of 1954 43 ARTICLE XIX Lessee's Options Section 1901 Extension Options 45 Section 1902 Purchase Options 45 ARTICLE XX Notices Section 2001 Notices 48 ARTICLE XXI Recording Section 2101 Recording 49 ARTICLE XXII General Section 2201 Arkansas Law Applicable 50 Section 2202 Severability 50 Section 2203 Captions for Reference Only 50 Section 2204 Trustee's Rights Cease When .Bonds and Trustee's Fees. Paid or Provided For 50 Section 2205 Enforcement Rights of Trustee 51 Section 2206 Provisions Binding on Successors and Assigns 51 Section 2207 Trustee's and Original Purchaser's Consent Required for Modification 51 Section 2208 Lessee Furnish Lessor and Trustee Annual Reports 51 Section 2209 Consolidation, Merger or Sale Permitted in Certain Circumstances 51 Section 2210 Copies of Notices to Original Purchaser 52 Section 2211 Dividend Restriction 52 4� 4 ARTICLE XXIII Page Expansion of Facilities Section 2301 Expansion of Facilities 53 Section 2302 Provisions Made in Trust Indenture for Release of Lands Involved in Expansion From Lien of Inventure; Consideration Paid for Lands Involved in Expansion 54 Section 2303 No Diminution of Lessee's Obligations to Pay Basic and Additional Rental 54 Section 2304 Lands That May be Included in Expansion 54 Section 2305 Rights Under Article XXIII Are in Addition to Other Rights and Options Under Lease and Agreement 54 ARTICLE XXIV Removal and Disposal of Property Section 2401 Lessee's Rights and Obligations Concerning Removal and Disposal of Building Service Equipment 55 Section 2402 Lessee's Rights and Obligations Concerning Removal and Disposal of Lessor's Machinery and Equipment 55 Section 2403 Lessee To Report Upon Request Dispositions or Removals Under Sections 2401 and 2402 58 r" I � M LEASE AND AGREEMENT This LEASE AND AGREEMENT made as of this first day of December, - 1970 by and between the CITY OF LITTLE ROCK, ARKANSAS ( "Lessor ") and MERICO, INC. , a corporation organized under and existing by virtue of the laws of the State of Texas, but authorized to do business in the State of Arkansas ( "Lessee "): WITNESSETH: WHEREAS Lessor is a duly organized and existing municipality, a City of the first class, under the laws of the State of Arkansas with full and lawful power and authority to enter into this Lease and Agreement, acting by and through its Board of Directors, in the public interest and for a public purpose, in securing and developing industry, providing employment and adding to the welfare and prosperity of the Lessor and its inhabitants, all pursuant to the provisions of Act No. 9 of the First Extraordinary Session of the Sixty- Second General Assembly of the State of Arkansas, approved January 21, 1960, as amended ( "Act No. 9 "); and WHEREAS Lessee is authorized under its Certificate of Incorporation and By -Laws and under the laws of the State of its incorporation to enter into this Lease and Agreement and to perform all covenants and obligations on its part to be performed under and pursuant to this Lease and Agreement; and WHEREAS Lessee is not prohibited under the terms of any outstanding trust indentures, deeds of trust, mortgages, loan agreements or other instru- ments or evidences of indebtedness of whatever nature from entering into this Lease and Agreement and discharging and performing all covenants and obli- gations on its part to be performed under and pursuant to this Lease and Agree- ment and affirmatively so represents to Lessor; and WHEREAS the industrial undertaking will consist of lands, buildings., improvements, machinery, equipment and facilities (the "Project "); and WHEREAS Lessor and Lessee hereby recite knowledge that Lessor has undertaken to furnish permanent financing of the Project costs, expenses of authorizing and issuing the bonds and making provision for interest during- -- construction, if necessary, by the issuance of Industrial Development Revenue Bonds under Act No. 9 in an amount not to exceed Five Million Dollars ($5, 000, 000), and pursuant to its undertaking to furnish the permanent financing Lessor submitted to the electors the question of issuing the bonds under Act No. 9, at which election the electors approved the issuance of the bonds; and WHEREAS the bonds are being sold and issued in Series (reference herein to "bonds" shall mean all bonds of the total authorized issue regardless of -series) with there being initially issued Series A in the principal amount of' $3, 300, 000 (the "Series A Bonds "); and WHEREAS Lessor and Lessee recite knowledge that a bank or trust company will be Trustee for the holders and registered owners of the bonds being issued by Lessor under Act No. 9 with the original Trustee being The Commercial National Bank of Little Rock, Little Rock, Arkansas, and the bonds will be secured by a Trust Indenture executed and delivered by and between Lessor and the Trustee (the Trustee will be herein referred to as the "Trustee ", and the Trust Indenture, which sets forth the nature and extent of the security for the payment of the principal of and interest on the bonds, the rights and obligations of Lessor, the Trustee and the holders and registered owners of the bonds, and which will otherwise state the terms and conditions upon which the bonds are issued and secured, and will be herein referred to as the "Trust Indenture" or the "Indenture "); NOW, TIIEREFORE, for valuable consideration receipt of which is hereby acknowledged by Lessor and Lessee, and in consideration of the mutual benefits and covenants herein contained, Lessor and Lessee AGREE as follows: V ARTICLE I CONSTRUCTING AND EQUIPPING OF PROJECT Section 101 . Prior to the delivery of the Lease and Agreement the Lessee has acquired title to the lands embodied in the Project (described on Exhibit A hereto) and has undertaken the constructing and equipping of the Project by entering into a construction contract and by acquiring or ordering machinery and equipment. Simultaneously with the delivery of this Lease and Agreement the title to the land embodied in the Project shall be conveyed to the Lessor. The Lessee shall be reimbursed out of the Construction Fund (hereinafter identified) for all expenditures theretofore made by it in connection with the acquisition of the lands and the construction of improvements. If any construction contracts have not been completed the Lessee shall be reimbursed for payments theretofore made by it under the construction contracts and all additional payments under such contracts shall be made out of the Construction Fund. Also, the Lessee shall be reimbursed for all expenditures theretofore made or incurred by it in connection with the acquisition and installation of machinery and equipment and title to all such machinery and equipment shall be transferred to the Lessor. The end result is to be that the Lessor be and become the owner of all lands, improvements, machinery and equipment paid for directly, or through reimbursements to the Lessee out of the Construction Fund. Thereafter, the Lessor agrees to execute all contracts or to place all purchase orders, in accordance with requests of the Lessee, in order to com- plete the Project subject, to the provisions of Section 103 hereof limiting the obligations of the Lessor to the extent of moneys in the Construction Fund. Lessee, with the cooperation of Lessor when necessary, shall obtain all necessary approvals from any and all governmental agencies requisite to the constructing and equipping of the Project, and the Project shall be constructed and equipped in compliance with all State and local laws, ordinances and J regulations applicable thereto. Lessee may amend, modify, authorize or undertake any changes, alterations, extras or additions to or from such contracts. All requests, approvals and agreements required on the part of Lessor and on the part of Lessee shall be in writing, signed by a duly designated representative of the party making such request, granting such approval, or entering into such agreement. The Lessor and Lessee shall, con- currently with the delivery of this Lease and Agreement, notify each other of the representative of each. It is agreed that each party may have more than one representative and may change the representative or representatives from time to time, with each such change to be in writing forwarded to the other party. The representative of each party so designated shall be authorized to enter into and execute any contracts or agreements or to grant any approvals or to take any action for and on behalf of the party hereto represented by him, and the other party to this agreement shall be entitled to rely upon the duly designated representative as having full authority to bind the party hereto represented by him. Lessor and Lessee shall see that there is in full force and effect, from the date of purchase of any machinery, equipment and other personal property to be pur- chased by it as hereinabove provided, or from the date the risk of loss, which under governing substantive law, is on the purchaser if such date be after the date of purchase, and until the insurance required to be carried by Lessee under the provisions of this Lease and Agreement shall be placed in full force and effect, the usual fire and extended coverage insurance, with the insurance to be in the amount necessary to prevent the application of the co- insurance provisions of the subject policies but not less than 80% of the full insurable value of the machinery, equipment and other personal property involved, with deductibles up to $10,000 permitted, and the Trustee shall be made a party insured as its interest may appear. rM LM M Section 102. Lessor and Lessee agree that the necessary steps shall be taken to see that there is in full force and effect at all times during the constructing and equipping of the Project the usual insurance coverage appli- cable to similar construction projects, but with deductibles up to $10,000 permitted, all of which small be subject to the prior written approval as to amount and companies by the Lessee and which shall be made payable to the Lessor and the Lessee as their interests may appear and with a standard mortgagee payment clause payable to the Trustee as its interest may appear. Section 103. Costs properly chargeable to Capital Account incurred by Lessor and Lessee in discharging their obligations under Section 101 hereof and in other sections of this Article I shall be referred to as "Project costs" and it is agreed that the Project costs will not exceed the available proceeds received from the sale of the bonds, or series thereof if less than the total authorized principal amount has been delivered, and that if the Project costs should exceed said amount, the Project will be completed, and the Lessee hereby agrees to pay the entire amount of any. such excess. Project costs, as that term is used in this Lease and Agreement, shall include all costs and expenses of every nature incurred by Lessor in accomplishing the Project, including, without limitation, the following: (1) All amounts paid by Lessor and Lessee in discharge of their obligations under Section 101 hereof, including without limitation, all amounts paid under all construction, engineering, architectural or other contracts; (2) All amounts paid for extras, changes or additions agreed to by Lessor and Lessee in accordance with the provisions of Section 101; (3) All payments incurred in acquiring and installing machinery, equipment and other personal property; (4) All amounts requested by Lessee to reimburse it for any expen- ditures incurred by Lessee pertaining to constructing and equipping the Project; (5) Such other additional fees, costs, expenses and expenditures of whatever nature pertaining to the Project, and its financing as may from time V U to time be agreed upon in writing by Lessor and Lessee in accordance with the provisions of Section 101 hereof and other sections of this Article I as constituting part of the Project costs. It is agreed that the sale proceeds shall be deposited in a Construc- tion Fund to be established pursuant to the provisions of the Trust Indenture. It shall be provided in the Trust Indenture (and Lessor agrees to cause appropriate provisions to be made therein) that the moneys in the Construction Fund shall be expended solely for the payment of the Project costs. Disburse- ments shall be made from the Construction Fund in accordance with the pro- visions of the Trust Indenture pertaining thereto. Any amount remaining in the Construction Fund after payment of all Project costs shall be transferred to .and deposited in the Bond Fund established pursuant to the provisions of the Trust Indenture, and the Lessee shall be credited with said amount against Lessee's basic rent obligations set forth in Section 203 of this Lease and Agreement, with such credit to be against the basic rent obligations as the same become due and payable under Section 203, beginning with -th.e first installment of basic rent due thereafter, and the Lessee shall not be re- quired to pay any basic rent thereafter, except when and to the extent basic rent has become due and payable in excess of such credit. Section 104. Lessee and its agents, servants, employees and repre- sentatives shall have free access to the Project during the construction thereof, and Lessee agrees that, immediately upon completion of the constructing and equipping of the Project, it will enter into full possession of and occupy the same under and pursuant to the terms of this Lease and Agreement. Lessee and its agents, servants, employees and representatives shall have the right to store and install machinery, equipment, fixtures, supplies and other per- sonal property in the Building during construction so long as such activities on the part of Lessee do not unreasonably interfere with work under construc- tion and equipment contracts. Lessor covenants that the Lessee, upon paying the rentals and performing all covenants, obligations and agreements on the part of Lessee to be performed under this Lease and Agreement, shall and may peaceably and quietly have, hold and enjoy the leased premises (as hereafter defined) for the term of this Lease and Agreement. Section 105. A. Lessor covenants that it will take such action and institute such proceedings as shall be necessary to cause and require all contractors and material suppliers to complete their contracts diligently in accordance. with the terms of said. contracts, including, without limitation, the correcting of any defective work-,.with all expenses incurred by Lessor in con- nection with the performance of its obligations under this Section 105 to be considered part of the Project costs as defined in Section 103, and Lessor agrees that the Lessee may, from time to time, in its own name, or in the name of the Lessor, take such action as may be necessary or advisable, as determined by Lessee, to insure the construction of the Project in accordance with the terms of the construction contract and the installation of machinery and equipment in accordance with any applicable contract pertaining thereto, to insure the peaceable and quiet enjoyment of the leased premises (as here- after defined) for the term of the Lease and Agreement, and to insure the per- formance by Lessor of all covenants and obligations of Lessor under this Lease and Agreement, with all costs and expenses incurred by Lessee in connection therewith to be considered as part of the Project costs as defined in Section 103. B. Lessor will assign and extend.to Lessee all vendor's warranties received by Lessor in connection with machinery and equipment purchased by Lessor for the Project, together with any warranties given by contractors, manufacturers or service organizations who perform construction work or install any machinery and equipment on the leased premises (as hereafter defined). If requested, Lessor will execute and deliver instruments of assignment to Lessee to accomplish the foregoing. ARTICLE II DEMISING CLAUSES DURATION OF LEASE TERN AND RENTAL PROVISIONS Section 201. Lessor, for and in consideration of the rents, covenants and agreements herein reserved, mentioned and contained, on the part of Lessee to be paid, kept and performed, agrees to and does hereby lease to Lessee, and Lessee agrees to, and does hereby lease, take and hire from Lessor, subject to the terms, conditions and provisions of this Lease and Agreement expressed the following; (a) The land situated in Pulaski County, Arkansas described in Exhibit A attached hereto (the "Land "); (b) The buildings, structures and other improvements now or at any time hereafter erected and installed on the Land; (c) All accretions, easements, rights of way and appurtenances belonging or in any wise appertaining to the Land /and or the improvements described in (a) and (b) above; and (d) All machinery, equipment and other personal property of every kind and nature whatever acquired by Lessor and paid for out of the Construction Fund and placed on or in the Land and /or the improvements described in (b) above, or elsewhere, including, without limitation, all replacements and substitutions which become the property of the Lessor pursuant to the provisions of this Lease and Agreement. All such machinery, equipment and other personal property shall be identified in a ledger or schedule, one copy of which shall be filed with the Trustee and one copy maintained by Lessee on the leased premises (as hereafter defined) and shall be marked by an appropriate tag, or other device, as being the property of the Lessor, except that no such marking shall be necessary in the case of items having a value of less than $1,000. The said machinery, equipment and other personal property leased hereby shall be referred to herein as "Lessor's machinery and equipment". The properties described in (a) , (b) , (c) and (d) above are herein -collectively referred to as the "leased premises" TO HAVE AND TO HOLD the leased premises unto the Lessee for the term of this Lease and Agreement as hereafter set forth. Section 202. The term of this Lease and Agreement shall commence 1970 and shall end at midnight on Section 203. (a) Basic Rent. (1) Subject to the credit provided for in Section 103, Section 1301 and Section 1401 (B) (ii), Lessee covenants to pay to Lessor, in the manner hereafter provided in Section 204, basic annual rent as follows, payable semiannually on the dates and in the amounts indicated: May 20, 1971 $108,405 November 20, 1971 108,405 May 20, 1972 108,405 November 20, 1972 288,405 May 20, 1973 103,455 November 20, 1973 293,455 May 20, 1974 98,230 November 20, 1974 288,230 May 20, 1975 93,005 November 20, 1975 283,005 May 20, 1976 87,780 November 20, 1976 277,780 May 20, 1977 82,080 November 20, 1977 272,080 May 20, 1978 76,3 U n November 20, 1978 266,380 May 20, 1979 70,680 November 20, 1979 260,680 May 20, 1980 64,505 November 20, 1980 254,505 May 20, 1981 58,330 November 20, 1981 248,330 May 20, 1982 51,680 November 20, 1982 191,680 May 20, 1983 46,780 November 20, 1983 186,780 May 20, 1984 41,705 November 20, 1984 181,705 May 20, 1985 36,630 November 20, 1985 176,630 May 20, 1986 31,450 November 20, 1986 201, 450 May 20, 1987 25,160 November 20, 1987 195,160 May 20, 1988 18,870 November 20, 1988 188,870 May 20, 1989 12,580 November 201 1989 182,580 May 20, 1990 6,290 November 20, 1990 176,290 (The above basic rental payments shall be reduced by the amount of any deposits into the Bond Fund pursuant to the provisions of the Trust Indenture other than basic rent hereunder, including profit realized from of moneys investments as provided in Section 701 (c) of the Trust Indenture.) In the event. a basic rent payment date falls on a non- banking day of the Trustee, the basic rent payment involved shall not be due and pay- able until the time of opening for business on the next succeeding day there- after that is a banking day. It is understood that of the $5, 000, 000 in principal amount of bonds of the City authorized for the purpose of financing the Project costs as aforesaid, only $3,300,000 in principal amount are being initially issued, It is hereby agreed that when additional bonds of said total authorized principal amount are issued and delivered, a supplemental Lease and Agreement will be executed and delivered by and between the Lessor and Lessee increasing the basic rent above set forth in the amount necessary to provide for the debt service requirements on the bonds additionally issued. It is further agreed that the execution and delivery of said Supplemental Lease and Agreement or Agreements, as aforesaid, by the officials of the Lessor and of the officers of the Lessee is expressly authorized, and additional action to authorize the same on the part of the governing body of the Lessor or on the part of the Board of Directors of the Lessee is not necessary. (2) If, during any year while any of the bonds shall be outstanding the above specified basic rent shall be insufficient to pay the principal of and interest on the bonds as the same become due, the amount of the insufficiency shall be paid by the Lessee as additional basic rent. If at any time the amount in the Bond Fund, hereinabove referred to and hereafter described in Section 204, is sufficient to pay in full the principal of (including redemption premiums, if any), interest on and the Trustee's and Paying Agent's fees in connection with all of the outstanding bonds of the Lessor, either at maturity or on earlier redemption, then no further basic rent shall be payable hereunder, and any funds representing payment of basic rent which are then held in the Bond Fund and are in excess of the amount required to pay in full the principal of (including redemption premiums, if any), interest on and the Trustee's fees in connection with all outstanding bonds of the Lessor, either at maturity ,Qr on earlier redemption, shall be refunded to Lessee as excess rent. " M Additional Rent. During the term hereof, Lessee shall pay as additional rent the Paying Agent's fees and uxpenses.and charges payable to the Trustee, as provided in the Trust Indenture, and all impositions (as defined in Section 301), expenses, liabilities, obligations and other payments of whatever nature which Lessee has agreed to pay or assume under the provisions of this Lease Agreement. If at any time any amounts paid by Lessee as additional rent hereunder are or become in excess of the amounts required for the purpose for which they were paid, such excess amounts shall be refunded to the Lessee. (c) So long as any of the principal of or interest on the bonds shall be outstanding and unpaid, or until payment thereof has been duly provided for, Lessee's obligation to pay basic rent and additional rent shall be absolute and - - unconditional and the basic rent and the additional rent shall be certainly payable on the dates or at the times specified without notice or demand, and without abatement or set -off, and regardless of any contingencies whatsoever, and not- withstanding any circumstances or occurrences that may now exist or that may hereafter arise or take place, including, but without limiting the generality of the foregoing: (1) The unavailability.of the leased premises for use and occupancy by the Lessee at any time by reason of the failure to complete the Project by any particular time or at all or by reason of any other contingency, occurrence or cir- cumstarice whatsoever (except in the event Lessee exercises the option to purchase and pays the purchase price as specified in Section 1902 hereof); (2) Damage to or destruction of the leased premises, or any part thereof (except in the event Lessee exercises the option to purchase and pays the purchase price as specified in Section 1303 hereof); (3) Legal curtailment of Lcssee's use and /or-occupancy of the leased premises, or any part thereof (except in the event Lessee exercises the option to purchase and pays the purchase price as specified in Section 1902 hereof); (4) Change in Lcssor's legiil orrianirdtion or status; • (5) The taking of title to or tho temporary use of the whole or 'any part of the leased Promises by coinderination as provided in Article ):1V hereof (except in the case of the taking of title to all or substantially all of the leased premises and the payment by Lessee of the additional rent in the amount that the total bond redemption expenses exceeds the net amount awarded as damages plus the funds in the Bond Fund, as-specified in Section 1401 A, and except in the event Lessee exercises the option to purchase and pays the purchase price as specified in Section 1403); (6) Any assignment under the provisions of Article X V, including without limitation, an assignment as part of a transaction involving merger, consolidation or sale of all or substantially all of Lessee's assets, as pro- vided in Section 1501; subject, however, to the provisions of Section 1501 that performance by an assignee or sub - lessee shall be considered as per- formance pro tanto by Lessee; - (7) Any, termination of this Lease and Agreement for any reason' whatsoever, including, without limitation, termination under Article XVIII; (8) Failure of consideration or commercial frustration of purpose; (9) Any change in the tax or other laws of the United States of America or of the State of Arkansas; or (10) Any default of the Lessor under this Lease and Agreement, or any other fault or failure of the Lessor whatsoever (except in the event Lessee exercises the option to purchase and.pays the purchase price as specified in Section 1902 hereof); Section 204. Payments of basic rent shall be made to Lessor by Lessee remitting the same directly to the Trustee, for the account of Lessc:, and shall be deposited by the Trustee in the trust account provided for in the Trust Indenture designated "Little Rock, Arkansas 1970 Industrial Develop- ment Bond Fund - Merico Project" (the "Bond Fund "), to be used by o rovided in the Trust Indenture . Lessor agrees at Lessee's request the Trustee as p o Lessee at reasonable intervals an accounting Of to cause the Trustee to furnish t ds paid and outstanding . the funds in the Bond Fund, including the amount of bon 203 (b) shall be paid by Lessee Additional rent specified in Section remitting the the account of Lessor, in the case of the Pay same directly - to the Trustee, for direct ' and the Trustee's expenses and charges, and either making ing Agent s fees .n the c , liabilities , case of impositions and other costs, payment 1 reed to be paid by Lessee under this obligations and payments assumed and agreed pursuant to the pro- Lease and Agree ment, or reimbursing Lessor. or Trustee, if, p thereof . visions of this Lease and Agreement, Lessor or Trustee shall make payment ARTICLE III TAXES ND XSSESS,N,I';�r 1'S_ (I \II'OSITIONS Section 301. Subject to the provisions of Section 302, Lessee shall pay all tars and assessments, general and specific, if any, levied and assessed do the leased premises during the term, and all water and sewer charges, assessments, and other governmental charges and impositions whatsoever, foreseen and unforeseen, which if not paid when due, would impair the lien of the Trust Indenture on the leased premises or the security of the bonds, or encumber Lessor's title, all of which are herein called "impositions "; provided, however, that any imposition relating to a fiscal period of the taxing authority, part of which extends beyond the term, shall be apportioned as of the expiration of the term. Lessor shall promptly forward to Lessee any notice, bill or other statement received by Lessor concerning any imposition. Lessee may pay any imposition in installments if so payable by law, whether or not interest accrues on the unpaid balance. Section 302. The parties hereto recite knowledge of the decision of the Supreme Court of the State of Arkansas in Wayland v. Snapp, 232 Ark. 57, 334 S.W.2d 633, concerning the exemption of properties owned by. municipalities and used for securing and developing industry under and pursuant to the provisions of Act No. 9. The Lessor covenants that it will not part with title to the leased premises or any part thereof during the term or take any other affirmative action which may reasonably be construed as tending to cause or ir:duce the levy or assessment of ad valorem taxes on the leased premises. The Lessor and the Lessee ack nowledge that (a) under their and other interpretations of present law, no part of the leased premises will be subject to ad valorem taxation by the State of Arkansas or by any political -or taxing sub - division thereof, and (b) this factor, among others, materially induced the Lessee to enter into this Lease and Agreement. However, the Lessee will pay all taxes and assessments, if any, in connection with the Project, which may be lawfully levied or assessed upon the leased premises, when the same shall become due; provided, however, that Lessee shall not be required to pay any such taxes or assessments so long as the Lessee shall contest the same, unless by such action the title of the Lessor to any part of the Project shall be materially endangered or the Project or any part thereof shall become subject to loss or forfeiture, in which event such taxes or assess- ments shall be paid prior to becoming delinquent. The Lessor hereby agrees that it will cooperate with the Lessee in resisting any such taxes or assessments if and to whatever extent the Lessee may request. U O ARTICLE IV INSURANCE Section 401 A. Lessee shall from the date of occupancy, at Lessee's sole cost and expense, keep all improvements constituting part of the leased premises and Lessor's machinery and equipment insured against loss or damage in accordance with the customary insurance practices of Lessee: (i) Against the perils of fire and the hazards ordinarily included under standard extended coverage endorsements in amounts necessary to prevent the application of the co- insurance provisions of the applicable policies but not less than 80% of the full insurable value thereof within the terms of applicable policies, with deductibles up to $10,000 permitted. (ii) Against war risk as and when a state of war or national or public emergency exists and such insurance is obtainable from a department or agency of the United States Government, upon reasonable terms, in the full amount necessary to prevent the application of the co- insurance provisions of the applicable policies but not less than 80% of their then full insurable value, or, if such amounts be not obtainable, then in the highest amount which can be so obtained, with deductibles up to $10,000 permitted. (iii) If there are boilers or pressure vessels, from boiler or pressure vessel explosion in an amount customarily carried in the case of similar indistrial operations, with deductibles up to $10,000 permitted. The term "full insurable value" means such value as shall be determined from time to time at the request of Lessor, Lessee or Trustee (but not more frequently than once in every forty -eight (48) months) by one of the insurers selected by Lessee. B. At all times during the term, Lessee shall, at no cost or expense to Lessor, maintain or cause to be maintained: (i) General Public Liability insurance against claims for bodily injury or death occurring upon, in or about the leased premises, with such insurance to afford protection to the limits of not less than $200,000 in respect of bodily injury or death to any one person and to the limit of not less than $500, 000 in respect of any one accident; and (ii) Property damage insurance against claims for damage to property occurring upon, in or about the leased premises with such insurance to afford r protection to the limit of not less than $100,000 in respect of damage to the property of any one owner. C. The_ insurance required by this Ar-t-icle IV shall be maintained in full force and effect at all times during the term of this Lease and Agreement, except: (i) The insurance required by Section 401 A. (i) as,to improvements and Lessor's machinery and equipment need not be placed in force and effect unt=? the completion of the construction of the Project, provided, however, that in no event shall the insurance required by Section 401 A. (i) be placed into force and effect later than the expiration of the builder's risk insurance carried pursuant to the provisions of any contracts entered into with contractors or the insurance initially taken out pursuant to the provisions of Article I hereof concerning Lessc-'s machinery and equipment, with the end in view of having full insurance coverage at all times; (ii) The insurance required by Section 401 B. need not be placed into force and effect until Lessee occupies the Project, either upon completion e. before completion in the event Lessee undertakes to perform work or store materials and supplies in the Project prior to completion as permitted by the provisions of Article I hereof. D. Copies or certificates of the insurance provided for by this Article shall be delivered by Lessee to the Lessor and the Trustee. And, in the case of expiring policies throughout the term, copies or certificates of any new or renewal policies shall be delivered by Lessee to Lessor and the Trustee. E. Policies of insurance provided for in Section 401 A. of this Article IV shall name the Lessor and the Lessee as insureds as their respective interests may appear, provided, ho,,,,•ever, that the Trustee shall also be named as a party insured pursuant to a standard mortgagee clause as its interests may appear. �" F. All insurance required by this Section 401 shall be effected with insurance companies selected by the Lessee. Lessee shall cause appro- priate provisions to be inserted in each insurance policy making each policy noncancellable without at least ten (10) days prior written notice to Lessor, Lessee and the Trustee. Also, it is agreed that no claim shall be made and no suit or action at law or in equity shall be brought by Lessor or by anyone claiming by, through or under Lessor, against Lessee for any damage to the improvements or Lessor's machinery and equipment covered by the insurance provided for by this Article IV, however caused, but nothing in this sub- section F shall diminish Lessee's obligation to repair or rebuild as provided in Article XIII. The Lessee shall have the• sole right and responsibility to adjust any loss with the insurer involved and to conduct any negotiations in connection therewith, subject to the approval of the Trustee as to settlement of any claim in excess of $25,000. V D ARTICLE V REPAIRS AND MAINTENANCE OF PREMISES AND ALTERATIONS Section "501. Lessee shall throughout the term, at no cost and ex- pense to Lessor, maintain, or cause to be maintained, and at the expiration of the term hereof subject to the provisions of Article XIX hereof, yield up or cause to be yielded up, in good tenantable repair, order and condition, reason- able wear and tear excepted, the buildings and improvements now or at any time erected on the lands included in the leased premises and promptly at no cost and expense to Lessor make or cause to be made all necessary repairs, interior and exterior, structural and non- structural, foreseen as well as unfore- seen, to the buildings and improvements constituting part of the leased premises. Section 502. Lessee shall have the right from time to time to make additi:ons, alterations and changes in or to the improvements constituting part of the leased premises and shall have the right to construct any improvements, provided, however, that no alterations shall be made which would change the character of the structures thereon so that the same will not be appropriate and usable for manufacturing purposes. It is understood and agreed that in the event the Lessee makes any additions, alterations and changes in or to the improvements constituting part of the leased premises as authorized by this Section 502, the Lessee shall be under no obligation at the expiration of the term to restore the leased premises to their original condition prior to such additions, altera- tions or changes. Section 503. All structural improvements and alterations made on the leased premises by or on behalf of Lessee shall immediately upon completion thereof be and become the property of the Lessor without payment therefor by Lessor but subject to this Lease and Agreement. -All machinery and equipment, trade fixtures, movable partitions, furniture and furnishings and other property installed at the expense of Lessee shall remain the property of the Lessee with the right_of_ ro;moval, whether or not affixed and /or attached to the real estate, and the Lessee shall, so long as it is not in default hereunder, be entitled but shall not be obligated to remove the same, or any part thereof, during the term, or within a reasonable time thereafter, but Lessee shall at its own cost and expense repair any and all damage to the leased promises resulting from or caused by their removal therefrom. Section 504. All property of any kind xrrhich may be on the leased premises (whether belonging to the Lessor, Lessee or to any third person) shall be at the sole risk of Lessee and those claiming by, through or finder Lessee and Lessor shall not be liable to Lessee or to those claiming by, through or under Lessee or to said third persons for any injury, loss or damage to any person or property on the leased premises. Section 505. Lessee shall throughout the term, at no cost and expense to Lessor, maintain or cause to be :maintained, and, subject to the pro- visions of Articles XL`C and XXIV hereof, at the expiration of the term hereof yield up, or cause to be yielded up, in good repair, order and condition, reason- able wear and tear excepted, Lessor's machinery and equipment. ARTICLE V1 USE OF PREJI 1ISES - COQ ,,IPLT:\I\IC1; %VITII ORDERS, ITC. Section 601. Subject to the follo,,ving provisions of this Section 601, Lessor and Lessee agree that Lessee may use. the leased premises for any lawful purpose. Lessee shall during the term promptly comply with all valid statutes, laws, ordinances, orders, judgments, decrees, regulations, directions and requirements of all federal, state, local and other govern- ments or governmental authorities, now or hereafter applicable to the leased premises. Lessee shall, however, have the right to contest any of the fore- going, and if compliance therewith may legally ue held in abeyance during such contest without incidence of any liens on the leased premises, Lessee may postpone compliance until final determination of such contest, provided _ such contest shall be prosecuted with due diligence; and even though a lien against the leased premises may be incurred by reason of such non - compliance, Lessee may neverthcless delay compliance therewith during contests thereof, provided Lessee, if required, furnishes Lessor reasonably satisfactory security against any loss by reason of such lien and effectively prevents foreclosure thereof. Lessee shall during the term comply with the mandatory requirements, rules and regulations of all insurers under the policies required to be carried under the provisions of this Lease and Agreement. Section 602. Lessor covenants that, to the full extent permitted by law, it will not attempt to impose upon the use or occupancy of the leased premises by the Lessee any laws, ordinances, rules or regulations more burdensome or restrictive than those in effect upon the date of execution of this Lease and Agreement. 1 AR'PIC LE VII WORK PIIPITORN•1ri) BY HISSI;r Section. 701. Lessee shall not do or'pe'rmit others under its control to do any work on the leased promises related to any rcpair,' rebuild - ing, alteration of or addition to the improvements constituting part of the leased premises unless Lessee shall have first procured and paid for all requisite municipal and other governmental permits and authorizations. Lessor shall join in the application for any such permit or authorization whenever required, but Lessee shall indemnify and hold Lessor harmless against and from all costs and expenses which may be thereby incurred by Lessor, All such work shall be done in a good and workmanlike manner and in compliance with all applicable building, zoning, and other laws, ordinances, governmental regulations and requirements and in accordance ,vith the reason- able requirements, rules and regulations of all insurers under the policies required to be carried by the provisions of this Lease and Agreement. Q O ARTICLE VIII MECHANICS' LIENS Section 801. If any lien shall be filed against the interest of Lessor, Lessee, or the Trustee in the leased premises or asserted against any rent payable hereunder, by reason of work, labor, 'services or materials supplied or claimed to have been supplied on or to the leased premises at the request or with the permission of Lessee, or anyone claiming under Lessee, Lessee shall, within thirty (30) days after receipt of notice of the filing thereof or the assertion thereof against such rents, cause the same to be discharged of record, or effectively prevent the enforcement or fore- closure thereof against the leased premises or such rents, by contest, payment, deposit, bond, order of Court or otherwise. Nothing contained in this Lease and Agreement shall be construed as constituting the express or implied consent to or permission of Lessor for title performance of any labor or services or the furnishing of any materials that would give rise to any such lien against Lessor's interest in the premises . t� 0 ARTICLE IX INDEMNIFICATION OF LESSOR AND TRUSTEE Section 901. Commencing with the completion of the Project or when the Lessee takes possession if prior to the completion of the Project, Lessee shall and agrees to indemnify and save Lessor and the Trustee harm- less against and from all claims by or on behalf of any person, firm or corporation arising from the conduct or management of, or from any work or thing done on, the leased premises during the term, and against and from all claims arising during the term from (a) any condition of the leased premises, (b) any breach or default on the part of Lessee in the performance of any of its obligations under this Lease and Agreement, (c) any act or negligence of Lessee or of any of its agents, contractors, servants, employees or licensees, or (d) any act or negligence of any assignee or sublessee of Lessee, or of any agents, contractors, servants, employees or licensees of any assignee or sublessee of Lessee. Lessee sh'all indemnify and save Lessor and the Trustee harmless from and against all costs and expenses incurred in or in connection with any such claim arising as aforesaid, or in connection with any action or proceeding brought thereon, and upon notice from Lessor, or the Trustee, Lessee shall defend them or either of them in any such action or proceeding. ARTICLE X LESSOR TAAY PFRFORIN L1;SSEP'S OBLIGY-NONS Section 1001. If Lessee shall fail to keep or perform any of its obligations as provided in this Lease and Agreement in respect of (a) maintenance of, insurance; (b) payment of impositions; (c), repairs and maintenance of the leased premises; (d) compliance with legal or insurance requirements; (c) keeping the leased premises lien free; or (f) making of any other payment or performance of any other obligations, then Lessor may (but shall not be obligated to do so) , upon the continuance of such failure on Lessee's part for thirty (30) days after viritten notice to Lessee, and without waiving or releasing Lessee from any obligation, and as an additional but not exclusive remedy, make any such payment or perform any such obligation, and .all sums so paid by Lessor and all necessary incidental costs and expenses incurred by Lessor in making such payment or performing such obligation shall be deemed additional rent and shall be paid to Lessor on demand, or at Lessor's option may be added to any installment of basic rent thereafter falling clue, and if not so paid by Lessee, Lessor shall have the same rights and remedies as in the case of default by Lessee in the payment of basic rent. -7- >. , ARTICLE XI PUBLIC: AND CITA.RQI S Section 1101. Lessee agrees to pay or -cause to be paid all charges for water, gas, sewer, electricity, light, heat or power, telephone or other service used, rendered or supplied to or for the Lessee upon or in connection with the leased premises throughout the term of this Lease and Agreement, and to indemnify Lessor and save it harmless against any liability or damage on such account. ARTICLE, XII INSPECTION OF PREMISES F,Y LESSOR Section 1201. Lessee shall permit Lessor and the Trustee or either of them, by their respective authorized representatives, to enter the leased premises at all reasonable times during usual business hours for the purpose of inspection, and for the performance of any work therein made necessary by reason of Lessee's default under any of the provisions of this Lease and Agreement. Lessor may, during the progress of any such work, keep and store on the leased premises all necessary materials, supplies and equipment and shall not be liable for inconvenience, annoyance, disturbance, loss of business or other damage to Lessee suffered by reason of the performance of any such work or the storage of materials," — - supplies and equipment. • � sue... ARTICLE XIII DANJAGE AND DESTRUCTION Section 1301. A. Lessee covenants and agrees that in the event of damage to or destruction of the leased premises, or any part thereof, by fire or other casualty, the Lessee shall immediately notify the Lessor and the Trustee. If the damage is in the amount of $100, 000 or less, Lessee shall proceed to re- store, repair, rebuild or replace the leased premises to the same extent, if any, required so that in the judgment of the Lessee, the Project is suitable for use for Lessee's purpose under this Lease and Agreement. If the damage exceeds $100,000, Lessee shall, at no cost and expense to Lessor or Trustee, proceed to restore, repair, rebuild or replace the leased premises as nearly as possible to the condition they were in immediately prior to such damage or destruction,.. subject to such alterations as Lessee may elect to make in conformity with the provisions of Article V hereof. Any item of machinery and equipment acquired as a replacement hereunder, or any item required, in whole or in part, out of insurance proceeds under this Article XIII, whether or not a replacement of or substitute for any item of damaged or destroyed machinery and equipment, if the insurance proceeds with which such item of machinery and equipment was pur -. chased, in whole or in part, were derived from insurance on property which was part of Lessor's machinery and equipment, shall be and become the property of Lessor and _shall be part of Lessor's machinery aryl equipment and subject to this Lease and Agreement. Such restoration, repairs, replacements or rebuild- ing shall be commenced promptly and prosecuted with reasonable diligence. B. All insurance money paid on account of such damage or de- struction shall be paid to the Trustee and applied as hereinafter set forth to the payment of the cost of the aforesaid restoration, repairs, replacements or rebuilding, including expenditures made for temporary repairs or for the protection of property pending the completion of permanent.restoration, repairs, replacements, or rebuilding or to prevent interference with the bUsineSS operated thereon (sometimes referred to as the "restoration "). In the case of damage in- volving a loss of $100, 000 or less, the insurance proceeds shall be paid by the Trustee to the Lessee upon receipt by Lessor and the Trustee of a certificate signed by an officer of Lessee that the restoration has been made, or is in the process of being made in accordance with the provisions of sub - section A. hereof pertaining to Lessee's obligation to restore. In the case of damage involving a loss of more than $100, 000 the insurance proceeds shall be paid by the Trustee to the Lessee upon receipt by Lessor and the Trustee of: A certificate signed by an officer of the Lessee (i) requesting payment of a specified amount of such insurance proceeds; w (ii) detailing the progress of the restoration and repair work; (iii) stating that such specified amount does not exceed the estimated cost of the work and materials in connection with the restoration, in- eluding as part thereof the estimated fees of any architect or engineer, if any; and (iv) stating that no part of such cost has previously- been made the basis of any request for the with- drawal of insurance proceeds under this Article. The Trustee shall have no responsibility as to the application by the Lessee of the insurance proceeds . If the insurance money shall be insufficient to pay all costs of the restoration, the Lessee shall pay the deficiency and shall nevertheless proceed to complete the restoration and pay the cost thereof. Any balance of the insurance proceeds remaining over and above the cost of the restoration shall be paid by the Trustee into the Bond Fund upon receipt by the Lessor and the Trustee of certificates as required by this Article to the effect that the restoration has been completed, and the Lessee shall be credited with said amount against Lessee's basic rent obliga- tions set forth in Section 203 of this Lease and Agreement, with such credit to.be against the basic rent ooligations as the same become due and payable under Section 203, beginning with the first installment of basic rent thereafter, and Lessee shall not be required to pay any basic rent thereafter except when and to the extent basic rent has become due and payable in excess of such credit. The total amount collected under any and all policies of insurance covering such damage or destruction shall be placed in a special fund and the same may be invested in any investments in which the Trustee may invest amounts in the Construction Fund under the Trust Indenture. Such investments shall be made by the Trustee as directed and designated by the Lessee. Section 1302. Lessee's obligation to make payment of the basic rent and all other covenants on the part of Lessee to be performed shall not be affected by any such destruction or damage, and Lessee hereby waives the pro- visions of any statute or law now or hereafter in effect contrary to such obliga- tion of Lessee as herein set forth, or which releases Lessee therefrom. Section 1303. Notwithstanding the provisions of the foregoing sections of this Article XIII, Lessee shall not be required to repair, restore, replace or rebuild the leased premises, or any part thereof, (a) if Lessee, pursuant to the provisions of Article XIX, shall elect to purchase the leased premises and shall proceed to pay the specified purchase price or (b) if the full amount necessary under the provisions of the Trust Indenture to pay or redeem all outstanding bonds shall have been paid and Lessee has not elected to purchase the leased premises. If Lessee shall so elect to purchase, the proceeds of all insurance may be used as part of the purchase price and upon the request of Lessee shall be so applied. If there be any excess insurance proceeds over and above the amount necessary to pay the purchase price, such excess shall be paid to and shall belong to the Lessee. If Lessee shall have paid the full amount necessary to pay or redeem all outstanding bonds, any insurance proceeds shall be paid to and shall belong to Lessee. ART IGIE XIV OIN]XINi` ATI0NH Section 1401. A. If during the teem of this Lcase and Agreement title to all or substantially all of the leased premises shall be taken or + condemned by a competent authority for any public use or purpose, then this Lease and Agreement shall terminate at midnight on the fifteenth day after the vesting of title in such authority and rent shall be paid to and adjusted as of that day.- In that event, subject to tine subsequent provisions of this Section, the condemnation award shall belong to the Lessor and the Lessee hereby assigns the a% yard to the Lessor. In the event the net amount awarded as damages or paid as a result of such taking (after deducting all attorney's fees and -`her expenses and costs in the condemnation proceeding) together -- - with the amount then in the Bond Fund, shall be insufficient to pay in full, on the first interest paying, dace after re.ez,)t of the award and after the required bond redemption notice can be given, the amount necessary to pay all principal, interest-, the Trustee's fees, redemption premiums, and all other costs of redemption (all of which, for purposes of this Section, shall be called "total bond redemption expense "), Lessee agrees to pay, promptly upon payment of the condemnation award, as additional rent hereunder, the amount by which the total bond redemption expense shall exceed -the net amount awarded as damages or paid (less such fees, expenses and costs) as a result of such taking plus the amount then on deposit in the Bond Fund. The Les'see's agreement pertaining to this Section 1401 shall survive such termination. For purposes of this Article XIV "all or substantially all of the leased premises" shall be deemed to mean a taking of all of the leased premises or a taking of such substantial portion of the leased premises that the Lessee as dctcr,nined by the Lessee in its sole discretion cannot 5 A J reasonably operate in the remainder in substantially the same manner as before. In the event the net amount awarded as damages or paid as a result of such taking as defined above, together with the amount then in the Bond Fund, shall be in ex- cess of the amount necessary to pay the total bond redemption expense, if Lessee is not in default in any of its other obligations under this Lease and Agreement in- volving monetary matters, such excess shall belong to and be paid to the Lessee, and if Lessee is in default with reference to any of its monetary obligations, the amount of the excess in excess of the amount necessary to satisfy the monetary obligations with reference to which Lessee is in default shall be paid to Lessee. The Lessor agrees that it will not voluntarily accept, without the prior approval of the Lessee, any amount as damages for a taking which shall be less than the "total bond redemption expense ", and the Lessor agrees that it will cooperate with the Lessee with reference to any award with the end in view of obtaining the maximum possible award justifiable as damages for the taking. B. If less than substantially all of the leased premises shall be taken or condemned by a competent authority for any public use or purpose, neither the term nor any of the obligations of either party under this Lease and Agreement shall be affected or reduced in any way, and (i) If any part of the improvements owned by Lessor on the leased premises (improvements as used herein shall include an item of Lessor's machinery and equip- ment) is taken, Lessee shall proceed to repair or rebuild (repair or rebuild shall include replacement of any item of Lessor's machinery and equipment) the remaining part as nearly as possible to the condition existing prior to such taking, to the extent that the same may be feasible, subject to the right on the part of the Lessee to make alterations so as to improve the efficiency of the improvements; and (ii) The entire condemnation award shall be paid to the Lessee, and the Lessor hereby assigns the same to the Lessee for the use of the Lessee in repairing and rebuilding as provided in (i) above. The award shall be trans- ferred to the Lessee in the same manner as is provided in Section 1301 with respect to insurance proceeds, provided that the words "insurance proceeds" there referred to shall for purposes of this sub - paragraph (ii) refer to "condemnation award." If the net condemnation award applicable to property owned by the Lessor is in excess of the amount necessary to repair and rebuild as specified in (i) above, such excess shall be paid to and belong to the Lessor and the amount of such excess shall be credited against basic rent next thereafter provided to be paid by Lessee under the provisions of Section 203 }hereof, and Lessee shall not be required to pay any basic rent thereafter except when and to the extent basic rent becomes due and payable in excess of the a, count so credited. If such excess is more than the remaining total basic rent obligations of the Lessee hereunder, and if at that time Lessee is not in monetary default with respect to any of its obligations under this Lease and Agreement, only that portion thereof equal to the remaining total basic rent obligations of Lessee shall be paid to and belong to Lessor, and the excess shall belong to and shall be paid to the Lessee. If Lessee is in default with reference to any of its monetary obligations, the amount of excess over and above the amount necessary to satisfy said monetary obligations `-vita reference to vhich Lessee is in default shall be paid to Lessee. If the net condemna- tion award is less than the amount necessary for the Lessee to repair and rebuild as set forth in (i) above, the Lessee shall nevertheless complete the repair and rebuilding work and pay the cost thereof; and (iii) If no part of the improvements is taken, the . net condemnation award shall be paid to Lessor and credited against basic rent obligations next thereafter provided to be paid by Lessee under the provisions of Section 203 hereof, and the Lessee shall not be required to pay any basic rent thereafter except when and to the extent basic rent becomes due-and payable in excess of the amount so credited. C . In the event of a taking under either A or B above, the Lessee shall have the right to participate in and to prove in the condemnation pro- ceedings and to receive any award (by way of negotiation, settlement or judgment) which may be made for damages sustained by Lessee by reason of the condemnation; provided, however, nothing in this sub - section C shall be construed to diminish or impair in any way Lessee's obligation under sub- section A of this Section 1401 to pay as additional rent the amount of any insufficiency of the net condemnation award and the funds in -tile Bond Fund to pay the total bond redemption expense as therein defined. D. If the temporary use of the whole or any part of the leased premises shall be t kon by right of elilinent d:,llia.lil, this Lease and Agree- merit shall not be thereby terminated and the parties shall continue to be obligated under all of its terms and provisions . If such taring is for a period of time ending on or prior to the expiration, of the term, Lessee shall be entitled to receive the entire amount of the award made for such - taking, whether by way of damages, relit or otherwise. If such taking is for a period of time which Extends beyond the expiration of 'the term, Lessee shall be entitled to receive the entire award, with the exception of an amount sufficient to pay and discharge all sums due Lessor from Lessee.from the time Lessee's right of possession is terrinated to the expiration of the term. Section 1402.. In the event of a taking of all or subtantially all of the leased premises as provided in Section 1401 A, notwithstanding the provision therein.that the rent sh-�E be paid to and adjusted as of the fifteenth day after vesting of title in the taking authority, the Lessee agrees to continuo to make payment of the basic rent and the additional rent until the condemnation award shall be actually received by the Lessor; provided, ,however, the Lessee shall be repaid solely out of .the net condemnation award the amount of rent so paid after the date provided in Section 1401 A for the adjustment of rent. This agreement to repay shall not be construed in any way to impair or dilriinish Lessee's obligations under Section 1401 to pay as additional rent the amount of any insufficiency of the net condernation award and the funds in the Bond Fund to pay the total bond redemption expense as therein defined. Section 1403. 'Notwithstanding the fact that all or any part of the leased premises shall be taken by right of eminent domain, Lessee shell have the right to exercise any option (.;ranted to it by the provisions of - Article XLX hereof and the foregoing provisions of this Article XIV shall be construed in the light of the effect of any option so exercised by Lessee. In the event of the exercise of an option-under Article XL`t and payment of the required purchase price, wlhether before or after such taking, the entire condemnation award shall belong to Lessee. ' Section 1404. Lessee shall have the right to participate in its own name in any negotiations or condemnation proceedings, but at its own expense, to resist or cdefend condemnation and to make any presenta- tion or conduct'any proceeding in its discretion to the end of obtaining any proper relief and, if the condemnation is concluded, to the end of obtaining *the maximum condemnation a,,card justified by the taking. Section 140S . Lessor covenants that it will not take or condemn any part of the leased promises, or attempt to do so. ARTICLE XV ASS TON N[ENT Section 1501. A. Lessee may assign this Lease or sublet the leased prcm.ises or part thereof provided that no such assignment or sub- letting and no dealings or transactions bet,,veen the Lessor or the Trustee and any sublessee or assignee shall relieve the Lessee of any of its obligations under this Lease and Agreement and Lessee shall remain as fully bound -as though no assignment or subletting had been made, and performance by any assignee or sublessee shall be considered as per- formance pro tanto by Lessee; provided, however, that Lessee may assign this Lease, and be thereby relieved of further obligation hereunder, in connection with a transaction involving merger, consolidation or sale-as permitted under Section 2209 provided the requirements thereof are met. B. . It is understood and agreed that this Lease and Agreement and /or the rents hereunder will be assigned to the Trustee as security for the payment of the principal of and interest on the bonds, but otherwise the Lessor shall not assign, encumber, sell or dispose of all or any part of its rights, title and interest in and to the leased premises and this Lease and Agreement, except to the Lessee in accordance viith the pro- visions of the Lease Agreement and to the Tru.stee under the Trust Indenture, but subject to the provisions of Article XVI hereof, without the prior written consent of the Lessee. ARTICLE YVI PRIORUEY OF LEASE Section 1601. Notwithstanding anything to the contrary in this Lease and Agreement, this Lease and Agreement (and any amendment or supplement hereto executed in accordance with and pursuant to the pro- visions of lMs Lease and Agreement) and the estate of Lessee hereunder are and shall continue to be superior and .prior to the Trust Indenture (and all supplements thereto) arid any other and all encumbrances, mortgages, deeds of trust and trust indentures, or any of them, constituting or granting a lien upon the leased premises or any part thereof or interest therein. ARTICLE XV11 ItL.,,,j[:DIES A I Z E CUMUf.!VrlVE - iio Iijpi_11;i') "I, V Section 1701. Lessor, Lessen and the-Trustee shall each be entitled to specific performance, and injunctive or other appropriate equitable relief for any breach or threatened breach of any of the'pro- visions of this Lease and Agreement, notwithstanding the availability of an adequate remedy at law, and each party hereby waives the right to raise such defense in any proceeding in equity. The specific remedies provided for in this Lease and Agreement are cumulative and are not exclusive of any other remedy. The failure of either party to insist in any one or more cases upon strict performance shall not be construed-as a waiver or relinquishment for the future. No acceptance of rent with knowledge of any default shall be deemed a waiver of such default, ARTICLE XVIII DEFAULT PROVISIONS Section 1801. The following shall be "events of default" under this Lease and Agreement and the terms "event of default" or "default" shall mean, whenever used in this Lease and Agreement, any one or more of the following events: (a) Lessee shall default in the true and punctual payment of the basic rent, extension rent, or any additional rent payable hereunder, and such default shall continue for ten (10) days after receipt of written notice from Lessor or the Trustee of such non - payment; or (b) Lessee shall neglect or fail to perform or observe any of the covenants herein contained on Lessee's part to be performed or observed (other than those referred to in sub-section (a) of this Section 1801) and Lessee shall fail to remedy the same : ^iii hi�i sixty (60) days after Lessor or the Trustee shall have given to Lessee notice specifying such neglect or failure (or within such additional period, if any, as may be reasonably required to cure such default if it is of such nature that it cannot be cured within said sixty (60) day period because of govern - mental restriction or any other cause beyond the control of the Lessee);..or (c) This Lease and Agrcement or the leased premises or any part thereof shall be taken upon execution or by other process of law directed against the Lessee, or shall be taken upon or subject to any attachment at the instance of any creditor of or claimant against the Lessee, and said aitacizment shall not be discharged or disposed of within ninety (g0) days after the levy thereof; or (d)Lcssee small be involved in financial difficulties as evidenced below and shall not cure the same within ninety (90) days after notice from tine Lessor, ' Vim LI_WJ (i) by its admitting in writing its .inability to pay its dents generally as they bocorrne due., or (ii) by its 'filing a petition in baii'l-ruptcy or for reorgani•Cc_tion or for 'tie adoption of an arranye- ment under the Bankruptcy Act (-.is now existing or in the future amended) or an nswer•or other pleading admitting the rlaterial allegations of such a petition or seeking, consenting to or acquiescing in the relief provided for under such Act, or (iii) by its making an assignment of all or a substantial part of its property for the benefit of its creditors, or (iv) by its seeking or consenting to or acquiescing in the appointment of a receiver or trustee for all or a substantial part of its property or of the leased premises or of its interest in this Lease and Agree- ment, or (v) by its being adjudicated a bankrupt or insolvent, or - - -- - (vi) by the entry of a court order without its consent which order shall not be vacated, set aside or stayed within ninety (90) days from the date of entry (1) appointing a receiver or trustee for all or a substantial part of its property or (2) approving a petition filed against it for the effecting of an arrangement in bankruptcy or for a reorganization pursuant to said Bankruptcy Act or for any other judicial modification - or alteration of the rights of creditors ►.J Section 1802. Whenever any event of default shall happen, the Lessor or the Trustee may take any of the following remedial steps; (a) The Lessor or the Trustee may, at its option, declare all install- ments of rent payable for the remainder of the Lease Term to be immediately due and payable, whereupon the same shall become immediately due and payable. (b) The Lessor or the Trustee may re -enter and take possession of the Project without terminating this Lease Agreement, and sublease the Project for the account of the Lessee, holding the Lessee liable for the difference in the rent and other amounts payable by such sublessee in such subleasing and the rents and other amounts payable by the Lessee hereunder. (c) The Lessor or the Trustee may terminate the Lease Term, exclude the Lessee from possession of the Project and use its best efforts to lease the Project to another for the account of the Lessee, holding the Lessee liable for all rent and other payments due up to the effective date of any such leasing. (d) The Lessor or the Trustee shall have access to and inspect, examine and make copies of the books and records and any and all accounts, data and income tax and other tax returns of the Lessee. .(e) The Lessor or the Trustee may take whatever action at law or in equity may appear necessary or desirable to collect the rent and any other amounts payable by Lessee hereunder, then due and thereafter to become due, or to enforce performance and observance of any obligation, agreement or covenant of the Lessee under this Lease Agreement. Any amounts collected pursuant to action taken under this Section shall be paid into the Bond Fund and applied- in accordance with the provisions of the Indentu :e. Section 1803. No remedy herein conferred upon or reserved to the Lessor or the Trustee is intended to be exclusive of any other available remedy or remedies, but each and every such remedy shall be cumulative and shall be in addition to every other remedy given under this Lease and Agreement or now or hereafter existing at law or in equity or by statute. No delay or omission to exercise any right or power accruing upon any default shall impair any such right or power or shall be construed to be a waiver thereof but any such right or power may be exercised from time to time and as often as may be deemed expedient. Section 1804. The foregoing provisions of this Article relating to the receipt of moneys by Lessor as the result of an acceleration, upon a reletting or otherwise are each to be construed as providing that all such payments by Lessee or others shall be made into the Bond Fund referred to in Section 204 and Lessee's said obligations shall further be subject to the provisions of Section 203 (a) (2) . Section 1805. The Lessor is issuing the bonds pursuant to an election made by it under Section 103 (c) (6) (D) of the Internal Revenue Code of 1954, as amended by Public Law 90 -364. It is the intention of the parties hereto that the interest on the bonds remain free from federal income taxation and to that end the Lessee covenants with the Lessor, with the Trustee and with each of the future holders of any of the bonds or interest coupons appertaining thereto, as follows: (1) Lessee covenants and agrees that it will never permit the occur- rence of the circumstances set forth in said Section 103 (c) (6) (D) and (E) so as to cause the loss of federal income tax' exemption on the interest on the bonds. (2) Should the interest on the bonds become taxable because of the occurrence of the circumstances set forth in Section 103 (c) (6) (D) and (E) of the Internal Revenue Code of 1954, as amended, Lessee agrees that within 30 days after demand by Lessor or the Trustee it will either, (i) Purchase the leased premises (in which event Lessor agrees to sell the leased premises) for a purchase price of the full amount necessary under the provisions of the Trust Indenture to pay or redeem (on t e first day thereafter '� U on which all outstanding bonds may be redeemed after giving the necessary notice) all outstanding bonds (including, with- out limitation, principal, interest, expenses of redemption and the Trustee's and Paying Agent's fees), but after deduction of any amount then in the Bond Fund and available for payment and redemption, plus an additional amount equal to 10% of the principal amount of bonds outstanding on the date of the violation; and any other options of the Lessee to purchase the leased premises shall be superseded by its mandatory obligation to purchase the leased premises under this Sub- section (2) for the purchase price herein set forth, or (ii) Prepay rent in the full amount necessary under the provisions of the Trust Indenture to pay or redeem (on the first day thereafter on which all outstanding bonds may be redeemed after giving the necessary notice) all outstanding bonds (including, without limitation, principal, interest, expenses of redemption and the Trustee's and Paying Agent's fees), but after deduction of any amount then in the Bond Fund and available for payment and redemption, plus an additional amount equal to 10% of the principal amount of bonds outstanding on the date of the violation; and thereafter to continue in possession as Lessee with all provisions of the Lease Agreement (except Lessee's basic rent obligations which shall be discharged) to continue in full force and effect at the extension annual rental specified in Section 1901. (3) On or before May 1, 1971 and on or before each May 1 thereafter to and including May 1, 1975, the Lessee will furnish to the Trustee a certificate of an independent public accountant or firm of independent public accountants stating that the $5,000,000 limitation imposed by the provisions of said Section 103 1 (c) (6) (D) had not been exceeded as of the December 31st preceding the date on which the certificate is due or, in the case of the certificate due May 1, 1975, that such limitation had not been exceeded as of the year of the six -year period to which the limitation applies. The Lessee will also comply with any regulations, including any filing or reporting requirements, that may be promulgated pursuant to said Section 103 (c) (6) (D) and (E) . ARTICLE XIX _ LESSEE'S OPTIONS Section 1901. Lessee shall have and is hereby granted the option to extend this Lease and Agreement for six (6) extension terms of five (5) years each for an extension. annual rental of One Hundred Dollars ($100.00) per year, payable in advance on the first business day of each year of the extension term, plus the additional rentals heretofore provided in Article II hereof and otherwise upon the terms, conditions and provisions of this Lease and Agree- ment. The options provided for herein shall be deemed automatically exercised by Lessee (without requirement of any notice of exercise) unless thirty (30) days prior to the end of the initial term or any extension term Lessee shall give Lessor written notice by certified or registered mail (with or without return receipt request) that Lessee does not elect to have the lease term extended beyond the then current initial or extension term. Whenever used in this Lease and agreement the words "extension term" or "renewal term" shall have the same meaning and shall refer to the term concerning which the option to extend is granted by this Section 1901. Furthermore, whenever the unqualified word "term" appears in this Lease and Agreement, the reference shall include the _.- initial and any extension terms. Section 1902. A. Prior to December 1, 1980, the Lessee shall have the right and option to purchase the leased premises if, but only if: (i) The leased premises shall sustain major damage or destruction; or (ii) Title to or the temporary use of all or substantially all of the leased premises shall be condemned as provided in Article XIV hereof; or v (W) As a result of changes in the Constitution of the United States or of the State of Arkansas, or of legislative action, or by the final decree, judg- _ ment or order of any court or administrative body entered after Lessee's contest thereof in good faith, this Lease and Agrer -Iment becomes void or unenforceable or impossible of performance in accordance with the intent and purposes of the parties as expressed in this Lease and Agreement, or unreasonable burdens or excessive liabilities are imposed upon either party to it; or (iv) . There is legal curtailment of Lessee's use and occu- pancy of all or substantially all of the leased pre- mises for any reason other than condemnation re- ferred to in sub - section (iii) . The term "major damage or destruction" as used in sub - section (ii) is defined to mean any damage or injury to or destruction of the leased premises or any part thereof (whether or not resulting from an insured peril) such that the leased premises cannot reasonably be restored to its condition immediately preceding such damage, injury or destruction within a period of seventy -five (75) working days, or which would prevent Lessee from carrying on its manu- facturing operations therein for a period of seventy -five (75) days or the resto- ration cost of which would exceed the total amount of insurance carried on the leased premises in accordance with the provisions.of Article N hereof, or such that it would not be economically feasible for the Lessee to repair the leased premises, as determined by the Lessee in its discretion. B. On and after December 1, 1980, and during the remainder of the initial and during any extension term hereof, Lessee shall have the unconditional right and option to purchase the leased premises at any time. C. At the expiration of the initial or any extension term and for a period of ninety days thereafter (if the purchase options under the provisions of Paragraphs A and B have not been exercised) Lessee shall have the further uncon- ditional right and option to purchase the leased premises. D. Purchase Price. The purchase price payable if the Lessee exercises Lessee's option to purchase the leased premises under the provisions of Paragraphs A, B or C of this Section, shall be the full amount necessary under the provisions of the Trust Indenture to pay or redeem (on the first date thereafter on which all outstanding bonds may be redeemed after giving the necessary notice) all outstanding bonds (including, without limitation, principal, interest, redemption premiums, if any, expenses --of redemption and the Trustee's and Paying Agent's fees) , but after deduction of any amount then in the Bond Fund and available for payment and redemption. In any case, if no bonds shall be outstanding at the time of purchase, or the redemption or payment of the bonds shall be or have been otherwise provided for, the purchase price of the leased _ . premises shall be One Hundred Dollars ($100.00) . F. Any of the foregoing options may be exercised by giving written notice to Lessor of the exercise thereof specifying the time and place of closing. At the closing, Lessor shall, upon payment of the purchase price hereinabove specified, deliver to Lessee a general warranty deed, bills of sale and other appropriate conveyance instruments transferring good and merchantable title to the leased premises free and clear of all liens and encumbrances except those to which title was subject when leased hereunder, or resulting from any failure of Lessee to perform any of its obligations under this Lease and Agreement; pro- vided, however, that if such option is exercised under the provisions of sub- paragraph A (iii) of this Section, such title may be subject to the rights, titles and interests of any party having taken or who is attempting to take title to or use of all or part of the leased premises by eminent domain. ARTICLE XXI RECORDING Section.2101. This Lease and Agreement and every assignment and modification thereof shall be recorded in the office of the Circuit Clerk and Ex Officio Recorder of Pulaski County, Arkansas. ARTICLE XX NOTICES Section 2001. All notices, demanis and requests which may or are required to be given by either party to the other or to the Trustee shall be in writing, and each shall be deemed to have been properly given when served personally on an executive officer of the party to whom such notice is to be given, or when sent postage prepaid by first class mail by deposit thereof in a duly constituted United States Post Office or branch thereof located in one of the present states of the United States of America in a sealed envelope addressed as follows: If intended for Lessee: Merico, Inc. 4200 Hoerner Street Little Rock, Arkansas 72209 Attention: General Manager with a copy to: Merico, Inc. Post Office Box 457 Carrollton, Texas 75006 Attention: President If intended for Lessor: City of Little Rock, Arkansas Office of the Mayor Little Rock, Arkansas 72201 If intended for the original purchaser of the bonds: Hendrix, Mohr & Yardley First National Building Birmingham, Alabama 35203 If intended for Trustee: The Commercial National Bank of Little Rock Little Rock, Arkansas Attention: Trust Officer Any party or the Trustee may change the address and the name of addressee to which subsequent notices are to be sent by notice to the other parties given as aforesaid. Li G� ARTICLE XXII GENERAL Section 2201. This Lease and Agreement shall be construed and enforced in accordance with the laves of the State of Arkansas. Wherever in this Lease and Agreement it is provided that either party shall or will make any payment or perform or refrain from performing any act or obligation, each such provision shall, even though not so expressed, be construed as an express covenant to make such payment or to perform, or not to perform, as the case may be, such act or obligation. Section 2202. If any provision of this Lease and Agreement or the application thereof to.any person or circumstances shall, to any extent, be determined to be invalid or unenforceable, the remainder of this Lease and Agreement and the application of its provisions to persons or circumstances other than those as to which it has been determined to be invalid or unenforceable, shall not be affected thereby, and each provision of this Lease and Agreement shall be valid and shall be enforced to the fullest extent permitted by law. Section 2203. The Article captions in this Lease and Agreement are. . for convenience and reference only and in no way define, limit or describe the scope or intent of this Lease and Agreement or any.part thereof, or in any wise affect this Lease and Agreement and shall not be considered in any construction thereof. Section 2204. It is agreed that after the bonds are fully paid and discharged, or adequate provision is made for their payment and discharge, and all proper fees and expenses of the Trustee and Paying Agent are paid or adequate provision made for their payment, the Trustee shall cease to have any right, title and interest in, to or under this Lease and Agreement. Thereafter, (a) The following provisions of this Lease and Agreement shall be void and of no effect: Sections 401 A, 501, 505, the last five lines beginning "provided Lessee" in 601, 801, 1001, 1201, 1301, 1402, 1801 (b) (c) (d), and 1802, and (b) All remaining rights of approval or other rights herein specified with reference to the Trustee shall inure to the benefit of and be applicable to Lessor. V U Section 2205. It is agreed that in the event of any non - payment of rent by Lessee or the failure or refusal by Lessee to observe, keep or perform any other covenant, condition, promise or agreement set forth in this Lease and Agreement to be observed, kept or performed by the Lessee, the Trustee shall be entitled, in the name of the Lessor, or in its own name (in accordance with the provisions of the Trust Indenture) , to enforce each and every right or remedy herein accorded in this Lease and Agreement to Lessor in the event of the non - performance or non - observance by Lessee of any such promise, covenant or agreement. Section 2206. The provisions of this Lease and Agreement shall bind and inure to the benefit of the parties hereto and their respective successors, assigns and sublessees (it being understood that assignments and subleasing are governed by the provisions of Article XV hereof) . Section 2207. It is agreed that the Lessor and the Lessee shall. not alter, modify or amend any of the terms of this Lease and Agreement without the prior written approval of the Trustee, which consent will not be unreason- ably withheld. Section 2208. Lessee shall furnish to Lessor and to the Trustee within 120 days after the end of each fiscal year, an unaudited balance sheet and related statements of income and surplus for such fiscal year in reasonable detail. Section 2209. The Lessee may, without the consent of the Trustee, consolidate with or merge into another corporation, or sell to another corporation substantially all of its business and assets, but only on condition (i) that such surviving, successor or transferee corporation is a corporation organized and existing under the laws of the State of Arkansas or is duly qualified to do business in the State of Arkansas; (ii) that the assignee corporation or the corporation resulting from or surviving such merger or consolidation shall expressly assume and agree to perform all of the Lessee's obligations under this Lease and Agreement; and (iii) in connection with any such consolidation or merger, there shall be filed with the Lessor, the original purchaser of the bonds and the Trustee a letter or certificate by a firm of independent public accountants (which is of the size and type commonly referred to as nationally known independent public accountants and which is acceptable to the Trustee), certifying that after the consummation of such consolidation or merger the corporation resulting from or surviving such consolidation or merger will have an excess of assets over liabilities at least as great as the Lessee would have had if such consolidation or merger had not occurred; or (iv) in connection with any such sale there shall be filed with the Lessor, the original purchaser of the bonds, and the Trustee a letter or certificate by a firm of independent public accountants (which is of the size and type commonly referred to as nationally known independent public accountants and which is acceptable to the Trustee) certifying that at the consummation of such transfer the corporation to which such transfer is made has an excess of assets over liabilities at least as great as the Lessee would have had if such transfer had not been made. Section 2210. Lessor and Lessee agree that copies of all notices required by any of the provisions of this Lease and Agreement to be sent to the Trustee must be sent to the original purchaser of the bonds. Section 2211. The Lessee will not pay any dividends, whether in cash or property and if in property computed at the fair market value thereof, sub- stantially in excess of its net income after income taxes, both federal and state, for the fiscal year during which such payment is made. ARTICLE XXIII ,1;Y,PANSION OF FACILITIES Section 2301. The progress of Lessee's business may justify an expansion of the Project or the construction of additional industrial facilities -(herein referred to as "additional facilities ") beyond those that can be financed out of the proceeds of the bonds to such an extent that Lessee may not desire to proceed under the provisions of Section S 02 to construct such facilities, There- fore, it is agreed, subject to all of the provisions of this Article XXIII, as follows: (a) If Lessee desires to construct additional facilities, it shall notify Lessor and Lessor agrees to proceed under the provisions of Act No. 9 (or any similar then existing legislation authorizing municipalities in the State of Arkansas to issue bonds for the purpose of securing and developing industry) to issue addi- tional bonds, otherwise than under the Indenture, subject to the requirements of Act No. 9 or any such then existing law, to finance such additional facilities. In that event, the Lessor and the Lessee agree to execute a separate Lease and Agreement covering the financing of such additional facilities and the leasing thereof to Lessee upon the same terms and conditions as set.forth in this Lease and Agreement, subject to any changes -or additions that may then be agreed upon by Lessor and Lessee, but there must be included provision for basic annual rent in the amount necessary to' provide for the payment of the principal of and interest on any such additional bonds, and the land involved in such expansion program shall automatically be withdrawn from this Lease and Agreement upon becoming subject to a separate Lease and Agreement between Lessor and Lessee. (b) If for any reason the additional facilities cannot be financed under pct No. 9, or any then existing similar law, as provided in sub - paragraph (a) above, or if for any reason Lessee does not desire to so proceed, Lessee shall have the right, upon notice to Lessor, to require Lessor to the extent permitted by Section 2304 to convey the land to be involved in said expansion program to Lessee by general warranty deed free and clear of all encumbrances except those to which title was subject when leased hereunder. Section 2302. Lessor shall make appropriate provisions in the Trust Indenture for a release of the lands to be involved in any expansion program (under either Section 2301 (a) or Section 2301 (b)) from the lien of the Trust Indenture. The consideration to be paid by Lessee to Lessor upon conveyance of the lands pursuant to the provisions of Section 2301 (b) shall be One Dollar ($1.00) per acre and the mutual benefits to be derived by the parties from such expansion program. Section 2303. The fact that the land involved in such expansion program shall cease to be subject to this Lease and Agreement by virtue of becoming subject to a separate Lease and Agreement or being acquired by Lessee shall not re- lieve, and shall not result in the relieving of Lessee of its obligation to pay basic rent and additional rent or any of the other covenants and obligations on the part of Lessee to be performed under this Lease and Agreement, or result in any diminution thereof. Section 2304. Lessee's expansion program and the land subject to said separate Lease and Agreement or said acquisition by Lessee pursuant to the pro- visions of Section 2301 may include only such portion of the Land originally leased and demised by this Lease and Agreement as shall not at such time be improved with a building or buildings or other structure or structures or be necessary for adequate ingress and egress to and from said buildings and structures plus such additional land adjacent to said buildings and structures, as may be reasonably necessary for the proper and efficient use of such buildings and structures. Section 2305. The rights conferred upon Lessee by this Article XXIII shall be in addition to and not in limitation of any of the options granted to Lessee by t ^e provisions of Article M hereof, and the provisions of this Article XXIII are in addition to and not a limitation upon Lessee's rights under Section 502 hereof. V ARTICLE XXIV REMOVAL AND DISPOSAL OF PROPERTY Section 2401. The Lessee may, provided Lessee is not in default in the payment of basic rent or additional rent as required by the provisions of this Lease and Agreement and has not received notice of any other default on its part hereunder, remove, free of any right or claim of Lessor or the Trustee, any building service equipment (hereinafter defin-ad), subject however, in all cases to the following: (a) Building service equipment may be so removed upon the substitution there.cf, then or theretofore, by Lessee of other building service equipment of a utility or value at least equal to that, at the time of removal, of the building service equipment removed; ` (b) Worn out or obsolete building service equipment may be so removed and building service equipment added by Lessee after the full completion of a building (and not by way of repair, replacement or the like) may be removed, provided the original efficiency, utility and value of the building is not impaired; (c) Lessee shall pay all the costs and expenses of any such removal and• shall immediately repair at its expense all damage caused thereby. The term "building service 'equipment" is intended to refer to such things as are affixed to or incorporated in a building for its operation, such as boilers, pumps, tanks, electrical panel switchboards, sprinklers, lighting equipment and wiring, heating, plumbing and ventilating equipment, elevators, escalators, refrigera- ting, air conditioning and air cooling equipment, and items similar in general to any of the foregoing. Section 2402. The Lessor and the Lessee recognize that after Lessor's 3 machinery and equipment is installed portions thereof may become inadequate, obsolete, worn out, unsuitable, undesirable or unnecessary in the operation of the Project as a modern manufacturing plant. The Lessor shall not be under any obligation to renew, repair or replace any such inadequate., obsolete, worn out, unsuitable, undesirable or unnecessary items of Lessor's machinery and equip- ment. In any instance where the Lessee in its sound discretion determines that any.items of Lessor's machinery and equipment have become inadequate, obsolete, worn out, unsuitable, undesirable or unnecessary in the operation of the Project as a modern manufacturing plant, (a) The Lessee may remove such items of Lessor's machinery and equipment from the Froject, and (on behalf of the Lessor) sell, trade -in, exchange or otherwise dispose of them without any responsibility or accountability to the Lessor or the Trustee therefor, provided that the Lessee substitute (either by direct payment of the cost thereof or by advance to the Lessor of the funds necessary therefor, as hereinafter provided) and install anywhere in the Project other machinery or equipment having equal or greater utility (but not necessarily the same function) in the operation of the Project as a modern manufacturing plant, and provided further that such removal and substitution shall not impair the operating unify of the Project, and all such substituted machinery or equipment shall be the sole property of the Lessor, shall be and become a part of Lessor's machinery and equipment subject to this Lease and Agreement and shall be held by the Lessee on the same terms and conditions as items originally comprising Les- sorts machinery and equipment; or v � (b) The Lessee may remove such items of Lessor's machinery and equipment from the Project and sell, trade in or exchange them (in whole or in part) on behalf of the Lessor, either to itself or to another, or scrap them (in whole or in part), without being required to substitute and install in the Project other items of machinery or equipment in lieu thereof, provided (i) that in the case of the sale of any such machinery or equipment to any- one other than itself or in case of the scrapping thereof, the Lessee pays into the Bond Fund the proeeeds from such sale or the scrap value thereof, as the case may be, (ii) that in the case of the trade in of such machinery or equipment for other machinery or equipment not to be installed in the Project, the Lessee pays into the Bond Fund the amount of the credit received by it on such i trade in, and (iii) that in the case of the sale of any such machinery 'or equipment to the Lessee, the Lessee pays into the Bond Fund an amount equal to the original cost thereof less depreciation at rates calculated in accordance with generally accepted accounting • practice. In any case where the Lessee purchases, installs and substitutes in the Project any item of machinery.or equipment, the Lessee may, in lieu of purchasing and installing said items of machinery and equipment itself, advance to the Lessor the funds necessary therefor, whereupon the Lessor will purchase and install such machinery or equipment in the Project. The Lessee will promptly report such removals, substitutions, sales and other dispositions of items of Lessor's machinery and equipment to the Trustee, will pay to the Trustee such amounts as are required by the provisions of the precedi :g subsection (b) to be paid into the Bond Fund promptly after the sale,trade -in or scraping G J requiring such payment, and will execute and deliver to the Lessor and the Trustce such documents as may from time to time be requested to confirm the title of the Lessor (subject to this Lease and Agreement) to any items of machinery and equip- mentthat under the provisions of this section are to become a part of Lessor's machinery and equipment. The Lessee will pay any costs (including counsel fees) incurred in subjecting to the lien of the Indenture any items of machinery or equip- ment that under the provisions of this section are to become a part of Lessor's machinery and equipment. The Lessee will not remove,or permit the removal of any of Lessor's machinery and equipment from the leased premises except in accordance with the provisions of this section. Section 2403. If requested by Lessor, Lessee shall furnish to Lessor, within sixty (60) days after the end of each calendar year, Lessee's certificate setting forth a summary description of all removals made pursuant to Sections 2401 and 2402. v 3 IN WITNESS WHEREOF, the parties hereto have caused this Lease and Agreement to be signed in several counterparts, each of which may be considered an original without the presentation of the others, by their duly authorized officials and officers as of the day and year first hereinabove written. ATTEST: City Clerk (SEAL) CITY OF LITTLE ROCK, ARKANSAS LESSOR Mayor MERICO, INC. LESSEE By (Title) ATTEST: (Title) (SEAL) ACYNOWLEDGM EN T STATE OF ) COUNTY OF ) On this day of December , 1970, before me, a Notary Public duly commissioned, qualified and acting within and for the County and State aforesaid, appeared in person the within named_ and - and , respectively, of Merico, Inc., a Texas corporation, to me personally well known, who stated that they were duly authorized in their respective capacities to execute the foregoing instrument for and in the name and behalf of said corporation, and further stated and acknowledged that they had so signed, executed and delivered said foregoing instrument for the con- sideration, uses and purposes therein mentioned and set forth. IN TESTIMONY WHEREOF, I have hereunto set my hand and official seal this day of December 1970. Notary Public My commission expires: (SEAL) v 3 ACKNOWLEDGMENT STATE OF ARKANSAS ) COUNTY OF PULASKI ) On this day of December , 1970, before me, a Notary Public duly commissioned, qualified and acting, within and for the County and State aforesaid, appeared in person the within named Haco Boyd and Mrs. Jane Czech Mayor and City Clerk, respectively of the City of Little Rock, Arkansas, a municipality of the State of Arkansas , to me personally known, who stated that they were duly authorized in their respective capacities to execute the foregoing instrument for and in the name of the City, and further stated and acknowledged that they had signed, executed and delivered said foregoing instrument for the consideration, uses and purposes therein mentioned and set forth. - IN TESTIMONY WHEREOF, I have hereunto set my hand and official seal this day of December 1 1970. Notary Public My commission expires: (SEAL) G 3 EXHIBIT A THE LEASE AND AGREEMENT BY AND BETWEEN THE CITY OF LITTLE ROCK, ARKANSAS AND MERICO, INC. The following described real estate situated in Pulaski County, Arkansas, to wit: (a) A tract of land in the Northwest Quarter (NW 1/4) of the Northwest Quarter (NW 1/4), Section 29, Township 1 North, Range 12 West, more particularly described as: Beginning at a point on the North line of said Section 29, 379.4 feet East of the Northwes -t corner thereof; thence East along the North line of said Section 29, 372.2 feet to a point on the West right - of -way line of the Missouri Pacific Railroad Company and Chicago, Rock Island and Pacific Railway Company joint right -of -way; thence South 23 degrees 57 minutes East along said West right -of -way line, a distance of 684.3 feet to a point on the North right -of -way line of Hoerner Street; thence West along the North right -of -way line of Hoerner Street, a distance of 650 feet to a point; thence North 625.3 feet to the point of beginning, containing 319,622 square feet, or 7.337 acres, more or less. (b) An irregular shaped tract or parcel of land located in the Northwest Quarter of the Northwest Quarter of Section 29, Township 1 North, Range 12 West, Pulaski County, Arkansas, more particularly described as follows: Beginning at a point in the north line of the Northwest Quarter of the North- west Quarter of said Section 29, said point being the northwest corner of a 0.3905 acre tract of land described in deed dated November 15, 1960, from Industrial Development Company.of Little Rock to Grantors therein, (Missouri Pacific Railroad Company and Chicago, Rock Island and - Pacific Railroad Company), recorded November 30, 1960 in Book 748, Pages 235 -237 of the Pulaski County, Arkansas, deed records; thence eastwardly, along said north line of Section 29, 44.2 feet; thence southeasterwardly, on a deflection angle of 45 degrees 00 minutes to the right from last described course, 70.7 feet; thence southwardly, on a deflection angle of 45 degrees 00 minutes to the right from last described course, 162.1 feet, more or less, to a point in Grantor's westerly property line; thence northwestardly, along said property line, 232. 1 feet, more or less, to the point of beginning, containing 8, 740 square feet, more or less. (c) A thirty (30) foot wide easement and right -of -way, being fifteen (15) feet in width on either side of a center line described as: Beginning at a point on the East right -of -way line of Patterson Avenue, 91.3 feet due South of the North line of Section 29 and Section 30, Township 1 North, Range 12 West, and running East, parallel to and 91.3 feet South of the North line of Section 30 and the North line of Section 29, in Township 1 North, Range 12 West, to the West line of the property described in paragraph (a) above, a distance of approximately 425 feet. ` 1 Z Section 2. That the Mayor, City Clerk and City Manager, or any of them, be, and they are hereby, authorized and directed, for and on behalf of the City, to do all things, execute all instruments and otherwise take all action necessary to the realization of the City's rights and to the discharge of the City's obligations as Lessor under the Lease and Agreement. Section 3. That the provisions of this Ordinance are hereby declared to be separable, and if any section, phrase or provision shall, for any reason, be declared to be invlaid, such declaration shall not affect the validity of the remainder of the sections, phrases or provisions. Section 4. That all ordinances and parts thereof in conflict herewith are hereby repealed to the extent of such conflict. Section 5. That there is hereby found and declared to be an immediate need for the securing and developing of industry within the City in order to provide additional employment and increased payrolls, alleviate unemployment and provide other benefits incidental to the operation of a substantial industry, and the execution and delivery of the Lease and Agreement authorized by this Ordinance are necessary for the accomplishment of these public benefits and purposes. It is, therefore, declared that an emergency exists, and this Ordinance, being necessary for the immediate preservation of the public health, safety and welfare, shall be in force and take effect immediately upon and after its passage. PASSED: December 7 ATTEST: City Cler (9;;XR) , 1970. APPROVED: Assistant Mayor