EXHIBIT 10.22
Revised August 27, 1998
STATE OF MISSISSIPPI
CITY OF STONE
LEASE AGREEMENT
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THIS AGREEMENT, made this the 1st day of September, 1998, between THE BOARD
OF EDUCATION OF THE STONE COUN'TY SCHOOL DISTRICT, 214 ▇▇▇▇▇ Street, Wiggins,
Stone County, Mississippi, hereinafter referred to as "LESSOR", and CMS DEFENSE
SYSTEMS, INC., ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, hereinafter
referred to as "LESSEE".
1. Lease of Property. LESSOR hereby leases the following 16th Section school
trust lands classified as industrial (hereinafter referred to as "the
Property") unto LESSEE, more particularly described as follows, to-wit:
That portion of Section ▇▇, ▇▇▇▇▇▇▇▇ ▇ ▇▇▇▇▇, ▇▇▇▇▇ 11, West, Stone
County, Mississippi, which is situated and located South of East ▇▇▇▇▇▇▇
Road, containing 465 acres, more or less.
2. Initial Term and Rental. This Lease Agreement shall be for an initial term of
Five (5) years from the date hereof at an annual ground rental of Forty-Two-
Thousand and No/100 Dollars ($42,000.00), with such annual rental to be made
payable to the STONE COUNTY SCHOOL DISTRICT. The initial annual ground
rental payment shall be due and payable as of the date hereof, arid cash
additional annual ground rental payment shall be due and payable as of the
yearly Anniversary date of this agreement. In addition, LESSOR shall, as of
the date of this agreement, pay a onetime sum to LESSEE in the amount of
Thirty-Thousand-Nine-Hundred-Ninety-Seven and No/100 Dollars ($30,997.00) as
payment for loss of previous and future growth of trees to be cleared on the
initial facility area of 21.19 acres together with the costs of site
preparation and tree planting associated therewith. LESSEE shall also pay off
the remaining three (3) years of the existing hunting lease to Three Oaks
Hunting Club, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, President, in total amount of $4,882.50.
3. Extension of Term. LESSEE shall have the option to extend the term of this
Agreement for Four (4) additional consecutive Five (5) year periods, provided
LESSEE: gives LESSOR written notice of its desire for such extension at least
Six (6) months prior to the expiration of the then existing term. The annual
ground rental for the extended terms shall be as follows, to-wit:
(a) First Extension Term - The annual around rental shall be increased by
Five percent (5%) of the initial annual ground rental amount resulting
in a total annual ground rental of Forty-Four-Thousand-One-Hundred and
No/100 Dollars ($44,100,00).
(b) Second Extension Term - The annual ground rental shall be determined as
provided by the procedure set out in the following Paragraph 4 captioned
"Reappraisal and Rent Adjustment".
(c) Third Extension Term - The annual ground rental shall be increased by
Five percent (5%) of the Second Extension Term annual ground rental.
(d) Fourth Extension Term - The annual ground rental shall be determined as
provided by the procedure set out in the following Paragraph 4 captioned
"Reappraisal and Rent Adjustment".
4. Reappraisal and Rent Adjustment. (a) The amount of rental to be paid during
the second (beginning 10th year of lease) and fourth (beginning 20th year of
lease) extension terms shall be determined as provided by this paragraph.
LESSOR shall, six months before the expiration of the first and third
extension terms, cause the subject property to be reappraised and the
redetermination made of the annual fair market rental amount. The reappraisal
shall he made pursuant to the terms of Section 29-3-65 of the Mississippi
Code of 1972, as amended, or pursuant to the statute then in effect governing
such leases and procedures for determining fair market rental value. The
appraisal shall establish the fair market value of the property and establish
a reasonable current percentage of income on real estate investment for the
purpose of determining annual fair market rental. Such percentage shall be no
less than the minimum acceptable percentage provided by statute then in
effect.
(b) Should the procedure described in subparagraph (a) above (the Statutory
Procedure) result in an increase of the annual ground rental amount over
the amount previously due, LESSEE, within 15 days after receiving notice
of the increase, shall have the right to elect an alternate method of
determining the current fair market rental value of the Property (the
Alternate Procedure) as follows: (1) Lessee may request an appraisal by
an appraiser having, the highest available qualifications and licensed in
accordance with Section 73-34-1 et seq. of the Mississippi Code of 1972,
as amended, to determine a current fair market annual rental value based
on the fair market value of the land and a reasonable percentage of
return on comparable land investments as of the rental adjustment date;
(2) the appraiser appointed by LESSEE and the appraiser previously
appointed by LESSOR under the Statutory Procedure, if they cannot agree,
will mutually select a review appraiser who shall review and analyze the
two appraisal reports and , if needed, inspect the land, consult with the
two appraisers, review their assumptions and source information and
request corrections, revisions or additions to the appraisal reports; (3)
The review appraiser shall report his opinion of annual fair market rent.
The lesser amount as determined by the Statutory Procedure or by the
Alternate Procedure shall be accepted by LESSOR and LESSEE as the current
fair market rental value of the leased property.
(c) If LESSEE. requests the Alternate Procedure, LESSEE shall pay all fees
and expenses of the LESSEE'S appraiser, the review appraiser, and any
additional charges of LESSOR'S appraiser.
(d) In no event, however, shall the adjusted annual ground rental for the
second or fourth extension terms be in an amount that is less than the
amount of annual ground rental for the preceding term.
(e) The amount of rent determined in the above manner shall be promptly
remitted upon conclusion of this rental adjustment procedure effective as
of the rental adjustment date.
5. Use. LESSEE shall use the Properly for the purpose of manufacturing,
maintaining and operating an assembly facility associated with non-nuclear
weapons systems and uses incidental thereto, which may consist of such
buildings as are necessary for such operations (collectively, the "Assembly
Facility"). All improvements to the Property necessary for LESSEE'S use shall
be made at LESSEE'S expense.
LESSEE shall erect an Assembly Facility suitable far its proposed use. It is
understood and agreed that the initial facility area to be cleared consists
of approximately Twenty-One-and-Nineteen-One-Hundredths (21.19) acres as set
out on the plat attached hereto as Exhibit "A'; and LESSOR grants LESSEE the
right to clear all trees, undergrowth, or other obstructions and to trim, cut
and keep trimmed and cut, all limbs which may interfere or fall upon LESSEE'S
facility or the LESSEE'S other improvements on said Twenty-One-and-Nineteen-
One-Hundredths (21.1 9) acre site. It is further understood and agreed that
LESSEE'S operations on the Property may require that its Assembly Facility be
expanded from time to time, and that such expansion will necessitate that
additional land be cleared of trees and other obstructions. It is likewise
further understood and agreed that all timber on the Property is reserved
unto LESSOR by operation of law concerning 16th Section lands. Therefore, if
at any time LESSEE shall determine that it will expand the Assembly Facility
area, it shall first notify LESSOR in writing of its intention to expand and
furnish LESSOR with a designation of the area upon which trees and other
obstructions will need to be cleared. Upon such receipt, LESSOR shall
forthwith notify and direct the Mississippi Forestry Commission to perform
any necessary cruise and/or appraisal of the timber located on the area to be
cleared as said Commission deems necessary to determine the status and value
of the trees situated thereon, and report its findings in writing to LESSOR
and LESSEE. If the Commission's report indicates that merchantable trees are
located on the area designated to be cleared, LESSOR shall forthwith proceed
with the advertisement and sale of said timber by bid as required under state
law governing 16th Section lands with said trees to be cut and removed
by the successful bidder within a reasonable time thereafter taking into
consideration state law in regard to such sale. LESSEE agrees to pay LESSOR
compensation for any loss of previous and future growth of trees on the
expansion area which are not merchantable at the rate of Fifty Dollars
($50.00) per acre per year based upon a 27 year tree growth cycle together
with the costs of site preparation anal tree planting associated therewith as
reflected by the Commission's report.
LESSOR may continue to grow and harvest timber on any area of the Property
either within or outside of any buffer zone established by LESSEE, other than
the Assembly Facility Area or any expansion area to be cleared as above
described, provided any such harvesting activities are undertaken or
performed at a time that does not interfere with LESSEE'S operations.
Governmental Approvals. LESSOR shall cooperate with LESSEE in its effort to
obtain and maintain in effect all certificates, permits, licenses and other
approvals required by governmental authorities for LESSEE'S use of the
Property.
7. Indemnification. LESSEE shall indemnify and hold LESSOR harmless against any
liability or loss from personal injury or property damage resulting from or
arising out of the use and occupancy of the Property by LESSEE or its
employees or agents, excepting, however, such liabilities and losses as may
be due to or caused by the acts or omissions of LESSOR or its employees or
agents. LESSEE shall provide a comprehensive general public liability policy
covering its operations on the Property. LESSEE shall provide liability
insurance for the Assembly Facility and worker's compensation insurance in
statutory amounts. Certificates of insurance shall be supplied to the LESSOR
prior to the commencement of construction and upon the renewal date of each
policy.
8. Taxes. LESSEE shall be responsible for paying any and all property taxes
separately levied or assessed against the improvements constructed by LESSEE
on the Property.
9. Option For Improvements To Vest In Lessor Upon Termination. Upon termination
of this agreement, LESSOR shall have the option to be vested with title to
the buildings as set out in Paragraph 5 constituting the Assembly Facility,
constructed or installed on the Property by LESSEE. If upon termination of
this agreement LESSOR exercises such option to have such title vested in it,
LESSEE shall within a reasonable period remove all personal properly and any
fixtures therein, provided such removal of fixtures does not significantly
damage or destroy the structural, mechanical or aesthetic integrity of such
buildings. LESSEE shall cooperate with LESSOR concerning such transfer of
title to the buildings, and agrees to execute any appropriate documents that
are necessary or desirable to accomplish such transfer of title to said
buildings. If upon termination of this agreement LESSOR chooses not to take
title to such buildings, then title to such buildings shall remain in LESSEE,
and LESSEE shall within a reasonable period remove all such buildings
together with personal property and fixtures, and restore the Property to its
original condition.
10. Enjoyment. LESSOR covenants that LESSEE, on paying the rental and performing
the covenants, terms and conditions required of LESSEE contained herein,
shall peaceably hold and enjoy the Property and the leasehold estate granted
to LESSEE by virtue of this Agreement.
11. Assignment. This lease Agreement may not be sold, assigned, or otherwise
transferred by either party in whole or in part without the express prior
written consent of the other party, which consent shall not unreasonably be
withheld. The foregoing shall not apply in the event either party shall
change its corporate name, merge or otherwise combine with another
corporation or in cases of inter-company transfer of LESSEE.
12. Condemnation. If the whole of the Property, or such potion thereof as will
make the Property unusable for the purposes herein leased, is condemned by
any legally constituted public authority, then this Agreement, and the term
hereby granted, shall cease from the time when possession thereof is taken
by the public authority, and rental shall be accounted for as between
LESSOR and LESSEE as of that date. Any lesser condemnation shall in no way
affect the respective rights and obligations of LESSOR and LESSEE hereunder.
However, nothing in this paragraph shall be construed to limit or adversely
affect LESSEE'S right to an award of compensation from any condemnation
proceeding for the taking of LESSEE'S leasehold interest hereunder or for
the taking of LESSEE'S improvements, fixtures, equipment, and personal
property.
13. Title Insurance. LESSEE, at LESSEE'S option, may obtain title insurance on
the Property. LESSOR shall cooperate with LESSEE'S efforts to obtain title
insurance by executing documents or obtaining requested documentation as
required by the title insurance company.
14. Hazardous Substances. LESSEE shall hold LESSOR harmless from and indemnify
LESSOR against any damage, loss, expense, response costs or liability,
including consultant fees and attorneys' fees, resulting from hazardous
substances generated, stored, disposed of or transported to, on or under the
Property as a result of LESSEE'S use of the Property. For purposes of this
Agreement, "hazardous substances" shall mean (a) any substance which
contains gasoline, diesel fuel or other petroleum hydrocarbons, (b) any
substance which is flammable, radioactive, corrosive or carcinogenic, (c)
any substance the presence of which on the Property causes or threatens to
cause a nuisance or health hazard affecting human health, the environment,
the Property or property adjacent thereto, or (d) any substance the presence
of which on the property requires investigation or remediation under any
hazardous substance law, as the same may hereafter be amended. "Hazardous
Substance Law', means the Comprehensive Environmental Response Compensation,
and Liability Act, 42 U.S.C. Section 9601 et seq.; the Resource Conservation
and Recovery Act, 42 U.S.C. Section 6901 et seq.; the Hazardous Material
Transportation Act, 49 U.S.C. Section 1801 et seq.; the Clean Water Act, 33
U.S C. Section 1251 et seq., the Clean Air Act, 42 U.S.C. Section 7401 et
seq.; the Federal Insecticide, Insecticide, Fungicide and Rodenticide Act, 7
U.S.C. Sections 136 et seq., the Toxic Substances Control Act, 15 U.S.C.
Section 2601 et seq.; the Emergency Planning, and Community right to Know
Act (▇▇▇▇ Title III) 42 U.S.C. Section 11001 et seq., and any applicable
state law or regulation.
LESSEE agrees to abide by and comply with all federal and state
environmental laws, rules, and regulations concerning air, water, soil,
toxic substances, and hazardous substances. LESSEE further agrees that if a
fine or other assessment is levied against LESSOR as a result of a violation
of any such federal and/or state environmental law, rule and/or regulation
attributable to LESSEE'S operations concerning the Property, then LESSEE
shall indemnify and hold LESSOR harmless from same. LESSEE further agrees
that if any such federal and/or state environmental law, rule, and/or
regulation requires any monitoring activities as a result of its operations
on the Property,. then LESSEE shall continue such monitoring activities upon
termination of the lease as required by such law, rule, and/or regulation.
LESSEE further agrees that if environmental pollution or contamination is
present on the property at the termination of this lease agreement, then
LESSEE: shall perform any cleanup or remedial operations necessary to remove
such pollution or contamination; arid if such pollution or contamination
cannot be removed or remedied rendering the property unusable, LESSEE agrees
to continue its lease of the property.
15. Opportunity to Cure. If LESSEE shall fail to pay any rental or other amounts
payable under this Agreement when due, or if LESSEE should fail to perform
any other of the covenants, terms or conditions of this Agreement, prior to
exercising any rights or remedies against L.ESSEE on account thereof, LESSOR
shall first provide LESSEE with written notice of the failure and provide
LESSEE with a thirty (30)) day period to cure such failure (if the failure
is a failure to pay rental or any other sum of money under this Agreement)
or a Sixty (60) day period to cure such failure (if the failure is a failure
to perform any other covenant, term or condition of this Agreement). If the
failure is not a failure to pay rental or any other sum of money hereunder
but is not capable of being cured within a Sixty (60) day period, LESSEE
shall be afforded a reasonable period of time to cure the failure provided
that LESSEE promptly commences curing the failure after the notice and
prosecutes the cure to completion
win due diligence. If the LESSEE fails to cure the failure within a
reasonable time period all payments due for the remaining existing term or
extension thereof shall become due and payable immediately as liquidated
damages for default.
16. Governing law. This Agreement shall be Governed and interpreted by and
construed in accordance with, the laws of the State of Mississippi.
17. Notices. All notices hereunder must be in writing and shall be deemed
validly given on the date when deposited in the United States mail, by
certified mail, return receipt requested, addressed as follows (or to any
other address that the party to be notified may have designated to the other
party by like notice at least Ten (IO) days prior thereto):
LESSEE: CMS DEFENSE SYSTEMS, INC
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: President
LESSOR: STONE COUNTY SCHOOL DISTRICT
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Superintendent of Education
The parties may substitute recipient's names and addresses by giving
notice as provided hereunder. Rejection or refusal to accept delivery of
any notice, or the inability to deliver any notice because of a changed
address of which no notice was given, shall be deemed to be receipt of any
such notice.
18. Miscellaneous. This Agreement cannot be modified except by a written
modification executed by LESSOR and LESSEE in the same manner as this
Agreement is executed. The headings, captions and numbers in this Agreement
are solely for convenience and shall not be considered in construing or
interpreting any provision in this Agreement. Whenever appropriate in this
Agreement, personal pronouns shall be deemed to include other genders and
the singular to include the plural, if applicable. This Agreement contains
all agreements, promises and understandings between the LESSOR and LESSEE;
and no verbal or oral agreements, promise statements, assertions or
representations by LESSOR or LESSEE or any employees, agents, contractors or
other representations of either, shall be binding upon LESSOR or LESSEE.
This Agreement may be executed in several counterparts, each of which shall
constitute an original and all of which shall constitute the same agreement.
19. Survival. The provisions hereof, which by their nature are continuing, shall
continue to bind the parties beyond any termination hereof, including but
not limited to the provisions of Paragraph 14 "Hazardous Substances".
IN WITNESS WHEREOF, the parties hereto have set their hands arid affixed
their respective seals the day and year first above written.
BOARD OF EDUCATION OF THE
STONE COUNTY SCHOOL DISTRICT,
LESSOR DISTRICT,
LESSOR,
By:
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
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▇▇▇▇▇▇ ▇▇▇▇▇▇▇, President
Attest:
/s/ ▇▇▇▇▇ ▇▇▇▇
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▇▇▇▇▇ ▇▇▇▇, Executive Secretary
CMS DEFENSE SYSTEMS, INC.,
LESSEE
By:
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President
STATE OF MISSISSIPPI
COUNTY OF STONE
Before me, the undersigned Notary Public in and for the aforesaid state and
county, this day personally came and appeared the above and within named ▇▇▇▇▇▇
▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇, who are the President and Executive Secretary,
respectively, of THE BOARD OF EDUCATION OF THE STONE COUNTY SCHOOL DISTRICT, who
acknowledged that in such capacity, they signed and delivered the above and
foregoing instrument of writing and attached the District's seal thereto, on the
day and year therein written, as the act and deed of said Board of Education,
they being first duly authorized so to do.
Given under my hand and official seal of office this, the 2nd day of
September, 1998
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Notary Public
My Commission Expires: SEAL
My Commission Expires Sept. 8, 1998
STATE OF FLORIDA
COUNTY OF ORANGE
Before me, the undersigned Notary Public in and for the aforesaid state and
county, this day personally came and appeared the above and within named ▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇, who is the President of CMS DEFENSE SYSTEMS, INC., who acknowledged
that in such capacity, he signed and delivered the above and foregoing
instrument of writing and attached the corporate seal thereto, on the day and
year therein written, as the act and deed of said corporation, he being first
duly authorized so to do.
Given under my hand and official seal of office this, the 31st day of
August, 1998.
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇
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Notary Public
My Commission Expires:
▇▇▇▇ ▇. ▇▇▇▇▇
State of Florida
My Comm. Exp: 08/19/00
Comm #: CC584118