# Appendix — Frank Lyon Co. v. United States > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385004_1672%3A03 ## Record - **Collection:** Supreme Court brief - **Document type:** Appendix - **Published:** January 1, 1978 - **Citation:** 435 U.S. 561 ## Text Octoser TerM. 1976 No.. 76-624 Frank Lyon Company, Appellant, v. UNITED States or America, Appellee. ON PETITION FOR CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE EIGHTH CIRCUT! VOLUME II (Pages 313-748) PETITION FOR WRIT OF CERTIORARI FILED NOVEMBER 3. 1976 CERTIORARI GRANTED FEBRUARY 22, 1977 IN THE Supreme Court of the United States Octoser Term, 1976 No. 76-624 Frank Lyon Company, Appellants v. Unrrep States or America, Appellee Petition for Writ of Certiorari Filed November 3, 1976 Certiorari Granted February 22, 1977 INDEX Page Complaint, filed September 27, 1973 ................ 6 Answers, filed November 26, 1973 .................5. s Stipulation, filed September 16, 1974 ................ 9 Supplemental Stipulation, filed December 23, 1974 ... 14 Transcript of Proceedings, November 26, 1974 Supplementary Findings of Fact and Conclusions of Law, filed Jume 11, 1975 ...............--ee00: 299 Proposed Findings of Fact and Conclusions of Law... 301 Judgment, filed June 11, 1975 Notice of Appeal, filed August 11, 1975 ewe we, .} 2a ~ *) eT ii Index Continued Page Plaintiffs’ Exhibit 1: Letter dated August 26, 1967 from Edward M. Penick, President of Worthen Bank & Trust Company to 0. O. Wyrick, Vice President of Federal Reserve Bank of St. Louis.. 313 Plaintiffs’ Exhibit 2: Letter dated September 1, 1967 from Edward M. Penick to O. O. Wyrick ........ Plaintiffs’ Exhibit 3: Letter dated —_— 12, 1967 from Edward M. Penick to O. O, Wyrick ........ 324 Plaintiffs’ Exhibit 4: Letter dated September 13, 1967 from O. O. Wyrick to Edward M. Penick ........ 326 Plaintiffs’ Exhibit 5: Letter dated September 1, 1967 from Edward M. Penick to H. C. Adams, Commis- sioner of State Bank Department .............. 328 Plaintiffs’ Exhibit 6: Letter dated September 5, 1967 from H. C. Adams to Edward M. Penick ........ 336 Plaintiffs’ Exhibit 7: Letter dated September 12, 1967 from Edward M. Penick to H. C. Adams ........ 338 Plaintiffs’ Exhibit 8: Letter dated September 13, 1967 from H. C. Adams to Edward M. Penick ........ 339 Plaintiffs’ Exhibit 9: Sale and Leaseback seminal dated September 28, 1967 to Goldman, Sachs & Co. 340 Plaintiffs’ Exhibit 10: Revised Sale and Leaseback proposal dated October 27, 1967 of Stephens, Inc. 344 Plaintiffs’ Exhibit 11: Letter dated October 30, 1967 from Frank Lyon to Worthen Plaintiffs’ Exhibit 12: C omparison of financing plans of Frank Lyon, Stephens, Inc. and Goldman, ET Ee on 00 5bnn ocd 6066 0006566600008606 348 Plaintiffs’ Exhibit 13: Specification for Sale-Lease- back of Worthen Bank waneng dated October 31, . tt ipa eeeeehboebdebeedeeds Obe6 6666000060668 34 Plaintiffs’ Exhibit 14: Letter dated November 1, 1967 from Frank Lyon te Worthen containing Lyon's SED GEE © ccccdcccceccccccccsesecesecs 352 Plaintiffs’ Exhibit 15: Comparison of financing plans dated November 2, 1967 Index Continued iii Page Plaintiffs’ Exhibit 16: Letter dated Noevmber 30, 1967 from Alan W. Peters, Vice President of First Na- tional City Bank to Edward M. Penick ......... 356 Plaintiffs’ Exhibit 17: Letter dated December 18, 1967 from Richard W. Baker, Jr., Vice President of New York Life Insurance Company to Frank ROU TET sancudcesdradcideciedabucekies 358 Plaintiffs’ Exhibit 18: Ground Lease dated May 1, 1968 between Worthen Bank & Trust Company, as Lessor, and Frank Lyon Company, as Lessee.... 366 Plaintiffs’ Exhibit 19: Building Lease dated May 1, 1968 between Frank Lyon Company, as Lessor, . and Worthen Bank & Trust Company, as Lessee. 376 Plaintiffs’ Exhibit 20: Note Purchase Agreement dated May 1, 1968 between Frank Lyon Company and New York Life Insurance Company ............ Plaintiffs’ Exhibit 21: Building Loan Agreement dated May 14, 1968 between Frank Lyon Company and First National City Bank ..................... 462 Plaintiffs’ Exhibit 22: Building Loan Mortgage Note for $7,000,000 dated — 14, 1968 from Frank l.von Company to First National City Bank .... 488 Plaintiffs’ Exhibit 23: Building Loan Mortgage dated May 14, 1968 from Frank Lyon Company and Worthen Bank & Trust Company to First Na- tional City Bank ..... 2.00000 cece cece 490 Plaintiffs’ Exhibit 24: Assignment dated May 14, 1968 from Frank Lyon Company to First National City _ ER -Genessséuneueenacnssncdbeus cccebbdabiess Plaintiffs’ Exhibit 25: Sales Agreement dated May 19, 1968 between Frank Lyon Company, as purchaser, and Worthen Bank & Trust Company, as seller .. 508 Plaintiffs’ Exhibit 26: Secured Note dated December 1, 1969 for $7,140,000 from Frank Lyon Company to New York Life Insurance Company ......... 523 j 3 . ‘ £ y e - iy é : ~ iv Index Continued Page Plaintiffs’ Exhibit 27: First Deed of Tru. t dated De- cember 1, 1969 from Frank Lyon Company and Worthen Bank & Trust Company to Darrell D. Dover and New York Life Insurance Company... 527 Plaintiffs’ Exhibit 28: Assi t dated December 1, 1969 from Frank Lyon Compeny to New York Life Insurance Company Plaintiffs’ Exhibit 29: Consent and Agreement dated December 1, 1969 of Worthen Bank & Trust Com- pany to New York Life Insurance Company .... 575 Plaintiffs’ Exhibit 32: Specimen bank statement of Frank Lyon’s account at First National City Bank with specimen checks and credit ticket attached.. 584 Plaintiffs’ Exhibit 33: Comparative consolidated bal- ance sheets of Frank Lyon Company and subsidi- aries as of December 31, 1969 and 1968 ....._... 587 Plaintiffs’ Exhibit 34: Comparative consolidated state- ment of income years ended December 31, 1969 and 1968 of Frank Lyon Company and sub- ED eve ccdabeesdbteccessuanordetinies.. 589 Plaintiffs’ Exhibit 35: Guaranty dated May 14, 1968 from Kdward M. Penick, President Worthen Bank & Trust Company to First National City NE CT oc ccvecuunticaccci 591 Plaintiffs’ Exhibit 36: Computation of tax loss on Worthen Building of Frank Lyon Company for years 1969 through 1993; vears 2007 through 2019 and years 2033 through 2044 .................. 595 Plaintiffs’ Exhibit 37: Letter dated August 22, 1967 from ©. O. Wyrick, Vice President of Federal Reserve Bank of St. Louis te Edward M. Penick, President of Worthen Bank and Trust Company of Little Rock, Arkansas ...................... 597 Plaintiffs’ Exhibit 38: Summary of Conservation with Mr. O. O. Wyrick dated September Te sineeuse 599 Plaintiffs’ Exhibit 39: Letter dated September 20, 1967 from Mr. Theodore M. Siouris, A General Partner to E. M. Penick, President of Worthen Bank & Trust ener An reference to Sale- Leaseback Financing of ew Bank Headquarters 601 Index Continued Vv Page Plaintiffs’ Exhibit 40: Letter dated April 16, 1968 from Edward Penick, President of Worthen Bank and Trust Company to Mr. H. C. Adams, State Bank Commissioner, Little Rock, Arkansas ...... 609 Plaintiffs’ Exhibit 41: Letter dated April 16, 1968 from Edward Penick, President of Worthen Bank and Trust Company to Mr. O. O. Wyrick, Vice President of Federal Reserve Bank of St. Louis.. 613 Plaintiffs’ Exhibit 42: Letter dated April 19, 1968 from O. 0. Wyrick, Vice President of Federal Re- serve Bank of St. Louis to Mr. Edward M. Penick, President, Worthen Bank and Trust Company... 618 Plaintiffs’ Exhibit 43: Letter dated April 22, 1968 from James Penick, Jr., Executive Vice President of Worthen Bank and Trust Company to Mr. O. O. Wyrick, Vice President, Federal Reserve Bank of St Louis Plaintiffs’ Exhibit 44: Letter dated April 23, 1968 from ©. O. Wyrick, Vice President, Federal Re- serve Bank of St. Louis to Mr. James Penick, Jr., Executive Vice President, Worthen Bank & Trust REY “bdceda se chousésucdenesasewedsenaass 622 Plaintiffs’ Exhibit 45: Comparison of annual rent with total of depreciation and interest for first 10 years of Worthen Bank Building .................... 623 Plaintiffs’ Exhibit 46: Worthen Bank & Trust Co. Rent Schedule on Worthen Building 1944 ...... 624 Plaintiffs’ Exhibit 47: Safeway Lease .............. 625 Plaintiffs’ Exhibit 48: Inter-office communication dated May 13, 1969 from B. H. Dean, Jr. to James A. Rowland for Mr. W. H. Dodge regarding Safe- a SE odbet dunwhoneartadatdanbneuebasses 641 Plaintiffs’ Exhibit 49: Letter dated July 28, 1971 from James B. Bolen, Jr. to T. H. Mayer and Nicholas M. Mayer enclosing Safeway Lease ............. 663 Plaintiffs’ Exhibit 50: Letter dated April 12, 1968 from Frank Lyon Company to Ed Penick, Presi- dent, Worthen Bank and Trust Company ....... 686 vi Index Continued Page Plaintiffs’ Exhibit 51: Letter dated April 26, 1974 from Rudy Landry, Investment Officer of Cabot, Cabot & Forbes Equity Trust to Mr. Frank Lyon, Chair- man of the Board, Frank Lyon Company ...... 687 Plaintiffs’ Exhibit 52: Explanation of Items of Frank RD SURED ddccucuctdueasanaceanedeccentcc 689 Defendants’ Exhibit 1: Equity interest in land and buildings of Worthen Bank & Trust Co. ......... 691 Defendants’ Exhibit 2: Cash Flow, Frank Lyon Co.- ED EE Sccdddsbdesanndaboddebanance 692 Defendants’ Exhibit 3: Loss from Rental Operation, Frank Lyon Co.-Worthen Building ............. 693 Defendants’ Exhibit 4: Gain on Sale 1980 if 1980 Op- tion is Exercised, Frank Lyon Co.-Worthen EET a cng Geld putin a rd ee ae 604 Defendants’ Exhibit 5: Tax Consequences vs. Eco- nomic Gain if 1980 Option is Exercised, Frank Lyon Co.-Worthen Building ................... 695 Defendants’ Exhibit 6: Tax Benefit—if Option Exer- cised November 30, 1980, Taking 1969 Tax Reform Act into Account, Frank Lyon Co.-Worthen Building Defemlants’ Exhibit 7: Schedule of Direct Reduction loan, Frank Lyon Company, Loan from New York Life (Schedule December 16, 1969) ........ 697 Defendants’ Exhibit 11: Letter dated November 28, 169 from Frank T. MeGehee, Assistant Vice President of Worthen Bank and Trust Company to New York Life Insurance Company .......... 701 Defendants’ Exhibit 12: Letter dated Noverher 25, 169 from Members American Institute of Certi- fied Publie Accountants of Gotham, Wyman & llowland to New York Life Insurance Company.. 705 Defendants’ Exhibit 13: Letter dated September 2, 1966 from Richard F. Gates, Vice President to Mr. Ilarry E. Meek, Attorney, Little Rock .......... 707 Index Continued vii Page Defendants’ Exhibit 14: Letter dated October 13, 1966 with enclosures from Harry E. Meek, Attorney to Worthen Bank & Trust Company ............ 708 Defendants’ Exhibit 15: Letter dated September 8, 1967 from C. J. Giroir, Jr., Attorney to Worthen Bank and Trust Company ............+..-0005 734 Defendants’ Exhibit 16: Inter-office communication dated August 11, 1967 from Richard F. Gates to Edward M. Penick regarding financing of bank building (pp. 1 and 2, and 8-10) ................ 742 313 P. Ex. 1 WortHen Bank ano Trust Company EstasLisnHep 1877 Litre Rock, ARKANSAS August 26, 1967 Mr. O. O. Wyrick, Vice President Federal Reserve Bank of St. Louis Post Office Box 442 St. Louis, Missouri, 63166 Dear Mr. Wyrick: The attached brochure and statements reflect informa- tion relating to the construction by Worthen Bank of a new main office, office building and parking facility to cost between $8,500,000.00 and $9,000,000.00. The building site is being acquired from Urban Renewal and is located on Capital Avenue between Louisiana and Center Streets, comprising approximately three-quarters of a block. Taking $9,000,000.00 as the total construction cost, it is contemplated that we will issue $4,000,000.00 non-converti- ble debentures, maturing in 25 years, to be retired by a sinking fund beginning the eleventh year. The balance of the funds would be raised by the negotiation of a mortgage loan for $5,000,000.00 through a wholly owned subsidiary with principal payments beginning the fourth year. Interest payments on debentures at an assumed rate of 61 would be $260,000.00 per annum and interest payments on the mortguge loan until principal reductions are begun, assuming a 614 per annum rate would be $325,000.00 for a total interest cost during the first three years of $585,000.00, The combination of debentures, totaling $4,000,000.00 which will be used to purchase stock of the subsidiary, and 4 mortgage loan negotiated by the subsidiary will pay the entire cost of land and building totaling $9,000,000.00. 314 Operating statements submitted reflect the results of the occupancy of the new building by Worthen Bank in the middle of 1969, by projecting growth in earnings and expenses for the period 1968 through 1973 deducting there from the occupancy expense of present building and add Ing expense of occupancy in the new building. We also project cost of space vacant until building is fully occupied by tenants as a bank expense. The pro forma statement of the subsidiary is based on estimates of tenant occupancy after approximately a three year period and highlights the need for adjusting the banks rental payments to meet varying costs of the subsidiary. The pro forma balance sheets merely show the results of issuing the debentures by the bank and the placing of the mortgage by the sub sidiary. We propose to sell our present main office facility, hopefully before we move into the new building. The pres ent facility, including fixtures and equipment, is carried on our books at a depreciated value of $786.526.29 The attached schedule of the cost of construction are the hudgeted figures agreed upon by the architects, Erhart, Kichenbaum, Rauch & Blass, and the contractors, being Matson Construction Company of Little Rock, Ark. and Bellows Construction Company of Houston, Texas, in con sultation with Carl E. Morse Company, Consultants, of New York City. Wi ex pect to bh rin construction as soon as we have re ceived approval from you and have arranged the financing, subject of course, to approval by the Board of Directors and State Supervisory Authorities. The construction is ex pected to be completed within 18 months from the date it beg in Your early consideration will be appreciated and of course, we will promptly furnish any additional informa lion you may require sincerely, s/ Kpwarp M. Penick President 315 WortTHEeEN BankK aNvp Trust CoMPANY Constr Mé tion (‘ast Bank & Office Building, 238,255 gross sq. ft. @ 22.82 5 Level Parking, 110,880 gross sq. ft. @ 6.00 Architects Fee—estimated Financing Charges—estimated Consultant Fees Land 60,650 sq. ft. (@ 23.53 per sa. ft. I i Estimated Project Cost [estimated Cost of Equipment Vault Kquipment Under Counter Equip. Pneumatic Kquip. T V Teller Kitechen-dining Equip. Carpeting Drapes built-ins Furniture Total Constru lion, Financing tf EL quipme nt Cost 32.000 12.000 10,000 125,000 150,000 42.000 20,000 79.000 80.000 5,436,600 665,280 259,000 378,000 162.000 ] 420, OU) BD BSU chuet). 329.000 217.000 546,000 $6.87 1,880 — 316 317 Operating Income over Wortuen Bank anv Trust Company aed 130 a 70 STATEMENT OF Earnineos, Pro Forma (Amount in Thousands) Applicable Federal Income Tax 367 51(8) —0— 51 SaLe or Non-ConvertisLe Dewentures $4,000,000 @ 642% 656 Mortcace THROUGH SUBSIDIARY $5,000,000 @ 642% Net Operating Earnings an os — == == December 31, 1966 Net Operating Earnings adjusted for Interest Cost of (1) Increased by $260,000 interest on Capital Notes. _ (2) Inereased by $565,000 which is rental paid Subsidiary on new building less Present Pro-Forma Pro ‘‘orma Pro-Forma ' $192,321.37 decrease in occupancy expense on old building & motor bank. Statement Statement Subsidiary Adjustments Statement (4) Depreciation of $175,000.00 and oceupaney expense on new building of Oreratina INCOME: _- $412,481.00. Int. & Div. on See. 985 985 985 (5) Rental paid by Worthen to Subsidiary, plus figures used to make Subsid- =e. & oe. on Loans 5,359 5,359 5,399 iary non-profit. pe Pg —" 39 39 at (6) Rental income from tenants 78,062 sq. ft. @ 4.50 per with 30% occupancy. Accounts 528 528 528 (7) Parking rental income (275 cars x 1.00 x 28 days x 12 months. Other Service egs., comms., - fees & Collection charges 49 49 49 (8) Reduced taxes 50% of the additional $633,000 expense or $316,000 tax Fee-Trust Department 170 170 170 reduction over last period. Other Income 156 156 156 Rental Income: Worthen Bank §65(5) (565) Others 281(6) 281 Parking 66 (7) | 66 TOTAL 7,285 7,286 912 7,653 Orer Tinea Expense: Salaries 1,850 1,850 1,850 Other Personnel Expense 402 402 402 Interest 1,911 2,171(1) 325(3) 2,496 Occupaney 296 669(2) 587 (4) (565 ) 691 Furniture & Equip. 308 308 308 Other Expenses 1,179 1,179 1179 TOTAL 5,946 06,379 912 6,926 318 319 Wearuss Bawa aun Taver Cesstanr Wortuex Bank ann Trust Company Pro Forma Batance SuHeer Pro Forma OperatTine STaTEMEN? 1968-1973 ~ (Amount in Thousands) Adjusted to 6-30-67 * Balance Sheet as of 6-30-69 1968 1969 1970 1971 1972 1973 (0's omitted) Operating Earnings —-9,300 10,400 «11,400 12.450 13,500 14,500 Adjustments § Completion Operating Expenses (5) 7,600 8,500 9,450 10400 11,300 12,200 for of Profit before taxes & 6/30/67 financing 6/30/69 additional cost allocable . Cash 38,488 38.488 to new building 1,700 1.900 1.950 = 2,050 2.200 2.300 as , = ss ——— =—=_—_ : = yore —= U.S. Government 1,700 1,900 1950 2050 2.200 2 300 Obligations 13,703 13,703 P! = ‘ : : : Ov5e » —— US. old Pilding xpense 90 192 192 : Ww 192 nst rumentalities 1,119 1,119 ~T.700 1.990 2142 wri 2.242 » 3q" » 4g” State & Municipal Obli rations 11,527 11,527 Lees: Loans & Discounts 87,538 87,538 sao Financing — - terest ’ scons Guaranteed Rental 900 «5570 BSTATT by ( CC 6,440 6,440 Vacant Tenant Space 150 144(2) 108(3) 72(4) 72 Stock in Federal Adjusted Parking 2 86 Reserve 270 270 Total Deductions 200,000 653 717 665 29 629 -~ Bldg. he & - Net before taxes 1,500 1,337 1425 1577 1,763 1,863 uipment (1 1,8 1,833 - ang 19 469 496 Cash Value Life Ins. Taxes (1) so LL —Officers 149 149 Net ()perating Earnings 1,100 981 1,046 1,158 1,294 1,367 Investment in Subsidia 4,000 4,000 Other Resources cd 328 : 398 (1) Taxes are figured at 26.6°% of Net Profit before taxes. Total Resources 161,395 185,395 (2) 40% of tenant rental—-3:31,000 Capital Stock ~~ 4,000 4,000 (3) 30% of 361,000 Surplus 5,000 5,000 (4) 20% of 361,000 ae Notes 4,000 4,000 (5) Interest on Debentures ineluded. Tndivided Profits & Reserves 2,496 2,496 Reserve for Unearned Interest 2,704 2,704 Deposits 147,195 147,195 Total Liabilities 161,395 185,395 Note: (1) This includes present main-office land, building & equipment carried @ depreciated amount of $736,- 526.29. 320 Wortuen Bank anv Trust Company Reau Estate Sursipiary Pro Forma BaLance SHeet Assets Land $1,425,000 Bank Building $7,575,000 Total Assets $9,000,000 Liabilities Mortgage Note $5,000,000 Capitalization Capital Stock $4,000,000 Total Liabilities $9,000,000 —— Wortuen Bank anv Trust Compayy Rear Estate Supsipiary Pro Forma Oreratine Statement— 3 Years Arter Occupancy Estimated Annual Ineome EXPENSES Bidg. Operation 192,611 sq. ft. @ 1.50 288,916 Parking Operation 110,580 sq. ft. @ .12 13,305 Real Estate Taxes (estimated) Land 19,760 Buil. ling 90,500 110,260 Estimate! Net Income before Depreciation Depreciation (50 yr. st. line) Net Income 412.421 517.44 NOTE: (1) Amortization of $5,000,000. loan @ 614% for 27 years is $39: 500 per year. This exceeds rental being estimated by bank by $27. }56. Adjustments would need to be made in bank rental paid to »ub- sidiary for any losses of subsidiary. P. Ex. 2 Wortnes Bark anv Trust Compayy ESTABLISHED 1877 Litre Rock, ARKANSAS September 1, 1967 Mr. 0. O W yrick, Vice President Fed ral Re serve Kank P.O. Box 442 St. Louis, Missouri 60602 Dear Mr. Wvriek | have discussed with Mr. Harve Adams, Arkansas State Bank Commissioner, and Mr. Kenneth Sar lers, , assistant bank commissioner, financing plans on our new building which would involve complete abandonment of the plans Dick Gates and I| diseussed with you. Under the new proposal we plan to put a portion of the new building. st , _ , ma on our books and nhandie the pbalanes totaling S,/ > ’ on a aie’ Al lease DACK arrangeme!l plan and a copy of the operating figures wh ch reflect the effect of this plan on o ir operations We ar presenuy in neg ations with Goldman & Sachs Com) inv of New York 1 handle the sak and ieasenacKk Mr. Adams has indicated to us that he can give us his appre ail Ti th . pian | i’ | “Way ara ye iave tentative iy sé hed led a wround breaking cerTremot}! ro! by ia it Ter noon, september lo I am hopet li that you! appro in be recvived so that we may go ahead with the pians tor this ground bre ining Ceremony as sched led l am also enclosing leas ng brochures and a copy of ex cerpts from the report of Landauer & Associates of New York regarding the possibility of our leasing this size building. These items were discussed at our meeting this week, and | promised to send you copies. Very truly yours, President 324 P. Ex. 3 September 12, 1967 Mr. 0. O. Wyrick, Vice President Federal Reserve Bank P. O. Box 442 St. Louis, Missouri 60602 Dear Mr. Wyrick: [In line with our conversation regarding the proposed financing of our building by using the sale and leaseback $742 million and by putting the balance of the cost of the parking garage and land under the parking garage on our statement, I am submitting ti you the estimated cost of this project. These costs have been revised from those previously furnished you in my letter of September Ist by dividing the architect fees, consultant jees, and finance charges between the two buildings, that is the sale and leaseback bank office building and the parking garage. The item of finance charges is an estimated figure, as we will not be financing any of the building cost on our own statement, but will arrange for the owners-lessors to finance the building themselves. This will work in the fol- lowing manner. We will conve title to the land on which the bank building and office building will be built to the in- vestors that will own the buiiding and lease it to us. They will put up the money for the cost of construction in an escr uw account with a trustee bank and we will take the money down as we need it for construction costs. We will be obligated to pay the difference between what the money costs the investors, if they have to borrow it elsewhere, and what they are able to earn on it as a short term in- vestment from the escrow account. So our financing charges really resolve themselves into being the difference between these two costs. By handling the construction costs in this manner it will at no time become an asset of the 325 bank and we will not be required to handle an interim financing arrangement. I would appreciate your approval of the plan as we have outlined it here and in our previous correspondence. Very truly yours, President 326 P. Ex. 4 Feperat Reserve Bank or Sr. Lovtis P. O. Box 442 Sr. Lovis, Missovrr 63166 0. O. Wyrick Vice President September 13, 1967 Mr. Edward M. Penick, President Worthen Bank & Trust Company P. O. Box 1681 Little Rock, Arkansas 72203 Dear Mr. Penick: This refers to your letters of September 1 and Septem- ber 12, 1967 seeking approval of your plans for the con- struction of a new bank building. We also acknowledge receipt of copy of letter dated September 1 to Mr. H. C. Adams, State Bank Commissioner, seeking his approval. It is understood that the original proposal, outlined in your letter of August 26, has been abandoned. As we understand it, the bank and office building is to be constructed and owned by a non-affiliated corpora- tion and leased to the bank at an annual rental cost of approximately $584,250, The lease would be on a long-term basis with an option to purchase the building after fifteen years at an agreed upon figure. The cost of construction is estimated at $6,532,650 which together with the land cost of $965,000 would make a total investment by the owner of $7,497,650. It is understood that the bank will have no financial interest in the building and will furnish none of the funds for its construction. It is further understood that the bank will construct a parking garage at an estimated cost of $1,001,350 on land 327 purchased for $460,000 for a total cost of $1,461,350. This investment when added to the present carrying value of leasehold improvements, present bank premises and _ pre- liminary cost of new bank building in the total amount of $1,695,768 would result in a total investment of $3,157,118 in bank premises by the bank, exclusive of furniture, fix- tures and equipment now carried on the bank’s books at $137,326 and $546,000 estimated cost of additional invest- ment in such assets. We understand that the investment in bank premises of $3,157,118 is to be reduced from sale of present bank building estimated at $600,000 which would reduce the bank’s total investment in bank premises to $2,557,118 which combined with investment in furniture, fixtures and equipment of $683,326 would result in a total investment in fixed assets of $3,240,444. Since the total investment in bank premises would not exceed the bank's capital stock of $4,000,000, the approval of the Board of Governors, pursuant to the provisions of Section 24A of the Federal Reserve Act, is not required and this office will interpose no objection to the expendi- ture. Llowever, the additional investment in fixed assets adds considerable pressure to a capital account that is not relatively strong and the directors are urged to review the bank's capital position frequently, to continue to conserve earnings in order that the capital structure may be strength -ned and to provide additional capital funds upon completion of the building program should a review at that time warrant such action, Very truly yours, /s/ O. O. Wyrick 0. O. Wyrick Vice President 328 P. Ex. § WortHen Bank ano Trust Company EstTaBlisHep 1877 Litt_.e Rock, ARKANSAS September 1, 1967 Mr. H. C. Adams State Bank Commissioner National Old Line Building Little Rock, Arkansas Dear Mr. Adams: Previously 1 submitted to you a plan for financing our new building under which we had originally proposed to issue #4 million in debentures and handle the balance of the construction cost of $5 million on a real estate mort- gage loan. Due to the statutory limitations on the rate of interest we can pay on the debentures, we have been un- able to locate a purchaser of the debentures at an interest figure of 6% or less. Consequently, this plan of financing must be abandoned. I would like your approval of a plan whereby we would carry on our bank books the cost of the new equipment and leasehold improvements amounting to $1,325,000 and the cost of the parking garage and land on which the park- ing garage will be situated amounting to $1,195,000, giving us a total new investment amounting to $2,520,000 in land, garage, and leasehold improvements. We would carry this on our books, which with the amount we have previously invested in this category, will give us a total investment of $4,353,000 in land, buildings, and leasehold improve- ments. This figure includes our present land and building at Fourth and Main Streets, which we plan to sell. It is presently carried on our books at $600,000. Upon the com- 329 pletion of the sale we would then have in this category on the balance sheet $3,753,000, which is 32.6% of our capital, surplus, undivided profits, and reserves. I am enclosing a pro forma statement of this bank as of June 30, 1967, giv- ing affect to this additional investment. The balance of the cost of construction of our building amounting to approximately $6 million plus $965,000 on the land would be handled on a sale and leaseback basis, which would not exceed a maximum of $74 million. We would have the right to repurchase this building after 15 years at a previously agreed upon figure and the land at the cost at which it was put in. We are in the process of negotiating with Goldman & Sachs Company of New York City the details of this sale and leaseback arrangement. I am enclosing a copy of a pro forma operating statement and projections for the next five years on the funds neces- sary for us to carry this sale and leaseback arrangement including the projected income we would receive from rents from this new bank building. We realize that the sale and leaseback arrangement may be slightly more expensive in the long run. llowever, we are of the opinion that the advantages it offers us by not tving down our capital in land and building leaves us more leeway in the management of our bank and keeping our funds more profitably employed. Previously I furnished you background information on the history of the bank and general economic conditions in our city and this same information would suffice for our request at this time for your approval of this plan of fi- nancing our new building. 330 I will be most happy to furnish you any other informa- tion you may need, as we are most anxious to start con- struction as quickly as possible. Very truly yours, President EMP/mab Ene. (1) Total Project Cost (2) Pro Forma Balance Sheet as of 6/30/69 (3) Bank Building Pro Forma Operating Statement —1973 (4) Pro Forma Operating Statement 1968-1973 331 Wortnen Bank anv Trust Company Tora, Prosectr Cost Cost of Bank Office Building € Land—Financed by Sale-Leaseback Construction Cost Bank & Office Building— 296,623 gross sq. ft. @ 20.23 6,000,000 Land 41,050 sq. ft. @ 23.53 per sq. ft. 965,000 Estimated Cost of Bank, Office Building & Land $6,965,000 Investment in Parking Garage, Furniture & Fixtures & Leasehold Improvements (June 30, 1967) Leasehold [Improvement 462,990 Bank Premises (Land & Building) 1,144,037 Furniture, Fixtures & Equipment 137,326 Preliminary Cost of New Bank Building (architects fees, consultants) __ 88,741 Total Present Investment 1,833,094 Sale of Present Building — 600,000 (1) Total Investment in Bank & Premises 1,233,094 332 Additional Items to Be Included in Bank’s Assets Land (parking garage) 333 Wortnen Bank anv Trust Company Pro Forma BaLance SHEET 19,600 @ 23.53 per sq. ft. 460,000 Parking Garage Adjusted to 6-30-67 + Balance Sheet as of 6-30-69 122,500 sq. ft. @ 6.00 per sq. ft. 735,000 (0’s omitted) Additional Investment in Furniture, Completion of Fixtures & Equipment had ey S/S Vault Equipment 32,000 Cash 38,488 38,488 Under Counter Equip. 12,000 U.S. Government Obligations —_ 13,703 13,703 Pneumatie Equip. 10,000 Obligations U.S. T.V. Teller 125,000 Inst rumentalities 1,119 1,119 Kitchen-dining Equip. 150,000 State & Municipal Obligations 11,527 11,527 Carpeting 42,000 Loans & Discounts 87,538 87,538 Drapes 20,000 Loans Guaranteed by CCC 6,440 (1) 4,520 Built-ins 75,000 Stock in Fed 270 270 Furniture 80,000 546,000 Bank Bidg., Vault & Equipment = 1,833 3,753 Leasehold improvements os Cash Value Life Ins.—Officers 149 149 Architects Fee 259,000 Other Resources 328 328 Financing Charges 378,000 neti span Consultants Fee 162,000 779,000 Total Resources 161,395 161,395 Total Balance Sheet Investment in Cap.tal Stock 4,000 4,000 Bank & Premises 3,753,094 (2) Surplus 5,000 5,000 Undivided Profits & Reserves 2,496 2,496 (1) Present bank building sold at book value of $600,000.00, a for Unearned Interest 2,704 coo (2) Additional Investment in Leasehold Improvement since a =a pa 6 30/67 estimated at $300,000.00. Total Capital & Liabilities 161,395 161,395 Enclosure 1 rennet (1) Decreased Commodity Credit Corp. loan by additional investment carried in Bank Bldg., Vault & Equipment. Enelosure 2 334 Worrnen Bank anv Trust Company Bank BvILpIneG Pro-Forma Operatinc StaTEMENT—1973 Income Tenant (1)—119,380 sq. ft. @ 4.75 per 567,055 Parking—122,500 sq. ft. 312 x 1.00 x 20 days x 12 months 74,880 641,935 Less: 15% vacancy factor tenant space 119,280 x 15% x 4.75 85,058 Estimated Annual Income 556,877 Expenses Building operation 119,380 sq. ft. @ 1.50 179,070 Parking: 122,500 sq. ft. @ .12 14,700 Real Estate Taxes (estimated) Land 19,760 Building 90,500 110,260 304,030 Net Income 252,847 Less: Lease Payment to Investor —5s4,250 Net Income (Loss) —331,403 Net rental per ft. for bank to occupy new bldg. (114,549 sq. ft.) $2.893 per sq. ft. Cost to occupy new building 331,403 Cost to occupy present quarters 192,321 Net Increase in occupancy cost 139,082 (1) Bank to oceupy 114,549 sq. ft. including all public areas and dining facilities. Enclosure 3 335 Wortnes Bank anv Trust Company Pro Forma Orernatine Statement 1968-1973 * (Amount in Thousands) 1968 1989970717297 Operating Earnings 9500 10400 11400 12450) 13,500 14,500 Operating Expenses = 7,600 8500 9450 W400) 11,500 12,200 Profit before taxes & additional co-t alloeable to new building 1,700 1900 = 1,950 2,050 2.200 2,300 his Occupaney Expense old building ptions. 14,461,184.74 14,189,000 13,971,450 Worthen Bank will pay agreed commitment fee, attorney fees and printing costs. Interim financing during constructior is to be supplied by the First National City Bank of New York at the prime 350 rate of interest, such interest to be paid by Worthen Bank on amounts actually disbursed. Investors interested in the above described sale and lease-back will supply the following information: 1. Equity to be supplied by investor $500,000 and annual rate of interest to be charged thereon 6%. 2. Lease rental payments to be required per annum payable quarterly: (a) 1 through 11 years $ 571,010 (b) 11 through 25 years $ 601,476 3. Rate of lease payments for each 5 year renewal op- tion. Dollar amount $300,000. 4. Lease rental payments to be paid on land to Worthen Bank during each renewal 5 year term: 25 through 30 years $100,000 30 through 35 years $150,000 35 through 40 years $200,000 40 through 45 years $250,000 45 through 50 years $250,000 50 through 55 years $250,000 5 through 60 years $250,000 60 through 65 years $250,000 5. Options of Worthen Bank to repurchase subject to assumption of mortgage loan by Worthen: (949,150—126,788) (1,198,280—198,280) lith year $822,362 15th year $1,000,000 20th vear $1,603,568 25th vear $2,145,935 351 6. Repurchase at 15th year—Summary: (a) Total rental payments at end 15th year $ 8,687,014 (b) Total of equity and accrued interest at end 15th yr $ 1,198,280 (ec) Add any premium or deduct any discount + $ -198,280 (d) Total cost of sale leaseback including balance due on mortgage”. $14,038,230 *Mortgage balance end of 15th year $4,351,216 These figures may not be entirely accurate since tables used were carried to only two places; minor differences will therefore obtain. 352 P. Ex. 14 Frank Lyon Company November 1, 1967 Mr. Ed Penick, President Worthen Bank & Trust Company 401 Main Street Little Rock, Arkansas 72201 Dear Ed: We have reviewed your proposal submitted to us yester- day. Unequivocably, we would like to accept it. However, we do not feel that this proposal is the best for Worthen Bank, therefore, we accept your proposal with one m. jor change. Your lease payments for the first five years will be reduced by $21,000 annually. On the en- closed sheet we have listed the points contained in your specification for easy comparison of our amended pro- posal with your proposal. Ed, as you know already, we want very much to be of service to Worthen Bank. Yours truly, Frank Lyon Company /s/ Franx Lyow Frank Lyon Chairman of the Board 353 Specirication For Save-Leasepack or Wortuexn Bank ano Orrice Bvitprne . Equity to be supplied by investor $500,000 and annual rate of interest to be charged thereon 6%. Lease rental payments to be required per annum pay- able quarterly: (a) 1 through 5 years $550,000 (b) 6 through 11 years $570,000 (c) 12 through 15 years $600,000 (d) 16 through 25 years $601,500 . Rate of lease payments for each 5 year renewal option. Dollar amount $300,000. . Lease rental payments to be paid on land to Worthen Bank during each renewal 5 year term: 25 through 30 years $100,000 30 through 35 years $150,000 35 through 40 years $200,000 ~ 40 through 45 years $250,000 45 through 50 years $250,000 50 through 55 years $250,000 55 through 60 years $250,000 60 through 65 years $250,000 . Options of Worthen Bank to repurchase subject to as- sumption of mortgage loan by Worthen: llth year $800,000 (949,150—149,150) 15th year $1,000,000 (1,198,280—198,280 ) on, 355 r P. Ex. 15 20th year $1,603,568 25th year $2,145,935 Comparison or Finance Puans 11/12/67 Repurchase at 11th year—Summary: (a) Total rental payments at end ; Lyons(2) Ours Lyons(1) stephens ai eel $ 6,170,000 Lease Rentals: , - ‘ > years 550,000 571,010 932,332 083,000 —s | vear 57 571.010 532,332 59835,000 : 1d accrued interest (i years 170,000 71, 32 083,00 (b) Total of equity ar 949.150 + vears 600,000 601,476 613,157 612,750 at end 11th year ~~? 10 years 601,500 601,476 613,157 612,750 (c) Add any premium or deduct any | Investor Equity 500,000 500,000 860,000 60,000 :, 9 150 (discount) (149,190) Rate 6% 6% 644, % 6, (d) Balance of mortgage assumed D,419,074 Maturity Basic $12,389 774 Lease 25 yrs 25 yrs. 25 yrs 20 Ps. , © = ; b Cc ; y a « »f i (e) Total cost of sale-leaseba Pn ae al Rencwal Options 1) vears 4% 4% 8% i Land Rental to Worthen after 25 we ars: 25-30 yrs 100,000 199,000 () 0 40.35 vrs 150.000 150.000 0 () - 40 vrs 200 000 200,000 () () HW). 65 vrs 250.000 250,000 ) () Peis Same Same Same Same Interim Finance Cost: 334,000 334,000 334,000 334,000 Ri purchase Options: lth year 800,000 822 362 — 707,724 loth vear 1.000.000 1,000,000 1,700,000 S98 725 -"h year 1,603,568 1,603 568 —— 1,219,930 Jth vear 2.145.935 9.145.925 - 2 850,000 Total @ 15th year: Basie Rent Repurchase 8 570.000 — 9,351,216 § 687.014 5,351,216 8,308,281 8,864,000 6,152,903 5.295.000 $14,038,230 Cost of Funds $14.461,184 $13,921,216 $14,189,000 356 P. Ex. 16 First Nationa City Bank Alan W. Peters Vice President November 30, 1967 Mr. Kkdward M. Penick President Worthen Bank and Trust Company P.O. Box 1681 Little Rock, Ark. 72203 Dear Kd: It is a pleasure to confirm the understanding worked out over the past few weeks regarding construction financ- ing for your new building. We stand ready to lend up to $7,000,000 at our best commercial rate (fluctuating) to a mutually aceeptable real estate corporation. We under- stand that there is a firm New York Life commitment for this amount and that Worthen Bank will guarantee com- pletion of the building and minimum rentals required by the takeout. Since Worthen Bank will not actually be guaranteeing our loan, we feel it reasonable to have some protection in the unlikely event that the New York Life loan does not become operative. May we suggest the best way to cover this eventuality is for Worthen to provide FNCB with a guarantee of rentals adequate to amortize the construction loan on a 20-year level payment schedule at 144% above our then existing Best Rate. With a real estate company as the actual borrower, we trust vou agree with our feeling that this financing should be struetured in the standard construction loan pattern. I sugezest that our Mortgage & Rea) Estate Department people contact Dick Gates or one of your other off.zers to 357 work out mechanics of the many details such as review of the takeout, handling of the mortgage, certification of the draws, and so forth. I trust that the arrangements outlined above are com- pletely agreeable to everyone at Worthen Bank. If so, let’s move forward as quickly as possible to put the details in order. We are anxious to cooperate and certainly do not want the first draw to be delayed by any teclinical problem. Best regards, Sincerely, Al 358 P. Ex. 17 New York Lire Insurance CoMPANy Richard W. Baker, Jr., Vice President in Charge of Real Estate and Mortgage Loans December 18, 1967 Frank Lyon Company P.O. Box 4408 Little Rock, Arkansas Gentlemen: You have advised us as follows with respect to the Worthen Building, which is being constructed in Little Rock, Arkansas, and with respect to the financing program for this property: (1) Worthen Bank and Trust Company (the ‘‘ Bank’’) owns a parcel of land (the ‘‘Land’’) located at 200 West Central Capitol Avenue, Little Rock, Arkansas, and hav- ing an area of approximately 61,720 square ieet, upon which the Bank is constructing the Worthen Building and a separate parking facility (the ‘‘Parking Facility’’) to provide parking for about 387 automobiles. The Worthen Building will be a 24-story and single basement, centrally air-conditioned, steel, conerete and masonry bank and office building, with 6 elevators and about 217,860 square feet of net rentable space. It is expected that construction will he completed by July, 1969. (2) The Bank’s estimated costs total $10,304,000, being $964,198 for acquisition of the site of the Worthen Build- ing, $460,802 for acquisition of the site of the Parking Facility, $6,463,000 for construction of the Worthen Build- ing, $1,015,000 for construction of the Parking Facility, $857,000 for consultant’s and architect’s fees and financing charges and $544,000 for fixtures and equipment. 359 (3) Upon the completion of construction, the Bank, as lessor, and a wholly-owned real estate subsidiary (the *‘Company’’) of Frank Lyon Company, as lessee, will enter into a lease (the ‘‘Ground Lease’’) of the land underlying the Worthen Building for an initial term of 25 years at a nominal ground rent, with renewals for an additional 40 years. At the same time, the Company will purchase the Worthen Building and possibly certain fix- tures and equipment (the ‘‘ Personal Property’’) from the Bank for $7,640,000, which amount will not exceed those eosts to the Bank of construction of the Worthen Building and of the Personal Property which are properly capital- izable in accordance with sound accounting practice, as such costs shall have been verified by us and to our satisfaction. (4) The purchase of the Worthen Building and the Personal Property by the Company is to be financed by a corporate loan in the principal amount of $7,140,000 to be made to the Company at the time of such purchase, which loan will he evidenced by the 63,% secured note (the ‘**Note’’) of the Company secured by an assignment to us of a lease (the *‘Sublease’’) of the Worthen Building, the lessee’s interest in the Ground Lease and the Per- sonal Property between the Company, as landlord. and the Bank, as tenant. The Note is to be additionally secured by a deed of trust (the ‘Deed of Trust’’) constituting a first lien on the Land, the Worthen Building, the Parking Facility and the leasehold estate created by the Ground Lease and a chattel mortgage or other effective first lien on the Personal Properiy. The Deed of Trust will mene. among other provisions, provisions requiring continuance of the corporate existence of the Company until full pay- ment of the Note. (5) The Note will be fully repaid over the period of 25 years by constant quarterly payments of $145,581.03 during the first 11 years of such period and of $153,289.32 360 during the remaining 14 years of such period, all such payments to be applied first to interest at the rate of 634% per annum and the balance to principal. (6) The Sublease shall be an absolutely net lease, shall permit no abatement or reduction of rent except upon conditions acceptable to us and shall be non-cancellable except upon such conditions as shall assure payment of the Note in full. If, and to the extent that, we so elect, the Deed of Trust shall be subordinate to the Sublease. The fixed expiration date of the Sublease shall in no event be earlier than the final maturity date of the Note. The Sublease shall provide for the payment of net rent in quarterly installments in amounts at least equal to the amounts of the quarterly payments required to be made hy the Company pursuant to the terms of the Note, as above provided. (7) The value of the Land, as determined by our ap- praisers, shal! not be less than $1,425,000. Those costs to the Bank of acquisition of the Land and of construction of the Worthen Building and the Parking Facility (in- eluding consultant’s and architect’s fees and financing charges) which are properly capitalizable in accordance with sound accounting practice, as such costs shall have been verified to our satisfaction by a firm of independent certified publie accountants satisfactory to us, shall be not less than $9,500,000. (8) All costs and expenses in connection with the pro- posed transaction, including, without limitation, the cost of titie insurance, survey charges, the fees and disburse- ments of our special counsel, recording fees, documentary stamp and other taxes and printing expenses will be paid by vou or the Company. We are pleased to advise you that, on the basis of the foregoing, and subject to our approval of the plans and specifications of the Worthen Building and the Parking 361 Facility, the title to the properties (including any ease- ments affecting the Land), all proceedings to be taken in connection with the loan herein contemplated and the form and substance of ali documents incident thereto, including, without limitation, the Note, the Deed of Trust, the Ground Lease, the Sublease and the instrument assigning to us all of the lessor’s interest in the Sublease, and subject further to the several matters referred to or set forth in this letter or in the Summary of Certain Prinei- pal Terms and Conditions (the ‘‘Summary’’) attached hereto as Exhibit A, we will agree that, upon the perform- ance of all of the terms and conditions referred to or set forth in this letter or in the Summary, we will purchase the Note in the principal amount of $7,140,000. It is understood that our agreement to purchase the Note will be contained in a separate Note Agreement hetween the Company and us, setting forth all of the terms and conditions of the loan and in form and sub- stance satisfactory to the Company and to us (and inelud- ing, as exhibits thereto, the forms of the Ground Lease. the Sublease, the Deed of Trust and other appropriate documents), and that the Note Agreement will be entered into as soon as practicable. We shall expect you to pay or reimburse us for, and by vour confirmation of this letter vou agree to reimburse us for, the fees and disbursements of our special counsel and all other out-of-pocket expenses which may be paid or ineurred by us in connection with the proposed loan even if, for any reason whatsoever, the Note Agreement is not exceuted or, if exeeuted, the transaction is net con summated. By your confirmation of this letter, vou further agree to indemnify and hold us harmless against any claim for brokerage commission or other such compensation which may he made against us by any person, firm or corpora- 362 tion in connection with the transaction contemplated herein. If the foregoing is satisfactory to you, please so con- firm by signing the enclosed copy of this letter and return- ing it to me within 15 days of the date of this letter. Very truly yours, New York Lire Insvrance CoMPANY By /s/ Ricnarp W. Baker, JR. Vice President in Charge of Real Estate and Mortgage Loans Confirmed as of the date first above written. Frank Lyon CoMPANY By /s/ Frank Lyon President 363 Kanreir A 634% Secured Note of Wholly-Owned Subsidiary of Frank Lyon Company Summary or Certain Principat Terms anp Conpitions Issuer: Wholly-owned subsidiary of Frank Lyon Com- pany. Amount of Note: $7,140,000. Rate: 634%. Maturity: 25 years from date of Note. Date of Closing: August, 1969. Mandatory Payments: Constant quarterly payments of $145,581.03 during the first 11 years and of $153,289.32 during the remaining 14 years prior to maturity, all such payments to be applied first to interest at the rate of 634% per annum and the balanee to principal. Optional Prepayments: No privilege to prepay prior to the end of the 11th loan year. Privilege to prepay the Note in full at the end of the 11th loan year and there- after at a premium starting at 344% at the end of the 11th loan year and decreasing % of 1% per year to the end of the 21st loan year and at a premium of 1% thereafter. Security: First deed of trust on the fee title of the Bank to the Land and the Parking Facility, on the fee title of the Company to the Worthen Building and on the leasehold estate of the Company under the Ground Lease and first chattel mortgage or other effective first lien on the Personal Property, subject only to the Ground Lease, the Sublease, the assignment of all of 364 the lessor’s right, title and interest in the Sublease and such other matters as New York Life may approve. Title Evidence: Title insurance to be furnished with re- spect to liens on real property in the amount of $7,140,000 by title insurance companies, and pursuant to policies, in form, substance and amount, satisfactory to New York Life. Attorney’s opinion to be furnished with respect to lien on fixtures and equipment by coun- sel, and pursuant to opinion in form and substance, satisfactory to New York Life. Sublease: The lessee’s interest under the Ground Lease ond all real property, fixtures and equipment acquired by the Company to be leased by the Company to the Bank. The Sublease to be an absolutely net, nonean- cellable lease for a term of at least 25 years from the date of the Note and to provide for nei rent payable in quarterly installments at least equal to the amounts of the quarterly mandatory payments required by the Note. The Sublease to provide for furnishing of finan- cial, operating and other statements by the Bank. Assignment of Sublease: The Company’s unencumbered right, title and interest in the Sublease to be assigned to New York Life to secure payment of the Note. Insurance: The Bank to maintain public liability, fire and extended coverage and boiler insurance and war dam- age insurance when a state of war or public emer- veney exists and, as required by New York Life, other insuranee when customarily carried by prudent owners of comparable properties. Deed of Trust Provisions: Deed of Trust to include, among other provisions, provisions satisfactory to New York Life relative to compliance with the terms of the Ground Lease and the Sublease, continuance of the corporate existence of the Company until full pay- ment of the Note and furnishing of financial and other 365 statements, and prohibiting the Company from engag- ing in any business other than owning, holding, leasing, maintaining and operating real property and fixtures and equipment incident thereto and from transferring the security except to an assuming domestic corpora- tion. Escrow: If, on the date of closing, more than 15% of the net rentable space in the Worthen Building is unfin- ished for occupancy, $5.00 per square foot of such un- finished space will be deposited by the Company in escrow upon terms and conditions satisfactory to New York Life until no more than 15% of such spaee re- mains unfinished. Expenses: All expenses incident to the transaction. in- cluding, without limitation, title insurance and survey charges, fees and disbursements of New York Life’s special counsel, recording fees, documentary stamp and other taxes and printing expenses are to be paid by you. Note Agreement: Agreement to be entered into between the Company and New York Life with respect to the issuance and purchase of the Note as soon as practica- ble containing representations and warranties and other provisions satisfactory to New York Life in- cluding, among other provisions, provisions satisfac- tory to New York Life relative to closing conditions and indemnification with respect to brokerage and other commissions, if any. 366 P. Ex. 18 Exhibit D Wortnen Bank & Trust Company, Lessor and Frank Lyon Company, Lessee Ground Lease Dated as of May 1, 1968 Grounp LEASE This Lease is dated as of May 1, 1968, between Worthen Bank & Trust Company (the ‘* Bank’’), an Arkansas bank- ing corporation with its principal office and place of busi- ness at Fourth and Main Streets, Little Rock, Arkansas, and Frank Lyon Company (the *‘Company’’), an Arkan- sas corporation with its principal office and place of busi- ness at West Sixty-fifth Street and Scott Hamilton Drive, Little Rock, Arkansas. 1. Leased Property. Upon and subject to the conditions and limitations set forth herein, the Bank leases to the Company, and the Company rents from the Bank, the real property (called ‘‘Tract A’’) described in Schedule 1 hereto. 2. Term of Lease. Subject to the further provisions hereof, this lease shall remain in full force and effect for a term commencing on May 1, 1968, and expiring at mid- 367 night on November 30, 2044*, unless the lease shall sooner terminate as provided in Paragraph 9 hereof. 3. Rent. The Company will pay to the Bank rent as fol- lows : (a) For the entire period commencing May 1, 1968, and ending November 30, 1994, the rent shall be the sum of $50.00, payable upon the execution of this (‘round Lease, receipt of which is hereby acknowledged. (b) For the period commencing December 1, 1994, and ending November 30, 1999, an anaual rent of $100,- 000 per year and one-fourth thereof shall be paid on the last day of each February, May, August and No- vember during each year of such period. (ec) For the period commencing December 1, 1999, and ending November 30, 2004, an annual rent of $150,000 per year and one-fourth thereof shall be paid on the last day of each February, May, August and November during each year of such period. (d) For the period commencing December 1, 2004, and ending November 30, 2009, an annual rent of $200,000 per year and one-fourth thereof shall be paid on the last day of each February, May, August and November during each year of such period. (e) For the period commencing December 1, 2009, und ending November 30, 2014, an annual rent of +200,000 per year and one-fourth thereof shall be paid on the last day of each February, May, August and November during each year of such period. (f) For the period commencing December 1, 2014, and ending November 30, 2034, an annual rent of * All dates contained herein, other than May 1, 1968, shall be chanyed ac. cordingly if the closing date in the Note Purchase Agreement shall be other than December 1, 1969. 368 $250,000 per year and one-fourth thereof shall be paid on the last day of each February, May, August and November during each year of such period. (g) For the period commencing December 1, 2034, and ending November 30, 2044, an annual rent of $10,000 per year and one-fourth thereof shall be paid on the last day of each February, May, August and November during each year of such period. 4. No Claims Against the Bank. Nothing contained in this Ground Lease be construed as giving the Company any right, power or authority to contract for or permit the performance of any labor or services or the furnishing of any materials or other property in such fashion as would permit the making of any claim against the Bank in re- spect thereof. 5. Indemnification by the Bank. During the term of the Building Lease dated as of May 1, 1968, between the Bank and the Company, the Bank will protect, indemnify and save harmless the Company from and against all liabilities, obligations, claims, damages, penalties, causes of action, costs and expenses (including attorney’s fees) imposed upon or incurred by or asserted against the Company in connection with this Ground Lease. If any action, suit or proceeding is brought against the Company by reason of any occurrence on or about Tract A during the term of said Building Lease, the Bank will at its expense resist and defend such action, suit or proceeding or cause the same to be resisted and defended by counsel designated by the Bank. 6. Payment of Taxes. The Bank (a) shall pay all taxes, assessments, water or sewer charges, license fee, inspec- tion fees, and other governmental charges with respect to Tract A, and (b) shall have the right to contest the amount or validity of such charge if such proceedings shall operate 369 to prevent or stay the sale of Tract A to satisfy such charge. 7. /nsurance. Any insurance with respect to Tract A shall be procured, maintained, and paid for by the Bank. 8. Condemnation of Property. In case of a taking of all or part of Tract A as a result of the exercise of the power of eminent domain, or the commencement of any proceed- ings or negotiations which might result in any such taking, the Company shall promptly give written notice thereof to the Bank, generally describing the nature and extent of such taking or the nature of such proceedings or ne- gotiations and the nature and extent of the taking might re- sult therefrom, as the case may be. In the absence of any judicial determination or allocation of values as be- tween Tract A and the improvements thereon, any payment or award received by the Bank or by the Company shall he held in trust by the recipient pending a determination of the respective interests of the Bank and the Company therein. The Company irrevocably authorizes and em- powers the Bank, in its name or otherwise, to file and prosecute what would be the Company’s claim for any such award or payment and to collect, give a receipt for, and retain the same as herein provided. The Bank will pay all costs, fees and expenses reasonably incurred by the Company in connection with any such taking and seeking and obtaining any award or payment on account thereof. %. Termination, This Ground Lease shall terminate (a) upon termination of the Building Lease dated as of May 1, 1968, between the Bank and the Company pursuant to Articles XVIII or XX thereof, or (b) upon the purchase by the Bank of the improvements on Tract A pursvaiit to Articles XVIT or XVIII or said Building Lease. 10. Mortgage or Assignment to Leasehold Mortgagec. The Company shall have the authority, without the consent 370 or approval of the Bank, to mortgage is leasehold interest and to assign this Ground Lease and the leasehold estate created thereby (including, but not limited to, an assign- ment in lieu of a foreclosure) to a Leasehold Mortgagee. As used herein, the term ‘‘Leasehold Mortgagee’’ shall mean each person, firm, corporation, or other entity ‘> whieh any part of the Company’s leasehold under this lease or any other rights (beneficial or otherwise) of the Company under this lease shall at the time have been con- veyed, conditionally or otherwise, by the Company under a mortgage or deed of trust. This Lease shall not be modi- fied, altered, amended or terminated without the written consent of any such Leasehold Mortgagee. 11. Default and Termination. Commencing December 1, 1994, if the Company shal! fail to pay any rent to the Bank when the same shall have become due and payable, and such failure shall continue for more than (30) days after receipt of written notice from the Bank, then the Bank at any time thereafter may at its option give a written termi- nation notice to the Company, and upon the date speci- fied in euch notice the term of this lease shall expire and terminate, and all rights of the Company under this lease shall cease, subject to the following limitations: (a) When giving notice to the Company with re- spect to any default under the provisions of this lease, the Bank shall also serve a copy of such notice upon any Leasehold Mortgagee by first class registered or certified mail, and no such notice to the Company shall he effective unless a copy of such notice is so served upon the Leasehold Mortgagee. (hb) If the Company shall fail to eure the default in the time prescribed herein, further notice to that effect shall likewise be given to the Leasehold Mortga- gee by first class registered or certified mail. 371 (¢) The Leasehold Mortgagee shall be allowed such additional time as may be required within which either to cure the default or to institute and complete fore- closure proceedings, or otherwise acquire title to the leasehold interest, and, so long as the Leasehold Mort- gagee shall be engaged either in curing the default or in proceeding to foreclose the mortgage or deed of trust, no such default shall operate or permit the Bank to terminate the lease. (d) If this lease should be terminated as provided herein, the Leasehold Mortgagee shall be entitled to receive a new lease for the remainder of the term upon the same terms and conditions as herein contained and having the same relative priority as the original lease if (i) the Leasehold Mortgagee agrees to take prompt steps to eure all defaults of the Company, (ii) the leasehold Mortgagee makes a written request upon the Bank for such new lease within thirty (30) days from the date of termination of this lease, and (iii) such written request is accompanied by payment to the Bank of all amounts then due to the Bank. (e) The Leasehold Mortgagee shall be granted the right to cure any default on the part of the Company and the further right to enter upon the premises and do all things necessary to that end, 12. Liability of Leasehold Mortgagee. The Leasehold Mortgagee shall not become personally liable for the obli- gations of this lease unless and until it becomes the owner of the leasehold estate by foreclosure, assignment in lieu of foreclosure or otherwise, and thereafter shall remain liable for such obligations only so long as the Leasehold Mortgagee remains the owner of the leasehold estate. If the Leasehold Mortgagee should become the owner of the leasehold estate, it may assign the lease without the Bank’s consent, and any purchase money mortgage delivered in 372 connection with any such assignment shall be entitled to the benefit of all of the provisions of this lease with re- spect to the mortgage or deed of trust of the leasehold estate. 13. No Waiver. No failure by the Bank to insist upon the strict performance of any term hereof or to exercise any right, power or remedy consequent upon a breach hereof, and no acceptance of full or partial rent during the continuance of any such breach, shall constitute a waiver of any such breach or of any such term. No waiver of any breach shall affect or alter this lease, which shall continue in full foree and effect, or the rights of the Bank with respect to any other then existing or subse- quent breach. 14. Notices. All notices and other communications here- under shall be in writing and shall be deemed to have been given when mailed by first class registered or certified mail, postage prepaid, addressed (a) if to the Bank, to Worthen Bank & Trust Company, at Fourth and Main Streets, Little Rock, Arkansas, or at such other address as the Bank shall have furnished to the Company in writ- ing, or (b) if to the Company, at West Sixty-fifth Street and Seott Hamilton Drive, Little Rock, Arkansas, to the attention of Mr. Ralph Cotham, or at such other address as the Company shall have furnished to the Bank in writ- ing, or (c) if to any Leasehold Mortgagee, at such address as such Leasehold Mortgagee shall have furnished in writ- ing to the Bank and the Company. 15. No Merger of Title. There shall be no merger of this lease or of the leasehold estate created by this lease with the fee estate in Tract A or any part thereof by reason of the fact that the same person, firm, corporation or other entity may acquire or own or hold, directly or indirectly, (a) this lease or the leasehold estate created by this lease or any interest in this lease or in any such leasehold estate 373 and ()) the fee estate in Tract A or in any part thereof or any interest in such fee estate. No such merger shall occur unless and until all persons, corporations, firms and other entities, including each Leasehold Mortgagee, having any interest in (i) this lease or the leasehold estate created by this lease and (ii) the fee estate in Tract A or any part thereof shall join in any written instrument effecting such merger and shall duly record the same. 16. General. Neither this lease nor any provision hereof may be changed, waived, discharged, or terminated oral- ly, but only by an instrument in writing signed by the par- ty against which enforcement of such change, waiver, dis- charge or termination is sought. All terms and provisions of this lease shall be binding upon and inure to the bene- fit of and be enforceable by the respective successors and assigns of the parties hereto. The paragraph headings in this lease are for purposes of reference only and shall not limit or define the meaning hereof. This lease may be exe- cuted in several counterparts, each of which is an original, but all of which shall constitute one instrument. In Wrirness Wuereor, the parties hereto have caused this lease to be executed and their respective corporate seals to be hereunto affixed and attested by their respective officers thereunto duly authorized. Attest: Worthen Bank & Trust Company /s/ Booker WortHen By /s/ Epwarp M. Penick Secretary President Frank Lyon Company Attest: By /s/ C. W. Apams /s/ M. R. Gopwix Secretary (Acknowledgements Omitted in Printing) 374 ScHEDULE 1 Or Grounp LEASE The land (Tract A) referred to in Paragraph 1 of the Ground Lease, dated as of May 1, 1968, between Worthen Bank & Trust Company, Lessor and Frank Lvon Company, Lessee, to which this Schedule 1 is attached, consists of a parcel in Little Rock, Pulaski County, Arkansas, and is more particularly described as follows: Becrxnrxnc at the Southwest corner of Lot 6, Block 84, Original City of Little Rock; thence northerly 160.33 feet along the West side of Lots 6, 5, 4 and 3 to a point 139.67 feet South of the Northwest corner of said Block 84; thence easterly 140.0 feet to a point on the East side of Lot 3, located 139.67 feet South of ibe Northeast corner of Lot 1; thence 43.88 feet ina southerly direction along the Fast side of Lots 3 and 4; thence easterly 160.0 feet to a point on the East side of Lot 9, located 116.45 feet North of the Southeast corner of Lot 7; thence southerly 116.45 feet along the ast side of Lots 9, 8 and 7 to the Southeast corner of Lot 7; thence westerly 300.0 feet along the South side of Lots 7 and 6 to the point of beginning, Suspsect, However, to certain restrictions, conditions and reservations contained in a Special Warranty Deed dated September 15, 1967, filed for record Sep- tember 15, 1967, and reeorded in Book 1009 at Page 537 of the records of the Cireuit Clerk of Pulaski County, Arkansas, executed by Housing Authority of City of Little Rock, Arkansas, to Worthen Bank & Trust Company. Less AND Except (a) the air space above the North 29.33 feet of Tract A beginning at an elevation of 318.23 feet above sea level and extending upward therefrom; excluding, however, the portion of said air space to be occupied —— 375 by the elevator shaft and stair well on the plans and specifications for construction of the improvements on Tract A, prepared by the architectural firm of Erhart, Eichenbaum, Rauch & Blass of Little Rock, Arkansas, and (b) an easement retained by Worthen Bank & Trust Company, its successors and assigns forever, upon the North 29.33 feet of Tract A to construct, repair and replace structural supports, columns or foundations thereon, together with the right of ingress and egress for such purposes; provided that Worthen Bank & Trust Company (or its successor in interest) shall repair any damage to improvements on Tract A as a result of the use of this easement and shall indemnify Frank Lyon Company (or its assignee) against any loss or damage caused by the use of this easement. f'urTHER SusJEct to liens for unpaid taxes and assess- ments and to unfiled mechanics’ and materialmens’ liens. 376 P. Ex. 19 Exhibit E Frank Lyon Company, Lessor AND WortHEN Bank & Trust Company, Lessee Building Lease Dated as of May 1, 1968 (Table of Contents Omitted in Printing) Buitpinc LEASE Lease, dated as of May 1, 1968, between Frank Lyon Company (Lessor’’), an Arkansas corporation having its principal office and place of business at West 65th Street and Scott Hamilton Drive,, Little Rock, Arkansas, and Worthen Bank & Trust Company (*‘ Lessee’’), an Arkansas banking corporation having its principal office and place of business at Fourth and Main Streets, Little Rock, Arkansas. ARTICLE 1 Leasep Property; Initia, TerM or LEASE Section 1.1 Upon and subject to the conditions and limitations set forth herein, Lessor leases to Lessee, and Lessee rents from Lessor, the following properties (collec- tively, the ‘‘Property’’) : (a) All buildings, structures and other improvements now or hereafter located on the land (Tract A’’) described in Schedule 1 hereto (collectively called the ‘‘Improve- ments’’); and 377 (b) All machinery and fixtures of every kind and na- ture whatsoever (collectively called the ‘‘ Building Service Equipment’’) which may be used or procured for use in connection with the operation and maintenance of the Im- provements, including but not limited to engines, motors, generators, dynamos, pumps and similar apparatus; fur- naces, boilers, incinerators, oil burners, radiators and pip- ing; stokers, heaters, tanks and heating equipment; wiring and electrical equipment; gas, electric, lighting, heating, plumbing, and bathroom fixtures, including pipes and con- duits; elevators, escalators and lifting apparatus; refrig- erating, air cooling, air conditioning, ventilating and sprinkling apparatus; partitions, built-in kitchen and res- taurant equipment; plants and shrubbery: and wall-to- wall carpeting and all other equipment and furnishings used or procured for use in connection with the operation and maintenance of the Improvements, together with all replacements thereof and additions thereto, but specifically excluding safety deposit boxes, vault doors, banking trade fixtures, furniture, china, glassware, silverware and simi- lar personalty; and, (ec) All of the leasehold estates, right, title and interest of Lessor created by that certain Ground Lease between Worthen Bank & Trust Company, as landlord, and Frank Lyon Company, as tenant, dated as of May 1, 1968, re- corded in the office of the Cireuit Clerk and Ex-Officio, Recorder of Pulaski County, Arkansas, on 1968, in Book-—— at page , in and to Tract A. Secrion 1.2. Subject to the further provisions hereof, this Lease shall remain in full force and effect for an initial term (the *‘Initial Term’’) commencing on May 1, 1968, and expiring at midnight on November 30, 1994,* unless this Lease shall sooner terminate as hereinafter provided, * To be adjusted accordingly if the Closing Date of the Note Purchase Agree- ment shal! be other than December 1, 1969. OE 378 with privilege unto Lessee, its successor and assigns, to extend the term of this Lease as provided in Section 2.1. ARTICLE II Extenpep Term or Lease Section 2.1. If Lessee is not in default in the perform- ance of any of its obligations hereunder, it shall have the options to extend the term hereof successively for eight (8) additional terms of five (5) years each upon the same terms as herein contained except that the Basic Rent pay- able during each such extended term shall be as set forth in Section 3.1 (b) and the number of extended terms per- mitted hereunder shall be reduced by one upon each such extension. Lease shall exercise each such option by giving written notice of such exercise to Lessor not less than twelve (12) months prior to the expiration of the term or the extended term, as the case may be, then in effect. Should Lessee fail to exercise any option to extend the term hereof, it shall have no right thereafter to exercise any succeeding option to extend the term hereof. ARTICLE IUl Basic Rent Section 3.1. Lessee will pay to Lessor or Assignee a net basic rent (**‘ Basie Rent’’) as follows: (a) For the portion of the Initial Term of this Lease prior to December 1, 1969,* no Basie Rent shall be payable, and for the balance of the Initial Term of this Lease a Basie Rent shall be payable as follows: (1) For the period commencing December 1, 1969,* and ending November 30, 1980,° $145,581.03 * To be adjusted accordingly if the Closing Date of the Note Purchase Agree- ment shall be other than December 1, 1969. 379 on each of the forty-four (44) Quarterly Install- ment Dates (as defined in Section 3.3 hereof) with- in such period. (2) For the period commencing December 1, 1980, and ending November 30, 1994,* $153,- 289.32 on each of the fifty-six (56) Quarterly In- stallment Dates within such period. (b) For each five-year extended term, a Basic Rent at an annual rate of $300,000. Such Basie Rent shall be payable in equal quarterly installments on the Quarterly Installment Dates within each such extended term. Section 3.2. The Basie Rent and other sums payable to Lessor or Assignee hereunder shall be payable in such coin or currency of the United States of America as at the time of payment shall be legal tender for the payment of public and private debts and shall be paid to Lessor or Assignee at Lessor’s address set forth above or to such agent or person or persons or at such other address as Lessor or Assignee from time to time may designate in writing. The Basie Rent shall be absolutely net to Lessor or Assignee so that this Lease shall vield to Lessor or Assignee the full amount of the installments of Basic Rent throughout the term of this Lease without deduction. Section 3.3. The Quarterly Installment Dates are the last day of each February, May, August and November during the term of this Lease or any extension thereof commencing February 28, 1970.* * To be adjusted accordingly if the Closing Date of the Note Purchase Agree ment sha!) be other than December 1, 1969. 380 ARTICLE IV AppiTionaL Rent Section 4.1. Lessee will also pay, from time to time as provided in this Lease as additional rent (‘‘ Additional Rent’’), (a) all other amounts, liabilities and obligations which Lessee herein assumes or agrees to pay, (b) interest at the rate of 10% per annum on such of the foregoing amounts, liabilities and obligations as are payable to Les- sor or Assignee and are not paid when due, from the due date until payment thereof, and (c) interest at the rate of 10% per annum on all overdue installments of Basic Rent, from the due date thereof until payment. In the event of any failure on the part of Lessee to pay any Additional Rent, Lessor or Assignee shal] have all the rights, powers and remedies provided for in this Lease or at law or in equity or otherwise in the case of non-payment of the Basic Rent. ARTICLE V No CounTercLaimM, ABATEMENT, ETc. Section 5.1. The Basic Rent, Additional Rent and all other sums payable by Lessee hereunder shall be paid without notice, demand, counterclaim, setoff, deduction or defense and without abatement, suspension, deferment, dimunition or reduction, and the obligations and liabilities of Lessee hereunder shall in no way be released, discharged or otherwise affected (except as expressly provided here- in) for any reason, including, without limitation, whether occurring before or after the Completion Date: (a) any defect in the condition, quality or fitness for use of the Property or any part thereof; (b) any change of grade of any abutting street; (c) any damage to or destruction of or any Taking (for a limited period or otherwise) of the Property or any part thereof; (d) any restriction, pre- vention or curtailment of or interference with any of the Property or any part thereof; (e) any title defect or en- cumbrance or any eviction or prospective eviction from the il 381 Property or any part thereof by title paramount or other- wise; (f) any change, waiver, extension, indulgence or other action or omission in respect of any obligation or liability of Lessor; (g) any bankruptcy, insolvency, re- organization, composition, adjustment, dissolution, liquida- tion or other like proceeding relating to Lessor or As- signee, or any action taken with respect to this Lease by any trustee or receiver of Lessor or of Assignee, or by any court, in any such proceeding; (h) any claim which Lessee has or might have against Lessor or Assignee; (i) any failure on the part of Lessor to perform or com- ply with any of the terms hereof or of any other agree- ment with Lessee; or (j) any other occurrence whatsoever, whether similar or dissimilar to the foregoing: whether or not Lessee shall have notice of knowledge of any of the foregoing. Except as expressly provided herein, Lessee waives all rights now or hereafter conferred by statute or otherwise to quit, terminate or surrender this Lease or the Property or any part thereof, or to any abatement, sus- pension, deferment, diminution or reduction of Basie Rent, Additional Rent or any other suin payable by Lessee here- under. All payments by Lessee to Lessor hereunder shall be final, and Lessee will not seek to recover any such pay- ment or any part thereof for any reason whatsoever. ARTICLE VI ConpDITION aND Use or Property Section 6.1. Lessor makes no representation or war- ranty with respect to the present or future condition of the Property or its fitness or availability for any particular use, and neither Lessor nor Assignee shall be liable for any latent or patent defect therein. Lessee may use the Property for any lawful purpose and will not do or per- mit any act or thing which is contrary to any Legal Re- quirement or Insurance Requirement, or which might im- pair the value or usefulness of the Property or any part EEE EEE 382 thereof, or which constitutes a public or private nuisance or abandonment or waste of the Property or any part thereof. ARTICLE VII Repairs AND MAINTENANCE OF PREMISES Section 7.1. Lessee convenants throughout the term of this J.ease, at Lessee’s sole cost and expense, to take good care of the Property and the adjoining sidewalks, curbs and vaults, and subject to the provisions of this Lease elsewhere set forth, to keep the same in good order and condition, excepting reasonable wear and tear, and prompt- ly at Lessee’s own cost and expense to make all neces- sary repairs, interior and exterior, structural and non- structural, ordinary as well as extraordinary, foreseen as well as unforeseen, and to shore the foundations and walls of the Property, and to do any other acts necessary for the preservation and safety of the Property if an exca- vation or other building operation shall be made upon any adjoining premises or streets. When used in this Section, the term ‘‘repairs’’ shall include replacements or renew- als when necessary, and all such repairs made by Lessee shall he at least equal in quality and class to the original work. Lessee shall keep and maintain all portions of the Property and the adjoining sidewaks in a clean and order- ly condition, free of accumulation of dirt, rubbish, snow and ice. ARTICLE VIII REPLACEMENT AND ReMovVAL or BUILDING SERVICE EQuIPMENT Section 8.1. All improvements and alterations to the Property, all replacements or renewals of Building Serv- ice Kquipment, and all personal property and fixtures ac- quired or installed by or on behalf of Lessee pursuant to 383 Lessee’s covenants in Section 7.1 hereof shall, immediate- ly upon completion, acquisition or installation thereof, be and become the property of Lessor without payment there- for by Lessor and shall be surrendered to Lessor upon the expiration or earlier termination of the term of this Lease. Lessee shall be entitled to remove any of Lessee’s per- sonal property, as defined in ARTICLE XXXI hereof, during the term of this Lease, or if the term shall end prior to the date herein specifically fixed for such termination, then within a reasonable time thereafter, but Lessee shall, at its own cost and expense, repair any and all damage to the Property resulting from or caused by their removal therefrom. ARTICLE IX Pusiiec Urimiry CHarGces Section 9.1. Lessee agrees to pay or cause to be paid all charges for gas, electricity, light, heat, power, water, storm and sanitary sewage, telephone and other communi- cation service used, rendered or supplied upon or in con- nection with the Property throughout the term of this Lease, and to indemnify Lessor and save it harmless against any liability or damages on such account. Lessee shall also at its sole cost and expense procure any and ail necessary permits, licenses or other authorizations re- quired for the lawful and proper installation and main- tenance upon the Property of wires, pipes, conduits, tubes and other equipment and appliances for use in supplying any such services to and upon the Property. ARTICLE X Mecuanics’ Liens Section 10,1. Lessee shall not suffer or permit any mechanics’ liens to be filed against the Property nor against Lessee’s leasehold interest in the Property by reason of 384 work, labor, services or materials supplied or claimed to have been supplied to Lessee or anyone holding the Prop- erty or any part thereof through or under Lessee. If any such mechanics’ lien shall at any time be filed, Lessee shall, within thirty (30) days after notice of the filing thereof, cause the same to be discharged of record by payment, deposit, bond, order of a court of competent jurisdiction or otherwise, or deposit with Lessor or As- signee the amount of such lien together with all interest and penalties that may or might accrue thereon (any bal- ance remaining after the discharge of such lien of record to be returned, without interest, to Lessee). If Lessee shall fail to cause such lien to be discharged within the period aforesaid, then, in addition to anv other right or remedy of Lessor, Lessor, if at any time Lessor believes that the nonpayment of such lien may subject the Property or some part thereof to forfeiture or loss, may, but shall not be obligated to, discharge the same either by paying the amount claimed to be due or by procuring the discharge of such lien by deposit or by bonding proceedings, and in any such event Lessor shall be entitled, if Lessor so elects, to cormpel the prosecution of an action for the fore- closure of such mechanics’ lien by the lienor and to pay the amount of the judgment for and in favor of the lienor with interest, costs and allowances. Any amount paid by Lessor, in excess of any amount so deposited with Lessor or Assignee, for any of the aforesaid purposes with in- terest thereon at the rate of ten per centum (10%) per annum from the date of payment shall be repaid by Les- see to Lessor on demand, and if unpaid may be treated as Additional Rent as provided in Section 4.1 hereof. Nothing in this Lease contained shall be deemed or construed in any way as constituting the consent or request of Lessor, express or implied, by inference or otherwise, to any con- tractor, subcontractor, laborer or materialman for the performance of any labor or the furnishing of any mate- rials for any specific improvement, alteration or repair of - 385 or to the Property or any part thereof, nor as giving Lessee a right, power or authority to contract for or per- mit the rendering of any services or the furnishing of any materials that would give rise to the filing of any me- chanics’ lien against the Property. ARTICLE XI INDEMNIFICATION OF LESSOR Section 11.1. Lessee agrees to indemnify and save Les- sor harmless against and from any and all claims by or on behalf of any person or persons, firm or firms, corpora- tion or corporations, arising from the conduct or manage- ment of or from any work or thing whatsoever done in and on the Property and will further indemnify and save Lessor harmless against and from any and all claims arising during the term of this Lease from any condition of the Property or any street, curb or sidewalk adjoining the Property, or of any vaults, tunnels, passageways or space therein or appurtenant thereto, or arising from any breach or default on the part of Lessee in the per- formance of any covenant or agreement on the part of Lessee to be performed, pursuant to the terms of this Lease, or arising from any act or negligence of Lessee, or any of its agents, contractors, servants, employees, or licensees or arising from any accident, injury or damage whatsoever caused to any person, firm or corporation oc- curring during the term of this Lease, in or about the Property, or upon or under the sidewalks and the land ad- jacent thereto, and from and against all costs, expenses and liabilities incurred in or in connection with any such claim or action or proceeding brought thereon; and in case any action or proceeding be brought against Lessor by reason of any such claim, Lessee upon notice from Les- sor convenants to resist and defend such action or pro- ceeding and to employ counsel therefor satisfactory to Lessor. Lessee covenants and agrees to pay, and to in- 386 demnify Lessor against, all legal costs and charges in- cluding counsel fees lawfully and reasonably incurred in obtaining possession of the Property after default of Les- see or after Lessee’s default in surrendering possession upon expiration or earlier termination of the term of this Lease or enforcing any covenant or agreement of Lessee herein contained. ARTICLE XII AppiTionaL Rent, PayMent or Taxes, ASSESSMENT, Etc. Sr ‘TION 12.1. Lessee covenants and agrees to pay as Additional Rent (subject as hereinafter provided), before any fine, penalty, interest or cost may be added thereto for the nonpayment thereof, all real estate taxes, personal property taxes, assessments, water rates and water charges, and other governmental levies and charges, gen- era, and special, ordinary and extraordinary, unforeseen as well as foreseen, of any kind and nature whatsoever (all of which taxes, assessments, water rates or water charges, and other governmental levies and charges are hereinafter referred to as ‘‘imposition”’ or ‘‘impositions’’) which are assessed, levied, confirmed, imposed or bosses a lien upon the Property or any part thereof or become payable during the term of this Lease. If, by law, any such imposition is payable, or may at the option of the taxpayer be paid, in installments (whether or not interest shall accrue on the unpaid balance of such imposition), Lessee may pay the same (and any accrued interest on the un- paid balance of such imposition), in installments as the samme respectively become due and before any tine, penalty, interest or cost may be added thereto for the non-payment of any such installment and interest. Any imposition relat- ing to a fiscal period of the taxing authority, a part of which period is included within the term of this Lease and a part of which is included in a period of time after the expira- wd 387 tion of this Lease shall (whether or not such imposition shall be assessed, levied, confirmed, imposed or become a lien upon the Property, or shall become payable during the term of this Lease) be adjusted between Lessor and Lessee as of the expiration of this Lease. Section 12.2. Nothing in this Lease contained shall re- quire Lessee to pay any franchise, corporate, estate, in- heritance, succession, capital levy or transfer tax of lessor, or any income, profit or revenue tax or any other tax, assessment, charge or levy upon the rent payable by Les- see under this Lease, nor shall any tax, assessment, ch-rge or levy of the character hereinabove in this Section de- seribed he deemed to be included within the term **impo- sition’ as defined in Section 12.1. If at any time during the term of this Lease under the laws of the State of Ar- kansas or any political subdivision thereof a tax or excise on rents is levied or assessed against Lessor or the Basie Rent, as a substitution in whole or in part for taxes as- sessed or imposed by said State or any political subdivi- sion thereof on land, buildings or personal property, the same shall he deemed to be included within the term ‘‘im- position’? as defined as aforesaid, and Lessee covenants (but to the extent only that such substitution so far as as- certainable relieves Lessee from the payment of imposi- tions as in Section 12.1 provided) to pay and discharge such tax or excise on rent in accordance with the provisions of Section 12.1 in respect of the payment of impositions. If Lessee shall be required by law to pay, and pursuant to such requirement does pay, any such tax, assessment, charge or levy in this Section deseribed Lessor shall, upon written request, reimburse Lessee for any such payments with interest at six per centum (6%) per annum (other than payments made by Lessee pursuant to the provisions in the preceding sentence in respect of a tax or excise on rents levied or assessed as a substitution in whole or in part for taxes assessed or imposed on land, buildings or personal property). 388 Section 12.3. Within a reasonable time after a request therefor is made by Lessor, Lessee covenants to furnish to Lessor for its inspection official receipts of the appro- priate taxing authority, or other proof satisfactory to Les- sor, evidencing the payment of any imposition payable by Lessee as provided in this Article. Section 12.4. Lessee shall have the right to contest the amount or validity of any such imposition by appro- priate proceedings. Lessee shall, nevertheless, promptly pay such imposition in accordance with the terms and provisions of this Lease, and nothing herein shall imply any right on the part of Lessee to postpone or defer such payment for any such purpose, unless such proceedings shall operate to prevent or stay the collection of the imposi- tion so contested and the sale of the Property, or any part thereof, to satisfy the same. Lessee shall set aside on its hooks adequate reserves with respect to such contested liability and shall fursish such security, if any, as may be required in the proceedings or reasonably requested by Lessor or Assignee, which security may include a deposit by Lessee with Lessor of a sum equal to the amount so contested and unpaid together with all interest and penal- ties in connection therewith and all charges that may or might be assessed against or become a charge on the prop- erty, or any part thereof, in said proceedings. Upon the termination of such proceedings, Lessee shall pay the amount of any such imposition, or part thereof, as finally determined in such proceedings, the payment of which may have been deferred during the prosecution of such proceedings, together with any costs, fees, interest, penal- ties or other liabilities in connection therewith, and up- on such payment, Lessor shall return the amount of any deposit above referred to without interest. If at any time during the continuance of such proceedings Lessor shall deem the amount deposited with it insufficient, Lessee shall, upon demand, deposit with Lessor such additional sum eR ee t tilt Aili igi alae mmm 447 densome contract materially and adversely affecting the business, operations or financial condition of the Company. H. The Company has not, either directly or through any agent, offered the Note or any similar security for sale to, or solicited any offer to buy the Note from, or other- wise approached or negotiated in respect thereof with, any person or persons other than the Purchaser, and the Com- pany agrees that neither it nor any agent on its behalf will sell or offer the Note to, or solicit any offer to buy the Note from, or otherwise approach or negotiate in respect thereof with, any person or persons whomsoever so as thereby to render the issuance and/or sale of the Note a violation of Section 5 of the Securities Act of 1933, as amended. I. All representations and warranties made by the Company herein and in any certificates delivered pursuant hereto shall survive the execution of the Deed of Trust and the Assignment and sale and delivery of the Note to the Purchaser herein provided for, notwithstanding any inquiry or investigation which the Purchaser may make in respect of the truth or accuracy of such representations and warranties. 3. Purchase of the Note. Subject to the terms of this Agreement, the Company hereby agrees to sell to the Pur- chaser, and the Purchaser agrees to purchase from the Company on such date after the completion of construction of the Building (as defined in paragraph 4D) and the com- pletion of construction of the Garage Facility (except for space in the balding which shall not have been finished for occupancy), but in no event later than December 1, 1969, as the Company shall designate by not less than thirty (30) days notice in writing to the Purchaser, the Note in the principal amount of $7,140,000. The Company agrees that such notice shall be accompanied by certificates itemizing, in detail, the Total Cost of the Building (as defined in para- a 448 graph 4D) and the Total Cost of the Mortgaged Property (as defined in the form of Consent and Agreement annexed hereto and marked Exhibit F) and showing the amounts paid and the amounts remaining to be paid in connection therewith. Anything herein to the contrary notwithstanding, the Company shall be entitled to defer the closing date for a period not exceeding the lesser of one hundred eighty — (180) days or the actual number of days by which con- struction of the Building shall have been delayed due to strikes, acts of God, governmental restrictions, enemy ac- tion, civil commotion, fire, unavoidable casualty or other causes beyond the control of the Company, provided that lack of funds shall not be deemed a cause beyond the con- trol of the Company, and provided further that the Pur- chaser shall in no event be required to purchase the Note during the period from December 1, 1969 to January 15, 1970. The Company will make delivery of the Note to the Pur- chaser by delivering the Note to the Purchaser at the Building, Center and Capitol Streets, Little Rock, Arkan- sas, against payment therefor in New York funds. The de- livery of and payment for the Note as aforesaid are herein referred to as ‘‘the closing’’, and the date thereof as ‘‘the closing date’’. The Purchaser represents that it is purchasing the Note for its own account, for investment, and not with a view to the distribution thereof, but subject, nevertheless, to the disposition of its property being at all times within its control. 4. Conditions. The obligation of the Purchaser to pur- chase and pay for the Note shall be subject to the following conditions : A. The Company shall have a good and clear record and marketable title in fee simple absolute to the Building atte cutied —— — a - ss 449 and an unencumbered leasehold estate under the Ground Lease free and clear of all jens, charges and encumbrances prior to or on a parity with the lien of the Deed of Trust except: (1) the matters set forth in the granting clause of the Deed of Trust; (2) Permitted Encumbrances, as defined in Section 1.1 (10) of the Deed of Trust; and (3) the Building Lease. B. The Company shall have leased Tract A for a term commencing on or prior to the closing date and ending not less than seventy-five (75) years from the commencement date, substantially in the form and on the terms of Exhibit D hereto annexed, subject, however, to any such changes as shall be mutually agreed upon by the parties hereto and their respective counsel; the Ground Lease shall have been duly filed for record in each proper office in the State of Arkansas and shall be in full force and effect; and such leasing of Tract A shall have been approved by the Hous- ing Authority of the City of Little Rock, Arkansas. C. The Company shall have leased the Building to the Bank for a term commencing on or prior to, and ending not less than twenty-five (25) vears after, the closing date under a Building Lease substantially of the form and terms of Exhibit E hereto annexed, subject, however, to such changes as shall be mutually agreed upon by the parties hereto and their respective counsel; and the Building Lease shall have been duly filed for record in each proper office in the State of Arkansas and shall be in full force and effect. If the closing shall take place on a date other than Decem- ber 1, 1969, all of said dates in Exhibit E shall be revised and adjusted appropriately to the mutual satisfaction of the parties. 450 D. The construction and equipping of the Building shall have been completed in accordance with plans and specifications furnished to and approved by the Purchaser, and all indebtedness for labor, wages, materials and sup- plies in connection with said construction and equipping shall have been paid in full or arrangements therefor satis- factory to the Purchaser shall have been made. ‘otham, Wyman & Howland, Certified Public Accountants, Little Rock, Arkansas, shall have certified to the Purchaser the Total Cost of the Building (as hereinbelow defined) in reasonable detail and the amount thereof shall be at least $7,640,000. The ‘‘completion of construction of the Build- ing’’ shall be established by the delivery to the Purchaser of a certificate (in form and substance satisfactory to the Purchaser) of Erhart, Eichenbaum, Rauch & Blass, Archi- tects, to that effect, and of the certificate of the Housing Authority of the City of Little Rock, Arkansas, required by Paragraph 12 of that certain Contract for Sale of Land (Offer and Acceptance), Central Little Rock Project, ARK R-12, dated September 1, 1966. For all purposes of this Agreement, ‘‘Total Cost of the Building’’ shall mean the aggregate of the costs reasonably and necessarily incurred and paid by the Company in con- nection with said construction and equipping of the Build- ing and charged or properly chargeable to the property accounts of the Company in accordance with generally ac- cepted accounting principles, including (but only if and to the extent the same is so charged and chargeable and conforms to such accounting principles) architect's fees and charges for labor, wages, salaries, materials, supplies, superintendence, insurance, accountants’ and attorney’s fees and expenses, interest on the construction loan, and all other items (other than operating, maintenance or start- up expenses) in connection with sueh construction and equipping and acquisition and so charged and properly chargeable and conforming to such accounting principles. ee ee ee 451 Compliance with the provisions of this Subsection shall be established by such certificates of architects, engineers and contractors and officers of the Company as shall be satisfactory in form and substance to the Purchaser. Be- fore accepting any certificates as evidence of the com- pliance with the provisions of this Subsection, the Pur- chaser in its discretion may make any further inquiry or investigation into the truth or accuracy of the matters evi- denced by any certificate furnished to the Purchaser as it may deem proper. If the Purchaser shall determine to make any such further inquiry or investigation, it shall be en- titled to examine the books and records of the Company, personally or by agent or attorney, and unless satisfied with or without such examination of the truth or accuracy of the statements contained in such certificates, it shall be under no obligation to accept such certificates as evidence of such compliance. E. The Deed of Trust shall have been duly exeeuted and delivered in the form and substance aforesaid: the Deed of Trust or notices or financing statements with re- spect thereto shall have been duly filed for record in each proper office in the State of Arkansas in which the Deed of Trust or such notices or financing statements should be filed for record and recorded or filed in order to perfect and preserve the lien of the Deed of Trust on the property intended to be covered thereby ; prior notice of the Deed of Trust shall have been given to the Housing Authority of the City of Little Rock, Arkansas; the Assignment shall have been duly executed and delivered in form and sub- stance aforesaid; the Assignment shal] have been duly filed for record in each proper office in the State of Arkansas in which the Assignment should be filed for record and re- corded or filed in order to perfect and preserve the assign- ment of the Building Lease; all other instruments relating to the issuance and sale of the Note and all proceedings taken on or prior to the closing date in connection with the performance of this Agreement shall be satisfactory 452 to the Purchaser and its special counsel named in Sub- section N of this Section; no Event of Default (as defined in Section 17.1 of the Deed of Trust) shall have oceurred (which shall not have been remedied) and no event which, with the lapse of time or with the notice and lapse of time specified in said Section 17.1 would become an Event of Default thereunder shall have occurred which shall not have been remedied; and the Purchaser shall have received copies of all such documents or other evidence as it may reasonably request in order to establish the consummation of such transactions and the taking of all corporate pro- ceedings in connection therewith, in form (as to certifica- tion and otherwise) and substance satisfactory to the Pur- chaser and its said special counsel. F. The Purchaser shall have received, not less than five (5) days prior to the closing date, a complete set of ‘as built’’ plans and specifications for the Building. G. The Purchaser shall have received a policy or poli- cies of title insurance insuring the interest of the Purchaser in the Mortgaged Property in an aggregate amount at least equal to the principal amount of the Note purchased pursuant to paragraph 3, issued by a title company or title companies, and in form and substance, satisfactory to the Purchaser and its special counsel, covering the Mort- gaged Property. H. The Purchaser shall have received policies of in- surance or certified copies thereof or certificates therefor (or other evidence satisfactory to the Purchaser that the below-mentioned insurance has been effected), satisfactory endorsed or written to reflect the Purchaser’s interest, issued by insurers of recognized responsibility and in form and amount satisfactory to the Purchaser (but in no event in an amount greater than provided for in the Deed of Trust) covering the risks specified in Subsections A, B (to the extent obtainable) C, D, and E of Section 10.1 of the Deed of Trust. >} : : ; 5 453 I. The Consent and Agreement, in the form attached hereto as Exhibit F, shall have been duly authorized, exe- cuted and delivered to the Purchaser by the Bank. J. All representations and warranties in paragraph 2 and in the Consent and Agreement attached as Exhibit F shall (except as affected by transactions contemplated by this Agreement) be true on the closing date with the same effect as though such representations and warranties had been made on and as of the closing date; the Company shall have performed all agreements on its part required to be performed under this Agreement and the Bank shall have performed all agreements required on its part to be per- formed under the Consent and Agreement on or prior to the closing date; all of the conditions under the Consent and Agreement shall have been fulfilled on or before the closing date; and the Purchaser shall have received a satis- factory certificate or certificates signed by appropriate of- ficers of the Company and/or the Bank, as to all questions of fact involved in the conditions set forth in this Sub- section. KX. At the time of the closing, there shall exist no ma- terial violations of law or municipal ordinances or orders or requirements of the State of Arkansas, or of any mu- nicipal department or other governmental! authority having jurisdiction, affecting any of the Mortgaged Property, and the Mortgaged Property shall comply in all material re- spects with the building restrictions and zoning regulations of the City of Little Rock, Arkansas. L. The Company shal! have delivered to the Pur- chaser copies of the consolidated balance sheets of the Company and its consolidated subsidiaries for the fiseal years ending December 31, 1967, and December 31, 1968, and the related consolidated statements of income and sur- plus for such fiseal years, certified by independent certified publie accountants. Said balance sheets and related state- ments (including any notes thereto) shall be correct and 454 complete and truly represent the financial condition of the Company and such subsidiaries as at the respective dates indicated and the results of the operations of the Company and such subsidiaries for the respective periods indicated, and shall have been prepared in accordance with sound accounting practice consistently maintained throughout the periods indicated. Such balance sheets and related state- ments shall show no material adverse changes in the finan- cial condition of the Company from that set forth in the balance sheet of the Company as at December 31, 1966, heretofore delivered to the Purchaser and no material ad- verse changes affecting the operations of the Company. M. The Purchaser shall have received, not less than five (5) days prior to the closing date, a survey by a sur- veyor, licensed as such in the State of Arkansas and ae- ceptable to the Purchaser, of Tract A and Tract B, showing the location of all buildings and improvements thereon, duly certified as an accurate survey as of a date not prior to the completion of the construction of the Building and the Garage Facility and not more than twenty (20) days prior to the closing date, and showing no material en- croachments, rights of way or easements on Tract A or Tract B or any material encroachments by the buildings or other improvements included in the Mortgaged on ad- joining property, except such as may be approved by the Purchaser on or prior to the closing date, and showing no other state of facts which would render the title to the Mortgaged Property unmarketable, N. The Purchaser shall have received from Messrs. House, Holmes and Jewell, who are acting as special coun- sel for the Purchaser in connection with this transaction, an opinion in scope and substance satisfactory to the Pur- chaser, as to, (1) the due incorporation and existence of the Com- pany and its corporate power to own property and to carry on its business as set forth in paragraph 2A; ee. ea 455 (2) the due incorporation and existence of the Bank and its corporate power to own, lease and sublease property and to carry on its business as set forth in the Consent and Agreement; (3) the due authorization, execution and delivery by the Company of this Agreement and the legality, validity and enforceability as against the Company of this Agreement in accordance with its terms; (4) the due authorization, execution, and delivery of the Consent and Agreement and as to the legality, validity and enforceability of said Consent and Agree- ment against the Bank in accordance with its terms; (5) the due authorization, execution and delivery of the Deed of Trust and the legality, validity and en- forceability thereof in accordance with its terms and as to the creation by the Deed of Trust of the lien it purports to create upon the Mortgaged Property and the Company’s interest in the Building Lease; (6) the due auth: rization, execution and delivery of the Assignment and the legality, validity and enforce- ability thereof in accordance with its terms; (7) the due authorization, execution and delivery and issue of the Note and the legality, validity and en- forceability thereof in accordance with its terms and the availability to the holder thereof of the benefits and security afforded by the Deed of Trust and the Assignment in accordance with the terms of the Deed of Trust, the Assignment and the Note; (8) the due authorization, execution and delivery of the Building Lease and the legality, validity and en- forceability thereof in accordance with its terms; (9) the due authorization, execution and delivery of the Ground Lease and the legality, validity and en- forceability thereof in accordance with its terms; 456 (10) the exemption of the issuance, sale and deliv- ery of the Note from the registration requirements of the Securities Act of 1933, as amended, and of the the Trust Indenture Act of 1939, as amended, and the Deed of Trust from the qualification requirements of availability to the Purchaser under existing laws of such exemptions in respect of any resale of the Note by the Purchaser if the Purchaser should in the future deem it expedient to sell the same; (11) as to the adequacy of the property descriptions contained in the Deed of Trast, the Ground Lease and the Building Lease for the purpose of the Deed of Trust, the Ground Lease and the Building Lease, and the compliance of the form of the Deed of Trust, the Assignment, the Ground Lease and the Building Lease with all applicable laws of the State of Arkansas, in- eluding applicable recording laws; (12) as to the formal approval of the Board of Gov- ernors of the Federal Reserve System to the consum- mation of the transactions contemplated by that cer- tain agreement (hereinafter called the ‘‘Sales Agree- ment’’) dated as of May 1, 1968 between the Company and the Bank and of the financing and leasing trans- actions contemplated by this Agreement, or to the effect that no such approval is required; (13) as to the formal approval of the Arkansas Bank Commissioner to the consummation of the trans- actions contemplated by the Sales Agreement and of the financing and leasing transactions contemplated by this Agreement, or as to the written ruling of said Commissioner that no such approval is required; (14) to the effect that the Deed of Trust or notices or financing statements with respect thereto have been duly filed for record and recorded and filed in each proper office in the State of Arkansas in which the 457 Deed of Trust or such notices and financing statements should be filed and recorded in order to perfect and preserve the lien of the Deed of Trust on the property intended to be covered thereby, that the Assignment has been duly filed for record and recorded and filed in each proper office in the State of Arkansas in which the Assignment should be filed and recorded in order to perfect and preserve the asignment of the Building Lease as provided for in the Assignment, that the Building Lease has been duly filed for record and re- corded in each proper office in said State and that all taxes, recording and filing fees and other charges re- quired to be paid in connection therewith or in con- nection with the issuance of the Note have been paid, and as to the necessity of any periodic or other re- recording, refiling or filing of the Deed of Trust or notice or continuation statements with respect thereto in order to preserve and protect such lien, and as to the necessity of any periodic or other re-recording, re- filing or filing of the Assignment in order to preserve and protect the assignment of the Building Lease; (15) to the effect that upon foreclosure of the lien created by the Deed of Trust and after the expiration of the statutory period of redemption, the Building Lease and the obligations of the lessee thereunder will continue in full force and effect unaffected by such foreclosure and the Purchaser of the Mortgaged Prop- erty upon such foreclosure will become the lessor under the Building Lease and will be entitled to exercise all the rights of the lessor thereunder without the neces- sity of any attornment by the lessee thereunder; (16) such other matters incident to the transactions hereby contemplated as the Purchaser may reasonably request. 458 O. The Purchaser shall have received from Messrs. Rose, Meek, House, Barron, Nash & Williamson, counsel for the Company, an opinion in scope and substance satis- factory to the Purchaser and its said special counsel as to all matters specified in Subsection N of this Section, except N(2), N(4), N(11) as it pertains to Trace B, N(12), and N(13). 5. Recordation. The Company agrees that, as soon as reasonably possible after the closing, it will, at its own expense, cause to be delivered to said special counsel for the Purchaser official evidence of the recordation and filing of the Deed of Trust and notices or financing statements with respect thereto and the Assignment, the Ground Lease and the Building Lease in the manner specified in the above-mentioned opinion of said special counsel for the Purchaser, showing that all taxes, recording fees and other charges in connection therewith have been paid and show- ing in reasonable detail the pertinent recordation ana filing data. The Company also agrees to re-record, refile or file the Deed of Trust or notices or continuation statements or financing statements with respect thereto wherever neces- sary in order to preserve and protect the lien of the Deed of Trust, and to re-record, refile or file the Assignment wherever necessary in order to preserve and protect the assignment of the Building Lease as provided for in the Assignment. 6. Financial Statements and Information. So long as the Purchaser shall hold the Note, the Company will fur- nish to the Purchaser as soon as available, and in any event within 120 days after the end of each fiscal year, be- ginning with the fiscal year ending December 31, 1969, two copies of its balance sheet as of the end of such fiscal year, setting forth in comparative form the corresponding fig- ures as at the end of the previous fiscal year, and two copies of its income and surplus statements for such fiscal year, setting forth in comparative form the corresponding nd veltesite A es 459 figures as at the end of the previous fiscal year. Such bal- ance sheets and statements shall be prepared in reasonable detail in accordance with good accounting practice, and shall be accompanied by a report and opinion of independ- ent certified public accountants of recognized standing se- lected by the Company. Such reports and opinions of such accountants shall include a statement that such account- ants, in making the audit necessary for such report, have obtained no knowledge of any default by the Company in the fulfillment of any of the terms, covernants, provisions or conditions of Sections 10.1 and 20.1 of the Deed of Trust, or, if such accountants shall have obtained knowledge of any such default, they shall disclose in such statements the default or defaults and the nature thereof. Such reports of such accountants shall also inelude such other reports, schedules or information as may be furnished to the Com. pany by such accountants in connection with such audit. It is understood that the Purchaser shall be free to de- liver copies of the financial statements referred to in this Section, as well as any other information or reports fur- nished to the Purchaser pursuant to this Agreement, to any regulatory body or commission to whose jurisdiction the Purchaser may be subject. 7. Inspection of Properties and Books. From the execu- tion and delivery of this Agreement to the closing and thereafter so long as the Purchaser shall hold the afore- said Note, the Purchaser shall have the right to visit and inspect any of the properties subject to the lien of the Deed of Trust, to examine the books of account of the Com- pany and to diseuss the affairs, finances and accounts of the Company with, and to be advised as to the same by, its Officers, all at such reasonable times and intervals as the Purchaser may desire. 8. Expenses. The Company agrees, whether or not the transactions hereby contemplated shall be consummated, to pay the fees and disbursements of Messrs. House, Holmes 460 and Jewell for their services to the Purchaser with relation to this Agreement, including the furnishing of the opinions referred to herein and any other transactions, to pay the reasonable expenses of any inquiry or investigation pur- suant to paragraph 4D, to pay the charges and expenses in connection with the furnishing of the survey and of the title insurance pursuant to Subsections G and M of para- graph 4, and to pay all printing, filing, recording and other expenses in connection with such transactions, and to re- imburse the Purchaser for any out-of-pocket expenses in connection therewith. 9. Communications. Except as otherwise expressly pro- vided herein, all communications provided for herein shall be delivered or mailed addressed as follows (or at such other address as may have been furnished in writing to the parties hereto): To the Company: Frank Lyon Company Attention: Mr. Ralph Cotham, Jr., Treasurer 6500 Seott Hamilton Drive Little Rock, Arkansas 72206 To the Purchaser: New York Life Insurance Company Attention: Vice-President in Charge of Real Estate and Mortgage Loans, 51 Madison Avenue New York, New York 10010 10. Brokerage Commission. The Company agrees to in- demnify and hold the Purchaser harmless against any claim for brokerage commission or other such compensa- tion which may be made against the Purchaser by any per- son, firm or corporation in connection with transactions - i : a é 461 hereby contemplated. The Purchaser represents that it has dealt with no person, firm or corporation other than the Company and the Bank in connection therewith. 11. Successors and Assigns. All covenants and provi- sions of this Agreement by or for the benefit of the parties hereto shall bind and inure to the benefit of their respective successors and assigns. 12. Applicable Law. This Agreement shall be construed and enforceable in accordance with the laws of the State of Arkansas. 13. Counterparts. This Agreements may be executed in any number of counterparts. Ix Witness Wuereor, the parties hereto have caused this Agreement to be duly executed. New York Lire Insurance Company By: /s/ Ricnarn W. Boren, Jr. Vice President Frank Lyon Company By: /s/ C. W. Asrams President 462 P. Ex. 21 Buitpinc Loan AGREEMENT Tuts Acreement made this 14th day of May, 1968, be- tween Frank Lyon Company, an Arkansas corporation, having it principal office at West 65th Street and Scott Hamilton Drive, Little Rock, Arkansas (the ‘‘Borrower’’), and First Nationat City Bayk, a national association, created and existing under the laws of the United States of America, and having a principal office at 399 Park Avenue, Borough of Manhattan, City, County and State of New York (the ‘‘Lender’’) ; WHITNESSETH: Wuenreas, on a certain parcel of land located at Center and Capitol Streets, Little Rock, Arkansas (the ‘*Land’’), there is to be constructed a 24-story and single basement bank and office building with 6 elevators and about 217,860 square feet of net rentable space (‘*Worthen Building’’), and a separate parking facility (‘‘Parking Facility’’) ; and Wuereas, the Borrower has made application to the lender for a construction loan (the *‘Loan’’), in the prin- cipal amount of $7,000,000.00 to assist in the construction of the Worthen Building; and Wuereas, Worthen Bank & Trust Company (** Wor- then’’) owns the Land upon which the Worthen Building and the Parking Facility are to be built; and Wuereas, Worthen has agreed to sell the Worthen Building to the Borrower as construction procedes; and Wuereas, Worthen, as lessor, and the Borrower as lessee, have entered into a lease (the ‘‘Ground Lease’’), of the land underlying the Worthen Building dated as of May 1. 1968, and recorded in the Cireuit Clerk’s office of Pulaski County of Arkansas; and ee 463 Wuerzas, the Borrower as lessor, and Worthen as lessee, have entered into a lease (the ‘*Building Lease’’) of the Worthen Brilding and certain items of equ'pment in- stalled there n, including a sublease of the land underlying the Worthen Building, dated [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385004_1672%3A03. Public record. Not legal advice.