March 15, 1968MINUTES OF COUNCIL MEEfINQ OF THE COUNCIL OF THE CITY OF FTFST MEliPHIS, ARKANSAS,
HAD AND HELD ON MARCH 15, 1968.
The City Council of the City of West Memphis, Arkansas, met in special evasion at
its regular meeting place in Weat Memphis, Arkansas, at 9:00 o'clock P.M. on the 15th
day of March, 1968. The following were presents Mayor Bob Eden,. presiding, and
Aldermen: 0. C. Haley, Pritchard Horton, Kirby Leggett, Paul Matthews, C. T. Rodgers, F. C. Weis,
and R. L. Smith; and City Attorney W. H. Dillahunty.
Nbaent: Alderman: 0. I. Bollinger.
The Notice for the Special Meeting was read by Mayer Eden sa follows:
Tos 0. I. Bollinger, 0. C. Haley, Pritchard Horton, Kirby Leggett, Paul Matthews,
C. T. Rodgers, Robert L. Smith, F. C. Weis, Aldermen Of The City Of West Memphis
You are hereby notified there will be a Special Meeting of the Council of the
City of Weet Memphis at 9s00 P.M., or as soon thereafter ae possible, Friday, March 15,
1968, in the City Hall in Weat Memphis, Arkansas, for the purpose of an Agreement for
the sale and purchase of Industrial Revenue Bonds for Southwest Chemical Corporation,
City of West Memphis, and Financial Consultants of America, Inc.
Witness n4 hand this 15th day of March, 1968.
~s-x-st~
The Mayor announced Alderman 0. I. Bollinger-ie a patient in the-Intensive-Care
Unit of Crittenden Memorial Hospital, and the Notice of Meeting with Waiver had been
sent to the Hospital for Mr. Bollinger'e signature, however, due to Mr. Bollinger's
condition special permission xould have to be secured from the attending physician to
see Mr. Bollinger, and the Mayor did not think the request should be made under the
circumstances.
City Attorney Dillahunty advised the Council in hie opinion the Special Meeting
xould not be a duly constituted meeting if the Waiver is not signed by Alderman Bollinger.
After discussion of the legality of the meeting, motion was made by Alderman Weis,
seconded by Alderman Rodgers That the Council proceed with the Special Meeting knowing
the legal technicalities. Upon vote, the voting xas as followas
Aye: Aldermen: Weis, Leggett, Haley, Rodgers, Horton, and Matthews.
Nos Alderman: Smith.
The motion carried, and the following proceedings were had to-wit:
The following letter from Mesara. Rose, Meek, House, Barron, Nash do Williamson, Bond
Counsel, was read by City Attorney DNllahuntys
March 15, 1968
Mr. W. H. Dillahunty
City Attorney
Bank of Weat Memphis Building
Fleet Memphis, Arkansas 72301
In re: West Memphis, Arkansas - Southwest Chemical
Corporation
Dear Mr. Dillahuntys
I understand that the industry and the investment house in the above are asking the City
to execute a contract for the sale of the bonds owing to the crisis caused by the ruling of
IRS that the interest on industrial revenue bonds not sold under a binding contract for a fixed
priced on or before March 15th, 1968 will no longer be exempt from Federal income taxes.
I have undertaken the drafting of such a contract in the absence of Mr. Campbell who is
on military duty and without his knowledge of the background, although I have discussed the
bond issue with him from time to time.
I enclose herewith the original and several copies of a contract which I think fair to
the City, the investment house, and the industry.
The contract is anb3ect entirely to the approval of the City. There is a blank for the
purchase price. I am told that the investment house has offered ninety-two cents on the
dollar and that the State Commissioner of Securities has said that he xould approve ninety
cents on the dollar. I do not know this of my own knowledge and there has not been time for ma
to check on this. The purchase price is a matter of negotiation and Mr. Campbell will not
approve sny purchase price contrary to the State statutes, or contrary to any ruling of the
Commissioner of Securities.
Item 4 is the suggestion of Mr. Sutton, and it seems a good one and for the protection of
the City. Unless the industry can comply therewith, apparently the bonds will not be delivered,
and if the industry can comply its financial ability seems to be strengthened.
I think myself that delivery on or before May 1, 1968 is too soon, Yor the parties will
need to agree on a number of details each as maturity schedules, the lease, rentals, the
trust indenture, and many other items after which Mr. Campbell will need to prepare all of
the various documents and submit them to the City for approval. To m®et the May 1 data, all
of this xill have to be done by April 1, for there is a thirty day referendum period.
I xould suggest at least dune 1 as a more realistic date.
The contract does not provide for earnest money, but this is not customary in a private
sale of Act 9 bonds. You should be satisfied, however, that the City will be reimbursed for
atsYy expenditures which it has incurred, but this is not ordinarily the function of earnest
money. If the City has spent money, which has not been repaid, it might be well to take a
day ofVMarch, 1968. The following were presents Mayor Bob Eden, presiding, and
Aldermen: 0. C. Haley, Pritchard Horton, Kirby Leggett, Paul Matthews, C. T. Rodgers, F. C. Weis,
and R. L. Smith; and City Attorney W. H. Dillahuaty.
Nbsent: Alderman. 0. I. Bollinger.
The Notice for the Special Meeting wan read by Mayor Eden ae follows:
To: 0. I. Bollinger, 0. C. Haley, Pritchard Horton, Kirby Leggett, Paul Matthews,
C. T. Rodgers, Robert L. Smith, F. C. Weis, Aldermen Of The City Of bleat Memphis
You arm hereby notified there will be a Special Meeting of the Council of the
City of bleat Memphis at 9x00 P.M., or as soon thereafter as possible, Friday, March 15,
1968, in the City Hall in West Memphis, Arkansas, for the purpose of an Agreement for
the sale and purchase of Industrial Revenue Bonds for Southwest Chemical Corporation,
City of bleat Memphis, and Financial Consultants of America, Inc.
Witness n4 hand this 15th day of March, 1968.
The Mayor announced Alderman 0. I. Bol~~nger-is a patient in the Intensive-Care
Unit of Crittenden Memorial Hospital, and the Notice of Meeting with Wainer had been
sent to the Hospital for Mr. Bollingersa signature, however, due to Mr. Bollinger~a
condition special permission would have to be secured from the attending physician to
see Mr. Bollinger, and the Mayor did not think the request should be made under the
circumstances.
City Attorney Dillahunty advised the Council in his opinion the Special Meeting
would not be a duly constituted meeting if the Waiver is not signed by Alderman Bollinger.
After discussion of the legality of the meeting, motion wan made by Alderman Weis,
seconded by Alderman Rodgers: That the Council proceed with the Special Meeting knowing
the legal technicalities. Upon vote, the voting was as follows:
Aye: Aldermen: Weis, Leggett, Haley, Rodgers, Horton, and Matthews.
Nos Alderman: Smith.
The motion carried, and the following proceedings were had to-wits
The following letter from Meeara. Rose, Meek, Home, Barron, Nash & Williamson, Bond
Counsel, was read by City Attorney DIIllahunty:
March 15, 1968
Mr. W. H. Dillahunty
City Attorney
Bank of West Memphis Building
bleat Memphis, Arkansas 72301
In re: bleat Memphis, Arkansas - 5outhweat Chemical
Corporation
Dear Mr. Dillahunty:
I understand that the industry and the investment house in the above are asking the City
to execute a contract for the sale of the bonds owing to the crisis caused by the ruling of
IRS that the interest on industrial revenue bonds not sold under a binding contract for a taxed
priced on or before March 15th, 1968 will no longer be exempt from Federal income taxes.
I have undertaken the drafting of such a contract in the absence of Mr. Campbell who is
on military duty and without his knowledge of the background, although I have discussed the
bond issue with him from time to time.
I enclose herewith the original and several copies of a contract which I think Pair to
the City, the investment house, and the industry.
The contract is aub~ect entirely to the approval of the City. There is a blank for the
purchase price. I am told that the investment house has offered ninety-two cents on the
dollar and that the State Commissioner of Securities has said that he xould approve ninety
cents on the dollar. I do not know this of my own knowledge and there has not been time for me
to check on this. The purchase price is a matter of negotiation and Mr. Campbell will not
approve anp purchase price contrary to the State statutes, or contrary to any ruling of the
Commissioner of Securities.
Item !; is the suggestion of Mr. Sutton, and it seems a good one and for the protection of
the City. Unless the industry can comply therewith, apparently the bonds x111 not be delivered,
and if the industry can comply its financial ability seems to be strengthened.
I think myself that delivery on or before May 1, 1968 is too soon, for the parties will
need to agree on a number of details ouch as maturity schedules, the lease, rentals, the
trust indenture, and many other items after which Mr. Campbell will need to prepare all of
the various documents and submit them to the City for approval. To meet the May 1 date, all
of this will have to be done by April 1, for there is a thirty day referendum period.
I would suggest at least June 1 as a more realistic date.
The contract does not provide for earnest money, but this is not customary in a private
sale of Act 9 bonds. You should be satisfied, however, that the City will be reimbursed for
anyy expenditures xhich it has incurred, but this is not ordinarily the function of earnest
money. If the City has spent money, which has not been repaid, it might be well to take a
deposit for that purpose.
Whey this draft copy ie in acceptable form, the City Council in a special meeting
regularly called may, preferably by ordinance, authorize the execution.
I shall not be available to a telephone until about 2:00 o'clock P.M. today, but
after that I shall be glad to have you telephone me if I can be of any further assistance.
I am sure that Mr. Campbell would want me to give his beat regards, and I do.
Yours very truly,
ROSE, MEEK, HOUSE, BARRON,
HASH do WILLIAMSON
(William Nash)
Agreement for the Sale and Purchase of Industrial Revenue Bonds presented was read by
the City Attorney as followas
AOREE,~IENT FOR THE SALE AND PURCHASE
OF INDUSTRIAL REVENUE BONDS
WHEREAS, at an election duly held on the lltth day of February, 1967, the electors of
the City of Weat Memphis, Arkansas approved an issue of industrial revenue bonds to be
issued under the provisions of Act No. 9 of the First Extraordinary Session of the
Sixty-second General Assembly of the State of Arkansas for the year 1960, as amended, in
a principal amount not to exceed Txenty-eight Million Five Hundred Thousand Dollars
($28,500,000.00) to be secured by a statutory mortgage_on the lands and buildings acquired
and constructed from the proceeds of the said bonds for the purpose of securing and developing
industry within or near the City of Weat Memphis, Arkansas, by assisting Southwest Chemical
Corporation, an Arkansas corporation, to construct, equip and operate a plant for the manu-
facture, storage, and sale of fertilizers, chemical products, and other related items; and
WHEREAS, Southwest Chemical Corporation has requested the City of West Memphis, Arkansas
to sell the said bonds and to enter. into a binding contract therefor; and
WHEREAS, Financial Consultants of America, Inc. of Memphis, Tennessee, desires to purchase
the said bonds:
NOW, THEREFORE, in consideration of the mutual promises and undertakings of the parties
hereto and other considerations hereinafter set forth, the City of Weat Memphis, Arkansas,
hereinafter referred to as "City" agrees to sell, and Financial Consultants of America, Inc.,
hereinafter referred to sa "Purchaser", agrees to purchase, Industrial Revenue Bonds of the
City in a principal amount not to exceed $28,500,000.00 isauable under the provisions of said
Act No. 9 pursuant to the said election held on the 1l;th day of February, 1967, aub~ect to
delivery all at one time, or in parcels from time to time, as the parties hereto may agree,
for the price of cents on the dollar plus accrued interest at the rate of six per
centum (6$) per annum, au ect to any ad~uatment downward in the proportion that any reduction
in the Bond Index as reported in The Bond Buyer at the time of the delivery of any bonds here-
under bears to the Bond Index as reported is The Bond Buyer as of the date hereof, and aub~ect
to further terms and conditions ae follows:
1. The bonds as sold may be converted at the option of the Purchaser into a principal
amount of bonds bearing a lower rate or rates of interest on such terms that the City will
receive no less and pay no more than if the bonds had not been converted, the said conversion
to be in accordance with the Universal Bond Values Tables and anb3ect to the approval of the
City.
2. The bonds shall be delivered under a maturity schedule which permits the full payment
thereof, principal and interest, together with all paying agent's charges and trustee's fees
in connection therexith and all other costa incidental thereto, solely Prom the rentals reserved
ender a lease by the City to Southwest Chemical Corporation of the lands and buildings acquired
and constructed and the machinery and equipment installed therein from the proceeds of the said
bonds.
3. The said bonds are not and will not be general obligations of the City but are and
will be special obligations only payable solely from the revenues derived from the said _
industrial project, and it is understood that all expenses, without any limitation thereon or
exceptions therefrom, incurred by or on behalf of the Gity, or at the request of the City, in
the issuance of the said bonds ahll be repaid to the City, or on its behalf, from the proceeds
of the said bonds.
!i. Southwest Chemical Corporation shall have secured guaranteed product contracts from Yirms
with credit acceptable to the Purchaser in amounts sufficient to guarantee earnings of at least
150 coverage of the average annual debt service requirements of the said bonds with contracts
ending for at least a period of ten (10) years or more.
5. The said bonds shall be delivered only :inpon the unqualified approving opinion of
Messrs Roae, Meejc, House, Barron, Naah do Williamson, bond counsel of the City of Little Rock,
Arkansan.
6. Purchaser: may, at its option, without further liability hereunder, elect to cancel
this purchase contract in the event of any change in the Federal laws or in the regulations of
the Internal Revenue Service which removes the exemption of the interest on the said bonds from
Federal Income Taxes or which adversely affects the exempt status of the interest on the said
bonds.
282
7.' The said bonds are subject to delivery on or before the first day of May, 1968,
and thereafter at the option of the Purchaser.
IN TESTIMONY HfU;REOF, the parties hereto have caused this Agreement to be executed,
and. their respective seals to be affixed hereto, this 15th day of March, 1968.
CITY OF WEST MEMPHIS, ARAANSAS
ATTEST:
(SEAL) y er
By.i
ayor
FINANCIAL CONSULTANTS OF AMERCIA, INC.
~~
t es
ATTEST:
e:
(SEAL)
City Attorney Dillahunty brought to the Councils attention Items 4, 6, and 7 oP the
Agreement, also the price for the bonds had not be inserted in the Agreement.
Mr. Don Sutton on Financial Consultants of America, Inc. submitted the amount of
92~ to be inserted for the price of the bonds, and gave a brief resume of the action of
his company due to the Internal Revenue Service regulation as to the crisis caused by the
ruling that interest on industrial revenue bonds not sold under a binding contract for a
tired price on or before March 15, 196tl, will iio longer be exempt from Federal Income
Taaea, and stated realized the Agreement submitted is not a normal contract and may not be
of value, but was submitted in an effort not to loose an industry for Weat Memphis.
Mr. C. V. Steed, Executive Vice-President and General Manager of Southwest Chemical
Corporation, spoke on behalf of the Corporation.
Mayor Eden reminded the Council of the obligation to uphold the reputation of the
City of Weat Memphis in bonding matters, and that he xould sign the Agreement if directed
by the Council, but xith reservation.
After lenghty discussion as to the ~eopartllzing a twenty-eight million dollar industry
for West Memphis, procedure for calling special Council Meeting, legal requirements for
regular„and special meetings, selection of bond counsel, approving opinion of bond counsel,
previous bond issues of the City, Agreement not stipulating good faith performance bond by
purchaser, bond market, IRS ruling, obligations of the City Council, opinion of the City
Attorney, and contents of the Agreement; motion was made by Alderman Rodgers, seconded by
Alderman Weis: That the Council accept the contract, and instruct the Mayor to sign even
though know of unusual circumstances. Upon vote, the voting was as folloxa:
Aye: Aldermen: Weis and Rodgers.
No: Aldermen: Smith, Leggett, Matthews, Haley, and Horton.
The motion failed.
The meeting was adjourned.
AT~~ l
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APPROVED: MARCH 21, 1968
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