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1512RESOLUTION NO . I S I ~ RESOLUTION APPROVING AN AGREEMENT FOR PAYMENTS IN LIEU OF TAXES IN CONNECTION WITH THE ISSUANCE OF INDUSTRIAL DEVELOPMENT REVENUE BONDS PREVIOUSLY AUTHORIZED WHEREAS, the City of West Memphis, Arkansas (the "City") adopted Ordinance No. 1749, passed and approved on October 17, 1996, which authorized the issuance and sale of $4,400,000 aggregate principal amount of the City's Variable Rate Demand Industrial Development Revenue Bonds (Proform Company, LLC Project), Series 1996 (the "Bonds"), pursuant to the provisions of Title 14, Chapters 164, Subchapter 2 of the Arkansas Code of 1987 Annotated, for the purpose of financing the acquisition, construction and equipping of an industrial project (the "Project"), identified in Ordinance No. 1749, and the leasing of the Project to Proform Company LLC, a Minnesota limited liability company (the "Company"); and WHEREAS, in connection with the issuance of the Bonds, it is proposed that the City and the Company enter into an Agreement for Payments in Lieu of Taxes, requiring the Company to make payments in lieu of ad valorem taxes in such amounts and on such terms as set forth therein, a copy of which has been presented to and is before this meeting; NOW THEREFORE, BE IT RESOLVED by the City Council of the City of West Memphis, Arkansas: Section 1. The Agreement for Payments in Lieu of Taxes is hereby approved in substantially the form submitted to this meeting, and the Mayor is hereby authorized to execute and deliver the same for and on behalf of the City. Section 2. This Resolution shall be effective immediately upon its passage. ADOPTED: November 21, 1996. ~~ ATTEST: ~/v' " City C er APPROVED: Mayor (SEAL) CERTIFICATE The undersigned, City Clerk of the City of West Memphis, Arkansas, hereby certifies that the foregoing is a true and perfect copy of a Resolution duly adopted by the City Council of the City of West Memphis, Arkansas at a regular session thereof held at the regular meeting place of the City Council at 5:30 o'clock p.m., on the 21st day of November, 1996. GIVEN under my hand and seal on "his ~ day of November, 1996. G.G~T/~ City C er ( uF.~AL) AGREEMENT FOR PAYMENTS IN LIEU OF TAXES City of West Memphis City Hall 205 South Redding West Memphis, Arkansas Attention: Mayor The City of West Memphis, Arkansas (the "City") proposes to issue $4,400,000 aggregate principal amount of its Variable Rate Demand Industrial Development Revenue Bonds (Proform Company, LLC Project), Series 1996 (the "Bonds"), under the provisions of Title 14, Chapter 164, Subchapter 2 of the Arkansas Code of 1987 Annotated (the "Act"), for the purpose of financing the cost of acquiring, constructing and equipping an industrial project near the City (the "Project"), and paying a portion of the expenses of issuing the Bonds. The Project will be leased by the City to the undersigned by a Lease Agreement dated as of November 1, 1996 (the "Lease Agreement"). The properties leased under the Lease Agreement are herein referred to as the "Leased Premises." Section 5.4 of the Lease Agreement provides that the undersigned is obligated to pay all taxes, assessments and governmental charges levied and assessed on the Leased Premises during the term of the Lease Agreement. The undersigned is informed and understands that, notwithstanding the provisions of Section 6.12 of the Lease Agreement, under the decision of the Supreme Court of the State of Arkansas in the case of Wayland y. SnaAD, 232 Ark. 57, 334 S.W.2d 633 (1960), the Leased Premises will be exempt from ad valorem taxes because it is owned by the City and used for a public purpose within the meaning of the applicable constitutional provision affording the exemption. Thus, the undersigned understands that it will have no ad valorem taxes to pay under the provisions of Section 6.12 of the Lease Agreement. The City has indicated a reluctance for all of the taxing authorities to lose the tax revenues which would otherwise be received if the Leased Premises were privately owned. Therefore, to induce the City to proceed with the issuance of the Bonds for the purposes indicated, which will inure to the benefit of the undersigned, and for other valuable consideration, the receipt of which is hereby acknowledged by the City, the undersigned agrees with the City as follows: 1. The Company will make payments in lieu of taxes on or before October 1 in each of the following years and in the following amounts, expressed as percentages of ad valorem taxes which would be payable if the Leased Premises were subject to ad valorem taxes: (a) For five years commencing in the year following completion of the Project, an amount equal to 30$ of the ad valorem taxes which would be payable if the Leased Premises were subject to ad valorem taxes, computed for the year in which the Project is completed; (b) For the next succeeding fifteen years, an amount equal to 50$ of the ad valorem taxes which would be payable if the Leased Premises were subject to ad valorem taxes, computed for the year in which the Project is completed; and (c) Thereafter, an amount equal to 100$ of the ad valorem taxes which would be payable if the Leased Premises were subject to ad valorem taxes, computed for the year in which the Project is completed. In the event additional phases to the Project are completed, the foregoing payments shall be adjusted upwards by applying the applicable percentage in any year to the ad valorem taxes which would be payable with respect to such additional phase, computed for the year in which the additional phase is completed. 2. Representatives of the Company will meet with the Assessor of Crittenden County and determine the assessed valuation of the properties comprising the Leased Premises upon completion of the Project. The determination shall be made by mutual agreement if possible, and if not shall be made by the Assessor as though the Leased Premises were privately owned. Such determination shall not change during the term of this Agreement. 3. The payments to be made by the Company pursuant to this Agreement are intended to be in lieu of all ad valorem taxes that would otherwise have to be paid on the Leased Premises (including any leasehold or other interest therein) to the State of Arkansas, Crittenden County, the City, and/or other taxing authorities. 4. The City agrees to distribute each payment hereunder among the taxing authorities in the proportion that the millage collected by each bears to the total millage collected by all during the year of distribution. 5. The City and the Company agree to use their best efforts to sustain the enforceability of this Agreement. However, if by reason of a change in the Constitution, or a change by the Supreme Court of the State of Arkansas in its interpretation of the Constitution or otherwise, the Company is required to pay any tax which the payments specified herein are intended to be in lieu of, the Company may deduct the aggregate of any such taxes paid by it from the amount herein agreed to be paid in ieu o axes. Furthermore, inasmuch as the payment herein agreed to be made by the Company is intended to be in lieu of taxes, it is agreed that said payment shall not as to any year be in an amount greater than would be payable for such year in ad valorem taxes, in the aggregate,_if it owned the Project. 6. The agreement herein made shall terminate and be of no further force and effect from and after the date that the Lease shall terminate for any reason other than a default on the part of the Company. If such termination shall be at a point constituting a portion of a tax year, the Company shall pay for the year in which termination occurred that portion of the specified annual payment that the number of days in such tax year that the Company was Lessee prior to the termination bears to 365 or 366 days, as appropriate. 7. This agreement shall be binding upon the successors v- and assigns of the Company, but no assignment shall be effective to ~,, relieve the Company of any of its obligations hereunder unless expressly authorized and approved in writing by the City or unless the Company simultaneously assigns the Lease and under the terms thereof is thereby relieved of further obligations thereunder. 8. This agreement may be executed simultaneously in several counterparts, each of which shall be deemed an original, and it shall not be necessary in making proof of this agreement to produce or account for more than one such counterpart. If the foregoing is acceptable, please so indicate by executing the acceptance set forth below, and returning to the Company, whereupon this instrument shall constitute a valid and binding contract between the Company and the City. DATED: , 1996 PROFORM COMPANY, LLC gy. Title: ACCEPTED: CITY OF WEST MEMPHIS, ARKANSAS By : (~~ ~~~ Mayor L~hvEMBER ~.1 , 1996 08/OS/97 TUE 17:05 FAX SO1 9782147 FRIDAY ELDREDGE & CLARK (dj002 AGREEMENT FOR PAYMENTS IN LIEU OF TAXES City of West Memphis City Hail 205 South Redding West Memphis, Arkansas Attention: Mayor The City of West Memphis, Arkansas (the "City") proposes to issue 54,400,000 aggregate principal amount of its Variable Rate Demand Industrial Development Revenue Bonds (Proform Company, LLC Project), Series 1996 (the "Bonds*j, under the provisions of Title 14, Chapter 164, Subchapter 2 of -the Arkansas Cede of 1987 Annotated (the "Act"), for the purpose of financing the cost of acquiring, constructing and equipping an industrial project near the City (the "Project"), and paying a portion of the expenses of issuing the Bonds. The Project will be leased by thQ City to the undersigned by a Lease Agreement dated a6 of November 1, 1996 (the "Lease Agreement"). The properties leased under the Lease Agreement are herein referred to as the "Leased Premises." Section 5.4 of the Lease Agreement provides that the undersigned is obligated to pay all taxes, assecsments and governmental charges levied and assessed on the Leased Promises during the term of the Lease Agreement. .The undersigned is informed and understands that, notwithstanding the provisions of Section 6.12 of the Lease Agreement, under the decision of the Supreme Court of the State of Arkansas in the caaQ of Wa _v. Snatig, Z32 Ark. 57, 334 S.W.2d 633 (1960), the Leased Premises will be exempt from ad valorem taxes because it is owned by the City and used for a public purpose within the meaning of the applicable constitutional provision affording the exemption. Thus, the undersigned understands that it will have no ad valorem taxes to pay under the provisions of Section 6.12 of the Lease Agreement. The city has indicated a reluctance for ail of the taxing authorities to lose the tax revenues which would otherwise be received it the Leased Premises wQrv privately owned. Therefore, to induce the City to proceed with the issuaACe of the Bonds for the purposes indicated, which will inure to the benefit of the undersigned, and for other valuable consideration, the receipt of which is hereby acknowledged by the City, the undersigned agrees with the City as folloWS: 1. The Company will make payments in lieu of taxes on or before October 1 in each of the foliovinq years and in the following amount6, expressed as percentages of ad valorem taxes olhich would be payable if the Leased Pre~aises were subject to ad valorem taxes: (aj For five years comsenoinq in the year following completion of the Project, an amount equal to 30~ of the ad valorea taxes which Mould be payable if 08/OS/9? TLB the Leased Premises were subject to ad valorem taxes, computed for the year in which the Project is completed; (b) For the next succeeding fifteen years, an amount equal to 50t of the ad valorem taxes which would be payable if the Leased Premises were subject to ad valorem taxes, computed for the year in which the Project is completed; and (c) Thereafter, an amount equal to 100 of the ad valorem taxes which would be payable if the Leased Premises were subject to ad valorem taxes, computed for the year in which the Project is completed. ~r+ Yn the event additional phases to the Project are completed, the foregoing payments shall be adjusted upwards by applying the applicable percentage in any year to the ad valorem taxes which would be payable with respect to such additional phase, computed for the year in which the additional phase is completed. 2. Representatives of the Company will meet with the Assessor of Crittenden County and determine the assessed valuation of the properties comprising the Leased Premises upon completion of the Project. The determination shall be made by mutual agreement if possible, and if not shall be made by the Assessor as though thQ Leased Premises were privately owned. Bush determination shall not change during the term of this Agreement. 3. The payments to be made by the Company pursuant to this Agreement are intended to be in lieu of all ad valorem taxes that would otherwise have to be paid on the Leased Premises (including any leasehold or other interest therein) to the State of Arkansas, Crittenden County, the City, and/or other taxing authorities. 4. The City agrees to distribute each payment hereunder among the taxing authorities in the proportion that the millage collected by each bears to the total ~oaillage Collected by all during the year of distribution. 5. The City and the Company agree to use their best efforts to sustain the enforceability of this Agreement. However, if by reason of a change in the Constitution, or a change by the Supreze Court of the State of Arkansas in itc interpretation o! the Constitution or otherwise, the Company is required to pay any tax which the payments specified heron are intended to be in lieu of, the Coapany may deduct the aggregate of any such taxes paid by it from the amount herein agreed to be paid in lieu of taxes. Furthezarore, inasmuch as the paysent herein agreed to be made by the Caapatsy ie intended to be in lieu of taxes, it is agreed that said payment shall not as to any year be in an amount greater than would be payable for such year in ad valorem taxes, in the aggregate, iP it owned the Project. 08/05/97 TUE 17:07 FA% 501 376214? FRIDAY ELDREDGE & CLARK f~ 004 6. The agreement herein made shall terminate and be of no further force and Affect from and after the date that the Lease chall terminate for any reason other than a default on the dart of the Company. If such termination shall be at a point constituting a portion of a tax year, the Company shall pay for the year in which termination occurred that portion of the specified annual payment that the numbQr of days in such tax yaar that the Company was Lessee prior to the termination bears to 365 or 366 days, as appropriate. 7. This agreement shall be binding upon the successors and assigns of the Company, but no assignment shall be effective to rolieve the Company of any of its obligations hereunder unless expressly authorized and approved in writing by the City or unless ~, the Company simultaneously assigns the Lease and under the terms thereof is thereby relieved of further obligations thereunder. 8. This agreement may be executed simultaneously in several counterparts, each of which shall be deemed an original, and it shall not be necessary in making proof of this agreement to produce or account for more than one such counterpart. If the foregoing is acceptable, please so indicate by executing the acceptance set forth below, and returning to the company, whereupon this instrument shall constitute a valid and binding Contract between the Company and the City. DATED: December 5, 1996 PROFORM COMPANY, LLC ay: ~~~i -u _ Title: ~~~~ CITY OF WEST M~SIS, ARIiANSAB Mayor December 5, 1995