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RESOLUTION NO. 9,628
A RESOLUTION AUTHORIZING THE ENTRY INTO AN AGREEMENT
TO ISSUE BONDS FOR THE PURPOSE OF ASSISTING IN THE
FINANCING OF AN INDUSTRIAL FACILITY WITHIN THE CITY.
WHEREAS, the City of Little Rock, Arkansas (the "City'), is authorized under
the provisions of Act No. 9 of the First Extraordinary session of the General Assembly
of the State of Arkansas for the year 1960, as amended ( "Act 9 "), to acquire, construct,
and equip facilities to secure and develop industry, and to assist in the financing thereof
by the issuance of bonds payable from the revenues derived from such facilities; and
WHEREAS, Lexicon, Inc., an Arkansas corporation (the "Company "), has
evidenced its interest in acquiring, constructing and equipping an industrial facility
consisting of a manufacturing facility and related facilities and improvements within the
City if permanent financing can be provided through the issuance of bonds under the
authority of Act 9; and
WHEREAS, The City desires to assist the Company in order to secure and
develop industry within the City; and to aid in the financing thereof under the provisions
of Act 9; and
WHEREAS, it is desirable that the Company and the City enter into an
Agreement to Issue Bonds for such purpose; and
NOW, THEREFORE, BE IT RESOLVED BY THE BOARD OF DIRECTORS OF
THE CITY OF LITTLE ROCK, ARKANSAS:
SECTION 1. The Mayor and the City Clerk of the City of Little Rock, Arkansas
are authorized and directed to enter into an Agreement to Issue Bonds in substantially
the form and substance as follows:
■� M s N fo r
AGREEMENT TO ISSUE BONDS
THIS AGREEMENT is made as of March _, 1996, by and between the CITY OF LITTLE
ROCK, ARKANSAS, a municipal corporation under the laws of the State of Arkansas (the "City "), and
LEXICON, INC., an Arkansas corporation ( "Company "), for the purpose of carrying out the purposes
set forth in Act 9 of the First Extraordinary Session of the General Assembly of the State of Arkansas
for the year 1960, as amended ( "Act 9 ").
WITNESETH:
WHEREAS, the City is authorized by Act 9 to own, acquire, construct, equip, operate, maintain,
sell, lease, or contract concerning or otherwise deal in or dispose of any land, buildings, or facilities of
any and every nature whatsoever that can be used in securing or developing industry within or near the
City; and
WHEREAS, the City as determined that such purposes may be served by cooperation with
Company in the acquisition, construction and equipping of a manufacturing facility and related facilities
and improvements to be located within the City for use by Company in its business (the "Project "); and
WHEREAS, the City and Company desire to cooperate in the acquisition, construction and
equipping of the Project and to have the costs of the Project financed from the proceeds of revenue bonds
of the City (the "Bonds ") to be issued pursuant to Act 9 in an aggregate principal amount now estimated
to be $6,000,000; and
WHEREAS, the City and Company contemplate that the Project will be leased to Company, with
an option to purchase, and the rental payments therefor shall be sufficient to pay debt service on the
Bonds and all related costs;
NOW, THEREFORE, in consideration of the premises and other good and valuable consideration
under the mutual benefits, covenants, and agreements herein expressed, the City and Company agree as
follows:
1. Proceedings. All proceedings in connection with the issuance of the Bonds shall
be consistent with the requirements of Act 9, including notice to all state agencies, and the publication
of notice as required by Act 9. All references contained herein to the issuance of the Bonds shall be
subject to compliance with the formalities of Act 9 when the facts required to do so are determined.
2. Acquisition. The City and Company will cooperate in causing to be commenced
and continued the required acquisition, construction and equipping of the Project, and Company may
provide, or cause to be provided, the necessary interim financing to permit such acquisition of the Project
to commence pending the issuance of interim and /or permanent Bonds. Not later than the time of
issuance of the Bonds for any portion of the Project, Company will convey and transfer or cause to be
conveyed and transferred to the City, for an amount approximately equal to that then expanded by
Company for the Project or portions thereof which are financed by the Bonds then issued (including at
Company's option any costs of interim financing), the Project or portions thereof to be then financed.
There shall also be conveyed to the City any easements and rights -of -way necessary to permit acquisition
and operation of the Project or such portion.
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3. Lease. The City shall enter into a lease, or leases, under which Company will
lease, with an option to purchase, from the City, such Project or portions thereof for a term not to exceed
thirty (30) years and will agree to make rental payments sufficient to pay the principal of the premium,
if any, and interest on the Bonds, together with all charges of any Trustee and /or any Paying Agent for
the Bonds.
4. Sale of Bonds. Security. The City will take such steps as are necessary to issue,
sell, and deliver, pursuant to the terms of Act 9, the Bonds for the purpose of financing the Project in
the aggregate amount necessary to furnish the permanent financing of all or any part of the costs of
accomplishing the Project. It is presently estimated by Company that Bonds in the aggregate amount of
$6,000,000 will be issued. However, the City's commitment is to issue the Bonds, pursuant to the terms
of Act 9, in such amount as shall be requested by Company for accomplishing all or any part of the
Project, whether or not such amount is more or less than the above estimate and whether or not the
manufacturing facility and related facilities and improvements finally acquired, constructed and equipped
are identical to or different from the facilities presently expected to constitute the Project. The Bonds
shall mature in such amount and times and shall bear interest at such rate or rates, to be payable on such
date or dates, and to have such optional and mandatory redemption features and prices as are mutually
agreed upon in writing by the City and Company. Company or an affiliate of Company may be the
purchaser of the Bonds. The City further agrees that it will enter into a lease and, if required, an
indenture of trust with a bank or trust company, qualified to exercise trust powers where necessary, for
the purpose of providing rental payments sufficient, with direct or indirect proceeds of the Bonds, to pay
the principal of and premium, if any, and interest on the Bonds as they become due together with the
charges of any Trustee and /or any Paying Agent for the Bonds, and pledging and /or otherwise securing
the payment of such rental payment for the benefit of the owner(s) of the Bonds. The lease, the
indenture, other related documents, and the Bonds shall contain such customary terms and conditions as
are agreed upon by the City and Company. The City will co- operate in consummating the transaction
so contemplated.
5. Bonds to be Special Obligations. The City shall have no financial responsibility
with respect to the Project, the Bonds, or the costs associated thereto, and the Bonds shall be special
obligations of the City and shall never constitute a general obligation, indebtedness, or pledge of the
credit of the City within the meaning of any constitutional or statutory provision and shall never be paid
in whole or in part out of any funds raised or to be raised by taxation or any other revenues or other
funds of the City except those (including unexpended Bond proceeds) derived from or in connection with
the sale or lease of the Project, as provided for herein.
6. Conditions of Issuance. The Bonds may be issued either at one time or in several
series and /or issues from time to time, in such aggregate principal amount or amounts as Company shall
request in writing, provided, however, that all conditions of Act 9 shall have been met.
7. Costs to be Financed. The costs of the Project may include any costs permissible
under Act 9, including but not limited to reasonable and necessary costs, expenses, and fees incurred by
the City in connection with the issuance of the Bonds; attorney's fees and expenses; and any trustee fees
and expenses, if any, required in connection with the underwriting or placement of the Bonds; recording
costs; rating agency's fees, if any, and printing costs. The City will upon request provide or cause to
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be provided to Company any data or information which may be reasonably required to verify any of such
costs, expenses, and fees.
8. Termination. In the event that the Bonds shall not be sold within five years from
the date hereof, this Agreement shall automatically terminate unless the parties hereto shall agree in
writing to its extension for a further period of time specified in such writing. Company may unilaterally
terminate this Agreement without liability to the City (except for any amounts due and owing by
Company to the City arising out of the transactions occurring on or before the time of such termination,
which shall be promptly paid by Company to the City) by giving notice by ordinary mail, postage
prepaid, facsimile or overnight courier service to the City specifying therein the date of termination which
may be the date of the notice.
9. Protection to the City. Company shall pay all of the City's costs and expenses
reasonably and necessarily incurred in connection with this Agreement or any other related document or
instrument. Company will at all times indemnify and hold harmless the City against any and all losses,
costs, damages, expenses, and liabilities or whatsoever nature directly or indirectly resulting from, arising
out of, or related to matters in connection with this Agreement.
10. Payment in Lieu of Taxes. The City and Company recognize that under the
Arkansas Constitution and decisions of the Supreme Court of Arkansas, the Project will be exempt from
ad valorem taxation. Company and the City agree, however, to enter into an agreement in the form
attached hereto as Exhibit A requiring Company to make payments in lieu of taxes, in such amounts and
on such terms as set forth therein.
11. Purpose and Effect. The Bonds are to be issued, sold, and delivered under the
authority of Act 9 and all related actions and documents shall be in conformity therewith. The City
intends this Agreement to be the declaration of its official intent, pursuant to the terms hereof, to issue
the Bonds in the aggregate principal amount of up to $6,000,000, as necessary to furnish the permanent
financing to pay for all of the costs of accomplishing the Project, and to expend the Bond proceeds to pay
or reimburse the costs of the Project (the "Expenditure "). The City and the Company consider this
Agreement to be a declaration of official intent for all purposes of Treasury Regulation Section 1.150 -2,
and further, state the following:
The City and the Company hereby declare their intent to reimburse themselves for the
Expenditure from the proceeds of the Bonds and, further, declare as follows:
a. It is expected that the Bonds will be issued on or about May 1, 1996. Proceeds
of the Bonds will be applied to reimburse the City and the Company for the Expenditure as soon as they
are available, but in no event later than eighteen (18) months after the later of (a) the date of the
Expenditure or (b) the date on which the Project is placed in service and in any event, within three (3)
years after the date of the making of the Expenditure.
b. The City and the Company are aware of no reason which would cause them to
expect that the Expenditure would be reimbursed from any source other than the proceeds of the Bonds.
C. The City and the Company are aware of no reason which would cause them to
believe that the Expenditure will not be reimbursed by the proceeds of the Bonds.
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d. The City and the Company are aware of nothing in the budget or financial
circumstances of the City or the Company which is inconsistent with the intent and declaration to finance
the Expenditure with the Bonds. The City and the Company are aware of no reason to expect that funds
other than proceeds of the Bonds will be reserved or allocated on a long -term basis or otherwise set aside
for the Expenditure pursuant to budgetary or financial policies of the City and the Company.
e. The Bonds will be issued in the principal amount of not to exceed $6,000,000.
f. The Expenditure will be a "capital expenditure" within the meaning of applicable
Treasury Regulations or will constitute a portion of the costs of issuance of the Bonds.
IN WITNESS WHEREOF, the City of Little Rock, Arkansas, acting pursuant to a resolution of
its Board of Directors, has caused its name to be hereunto subscribed and Company has caused its name
to be subscribed hereto by its duly authorized officers, all as of the year and date first above written.
ATTEST:
By
City Clerk
(SEAL)
ATTEST:
M
(SEAL)
k
CITY OF L=E,ftQCK, ARKANSAS
By
a or
By_
Title
LEXICON, INC.,
an Arkansas Corporation
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SECTION 2. This resolution shall be in full force and effect from and after its
adoption.
ADOPTED: March 5, 1996
ATTEST:
ROBBIE - RANUUUK
Clri'� CLERK
APPROVED AS TO FORM:
THOMAS M. UAKFENMK
CITY ATTORNEY
APPROVED:
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EXHIBIT "A"
AGREEMENT FOR PAYMENT IN LIEU OF TAXES
City of Little Rock, Arkansas
Little Rock, Arkansas
Ladies and Gentlemen:
Lexicon, Inc., an Arkansas corporation ( "Company ") has requested the City of Little Rock,
Arkansas (the "City ") to enter into an Agreement to Issue Bonds pursuant to Act No. 9 of 1960, as
amended ( "Act 9 "), for the purpose of assisting Company in acquiring, constructing and equipping
industrial facilities, consisting of a manufacturing facility and related facilities and improvements to be
located within the City (the "Project "). To provide for the financing of the cost of the Project it is
proposed that the City issue approximately $6,000,000 of industrial development revenue bonds under
the authority of Act 9 (the 'Bonds ").
The Bonds will be secured by a pledge of revenues derived from the Project, including
particularly lease rentals to be paid by Company to the City under a lease agreement not to exceed thirty
years (the "Lease") proposed to be entered into between the City and Company.
The Lease will provide that Company would be obligated to pay all taxes and assessments,
general and special, levied and assessed on the Project during the term of the Lease as well as water and
sewer charges, assessments and other governmental charges and impositions. Company is informed and
understands that, notwithstanding such provisions in the Lease, under the decision of the Supreme Court
of the State of Arkansas in the case of Wayland v. Snap , 232 Ark. 57, 334 S.W.2d 633 (1960), the
Project will be exempt from ad valorem taxes because it would be owned by the City and used for a
public purpose within the meaning of the applicable Constitutional provision affording the exemption.
Thus, Company understands that it, as lessee of the Project owned by the City, will, in fact, have no ad
valorem taxes to pay under the provisions of the Lease. The City has indicated a reluctance to lose all
tax revenues which would otherwise be received if the properties involved were privately owned.
Therefore to induce the City to proceed with the issuance of the Bonds for the purpose indicated and to
induce Company to build a substantial industrial project near the City, and for other valuable
consideration, the receipt of which is hereby acknowledged by the City, Company agrees with the City
as follows:
1. (a) To defray the City's administrative expense and as compensation for services
rendered and to be rendered the Company will pay to the City the sum of
$500.00 annually during the years 1996 to , inclusive, payable on or
before June 30 of each year.
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(b) In lieu of ad valorem property taxes, the Company will pay to the City the sum
of $ annually commencing with the year 1997 and continuing
through the year (unless otherwise provided), payable not later than
October 10 each year.
(c) Payments not made when due shall bear interest at 7.00% per annum until paid.
2. The payments to be made by Company, pursuant to this Agreement, are intended to be
in lieu of all ad valorem taxes that would have to be paid on the Project leased by Company in the Lease
to the State of Arkansas, the City of Little Rock, Pulaski County, School or Community College Districts
and /or other political subdivisions of the State of Arkansas if the Project were not exempt from ad
valorem taxes under the provisions of Article 16, Section 5 of the Constitution of the State of Arkansas
as interpreted by the Supreme Court of the State of Arkansas in Wayland v. Snapp, supra (the "taxing
authorities ").
3. 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.
4. The City and Company agree to cooperate in sustaining 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, Company is required to pay
any tax which the payments specified herein are intended to be in lieu of, Company may deduct the
aggregate of any such payments made by it from the amount herein agreed to be paid in lieu of taxes and
need only pay the difference to the taxing authorities. Furthermore, inasmuch as the payment herein
agreed to be made by 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 otherwise be payable for such year in ad valorem
taxes, in the aggregate, on account of its ownership of the Project.
5. 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 purpose other than a default on the part of Company.
If such termination shall be at a point constituting a portion of a tax year, Company shall pay in
lieu of taxes for the year in which termination occurred that portion of the specified annual payment that
the number of days in such tax year that Company was Leased prior to the termination bears to 365 days.
6. This agreement shall be binding upon the successors and assigns of Company, but no
assignment shall be effective to relieve Company of any of its obligations hereunder unless expressly
authorized and approved in writing by the City.
7. This agreement may be executed in counterparts, each of which shall be deemed an
original, and all of which shall constitute but one and the same instrument.
If the foregoing is acceptable, please so indicate by executing the acceptance set forth below, and
returning to Company, whereupon this instrument shall constitute a valid and binding contract between
Company and the City.
DATED: March—, 1996.
By
Title
ACCEPTED:
CITY O LITTLE ROCK, ARKANSAS
By
M
March _, 1996
LEXICON, INC.,
an Arkansas Corporation
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