12726RESOLUTION NO. 12,726
A RESOLUTION AUTHORIZING A MEMORANDUM OF
INTENT BETWEEN THE CITY OF LITTLE ROCK,
ARKANSAS AND SAGE V FOODS, LLC PERTAINING TO
THE ISSUANCE OF INDUSTRIAL DEVELOPMENT
REVENUE BONDS; AND PRESCRIBING OTHER MATTERS
RELATING THERETO.
BE IT RESOLVED by the Board of Directors of the City of Little Rock, Arkansas:
Section 1. There is hereby authorized the execution and delivery of a Memorandum of
Intent by and between the City of Little Rock, Arkansas (the "City ") and Sage V Foods, LLC, a
California limited liability company, and the Mayor and City Clerk are hereby authorized to execute
and deliver the Memorandum of Intent for and on behalf of the City. The Memorandum of Intent is
approved in substantially the form submitted to this meeting.
Section 2. The Mayor and City Clerk are hereby authorized and directed, for and on
behalf of the City, to do all things, execute all instruments and otherwise take all action necessary to
the realization of the City's obligations under the Memorandum of Intent.
PASSED: July 15, 2008.
ATTEST:
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Nat i S. Blocker, Assistant City Clerk
For Nancy Wood, City Clerk
(SEAL)
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Mark Stodola, Mayor
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MEMORANDUM OF INTENT
This MEMORANDUM OF INTENT is between the CITY OF LITTLE ROCK, ARKANSAS
(hereinafter referred to as the "City "), and SAGE V FOODS, LLC, a California limited liability
company (hereinafter referred to as the "Company ").
IN CONSIDERATION of the undertakings of the parties set forth herein and the benefits to
be derived therefrom and of other good and valuable considerations, receipt of which is hereby
acknowledged by the parties, the City and the Company AGREE:
1. Preliminary. (a) The City is authorized by the laws of the State of Arkansas,
including particularly Title 14, Chapter 164, Subchapter 2 of the Arkansas Code of 1987 Annotated
(the "Act "), to issue revenue bonds for financing the costs of acquiring, constructing and equipping
industrial facilities (as defined in and authorized by the Act).
(b) It is proposed that the City issue its revenue bonds under the Act for the purpose of
assisting the Company in acquiring, constructing and equipping an industrial project in the Little
Rock Port Industrial Park, generally consisting of a rice production facility, together with related land
and machinery, equipment and other tangible personal property (the "Project ").
(c) In order to secure and develop industry in furtherance of the public purpose of the
Act, the City is willing to proceed with the issuance of such revenue bonds as, when and if requested
by the Company, subject to compliance with all conditions set forth in the Act.
(d) The City considers that the acquiring, constructing and equipping of the Project will
furnish substantial employment and payrolls and will thereby promote the economic welfare of the
inhabitants of the City and adjacent areas.
2. Undertakings. Subject to the conditions stated herein, the City and the Company
agree as follows:
(a) When requested by the Company, the City will take the necessary steps to issue
revenue bonds under the Act in such amounts as shall be requested by the Company for
accomplishing all or any part of the Project. It is expected at this time that revenue bonds will be
issued in series from time to time in the aggregate principal amount of $25,000,000 for the purpose
of financing the costs of accomplishing the Project. It is understood, however, that revenue bonds
shall be issued in such amounts and at such times as shall be requested by the Company for
accomplishing all or any part of the Project, whether those amounts are, in the aggregate, more or
less than the above estimate.
(b) The City will, at the proper time and subject in all respects to the recommendation
and approval of the Company, adopt such proceedings and authorize the execution of such
documents as may be necessary and advisable for the issuance of the bonds, the acquiring,
constructing and equipping of the Project, the leasing or sale thereof to the Company, and the
securing of the payment of the bonds by a lien on and security interest in the properties comprising
the Project, all in conformity with the Act and any other applicable federal and state laws and upon
terms and conditions mutually satisfactory to the City and the Company.
(c) Upon the issuance of revenue bonds as provided herein, the Company will enter into
appropriate agreements with the City obligating itself to pay to the City amounts sufficient to pay
the principal of, premium, if any, and interest on the bonds when due, and containing such customary
terms and conditions as are agreed upon by the City and the Company consistent with the authority
conferred by the Act.
(d) The Company will pay all costs of the Project and all financing costs (including all
expenses of the City in authorizing and issuing the bonds) not paid from the proceeds of the bonds.
(e) The City and the Company will take such further action and adopt such further
proceedings as may be required to implement the aforesaid undertakings or as it may deem
appropriate in pursuance thereof.
3. Ad Valorem Taxation. The City and the Company are informed and understand that
under the Arkansas Constitution and decisions of the Supreme Court of Arkansas, particularly the
cases of Wayland v. Snapp, 232 Ark. 57, 334 S.W. 2d 633 (1960), and Pulaski County v. Jacuzzi
Bros. Div., 332 Ark. 91, 964 S.W.2d 788 (1998), the properties comprising the Project will be
exempt from ad valorem taxes on the real and personal property comprising the Project by virtue of
their ownership by the City. Should the Company request the City to proceed with the issuance of
the bonds as provided herein, the Company and the City shall enter into an agreement substantially
in the form attached hereto as Exhibit A requiring the Company to make payments in lieu of taxes
in the amounts and on the terms set forth, which amounts and terms are acceptable to the City and
the Company.
4. General Provisions. (a) As specified in the Act, the revenue bonds issued as
provided herein will not be general obligations of the City, but will be special obligations, and in no
event will they constitute an indebtedness of the City within the meaning of any constitutional or
statutory limitation.
(b) The Company may revise the plans for the Project and the facilities presently
expected to comprise the Project at any time and from time to time in any respect, including, without
limitation, any changes therein, additions thereto, substitutions therefor and deletions therefrom, and
this Memorandum of Intent shall apply thereto.
(c) The Company's interest in this Memorandum of Intent may be assigned by the
Company to any parent or subsidiary of the Company or any subsidiary of the Company's parent, or
any other entity controlling, controlled by, or under common control with the Company.
(d) This Memorandum of Intent shall continue in full force and effect until the Project
and its financing (including bonds issued in separate series) is accomplished.
IN WITNESS WHEREOF, the City and the Company have entered into this Memorandum
of Intent by their officers thereunto duly authorized, as of the 15th day of July, 2008.
ATTEST:
City Clerk
(SEAL)
CITY OF LITTLE ROCK, ARKANSAS
an
Mayor
SAGE V FOODS, LLC
By:
President
EXHIBIT A
PAYMENT IN LIEU OF TAX AGREEMENT
City of Little Rock, Arkansas Date: 12008
City Hall, 500 West Markham
Little Rock, Arkansas 72201
Attention: Mayor
Re: City of Little Rock, Arkansas Industrial Development Revenue Bonds
(Sage V Foods, LLC Project)
Ladies and Gentlemen:
The City of Little Rock proposes to issue the industrial development revenue bonds identified
above (the "Bonds ") underthe provisions of the Municipalities and Counties Industrial Development
Revenue Bond Law, Ark. Code Ann. § § 14 -164 -201 to -224 (the "Act "), for the purpose of financing
the cost of acquiring, constructing and equipping an industrial project in the Little Rock Port
Industrial Park, generally consisting of a rice production facility, together with related land and
machinery, equipment and other personal property (the "Project "). It is expected that the Bonds will
be issued in series from time to time. The Project will be leased by the City to Sage V Foods, LLC,
a California limited liability company (the "Company "), pursuant to one or more lease agreements
(collectively, the "Lease "), for rentals sufficient to pay debt service on the Bonds.
Under the policies of the City applicable to industrial development bonds, the Company has
previously paid an initial administrative fee to the City of $2,500 (and will pay an additional sum of
$ when the first series of the Bonds are delivered). Additional amounts will be paid to the
City annually for administrative expenses as hereinafter provided.
The Lease will provide that the Company is obligated to pay all taxes and assessments levied
and assessed on the Project during the term of the Lease. The Company is informed and understands
that, notwithstanding the provisions of the Lease, under Article 16, Section 5 of the Constitution of
the State of Arkansas, as interpreted by the Arkansas Supreme Court in Wayland v. Snapp, 233 Ark.
57, 334 S.W. 2d 633 (1960), and Pulaski County v. Jacuzzi Bros. Div., 332 Ark. 91, 964 S.W.2d 788
(1998), and Ark. Code Ann. §§ 14 -164 -701 to -703, the Project 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 and statutory provisions affording the exemption.
Thus, the Company understands that it, as Lessee of the Project owned by the City, will, in
fact, pay no ad valorem taxes on the Project property under the provisions of the Lease. The City
has indicated a reluctance to lose all tax revenues which would otherwise be received by it if the
property involved was privately owned.
Therefore, to induce the City to proceed with the issuance of the Bonds for the purpose
indicated, which will inure to the benefit of the Company, and for other valuable consideration, the
receipt of which is hereby acknowledged, the 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 S annually
during each calendar through , payable on or before June 30 of each year, commencing June
30, 2009.
(b) In lieu of ad valorem property taxes, the Company will pay to the City an annual sum
equal to 35% of the amount which would be payable as ad valorem taxes that would have to be paid
on the Project to the State of Arkansas, the City, Pulaski County, the Little Rock School District,
and /or other political subdivisions of the State of Arkansas (the "taxing authorities ") 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, and Pulaski County v. Jacuzzi Bros. Div., supra, and Ark. Code Ann.
§ § 14 -164 -701 to —703. Payments are due not later than October 10 each year.
2. The payments to be made pursuant to paragraph 1(b) are intended to be in lieu of all
ad valorem taxes that would have to be paid on the Project to the taxing authorities 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, and Pulaski County v. Jacuzzi Bros. Div., supra, and Ark. Code Ann.
§§ 14- 164 -701 to -703, but are not intended to be in lieu of (I) any licenses, occupation or privilege
tax, or fee imposed upon the Company for or with respect to its right to carry on its business in the
State of Arkansas, (ii) any special benefit or local improvement tax or assessment, or (iii) fees or
charges for utility services rendered, such as for water or sewer services.
3. The City agrees to distribute each payment under paragraph 1(b) among the taxing
authorities in the proportion that the millage collected bears to the total millage collected by all
during the year of distribution.
4. The City and the Company agree to cooperate in sustaining the enforceability of this
Agreement. However, if by reason of a change in the Constitution of the State of Arkansas, a change
by the Supreme Court of the State of Arkansas in its interpretation of the Constitution, a change by
the General Assembly of the State of Arkansas, or otherwise the Company is required to pay any tax
for which the payments specified in paragraph 1 are intended to be in lieu, the Company may deduct
the aggregate of any such payments made by it from any amount herein agreed to be paid under
paragraph 1. Furthermore, inasmuch as the payments in paragraph 1 herein agreed to be made are
intended to be in lieu of taxes, it is agreed that said payments 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.
2
5. The agreement herein made by the Company shall terminate and be of no further force
and effect from and after the date that the Agreement shall terminate for any purpose other than a
default on the part of the Company. If such termination shall be at a point constituting a portion of
a 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 year that the Project was exempt prior to the
terminations bears to 365 days or 366 days, as appropriate.
6. This agreement shall be binding upon the successors 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.
When executed this instrument shall constitute a valid and binding contract between the
Company and the City.
ACCEPTED:
CITY OF LITTLE ROCK, ARKANSAS
:
Mayor
11:
Very truly yours,
SAGE V FOODS, LLC
President