12946RESOLUTION NO. 12,946
A RESOLUTION AUTHORIZING THE ENTRY INTO AN AGREEMENT
TO ISSUE BONDS FOR THE PURPOSE OF ASSISTING IN THE
FINANCING OF INDUSTRIAL FACILITIES AT THE PORT OF THE CITY
OF LITTLE ROCK, ARKANSAS, TO BE LEASED TO NOVUS
ARKANSAS, INC., PURSUANT TO THE AUTHORITY OF THE LAWS OF
THE STATE OF ARKANSAS, INCLUDING PARTICULARLY
AMENDMENT 65 TO THE ARKANSAS CONSTITUTION AND THE
MUNICIPALITIES AND COUNTIES INDUSTRIAL DEVELOPMENT
REVENUE BOND LAW.
WHEREAS, the City of Little Rock, Arkansas, is authorized under the provisions
of Amendment 65 to the Arkansas Constitution and the Municipalities and Counties
Industrial Development Revenue Bond Law, Ark. Code Ann. §§ 14- 164 -201 to -224 (the
"Act "), to own, acquire, construct, equip, and lease 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, NOVUS [INTERNATIONAUARKANSAS ?], Inc. (the "Company "),
has evidenced its interest in the construction, expansion, and equipping of
manufacturing and distribution buildings, improvements, and facilities at the Port of Little
Rock (the "Project ") if the permanent financing can be provided through the issuance of
bonds under the authority of the Act; 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 the Act; and
WHEREAS, it is desirable that the City enter into an Agreement to Issue Bonds
for such purpose.
NOW, THEREFORE, BE IT RESOLVED BY THE BOARD OF DIRECTORS OF
THE CITY OF LITTLE ROCK, ARKANSAS that:
Section 1. The Mayor and the City Clerk of the City are hereby authorized to
enter into an Agreement to Issue Bonds in substantially the form and substance as
follows:
AGREEMENT TO ISSUE BONDS
THIS AGREEMENT is made as of March 3, 2009, by and between the City of
Little Rock, Arkansas, a city of the first class under the laws of the State of Arkansas
(the "City "), and NOVUS [INTERNATIONAL/ARKANSAS ?], Inc. (the "Company "), for
the purpose of carrying out the purposes set forth in the Municipalities and Counties
WIT NESS ETH:
WHEREAS, the City is authorized by Amendment 65 to the Arkansas
Constitution and the Act to own, acquire, construct, reconstruct, extend, equip, improve,
operate, maintain, sell, lease, or contract concerning, or otherwise deal in or dispose of
any land, buildings, or facilities or any and every nature that can be used in securing or
developing industry, within or near the City; and
WHEREAS, the City has determined that such purposes may be served by
cooperation with the Company in the construction, expansion, and equipping of
manufacturing and distribution buildings, improvements, and facilities at the Port of Little
Rock (the "Project "); and
WHEREAS, the City and the Company desire to cooperate in the acquisition,
constructing, 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
the Act in an aggregate principal amount now estimated not to exceed $40,000,000
(excluding any bonds issued to refund the Bonds); and
WHEREAS, the City and the Company intend to enter into a Lease Agreement
(the "Lease ") of the real and personal property constituting the Project, which
contemplates that the Project will be leased to the Company, with an option to purchase
for a nominal price, and the rental payments therefore together with other moneys
available 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 the Company agree as follows:
1. Proceedings. All proceedings in connection with the issuance of the Bonds
shall be consistent with the requirements of the Act. All references contained herein to
the issuance of the Bonds shall be subject to compliance with the formalities of the Act
when the facts required to do so are determined.
2. Acquisition, Construction, and Equipping. The City and the Company will
cooperate in causing to be commenced and continued the required acquisition,
construction, and equipping of the Project, and the Company may provide, or cause to
be provided, the necessary interim financing to permit work on the Project to commence
and continue expeditiously pending the issuance of Bonds. Not later than the date of
issuance of the Bonds, the Company will convey and transfer or cause to be conveyed
and transferred to the City, the Project or portions thereof theretofore acquired,
constructed, and equipped. There shall also be conveyed to the City any easements
and rights -of -way necessary to permit construction, equipping, installation, operation,
and maintenance of the Project.
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3. Lease. The City and the Company shall enter into the Lease under which the
Company will lease the Project, with an option to purchase for a nominal price, from the
City and will agree to make rental payments sufficient to pay the principal of and
premium, if any, and interest on the Bonds.
4. Sale of Bonds, Security. The City will take such steps as are necessary to
issue, sell, and deliver the Bonds, pursuant to the terms of the Act, for the purposes of
financing the costs of the Project, in each case only upon receipt of the written
designation by the Company of the purchaser(s) or underwriter(s) thereof, such Bonds
to be in such principal amount, to mature in such amount and times, to bear interest at
such rate or rates, to be payable on such dates, and to, have such optional and
mandatory redemption features and prices as are determined by the City and approved
in writing by the Company. The City further agrees that it will enter into the Lease and a
mortgage with the purchaser of the Bonds, for the purpose of providing rental payments
sufficient, with other amounts available from the Company or directly or indirectly from
the proceeds of the Bonds, to pay the principal of and premium, if any, and interest on
the Bonds as they become due, and pledging and otherwise securing the payment of
such rental payments for the benefit of the holder(s) of the Bonds. The Lease, the
mortgage, other related documents, and the Bonds shall contain such terms and
conditions as are agreed upon by the City and the Company. The City will cooperate in
consummating the transactions 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 with either,
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 from time to time, in such aggregate principal amount or amounts as the
Company shall request in writing; provided, however, that all conditions of the Act shall
have been met.
7. Costs to be Financed. The costs of the Project may include any costs
permissible under the Act, including but not limited to reasonable and necessary costs,
expenses, and fees incurred by the City in connection with the issuance of the Bonds or
in connection with the Project; fees and out -of- pocket expenses of Williams & Anderson
PLC; recording costs; rating agency's fees, if any; and printing costs. The City will upon
request provide or cause to be provided any data or information which may be
reasonably required to verify any of the costs, expenses, and fees enumerated above.
8. Termination. In the event that the Bonds shall not be sold within three years
from the date hereof, this Agreement shall automatically terminate unless the parties
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hereto shall agree in writing to its extension for a further period of time specified in such
writing, which agreement on the part of the City shall not be unreasonably withheld.
The Company may unilaterally terminate this Agreement without liability to the City
(except for any amounts due and owing by the Company to the City) by giving notice by
ordinary mail, postage prepaid, to the City specifying therein the date of termination,
which may be the date of the notice.
9. Protection to the City. The 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. The Company will at all times indemnify and hold
harmless the City against any and all losses, costs, damages, expenses, and liabilities
of whatsoever nature directly or indirectly resulting from, arising out of, or related to
matters in connection with this Agreement.
10. Ad Valorem Taxation Exemption. The City and the Company recognize
that under the Arkansas Constitution and decisions of the Supreme Court of Arkansas
and in accordance with Ark. Code Ann. §§ 14- 164 -701 to -703, the Project will be
exempt from ad valorem taxation. The City agrees that the Company shall be required
to enter into an Agreement for Payments in Lieu of Taxes ( "PILOT Agreement ") with the
City in substantially the form submitted to this meeting, providing for payments in lieu of
a portion of the ad valorem taxes that would otherwise be levied by local public bodies
with taxing authority.
11. Purpose and Effect. The Bonds are to be issued, sold, and delivered under
the authority of the Act and all related actions and documents shall be in conformity
therewith. The City intends this Agreement to be the expression of its present intent,
pursuant to the terms hereof, to issue the bonds up to $40,000,000 aggregate principal
amount outstanding at any one time, and also to issue additional Bonds if the Project
costs exceed such amount, and to expend the Bond proceeds to defray the costs of the
Project.
12. Assignment. The Company may assign this Agreement and the PILOT
Agreement in whole or in part to an affiliate of the Company without the prior written
consent of the City and to an entity which is not an affiliate of the Company with the
prior written consent of the City, which consent shall not be unreasonably withheld.
Notwithstanding the foregoing, no assignment and no dealings or transactions between
the City and any assignee shall relieve the Company of any of its obligations under this
Agreement.
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 by
its Mayor and the Company has caused its corporate name to be subscribed hereto by
its duly authorized officer, all as of the year and date first above written.
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CITY OF UT ULE ROCKZ ARKANSAS
c
NOVUS ARKANSAS, LLC
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Section 2. The PILOT Agreement is hereby approved in substantially the form
submitted to this meeting.
Section 3. This Resolution shall be in full force and effect from and after its
adoption.
Section 4. Severability. In the event any title, section, paragraph, item,
sentence, clause, phrase, or word of this resolution is declared or adjudged to be invalid
or unconstitutional, such declaration or adjudication shall not affect the remaining
portions of this resolution, which shall remain in full force and effect as if the portion so
declared or adjudged invalid or unconstitutional was not originally a part of this
resolution.
Section 5. Repealer. All ordinances or resolutions of the City in conflict
herewith are hereby repealed to the extent of such conflict.
PASSED: March —, 2009
ATTEST:
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... IN Mon
APPROVED AS TO LEGAL FORM:
Thomas M. Carpenter, C it Attorney
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PAYMENT IN LIEU OF TAX AGREEMENT
Date: March z1 , 2009
City of Little Rock, Arkansas
Little Rock, Arkansas
Re: City of Little Rock, Arkansas Industrial Development Revenue Bonds, Series
2009 (Novus International, Inc. Expansion Project)
Ladies and Gentlemen:
Novus Arkansas, LLC ( "Novus ") has indicated its intent to manufacture additional
products and expand its scope of services at its existing facility in Little Rock, Arkansas
(the "Existing Facility "). These activities by Novus will require substantial capital
expenditure and will help protect existing jobs and possibly increase employment at
Novus. Thus, in order to facilitate the foregoing, and to also provide incentive to Novus
to consider relocating other manufacturing and services operations to the Existing
Facility or this area, the City of Little Rock, Arkansas (the "Issuer ") proposes to issue the
Industrial Development Revenue Bonds referenced above under the provisions of Act 9
of the First Extraordinary Session of the Sixty- Second General Assembly of the State of
Arkansas, approved January 21, 1960, as amended ( "Act 9 Bonds "). These Act 9
Bonds (which may be issued in more than one series) shall be issued for the purpose of
financing the cost of remodeling and renovating the Existing Facility, the acquisition of
new machinery and equipment to be placed within the Existing Facility, and the
relocation of machinery and equipment to the Existing Facility. These Act 9 Bonds may
also be issued for the purpose of financing any new or additional lands, buildings,
improvements, and any new or relocated machinery and equipment sited within any
such new or additional such buildings or improvements. These Act 9 Bonds may also
be issued for any new or relocated machinery and equipment sited within any other
building or improvements owned or leased by Novus, and used in the manufacture or
distribution of products by Novus in the City of Little Rock, Pulaski County, Arkansas.
Any and /or all of the scenarios listed directly above shall collectively be referred to
hereinafter as the "Expansion Project."
The Expansion Project will be leased by the Issuer to Novus pursuant to a Lease
Agreement dated as of the date of the Act 9 Bonds (the "Lease "). The Act 9 Bonds will
be secured by a pledge of revenues from the Expansion Project including, in particular,
lease rentals to be paid by Novus to the Issuer under the Lease.
The Lease provides in Article IV that Novus is obligated to pay all taxes and
assessments, general and special, levied and assessed on the Expansion Project
during the term of the Lease, as well as water and sewer charges, assessments and
other governmental charges and impositions. Novus is informed and understands that,
notwithstanding Article IV of the Lease, under Article 16, Section 5 of the Constitution of
the State of Arkansas as implemented by Act 497 of 1981 (Act No. 497), and under the
decision of the Supreme Court of the State of Arkansas in the case of Wayland v.
Snapp, 232 Ark. 57, 334 S. W. 2d 663 (1960), the Expansion Project will be exempt
from ad valorem taxes because it is owned by the Issuer and used for a public purpose
within the meaning of the applicable constitutional and statutory provisions affording the
exemption. Thus, Novus and the Issuer agree that Novus, as Lessee of the Expansion
Project owned by the issuer will, in fact, pay no ad valorem taxes under the provisions
Article IV of the Lease on the Expansion Project. However, it is the mutual desire of the
Issuer and Novus that Novus make payments in lieu of taxes on the Expansion Project.
Under policies of the Issuer applicable to industrial development bonds, Novus has paid
an initial administrative fee to the Issuer of $2,500 (and will pay an additional sum of
$10,000 when the Bonds are delivered). Additional amounts will be paid to the Issuer
annually for administrative expenses during the time the Bonds are outstanding as
hereinafter provided.
Therefore, to induce the Issuer to proceed with the issuance of the Act 9 Bonds for the
purposes indicated, and to induce Novus to proceed with the Expansion Project, which
will inure to the benefit of Novus and the Issuer, and for other valuable consideration,
the receipt of which is hereby acknowledged, Novus agrees with the issuer as follows:
1. With reference to tax years 2009 through 2029 (or for so long as the Act 9 Bonds
are outstanding), Novus will make payments in lieu of taxes on or before October
1 of the succeeding year equal to 35% of the ad valorem taxes assessed in such
year as if the Expansion Project were deemed not to be for a public purpose.
These benefits will be available to Novus as long as Novus is able to certify that
permanent and temporary employment at the Existing Facility and the Expansion
Project is maintained at a level of at least 25 individuals at any time during the
tax year.
2. It is understood that the agreement set forth in this document is intended to be a
separate agreement from, and not a replacement of, any other agreement
between Novus and the Issuer. Specifically, this agreement shall not change any
terms and conditions of any, if any, Existing Payment Agreement currently in
effect and under which Novus is currently making payments. The Existing
Payment Agreement shall remain in full force and effect, and no asset covered
under the Existing Payment Agreement shall be subject to the terms of this new
agreement.
3. The Issuer 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. Payments hereunder are not intended to be in lieu of (i) any licenses, occupation
or privilege tax or fee imposed upon Novus 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.
5. The Issuer and Novus agree to use their best efforts to sustain the enforceability
of this agreement. However, if by any reason there is 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, and Novus is required
to pay any tax for which the payments specified in paragraph 1 above are
intended to be in lieu, Novus may deduct the aggregate of any such payments
made by it from any amount herein agreed to be paid under paragraph 1.
6. The agreement herein made by Novus 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 Novus. If such termination shall be at a point
constituting a portion of a year, Novus 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 Expansion Project was exempt prior to the termination bears
to 365 days.
7. This agreement shall be binding upon the successors and assigns of Novus, but
no assignment shall be effective to relieve Novus of any of its obligations
hereunder unless expressly authorized and approved in writing by the Issuer.
8. This agreement may be executed simultaneously in counterparts, each of which
shall be deemed an original.
9. To defray the Issuer's administrative expense and as compensation for services
rendered, and to be rendered, Novus will pay to the Issuer the sum of $2,500 for
the annually during the years 2009 to the time that the Lease expires, payable on
or before June 30 of each year.
When executed, this instrument shall constitute a valid and binding contract by and
among Novus and the Issuer.
Very truly yours,
Novus Arkansas, LLC
By:
Title:
ACCEPTED:
City of Little Rock, Arkosas
By: ig Lew
Mayor
Date: