2b. Location, Development and Use AgreementFROM:
Citv of Kalispell
Post Office Box 1997 • Kalispell, Montana 59903-1997 • Telephone (406) 758-7700 • FAX (406) 758-7758
Honorable Mayor and City Council
Chris A. Kukulski, City Manager
SUBJECT: Location, Development and Use Agreement
MEETING DATE: February 7, 2000
BACK GROUND: Attached is a copy of the Location, Development and Use Agreement (LDUA)
which will be signed by Stream, American Capital Group (Jim Taylor) and the City of Kalispell. Even
though all six of the documents to be approved at the February 7th meeting are important, it is the
LDUA that ties the entire Stream International project together. Most importantly, the LDUA details
the responsibilities of each party and the penalties for failing to perform. I want to note that because of
the magnitude of all of the documents pertaining to this project, Mae Nan Ellingson, Glen and I are
asking for Council's authority to make minor changes to the documents. This authority could not be
used to make any substantive changes, rather we could fix typos and refine language to clarify the intent
of what is being approved by the Council.
Although the entire document is of upmost importance, the intent of this memo is to cover only the
major business points we would like approved. The following will cover these major business points
in the order in which they are detailed in the agreement:
Section 4 - City Undertakings - The City represents that it has already received preliminary approval
on a $500,000 EDA Grant and will follow through, with Stream's cooperation, to secure these funds
in order to make improvements in the space to be leased to Stream. If the City does not secure the
EDA funds, we agree to re -apply for the monies at a future date in order to reimburse Stream for the
total amount of improvements equal to the grant.
The City is also responsible for securing a CDBG Training Grant in the amount of $400,000. If the
City is unsuccessful in securing this grant, we agree to re -apply for future monies in order to offset
Streams cost with their assistance.
The City agrees to work with Stream in order to ensure that Flathead Electric and Century Tel
perform on their obligations to the project. Flathead Electric and Century Tel have each agreed to
make capital improvements totaling $50,000 and contribute $20,000 annually to reimburse Stream
for employee training.
The City agrees to secure a loan from American Capital in the amount of $1.5 million and also loan
$1.0 million to Stream from our Urban Development Action Grant funds at an annual interest rate
of 11.5% over a term of ten (10) years to be secured by a bankable letter of credit.
Section 5 - Company's Undertakings with Respect to Project - Stream agrees to sign a ten (10) year
lease at a market rate of $5.50 per square foot (the lease is a separate legal document).
Page 1 of 3
Stream agrees to invest approximately $3.8 million (inclusive of the EDA grant) in real property
improvements to our building within six (6) months. Stream further agrees to invest approx. $3.95
million in personal property and equipment within six (6) months of execution of the lease.
Stream agrees to pay all of its real and personal property taxes as well as any special assessments
that might be apportioned to the property. In addition, Stream agrees to pay the City a "deficiency
tax" payment, if for some reason Stream's local property taxes fall below $140,000 annually. This
helps to ensure the City's ability to pay the debt retirement payments in spite of changes to the tax
system which may be out of the City's control.
Section 6 - User Fee - As a result of the City's loan through the Board of Investment (BI), which
results in the creation of basic sector jobs, the City is eligible for two incentive programs. The first
is a tax credit to Stream for their annual State of Montana Corporate License obligation provided
Stream agrees to pay a "user fee". This user fee will be calculated on an annual basis and will be
equal to Stream's Corporate License tax. It is estimated that this user fee could be as high as
$90,000 based on the operation being fully developed (est. date of 2004). This user fee will greatly
enhance the City and Port Authority's ability to pay the debt retirement payments on the BI loan.
The Interlocal Agreement details how this user fee would impact each entity's responsibility to
contribute toward the debt retirement.
The second is a 2.5% interest rate reduction on our BI loan for the creation of jobs. We estimate that
once the first 75 individuals are hired by Stream, the City will be eligible for this interest rate
reduction. Stream is required to submit a job credit certification form 75 days after the Closing.
This interest rate reduction will lower our interest on the BI loan to 6.21 %, thus creating an annual
debt retirement payment of approx. $337,000.
Section 7 - Job Provisions and Reimbursement for Improvements - Stream agrees to create a
minimum of 500 full time jobs by June 1, 2003. The first 150 full time jobs will be created within
nine months, the second 150 full time jobs will be created within eighteen months and the final 200
full time jobs will be created within thirty-six months.
Stream agrees to utilize their three -tiered pay structure in Kalispell which currently includes wages
of. Tier I - $7.50 - $9.00/hr; Tier II - $9.00 - $12.00/hr and; Tier III - $12.00 - $16.00/hr. Once the
facility is fully operational, it is estimated that 40% of the 500 full time jobs will consist of
individuals above the Tier I status.
In order for Stream to receive credit toward the 500 j ob requirement, the hourly wages paid plus the
dollar amount of benefits provided for each employee cannot be less than the average "private
wage" paid in the State of Montana as reported by the Department of Labor on July 15 of each year.
Stream agrees to cooperate and assist the City(or designated representative) in conducting a j ob audit
annually. Prior to the creation of the 500 jobs, audits will be conducted in the loth, 19th, 24th, and
361h months in order to determine if Stream has complied with the ramp -up period described above.
The City agrees that if we fail to secure the entire $4,000,000 incentive package as described in
Section 4, we will decrease Stream's job obligation proportionateley as it pertains to Section 7.4,
Page 2 of 3
Reimbursement for Improvements. As an example, if the City fails to secure 10% of the
$4,000,000, Stream's job obligation will be lowered to 450 full time employees. It should be noted
that we currently have a $150,000 cushion because the total incentive package exceeds the
$4,000,000 target. I will also state that Stream will not decrease its workforce as a result of this
provision.
The City agrees to reimburse Stream $2.75 million over ten (10) years as a result of Stream's $3.8
million investment into capital improvements to our building. The annual reimbursement of
$275,000 is equal to the lease payment owed by Stream, and as a result, will not require an
exchange of dollars, unless Stream fails to perform on the job creation and maintenance obligations
as described in Section 7.1. Therefore, if the City secures $4,000,000 million in incentives for
Stream, and Stream fails to perform on its job obligations, Stream will owe the City the difference
between the lease payment and our reimbursement payment.
Section 8 - Events of Default and Remedies - Stream agrees that if they fall below 250 jobs as a
result of the job audit Stream will receive no credit towards the improvements for that year.
In summary, I feel that Mae Nan has done an excellent job drafting this agreement. The agreement is
clear and concise as to each entities responsibilities. The agreement also details the penalties each entity
will face if they fail to perform. I believe the major points of this agreement meet the intent of what the
City Council has approved in concept during several previous workshops on this matter and sincerely
hope that you will authorize me to sign this document on behalf of the City of Kalispell.
RECOMMENDATION: That the City Council authorize me to sign the attached Location,
Development and Use Agreement. I further request that I be authorized to make non -substantive
(minor) changes to the agreement, if necessary, based on the advise of our legal counsel.
FISCAL EFFECTS: The direct impact of this project on the City's tax revenues will be offset
by the expenses paid out in order to complete the project. However, the indirect impact of creating 500
full time jobs will definitely help to strengthen our economy and spur economic growth.
ALTERNATIVES: As suggested by the Council.
Respectfully submitted,
Chris A. Kukulski
City Manager
Report compiled February 3, 2000
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02/04/00
LOCATION, DEVELOPMENT AND USE AGREEMENT
between
CITY OF KALISPELL, MONTANA
and
STREAM INTERNATIONAL SERVICES CORP.
Dated as of February 8, 2000
TABLE OF CONTENTS
Page
Section 1. Definitions; Rules of Interpretation; Exhibits .............................................. 2
1.1. Definitions................................................................................................ 2
1.2. Rules of Interpretation.............................................................................. 7
1.3. Exhibits..................................................................................................... 7
Section 2. Representations............................................................................................ 8
2.1. City Representations................................................................................. 8
2.2. Company Representations........................................................................ 9
Section3. The Project................................................................................................... 10
Section 4.
City Undertakings........................................................................................
10
4.1.
The Property; Board Loan........................................................................
10
4.2.
Lease of Property......................................................................................
11
4.3.
EDA Grant................................................................................................
11
4.4.
CDBG Grant.............................................................................................
11
4.5.
Flathead Electric Cooperative, Inc...........................................................
12
4.6.
CenturyTel Services Group, Inc...............................................................
12
4.7.
Loan From American Capital...................................................................
12
4.8.
City Loan..................................................................................................
13
Section 5.
Company's Undertakings with Respect to Project ......................................
13
5.1.
Lease of Property......................................................................................
13
5.2.
Construction of Improvements.................................................................
13
5.3.
Installation of Personal Property and Equipment .....................................
13
5.4.
Permits; Environmental Laws..................................................................
14
5.5.
Compliance with State Law Bidding........................................................
14
5.6.
Corporate Existence..................................................................................
14
5.7.
Property Tax Obligation; Deficiency Tax Payment .................................
14
Section6. User Fee....................................................................................................... 15
6.1. User Fee; Payment to the City.................................................................. 15
6.2. Calculation of User Fee and Income Tax Credit ...................................... 15
6.3. Interest Rate on Board of Investments Loan and
Job Credit Certification........................................................................ 15
Section 7. Job Provisions - Reimbursement for Improvements ................................... 16
7.1. Agreement to Create and Provide Jobs .................................................... 16
7.2. Evidence of Job Creation; Job Audit ........................................................ 17
7.3 Modification of Job Obligation................................................................ 18
7.4. Reimbursement for Improvements........................................................... 18
me
Section 8.
General Provisions.......................................................................................
19
8.1.
Agreement to Pay Attorney's Fees and Expenses ....................................
19
8.2.
No Additional Waiver Implied by One Waiver .......................................
19
8.3.
Conflicts of Interest; City's Representatives
Not Individually Liable............................................................................
19
8.4.
Rights Cumulative....................................................................................
19
8.5.
Term of Agreement..................................................................................
19
Section 9.
Administrative Provisions............................................................................
20
9.1.
Notices....................................................................................................
20
9.2.
Role of Authority......................................................................................
20
9.3.
Binding Effect..........................................................................................
20
9.4.
Severability...............................................................................................
21
9.5.
Amendments, Changes and Modifications ...............................................
21
9.6.
Further Assurances and Corrective Instruments .......................................
21
9.7.
Execution Counterparts............................................................................
21
9.8.
Applicable Law.........................................................................................
21
9.9.
Captions....................................................................................................
21
Signatures....................................................................................................................... 22
Exhibit A
—Description of the Improvements
Exhibit B—Description
of Personal Property and Equipment
Exhibit C—Description
of the Property
Exhibit D—Form
of Lease Agreement
Exhibit E—Company
Certificate as to Job Credit Certification
Exhibit F—Form
of Flathead Electric Agreement
Exhibit G—Form
of CenturyTel Agreement
Exhibit H—Form
of the Company's Job Audit Certificate
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LOCATION, DEVELOPMENT AND USE AGREEMENT
THIS LOCATION, DEVELOPMENT AND USE AGREEMENT, dated as of
February 8, 2000, between the CITY OF KALISPELL, MONTANA, a municipal corporation
and political subdivision of the State of Montana (the "City"), and STREAM
INTERNATIONAL SERVICES CORP., a for profit corporation duly organized and existing
under the laws of the State of Delaware (as hereinafter defined, the "Company").
WITNESSETH:
WHEREAS, Montana Code Annotated, Title 7, Chapter 15, Parts 42 and 43, as
amended (the "Act"), authorizes the City to issue and sell its taxable tax increment industrial
infrastructure revenue bonds for the purpose of financing all or a portion of the costs of the
acquisition, construction and installation of urban renewal projects and related financing costs;
and
WHEREAS, the City has, pursuant to the Act, established its West Side Urban
Renewal District (as hereinafter defined, the "District") and has provided for the segregation of
the tax increment derived therefrom as permitted by the Act; and
WHEREAS, pursuant to Flathead County Commissioners' Resolution No. 1346,
Flathead County (the "County") created the Flathead County Economic Development Authority
as a port authority (the "Authority") on July 22, 1999; and
WHEREAS, the City and the Authority requested all interested firms and agencies to
submit a proposal ("RFP") for the lease of a 50,000 square foot space in the Gateway West Mall
in the City, all in accordance with the provisions of Section 7-15-4263, M.C.A. The proposals
were required to include information on the nature of the business to be conducted,
organizational structure, key officers of the firm, a description of the ability of the firm to
respond, financial strength and stability, and any specific requirements the firm may have for the
leased space; and
WHEREAS, upon reviewing the proposal submitted by the Company on January 6,
2000 (the "Company Proposal"), the City and the Authority accepted the Company Proposal for
the Project (as herein defined) and authorized the entering into of negotiations with the Company
and other parties to finalize plans and documents for implementing the Company Proposal; and
WHEREAS, in the process of negotiating plans and documents with the parties
involved, it has become apparent that the City should acquire approximately 59,000 square feet
rather than 50,000 square feet to provide all necessary space to the Company; and
WHEREAS, pursuant to an Interlocal Agreement, dated as of February 8, 2000, the
City, the Authority and the County have set forth their responsibilities and obligations with
respect to the acquisition, ownership, management and financing of the Property and other
obligations with respect to the Project; and
WHEREAS, the City Council has approved and authorized the entering into and
execution of the Interlocal Agreement; and
WHEREAS, pursuant to an Agreement for Conveyance of Real Property, dated as of
February 8, 2000, between the City and American Capital Group, LLC, a California limited
liability company ("American Capital Group"), the City has agreed to purchase and American
Capital Group has agreed to sell to the City approximately 59,000 square feet of the Gateway
West Mall suitable for lease to the Company (the "Property"); and
WHEREAS, the City Council has approved the Project as an Urban Renewal Project
within the meaning of the Act; and
WHEREAS, Montana Session Laws 1995, Chapter 477 (codified in part as Montana
Code Annotated, Sections 17-6-309 and 17-6-316) (the "Board of Investments Loan Act")
authorizes the Board of Investments of the State of Montana (the "Board of Investments") to
make a loan to a local government entity for the purpose of financing infrastructure
improvements to enhance economic development and create jobs in the basic sector of the
economy, if the loan will result in the creation of a business estimated to employ at least 50
people in Montana on a permanent full-time basis and further authorizes such local government
to charge use fees and to pledge such fees to the repayment of such loan; and
WHEREAS, the Board of Investments has determined that the Project is eligible for
financing and is consistent with the policies and purposes of the Board of Investments Loan Act
and has agreed to loan the City $2,500,000 to finance a portion of the Project, namely the
acquisition of the Property; and
WHEREAS, to acquire the Property and to encourage the location and development of
the Project in the District, the City will issue its West Side District Taxable Tax Increment Urban
Renewal Revenue Bonds, Series 2000 (the "Series 2000 Bond"), in the aggregate principal
amount of $2,500,000, to evidence the Loan from the Board of Investments; and
WHEREAS, the City and Authority have conducted negotiations with the Company as
well as other parties to arrive at final terms and conditions that are satisfactory to the Company
and the City; and
NOW THEREFORE, the City, pursuant to the Act, and the Company, each in
consideration of the representations, covenants and agreements of the other, as set forth herein,
mutually represent, covenant and agree as follows:
Section 1. Definitions; Rules of Interpretation; Exhibits.
1.1. Definitions. For all purposes of this Agreement, except as otherwise expressly
provided or unless the context clearly requires otherwise, the following terms have the meanings
assigned to them:
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"Act" means Montana Code Annotated, Title 7, Chapter 15, Parts 42 and 43, including
any amendment thereof.
"Agreement" means this Location, Development and Use Agreement, including any
amendment hereof or supplement hereto entered into in accordance with the provisions hereof.
"Agreement for Conveyance of Real Property" means the Agreement for
Conveyance of Real Property dated as of February 8, 2000, between the City and American
Capital Group relating to the Property.
"American Capital" means American Capital Group, LLC, a California limited
liability company or successor thereto.
"American Capital Loan" means the loan to be made by American Capital to the
Company as provided in Section 4.7 hereof.
"Authority" means the Flathead County Economic Development Authority or any
successor to its functions under the Interlocal Agreement.
"Basic Sector" means business activity conducted in the State that produces goods and
services for which 50% or more of the gross revenues are derived from out-of-state sources or
business activity conducted in -state that produces goods and services, 50% or more or which will
be purchased by in -state residents in lieu of like or similar goods and services which would
otherwise be purchased from out-of-state sources.
"Benefits" means the Company's standard benefits package which presently includes
medical, dental, optical, paid time off, flexible spending accounts, prescription drug coverage,
short and long term disability income protection, life insurance and a 401(k) savings and
retirement plan.
"Board of Investments" means the Board of Investments of the State of Montana or
any successor to its functions under the Bond Resolution.
"Board of Investments Certificate" means the Certificate issued by the Board of
Investments certifying that the business actually to be conducted by the Company in the State is
in the Basic Sector as defined by its Rules.
"Board Loan" means the loan made by the Board of Investments to the City in the
principal amount of $2,500,000, for the purpose of financing the acquisition of the Property.
"Bond" means the City's West Side District Taxable Tax Increment Urban Renewal
Revenue Bonds, Series 2000, issued to evidence the Board Loan.
"Bond Resolution" means Resolution No. , adopted by the City Council on
February 7, 2000, authorizing the issuance of the Bond and setting forth the terms and conditions
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related thereto, as such may be amended or supplemented from time to time in accordance with
its terms.
"Business Day" means any day other than a Saturday, Sunday or other day on which
the Registrar for such series of Bond is not open for business.
"City" means the City of Kalispell, Montana, or any successors to its functions
hereunder.
"City Loan" means the loan to be made by the City to the Company as provided in
Section 4.8 hereof.
"City Representative" means the City Manager or any other person authorized to act
on behalf of the City under or with respect to this Agreement, as evidenced by a certificate
conferring such authority executed by the City Manager and provided to the Company.
"Closing Date" means March 8, 2000, provided that the Closing Date may be extended
with the consent of the Company.
"Company" means Stream International Services Corp., a Delaware corporation, or its
permitted successors and assigns hereunder.
"Company Certificate" means the certificate filed by the Company from time to time,
in its discretion, with the City certifying the number of jobs created with respect to the Project in
substantially the form as shown on Exhibit E hereto.
"Company's State of Montana Corporate License Tax" means the Company's
license and income tax liability calculated and assessed in accordance with Title 15, Chapter 31,
M.C.A.
"Completion Date" means September 1, 2000, unless such date is extended by the
terms of this Agreement.
"Council" means the City Council or any successor governing body of the City,
however denominated by statute or charter.
"Declaration of Restrictions and Establishment of Easements Affecting Land"
means the Declaration of Restrictions and Establishment of Easements Affecting Land between
ACG-Kalispell Investors, LLC and the City, which is attached to the Lease as Exhibit _.
"Deficiency Tax Payment" means the payment by the Company to the City of an
amount equal to the greater of the Company's actual Property Tax Obligation as defined herein
or $140,000.
0
"District" means the West Side Urban Renewal District created by Ordinance No.
1259 (the "Ordinance"), adopted on March 17, 1997, which Ordinance approved the West Side
Urban Renewal Plan for the District containing a tax increment financing provision all as set
forth in the Ordinance.
"EDA Improvements" means the Improvements as agreed upon by the City and the
Company to be funded from the Economic Development Agency Grant.
"Environmental Laws or Regulations" means and includes the Federal
Comprehensive Environmental Response and Liability Act ("CERCLA" or the "Federal
Superfund Act") as amended by the Superfund Amendments and Reauthorization Act of 1986
("SARA"), 42 U.S.C. §§ 9601 et seq.; the Federal Resource Conservation and Recovery Act of
1876 ("RCRA"), 42 U.S.C. §§ 6901 et seq.; the Clean Water Act, 33 U.S.C. § 1321 et seq.; and
the Clean Air Act, 42 U.S.C. §§ 7401 et seq., all as the same may be from time to time amended,
and any other federal, state, county, municipal, local or other statute, code, law, ordinance,
regulation, requirement or rule which may relate to or deal with human health or the
environment including without limitation all regulations promulgated by a regulatory body
pursuant to any such statute, code, law or ordinance.
"Estimated Completion Date" means the date by which the Company will have
installed the Improvements and located the Personal Property and Equipment on the Property, no
later than September 1, 2000.
"Fiscal Year of Company" means January 1 through December 31 of each year.
"Force Majeure" means, without limitation, the following: acts of God; strikes,
lockouts or other industrial disturbances; acts of public enemies; orders or restraints of any kind
of the government of the United States of America of the State or any of its departments,
agencies or officials, or any civil or military authority; insurrections; riots; landslides;
earthquakes; fires; storms; droughts; floods; explosions; or any other cause or event not
reasonably within the control of the Company and not resulting from its negligence.
"Full Time Job" means a 2,080 hour a year position in Kalispell, Montana paying an
hourly rate of not less than $7.50, plus Benefits.
"Improvements" means the work, materials, fixtures and improvements, described in
Exhibit A hereto, to be installed by the Company on the Property, as such may be amended from
time to time in accordance with Section 4.2 hereof.
"Interest Rate Reduction Job" means a job in the Basic Sector paying wages no less
than the Private Wage.
"Interlocal Agreement" means the Interlocal Agreement dated as of 52000,
between the City, County and Authority relating to the acquisition, ownership and maintenance
of the Property.
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"Interlocal Rate Reduction Job" means a job in the basic sector of the economy
meeting the qualifications imposed by the Board of Investments for an interest rate reduction
"Job Audit" means the audit performed by the City or its agent, as provided in Section
7.2.
"Lease" means a Lease Agreement entered into by the City, the Authority and the
Company in respect of the Property, substantially in the form of Exhibit D hereto.
"Lease Execution Date" means March 8, 2000.
"Loan Repayments" means the amount to be paid by the Company on the City Loan.
"Personal Property and Equipment" means the items of personal property and
equipment, described in Exhibit B hereto, to be installed and located in the Property by the
Company.
"Pledged Revenues" means the following sources of funds that will be pledged to the
repayment of the Bond: (1) the User Fee; (2) an annual appropriation by the City of the interest
income differential of 5.9% of the Loan Repayment; and (3) the Port Authority Levy; and (4) the
Tax Increment, including the Deficiency Tax Payment.
"Port Authority Levy" means an annual appropriation by Flathead County, Montana,
of $125,000 of its authorized millage for "Port Authority" purposes, plus a pledge to levy and
appropriate an additional $31,000 in the event the other Pledged Revenues are inadequate to pay
the principal of and interest on the Bond when due.
"Property" means the approximate 59,000 square foot commercial office facility to be
acquired by the City from the proceeds of the Board Loan to be leased to the Company, as
depicted on Exhibit C hereto.
"Private Wage" means the annual average private wage paid in the State of Montana
as reported by the Department of Labor, effective as of July 15 of each year.
"Project" means the Gateway West -Stream Project, as more fully described in Section
3 of this Agreement.
"Project Documents" means this Agreement, the Lease, including the Declaration of
Restrictions and Establishment of Easements Affecting Land, the Loan Agreement and
Promissory Note; and.
"State" means the State of Montana.
I Me
"Taxes" means all taxes levied on an ad valorem basis by a Taxing Body against
taxable real and personal property located within the District and shall include all payments in
lieu of taxes received by the City with respect to property within the District.
"Tax Increment" means the amount received by the City pursuant to the Act and the
Plan from the extension of levies of Taxes against the incremental taxable value, as defined in
the Act, of all taxable property within the District and shall include any payments in lieu of
Taxes attributable to the incremental taxable value and [all payments received by the City
designated as replacement revenues for lost tax increment.]
"User Fee" means the fee imposed by the City with respect to the Property pursuant to
Montana Code Annotated, Section 17-6-316, as amended, as specified in Section 6 hereof.
"Wages" means any money due an employee from the employer or employers,
whether to be paid by the hour, day, week, semimonthly, monthly, or yearly, and includes bonus,
piecework, and all tips and gratuities that are covered by section 3402(k) and service charges
that are covered by section 3401 of the Internal Revenue Code of 1954, as amended and
applicable on January 1, 1983, received by employees for services rendered by them to patrons
of premises or businesses licensed to provide food, beverage, or lodging.
1.2. Rules of Interpretation.
(1) This Agreement shall be interpreted in accordance with and governed by the
laws of the State without giving effect to the conflicts -of -laws principles thereof.
(2) The words "herein," "hereof' and words of similar import, without reference
to any particular section or subdivision, refer to this Agreement as a whole rather than to
any particular section or subdivision hereof.
(3) References herein to any particular section or subdivision hereof are to the
section or subdivision of this instrument as originally executed.
(4) Any terms not defined herein but defined in the Bond Resolution shall have
the same meanings herein unless the context hereof requires otherwise.
(5) "Or" is not exclusive but is intended to contemplate or encompass one, more
or all of the alternatives conjoined.
1.3. Exhibits. The following Exhibits are attached to and by reference made a part of this
Agreement:
Exhibit A: a description of the Improvements;
Exhibit B: a description of Personal Property and Equipment;
-7-
Exhibit C: a description of the Property;
Exhibit D: a form of the Lease;
Exhibit E: Company Certificate as to Job Credit Certification;
Exhibit F: a form of Flathead Electric Agreement;
Exhibit G: a form of CenturyTel Agreement; and
Exhibit H: a form of the Company's Job Audit Certificate.
Section 2. Representations.
2.1. City Representations. The City hereby represents as follows:
(a) The City is authorized by law to enter into this Agreement and to carry out
its obligations hereunder and to issue the Bond and has complied with all applicable
provisions of law and its City ordinances and resolutions to enter into this Agreement
and issue the Bond.
(b) The City has obtained from the Board of Investments a commitment to
make the Board Loan to the City to be evidenced by the Bond.
(c) The City is authorized to enter into the Agreement for Conveyance of Real
Property, the Interlocal Agreement, the Lease and the Loan Agreement.
(d) Pursuant to the Act, and after public hearing duly called and held, the City
by the Ordinance has duly created the District, and to pay part or all of the costs to be
incurred by the City in connection with the construction, acquisition and financing of
the Project has authorized the issuance of the Series 2000 Bond under the Bond
Resolution.
(e) The City Council has duly authorized the execution and delivery of this
Agreement, the Bond Resolution, the Lease, the Declaration of Restrictions and
Establishment of Easements Affecting Land, the Agreement for Conveyance of Real
Property and the Loan Agreement.
(f) All acts, conditions and things required by the Constitution and laws of the
State of Montana and ordinances and resolutions of the City to be done, to exist, to
happen and to be performed in order to make this Agreement a valid and binding
special, limited obligation of the City in accordance with its terms have been done, do
exist, have happened and have been performed as so required.
(g) The City is not aware of any facts the existence of which would cause City
to be in violation in any material respect of any Environmental Laws or Regulations
applicable to the Project. The City has not received from any local, state or federal
official any notice or communication indicating that the activities of the City may be or
will be in violation of any Environmental Laws or Regulations applicable to the
Project.
2.2. Company Representations. The Company hereby represents as follows:
(a) The Company is a corporation duly incorporated, validly existing and in
good standing under the laws of the State of Delaware and is duly qualified to do
business in the State.
(b) The Company has the power to enter into this Agreement and the Lease and
by all necessary corporate action has duly authorized the execution and delivery of this
Agreement and the Lease.
(c) The Company has visited and inspected the Property and has determined
that the Property is suitable for its uses and will take it as is, subject to the specific
obligations of the parties with respect thereto as described in this Agreement and in the
Lease.
(d) The Company has reviewed the provisions of the Lease and has approved
the terms and conditions thereof.
(e) The Company is not aware of any facts the existence of which would cause
Company to be in violation in any material respect of any Environmental Laws or
Regulations applicable to the Project. The Company has not received from any local,
state or federal official any notice or communication indicating that the activities of the
Company may be or will be in violation of any Environmental Laws or Regulations
applicable to the Project.
(f) Neither the execution and delivery of this Agreement or the Lease, the
consummation of the transactions contemplated hereby or thereby, nor the fulfillment
of or compliance with the terms and conditions of this Agreement or the Lease is
prohibited or limited by, conflicts with or results in a breach of the terms, conditions or
provisions of the certificate of incorporation or bylaws of the Company or any evidence
of indebtedness, agreement or instrument of whatever nature to which the Company is
now a party or by which it is bound, or constitutes a default under any of the foregoing.
(g) There is no action, suit, investigation, or proceeding now pending or, to the
knowledge of the Company, threatened against or affecting the Company or its
business, operations, properties, or condition (financial or otherwise) before or by any
governmental department, commission, board, authority, or agency, or any court,
arbitrator, mediator or grand jury, which could, individually or in the aggregate,
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materially and adversely affect the business, operations, properties, or condition
(financial or otherwise) of the Company.
(h) The Company has reviewed the form of the Bond Resolution and the Series
2000 Bond. The Company acknowledges that the Bond is a special, limited obligations
of the City payable from the funds described therein, including but not limited the Loan
Repayments, the User Fee, Port Authority Levy and the Tax Increment, which indicates
the Deficiency Tax Payment.
Section 3. The Project. The Project as approved shall be known as the Gateway West -
Stream Project, and shall consist of the components summarized in this section and as more fully
defined and described. The Project as defined and described in this Agreement and the
obligations of the City and the Company hereunder and under the Project Documents supercedes
any obligations, representations or conditions contained in any other previous documents.
The City shall acquire the Property and lease it to the Company at a fair market rate;
the Company shall construct and install the Improvements and Personal Property and Equipment
in and on the Property; the Company shall establish and maintain within 36 months of June 1,
2000, 500 Full Time Jobs with Benefits; the City will reimburse the Company for up to
$2,750,000 over a ten year period for the Improvements to the Property, provided the
Company's job obligations as described herein are met; the City will loan the Company
$1,000,000 to be used for the construction of the Improvements and the acquisition, installation
of Equipment, Personal Property; and the City will cause American Capital to loan $1,500,000 to
the Company to be used for the construction of the Improvements; and the City will seek to
obtain the EDA Grant, the CDBG Grant and financial assistance from Flathead Electric and
CenturyTel in accordance with the Agreement.
Section 4. City Undertakings.
4.1. The Property; Board Loan. The City will issue the Series 2000 Bond as provided
in the Bond Resolution to the Board of Investments in evidence of the Board Loan and use the
proceeds to acquire the Property pursuant to the terms of the Agreement for Conveyance of Real
Property, no later than the Closing Date.
4.2. Lease of Property. Immediately upon the acquisition of the Property, the City will
enter into the Lease.
4.3. EDA Grant. (a) The City has applied for and has received [preliminary approval
that] an Economic Development Agency Grant (the `EDA Grant") in the amount of $500,000
will be awarded to the City, the proceeds of which are to be used to construct a portion of the
Improvements described on Exhibit A, as provided in Section 5.2 hereof. The City will proceed
with due diligence and do all things in its power to obtain the EDA Grant as quickly as possible.
The Company agrees to provide such assistance as may be requested by the City in applying for
the Grant, provided however, that the Company may request the City at any time to abandon any
efforts to obtain the EDA Grant for the Project. The City has no knowledge or information
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relating to the eligibility of the Project for the EDA Grant that it has not disclosed to the
Company.
(b) If by the time the Improvements are needed to be constructed the City has not
received the proceeds of the EDA Grant, but has been officially awarded the EDA Grant, the
City agrees to construct the EDA Improvements so that the Company is not delayed in the
construction of the other Improvements or the Estimated Completion Date is not delayed. The
City will cause its engineers and contractors to work with the Company's engineers and
contractors so that the installation and construction of the EDA Improvements can be achieved
as efficiently as possible.
(c) If on the Lease Execution Date, the City has not been officially awarded the EDA
Grant, the Company agrees that it will fund the EDA Improvements and seek reimbursement
from the City once the EDA Grant is awarded and received. The Company understands that in
order to obtain reimbursement for the EDA Improvements, it must comply with the Federal
regulations applicable to the construction of federally financed facilities.
If the EDA Grant is denied, the City shall be obligated to submit a new application for
the EDA Grant and use its best efforts to obtain the EDA Grant or seek alternative grants of
equivalent amounts and reimburse the Company in the amount obtained.
4.4. CDBG Grant. (a) The City and the Company recognize that training of the
Kalispell work force will be needed to provide the Company with suitable employees. The City
has agreed to apply for a loan from the Community Development Block Grant Program (the
"CDBG Program") administered by the Department of Commerce in the amount of $400,000 to
provide job training (the "CDBG Grant"). The Department of Commerce has conducted a public
hearing on a rules change for the CDBG Program that would make an application for job training
eligible for grant funding. The City has conducted the necessary hearings under the Program on
the CDBG Grant for the Stream Project and has approved the submission of an application to the
Department of Commerce. The City agrees to submit the application on the earliest possible
date consistent with Program rules. It is understood that the CDBG Grant will not have been
awarded by the Closing Date.
(b) The Company hereby represents and agrees that it will enter into the Lease and
perform its obligations thereunder and hereunder, notwithstanding that the CDBG Grant will not
have been awarded as of the Lease Execution Date.
The City agrees to do all things within its power to obtain the CDBG Grant and the
Company agrees to provide such assistance as may be requested by the City in obtaining the
CDBG Grant. If and when funded, the City will reimburse the Company for eligible training
program expenses incurred to date.
If the City's original application is not accepted, the City agrees to submit an additional
application and to do all things within its power to obtain the CDBG Grant or other alternative
grants in similar amounts for similar purposes and make those moneys available to the Project
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and the Company agrees to provide such assistance as may be requested by the City; provided,
however, that the Company may request the City at any time to abandon any efforts to obtain the
CDBG Grant or any other grants for the Project.
4.5. Flathead Electric Cooperative, Inc.. A part of the incentive package for the
Project is to be provided by Flathead Electric Cooperative, Inc., in Kalispell, Montana ("Flathead
Electric"), in the estimated amount of $250,000. The Company has reviewed and approved an
agreement with Flathead Electric, substantially in the form of Exhibit F hereto, setting forth the
terms and conditions of Flathead Electric's commitment. Failure of Flathead Electric to perform
its obligation thereunder shall not constitute a default by the City under this Agreement, and the
Company acknowledges that it shall be obligated to enter into the Lease and perform its
obligations thereunder and hereunder. The City agrees that it will assist the Company in seeking
performance of Flathead Electric's obligation.
4.6. CenturyTel Service Group, Inc.. A part of the incentive package for the Project is
to be provided by CenturyTel Service Group, Inc., in Kalispell, Montana ("CenturyTel"), in the
estimated amount of $250,000. The Company has reviewed and approved an agreement with
CenturyTel, substantially in the form of Exhibit G hereto, setting forth the terms and conditions
of CenturyTel's commitment. Failure of CenturyTel to perform its obligation thereunder shall
not constitute a default by the City under this Agreement, and the Company acknowledges that it
shall be obligated to enter into the Lease and perform its obligations thereunder and hereunder.
The City agrees that it will assist the Company in seeking performance of CenturyTel's
obligation.
4.7. Loan from American Capital. Pursuant to the Agreement for Conveyance of Real
Property, the City has obligated American Capital to loan the Company the sum of $1,500,000
payable over a term of ten years for the construction or installation of a portion of the
Improvements and the acquisition and installation of Personal Property and Equipment as
provided herein. The Company has reviewed and negotiated the terms of the Loan with
American Capital and represents to the City that the terms are acceptable to the Company.
4.8. City Loan. The City agrees to loan the Company $1,000,000 from its Urban
Development Action Grant Funds at an annual interest rate of 11.5% over a term of 10 years.
The Company agrees to borrow such funds from the City and to use the proceeds of the Loan to
pay a portion of the cost of the Improvements and the acquisition and installation of Personal
Property and Equipment that are to be constructed pursuant to Section 5.2 hereof.
The Company's obligation to make Loan Repayments in the amount sufficient to
amortize the Loan over the 10 year period may be evidenced by a loan agreement or an
additional rental payment under the Lease, so long as the Company's obligation to pay is secured
by a bank letter of credit acceptable to the City. Failure to make the Loan Repayments, however
characterized, may result in termination of the Lease. The City also reserves the right to seek
specific performance of the obligation to make the Loan Repayment.
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Section 5. Company's Undertakings with Respect to Project.
5.1. Lease of Property. The Company will enter into a Lease Agreement with the City
for the Property, in the form of Exhibit D hereto, no later than the Lease Execution Date.
5.2. Construction of Improvements. The Company hereby represents that the
Improvements shown on Exhibit A hereto will make the Property suitable for its uses under the
Lease and agrees that it will construct, install and complete the Improvements as provided herein
no later than the Completion Date, subject to Force Majeure. The estimated costs of the
Improvements, inclusive of the $500,000 to be funded by the EDA Grant, is $3,800,000. The
City and the Company will agree which of the Improvements are to be constructed by the City
from the EDA Grant (the "EDA Improvements").
The Company acknowledges and agrees that as a condition of the EDA Grant, the City
will be required to install and construct such EDA Improvements in accordance with the terms of
the EDA Grant and agrees to provide the City and its contractors with access to the Property as
may be required to construct the EDA Improvements. The Company acknowledges that at the
end of the term of the Lease, as the same may be extended, that all Improvements (exclusive of
any Personal Property and Equipment that may not have become a fixture) shall become the
property of the City and the Company shall not be entitled to any payment or reimbursement
therefor. The Company shall provide to the City construction contracts, invoices, bills of sale or
other evidence of the amounts spent by the Company for the Improvements.
Prior to commencement of construction of the Improvements, the Company shall
submit to the City a complete set of plans and specifications for the Improvements.
5.3. Installation of Personal Property and Equipment. The Company will install and
locate on the Property the Personal Property and Equipment, specifically described on Exhibit B
hereto, no later than the Completion Date subject to Force Majeure. The estimated costs of the
Personal Property and Equipment is $3,950,000. The Company shall provide the City with a
complete detailed list of all Personal Property and Equipment located or installed on the Property
within 180 days of the execution of the Lease, the costs thereof and copies of invoices, bills of
sale, receipts or other evidence of the purchase price of the Personal Property and Equipment.
5.4. Permits, Environmental Laws. The Company will obtain, in a timely manner, all
required permits, licenses and approvals, and will meet, in a timely manner and in all material
respects, all requirements of all local, state and federal laws and regulations which must be
obtained or met in connection with the acquisition and construction of the Project. The
Company will comply in all material respects with all Environmental Laws or Regulations
applicable to the construction, acquisition, and operation of the Project, will obtain any and all
necessary environmental reviews, licenses or clearances under, and will comply in all material
respects with, the National Environmental Policy Act of 1969.
5.5. Compliance with State Law Bidding. The Company agrees to assist and cooperate
with the City in the design of the Improvements to be constructed by the City to ensure that the
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Improvements are compatible with and meet the needs of the Project, and further agrees to cause
its agents to assist the City, when and if necessary, to ensure that the Improvements are
contracted for and constructed in accordance with the provisions of State law and the
requirements of the EDA Grant.
5.6. Corporate Existence Assumption. The Company agrees that it will not assign its
obligation to another corporation or entity unless the Company first gives to the City notice of
the proposed assignment, and unless the assignee agrees in writing to assume the obligations of
the Company hereunder and under the Lease and the City approves of the assignment or
assumption. The approval by the City shall not be unreasonably withheld, but in approving any
assignment or assumption, the City shall consider the ability of the assignee or assumptor to
perform the obligations. The Company may merge or consolidate with another company or
entity and assign and transfer its obligations under the Project Documents to the successor entity
as long as the "net worth" of the successor entity is not less than the "net worth" of the Company
prior to the merger or consolidation. No such assignment, transfer, merger or consolidation shall
release the Company from its obligations under this Agreement, the Lease or any other Project
documents it has executed in connection with this Agreement.
5.7. Property Tax Obligation; Deficiency Tax Payment. Under the terms of the Lease,
the Company has agreed to pay as due all real and personal property taxes including Beneficial
Use taxes assessed against the Property and its Personal Property and Equipment installed and
located therein (the "Property Tax Obligation"), in addition to any special assessments that
might be apportioned to the property and made an obligation under the Lease. The Company
understands and acknowledges that even though the Property is owned by the City, it is subject
to a "beneficial use" tax as provided in Section 5-24-2304, M.C.A. The Company further
acknowledges that the City's ability to acquire the Property and enter into this Agreement is
dependent on the creation by the Project of additional taxes and additional Tax Increment
Revenue within the District. Based on the estimated value of the Property, the dollar amount of
the Improvements to be installed to the Property pursuant to Section 5.2 and the dollar amount of
the Personal Property and Equipment to be installed or located on or in the Property pursuant to
Section 5.3, the City has estimated that the Project will generate property taxes payable by the
Company based on current tax rates and mill levies in an amount not less than $140,000 a year.
The Company understands that this is an estimate and not a representation that the Company's
Property Tax Obligation will not or can not exceed such amount.
The Company hereby covenants and agrees that to the extent and in the event that the
Company's annual Property Tax Obligation is less than $140,000, whether by virtue of reduction
in taxable valuation of property, reduction of mill levies assessed against the Company's
property or the Company defaults under the Lease and has no annual Property Tax Obligation,
the Company will pay directly to the City an annual amount equal to the greater of the
Company's actual Property Tax Obligation or $140,000 (the "Deficiency Tax Payment"). Under
Montana law, the Department of Revenue uses the value of real and personal property
established as of January 1 each year to determine the amount of taxes to be billed for the
ensuing Fiscal Year. The Company will receive its notice of its Real Property tax obligation for
a fiscal year on or about November 1 and it will receive its notice of Personal Property tax
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obligation for a fiscal year on or about July 1. The City Finance Officer shall verify the amount
of the Company's Property Tax Obligation based on the actual Real and Personal Property billed
during the calendar year based on values established January 1. If a Deficiency Tax Payment is
owed, the City shall submit an invoice to the Company no later than December 31. The
Deficiency Tax Payment shall be due and payable in one installment on [February 15 of each
year through the term of this Agreement, commencing February 15, 2001]. The amount of
Deficiency Tax Payment due, but not paid, shall bear interest and penalties at the same rate
applicable to unpaid property taxes as specified in Section 15-16-102, M.C.A. Upon receipt of
amounts due, if any, the City shall deposit the Deficiency Tax Payment in the Debt Service Fund
created for the Bond and the Deficiency Tax Payment shall be used solely to pay the principal of
and interest on the Bond as due.
Section 6. User Fee.
6.1. User Fee, Payment to the City. In consideration of the Board of Investments
making the Loan to the City, and the City applying the proceeds to the acquisition of the
Property for the benefit of the Company, the use of which will be made available directly to the
Company under the Lease, the Company shall during the term of this Agreement pay to the City
an annual User Fee in an amount equal to the Company's State of Montana Corporate License
Tax obligation. The User Fee shall be payable in one installment in each year, commencing
[February 15, 2001]. Upon receipt, the City shall deposit the User Fee in the Debt Service Fund
created for the Bond and the User Fee shall be used solely to pay the principal of and interest on
the Bond as due. Failure to make the User Fee payment when due may result in the City's
termination of the Lease. The City also reserves the right to seek specific performance of the
obligation to make the User Fee payment.
6.2. Calculation of User Fee and Corporate License Tax Credit. No later than
January 30 of each year, the Company shall calculate its State of Montana Corporate License
Tax obligation and shall provide the City with a copy of the Company's proposed Corporate
License Tax return and a check made payable to the City in an amount equal to the Company's
calculation of its liability. Upon receipt of the User Fee, the City will provide to the Company a
certificate of payment addressed to the Department of Revenue indicating the amount of the
User Fee paid for inclusion with its return. The City takes no responsibility for determining or
confirming the amount of the Company's State of Montana Corporate License Tax obligation. If
it is determined subsequent to the payment of the User Fee that the amount calculated was in
error, the Company shall provide the City with its amended Corporate License Tax Return for
that year. To extent the User Fee was over paid, the Company shall be entitled to take a credit
against the overpayment against its next User Fee payment. To the extent the User Fee was
underpaid, the Company shall remit to the City with its amended Return a check in the amount
of the underpayment. Failure to make the Deficiency Tax Payment when due may result in the
City's termination of the Lease. The City also reserves the right to seek specific performance of
the obligation to make the Deficiency Tax Payment.
6.3. Interest Rate on Board of Investments Loan and Job Credit Certification. The
Company acknowledges and agrees that the User Fee is a Pledged Revenue and as such will be
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used in addition to other revenue sources to pay the principal of and interest on the Board Loan.
The Board will reduce the interest rate on the Loan .05% for each Qualifying Job created, up to a
maximum of 2.5%. Based on the Company's proposed hiring schedule as set forth in Section
7.1, it is anticipated that within 90 days of the Closing of the Loan, the Loan will qualify for the
maximum interest rate reduction. In order for the City to avail itself of a reduced interest rate on
its Board Loan, the Company acknowledges that the Board of Investments will require that the
Company file a Job Credit Certification which the City will in turn file with the Board. Within
75 days of Closing, the Company agrees it will provide to the City a Job Credit Certification,
substantially in the form of Exhibit E hereto. If upon the first filing of Job Credit Certification
the maximum interest rate reduction is not achieved, the Company agrees to provide to the City,
no more than one each 30 days, additional Job Credit Certifications as requested until the
maximum interest rate reduction is achieved.
Section 7. Job Provisions - Reimbursement for Improvements.
7.1. Agreement to Create and Provide Jobs. The Company acknowledges that an
inducement for the City to accept the Company's proposal and enter into this Agreement was the
Company's representation in its proposal that it would within 36 months create 500 Full Time
Jobs within the City of Kalispell. In furtherance of that representation, the Company specifically
agrees and covenants as follows:
(1) The Company agrees to establish no fewer less than 150 Full Time Jobs within
nine months of June 1, 2000 (a "Job Creation Period"). For a job to be counted as a
Full Time Job, it must have been in existence for at least 30 days before the Job Audit.
The Company agrees to establish no fewer than 300 Full Time Jobs within 18 months
of June 1, 2000 (a "Job Creation Period"). For a job to be counted as a Full Time Job,
it must have been in existence for at least 60 days before the Job Audit. The Company
agrees to establish no fewer than 500 Full Time Jobs within 36 months of June 1, 2000
(a "Job Creation Period"). For a job to be counted as a Full Time Job, it must have
been in existence for at least 90 days before the Job Audit. At all times after June 1,
2003, the Company agrees to maintain no fewer than 500 Full Time Jobs throughout
the term of the Lease. For a job to be counted, it must have been in existence for at
least 120 days before the Job Audit.
(2) The Company intend to utilize the following three tiered pay structure for the
Project: tier I - $7.50 to $9.00 per hour; tier II - $9.00 to $12.00 per hour; tier III -
$12.00 to $16.00 per hour. The Company will use all reasonable efforts to train and
employ a substantial percentage of the Company's employees in Kalispell
(approximately 40%) at tier II, tier III and management. The Company further
represents that it does not intend that the Kalispell Project be a tier I or entry level
operation.
(3) In order to get credit toward the 500 Full Time Job requirement in this section, the
hourly Wages paid plus the dollar amount of Benefits provided for each employee shall
not be less than the average Private Wage.
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7.2. Evidence of Job Creation; Job Audit. A job audit (the "Job Audit") will be
performed by the City or its agent 30 days after the end of each Job Creation Period and 30 days
after the end of each 12 month period subsequent to the last Job Creation Period. The Company
will provide to the City no later than 20 days prior to the Job Audit a completed and certified Job
Audit Certificate in substantially the form attached hereto as Exhibit H.
The Company agrees to provide to the City such other documents and evidence that it
may reasonably require to ascertain the accuracy and veracity of the information provided in the
report. The Company will provide to the City reasonable access to its records and facilities for
the purpose of conducting on -site audits for compliance with this section.
7.3. Modification of Job Obligation. The City acknowledges that an inducement for
the Company to enter into this agreement was the City's representation that it could make
available to the Company financial incentives in the amount of $4,000,000 (the "Incentive
Package"). The City and Company have identified the following items as comprising the
Incentive Package: $2,750,000 of Reimbursement for Improvements as provided in Section 7.4;
the CDBG Grant in the amount of $400,000 as set forth in Section 4.4; the EDA Grant in the
amount of $500,000 as set forth in Section 4.3; the Flathead Electric Grant in the amount of
$250,000, as set forth in Section 4.5; and the Century Tel Grant in the amount of $250,000 as set
forth in Section 4.6 for a total of $4,150,000. If the City is unable to provide an Incentive
Package of at least $4,000,000 and the City and Company mutually agree that no additional
funding shall be sought, the Company's job obligation for each Job Creation Period shall be
reduced proportionately by a fraction, the denominator of which shall be $4,000,000 and the
numerator of which shall be the actual amount of the Incentive Package obtained at the end of
the Job Creation Period. For purposes of determining the value of the Financial Incentive
provided or obtained at any time, the $2,750,000 agreed to herein for Reimbursement for
Improvements shall be deemed to be fully obligated and provided, and there shall be no
reduction of Job Obligation for amounts paid for Reimbursement for Improvements attributable
to the Company's failure to meet its Job Obligations as set forth herein.
7.4. Reimbursement for Improvements. As a condition of the Project, the City has
required the Company to install the Improvements to the Property, as specified in Section 4.2,
which Improvements will enure to the benefit of the City upon expiration of the Lease. The
estimated costs of the Improvements to be constructed, exclusive of the $500,000 to be financed
by the EDA Grant, is $3,500,000. The City hereby agrees, subject to limitations set forth in the
following paragraph, to reimburse the Company up to a maximum $275,000 a year for a period
of ten years, up to a maximum aggregate reimbursement of $2,750,000 or the actual dollar
amount of the Improvements paid for by the Company. If the amount of Improvements paid is
less than $2,750,000, the annual payment shall be adjusted to fully amortize the dollar amount
expended for the Improvements over a term not to exceed ten years.
The reimbursement for any year is dependent on the Company's meeting its job
creation and maintenance obligations as stated in Section 7.1 hereof, as may be modified from
time to time by Section 7.3. If, as a result of the Job Audit, the City determines that the
Company has not met its job obligation, the City shall, no later than 10 days before the Lease
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Payment Date, notify the Company of what amount of reimbursement, if any, it will be entitled
to receive (the "Reimbursement Payment"). The Company shall notify the City within 10 days
of receipt of notice to challenge the City's calculation of the amount of the Reimbursement
Payment owed and its determination that the Company is not in compliance with its job
obligation. The Company shall have 30 days from the date of its initial notice to contest the
City's calculation. [In the event the parties can not agree as to the amount of reimbursement
owed, 1.
In determining the amount of the Reimbursement Payment, the City shall multiply
$275,000 by a fraction, the numerator of which shall be the actual (average) number of jobs
created during [the year] [ period] and the denominator shall be either 150, 300 or 500,
depending on the job obligation for the year in question, provided, however, for any twelve
month period after June 1, 2003, the Company does not maintain at least 250 Full Time Jobs, the
Company shall be entitled to no reimbursement for Improvements for that period.
Failure by the Company to meet its job obligations as defined in this Section shall
result in the reduction of the Reimbursement Payment as herein provided.
Section 8. General Provisions.
8.1. Agreement to Pay Attorneys' Fees and Expenses. In the event either party to this
Agreement should default under any of the provisions hereof and the nondefaulting party should
employ attorneys or incur other expenses for the collection of moneys or the enforcement or
performance or observance of any obligation or agreement on the part of the defaulting party
herein contained, the defaulting party agrees that it will on demand therefor pay to the
nondefaulting party the reasonable fee of such attorneys and such other expenses reasonably so
incurred by the nondefaulting party.
8.2. No Additional Waiver Implied by One Waiver. In the event any agreement
contained in this Agreement should be breached by either party and thereafter waived by the
other party, such waiver shall be limited to the particular breach so waived and shall not be
deemed to waive any other breach hereunder.
8.3. Conflicts of Interest; City's Representatives Not Individually Liable. No member,
officer or employee of the City shall have any personal interest, direct or indirect, in this
Agreement, the Project or the Improvements, nor shall any such member, officer or employee
participate in any decision relating to this Agreement which affects his or her personal interests
or the interests of any corporation, partnership, or association in which he or she is, directly or
indirectly, interested. No member, officer or employee of the City shall be personally liable to
the Company in the event of any default under or breach of this Agreement by the City, or for
any amount which may become due to the Company for any obligation issued under or arising
from the terms of this Agreement, except for any fraudulent misrepresentation made by any such
member, officer or employee in violation of the first sentence of this Section 9.1.
8.4. Rights Cumulative. The rights and remedies of the parties of this Agreement,
whether provided by law or by this Agreement, shall be cumulative, and the exercise by either
party of any one or more of such remedies shall not preclude the exercise by such party, at the
same or different times, of any other remedy for the same default or breach or of any of its
remedies for any other default or breach of the party. No waiver made by either such party with
respect to the performance or the manner or time thereof, of any obligation under this
Agreement, shall be considered a waiver with respect to the particular obligation of the other
party or a condition to its own obligation beyond those expressly waived in writing and to the
extent thereof, or a waiver in any respect in regard to any other rights of the party making the
waiver of any obligations of the other party. Delay by a party hereto instituting or prosecuting
any cause of action or claim hereunder shall not be deemed a waiver of any rights hereunder.
8.5. Term of Agreement, Termination. This Agreement shall remain in effect until
March 8, 2010, or such later date upon which all payments required by the Board Loan have
been made and all other obligations of the Company under this Agreement, the Lease and all
other documents executed pursuant to this Agreement have been satisfied. This Agreement may
not be terminated by either party unless prior to the Closing Date, either party is rendered
incapable, as a result of circumstances totally beyond its control, of performing its obligations
hereunder.
Section 9. Administrative Provisions.
9.1. Notices. All notices, certificates or other communications required to be given to
the City and the Company hereunder shall be sufficiently given and shall be deemed given when
delivered or deposited in the United States mail in certified form with postage fully prepaid and
addressed as follows:
If to the City: City of Kalispell
312 1 st Avenue East
Kalispell, Montana 59903
Attn: City Manager
If to the Authority: Flathead County Port Authority
c/o Jobs Now
215 E. Idaho
Kalispell, MT 59901
Attn: Executive Director
If to the Company: Stream International Services Corp.
85 Dan Road
Canton, Massachusetts 02021
Attn: [Director Legal Department]
The City and the Company, by notice given hereunder, may designate different addresses to
which subsequent notices, certificates or other communications should be sent.
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10.2. Role of Authority. The Company acknowledges that the City may appoint and
intends to appoint the Authority as its agent for purposes of implementing and monitoring
compliance with this Agreement.
10.2. Binding Effect. This Agreement shall inure to the benefit of and shall be binding
upon the City and the Company and their respective successors and assigns.
10.3. Severability. If any provision of this Agreement shall be held invalid or
unenforceable by any court of competent jurisdiction, such holding shall not invalidate or render
unenforceable any other provision hereof.
10.4. Amendments, Changes and Modifications. This Agreement may be amended or
any of its terms modified only by written amendment authorized and executed by the City and
the Company and, except as otherwise provided herein, with the prior written consent of the
Board of Investments.
10.5. Further Assurances and Corrective Instruments. The City and the Company
agree that they will, from time to time, execute, acknowledge and deliver, or cause to be
executed, acknowledged and delivered, such supplements hereto and such further instruments as
may reasonably be required for correcting any inadequate or incorrect description of the Project
or the Improvements or for carrying out the expressed intention of this Agreement.
10.6. Execution Counterparts. This Agreement may be simultaneously executed in
several counterparts, each of which shall be an original and all of which shall constitute but one
and the same instrument.
10.7. Applicable Law. This Agreement shall be governed by and construed in
accordance with the laws of the State without giving effect to the conflicts -of -laws principles
thereof.
10.8. Captions. The captions or headings in this Agreement are for convenience only
and in no way define, limit or describe the scope of intent of any provisions or Sections of this
Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day of February, 2000.
(SEAL)
(SEAL)
CITY OF KALISPELL, MONTANA
By
Mayor
By
City Manager
Attest:
Clerk of Council
STREAM INTERNATIONAL SERVICES CORP.
By
Its
Attest:
Its
-21-
EXHIBIT A
DESCRIPTION OF THE IMPROVEMENTS
Front Entrance & 1 Employee Entrance
(Adjacent to employee parking)
ADA & Code compliant
Drywall Construction - Interior of exterior
walls/columns, taped, sanded and primed -
ready to paint
Floor Level (Allowance)
New HVAC Infrastructure
1 ton per 250 u.s.f.
Sprinkler
Electrical - 5 watts/s.f. for power & signal,
3 watts/s.f. for lighting includes service to
main panel boards, sub panel & meter
Generator
Open Ceiling (Demolition)
General Conditions
Permitting
A & E Fees for above services
Demolition
Miscellaneous Metal Fabrications
Millwork
Waterproofing & Damproofing
Flashing & Sheetmetal
Concrete
Caulking & Sealants
Aluminum Frames
A-1
Wood Doors
Finish Hardware
Glass & Glazing
Drywall & Acoustical
Ceramic Tile
Flooring & Base
Painting & Wallcovering
Visual Display boards
Toilet Partitions & Accessories
Access Flooring
Fire Extinguishing & Cabinets
Residential Appliances
Signage
Projection Screens
Window Treatment
Mechanical
Plumbing
Fire Protection
FM200
Electrical
Fire Alarm
Total Estimate $3,800,000
EXHIBIT B
DESCRIPTION OF PERSONAL PROPERTY AND EQUIPMENT
Personal Property and Equipment
Furniture
Voice Communications
Computers
Data Communications
Total
Cost
$1,650,000
1,000,000
800,000
500,000
$3,950,000
EXHIBIT C
DESCRIPTION OF PROPERTY
C-1
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EXHIBIT D
FORM OF LEASE
D-1
EXHIBIT E
COMPANY CERTIFICATE AS TO
JOB CREDIT CERTIFICATION
Stream International Services Corp. (the "Company") by and through its
hereby certifies with respect to the $2,500,000 Infrastructure Loan made by the Board of
Investments to the City of Kalispell (the "Loan") as follows:
1) As of the date hereof, the Company has hired the number of persons for
permanent, full-time positions at the rate of pay shown on the attached Schedule.
2) In certifying as to full-time employment, we understand that the term full-time
means an employee who is scheduled to work full time (i.e., a minimum of 35 to
40 hours per week) for an indefinite period of time.
3) All of the employees referred to in the Schedule are paid at or above the
minimum wage.
4) None of the employees referred to in the Schedule has been included in any Job
Credit Certification previously filed or submitted.
Pursuant to this certificate, the Company requests an interest rate reduction of % on
the Loan.
Dated this day of , 20_.
STREAM INTERNATIONAL
SERVICES CORP.
By.
Its
Submitted to the Board of Investments this _ day of , 20_ by the
City of Kalispell.
CITY OF KALISPELL
By.
Its
E-1
Schedule
MONTANA BOARD OF INVESTMENTS LOAN
KALISPELL EMPLOYEES FOR JOB CREDIT CERTIFICATION
Date:
EMPLOYEE
NUMBER
TOTAL EMPLOYEES
ANNUAL JOB
HIRE DATE SALARY CALCULATION
F-1
EXHIBIT F
FLATHEAD ELECTRIC AGREEMENT
F-1
EXHIBIT G
CENTURYTEL AGREEMENT
G-1
EXHIBIT H
JOB AUDIT CERTIFICATE
Stream International Service Corp. (the "Company") by and through its
hereby certifies with respect to the Company's Location, Development and Use Agreement
with the City of Kalispell, Montana (the "City"), dated as of February 8, 2000 (the
"Agreement"), as follows:
4) Capitalized terms used in this Certificate and herein shall have the meanings as
defined in the Agreement.
2) As of the date hereof, the Company has hired the number of persons for
permanent, full-time positions at the rate of pay shown on the attached Schedule.
3) In certifying as to Full -Time employment, we understand that the term full-time
means an employee who is scheduled to work full time (i.e., a minimum of 35 to
40 hours per week) for an indefinite period of time.
4) All of the employees referred to in the Schedule are paid at or above $7.50 per
hour.
Dated this day of , 20_.
STREAM INTERNATIONAL SERVICE CORP.
By.
Its
H-1
Personnel and Wage Data:
Audit Period: From to
SCHEDULE
[Audit Date]
Total number of employees at Kalispell site as of Audit Date:
Total number of employees as of 30 days prior to Audit Date:
Total number of Full Time Employees as of 30 days prior to Audit Date:
Total personnel costs during last 30 days prior to Audit Period: $
Wages $_
Benefits $
The Lowest Hourly Wage paid and the costs of Benefits provided to Full Time Employees
(included within this audit) as follows:
Lowest Hourly Wage $
Hourly costs of Benefits $
Total hourly cost $
Total annual cost (total hourly cost x 2,080) $
The average number of Full Time Employees receiving the Lowest Wage and Benefit Package
calculated in accordance with FN(2) is
The average number of Full Time employees receiving Wage and Benefit Packages above the
lowest calculated in accordance with FN(2) is
NOTE: Instructions for Completing Schedule
1. Include detail of how this cost was determined. Use cost data only for employees
working at the Kalispell site.
2. For the initial 9 month audit the average will be for the last 30 days before the end
of the Audit Period. For the 18 month audit, the average will be for the last 60
days before the end of the Audit Period. For the 36 month audit the average will
be for the last 90 days before the end of the Audit Period. For all other audits the
average will be for all thirty day periods within the 12 month reporting period.
H-2