Exhibit 10.30


 


Execution Copy


 


 




 


 






 





TAX ABATEMENT AGREEMENT


 


 


Dated as of December 1, 2005


 






 


 


BETWEEN THE


 


 


CITY OF GARNETT, KANSAS


 


 


AND


 


 


EAST KANSAS AGRI-ENERGY, L.L.C.


 




 





 


Prepared
By:


 


Gilmore &
Bell, P.C.

Kansas City, Missouri


 

















 


TAX ABATEMENT AGREEMENT


 


THIS TAX ABATEMENT AGREEMENT, dated as of December 1, 2005 (the “Agreement”), between the CITY OF GARNETT, KANSAS, a municipal corporation organized
and existing under the laws of the State of Kansas (the “City”), and EAST KANSAS AGRI-ENERGY, L.L.C., a Kansas limited liability
company (the “Company”);


 


WITNESSETH:


 


WHEREAS, the
City is authorized by K.S.A. 12-1740 to 12-1749d, inclusive, as amended (the “Act”),
to acquire, purchase, construct and improve certain facilities for commercial,
industrial and manufacturing purposes, to enter into leases and lease-purchase
agreements with any person, firm or corporation for said projects, and to issue
revenue bonds for the purpose of paying the cost of any such facilities;


 


WHEREAS,
pursuant to such authorization, the governing body of the City has passed and
approved an Ordinance authorizing the City to issue its Industrial Revenue
Bonds (East Kansas Agri-Energy Project), Series 2005 (the “Bonds”), in the
aggregate principal amount not to exceed $50,000,000, to finance the cost of
acquiring, purchasing, constructing, installing and equipping a commercial
project, consisting of an ethanol production facility, including land,
buildings, structures, improvements, fixtures, machinery and equipment (the “Project”),
and authorizing the City to lease the Project to East Kansas Agri-Energy,
L.L.C. (the “Company”) pursuant to a Lease Agreement (the “Lease Agreement”) to
be entered into by and between the City, as lessor, and the Company, as lessee,
at the time the Bonds are issued;


 


WHEREAS, the
City is authorized and empowered under the Act and K.S.A. 79-201a, as amended
(the “Abatement Statute”) to exempt from ad valorem taxation all or any portion
of the Project financed with the proceeds of the Bonds, subject to the
limitations set forth in the Abatement Statute and this Agreement; and


 


WHEREAS,
pursuant to the foregoing; the City desires to enter into this
Agreement with the Company in consideration of the Company’s desire to
purchase, construct and equip the Project upon the terms and conditions hereinafter
set forth and in the Lease Agreement;


 


NOW, THEREFORE, in
consideration of the premises and the mutual representations, covenants and
agreements herein contained, the City and the Company hereby represent, covenant
and agree as follows:


 


ARTICLE I


 


DEFINITIONS


 


Section 1.1.                                Definitions of Words and Terms. The following words and terms as used herein
shall have the following meanings:


 


“Abatement Statute” means K.S.A. 79-201a, as amended.


 


“Agreement”
means this Tax Abatement Agreement dated as of December 1, 2005, between
the City and the Company, as from time to time amended and supplemented in
accordance with the provisions hereof.


 

















 


“Board of Tax Appeals” means the State of Kansas Board of Tax Appeals.


 


“Bond Financed Portion of the Project” means that portion of the Project financed
from the proceeds of the Bonds as evidenced by the requisitions submitted by
the Company to the bond trustee in accordance with Section 2.8 hereof.


 


“Bonds” means
the City’s Industrial Revenue Bonds (East Kansas Agri-Energy Project), Series 2005,
issued in the aggregate maximum principal amount of $50,000,000.


 


“City” means
the City of Garnett, Kansas.


 


“Company”
means East Kansas Agri-Energy, L.L.C., a Kansas limited liability company, and
its successors and assigns.


 


“Event of Default” means any Event of Default as
described in Section 5.1 hereof.


 


“Exempt Period”
means calendar years 2006 through 2015, inclusive.


 


“Exempt Property” means all Property that is exempt from taxation pursuant to K.S.A.
79-201(a) Second by reason
that such property was constructed or purchased with the proceeds of the Bonds
authorized by and in accordance with the Abatement Statute.


 


“Future Facility Additions” means any additions, improvements or renovations to or equipping of
the Bond Financed Portion of the Project. As used herein, “Future Facility
Additions” shall never include any future additions, improvements or
renovations to or equipping of the Project that are exempt from ad valorem
taxes.


 


“Lease Agreement” means the Lease Agreement dated as of December 1, 2005, between
the City and the Company.


 


“Property”
means all real and personal property subject to taxation pursuant to K.S.A.
79-101.


 


“Project”
means acquiring, purchasing, constructing, installing and equipping a
commercial project, consisting of an ethanol production facility, including
land, buildings, structures, improvements, fixtures, machinery and equipment;
all located in the City at 1304 South Main.


 


“Project Costs” means all
costs and expenses of every nature paid from the proceeds of the Bonds and
relating to the acquisition, purchase, construction and equipping of the
Project.


 


“Project Site”
means all of the real property described in Exhibit A
attached hereto and by this reference made a part hereof.


 


ARTICLE II

EXEMPTION;
PAYMENTS IN LIEU OF
TAX


 


Section 2.1.                                Obligation of City to Effect Tax Abatement. The City agrees to use its best efforts to
cause the Bond Financed Portion of the Project to be Exempt Property, and
agrees to make all filings required by the Board of Tax Appeals; provided,
however, the City shall not be liable for any failure


 


2

















 


of
the Board of Tax Appeals to effect the exemption permitted by the Abatement Statute.
The City covenants that it will not knowingly take any action that the City has
knowledge may cause the Bond Financed Portion of the Project to no longer
be Exempt Property. In the event the Bond Financed Portion of the Project is
determined to no longer be Exempt Property, the City shall, at the Company’s
request, cooperate with the Company in all reasonable ways to cause the Bond
Financed Portion of the Project to be Exempt Property, including cooperating
with the Company in any related litigation. The Company agrees to pay to the
City the costs that the City incurs (including legal fees and expenses) in
cooperating with the Company in the manner required by this Section.


 


Section 2.2                                   Term of Agreement. This Agreement shall become effective upon
execution and, subject to earlier termination pursuant to the provisions of
this Agreement (including particularly Article V hereof), shall terminate on January 1, 2016.


 


Section 2.3.                                No Abatement of Special
Assessments. The City and the Company hereby agree that the
Abatement Statute and any tax abatement with respect to the Project shall not
apply to special assessments. In the event special assessments are ever abated,
the Company hereby agrees that 100% of the amount of such abated special
assessments shall be paid at the times and in the manner required.


 


Section 2.4.                                Compliance. The Company shall provide the City, upon the
City’s request, with (i) copies of the requisitions submitted by the
Company to the trustee for the Bonds in accordance with the Lease Agreement, (ii) a
list containing a brief description and the amount of all costs of the Bond
Financed Portion of the Project, and (iii) the total costs of the Project,
all in such reasonable detail as the City shall request.


 


Section 2.5.                                No Abatement
on Appraised Value of Future Facility Additions. In the event any
Future Facility Additions are determined to be Exempt Property as a result of
the issuance of the Bonds, this Agreement or for any other reason, the Company
agrees that 100% of the amount of such abated ad valorem taxes attributable to
the Future Facility Additions shall be paid to the City at the times and in the
manner required by law. This provision shall not be construed as restricting
the Company from applying to the City or to any other governmental entity for
any future tax abatement in connection with any Future Facility Additions.


 


Section 2.6.                                Projected Construction
Schedule. The Company
expects to commence and complete construction of the Project as in accordance
with the schedule set forth on Exhibit B.


 


ARTICLE III


 


COVENANTS OF THE COMPANY


 


Section 3.1.                                Inspection. The Company agrees that the City and its duly
authorized agents shall have the right at reasonable times (during business
hours), subject to at least 48 hours advance notice and to the Company’s usual
business proprietary, safety and security requirements, to enter upon the
Project Site to examine and inspect the Project and the records of the Company
which demonstrate compliance with this Agreement.


 


Section 3.2.                                Compliance with Laws. The Project will comply in all material
respects with all applicable building and zoning, health, environmental and
safety ordinances and regulations and all other applicable laws, rules and
regulations.


 


3

















 


Section 3.3.                                Construction. The Project will be constructed, equipped and
operated in a manner that is consistent with the description of the Project
herein. In the event the Project is constructed in a manner that the City
determines, in its reasonable discretion, is materially inconsistent with the
description of the Project herein, the City reserves the right to declare an
Event of Default in accordance with Section 5.1
hereof.


 


Section 3.4.                                Employment Certification. At any time that the City may request,
for the term of this Agreement, the Company agrees to provide a written
certification to the City stating the total number of employees employed at the
Project.


 


Section 3.5                                   Payment of Fees and Reimbursement
or Payment of Costs. The
Company agrees to promptly reimburse the City, upon receipt by the Company of
an invoice from the City, for any amounts that the City pays to any other party
as a result of the City pursuing, obtaining or maintaining the tax abatement
granted to the Company pursuant to this Agreement. These costs shall include,
but shall not be limited to, all fees and expenses for filings with the Board
of Tax Appeals (including the existing $250 application fee and the $250 annual
administration fee), legal notice publication expenses, and the costs and
expenses of the City’s legal counsel. The Company agrees that the City may, in
lieu of seeking reimbursement from the Company, forward any invoice received by
the City to the Company, which invoice is for a cost which the City could seek
reimbursement from the Company pursuant to this paragraph, and the Company
agrees to promptly pay such invoice and to promptly provide the City with
evidence of such payment.


 


ARTICLE IV


 


SALE AND ASSIGNMENT


 


The
benefits granted by the City to the Company pursuant to this Agreement shall
belong solely to the Company and such benefits shall not be transferred (other
than to an affiliate of the Company), assigned, pledged or in any other manner
hypothecated without the express written consent of the City; provided, nothing
herein shall preclude the Company from assigning or pledging its interest in
the Project so long as the Company continues to occupy the Project and
otherwise remains responsible for its undertakings herein.


 


ARTICLE V


 


DEFAULT AND REMEDIES


 


Section 5.1.                                Events of Default. If any one or more of the following events
shall occur and be continuing, it is hereby defined as and declared to be and
to constitute an “Event of Default” hereunder:


 


(a)                                  the Company shall fail to perform any of
its obligations hereunder;


 


(b)                                 the Company shall breach any covenant
contained herein or any representation of the Company contained herein shall
prove to be materially false or erroneous; or


 


(c)                                  the Company shall be in default under the
Lease Agreement.


 


4

















 


Section 5.2.                                Remedies on Default. Upon the occurrence of an Event of Default
hereunder, the Company shall be given 60 days (or such longer period as the
City and the Company may agree), following written notice by the City to
the Company of the occurrence of such Event of Default, to cure such Event of
Default. If such Event of Default is not cured within such time, this Agreement
may be terminated by written notice to the Company from the City. Such
termination shall be effective immediately following delivery of such written
notice. Upon such termination, the Exempt Property shall no longer be exempt
from ad valorem property taxation.


 


ARTICLE VI


 


MISCELLANEOUS PROVISIONS


 


Section 6.1.                                Severability. If for any reason any provision of this
Agreement shall be determined to be invalid or unenforceable, the validity and
enforceability of the other provisions hereof shall not be affected thereby.


 


Section 6.2.                                Governing Law. This Agreement shall be construed in accordance
with and governed by the laws of the State of Kansas.


 


Section 6.3.                                Execution in Counterparts. This Agreement may be executed
simultaneously in several counterparts, each of which shall be deemed to be an
original and all of which shall constitute but one and the same instrument.


 


[Remainder of page intentionally blank.]


 


5

















 


IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be executed in their respective corporate names and their respective
corporate seals to be hereunto affixed and attested by their duly authorized
officers, all as of the date first above written.


 


	
   

  	
  CITY
  OF GARNETT, KANSAS

  
	
   

  	
   

  	
   

  
	
  (SEAL)

  	
  By:

  	
    /s/
  James A Shmidl

  
	
   

  	
   

  	
  Mayor

  
	
  ATTEST:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/
  Joyce E. Martin

  	
   

  	
   

  	
   

  
	
   

  	
  City Clerk

  	
   

  	
   

  	
   

  



 


Tax
Abatement Agreement


East
Kansas Agri-Energy, Series 2005


 


S-1

















 


	
   

  	
  EAST KANSAS AGRI-ENERGY, L.L.C.

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ William Pracht

  
	
   

  	
   

  	
  William R. Pracht

  
	
   

  	
   

  	
  Chairman and President

  



 


Tax
Abatement Agreement


East
Kansas Agri-Energy, Series 2005


 


S-2

















 


EXHIBIT B


 


ESTIMATED CONSTRUCTION SCHEDULE


 


	
  Event

  	
   

  	
  Projected

  Date

  
	
   

  	
   

  	
   

  
	
  Acquisition of Real Estate

  	
   

  	
  September 2004

  
	
   

  	
   

  	
   

  
	
  Commencement of Construction

  	
   

  	
  November 2004

  
	
   

  	
   

  	
   

  
	
  Substantial Completion of Construction

  	
   

  	
  June 2005

  
	
   

  	
   

  	
   

  
	
  Final Completion

  	
   

  	
  July 2005

  



 


B-1