EXHIBIT 10.12
March 20, 1991
THE CITY OF SYRACUSE
and
CITY OF SYRACUSE INDUSTRIAL DEVELOPMENT AGENCY
and
PROJECT ORANGE ASSOCIATES, L.P.
PAYMENT IN LIEU OF TAX AGREEMENT
Dated: April 5, 1991
THIS AGREEMENT, dated April 5, 1991, by and among the CITY OF SYRACUSE, a
municipal corporation of the State of New York with an office at 000 Xxxx Xxxx,
Xxxxxxxx, Xxx Xxxx 00000 (hereinafter referred to as the "Municipality'), the
CITY OF SYRACUSE INDUSTRIAL DEVELOPMENT AGENCY, a corporate governmental agency
constituting a body corporate and politic and a public benefit corporation
organized and existing under the laws of the State of New York, having an office
at 000 Xxxxxxxxxx Xxxxxx, Xxxxxxxx, Xxx Xxxx 00000 (hereinafter referred to as
the "Agency") and PROJECT ORANGE ASSOCIATES, L.P., a Delaware limited
partnership with an office at 0000 Xxxxxxxx Xxxxxxxxx, Xxxxx 000, Xxxx Xxxxxxxx,
Xxx Xxxx 00000 (hereinafter referred to as the "Company").
WITNESSETH:
WHEREAS, the New York State Industrial Development Agency Act, being Title
1 of Article 18-A of the General Municipal Law, Chapter 24 of the Consolidated
Laws of the State of New York, as amended (hereinafter referred to as the
"Enabling Act") authorizes the creation of industrial development agencies for
the benefit of the several counties, cities, villages and towns in the State of
New York and empowers such agencies, among other things, to acquire, construct,
reconstruct, lease, improve, maintain, equip and furnish real and personal
property, whether or not now in existence or under construction, which shall be
suitable for, among others, manufacturing, warehousing, research, commercial or
industrial purposes, in order to advance the job opportunities, health, general
prosperity and economic welfare of the people of the State of New York and to
improve their recreation opportunities, prosperity and standard of living; and
WHEREAS, the Enabling Act further authorizes each such agency to lease its
projects, to charge and collect rent therefor, to issue its bonds for the
purpose of carrying out any of its corporate purposes and, as security for the
payment of the principal and redemption price of, and interest on, any such
bonds, to mortgage any or all of its facilities and to pledge the revenues and
receipts therefrom to the payment of such bonds; and
WHEREAS, pursuant to and in accordance with the provisions of the Enabling
Act, Chapter 641 of the 1979 Laws of the State of New York as amended (said
chapter and the Enabling Act being hereinafter collectively referred to as the
"Act") the Agency was created for the benefit of the City of Syracuse and the
inhabitants thereof; and
WHEREAS, the Agency proposes to acquire the interests of the Company in a
ground lease dated February 27, 1990 between the Company as lessee and SYRACUSE
UNIVERSITY as lessor (the "Ground Lease") for a certain parcel of real property
located in the City of Syracuse and more particularly described in Exhibit "A"
attached hereto (the "Land"), and certain related agreements, including
agreements relating to the operation of the existing Syracuse University steam
plant located at the same site (the "Existing Plant"), to lease (and grant an
option to purchase) or sell a certain facility to be constructed thereon
described in the second following paragraph to the Company under a Lease and
Sublease Agreement bearing even date herewith by and between the Agency and the
Company (the "Facility Agreement") and to reassign the interests of the Company
in the Ground Lease and such related agreements back
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to the Company upon the fulfillment of the Company's obligations under the
Facility Agreement; and
WHEREAS, the Agency proposes to lease the interests of the Company in
certain easements, permits and rights of way, including the easements, permits
and rights of way described in Exhibit "B" attached hereto (collectively, the
"Easement") and to sublease (and grant an option to purchase) or sell to the
Company such interests and certain improvements and structures to be developed
therein, thereon and thereunder, as described in the following paragraph, under
the Facility Agreement and to terminate the interests of the Agency in the
Easement upon fulfillment of the Company's obligations under the Facility
Agreement; and
WHEREAS, the Agency will hold various interests in or with respect to the
Land, the buildings erected thereon (the "Buildings"), the equipment installed
herein (the "Equipment") and the Easement, together with the improvements and
structures to be developed therein, thereon and thereunder (the "Pipeline") for
use by the Company as a steam and electric generation facility, and the Existing
Plant (such interests in or with respect to the Land, Building, Easement,
Equipment, Pipeline and Existing Plant being hereinafter referred to
collectively as the "Facility"); and
WHEREAS, under the present provisions of the Act and Section 412-a of the
Real Property Tax Law of the State of New York, the Agency is not required to
pay taxes or assessments upon any of the property acquired by it or under its
jurisdiction or supervision or control; and
WHEREAS, the Agency has expressed its reluctance to enter into the Facility
Agreement unless the Company shall agree to make payments in lieu of real
property taxes to the Municipality with respect to the portion of the Facility
lying within the boundaries of the Municipality; and
WHEREAS, the Company is desirous that the Agency enter into the Facility
Agreement, and the Company is willing to enter into this Payment in Lieu of Tax
Agreement in order to induce the Agency to enter into the Facility Agreement;
NOW, THEREFORE, in consideration of the matters above recited and in order
to induce the Agency to enter into the Facility Agreement, the parties hereto
formally covenant, agree and bind themselves as follows, to wit:
ARTICLE I
REPRESENTATIONS AND WARRANTIES
------------------------------
The Company does hereby represent and warrant as follows:
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(a) Power: The Company is a limited partnership duly organized and
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validly existing under the laws of the State of Delaware, and by proper action
of its general and limited partners has been duly authorized to execute, deliver
and perform this Agreement.
(b) Authorization: The Company is authorized and has the power to
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enter into this Agreement and the transactions contemplated hereby and to
perform and carry out all covenants and obligations it is to perform under and
pursuant to this Agreement. The Company has duly authorized the execution,
delivery and performance of this Agreement and the consummation of the
transactions herein contemplated. The Company is not prohibited from entering
into this Agreement and discharging and performing all covenants and obligations
it is to perform under and pursuant to this Agreement by (and the execution,
delivery and performance of this Agreement, the consummation of the transactions
contemplated hereby and the fulfillment of and compliance with the provisions of
this Agreement will not conflict with or violate or constitute a breach of or a
default under) the terms, conditions or provisions of its Agreement of Limited
Partnership or any other restriction or any law, rule, regulation or order of
any court or other agency or authority of government, or any contractual
limitation, restriction or outstanding indenture, deed of trust, mortgage, loan
agreement, other evidence of indebtedness or any other agreement or instrument
to which the Company is a party or by which it or any of its property is bound,
and neither the Company's entering into this Agreement nor the Company's
discharging and performing all covenants and obligations on its part to be
performed under and pursuant to this Agreement will be in conflict with or
result in a breach of or constitute (with due notice and/or lapse of time) a
default under any of the foregoing, or result in the creation or imposition of
any lien of any nature upon any of the property of the Company under the terms
of any of the foregoing, and this Agreement is the legal, valid and binding
obligation of the Company enforceable in accordance with its terms.
(c) Governmental Consent: Any and all consents, (including but not
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limited to the consents required by Section 854(4) of the General Municipal Law)
approvals or authorizations of, or filings, registrations or qualifications
with, any governmental or public authorities on the part of the Company, which
are required as a condition to the execution, delivery or performance of this
Agreement by the Company or as a condition to the validity of this Agreement
have been received or made by the Company and are in full force and effect and
the Company has no notice of any condition with respect to such consents,
approvals, authorizations, filings, registrations or qualifications which would
prevent, preclude or otherwise render impossible the Company's execution,
delivery or performance hereunder.
The Municipality does hereby represent and warrant as follows:
(a) Authorization: The Municipality has secured all approvals of
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appropriate officers, boards and bodies of the Municipality necessary to duly
authorize the
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execution, delivery and performance of this Agreement by the Municipality and
the performance by the Municipality of its obligations hereunder.
(b) Validity: The Municipality is not prohibited from entering into
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this Agreement and discharging and performing all covenants and obligations on
its part to be performed under and pursuant to this Agreement by the terms,
conditions or provisions of any law, any order of any court or other agency or
authority of government, or any agreement or instrument to which the
Municipality is a party or by which the Municipality is bound. This Agreement is
the legal, valid and binding obligation of the Municipality, enforceable in
accordance with its terms.
The Agency does hereby represent and warrant as follows:
(a) Existence and Power: The Agency has been duly established under
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the provisions of the Act and has the power to enter into the transactions
contemplated by this Agreement and to carry out its obligations hereunder.
(b) Intentions: The Agency presently intends to take an assignment or
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lease of the Company's interests under the Ground Lease and the Easement,
participate in financing the construction and equipping of the Facility and
lease or sell the Facility to the Company pursuant to the provisions of the
Facility Agreement.
(c) Authorization: The Agency is authorized and has the corporate
-------------
power under the Act, its by-laws and the laws of the State of New York to enter
into this Agreement and the transactions contemplated hereby and to perform and
carry out all the covenants and obligations on its part to be performed under
and pursuant to this Agreement. By proper corporate action on the part of its
members, the Agency has duly authorized the execution, delivery and performance
of this Agreement and the consummation of the transactions herein contemplated.
(d) Validity: The Agency is not prohibited from entering into this
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Agreement and performing all covenants and obligations on its part to be
performed under and pursuant to this Agreement by the terms, conditions or
provisions of the Act, any other law, any order of any court or other agency or
authority of government, or any agreement or instrument to which the Agency is a
party or by which the Agency is bound.
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ARTICLE II
COVENANTS AND AGREEMENTS
------------------------
(a) Assessment of Facility: Pursuant to Section 874 of the General
----------------------
Municipal Law and Section 412-a of the Real Property Tax Law, the parties hereto
are agreed that upon acquisition of interests in the Facility by the Agency as
provided for in the Facility Agreement, and for so long thereafter as the Agency
shall retain such interests in the Facility, the portion of the Facility lying
within the boundaries of the Municipality shall be assessed by the Municipality
as exempt upon its assessment rolls prepared subsequent to the acquisition by
the Agency of such interests in the Facility. The parties hereto are further
agreed that the Facility shall be entitled to such exempt status on the tax
rolls of the Municipality from the date of the Facility Agreement entered into
by the parties. Pursuant to the provisions of the Facility Agreement, the
Company will be required to pay on behalf of the Agency all taxes and
assessments lawfully levied and/or assessed against the Facility, including
taxes and assessments levied for the current tax year (commencing with the date
of this Agreement) and all subsequent tax years except and to the extent the
Facility shall be entitled to exempt status on the tax rolls of the
Municipality.
(b) Special Assessments: The parties hereto are agreed that the tax
-------------------
exemption extended to the Agency by Section 874 of the General Municipal Law and
Section 412-a of the Real Property Tax Law does not entitle the Agency to
exemption from special assessments and special ad valorem levies. Pursuant to
the Facility Agreement and this Agreement, the Company shall pay on behalf of
the Agency all special assessments and special ad valorem levies lawfully levied
and/or assessed against the Facility.
(c) Manner of Assessment: The Facility will be assessed in the same
--------------------
manner as other similar properties in the City of Syracuse in accordance with
the Real Property Tax Law. As long as the Agency retains the interests in the
Facility or contemplated by the Facility Agreement, such assessment will or may
appear upon the tax rolls under "exempt properties."
(d) Notice of Chance of Assessments: The Municipality shall provide
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the Company with advance notice, in the same manner as it notifies any other
taxpayer in the City of Syracuse, of any change in assessment with respect to
the Facility.
(e) Right to Receive Services: The Municipality shall provide all
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services to the Facility which it would have provided if the Facility was
subject to the payment of full taxes and all assessments.
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The Company shall enter into simultaneously herewith and shall comply
with the terms and conditions of a certain Host Community Agreement among the
Company, the Municipality and the Syracuse Housing Authority, and particularly
shall make each and every payment required thereby.
ARTICLE III
PAYMENTS IN LIEU OF TAXES
-------------------------
As used in this Agreement the following terms have the meanings
set forth below:
"Annual Base PILOT Amount" for 1992 means $500,000 and for any PILOT
------------------------
Year after 1992 means the Annual PILOT Amount payable with respect to the
immediately preceding PILOT Year, including any adjustments to the prior year's
Annual PILOT Amount, as determined in accordance with this Article III.
"Annual Change in Tax Rate" for any PILOT Year means the change (an
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increase being a positive change and a decrease being a negative change) in the
Tax Rate in effect for that PILOT Year compared to such Tax Rate in effect for
the immediately preceding PILOT Year. The Annual Change in Tax Rate shall be
calculated to three decimal places. For example, if the Tax Rate for the 1993
PILOT Year were $100.00 per thousand dollars of assessed valuation and the Tax
Rate for the 1994 PILOT Year were $104.50 per thousand, the Annual Change in Tax
Rate for the 1994 PILOT Year would be .045.
"Annual PILOT Amount" for any PILOT Year means the total payments in
-------------------
lieu of taxes payable by the Company to the Municipality with respect to that
PILOT Year pursuant to this Agreement but without regard to any Electric
Interconnect Credits.
"Base Increment Condition" means the First Base Increment
------------------------
Condition or the Second Base Increment Condition.
"Electric Energy Purchaser" means Niagara Mohawk Power
-------------------------
Corporation and its successors or assigns.
"Electric Interconnect Credit" means, for any PILOT Year, an amount
----------------------------
equal to 50% of the amount paid with respect to that PILOT Year, by the Company
to the Electric Energy Purchaser as reimbursement for any special franchise tax
payments with respect to the electrical interconnect between the Facility and
the Electric Energy Purchaser's grid, as more particularly described on Exhibit
"C" hereto.
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"Electric Tariff Rate" means at any point in time, and for the
--------------------
purposes of determining the occurrence of a Base Increment Condition and the
Annual PILOT Amount, the time weighted Peak and Off Peak Rate payable by the
Electric Energy Purchaser to the Company for one kilowatt hour of electricity
delivered by the Company to the Electric Energy Purchaser, as determined by
reference to the Electric Energy Purchaser's then effective tariff approved by
the Public Service Commission of the State of New York ("PSC") for payment to
qualifying on-site generation suppliers (currently Service Classification No. 6
of PSC No. 207 Electricity and herein, as from time to time amended or replaced,
the "SC-6 Tariff"). The Company shall calculate the Electric Tariff Rate
annually on March 31st and additionally upon the effectiveness, following
approval by the PSC, of a change in the SC-6 Tariff or any replacement or
modification thereof.
The time weighted Peak and Off-Peak Rate shall be determined by
calculating from the SC-6 Tariff the percentage of each twenty-four (24) hour
period to which Peak and Off-Peak rates apply (disregarding any holiday or other
variations provided in the SC-6 Tariff); it being the intent of this provision
that the total of Peak and Off-Peak percentages shall equal one hundred percent.
Each percentage thus determined shall then be multiplied by the SC-6 Tariff rate
per kilowatt hour applicable thereto and to the sum of these two calculations
shall be added the average monthly fuel adjustment per kilowatt hour applicable
to the Company's deliveries to the Electric Energy Purchaser for the immediately
preceding calendar year as determined by reference to the Electric Energy
Purchaser's monthly statements for electricity delivered during the immediately
preceding calendar year. The result shall be the Electric Tariff Rate which
shall be effective until the next succeeding Electric Tariff Rate calculation,
if any.
"First Base Increment Amount" means one hundred thousand dollars
---------------------------
($100,000).
"First Base Increment Condition" means the first time during the PILOT
------------------------------
Term that the Electric Tariff Rate exceeds eight cents per kilowatt hour.
"Guaranteed PILOT Amount" means, for each PILOT Year commencing prior
-----------------------
to Substantial Completion of the Facility, an amount equal to the lesser of the
Annual PILOT Amount for that PILOT Year or Five Hundred Thousand Dollars
($500,000.00), (ii) for the first PILOT Year commencing after Substantial
Completion of the Facility, the sum of (x) Five Hundred Thousand Dollars
($500,000.00) and (y) the product of Five Hundred Thousand Dollars ($500,000.00)
multiplied by the Annual Change in Tax Rate for that PILOT Year (which product
will be a negative number if there was a decrease in the Tax Rate), and (iii)
for each PILOT Year thereafter, the sum of (x) the Guaranteed PILOT Amount for
the preceding PILOT Year and (y) the product of the Guaranteed PILOT Amount for
the preceding PILOT Year multiplied by the Annual Change in Tax Rate for that
PILOT Year (which product will be a negative number if there was a decrease in
the Tax Rate); provided, however, that the Guaranteed PILOT Amount shall not be
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less than Five Hundred Thousand Dollars ($500,000.00) for any PILOT Year
commencing after Substantial Completion of the Facility. By way of illustration,
if Substantial Completion of the Facility occurs in 1992 and the Annual Change
in Tax Rate for 1993 is an increase of 6%, for 1994 is an increase of 5%, and
for 1995 is a decrease
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of 2%, then the Guaranteed PILOT Amount for 1993 will be $530,000.00 ($500,000
plus the product of $500,000 times 6%), the Guaranteed PILOT Amount for 1994
will be $556,500.00 ($530,000 plus the product of $530,000 times 5%), and the
Guaranteed PILOT Amount for 1995 will be $545,370.00 ($556,500 minus the product
of $556,500 times 2%).
"Maximum Electrical Output" means, at any given time, the lower of (x)
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the maximum permitted net electric generating capacity of the Facility allowed
under the terms of the Ground Lease and the PSD Permit with respect to the
Facility which was issued by the New York State Department of Environmental
Conservation on December 18, 1989 as hereafter replaced, modified, or amended,
or (y) the actual electric generating capacity of the Facility net of in-
Facility use ("Net Electric Generating Capacity") as determined by an
independent engineer agreeable to the parties.
"PILOT Term" means the period commencing upon the effective date of
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the Facility Agreement and ending twenty years after Substantial Completion of
the Facility.
"PILOT Year" means any calendar year during the PILOT Term.
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"Second Base Increment Amount" means three hundred thousand
----------------------------
dollars ($300,000).
"Second Base Increment Condition" means the first time during the
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PILOT Term that the Electric tariff rate exceeds ten cents per kilowatt hour.
"Substantial Completion" means the date on which the Facility delivers
----------------------
both steam to Syracuse University and electricity to the Electric Energy
Purchaser.
"Tax Rate" shall mean, for any given year, the combined City of
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Syracuse, County of Onondaga, City School District and County Water District,
real property tax rate used for calculating other combined City/County real
property taxes owed by private owners of real property situated in the City of
Syracuse, New York during that year.
(a) Generally: The Annual PILOT Amount for 1990 shall be zero and the
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Annual PILOT Amount for 1991 shall be $25,000. The Annual PILOT Amount with
respect to each PILOT Year after the 1991 PILOT Year shall equal the sum of (i)
the Annual Base PILOT Amount for that PILOT year and (ii) the product of the
amount in clause (i) multiplied by the Annual Change in Tax Rate for that PILOT
Year (which product will be a negative number if there was a decrease in the Tax
Rate); provided, however, that until Substantial Completion of the Facility the
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Annual PILOT Amount for each PILOT year after 1991 shall be an amount equal to
the product of (1) the sum of (x) Five Hundred Thousand Dollars ($500,000) and
(y) the product of Five Hundred Thousand Dollars ($500,000) multiplied by the
Annual Change in Tax Rate; multiplied by (2) the percentage to which Facility
construction is complete on December 31st of the previous PILOT Year. Such
percentage of completion shall be determined by the
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Municipality based upon inspection of the Facility site and review of Company
records related to the construction thereof.
The Annual PILOT Amount will be further adjusted as provided in
paragraphs (b)-(e) of this Section 3.02.
As soon as practicable after a change in the SC-6 Tariff becomes
effective the Company shall provide the Municipality with (i) the Company's
calculation of the Electric Tariff Rate and (ii) a copy of the portions of the
SC-6 Tariff used by the Company in calculating the Electric Tariff Rate. In
March of each year the Company shall provide the Municipality with copies of the
Electric Energy Purchasers monthly statements for the immediately preceding
calendar year.
(b) Changes in Electric Tariff Rate: If any change in the Electric
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Tariff Rate becomes effective during the PILOT Year, the Annual PILOT Amount for
that year will be adjusted upwards (for an increase in the Electric Tariff Rate)
or downwards (for a decrease in the Electric Tariff Rate) as follows:
(1) For each change of one cent per kilowatt hour in the Electric
Tariff Rate the Annual PILOT Amount for that year will be adjusted (i) Seventy-
five Thousand Dollars ($75,000) to the extent that the change causes the
Electric Tariff Rate to fluctuate between six cents per kilowatt hour and eight
cents per kilowatt hour, (ii) One Hundred and Fifty Thousand Dollars ($150,000)
to the extent that the change causes the Electric Tariff Rate to fluctuate
between eight cents per kilowatt hour and ten cents per kilowatt hour, and (iii)
Three Hundred Thousand Dollars ($300,000) to the extent that the change causes
the Electric Tariff Rate to fluctuate in a range above ten cents per kilowatt
hour; provided, that for any increment of increase or decrease in the Electric
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Tariff Rate of less than one full cent remaining after application of provisions
(b)(l)(i) and (ii), there shall be a pro rata adjustment at the rate per
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kilowatt hour applicable to the next higher or lower full cent of Electric
Tariff Rate change; and provided, further, that if the change first becomes
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effective on a day ("the Effective Day") after the first day of any PILOT Year,
the amount of the adjustment to the Annual PILOT Amount for that PILOT year
resulting from that change shall equal the product of the amount calculated as
provided above multiplied by a fraction having a numerator equal to the number
of days in that PILOT Year remaining from and after the Effective Day and a
denominator equal to 365. Any increase pursuant to this paragraph 3.02(b)(l) to
the Annual PILOT Amount for any PILOT Year in which the Electric Tariff Rate is
increased shall be payable, subject to Article IV, on the earlier of January 31
of the following PILOT Year or 30 days after the Company receives a xxxx for
such increase from the Municipality. Any decrease pursuant to this paragraph
3.02(b)(l) to the Annual PILOT Amount for any PILOT Year in which the Electric
Tariff Rate is decreased shall be credited against the payments due from the
Company to the Municipality hereunder on the next quarterly payment dates until
the entire amount of the credit has been used.
(2) If there is any change in the Electric Tariff Rate which becomes
effective after January 1 of a PILOT year (the "reference PILOT Year"), then the
amount determined by subtracting (i) the total adjustments to the Annual PILOT
Amount for the reference PILOT Year calculated pursuant to paragraph 3.02(b)(1)
from (ii) the amount by which
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the Annual PILOT Amount for the reference PILOT Year would have been adjusted if
the net change between the Electric Tariff Rate in effect on December 31 of the
immediately preceding PILOT Year and the Electric Tariff Rate in effect on
December 31 of the reference PILOT Year had been effective on January 1 of the
reference PILOT Year and no other changes in the Electric Tariff Rate had
occurred during the reference PILOT Year, shall be added to the Annual PILOT
Amount for the PILOT Year immediately following the reference PILOT Year. If
such difference shall be a negative number, it shall nonetheless be added to the
Annual PILOT Amount for the next PILOT Year, in which case it will result in a
reduction of such Annual PILOT Amount.
(3) The following are illustrations of how the parties intend that the
adjustments described in the preceding paragraphs (1) and (2) shall be
calculated (all four examples disregard any adjustments to the Annual PILOT
Amount which are required by paragraphs 3.02(c), (d), or (e)): (i) if the
Electric Tariff Rate at the beginning of a PILOT Year is $.06/kwh and effective
July 1 of that PILOT Year the Electric Tariff Rate is increased to $.075/kwh,
then the Annual PILOT Amount for that PILOT Year would be increased by
$56,712.33 (1.5 x $75,000 x 184/365 = $56,712.33), and if the Annual PILOT
Amount for that PILOT Year was $556,712.33 then the Annual Base PILOT Amount for
the next PILOT Year would, by operation of paragraph 3.02(b)(2), be increased to
$612,500; (ii) if the Electric Tariff Rate is increased from $.07/kwh to
$.0925/kwh effective January 1 of a PILOT Year, then the Annual PILOT Amount for
that PILOT Year will be increased by S262,500 (1 x $75,000 + (1.25 x $150,000))
and the Annual PILOT Amount for that PILOT Year would become the Annual Base
PILOT Amount for the next PILOT Year; (iii) if the Electric Tariff Rate on
January 1 of a PILOT Year is $.85/kwh and effective April 1 of that PILOT Year
is increased to $.1025/kwh, then the Annual PILOT Amount for that PILOT Year
will be increased by $226,027.38 ((1.5 x $150,000) + (.25 x $300,000) x
275/365), and if the Annual PILOT Amount for that PILOT Year was $950,000 then
the Annual Base PILOT Amount for the next PILOT Year would, by operation of
paragraph 3.02(b)(2), be increased to $1,025,000; and (iv) if the Electric
Tariff Rate on January 1 of a PILOT Year is $.1025/kwh and effective April 1 of
that PILOT Year is decreased to $.085/kwh, then the Annual PILOT Amount for that
PILOT Year will be decreased by $226,027.38 ((-1.5 x $150,000)+ (-.25 x
$300,000) x 275/365), and if the Annual PILOT Amount for that year was $800,000
then the Annual Base PILOT Amount for the next PILOT Year would, by operation of
paragraph 3.02(b) (2), be decreased to $725,000.
(c) Base Increment Adjustments: In the PILOT Year in which a Base
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Increment Condition occurs, the Annual PILOT Amount for that PILOT Year shall be
increased by an amount equal to the product of (i) the First or Second Base
Increment Amount, whichever is applicable, multiplied by (ii) a fraction having
a numerator equal to the number of days remaining in that PILOT Year after the
applicable Base Increment Condition occurred and a denominator equal to 365. Any
increase pursuant to this paragraph 3.02(c)to the Annual PILOT Amount for any
PILOT Year during which a Base Increment Condition occurs shall be payable,
subject to Article IV, on the earlier of January 31 of the following PILOT Year
or 30 days after the Company receives a xxxx for such increase from the
Municipality. The excess, if any, of the First or Second Base Increment Amount,
whichever is applicable, over the increase to the Annual PILOT Amount pursuant
to this paragraph 3.02(c) for the PILOT Year in which a Base
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Increment Condition occurs shall be added to the Annual PILOT Amount for the
next PILOT Year. The Annual PILOT Amount for the PILOT Year in which a Base
Increment Condition occurs, as adjusted by the addition of the excess pursuant
to the preceding sentence, shall become the Annual Base PILOT Amount for the
following PILOT Year.
(d) Exhaustion of Initial Gas Supply: The Annual Base PILOT Amount
--------------------------------
for the PILOT Year which is the later of (x) the year 2008 or (y) the PILOT Year
during which the Company's initial prepaid gas supply from Noranda, Inc.
pursuant to a Restated Gas Sales and Purchase Agreement dated March ____, 1991
(the "Gas Supply Agreement"), is exhausted, shall be adjusted by subtracting
from such amount 50% of the portion, if any, of the Annual Base PILOT Amount
for that PILOT Year that is attributable to the occurrence of the Second Base
Increment Condition (that is 50% of the Second Base Increment Amount as adjusted
for changes in the Tax Rate subsequent to the PILOT Year, if ever, in which the
Second Base Increment Condition occurred); provided, however, that the
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adjustment provided in this paragraph 3.02(d) shall not be made if the Company
shall have entered into an extension or replacement of the Gas Supply Agreement
at the same or more favorable cost per delivered decatherm.
(e) Increased Generating Capacity: In the event that at any time
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during the PILOT Term the Maximum Electrical Output is increased above 80
Megawatts (and this Agreement is not terminated pursuant to Section 9.01), then
the Annual PILOT Amount for that PILOT Year will be increased by an amount equal
to the product of (i) the Annual PILOT Amount for that PILOT Year as calculated
before giving effect to the adjustment provided for in this paragraph multiplied
by (ii) a fraction having a numerator equal to the excess of (A) the new Maximum
Electrical Output over (B) the higher of 80 megawatts and the Maximum Electrical
Output immediately prior to such increase, and a denominator equal to 80
megawatts; provided, however, that if the Maximum Electrical Output is increased
--------- -------
after the first day of a PILOT Year, then the amount of the adjustment to the
Annual PILOT Amount for that PILOT Year shall equal the product of the amount
calculated as provided above multiplied by a fraction having a numerator equal
to the remaining number of days in that PILOT Year and a denominator equal to
365. The Annual Base PILOT Amount for any PILOT Year following a PILOT Year
during which the Maximum Electrical Output was first increased above 80
megawatts, shall be calculated as if the Maximum Electrical Output was increased
on January 1 of the PILOT Year in which the Maximum Electrical Output was
increased. By way of illustration, assuming that the Annual PILOT Amount for the
1995 PILOT Year were $1,000,000 (as calculated prior to June 30 of that year)
and that the Maximum Electrical Output is increased from 80 megawatts to 100
megawatts on June 30 of that PILOT Year, then by operation of this paragraph
3.02(e) the Annual PILOT Amount for the 1995 PILOT Year would be increased by
$125,000 ($1,000,000 x (100-80)/80 x 154/365) but the Annual Base Amount for the
1996 PILOT Year would be $1,250,000 calculated based on an adjustment due to the
increase in the Maximum Electrical Output for the 1995 PILOT Year of $250,000,
because for this purpose the increase in Maximum Electrical Output would be
assumed to have occurred on January 1, 1995, not on June 30, 1995, and thus
there would be no allocation of the adjustment based on the number of remaining
months in 1995.
-11-
ARTICLE IV
METHOD OF MAKING PILOT PAYMENTS
-------------------------------
As used in this Agreement the following terms have the meanings
specified:
"Agent" means one or more Banks or other financial institutions or
-----
other entities designated to act as agent for the Banks with respect to Senior
Debt, which shall be identified to the Agency by notice from the Company and the
Agent.
"Bank" or "Banks" means the lenders who advance Senior Debt or to whom
---- -----
Senior Debt is from time to time owing as assignee of a lending bank.
"Construction Loan" means that certain construction and term loan
-----------------
indebtedness of the Company to one or more banks secured by a mortgage or other
appropriate security interest in the Agency's interest in the Facility, 100% of
the proceeds of which are designated for use in connection with the
construction, development, improvement, expansion, alteration, maintenance,
repair, replacement, operation, or for costs of the development, of the Facility
or the Existing Plant or any facilities which are appurtenant to or are a
necessary and integral part of the operation of the Facility or the Existing
Plant, including the establishment of appropriate reserves required by the
banks, capitalized interest and other reasonable and necessary financing costs,
having an initial maturity of approximately sixteen (16) years from Substantial
Completion of the Facility.
"Deferred Obligation" means any unpaid balance of the amounts
-------------------
calculated pursuant to Sections 4.03(b) and 4.03(d).
"Mandatory Costs" means, with respect to each calendar quarter during
---------------
the PILOT term, the aggregate of the amounts which are due and payable or
required to be set aside for payment by the Company during such quarter pursuant
to the terms of the governing instruments or transactions and are actually paid
or properly set aside for payment during such quarter, for each of the
following:
(i) Installments of debt service and other charges required to be paid
in accordance with the terms of the instruments governing Senior Debt, including
payments to any reserve fund required by the terms of Senior Debt (whether or
not the proceeds of such reserve fund may subsequently be available for payment
of principal and interest) but excluding amounts due solely as a result of the
exercise by any holder of Senior Debt of its rights to accelerate the maturity
of all or part of the principal thereof by reason of the occurrence of a default
or an event of default under the terms of the instruments governing such Senior
Debt,
(ii) All other reasonable and necessary costs of the operation and
maintenance of the Facility, including insurance premiums and amounts owing to
suppliers and
-12-
transporters of consumables with respect to current deliveries, but excluding,
-------------
(1) Subordinated PILOT Obligations, (2) bonuses to any operators of the
Facility, (3) user charges payable to Syracuse University with respect to the
Existing Plant, (4) any management fees due to G.A.S. or Xxxx X. Xxxxxx, or any
entity controlled by, under common control with or which controls either G.A.S.
or Xxxx X. Xxxxxx, or any other similar payments or fees, and (5) all other
charges for the operation or administration of the Facility not expressly
identified in this definition which are by their terms, directly or indirectly,
subject to subordination or deferral to the extent necessary to permit the prior
payment of Senior Debt, and
(iii) All amounts required to be paid or set aside for payment of
real property taxes and with respect to the Facility, payments to municipal
authorities in lieu thereof (including the Guaranteed PILOT Amount to be paid
pursuant to this Agreement) or with respect to gross receipts, franchise or
other similar taxes, but excluding any Subordinated Obligations, and
(iv) All amounts required to be paid for the Company's actual
reasonable expenses of administration and overhead (other than to or for the
benefit or profit of G.A.S., Xxxx X. Xxxxxx or any entity controlled by, under
common control with, or which controls either G.A.S. or Xxxx X. Xxxxxx),
including payment or reimbursement of costs and expenses incurred by the
managing general partner of the Company to the extent payment of such expenses
is permitted under the instruments governing Senior Debt prior to the payment of
installments of debt service on Senior Debt.
"Net Cash Flow" shall mean, with respect to each calendar quarter, the
-------------
excess of the gross revenues directly or indirectly generated by the Company
from operation or ownership of the Facility, or otherwise (including without
limitation all revenues derived by the Company from the sale of steam to
Syracuse University), over the Mandatory Costs actually paid or properly set
aside for payment during such quarter.
"Senior Debt" means the Construction Loan, plus additional debt in the
-----------
aggregate outstanding principal amount on any date of not more than twenty five
million dollars ($25,000,000) incurred by the Company for the sole purpose of
financing the debt service on the Construction Loan, or paying Mandatory Costs,
provided, however, that Senior Debt shall include debt incurred by the Company
--------- -------
upon a refinancing or extension of the payment term of the Construction Loan,
whether or not the refinancing or extension is arranged with the original
lending institution, so long as the aggregate amounts payable in each quarter
for installments of debt service which are Mandatory Costs do not exceed the
amounts that would have been payable in such quarter for installments of debt
service on the Construction Loan if such refinancing or extension had not
occurred. The principal amount of the Construction Loan shall not exceed two
hundred thirty five million dollars ($235,000,000). The principal amount of the
Senior Debt after equity contribution, however, shall not exceed Two Hundred
Million Dollars ($200,000,000).
"Subordinated PILOT Amount" means, with respect to any calendar
-------------------------
quarter within any PILOT Year, the excess, if any, of that portion of the Annual
PILOT Amount
-13-
for that PILOT Year which is due in respect of that calendar quarter in excess
of 25% of the Guaranteed PILOT Amount for that PILOT Year.
"Subordinated PILOT Obligations" means Subordinated PILOT Amounts
------------------------------
and Deferred Obligations.
Subject to the deferral provisions of Section 4.03, the Company agrees
to pay to the Municipality the annual PILOT Amount for each PILOT Year in four
equal installments (except to the extent that adjustments are made to the Annual
PILOT Amount during a PILOT Year) which shall be due and payable in arrears with
respect to the prior quarter on April 15, July 15, and October 15 of each PILOT
Year and on January 15 of the following PILOT year. All payments shall be in
lawful money of the United States of America. The Company shall be entitled to
receive receipts for all such payments.
Section 4.03. Deferral of Subordinated PILOT Amounts
(a) Priority: The Subordinated PILOT Obligations shall be subordinate
--------
and junior in right of payment to the Senior Debt on the terms and subject to
the conditions stated in this Section 4.03.
(b) Payment of Subordinated PILOT Amounts: Except as otherwise
-------------------------------------
provided in this Section 4.03, Subordinated PILOT Amounts shall be due and
payable to the fullest extent of Net Cash Flow (as determined separately for
each calendar quarter) after, and subject only to, the prior payment of any
Deferred Obligations and interest thereon, as further provided in this Section
4.03. In the event that the balance of Net Cash Flow remaining after payment of
Deferred Obligations and interest thereon is less than the Subordinated PILOT
Amount, the obligation to pay the difference (a "Deferred Obligations") shall be
deferred and such obligation shall be payable as provided in paragraph (c) of
this Section 4.03.
(c) Payment of Deferred Obligations: The aggregate of all Deferred
-------------------------------
Obligations shall be due and payable quarterly on the same dates as installments
of the Annual PILOT Amount, to the extent of the first available Net Cash Flow
after the payment of current interest on Deferred Obligations, and, in all
events, shall be paid in full upon the last day of the initial PILOT Term.
(d) Interest on Deferred Obligations: Interest on Deferred Obligations
--------------------------------
shall accrue at the rate provided for in Section 10.02 and the interest so
accrued as of the end of each calendar year shall be added to the balance of
Deferred Obligations. Interest on Deferred Obligations shall be due and payable
quarterly (on the same dates as installments of the Annual PILOT Amount) to the
extent of the first available Net Cash Flow prior to the payment of Deferred
Obligations and in all events shall be paid in full not later than the last day
of the initial PILOT Term.
-14-
(e) Company to Provide Accounting Statement: So long as any
---------------------------------------
Subordinated PILOT Amounts are accrued and owing or any Deferred Obligations are
outstanding, then, on or before March 31st of each PILOT Year, the Company shall
furnish or cause to be furnished to the Municipality a statement prepared by a
nationally recognized firm of independent certified public accountants
designated by the Company, setting forth, in reasonable detail, a computation of
Net Cash Flow for the preceding year by quarters and the application thereof.
(f) No Payment of Other than Mandatory Costs: If and for so long as
----------------------------------------
any Deferred Obligations are outstanding, the Company shall not make any
distribution or payment otherwise than on account of Mandatory Costs.
(g) Limitation on Deferred Payment of Subordinated Amounts: The
--------------------------------------------------------
provisions of this Section 4.03 and the Municipality's agreement to defer
receipt of Subordinated PILOT Amounts shall be effective from the date hereof
until the first to occur of any of the following events:
(i) The expiration of the PILOT Term;
(ii) The Senior Debt is paid or otherwise satisfied;
(iii) The Electric Tariff Rate first equals or exceeds $.085;
(iv) The Maximum Electrical Output first equals or exceeds 80
Megawatts per hour; or
(v) The transfer by the Company of its rights under the
Agreement (otherwise than pursuant to or in lieu of the
exercise by any holder of Senior Debt of any right of
assignment or foreclosure available under the instruments
governing the Senior Debt).
From and after occurrence of the first to occur of the foregoing events ("the
Subordination Termination Event") (i) the right of the Company hereunder to
defer payment of portions of subsequent Annual PILOT Amounts shall terminate and
be of no further force and effect, so that all Annual PILOT Amounts then or
thereafter accrued and owing (other than any such amounts constituting Deferred
Obligations as of the time of the Subordination Termination Event) shall be due
and payable quarterly, as herein provided; and (ii) any remaining Net Cash Flow
(as calculated without adjustment for Subordinated PILOT Amounts) shall be
applied by the Company first to the interest on Deferred Obligations and
thereafter to the principal of Deferred Obligations.
(h) Rights of Senior Debt to Enforce Subordination: No present or
----------------------------------------------
future holder of any Senior Debt shall be prejudiced in the right to enforce
subordination of any Subordinated PILOT Obligations by any act or failure to
act on the part of the Company.
-15-
(a) Company's Right to Electric Interconnect Credit The Company shall
-----------------------------------------------
be entitled to receive for each PILOT Year an Electric Interconnect Credit which
shall be available as a credit against the Annual PILOT Amounts due hereunder,
in accordance with this Section 4.04.
(b) Method of Claiming Credits: To claim the Electric Interconnect
--------------------------
Credit, the Company shall provide to the Municipality a copy of the Electric
Energy Purchaser's invoice to the Company reflecting its charge for the special
franchise tax xxxx applicable to the electric connection between the Facility
and the Electric Energy Purchaser's grid (the "Facility Electric Interconnect")
and evidence of the Company's payment thereof. Such payment by the Company may
be effected by a credit or deduction taken by the Electric Energy Purchaser
against charges owing by it for electricity purchased from the Company. The
Municipality's approval of the Electric Interconnect Credit amount for each year
shall be conclusively presumed unless the Municipality objects in writing within
30 days of the date on which such invoice with respect to that year is received
by the Municipality.
(c) How and When Credit is Applied: The amount of each Electric
------------------------------
Interconnect Credit shall be equal to fifty percent (50%) of the special
franchise tax charges actually paid by the Company for the Facility Electric
Interconnect. The Electric Interconnect Credit shall accrue each year as of the
time the payment of such special franchise tax charges is made by the Company or
credited by the Electric Energy Purchaser against amounts otherwise payable by
it to the Company. From and after the time of its accrual, the Electric
Interconnect Credit shall be applied on each quarterly date on which any
installment of the Annual PILOT Amount is due, first to reduce any Subordinated
PILOT Amount; then to pay interest on Deferred Obligations; then to reduce
Deferred Obligations; then to reduce the Guaranteed PILOT Amount, but not (i) by
an amount which would cause the aggregate of such reductions for any PILOT Year
to exceed 36% of the total Electric Interconnect Credit for that PILOT Year or
(ii) to a level below $125,000 for any quarter; and finally, any balance shall
be carried forward and shall be available for application on the next quarterly
date, in the same order and subject to the same limitations. In no event shall
the Municipality or the Agency be obligated to reimburse the Company if the
Electric Interconnect Credit has not been applied in full during the term of
this Agreement in accordance with the provisions of this Section 4.04(c).
ARTICLE V
SECURITY
--------
(a) In the following events:
-----------------------
(i) any insolvency, bankruptcy, receivership, liquidation,
reorganization, readjustment, composition or other
-16-
liquidation, reorganization, readjustment, composition
or other similar proceeding relating to the Company,
or its property,
(ii) any proceeding for the liquidation, dissolution, or
any winding up of the Company, voluntary or
involuntary, whether or not involving insolvency or
bankruptcy proceedings,
(iii) any assignment by the Company for the benefit of
creditors, or
(iv) any other marshalling of the assets of the Company,
then, all Senior Debt (including any interest thereon accruing at the default
rate after the commencement of any such proceedings and any additional interest
that would have accrued thereon but for the commencement of such proceedings,
whether or not in each case such interest is allowed as a claim in such
proceedings) shall first be paid in full before any payment or distribution,
whether in cash, securities or other property, shall be made with respect to any
Subordinated PILOT Obligations.
(b) Payments to Senior Debt: Any payment or distribution whether in
-----------------------
cash, securities or other property, which would otherwise (but for these
subordination provisions) be payable or deliverable in respect of Subordinated
PILOT Obligations shall be paid or delivered directly to the holders of Senior
Debt in accordance with the priorities then existing among such holders until
all Senior Debt (including any interest thereon accruing at the default rate
after the commencement of any such proceedings) shall have been paid in full.
(c) Transfer of Payments Received on Behalf of Senior Debt: From and
------------------------------------------------------
after Agency or Municipality receipt of notice of an event of default with
regard to Senior Debt, if any payment or distribution of any character or any
security, whether in cash, securities or other property, shall be received by
any person on account of Subordinated PILOT Obligations in contravention of any
of the terms hereof and before all Senior Debt shall have paid in full, such
payment or distribution or security shall be received in trust for the benefit
of, and shall be paid and delivered and transferred to, the holders of Senior
Debt at the time outstanding in accordance with priorities then existing among
such holders for application to the payment of all Senior Debt remaining unpaid,
to the extent necessary to pay all Senior Debt in full. In the event of the
failure of any person receiving payment on account of any Subordinated PILOT
Obligations to endorse or assign any such payment, distribution or security,
each holder of Senior Debt is hereby irrevocably authorized to endorse or sign
the same.
In addition to any other provisions of this Agreement pertaining to
the priority of payments to the Municipality, upon payment in full of Senior
Debt the Municipality
-17-
shall be subrogated to all of the rights of any holders of Senior Debt to
receive any further payments or distributions applicable to Senior Debt until
such time as the Subordinated PILOT Obligations shall have been paid in full,
and, for the purposes of the Municipality's subrogation hereunder, payments or
distributions received by the holders of Senior Debt of cash, securities or
other property to which the Municipality is entitled under these subrogation
provisions shall, as between the Company and its creditors other than the
holders of Senior Debt, on the one hand, and the Municipality, on the other, be
deemed to be payment or distribution by the Company to or on account of
Subordinated PILOT Obligations.
ARTICLE VI
DEFAULT/REMEDIES
----------------
Any one or more of the following events shall constitute an event of
default under this Agreement, and the terms "Event of Default" or "Default"
shall mean, whenever they are used in this Agreement, any one or more of the
following events:
(a) Failure to Pay Amounts Due During Subordination: Prior to the
-----------------------------------------------
occurrence of the Subordination Termination Event, any failure of the Company to
pay to the Municipality within thirty (30) days of the date on which payment is
due and the continuance of such failure for thirty (30) days after written
notice by the Municipality to the Company, any portion of (i) the Guaranteed
PILOT Amount, (ii) any Subordinated PILOT Amount (unless payment of that amount
shall be deferred in accordance with Section 4.03), or (iii) any payment
required under the Host Community Agreement referenced in Section 2.02.
(b) Failure to Pay Amounts Due After Termination of Subordination:
-------------------------------------------------------------
Subsequent to the occurrence of the Subordination Termination Event, any failure
of the Company to pay to the Municipality or the Agency within thirty (30) days
of the date on which payment is due and the continuance of such failure for
thirty (30) days after written notice by the Municipality to the Company, any
amount required to be paid by the Company to the Agency or Municipality under
this Agreement or any payment required under the Host Community Agreement
referenced in Section 2.02.
(c) Failure to Perform: Failure of the Company to observe and perform
------------------
any other covenant, condition or agreement on its part to be observed and
performed (other than as referred to in paragraph (a) or (b) above) and the
continuance of such failure for a period of thirty (30) days after written
notice by the Municipality to the Company specifying the nature of such failure
and requesting that it be remedied (unless the failure is not susceptible of
being cured within 30 days, in which case there shall be no default arising from
such failure so long as the Company takes all reasonable steps to cure such
failure within 30 days after such notice and is diligently continuing to take
appropriate steps to cure such failure).
-18-
(d) False Representation: Any warranty or representation by or on
--------------------
behalf of the Company contained in this Agreement shall prove to have been false
or incorrect in any material respect on the date when made.
(e) Exercise of Remedies by Senior Debt: Exercise by any holder of
-----------------------------------
Senior Debt of any right of assignment or foreclosure of the Facility or of any
other remedy which causes the Company to transfer, assign or terminate its
interests in the Facility as a consequence of any default or event of default on
the part of the Company under the instruments governing the Senior Debt, unless
such transfer, assignment or foreclosure complies with the requirements of
Section 8.01(b).
(f) Liquidation, Bankruptcy, and Insolvency: The Company shall file a
---------------------------------------
voluntary petition in bankruptcy or shall be adjudicated a bankrupt or
insolvent, or shall file any petition or answer seeking any reorganization,
arrangement, composition, readjustment, liquidation, dissolution or similar
relief under the present or any future federal bankruptcy code or any other
present or future federal, state or other bankruptcy or insolvency statute or
law, or shall seek, consent to or acquiesce in the appointment of any bankruptcy
or insolvency trustee, receiver or liquidator of all or any substantial part of
its properties or the Facility.
(a) Termination of Right of Deferral: Whenever an Event of Default
--------------------------------
shall occur as set forth in Section 6.01(a), and such default shall not have
been cured following notice as provided for in Section 8.01(a), at the option of
the Municipality, effective upon written notice by the Municipality to the
Company and the Agent, the Company's right to defer payment of Subordinated
PILOT Amounts in accordance with Section 4.03(b) shall terminate and be of no
further effect, but the exercise of the remedy described in this paragraph (a)
shall not accelerate the maturity of, or otherwise affect the nature of the
Company's obligation to pay Deferred Obligations and interest thereon in
accordance with Sections 4.03(c) and 4.03(d).
(b) Acceleration of Deferred Obligations: Whenever an Event of
------------------------------------
Default shall occur as set forth in Section 6.01(b), and such default shall not
have been cured following notices as provided in Section 8.01(a), or an Event of
Default shall occur as set forth in Section 6.01 (c), (d), (e) or (f) the
Municipality may (i) at its election, effective upon written notice by the
Municipality to the Company and the Agent, declare all Deferred Obligations
together with the accrued interest thereon to be immediately due and payable and
terminate the Company's rights to limit payment of previously Deferred
Obligations and the accrued interest thereon to Net Cash Flow, in accordance
with Sections 4.03(c) and 4.03(d), subject nevertheless to the continuing
subordination of Deferred Obligations to the prior payment in full of Senior
Debt to the extent and in the manner provided in Section 4.03, (ii) take
whatever action at law or in equity may appear necessary or desirable to collect
the amount then in default or to enforce the performance and observance of the
obligations, agreements and covenants of the Company under this Agreement,
subject always to the rights of the holders of Senior Debt to receive prior
payment in full of the Senior Debt, or (iii) request that the Agency comply with
the provisions of Section 6.03 terminating this Agreement.
-19-
Whenever any Event of Default shall have occurred with respect to this
Agreement, except a default pursuant to Section 6.01(a), and shall be
continuing, the Agency may, and upon the written request of the Municipality
shall, record a deed and any other necessary documents (including an assignment
of lease with respect to the Ground Lease) in the appropriate County Clerk's
Office conveying the Land, the Building, and/or the Equipment to the Company or
such other person or persons as may be required. The recording of the deed and
any other documents shall constitute delivery of such to the Company. In order
to facilitate transfer of title, the Company hereby appoints the Chairman of the
Agency as its agent, with full authority to execute and deliver all documents
necessary to effect the transfer of title to the Facility from the Agency to the
Company. Notwithstanding anything to the contrary in the foregoing, the Company
and the Agency agree that in the event of the occurrence of an Event of Default
specified in Section 6.01(f), the transfer of title to the Facility from the
Agency to the Company shall be deemed to occur simultaneously with the happening
of such event (and without prior notice to the Company) and the deed and other
documents necessary to evidence such transfer shall be executed, delivered and
recorded forthwith, with copies to the Company and the Municipality.
If the Company should default in performing any of its obligations,
covenants and agreements under this Agreement and the Agency or the Municipality
should employ attorneys or incur other expenses for the collection of any
amounts payable hereunder or for the enforcement of performance or observance of
any obligation or agreement on the part of the Company herein contained, the
Company agrees that it will, on demand therefor, pay to the Agency or the
Municipality, as the case may be, the reasonable fees and disbursements of such
attorneys and such other reasonable expenses so incurred.
Each notice by the Municipality to the Company pursuant to any
provision of this Article VI shall also be given to the Agent.
ARTICLE VII
LIMITED OBLIGATION OF THE PARTIES
---------------------------------
(a) No Recourse: All covenants, stipulations, promises, agreements and
-----------
obligations of the Agency contained in this Agreement shall be deemed to be the
covenants, stipulations, promises, agreements and obligations of the Agency and
not of any member,
-20-
officer, agent, servant or employee of the Agency in his or her individual
capacity, and no recourse under or upon any obligation, covenant or agreement
contained in this Agreement, or otherwise based or in respect of this Agreement,
or for any claim based thereon or otherwise in respect thereof, shall be had
against any past, present or future member, officer, agent, servant or employee,
as such, of the Agency or any successor public benefit corporation or political
subdivision or any person executing this Agreement on behalf of the Agency,
either directly or through the Agency or any successor public benefit
corporation or political subdivision or any person so executing this Agreement.
It is expressly understood that this Agreement is a corporate obligation, and
that no such personal liability whatever shall attach to, or is or shall be
incurred by, any such member, officer, agent, servant or employee of the Agency
or of any successor public benefit corporation or political subdivision or any
person so executing this Agreement under or by reason of the obligations,
covenants or agreements contained in this Agreement or implied therefrom. Any
and all such personal liability of, and any and all such rights and claims
against, every such member, officer, agent, servant or employee under or by
reason of the obligations, covenants or agreements contained in this Agreement
or implied therefrom are, to the extent permitted by law, expressly waived and
released as a condition of, and as a consideration for, the execution of this
Agreement.
(b) Limited Obligation of Agency: The obligations and agreements of
----------------------------
the Agency contained herein shall not constitute or give rise to an obligation
of the State of New York or the City of Syracuse, New York, and neither the
State of New York nor the City of Syracuse, New York shall be liable thereon.
Furthermore, such obligations and agreements shall not constitute or give rise
to a general obligation of the Agency, but rather shall constitute limited
obligations of the Agency payable solely from the revenues of the Agency derived
and to be derived from the lease, sale or other disposition of the Facility.
(c) Further Limitation: Except as provided in Section 6.03, the Agency
------------------
shall not be obligated to take any action pursuant to any provision hereof
unless (i) the Agency shall have been requested to do so in writing by the
Municipality or the Company and (ii) if compliance with such request is
reasonably expected to result in the incurrence by the Agency (or any of its
members, officers, agents, servants or employees) of any liability, fees,
expenses or other costs, the Agency shall have received from the Company
security or indemnity reasonably satisfactory to the Agency for protection
against all such liability, and for the reimbursement of all such fees, expenses
and other costs.
Anything in this Agreement to the contrary notwithstanding, none of
the Municipality, the Agency or their successors and assigns, shall have any
claim, remedy or right whatsoever to proceed (at law or in equity) against any
of the partners of the Company (including, without limitation, any past, present
or future partner of the Company) for the payment of any sums owing under or on
account of this Agreement, or for the payment or performance of any liability
arising under this Agreement (but excluding sums recoverable from partners of
the Company under applicable law); and the Municipality and the Agency, by
entering into this Agreement, hereby waive and release any liability of the
partners of the
-21-
Company (including, without limitation, any past, present or future partners of
the Company) for and on account of such indebtedness or such liability,
provided, however, that nothing herein contained shall limit, restrict or impair
--------- -------
the rights of the Municipality or the Agency to bring suit and obtain judgment
against the Company (provided that no partner of the Company shall have any
personal liability on such judgment).
ARTICLE VIII
RIGHTS OF BANKS
---------------
(a) Notice Prior to Termination: The Municipality agrees that,
---------------------------
notwithstanding any right it may have under this Agreement or otherwise, at law
or in equity, it shall not terminate this agreement or exercise any other right
or remedies by reason of an Event of Default arising under Section 6.01(a), (b),
(c) or (e), unless it shall have given the Agent at least 30 days' prior written
notice (15 days in the case of an Event of Default arising under Section
6.01(a)) of its intent to terminate this Agreement or exercise such other
remedies and the Agent or the Banks shall not have cured the condition giving
rise to such right of termination within such time period.
(b) Waiver of Consent to Foreclosure: Foreclosure of the Facility
---------------------------------
pursuant to the exercise of any right of the Agent or the Banks under Senior
Debt, or any sale or other transfer, assignment or termination of the Company's
rights therein by the Agent or any Bank, whether by judicial proceeding or any
power of sale, or any transfer, assignment or conveyance by the Company in lieu
thereof shall not require the consent of the Municipality or the Agency or
constitute an Event of Default under or pursuant to Section 6.01(e) provided
that:
(w) the Bank or transferee, including any parent of
the Bank or transferee, is not in arrears on any
tax obligation to the Municipality,
(x) the Municipality receives written notice of the
proposed transfer including the identity of the
proposed Bank or transferee and certifying the
satisfaction of each of the conditions (w) through
(y) in this Section 8.01(b), at least 30 days
prior to the effective date of the transaction,
(y) the Bank or transferee accepts and ratifies in
writing all the terms and conditions of this
Agreement, and
(z) acceptance of the Bank or transferee by the
Municipality does not violate any properly
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published and adopted rules or policy of the
Agency or Municipality.
(c) Assignment on Notice by Company: The Company may assign its
--------------------------------
rights and interests under this Agreement to any purchaser or transferee of the
Facility provided that there are no Deferred Obligations outstanding at the time
of the transaction; or (ii) all Deferred Obligations together with the accrued
interest thereon are paid at the time of the transaction; or (iii) the
transferee has demonstrated to the satisfaction of the Agency and the
Municipality a plan for and intention to pay all Deferred Obligations, and the
conditions of items (w) through (z) of Section 8.01(b) are met.
(d) Assignment on Notice by Bank: In the event the Agent or the Banks
-----------------------------
shall acquire any interest in the Facility as permitted by Section 8.01(b), they
may assign their interests subject to further compliance with items (w) through
(z) of Section 8.01(b).
(a) The Company will not enter into, amend, terminate, waive or
supplement this Agreement or any provision hereof without the prior written
consent of the Banks (or such number of percentage of the Banks as may be
required under the terms of the relevant agreements governing Senior Debt).
(b) In the event that the Agreement is rejected by a trustee or
debtor-in-possession in any bankruptcy or insolvency proceeding, and if, within
45 days after such termination, the Banks or their successors or assigns shall
so request, the Municipality will execute and deliver to the Banks a new
agreement, which shall be on the same terms and conditions as this Agreement for
the remaining term of this Agreement before giving effect to such termination.
(c) In the event Agent or its designee or assignee elects to perform
the Company's obligations under the Agreement or to enter into a new Agreement
as provided in Section 8.01(b) or Section 8.02(b) or otherwise, the Agent and
the Banks, and their designees and assignees, shall not have personal liability
to the Municipality for the performance of such obligations, and the sole
recourse of the Municipality in seeking the enforcement of such obligations
shall be to such parties' interest in the Facility.
ARTICLCE IX
TERMINATION
-----------
In the event that at any time during the PILOT Term the Maximum
Electrical Output of the Facility shall exceed 80 Megawatts per hour then (i)
the Company shall
-23-
have the right, within thirty (30) days of the first occurrence of such event to
terminate this Agreement upon thirty (30) days prior written notice to the other
parties and (ii) the Municipality shall have the right, within thirty (30) days
of the receipt of written notice by the Company of the first occurrence of such
event, to terminate this Agreement upon thirty (30) days prior written notice to
the other parties. If neither party shall exercise the above right to terminate
within the period provided above, the Annual PILOT Amount shall be increased in
the manner provided in Section 3.02(e).
Anything herein to the contrary notwithstanding, this Agreement shall
terminate and be of no further force and effect upon the first to occur of the
following:
(i) expiration of the Initial PILOT Term; or
(ii) termination of the Facility Agreement.
ARTICLE X
MISCELLANEOUS
-------------
This Agreement shall become effective and the obligations of the
Company shall arise absolutely and unconditionally upon the execution and
delivery hereof and shall continue to remain in effect until terminated in
accordance with Article IX hereof.
If the Company shall fail to make any payment required by this
Agreement when due, within the applicable grace period, or shall defer any
payment pursuant to Section 4.03 hereof, its obligation to make the payment
defaulted upon or deferred shall continue as an obligation of the Company and
shall bear interest, until paid, at the rate and in the manner the Municipality
charges from time to time for delinquent property taxes.
Where the Company is required to do or accomplish any act or thing
hereunder, and the Company causes the same to be done or accomplished such act
or thing shall have the same force and effect as if done or accomplished by the
Company.
-24-
So long as the Facility shall be entitled to exemption from real
property taxes as provided in Section 2.01(a) hereof, the Agency agrees, to the
extent permitted by law, that it shall not, without the prior written consent of
the Municipality, make any agreement regarding the leasing or sale of the
Facility which does not require that payments in lieu of taxes be paid to the
Municipality in the amounts set forth in Article III hereof.
Except as otherwise provided herein this Agreement may be amended,
changed, modified, altered or terminated only by a written agreement duly
approved and executed by the parties hereto and in the case of the Municipality
with the written concurrence of the governing bodies of the Municipality
affected by such amendment, modification, alteration or termination.
(a) No Remedy Exclusive: No remedy herein conferred upon or reserved
-------------------
to the Agency or the Municipality is intended to be exclusive of any other
available remedy or remedies, but each and every such remedy shall be cumulative
and shall be in addition to every other remedy given under this Agreement or now
or hereafter existing at law or in equity or by statute.
(b) Delay: No delay or omission in exercising any right or power
-----
accruing upon the occurrence of any Event of Default hereunder shall impair any
such right or power or shall be construed to be a waiver thereof but any such
right or power may be exercised from time to time and as often as may be deemed
expedient.
(c) Notice Not Required: In order to entitle the Agency or the
-------------------
Municipality to exercise any remedy reserved to it in this Agreement, it shall
not be necessary to give any notice, other than such notice as may be expressly
required in this Agreement.
(d) No Waiver: In the event any provision contained in this Agreement
---------
should be breached by any party and thereafter duly waived by the other party so
empowered to act, such waiver shall be limited to the particular breach so
waived and shall not be deemed to be a waiver of any other breach hereunder. No
waiver, amendment, release or modification of this Agreement shall be
established by conduct, custom or course of dealing.
In addition to any other notices required to be provided hereunder,
the Company shall provide on the schedule indicated the following information to
the officer or officers designated by the Municipality for receipt thereof:
-25-
(a) the applicable Electric Tariff Rate and the effective date
thereof (March 1, June 1, September 1, December 1).
(b) any change in the Maximum Electrical Output and the effective
date thereof (when received by Company).
(c) the remaining decatherms of prepaid gas supply pursuant to
the Gas Supply Agreement (December 1);
(d) an annual financial statement, prepared by a nationally
recognized firm of independent certified public accountants designated by
the Company (commencing April 1, 1992); and
(e) copies of each and every lease or sublease for the Facility
within 10 days of the execution of said lease or sublease.
The Municipality will provide the Agency, the Agent and the Company
with statements of the Annual PILOT Amount at the same time tax bills are mailed
to the owners of privately owned property and quarterly thereafter together with
a statement of Deferred Obligations and the interest thereon compounded to the
date of the statement. Quarterly statements of the adjusted Annual PILOT Amounts
will be provided to the Company, the Agent and Agency. Each statement will
reflect payments received 10 days prior to the date of the statement. The
statements will indicate each step used to calculate the Annual PILOT Amount and
the date or dates on which payment of the quarterly amount is due.
All notices, certificates or other communications hereunder shall be
in writing and shall be sufficiently given and shall be deemed given (i) when
hand delivered physically (by personal service, recognized express delivery
service or facsimile transmission), (ii) three days after mailed by United
States registered or certified mail, or (iii) delivered by postage prepaid,
return receipt requested, to the Municipality, Agency, the Company or the Agent,
as the case may be, at their respective addresses as follows:
(a) To the Municipality
-------------------
City of Syracuse
000 Xxxx Xxxx
Xxxxxxxx, Xxx Xxxx 00000
Attention: Corporation Counsel
(b) To the Agency
-------------
-26-
City of Syracuse Industrial
Development Agency
000 Xxxxxxxxxx Xxxxxx
Xxxxxxxx, Xxx Xxxx 00000
Attention: Chairman
(c) To the Company
--------------
Project Orange Associates, L.P.
Xxxxx 000
0000 Xxxx & Xxxxxxx Xxxx
Xxxxxx, Xxxxxxxxxx 00000
With a copy to:
--------------
Kronish, Lieb, Weiner & Xxxxxxx
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxx, Esq.
(d) To the Agent:
-------------
At the address stated on the notice provided
by the Company as contemplated by
Section 4.01
provided, that the Agency, the Company, the Agent and the Municipality may, by
notice given hereunder to each of the others, designate any further or different
addresses to which subsequent notices, certificates or other communications to
them shall be sent.
Section 10.10. Binding Effect
This Agreement shall inure to the benefit of, and shall be binding
upon the Municipality, the Agency, the Company and their respective successors
and assigns.
Section 10.11. Severability
If any article, section, subdivision, paragraph, sentence, clause,
phrase, provision or portion of this Agreement shall for any reason be held or
adjudged to be invalid or illegal or unenforceable by any court of competent
jurisdiction, such article, section, subdivision, paragraph, sentence, clause,
phrase, provision or portion so adjudged invalid, illegal or unenforceable shall
be deemed separate, distinct and independent and the remainder of this Agreement
shall be and remain in full force and effect and shall not be invalidated or
rendered illegal or unenforceable or otherwise affected by such holding or
adjudication unless the effect of
-27-
such invalidity, illegality or unenforceability would be to deprive any party
hereto of the material benefits intended to be conferred upon it by this
Agreement.
Section 10.12. 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.
Section 10.13. Applicable Law
This Agreement shall be governed by and construed in accordance
with the laws of the State of New York.
-28-
IN WITNESS WHEREOF, the Municipality, the Agency and the Company have
caused this Agreement to be executed in their respective names, all being done
as of the date first above written.
CITY OF SYRACUSE
Attest: /s/ Xxxxxx X. Xxxxxx By: /s/ Xxxxxx X. Xxxxx
_______________________________ _______________________________
Xxxxxx X. Xxxxxx Xxxxxx X. Xxxxx, Mayor
City Clerk
CITY OF SYRACUSE INDUSTRIAL DEVELOPMENT AGENCY
By: /s/ Xxxxxxx X. XxXxxxxx
_______________________________
Attest: /s/ Xxxxxxx X. XxXxxxxx, Chairman
_______________________________
Secretary
PROJECT ORANGE ASSOCIATES, L.P.
By: NCP Syracuse, Inc.
Managing General Partner
By: /s/ Xxxxxxx Xxxx
_______________________________
Vice President
-00-
XXXXX XX XXX XXXX )
COUNTY OF ONONDAGA ) ss:
CITY OF SYRACUSE )
On this 4th day of April, 1991, before me personally came XXXXXX X. XXXXX,
Mayor of the City of Syracuse with whom I am personally acquainted, who, being
by me duly sworn, did depose and say: That he resides in the City of Syracuse,
New York; that he is the Mayor of the City of Syracuse, the corporation
described in and which executed the within instrument; that he knows the
corporate seal of said City and it was so affixed pursuant to the Charter of the
City; that he signed said instrument as Mayor of said City of Syracuse by like
authority; that said XXXXXX X. XXXXX further says that he is acquainted with
Xxxxxx X. Xxxxxx and knows him to be the City Clerk of said City of Syracuse;
that the signature of Xxxxxx X. Xxxxxx was thereto subscribed pursuant to said
Charter.
/s/ Xxxxx X. Xxxx
____________________________________
Notary Public
STATE OF NEW YORK )
COUNTY OF ONONDAGA ) ss:
CITY OF SYRACUSE )
On this 3rd of April, 1991, before me personally came XXXXXXX X. XxXXXXXX,
to me personally known, who, being by me duly sworn, did depose and say that he
resides at 000 Xxxxxxx Xxxxx, Xxxxxxxx, Xxx Xxxx, and he is the Chairman of CITY
OF SYRACUSE INDUSTRIAL DEVELOPMENT AGENCY, the public benefit corporation named
in and which executed the foregoing instrument; and that he signed his name
thereto by authority of the members of said public benefit corporation.
/s/ Xxxxx X. Xxxx
____________________________________
Notary Public
STATE OF NEW YORK )
)
COUNTY OF NEW YORK ) ss:
On this 11th day of April, 1991, before me personally came Xxxxxxx Xxxx, to
me personally known, who being by me duly sworn, did depose and say that he
resides at _____________________________; that he is the Vice President of NCP
SYRACUSE, INC., which is the managing general partner of Project Orange
Associates, L.P., the limited partnership described in and which executed the
annexed Agreement, that he had due authority to sign the foregoing instrument on
behalf of said corporation as the act and deed of said limited partnership; and
he duly acknowledged to me that he executed the foregoing instrument as the act
and deed of said limited partnership.
-30-
/s/ Xxxxxx X. Midwinter
____________________________________
Notary Public
-31-
SCHEDULE A
All that tract or parcel of land situate in the City of Syracuse, County of
Onondaga and State of New York, being Lots 116 and 117 and part of Xxxx 000,
000, 000 xxx 000 xx Xxxxx 259 in said City and being more particularly described
as follows:
Beginning at a point in the southerly boundary of Xxxxxx Street at its
intersection with the northerly prolongation of the easterly wall of the
existing "Xxxxx Steam Plant", said point being N 86(Degrees) 26' 30" E, a
distance of 135.63 feet, measured along said southerly street boundary, from the
easterly boundary of Xxxxx XxXxxxx Xxxxxx; running thence N 86(Degrees) 26' 30"
E along said southerly boundary of Xxxxxx Street, a distance of 222.07 feet to
its intersection with the westerly boundary of lands of The People of the State
of New York (Almond Street); thence along said westerly boundary the following 4
courses and distances:
1) S 8 (degrees) 17' 15" E, 69.45 feet to a point of curvature;
2) southerly, following a curve to the right having a radius of 2449.30
feet, an arc distance of 48.51 feet;
3) S 6 (degrees) 47' 25" E, 30.03 feet to a point of curvature;
4) southerly, following a curve to the right having a radius of 2449.30
feet, an arc distance of 9.42 feet to its intersection with the easterly
prolongation of the northerly wall of the existing "Chilled Water
n
Plant";
thence S 84(degrees) 10' 14" W along said easterly prolongation and along
existing northerly wall, a distance of 90.82 feet to the northwesterly corner of
the "Chilled Water Plant"; thence S 5(degrees) 56' 15" E along the existing
westerly wall of the "Chilled Water Plant" and its southerly prolongation, a
distance of 155.84 feet to its intersection with the northerly boundary of Xxxx
Street; thence S 85(degrees) 57' 50" W along said northerly boundary of Xxxx
Street, a distance of 133.23 feet to its intersection with lands formerly of the
Delaware-Lackawanna & Western Railroad Company, now Conrail; thence N 4(degrees)
02' 10" W along said Railroad boundary, a distance of 44.43 feet to its
intersection with the westerly prolongation of the southerly wall of the
existing "Transformer Building"; thence N 87(degrees) 37' 50" E along said
westerly prolongation and along said existing southerly wall, a distance of
37.15 feet to the southeasterly corner of said "Transformer Building"; thence N
2(degrees) 22' 10" W along the easterly wall of said Building, a distance of
24.00 feet to the northeasterly corner thereof; thence S 87(degrees) 37' 50" W
along the northerly wall of said building, a distance of 34.50 feet to the
northwesterly corner thereof; thence S 2(degrees) 22' 10" E along the westerly
wall of said "Transformer Building", a distance of 5.29 feet to a point; thence
S 87(degrees) 57' 50" W, a distance of 3.20 feet at an angle point in the
boundary of lands formerly of the Delaware-Lackawanna & Western Railroad
Company, now Conrail; thence
N 66(degrees) 32' 30" W along said Railroad boundary, a
distance of 17.48 feet to its intersection with the southerly prolongation of
the easterly wall of the existing "Xxxxx Steam Plant"; thence N 3(degrees) 31'
46" W along said southerly prolongation, a distance of 246.40 feet to the point
of beginning.
Excepting and Reserving a Permanent Easement for Ingress and Egress, 5 feet
in width, lying westerly of and adjoining the westerly wall of the existing
"Transformer Building"; 20 feet in width, lying northerly of and adjoining the
northerly wall of said Building; 3 feet in width, lying easterly and southerly
of and adjoining the easterly and southerly wall of said existing "Transformer
Building".
Also, excepting and reserving a Permanent Easement for Ingress and Egress,
15 feet in width, lying westerly and northerly of and adjoining the westerly and
northerly wall of the existing "Chilled Water Plant", extending easterly from
the northwesterly corner of said building, a distance of 77 feet and extending
southerly from the northwesterly corner of said building, a distance of 78 feet.
Also, excepting and reserving a Permanent Easement for Ingress and Egress,
10 feet in width, lying easterly of and adjoining the easterly wall of the
existing "Xxxxx Steam Plant" and extending southerly, from the southerly
boundary of Xxxxxx Street, a distance of 114 feet.
EXHIBIT "A-3"
LIST OF CITY EASEMENT AGREEMENTS
EASEMENTS WITHIN THE LIMITS OF THE CITY OF SYRACUSE,
ASSIGNED BY PROJECT ORANGE ASSOCIATES, LP.
TO CITY OF SYRACUSE INDUSTRIAL DEVELOPMENT AGENCY
-------------------------------------------------
1. Permanent Easement from Oakwood Cemeteries of Syracuse to O'Brien & Xxxx
Engineers, Inc., dated as of November 1, 1990, recorded January 7, 1991 in
the Onondaga County Clerk's Office in Deed Book 3671 at Page 157, as
modified by amendment dated April 3, 1991, recorded April 18, 1991 in the
Onondaga County Clerk's Office in Deed Book 3689 at Page 160. [707-16]
2. Permanent Easement from Syracuse University to Project Orange Associates,
L.P., dated as of November 1, 1990, to be recorded in the Onondaga County
Clerk's Office prior to this agreement. [707-14, 15, 17]
