PAYMENT IN LIEU OF TAXES AGREEMENT
This Agreement (the "Agreement"), made as of the lst day of
November, 1990, by and between SPECIAL METALS CORPORATION, a corporation
organized and existing under the laws of the State of Delaware (hereinafter
together with its successors and assigns, referred to as the "Company"), and
COUNTY OF CHAUTAUQUA INDUSTRIAL DEVELOPMENT AGENCY, a corporate government
agency constituting a body corporate and politic and a public benefit
corporation of the State of New York (hereinafter referred to as the "Agency").
W I T N E S S E T H
WHEREAS, the New York State Industrial Development Agency Act,
constituting Title I of Article 18-A of the General Municipal Law of the State
of New York, Chapter 24 of the Consolidated Laws of the State of New York, as
amended (the "Enabling Act") authorizes and provides for the creation of
industrial development agencies in the several counties, cities, villages, and
towns in the State of New York and empowers such agencies, among other things,
to acquire, expand, construct, reconstruct, lease, improve, maintain, equip,
furnish, and dispose of one or more projects for the purpose of promoting,
developing, encouraging, and assisting in the acquisition, expansion,
construction, reconstruction, improvement, maintaining, equipping, and
furnishing of industrial, manufacturing, warehousing, commercial, research, and
recreational facilities, and thereby advance the job opportunities, general
prosperity, and economic welfare of the people of the State of New York; and
WHEREAS, pursuant to and in accordance with the provisions of the
Enabling Act and Chapter 71 of the 1972 Laws of New York (together with the
Enabling Act, hereinafter referred to as the "Act"), the Agency, which has been
created and established pursuant thereto for the benefit of the County of
Chautauqua, proposes to undertake the acquisition below; and
WHEREAS, the project being undertaken consists of (i) the
acquisition of certain land more particularly described on Exhibit A hereto
("Land"), (ii) the acquisition of certain existing improvements located on the
Land ("Improvements"), (iii) the acquisition and construction of a new building
in which the Equipment (hereinafter defined) is to be located on the Land ("New
Improvements") and (iv) the acquisition and installation of certain equipment
more particularly described on Exhibit B hereto in the New Improvements
("Equipment") (collectively, the actions described in (i), (ii), (iii) and (iv)
hereinafter referred to as the "Project"); and
WHEREAS, the Agency is or will be the owner of the Land, the
Improvements and the New Improvements (collectively, the "Facility"), as well as
the Equipment; and
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WHEREAS, the Agency proposes to undertake the Project as an
authorized project under the Act and to lease the interest of the Agency
pursuant to a Lease Agreement dated as of September 1, 1990 entered into between
the Agency, as lessor, and the Company, as lessee (the "Lease"); and
WHEREAS, under the present provisions of the Act and under the
present Section 412A of the Real Property Tax Law of the State of New York, the
Agency is required to pay no taxes or assessments upon any of the property
acquired by it or under its jurisdiction or supervision or under its control;
and
NOW, THEREFORE, in consideration of the premises and the payments,
agreements, and covenants hereinafter contained, the Company and the Agency
formally covenant and agree as follows:
Section 1. Equipment. The Agency and the Company agree that the
Equipment is personal property and should not be assessed as real property for
tax purposes. No portion of the value of the Equipment shall enter into the
computations for the Payments in Lieu of Taxes provided for in this Agreement.
Section 2. Tax-Exempt Status of Facility.
A. Assessment of Facility. Pursuant to Section 874 of the General
Municipal Law of the State of New York and Section 412-a of the Real Property
Tax Law, the parties hereto understand that, upon acquisition of the Facility by
the Agency, and for so long thereafter as the Agency shall own the Facility, the
Facility shall be assessed by the various taxing entities having jurisdiction
over the Facility, including, without limitation, the County of Chautauqua, the
City of Dunkirk and the Dunkirk Public School District (such taxing entities,
and any successors thereto, being hereinafter collectively referred to as the
"Taxing Entities", and each of such Taxing Entities being hereinafter
individually referred to by name or as a "Taxing Entity") as exempt upon the
assessment rolls of the respective Taxing Entities prepared subsequent to the
acquisition by the Agency of title to the Facility. The Company shall, promptly
following acquisition by the Agency of title to the Facility, take such action
as may be necessary to ensure that the Facility shall be assessed as exempt upon
the assessment rolls of each Taxing Entity prepared subsequent to such
acquisition by the Agency. The Facility shall not be entitled to such exempt
status on the tax rolls of any Taxing Entity until the first tax year of such
Taxing Entity following the tax status date of such Taxing Entity occurring
subsequent to the date upon which the Agency became the owner of record of the
Facility. Pursuant to the provisions of the Lease, the Company will be required
to pay all taxes and assessments lawfully levied and/or assessed against the
Facility, including taxes and assessments levied for the current tax year and
all subsequent tax years, until the Facility shall be entitled to exempt status
on the tax rolls of the respective Taxing Entities. The Agency will cooperate
with the Company to preserve the tax-exempt status of the Facility.
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B. Special Assessments. The parties hereto understand 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 Lease Agreement, the Company will be required to pay all special assessments
and special ad valorem levies lawfully levied and/or assessed against the
Facility.
C. Other Charges. If any taxes, assessments, service charges or
other governmental charges be payable by the Company on the rents under the
Lease or the occupancy of or any interest of the Company in the Facility or any
part thereof or any personal property other than inventory used in connection
with the business conducted and located therein (other than real property taxes
on Equipment which may be or become affixed to the Facility), the amount of any
tax, assessment or charges shall be paid by the Company. Furthermore, water
charges, sewer rentals, sewage treatment charges, solid waste charges and any
other charges in the nature of utility charges shall be paid directly by the
Company and shall not be credited against or affect in any manner any payment in
lieu of taxes in any year and shall be computed pursuant to the formula adopted
by the relevant Taxing Entity(s).
Section 3. Payments In Lieu Of Taxes.
A. Agreement to Make Payments. The Company agrees that it will make
annual payments in lieu of taxes in the amounts hereinafter provided to the
respective Taxing Entities. The Company also agrees to give the appropriate
officer or officers of each respective Taxing Entity responsible for assessing
properties on behalf of each such Taxing Entity (such officers being hereinafter
collectively referred to as the "Assessors") a copy of this Agreement. The
payments due hereunder to any particular Taxing Entity shall be paid by the
Company to the appropriate officer or officers of such Taxing Entity.
Notwithstanding anything to the contrary herein, the payment in lieu of taxes
should not exceed the amount the Company would pay under the normal calculation
for any period.
B. Valuation of Facility.
(1) The value of the Facility for purposes of determining
payments in lieu of taxes due hereunder shall be determined by the appropriate
Assessor for each Taxing Entity. The parties hereto agree that the appropriate
Assessors shall (a) appraise the Facility in the same manner as other similar
properties in the general area of the Facility, and (b) place a value for
assessment purposes (hereinafter referred to as the "Assessed Value") upon the
Facility, equalized if necessary by using the appropriate equalization rates as
apply in the assessment and levy of real property taxes. The initial Assessed
Value of the Land and the Improvements is $485,450.00. Based upon the Company's
estimated cost of the New Improvements, the Initial Assessment of the New
Improvements is $434,900.00.
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(2) The Company shall have the right solely at its cost and
expense to seek a reduction in the Assessed Value of the Facility and/or a
determination that certain assets which constitute a portion of the Facility do
not constitute real property. The Agency shall not be required to join in any
such proceeding or contest brought by the Company unless such proceeding or
contest is required to be brought in the name of the Agency, in which case the
Agency will join in the proceeding or contest so long as the Agency is not
thereby required to bear any cost or expense directly or indirectly related
thereto. On final determination of such proceeding or contest, the Company shall
promptly pay or discharge any decision or judgment and all interest and
penalties incidental thereto. The pendency of such a proceeding or contest shall
not xxxxx the Company's obligation to make payments in lieu of taxes.
(3) The Initial Assessment of the New Improvements has been
based on the Plans and Specifications (as defined in the Lease) and the
estimated construction costs thereof. On the Completion Date as established in
the Lease, the Company will confirm the actual construction cost of the New
Improvements and, upon the request of the Agency, will furnish the Agency with
invoices and other evidence of such costs. If the actual cost of the New
Improvements differs from the Initial Assessment thereof, the Agency will adjust
accordingly the Payments in Lieu of Taxes set forth in Section 2.F.
C. Tax Rates in the Applicable Jurisdictions. For purposes of this
Section 3.F., the tax rates for the County of Chautauqua and the following local
municipal and school districts jurisdictions have been established in the
following amount per thousand dollars of Assessed Value:
County of Chautauqua: $ 22.82
City of Dunkirk: $ 41.10
Dunkirk Public Schools: $ 43.04
D. Applicable Period. Subject to subsection B, for purposes of
computing the total payments in lieu of taxes to all Taxing Entities as set
forth in Sections 3.E and 3.F. and only for that purpose, the above tax rates
and Assessed Values are to be frozen for 10 years as specifically set forth in
Section 3.F. below.
E. Amount of Payments in Lieu of Taxes - Land and Improvements. In
any tax year beginning on or after July 1, 1991, for the periods set forth in
Section 3.F, the Company agrees to make annual payments in lieu of real property
taxes in such amounts as shall be determined by multiplying the tax rate or
rates of each Taxing Entity applicable to the Land and Improvements in effect as
of the date of this Agreement and set forth in Section 3.C as if the same were
owned by the Company and not the Agency by an amount equal to one hundred
percent (100%) of the Initial Assessed Value. The total payment shall be
$51,923.74 payable $11,077.97 to the
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County of Chautauqua, $19,952.00 to the City of Dunkirk and $20,893.77 to the
Dunkirk Public School District.
F. Amount of Payments in Lieu of Taxes - New Improvements. Subject
to Section 2.A. and Section 3.G., the Company hereby covenants and agrees to
pay, at the time specified in Section 3.I., so long as the Agency is the record
owner of the New Improvements as follows:
1. County. With respect to the County of Chautauqua:
(a) in any tax year beginning on or after January 1,
1992 and through the year ending December 31, 2001, the
Company will make payments in lieu of taxes for the New
Improvements equal to a percentagee of the Assessed Value of
the New Improvements specified below multiplied by the tax
rate of the County of Chautauqua specified in Section 3.C. as
follows:
Tax Year Percentage Payment
-------- ---------- -------
1/l/92 to 12/31/92 0% 0
1/l/93 to 12/31/93 10% 992.45
1/l/94 to 12/31/94 20% 1,984.91
1/l/95 to 12/31/95 30% 2,977.37
1/l/96 to 12/31/96 40% 3,969.82
1/l/97 to 12/31/2001 50% 4,962.28; and
(b) thereafter, until the date that the Agency shall no
longer be the record owner of the Improvements, the Company
shall make full payments in lieu of taxes with respect to the
County of Chautauqua as if the Company were the record owner
of the Improvements and the New Improvements were assessed at
full value for purposes of taxation subject, however, to any
reductions in such payments to which the Agency and the
Company may agree.
2. City. With respect to the City of Dunkirk:
(a) in any tax year beginning on or after January 1,
1992 and through the year ending December 31, 2001, the
Company will make payments in lieu of taxes for the New
Improvements equal to a percentage of the Assessed Value of
the New Improvements specified below multiplied by the tax
rate of the City of Dunkirk specified in Section 3.C. as
follows:
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Tax Year Percentage Payment
-------- ---------- -------
1/l/92 to 12/31/92 0% 0
1/l/93 to 12/31/93 10% 1,787.43
1/l/94 to 12/31/94 20% 3,574.87
1/l/95 to 12/31/95 30% 5,362.31
1/l/96 to 12/31/96 40% 7,149.75
1/l/97 to 12/31/2001 50% 8,937.19; and
(b) thereafter, until the date that the Agency shall no
longer be the record owner of the Improvements, the Company
shall make full payments in lieu of taxes with respect to the
City of Dunkirk as if the Company were the record owner of the
Improvements and the New Improvements were assessed at full
value for purposes of taxation subject, however, to any
reductions in such payments to which the Agency and the
Company may agree.
3. School. With respect to the Dunkirk Public School District:
(a) in any tax year beginning on or after July 1, 1991
and through the year terminating June 30, 2001, the Company
will make payments in lieu of taxes for the New Improvements
equal to a percentage of the Assessed Value of the New
Improvements specified below multiplied by the tax rate of the
Dunkirk Public School District as follows:
Tax Year Percentage Payment
-------- ---------- -------
7/l/91 to 6/30/92 0% 0
7/l/92 to 6/30/93 10% 1,871.85
7/l/93 to 6/30/94 20% 3,743.70
7/l/94 to 6/30/95 30% 5,615.55
7/l/95 to 6/30/96 40% 7,487.40
7/l/96 to 6/30/2001 50% 9,359.25; and
(b) thereafter, until the date that the Agency shall no
longer be the record owner of the Improvements, the Company
shall make full payments in lieu of real estate taxes with
respect to the Dunkirk Public School District as if the
Company were the record owner of the New Improvements and the
Improvements were assessed at full value for purposes of
taxation subject, however, to any reductions in such payments
to which the Agency and the Company may agree.
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The above reflects the policy that the reduced payments in
lieu of taxes will be scheduled to be made in whole tax fiscal years (that is,
tax payments and payments in lieu of taxes will not be prorated to the date the
Agency becomes owner of the New Improvements), and that the Company will pay
full taxes, or the equivalent of full taxes, before and after the reduced
payment in lieu of tax period (subject to further reductions, if any, agreed to
in the future).
G. Reduction of Payment in Lieu of Taxes by Reason of Reduction in
Tax Rates and/or Assessed Value. Notwithstanding anything to the contrary
herein, the payment in lieu of taxes specified in Section 3.F should not exceed
the percentage specified of the amount the Company would pay under the normal
tax calculation for any period, after taking into account the percentage of tax
to be paid by the Company in that particular year in accordance with Section
3.F.
Therefore, if the tax (calculated as if the Company were the record
owner of the New Improvements and the New Improvements were assessed at full
value for purposes of taxation, after taking into account the percentage of tax
to be paid by the Company in that particular year in accordance with Section
3.F.) otherwise due any taxing jurisdiction, decreases due to a reduction in tax
rates, Assessed Value, or otherwise, below the payment in lieu of taxes as
specified in Section 3.F., then the payment in lieu of taxes due that taxing
jurisdiction shall be decreased to equal the tax that would otherwise be due.
However, once a payment in lieu of taxes been so reduced, if the
taxes which would otherwise be due subsequently increase, the payment in lieu of
taxes will similarly increase but not in excess of the amount specified in
Section 3.F.
H. Payments to Chautauqua County Department of Finance. All payments
in lieu of taxes shall be made by the Company directly to the Chautauqua County
Department of Finance (the "Department") promptly upon receipt of xxxxxxxx from
the Department. It is understood that the Department shall receive the payments
in lieu of taxes in trust for each of the Taxing Entities enumerated in
subsection (1), (2) and (3) of Section 3.F. above, and Chautauqua County shall
make the payments in lieu of taxes to such Taxing Entity as the Agency shall
direct in the event that the Department shall determine to no longer receive,
process and disburse such payments.
I. Due Dates; Interest; Penalties. The Company will be billed by the
Agency, the Department or any of the Taxing Entities for the respective
payments, as if the Facility were on their respective tax rolls, at the times
when taxes for such Taxing Entities are due.
The applicable due dates, interest and penalties are as follows:
All payments are net for 30 days from due date.
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County & Town Taxes Due: January
payment in February, 1%
payment in March, 2%
payment in April and beyond, 5% penalty
plus 1% of (tax & penalty) per month
from Feb. lst
Dunkirk City Taxes: Due: April
payment in May and beyond, additional
1% per month
School Taxes: Due: September
payment in October, 2%
payment in November, 3%
payment in December and January, 3%
plus 7% penalty on tax and interest
payment in February and beyond, 1% per
month computed on January amount
J. Partial Sale; Transferee's Obligation; Apportionment of Reduction
to Local Taxing Entities. During the period set forth above, in the event that
any portion of the Land or the Improvements located thereon is sold or disposed
of by the Agency, the transferees thereof will thereafter pay the real property
taxes on such Improvements as may be located on the portion of the Land sold and
on the portion of the Land sold as may be required by applicable law.
K. Sale; Company's Obligation. In the event that the Agency sells
the Facility to any party other than the Company (to the extent consented to by
the Company or permitted under the terms of the Lease), the Company's obligation
for payments in lieu of taxes, shall be prorated to the date of the closing of
the transaction and thereupon all obligations of the Company for payments in
lieu of taxes shall cease, but the Agency shall take such steps with the
purchaser other than the Company to assure that each of the Taxing Entities
shall suffer no loss of revenue until such Facility can be placed back on the
tax rolls and taxes levied and billed therefore.
Section 4. Effective Date; Duration of Agreement. This Agreement
shall become effective upon the delivery of the Lease and shall continue in
effect until the earlier of (i) June 30, 2001 or (ii) the date in which title to
the Facility is conveyed to the Company pursuant to the Lease.
Section 5. Events of Default. The following shall constitute "Events
of Default" under this Agreement:
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A. Failure by the Company to make any payment specified in Section 3
hereof within thirty (30) days of receipt of written notice from any Taxing
Entity and the continuance of such failure for a period of ten (10) days after
receipt by the Company of written notice from the Agency.
B. Failure by the Company to make any payment specified in Section 2
hereof and the continuance of such failure for a period of ten (10) days after
receipt by the Company of written notice from the Agency.
C. The occurrence and continuation of a default under the terms of
any agreement entered into between the Agency and the Company.
Upon the occurrence and continuance of an Event of Default
hereunder, the Company shall be required to make payments in lieu of taxes
levied by the Taxing Entities on the Facility if it were owned by the Company,
such amounts to commence to be paid for the period subsequent to the date it is
determined by the Agency that there is an Event of Default hereunder. In such
event, the tax rate, interest, and penalties shall be those then in effect in
the jurisdiction(s) in which the Facility is located.
Upon the occurrence and continuance of an Event of Default
hereunder, the Agency shall be entitled to recover the payments in default from
the Company, together with all the costs and expenses of the Agency, its
successors or assigns, paid or incurred in such recovery (including court costs
and reasonable attorney's charges) and interest at the rate charged by the
respective Taxing Entities on overdue payments of taxes. In addition, the Agency
shall have the right to reconvey the Facility to the Company at any time, and
the Company shall accept any such tender of reconveyance.
The Agency, in enforcing payment by the Company of said amounts, may
take whatever action and exercise any or all of the rights and remedies
specified in this Agreement or any other remedy provided by law.
Each and every Event of Default shall give rise to a separate cause
of action hereunder, and separate suits may be brought hereunder as each cause
of action arises. The Company irrevocably agrees that any suit, action, or other
legal proceeding arising out of this Agreement may be brought in the courts of
record of the State of New York, or the courts of the United States located
within the State of New York, consents to the jurisdiction of each such court in
any such suit, action, or proceeding, and waives any objection which it may have
to the laying of the venue of any such suit, action, or proceeding in any of
such courts.
In no event shall the Agency be liable to any of the Taxing Entities
for the payments specified herein, whether or not the Company makes such
payments. The Company hereby agrees to indemnify the Agency against any such
liability for
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such payments and against all penalties, interest, and other charges resulting
from the delinquency of such payments.
Section 6. Reimbursement for Expenses. The Company hereby covenants
and agrees that the Company shall make a payment to the Agency in the amount of
a one-time payment of $15,250 and that the Company shall make additional
payments to the Agency in an amount equal to the reasonable legal fees of
General Counsel to the Agency.
Section 7. Covenants by the Agency. The Agency covenants that,
unless otherwise required by law, the Agency will not enact, adopt or apply to
the detriment of the Company any laws, ordinances, rules, or regulations
imposing any taxes, assessments, or other charges of payments on the Project or
the Company's leasehold interest or personal property therein, or its use or
occupancy thereof or its gross receipts or income therefore, except as the
Company and the Agency have herein agreed, or may agree from time to time in the
future.
Section 8. Notices. Any notice or other written communications
required or permitted hereunder shall be determined to be duly and properly
given, made, or delivered if delivered or mailed by ordinary mail, if to the
Agency, to Chairman, County of Chautauqua Industrial Development Agency, 000
Xxxxxxxx Xxxxxx, Xxxxxxxxx, Xxx Xxxx 00000, and if to the Company, Special
Metals Corporation, Xxxxxx Xxxxxxxxxx Xxxx, Xxx Xxxxxxxx, Xxx Xxxx 00000,
Attention: Xxxxxx X. Xxxxxxx, Secretary and Chief Legal Counsel.
Section 9. Assignment of Agreement. This Agreement shall be binding
upon the successors and assigns of the Company but no assignment shall be
effective to relieve the Company of any of its obligations hereunder unless
expressly authorized and approved in writing by the Agency.
Section 10. Independent Agreement. Notwithstanding any other
provision of this Agreement, including the recitals thereof, the parties agree
that the Lease executed between the parties thereto shall be a separate and
independent document from this Agreement, and irrespective of whether any
provision of this Agreement or the entirety hereof shall be held invalid or
unenforceable by any court of competent jurisdiction, the Lease shall be
construed, interpreted, and otherwise regarded separate and apart from this
Agreement. The parties hereto specifically note that the considerations and
terms provided for in this Agreement and provided for in the Lease are the only
considerations and terms for which the parties thereto have executed this
Agreement.
Section 11. Amendments. This Agreement may not be modified,
amended, supplemented, or changed without the written consent of the Agency and
the Company and by written notification to the Taxing Entities.
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Section 12. Prior Agreements. This Agreement constitutes the entire
agreement, and supersedes all prior agreements and understandings, whether
written or oral, among the parties with respect to the subject matter hereof and
may be executed simultaneously in several counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
instrument.
IN WITNESS WHEREOF, the Agency and the Company have made this
Agreement to be executed in their respective names, all on the date first above
written.
COUNTY OF CHAUTAUQUA
INDUSTRIAL DEVELOPMENT
AGENCY
By_________________________________
Name:______________________________
Title:_____________________________
SPECIAL METALS CORPORATION
By_________________________________
Name:______________________________
Title:_____________________________
