EXHIBIT 10.6
PAYMENT IN LIEU OF TAX AGREEMENT
THIS PAYMENT IN LIEU OF TAX AGREEMENT dated as of October 1, 1994 by
and between ONONDAGA COUNTY INDUSTRIAL DEVELOPMENT AGENCY, public benefit
corporation having its office at 000 Xxxxxxxxxx Xxxxxx, Xxxxxxxx, Xxx Xxxx 00000
(the "Agency") and XX XXXXXXXXXX, L.P., a limited partnership organized and
existing under the laws of the State of Delaware, having an office at 0000
Xxxxxx Xxxx, Xxxxxxxxx, Xxx Xxxx 00000-0000 (the "Company").
W I T N E S S E T H:
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, as amended (the '"Enabling Act"), authorizes the
creation of industrial development agencies for the benefit of the several
counties, cities, villages and towns in the State and empowers such agencies,
among other things, to acquire, construct, reconstruct, improve, maintain,
equip, and furnish real and personal property, whether or not now in existence
or under construction, which shall be suitable for, among other things,
industrial, manufacturing, warehousing, commercial, research, and recreational
purposes in order to advance the job opportunities, health, general prosperity,
and economic welfare of the people of the State and to improve their recreation
opportunities, prosperity, and standard of living; and
WHEREAS, the Enabling Act further authorizes each such agency to lease
or sell its projects, to charge and collect rent or the purchase price 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 435 of the 1970 Laws of the State, as amended by Chapter
676 or the 1975 Laws of the State, as amended (collectively with the Enabling
Act, the "Act"), created the Agency for the benefit of Onondaga County, New
York, and the inhabitants thereof; and
WHEREAS, the Project consists of (A)(1) the Agency's leasing from the
Company of two parcels of land located in the Town of Clay, County of Onondaga
as more particularly described on Exhibit A attached hereto (the "Land'")
together with an approximately 135,000 square foot manufacturing and
distribution facility (the "Existing Facility") located on the land and (2) the
construction of an approximately 5,000 square foot addition (the "Addition") to
the Existing Facility (the Land, the Existing Facility and the Addition are
referred to collectively as the "Project Facility") and (B) the sublease of the
Project Facility to the Company; and
WHEREAS, the Agency will accept title to the then-existing portions of
the Project Facility and a leasehold interest in the Land and the Agency and the
Company will enter into a lease agreement (the "Project Agreement") specifying
the terms and conditions pursuant to which the Agency agrees to acquire,
construct, reconstruct, and install the Project Facility and to lease the
Project Facility to the Company; and
WHEREAS, under the current provisions of the Act and Section 412-a of
the Real Property Tax Law of the State, the Agency is required to pay no taxes
upon any of the property acquired by it or under its jurisdiction or supervision
or control; and
WHEREAS, in order to induce the Company to undertake the Project, the
Agency proposes to acquire, construct, and install the Project Facility and
retain title thereto during the term of this Payment in Lieu of Tax Agreement,
and the Company is willing to enter into this Payment in Lieu of Tax Agreement
in order to induce the Agency so to retain title to the Project Facility during
the term of this Payment in Lieu of Tax Agreement and to enter into this Payment
in Lieu of Tax Agreement.
NOW, THEREFORE, in consideration of the matters above recited, the
parties hereto formally covenant, agree, and bind themselves as follows, to wit:
SECTION 1. TAX-EXEMPT STATUS OF PROJECT FACILITY.
(A) Assessment of Project Facility: Pursuant to Section 874 of the
General Municipal Law of the State and Section 412-a of the Real Property Tax
Law, the parties hereto understand that, upon acquisition of the Project
Facility by the Agency, and for so long thereafter as the Agency shall own the
Project Facility, the Project Facility shall be assessed by the Town of Clay
(the "Town") and by the various other taxing entities having jurisdiction over
the Project Facility including, without limitation, Onondaga County (the
"County"), the Liverpool School District (the "School District") and any other
political unit or units wherein the Project Facility is located (the Town, the
County, the School District and such other taxing entities being sometimes
collectively referred to herein as the "Taxing Entities" and each of such Taxing
Entities being sometimes individually referred to as a "taxing Entity") as
exempt upon the assessment rolls of the respective Taxing Entities prepared
subsequent to the acquisition by the Agency and the Project Facility. The
parties hereto understand that the Project 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 first tax status date of such Taxing
Entity occurring subsequent to the date upon which the Agency becomes the owner
of the Project Facility. Pursuant to the provisions of the Project Agreement,
the Company will be required to pay all taxes and assessments lawfully levied
and/or assessed against the Project Facility, including taxes and assessments
levied for the current tax year and all subsequent tax years, until the Project
Facility shall be entitled to exempt status on the tax rolls of the respective
Taxing Entities. The Company confirms its obligations under the Project
Agreement and agrees to pay such lawfully levied and/or assessed taxes and
assessments. Subject to the terms and conditions of this Agreement, the Agency
will cooperate with the Company to preserve the tax-exempt status of the Project
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 Project Agreement, the Company will be required to pay all special
assessments and special ad valorem levies lawfully levied and/or assessed
against the Project Facility.
SECTION 2. PAYMENTS IN LIEU OF TAX.
(A) Agreement to Make Payments. The Company agrees that it will make
annual payments in lieu of taxes to the Agency in the amounts and on the terms
hereinafter provided.
(B) Amount of Payments in Lieu of Tax.
(I) On January 31, 1996 and on January 31 of each calendar
year thereafter through and including calendar year 2005, the Company agrees to
make annual payments in lieu of taxes ("Annual Payments") to the Agency, in the
amounts set forth below. The Agency shall pay to each Taxing Entity the amounts
set forth below out of each Annual Payment:
Total Liverpool
Year Annual Payment School District Town of Clay Onondaga
---- -------------- --------------- ------------ --------
County
------
1996 $ 43,142 $43,142 $ 0 $ 0
1997 51,316 47,456 934 2,926
1998 59,493 51,771 1,869 5,853
1999 67,667 56,085 2,803 8,779
2000 75,843 60,399 3,738 11,706
2001 84,016 64,713 4,673 14,630
2002 92,913 69,027 5,607 17,559
2003 100,368 73,341 6,542 20,485
Total Liverpool
Year Annual Payment School District Town of Clay Onondaga
---- -------------- --------------- ------------ --------
County
------
2004 108,543 77,655 7,476 23,412
2005 116,719 81,969 8,411 26,339
-------
Total $799,300
(C) Receipts for Payments. The Company shall be entitled to receive
receipts for all payments in lieu of taxes made hereunder.
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(D) Method of Payment. Each payment by the Company hereunder shall be
paid in lawful money of the United States of America.
SECTION 3. CREDIT FOR TAXES PAID.
(A) Credits. The parties hereto acknowledge and agree that the
obligation of the Company to make the payments provided in Section 2 hereof
shall be in addition to any and all other taxes and governmental charges of any
kind whatsoever which the Company may be required to pay under the Project
Agreement. It is understood and agreed, however, that should under any
subsequently adopted state or local law the Company pay in any tax year to any
general assessment, service charges or other general governmental charges of a
similar nature levied and/or assessed upon the Project Facility or the interest
therein of the Company of the occupancy thereof by the Company (but not
including, by way of example, (i) sales and use taxes, and (2) special
assessments of any nature, special ad valorem charges of any nature or
governmental charges in the nature of utility charges, including, but not
limited to, rates and charges), then the Company's obligation hereunder to make
payments in lieu of taxes in such tax year shall be reduced by the amounts which
the Company shall have so paid to such Taxing Entity in such tax year, but there
shall be no cumulative or retroactive credit as to any payment in lieu of taxes
due in any other tax year.
(B) Method of Claiming Credits. If the Company desires to claim a
credit against any particular payment in lieu of tax due hereunder, the Company
shall give the governing body of the affected Taxing Entity and the Agency prior
written notice of its intention to claim any credit pursuant to the provision of
this Section 3, said notice to be given by the Company at least ten days prior
to the final date on which such payment in lieu of tax is due pursuant to the
provision of Section 2 hereof.
SECTION 4. INTEREST AND PENALTIES. If the Company shall fail to make
any payment required by this Agreement when due, its obligation to make the
payment so in default shall continue as an obligation of the Company until such
payment in default shall have been made in full. Any payment required by Section
2(B) hereof shall be subject to a late payment penalty of 5% of the amount due
which shall be paid by the Company to the affected Taxing Entities. For each
month, or part thereof, that the payment in lieu of taxes required by Section
2(B) hereof is delinquent beyond the first month, interest shall accrue and be
paid to the affected Taxing Entities on the total amount due plus a late payment
penalty in the amount of 1% per month until the payment is made.
SECTION 5. RECAPTURE. In the event that (a) the Project Facility is
sold (except to a corporation formed for the purpose of succeeding to the assets
and liabilities of the Company) or closed or (b) the number of jobs at the
Project Facility is reduced below 75% of the number employed on the date of this
Agreement or below 75% of the employment projections provided by the Company to
the Agency except as a result of a Material Change of Circumstance (each, a
"Recapture Event"), the Company shall pay to the Agency, based on the formula
set forth below, a portion of the Aggregate Tax Savings which the Company
realized as a result of the Agency's participation in the Project. For purposes
of this Section: (x) "Material Change of Circumstance" shall mean (i) any event
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including, without limitation, damage or destruction to the Project Facility,
which materially interferes with the operation of the Project Facility; (ii) any
material change in the economy which requires the Company or its affiliates to
downsize or otherwise reduce the operations conducted at the Project Facility;
or (iii) any other change or circumstance which, in the agreement of the
parties, would warrant the reduction of employment at the Facility, and (y)
"Aggregate Tax Savings" shall mean (i) all sales, use or mortgage recording
taxes which the Company would have paid if the Agency had not participated in
the Project and (ii) the amount by which the real property taxes which the
Company would have paid absent Agency participation exceeds the payments in lieu
of taxes actually paid by the Company.
Percentage of Aggregate
Date of Recapture Event Tax Savings Recaptured
----------------------- -----------------------
Prior to July 1, 1996 75%
July 1, 1996 - June 31, 1997 60%
July 1, 1997 - June 31, 1998 40%
July 1, 1998 - June 31, 1999 20%
After July 1, 1999 0%
SECTION 6. TERM OF AGREEMENT. This Payment in Lieu of Tax Agreement
shall become effective and the obligations of the Company shall arise absolutely
and unconditionally upon the parties' execution and delivery of this Agreement.
This Payment in Lieu of Tax Agreement shall expire on December 31, 2005.
SECTION 7. AMENDMENT OF AGREEMENT. This Payment in Lieu of Tax
Agreement may not be amended, changed, modified, altered or terminated by either
party except pursuant to a written instrument executed by the Agency and the
Company.
SECTION 8. BINDING EFFECT. This Payment in Lieu of Tax Agreement shall
inure to the benefit of, and shall be binding upon, the Agency, the Company and
their respective successors and assigns; notwithstanding the foregoing, the
Company shall not assign its right or delegate its duties under this Agreement
without the prior written consent of the Agency except to a corporation formed
to succeed to the Company's assets and liabilities.
SECTION 9. DEFAULT. In the event any Annual Payment is not received by
the Agency when due, the Agency may, in addition to collecting the interest
provided for in Section 4 above, xxx or take such other at law or in equity as
it deems appropriate to collect amounts due hereunder.
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SECTION 10. COSTS AND EXPENSES. In the event that the Company shall
fail to make any payment required hereunder when due and the Agency refers to an
attorney collection of such amounts due, the Company shall pay to the Agency all
costs and expenses, including reasonable attorneys' fees, incurred with respect
thereto. An affected Taxing Entity which has not received a payment due to it in
accordance with Section 2(B) hereof may commence legal action against the
Company if the Company has failed to make such payment to the Agency. In such
action, the Taxing Entity shall be entitled to recover the amount due, the late
payment penalty, interest, expenses, together with reasonable attorneys' fees
necessary to prosecute such action.
SECTION 11. NOTICES.
(A) All notices, certificates, and other communications hereunder shall
be in writing and shall be sufficiently deemed given when sent to the applicable
address stated below by registered or certified mail, return receipt requested,
or by such other method as shall provide the sender with documentary evidence of
such delivery. The addresses to which notices, certificates or other
communications hereunder shall be delivered are as follows:
If to the Company:
XX Xxxxxxxxxx, L.P.
0000 Xxxxxx Xxxx Xxxxxxxxx, Xxx Xxxx 00000-0000
Attn.: Chief Financial Officer
If to the Agency:
Onondaga County Industrial Development Agency
000 Xxxxxxxxxx Xxxxxx
Xxxxxxxx, Xxx Xxxx 00000
Attn.: Chairman
(B) Any person entitled to notice may, by notice given hereunder,
designate any different address to which subsequent notices, certificates, and
other communications shall be sent.
SECTION 12. SEVERABILITY. If any article, section, subdivision,
paragraph, sentence, clause, phrase, provision, or portion of this Payment in
Lieu of Tax 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.
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SECTION 13. COUNTERPARTS. This Payment in Lieu of Tax 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 14. APPLICABLE LAW. This Payment in Lieu of Tax Agreement
shall be governed by and construed in accordance with the laws of the State of
New York.
SECTION 15. NO RECOURSE; SPECIAL OBLIGATION. The obligations and
agreements of the Agency contained herein shall be deemed the obligations and
agreements of the Agency, and not of any member, officer, agent (other than the
Company) or employee of the Agency in his individual capacity, and the members,
officers, agents (other than the Company) and employees of the Agency shall not
be liable personally hereon or be subject to any personal liability or
accountability based upon or in respect hereof or of any transaction
contemplated hereby. The obligations and agreements of the Agency contained
herein shall not constitute or give rise to an obligation of the State or of the
County of Onondaga, and neither the State nor the County of Onondaga shall be
liable hereon, and, further, 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 Project Facility.
SECTION 16. THIRD PARTY BENEFICIARIES. The provisions of this
Agreement are intended to be for the benefit of the Agency and the respective
Taxing Entities.
SECTION 17. WAIVER OF RIGHT TO CONTEST. Notwithstanding anything to the
contrary contained herein, the Company hereby waives its right to contest
assessments of the Project Facility during the term of this PILOT Agreement.
IN WITNESS WHEREOF, the Agency and the Company have caused this Payment
in Lieu of Tax Agreement to be executed in their respective names by their
respective authorized officers, all as of the day and year first above written.
ONONDAGA COUNTY INDUSTRIAL
DEVELOPMENT AGENCY
By: /s/ Xxxxx X. Xxxxxxxxx
-------------------------------
Xxxxx X. Xxxxxxxxx
Chairman
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XX XXXXXXXXXX, L.P.
By: XX Xxxxxxxxxx Acquisition
Corporation,
General Partner
By: /s/ Xxxxxx F.X. Xxxxxx
------------------------
Xxxxxx F.X. Xxxxxx
Vice President
STATE OF NEW YORK )
) ss:
COUNTY OF ONONDAGA )
On this 1st day of December, 1994 before me personally came XXXXX
XXXXXXXXX, to me known, who, being by me duly sworn, did depose and say that he
resides in Baldwinsville, New York, that he is Chairman of Onondaga County
Industrial Development Agency, the public benefit corporation described in and
which executed the foregoing Agreement; and that he signed his name thereby by
authority of the members of said public benefit corporation
/s/ Xxxxx X. Xxxxx
---------------------------------------
XXXXX X. XXXXX
Notary Public, State of New York
Qualified in Onon. Co. No. 4961729
My Commission Expires February 6, 1996
