Credit Enhancement Agreement.doc

Credit Enhancement AgreementCREDIT ENHANCEMENT AGREEMENT betweenAAA, _(ADDRESS) and BBB CORPORATION Dated as of _,_,_(M/D/Y) . TABLE OF CONTENTSARTICLE I Section 1.1. Definitions Section 1.2. Interpretation and Construction Section 1.3. Development Program Section 1.4. Completion Section 1.5. City Costs Section 1.6. Agreement Controls ARTICLE II Section 2.1. Creation of Development Program Fund Section 2.2. Liens Section 2.3. Deposits into Development Program Fund Section 2.4. Monies Held in Trust ARTICLE III Section 3.1. Credit Enhancement Payments Section 3.2. Failure to Make Payment Section 3.3. Manner of Payments Section 3.4. Obligations Unconditional Section 3.5. Limited Obligation Section 3.6. Calculation of Retained Tax Increment Section 3.7. Revaluation ARTICLE IV Section 4.1. Pledge of Project Cost Account Section 4.2. Perfection of Interest Section 4.3. Further Instruments Section 4.4. No Disposition of Developer Subaccount Section 4.5. Access to Books and Records ARTICLE V Section 5.1. Events of Default Section 5.2. Remedies on Default Section 5.3. Remedies Cumulative Section 5 .4. Agreement to Pay Attorneys' Fees and ExpensesSection 5.5. Tax LawsARTICLE VISection 6.1. Effective Date and TermSection 6.2. Cancellation and Expiration of TermARTICLE VIISection 7.1. Consent to Pledge and/or AssignmentSection 7.2. Pledge, Assignment or Security InterestSection 7.3. AssignmentARTICLE VIIISection 8.1. SuccessorsSection 8.2. Parties in InterestSection 8.3. SeverabilitySection 8.4. No Personal Liability of Officials of the CitySection 8.5. CounterpartsSection 8.6. Governing LawSection 8.7. NoticesSection 8.8. AmendmentsSection 8.9. Net AgreementSection 8.10. Benefit of Assignee or PledgesSection 8.11. IntegrationSection 8.12. DisputesSection 8.13. Arbitration THIS CREDIT ENHANCEMENT AGREEMENT dated as of _,_,_(M/D/Y), between the AAA, _ (the 'City'), a municipal body corporate and politic and a political subdivision of the State of _, and BBB Corporation (the 'Developer'), a _(ADDRESS) corporation with a place of business in Bath, _(ADDRESS) .WITNESSETH THAT   WHEREAS, the City designated The BBB Municipal Development and Tax Increment Financing District #1 and The BBB Municipal Development and Tax Increment Financing District #2 (the 'Districts') pursuant to Chapter 207 of Title 30-A of the _(ADDRESS) Revised Statutes, as amended, by action of the City Council at a City Council Meeting held on _,_,_(M/D/Y) (the 'Vote') and pursuant to the same Vote adopted a development program and financial plan for the Districts (the 'Development Program'); andWHEREAS, the _(ADDRESS) Department of Economic and Community Development has reviewed and accepted the District and the Development Program effective _,_,_(M/D/Y); andWHEREAS, the Development Program contemplates the execution and delivery of a credit enhancement agreement between the City and the Developer; andWHEREAS, the City and the Developer desire and intend that this Credit Enhancement Agreement be and constitute the credit enhancement agreement contemplated by and described in the Development Program;NOW, THEREFORE, in consideration of the foregoing and in consideration of the mutual promises and covenants set forth herein, the parties hereby agree as follows:ARTICLE IDEFINITIONS: INTERPRETATIONS SECTION 1.1. DEFINITIONS. The terms defined in this Article I shall, for all purposes of this Agreement, have the meanings herein specified, unless the context clearly requires otherwise:'Agreement' shall mean this Credit Enhancement Agreement between the City and the Developer.'Captured Assessed Value' shall mean the valuation amount by which the then current assessed value of the Districts exceeds the Original Assessed Value of the Districts.'City' means the AAA, _(ADDRESS), a municipality duly organized and existing under the laws of the State of _(ADDRESS).'City Share' means (a) all of the Retained Tax Increment Revenues other than the Developer Share thereof plus (b) all interest and earnings on all of the Retained Tax Increment Revenues, except as provided in Section 3.1(e) hereof.'Developer' means BBB Corporation, a _(ADDRESS) corporation with a place of business in Bath, _(ADDRESS).'Development Program' means the development program for the District as adopted by the Bath City Council at a Meeting held on _,_,_(M/D/Y).'Development Program Fund' means the development program fund described in the Financial Plan section of the Development Program and established and maintained pursuant to Article II hereof.'Developer Share' means (a) 100% of the Real Property Increment with respect to the Land Level Facility and 50% of the Real Property Increment with respect to the Existing Facility and 50% of the Personal Property Increment with respect to the Land Level Facility and 50% of the Personal Property Increment with respect to the Existing Facility, for each of the twenty-five years of the term of this Agreement (commencing with the year _ Tax Year) of the Retained Tax Increment Revenues, provided, however, that such percentages shall be reduced to the following amounts at such time that the aggregate amount of payments by the City to the Developer during the term of this Agreement and pursuant to this Agreement equal $ _; 100% of the Real Property Increment with respect to the Land Level Facility with respect to assessed value equal to the assessed value of Land Level Facility (District #1) real property as of _,_,_(M/D/Y); 35% of the Real Property Increment with respect to the Land Level Facility with respect to assessed value of real property in excess of the assessed value of Land Level Facility (District #1) real property as of _,_,_(M/D/Y); 35% of the Personal Property Increment with respect to the Land Level Facility; 35% of the Real Property Increment with respect to the Existing Facility; and 35% of the Personal Property Increment with respect to the Existing Facility.In the event that the Tax Shift Formulas are changed and as a result the City's Tax Shift amount is decreased by reason of inclusion in the City's valuation for purposes of the Tax Shift Formulas of any portion of the Captured Assessed Value with respect to which the Developer's Share is determined hereunder, then, commencing with the later of (a) the _ Fiscal Year or (b) the Fiscal Year in which the Tax Shift Formulas are changed, the Developer Share shall be reduced by an amount equal to 50% of the difference, calculated solely with respect to the Developer Share of the Retained Tax Increment, between (a) the Tax Shift as determined using the method set forth in the current Tax Shift Formulas and (b) the Tax Shift as properly determined using the then effective State laws relating to state aid to education, revenue sharing and county tax; any reduction under this paragraph shall be calculated annually and applied to reduce the payments of the Developer Share on the next scheduled payment date herein following such calculation.A change in the Tax Shift resulting other than from including Captured Assessed Value in the City's valuation shall not result in a reduction of the Developer's Share.Anything in this Agreement to the contrary notwithstanding, for purposes of calculating the Developer's Share, the platform for the Land Level Transfer System (the concrete pad, filled land and pilings supporting the structures thereon) shall be included within the real property increment of the Land Level Facility.'District(s)' means the BBB Corporation Municipal Development and Tax Increment Financing District #1 ('District #1') and The BBB Municipal Development and Tax Increment Financing District #2 ('District #2') designated by the City pursuant to Chapter 207 of Title 30-A of the _(ADDRESS) Revised Statutes, as amended, by vote at City Council Meeting held on _,_,_(M,D,Y), which Districts shall include the Existing Facility and the Land Level Facility.'Effective Date' means _,_,_(M/D/Y).'Existing Facility' means the Property consisting of the existing shipbuilding facility of the Developer, located on the parcel shown on Tax _,_(M,D) as Parcel 142 within District #2, including all land, buildings, and all personal property located on such parcel as of _,_(M,D) each year subject to City ad valorem taxes together with all improvements or additions thereto within the existing geographic boundaries of such facility, all as currently depicted on Exhibit A hereto.'Financial Plan' means the financial plan described in the 'Financial Plan' Section of the Development Program.'Fiscal Year' means _,_(M/D) to _,_(M/D) of each year or such other fiscal year as the City may from time to time establish; for purposes of this Agreement, the Fiscal Year _ means the Fiscal Year commencing _,_,_(M/D/Y) and ending _,_,_(M/D/Y) and the Fiscal Year _$ means the Fiscal Year commencing _,_,_(M/D/Y) and ending _,_,_(M/D/Y).'Land Level Facility' means the land level facility to be constructed in District #1 by the Developer adjacent to the Existing Facility, together with all land, buildings, personal property located on such adjacent land as of April 1 of each year subject to City ad valorem taxes together with all improvements or additions thereto as depicted on Exhibit B hereto.'Original Assessed Value' means $ _, the assessed value of the Districts as of _,_,_(M/D/Y) as the same may be adjusted from time to time in accordance with Section 3.7 hereof.'Personal Property Increment' means that portion of the Tax Increment attributable to increases in personal property valuations with respect to personal property located in the Districts.'Project' means the design, planning, development, acquisition, construction and operation of the Land Level Facility and other BBB Corporation improvements within the Districts as described in the Development Program.'Project Cost Account' means the project cost account described in the Financial Plan Section of the Development Program consisting of the City Subaccount and the Developer Subaccount and established and maintained pursuant to Article II hereof and to provisions of 30-A M.R.S.A. Section 5254(3)(A)(2).'Project Costs' means 'project costs' as defined in 30-A M.R.S.A.Section 5152(8).'Property' means all real property and all personal property now or hereafter located in the Districts.'Property Taxes' means any and all ad valorem property taxes levied, charged or assessed against real or personal property in the Districts by the City, or on its behalf.'Real Property Increment' means that portion of the Tax Increment attributable to increases in real estate valuations with respect to real estate located in the Districts.'Retained Tax Increment Revenues' means that portion of the Tax Increment to be retained by the City and deposited into the Development Program Fund pursuant to the terms of the Development Program and this Agreement.'Tax Increment' means the real and personal property taxes exclusive of any state, country or special district tax, assessed by the City on the captured assessed value of property within the Districts, which Tax Increment shall consist of the Real Property Increment and the Personal Property Increment.'Tax Payment Date' means the date(s) on which property taxes levied by the City are due and payable from owners of property located within the City.'Tax Shift' means the decrease in county tax payable by the City and the increases in State aid for education and revenue sharing in all three cases resulting from the exclusion of Captured Assessed Value from the City's valuation in calculating such amounts of county tax, State aid to education and revenue sharing under the current Tax Shift Formulas.'Tax Shift Formulas' mean the formulas currently utilized by the State of _(ADDRESS) in calculating (a) the county tax payable in accordance with 30-A M.R.S.A.Section 706 and 36 M.R.S.A. Sections 305(1), 381; (b) the municipal revenue sharing distribution of the Local Government Fund in accordance with 30-A M.R.S.A. Section 5681; and (c) State aid to education, including aid for total operating costs, total program cost allocation (taking into account the maximum local share or circuit breaker) and total debt service cost allocation (taking into account the maximum local share or circuit breaker), all as computed in accordance with _(ADDRESS) Department of Education Form ED 261.SECTION 1.2. INTERPRETATION AND CONSTRUCTION. In this Agreement, unless the context otherwise requires:(a) The terms 'hereby,' 'hereof,' 'hereto,' 'herein,' 'hereunder' and any similar terms, as used in this Agreement, refer to this Agreement, and the term 'hereafter' means after, and the term 'heretofore' means before, the date of delivery of this Agreement.(b) Words importing a particular gender mean and include correlative words of every other gender and words importing the singular number mean and include the plural number and vice versa.(c) Words importing persons mean and include firms, associations, partnerships (including limited partnerships), trusts, corporations and other legal entities, including public or governmental bodies, as well as any natural persons.(d) Any headings preceding the texts of the several Articles and Sections of this Agreement, and any table of contents or marginal notes appended to copies hereof, shall be solely for convenience of reference and shall not constitute a part of this Agreement, nor shall they affect its meaning, construction or effect.(e) Except as otherwise provided herein, all approvals, consents and acceptances required to be given or made pursuant to this Agreement by any signatory hereto shall not be withheld unreasonably, provided, that this paragraph shall not apply to approvals, consents and acceptances under applicable laws, ordinances and codes, including, without limitation, land use ordinances.(f) All notices to be given hereunder shall be given in writing and, unless a certain number of days is specified, within a reasonable time.(g) If any clause, provision or Section of