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HomeMy WebLinkAbout7503RESOLUTION NO. 7503 A RESOLUTION APPROVING AN ESCROW AGREEMENT BETWEEN PUEBLO, A MUNICIPAL CORPORATION, FUEL RESOURCES DEVELOPMENT CO. AND PUEBLO BANK AND TRUST COMPANY RELATING TO REMOVAL OF THE METHANE RECOVERY SYSTEM AT THE PUEBLO LANDFILL AND AUTHORIZING THE PRESIDENT OF THE CITY COUNCIL TO EXECUTE SAME BE IT RESOLVED BY THE CITY COUNCIL OF PUEBLO, that: SECTION 1 The Escrow Agreement dated June 1, 1994 between Pueblo, a municipal corporation, Fuel Resources Development Co. and Pueblo Bank and Trust Company relating to the removal of the methane recovery system at the Pueblo Solid Waste Landfill (the "Escrow Agreement "), a copy of which is attached hereto, having been approved as to form by the City Attorney, is hereby approved. SECTION 2 The President of the City Council is authorized to execute the Escrow Agreement in the name of the City and the City Clerk is directed to affix the seal of the City thereto and attest same. INTRODUCED: November 28 1 1994 B y FAY KASTELIC Councilperson ROVED: esi nt of the City Council J:\CfFY\ADMIN\FUELCO\RES-ESAG.WPD ESCROW AGREEMENT THIS ESCROW AGREEMENT, dated as of June 1, 1994, by and among Fuel Resources Development Co., a Colorado corporation ( "Fuelco "), the City of Pueblo, a municipal corporation ( "Pueblo ") and Pueblo Bank & Trust Company, a Colorado state bank ( "Escrow Agent "). WHEREAS, Pueblo is the owner of property located in Pueblo County, Colorado, which is known as the Pueblo Solid Waste Landfill; and WHEREAS, by agreement entitled Second Amended Agreement, dated June 11, 1990, by and between Pueblo and Fuelco ( "Second Amended Agreement "), Pueblo, subject to the conditions set forth in the Second Amended Agreement, granted to Fuelco all of the City's right, title and interest in and to the Landfill Gas (as that term is defined in the Second Amended Agreement), as well as the exclusive right to explore, drill, extract, recover, collect, gather, transport, produce, treat, process, separate, manufacture and synthesize all such Landfill Gas and to develop, construct, erect, install, operate, maintain, modify and remove all plants and facilities and other structures necessary and convenient to the full enjoyment by Fuelco of the rights granted in the Second Amended Agreement; and WHEREAS, Fuelco has constructed and installed a Gas Methane Recovery System and Facility ( "the System ") upon certain land covered by the Second Amended Agreement ( "System Land ") (the System and System Land being collectively referred to herein as the "Landfill "); and WHEREAS, pursuant to Paragraph 17, entitled "Removal of Improvements," of the Second Amended Agreement, Fuelco is required to remove all structures and improvements placed on the Landfill (excluding the Production Facilities as that term is defined in that certain Agreement by and among Fuelco and Pueblo and Rentech, Inc. dated June 1, 1993); and WHEREAS, on October 21, 1993, Fuelco delivered its Notice of Intention to Abandon the Landfill, which notice was delivered to Pueblo by certified mail; and WHEREAS, notwithstanding such abandonment, Pueblo has requested that Fuelco not remove the System from the System Land, pending Pueblo's review and analysis of the System to determine whether and to what extent Pueblo wishes to retain the System; and WHEREAS, Fuelco has agreed not to remove the System from the System Land on the condition that the System is conveyed, at no cost, to Pueblo and that Pueblo agree that the ultimate cost for any such removal shall be paid out of the escrow account created by this Agreement and that Fuelco's obligation to bear the cost of said removal shall exist only for a period of two years from the date hereof. Fuelco's agreement in this regard is also conditioned upon Pueblo acknowledging that by execution of this Escrow Agreement and deposit of funds as provided herein, Fuelco is fully discharged from all of its obligations and duties arising under or by virtue of paragraph 17 of the Second Amended Agreement; and WHEREAS, Escrow Agent has agreed to act as Escrow Agent for the purposes of this Agreement. NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth herein, and such other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows: 1. Fuelco has caused to be delivered to Escrow Agent pursuant to this Agreement, and Escrow Agent hereby acknowledges receipt of, the aggregate sum of U.S. $125,000 in cash (the "Escrow Fund "). 2. Escrow Agent shall, as soon as reasonably practicable and from time to time during the term hereof, invest the Escrow Fund in demand deposits in a depository institution insured by the FDIC or in liquid funds of the United States Government or any instrumentality or agency thereof as Escrow Agent shall determine with such investments being of such duration as Escrow Agent shall determine; provided, however, that Escrow Agent shall not have the responsibility for any investment or reinvestment of any part of the Escrow Fund at a time when payment thereof under this Agreement appears to be imminent. 3. The Escrow Fund shall be used solely to pay the cost of removal of the System or portion of the System from the System Land, or to reimburse Pueblo for same, but only to the extent Pueblo initiates removal of all or a portion thereof on or before two years from the date hereof and thereafter diligently pursues such removal. As used in this Agreement, the term "removal" shall mean the performance of work for the purpose of capping, removal, modification, closure or abandonment in place of any portion or portions of the System in a manner so as to prevent subsequent disruption or maintenance expense for the System Land, and the phrase "costs of removal" shall include all reasonable costs associated with such removal, including costs of engineering, testing, analysis, demolition, excavating, construction, and site remediation. In the event Pueblo does not timely initiate removal of the System or portion of the System as herein provided, the Escrow Fund, or any unexpended balance remaining in the Escrow Fund after all disbursements have been made pursuant to this Agreement, shall be returned to Fuelco. 4. In consideration of Fuelco establishing the Escrow Fund for the purposes stated in this Escrow Agreement, Pueblo acknowledges and agrees that Fuelco is fully discharged from all of its obligations under paragraph 17 of the Second Amended Agreement as same relate to the Landfill. Upon the establishment of the Escrow Fund, the Second Amended Agreement shall be deemed terminated as it relates only to the Landfill. The Second Amended Agreement shall remain in full force and effect as it relates to the Production Facilities as that term is used in that certain June 1, 1993 Agreement by and among Fuelco, Pueblo and Rentech Inc. In the event the cost for removal of the System or portion thereof exceeds the monies available in the Escrow Fund, including all accrued interest, Pueblo or Pueblo's contractors or agents shall be solely responsible for such excess costs. Pueblo acknowledges and agrees that Fuelco's liability for removal of the System is limited to the monies available in the Escrow Fund, including accrued interest, and that selection and -2- oversight of the contractor performing the removal work shall be the sole responsibility of Pueblo. 5. Costs of removal of the System or any portion thereof which are payable from the Escrow Fund shall be reasonably determined by Pueblo's Director of Public Works ( "Director ") and incorporated into written instructions to the Escrow Agent, which instructions shall be subject to approval by Fuelco, which approval shall not be unreasonably withheld, provided that if Fuelco does not approve or object to such instructions in writing delivered to the City and Escrow Agent within thirty (30) days after receipt thereof, Fuelco's approval shall conclusively be deemed to have been given. If, at any time prior to the termination of this Agreement, Escrow Agent receives such written instructions from Director with Fuelco's approval (either actual or deemed) or Fuelco and Pueblo jointly direct that payment be made in accordance with the terms of this Agreement, then the Escrow Agent shall make such payment out of the Escrow Fund to Pueblo or Fuelco or third -party payee, as the case may be, in accordance with this Agreement and such instructions, unless funds remaining in the Escrow Fund shall be insufficient to comply with such instructions. If funds in the Escrow Fund are insufficient, Escrow Agent shall deliver the balance of the Escrow Fund (together with all interest earned thereon through the date of payment) to the appropriate party, shall advise Fuelco and Pueblo in writing of the amount of such payment and this Agreement shall be deemed terminated. Escrow Agent shall be entitled to rely on the written instructions given pursuant to this paragraph 5 and shall have no obligation to inquire into the authenticity or accuracy of any such written instructions. 6. Escrow Agent may make any payments out of the Escrow Fund that may at any time be permitted to be made under the provisions of paragraphs 5 and 7 hereof, and shall make all such payments at the time the same are required to be made under such paragraphs or as are jointly requested in writing by Fuelco and Pueblo. 7. In the event Escrow Agent has not received written instructions required by Paragraph 5 above, which instructions fully deplete all funds remaining in the Escrow Fund, together with interest, Escrow Agent shall, on or after the third anniversary of this Agreement, and without notice, pay to Fuelco all funds remaining in the Escrow Fund, together with interest, if any, earned through the date of such payment and this Agreement shall be deemed terminated; provided, however, that if there is a dispute between Pueblo and any contractor performing removal work regarding outstanding billings relating to the cost of removal as that term is defined in Paragraph 3 above, the amount of any such disputed billing shall be retained by Escrow Agent pending resolution thereof. 8. Escrow Agent shall be obligated to perform only the duties that are expressly set forth herein and need not take notice of any provisions of the Second Amended Agreement. In the event of any dispute or adverse conflicting claim such that Escrow Agent cannot reasonably determine its own proper course of action, Escrow Agent shall be entitled to commence an action in the nature of interpleader in the District Court in and for the County of Pueblo, and thereafter join and serve process upon both Fuelco and Pueblo and tender to said court all funds in the Escrow Fund which Escrow Agent holds, and Escrow Agent shall thereupon be discharged from any duty to any party or entity which it previously had hereunder. -3- 9. Escrow Agent shall not be under any obligation to take any legal action in connection with this Agreement or for its enforcement, or to appear in, prosecute or defend any action or legal proceeding which, in its opinion, would or might involve it in any cost, expense, loss or liability, unless and as often as requested by it, it is furnished with satisfactory security and indemnity against all such cost, expense, loss or liability. 10. Escrow Agent shall be considered by the parties and regarded as a depository only, and shall not be responsible or liable (except for its own gross negligence or willful misconduct) with respect to the Escrow Fund or any matters arising therefrom. Except as specifically set forth in this Agreement, Escrow Agent's duties hereunder shall be limited to the safe keeping of the Escrow Fund, investing the same in accordance with paragraph 2 above and receiving any accrued interest or other proceeds from the investment of the Escrow Fund and for the disbursement of the Escrow Fund in accordance with this Agreement and the written instructions given in accordance herewith. 11. Upon full payment of the Escrow Fund and interest thereon in accordance with this Agreement or upon the commencement by Escrow Agent of an action as provided in paragraph 8 above, this Agreement shall be deemed to be terminated and Escrow Agent shall be released and discharged from any and all further obligations hereunder. It is understood and agreed that the duties of Escrow Agent hereunder are purely ministerial in nature and that it shall not be liable for any error of judgment, fact or law or any act done or admitted to be done, except for its own gross negligence or willful misconduct. 12. All notices, consents, approvals, directions and instructions, and copies thereof, required or permitted under this Agreement shall be given in writing and delivered either by hand, by Federal Express or by registered or certified mail, with all postage charges prepaid and addressed as follows: (a) If to Fuelco: Fuel Resources Development Co. c/o Public Service Company of Colorado 1225 17th Street, Suite 2100 Denver, Colorado 80202 Attn: Richard C. Kelly With a copy to (which shall not constitute notice): LeBoeuf, Lamb, Greene & MacRae 633 17th Street, Suite 2800 Denver, Colorado 80202 Attn: Thomas R. O'Donnell, Esq. (b) If to Pueblo: City of Pueblo 1 City Hall Place Pueblo, Colorado 81003 -4- Attn: Lewis Quigley and City of Pueblo 211 E. "D" Street Pueblo, Colorado 81003 Attn: Tom Cvar With a copy to (which shall not constitute notice): Thomas E. Jagger, Esq. 127 Thatcher Building Pueblo, Colorado 81003 (c) If to Escrow Agent: Pueblo Bank & Trust Company 301 W. 5th Street Pueblo, CO 81003 Attn: Ken Suess With a copy to (which shall not constitute notice): Altman Keilbach Lytle & Parlapiano 501 Thatcher Building Pueblo, CO 81003 or at such other address as any party shall request by a notice given pursuant to this paragraph. Copies of all communications hereunder shall be sent to the Escrow Agent. All notices and copies thereof shall be deemed given when delivered as provided in this paragraph or, if mailed, on the date shown on the return receipt as the date delivered or refused. 13. In consideration for the services to be performed by Escrow Agent hereunder, Escrow Agent shall be entitled to reasonable fees, to be determined in accordance with the Fee Schedule attached hereto as Schedule A. Escrow Agent shall be entitled to recover such fees and any amounts otherwise owing to Escrow Agent on account of its services pursuant to this Agreement, from any monies available in the Escrow Fund, or if same be insufficient, from Pueblo or amounts payable to Pueblo hereunder. 14. Escrow Agent may resign at any time upon giving the parties hereto sixty (60) days' notice to that effect. In such event, the successor escrow agent shall be such person, firm or corporation as shall be mutually selected by Fuelco and Pueblo. It is understood and agreed that Escrow Agent's resignation shall not be effective until a successor escrow agent agrees to act hereunder. Upon the delivery of the Escrow Fund and all interest earned thereon through the date -5- of such delivery to the successor escrow agent, the Escrow Agent shall be released and discharged from any further liability or obligation hereunder. 15. Simultaneously with the execution of this Agreement, the parties hereto shall execute such transfer documents as are necessary to evidence Fuelco's conveyance of the System to the City of Pueblo, at no cost. 16. This Agreement contains the entire understanding of the parties hereto with respect to the subject matter hereof and cannot be changed or modified other than in writing signed by all parties hereto. 17. This Agreement shall be governed by and construed in accordance with the laws of the State of Colorado. 18. This Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective successors and assigns. No provision of this Agreement shall confer rights or benefits upon any person not a party hereto. 19. This Agreement may be executed in one or more counterparts, each of which is to be deemed an original, but which together constitute one and the same instrument. IN WITNESS WHEREOF, the parties have executed this Escrow Agreement as of the date first above written. FUEL RESOURCES DEVEL hNT CO. ATTEST: Secretary U Donald L. Peterson Vice President CITY OF PUEBLO % a ATTEST: By Cii§ Clerk P esi ent of the City Council PUEBLO BANK & TRUST COMPANY By ', , Na me: cl."e) -i. u�• ;..cJQ Title: S - t-vr )'rra> ).n 0 Schedule A FEE AGREEMENT Escrow Agreement Fuel Resources Development Co. & City of Pueblo Pueblo Bank & Trust's fee for performing services as Escrow Agent under the agreement between the above referenced parties shall be: Annual account maintenance fee: $500 /year or part thereof Disbursement fee: $12.50 /remittance (check, wire, advice of credit) Additional statement fee: $10.00 /statement /addressee (bank will provide quarterly reports to two addressees) Bank will be reimbursed for any extraordinary out -of- pocket expenses such as express mail, certified mail, tax preparation, litigation, etc. Fees will be deducted from the account quarterly unless other arrangements are agreed upon. Accepted: Fuel Resources Development Co. by: Donald L. Peterson Vice President Accepted: City of Pueblo by Pr sident of the City Council Pueblo Bank & Trust by: date:— Z..,,r 2!_3 enneth W. Suess, SVP & Manager