Exhibit “17-B”
September 20, 2005
DRAFT AGREEMENT TERM SHEET
New York Power Authority Contribution to
Private Equity Initiative in St. Lawrence County
- The
Authority will agree to grant $10 million to a newly formed not-for-profit
entity (actual name TBD and referred to herein as the “Private Equity Fund
Consortium,” or “PEFC”) to be used by such entity for purposes of
investing in businesses that will promote economic development, employment
and the tax base in St Lawrence County, extend Clarkson’s current
technology commercialization efforts and be consistent with local and
State environmental rules, regulations and policies.
- PEFC will agree that its charter, by-laws
and original Board of Directors will be subject to the approval of the
Authority, which approval cannot be unreasonably withheld.
- PEFC
will also agree to use the Authority’s $10 million in funds to make a $9.75
million capital commitment to a fund manager with the expectation that
such manager will be Golden Technology Management, LLC (the “Fund
Management”). PEFC further will agree that it will only distribute such
committed funds to Fund Management and Fund Management will only be able
to draw down from the committed fund $1 for every $2 of private capital
raised by and invested through Fund Management. The principal terms and
conditions for PEFC’s investment with Fund Management are attached as
Attachment A to this document (to follow) and among other things establish
an incentive for private investors to invest in the economic development
of the community as well as require that all Authority funds be invested
in companies headquartered in and principally operated out of St. Lawrence
County. Clarkson will agree that Fund Management will not be controlled by
Clarkson and that its activity will not be restricted to technologies
developed at Clarkson. Instead,
pursuant to its agreement with PEFC, Fund Management will invest at least
two-thirds of all capital raised by the Fund, both the committed Authority
monies and privately placed equity, in technology-driven businesses
related to energy independence and environmental sustainability. The remaining Fund capital will be
invested in diversified opportunities.
- The
parties agree that the incentive for private investment will be in the
form of a priority return-on-investment for private investors. The typical
fund life is 10 years. As this is an early-stage private equity
initiative, it is expected to survive for 12 years with approximately $30
million in equity to be invested over the first six years of Fund
activity.
- The
Authority will agree that PEFC will be allowed to expend up to $250,000 of
the $10 million to pay for immediate and projected legal and
administrative costs of establishing PEFC and any Fund Management-related
corporate structures and contracts and PEFC will maintain the unspent
balance of such money for future nominal operating expenses.
- After
initially committing the original $9.75 million as described herein, PEFC
will be allowed to deploy any returns on investment from Fund Management
in a manner decided upon at the sole discretion of its then current Board
of Directors, provided such activity is consistent with PEFC’s charter as
described above with regard to leveraging private funds and permitted
investment areas. In the event that Fund Management is unable to secure
matching funds sufficient to draw down the full, initial $9.75 million of
Authority funds from PEFC within eight years, PEFC with the assistance of
the St Lawrence County Industrial Development Authority and the New York
State Economic Development Corporation, will be allowed to invest any
uncalled funds and returns-on- investments in a manner that remains
consistent with PEFC’s charter but allows for the broadest use of such
funds for economic development opportunities in St. Lawrence County,
provided each investment meets with the Authority’s approval.
- PEFC
and Fund Management will both agree that the Authority will have the
right, upon reasonable notice, to periodically audit their respective
books and records to assure that the Authority’s funds are used for the
purposes set forth in this agreement and that copies of such books and
records will be maintained at all times in New York State.