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Home My WebLink About10596RESOLUTION NO. 10596 A RESOLUTION APPROVING A SETTLEMENT AGREEMENT AND RELEASE BETWEEN THE CITY OF PUEBLO, A MUNICIPAL CORPORATION AND EUPEC RISK MANAGEMENT SYSTEMS. INC.. RELATING TO A JOB CREATING CAPITAL IMPROVEMENT PROJECT BE IT RESOLVED BY THE CITY COUNCIL OF PUEBLO, that: SECTION 1. The Settlement Agreement and Release dated December 12, 2005 between the City of Pueblo and EUPEC Risk Management Systems, Inc. relating to a job creating capital improvement project, a copy of which is attached hereto, having been approved as to form by the City Attorney, is hereby approved. The President of the City Council is authorized to execute and deliver the Settlement Agreement and Release in the name of the City and the City Clerk is directed to affix the seal of the City thereto and attest same. SECTION 2. The Special Warranty Deed from Pueblo Development Foundation to the City of Pueblo conveying title to Lot 38, Pueblo Memorial Airport Industrial Park Subdivision and all improvements thereon, a copy of which is attached hereto, having been approved as to form by the City Attorney, is hereby approved and accepted. SECTION 3. This Resolution shall become effective upon final passage and approval. APP ' 9F CITY - CPYWIL • A, t INTRODUCED December 12, 2005 BY Michael Occhiato Councilperson Background Paper for Proposed RESOLUTION AGENDA ITEM # . D DATE: December 12, 2005 DEPARTMENT: Law Department TITLE A RESOLUTION APPROVING A SETTLEMENT AGREEMENT AND RELEASE BETWEEN THE CITY OF PUEBLO, A MUNICIPAL CORPORATION AND EUPEC RISK MANAGEMENT SYSTEMS, INC., RELATING TO A JOB CREATING CAPITAL IMPROVEMENT PROJECT ISSUE Should the City Council approve the Settlement Agreement and Release with EUPEC Risk Management Systems, Inc. Approve the Settlement Agreement and Release. BACKGROUND During August 2002 City, Pueblo Development Foundation ( "Foundation ") and EUPEC Risk Management Systems, Inc. ( "Company ") entered into a job creating capital improvement project whereby: (a) City advanced $650,000 to Foundation for the purchase of land and 26,958 square foot building ( "Building ") known as 31965 United Avenue, Pueblo, Colorado for lease to Company. (b) City advanced $760,000 to Company to remodel the Building. (c) Company committed to employ 75 full -time employees for a seven (7) year period starting October 15, 2005. (d) Company entered into a 10 -year lease with option to purchase the Building with Foundation ( "Lease "). City's $760,000 as well as an additional $1,242,000 of Company's funds were used to remodel the Building and improve the land. under its employment agreement with the City and will be in default under its Lease with Foundation. Company is willing to surrender its interest in the Building and land in which it has invested $1,242,000 and transfer to City office fixtures, furniture and equipment located in the Building for which it paid $251,327 in full satisfaction and release of its obligation under its employment agreement and Lease. Other than its business at Pueblo Memorial Airport, Company has no other business, activities or assets. According to Company's records, its parent EUPEC GmbH, a German company has invested over $14 million in this transaction and business venture. Foundation will transfer its interest in the land and Building to the City. City will then own the land and Building free of any claims of Company or Foundation. FINANCIAL IMPACT Sees Background. SETTLEMENT AGREEMENT AND RELEASE This Settlement Agreement and Release ( "Settlement Agreement ") entered into as of December 12, 2005 by and between EUPEC Risk Management Systems, Inc., a Delaware corporation, 31965 United Avenue, Pueblo, Colorado, 81001 ( "Company"), the City of Pueblo, a municipal corporation, l CityHall Place, Pueblo, Colorado, 81003 ( "City") and Pueblo Development Fountain, a Colorado nonprofit corporation, Post Office Box 1663, Pueblo, Colorado, 81002 ( "Foundation "), Witnesseth: RECITALS A. In furtherance of a job creating capital improvement project the Company, City and Foundation entered into the following agreements and advanced the following funds: (1) City and TransWave International, Inc. entered into an Agreement dated August 26, 2002 and City and Company as successor of TransWave International, Inc. entered into an Amendment To Agreement dated as of August 26, 2002 (the Agreement and Amendment To Agreement are herein collectivelyreferred to as the "Company Agreement "). (2) Foundation and TransWave International, Inc. entered into a Lease dated August 26, 2002 and Foundation and Company as successor ofTransWave International, Inc. entered into an Amendment To Lease dated as of August 26, 2002 (the Lease and Amendment To Lease are herein collectively referred to as the "Lease "). (3) City advanced the sum of $650,000.00 to purchase the Real Property (described below) in the name of Foundation and $760,000.00 to remodel the building located on the Real Property (`Building "). Company advanced an additional $1,243,000.00 remodeling the Building and improving the Real Property ( "Company's Contribution") B. Company has closed its business operations in Pueblo, Colorado and will not now or in the future meet and comply with its Employment Commitment as described and defined in the Company Agreement. C. City has duly given notice to Company of Company's default in its Employment Commitment pursuant to paragraph 4(d) of the Company Agreement and Company received the notice of default, a true copy of which is attached hereto as Exhibit "A ". Company is in default of its Employment Commitment as defined and described in the Company Agreement and Company is and will be unable to cure such default. Company has waived its right, if any, to cure such default. City has declared the entire balance of Company's Repayment Obligation as defined in the Company Agreement in the amount of $760,000.00 to be due and owing and Company is now indebted to and owes City the sum of $760,000.00 together with interest thereon at the rate of ten percent (10 %) per annum from date hereof until paid in full ( "Company's Indebtedness "). D. Pursuant to Article 4.01 of the Lease, monthly rent of $10,000.00 per month is due and owing during the balance of the ten (10) year term of the Lease commencing with the month of January 2006 and each month thereafter until the month of April 2013. E. As used herein, the following words shall have the following meanings: (1) "Effective Date" means midnight December 31, 2005. (2) "Real Property" means Lot 38, Pueblo Memorial Airport Industrial Park, Pueblo County, Colorado, and all buildings and other improvements located thereon; street address: 31965 United Avenue, Pueblo, Colorado, 81001. (3) "Equipment" means the office furniture, equipment and leasehold improvements described in Exhibit `B" attached hereto. AGREEMENT In consideration of the foregoing Recitals and mutual covenants contained herein, Company, City and Foundation agree as follows: 1. As an inducement to City and Foundation to enter this Settlement Agreement and consummate the transactions contemplated hereby, Company represents, warrants and covenants now and on the Effective Date: (a) This Settlement Agreement is duly authorized, executed and delivered by Company and is a legal, valid and binding obligation of Company enforceable against Company in accordance with its terms. Company has taken all action and obtained all consents required to enter into this Settlement Agreement and perform its obligations hereunder. (b) Company's execution and delivery of this Settlement Agreement and performance ofits obligations hereunder do not and will not violate any statute, ordinance, regulation or law to which Company is subject or any provision of any contract, agreement, document or undertaking to which Company is a party or to which it is subject. (c) The Real Property and Equipment are and will be on the Effective Date in a good and clean condition and state of repair. (d) The Real Property and Equipment are and will be on the Effective Date free of all liens and encumbrances caused, permitted or authorized by the acts, defaults or omissions of Company. (e) No Hazardous Materials as defined in the Lease are now located in, on or under the Real Property or will be on the Effective Date that were introduced in, on or under the Real Property by the Company or under its direction or authority. Ira (f) The Recitals and all matters contained therein are true, correct and accurate. 2. Company shall on or before the Effective Date vacate the Real Property, remove all its trade fixtures, equipment and other property (except the Equipment) therefrom, and surrender possession of the Real Property and Equipment to City in good and clean condition and state of repairs. 3. Company sells, transfers and assigns to City all of its right, title and interest in the Equipment and warrants title to the same and will execute and deliver to City on or before the Effective Date a bill of sale for same in form and content acceptable to City. 4. Company shall paybefore delinquent all charges for janitorial and trash services, and utilities serving or provided to the Real Property including City's Combined Service Fee (herein collectively "Utility Charges ") through the Effective Date, and pay before delinquent all general property taxes assessed against the Real Property and personal property taxes assessed against the Equipment (herein collectively "Property Taxes "), including without limitation, Property Taxes for the year 2005 payable in 2006. Company shall indemnify, defend, and save City harmless from such Utility Charges and Property Taxes. 5. Company shall meet, perform and comply with all covenants and provisions on the part of Company to perform and comply with under the Lease through the Effective Date. 6. Company shall on or before the Effective Date cause to be released and discharged any memorandum of the Lease recorded in the office of the Pueblo County Clerk and Recorder. 7. Company completely releases and forever discharges City and Foundation and all officers, agents, employees, successors and assigns of City and Foundation of and from and against all past, present or future claims, demands, obligations, actions, causes of action, rights, damages and costs of any nature whatsoever, whether based on a tort, contract or any other theory of recovery, which Company now has, or which may hereafter accrue or otherwise be acquired, on account of or in any way growing out of or related to the Company Agreement, the Lease, or the matters described in the Recitals, including without limitation, Company's Contribution. 8. Subject to full compliance and complete performance and satisfaction of the representations, warranties, covenants, provisions, obligations and undertakings of Company set forth in paragraphs 1 through 7 above, both inclusive, the Lease will terminate on the Effective Date and City and Foundation do hereby completely release and forever discharge Company, its affiliates, and its officers, agents, employees, successors and assigns from and against all past, present or future claims, demands, obligations, actions, causes of action, rights, damages, and costs of any nature whatsoever, whether based on a tort, contract or any other theory of recovery, which City or Foundation now have, or which may hereafter accrue or otherwise be acquired on account of or in any way growing out of or related to the Company Agreement, the Lease or the matters described in the Recitals, including, without limitation, Company's Indebtedness, but excluding any claim, -3- demand, obligation, action, cause of action, right, damage and cost (including reasonable attorney fees) arising out of or under this Settlement Agreement. 9. Time is of the essence hereof. This Settlement Agreement contains the entire understanding between City, Foundation and Company with respect to the matters herein set forth and shall be binding upon and inure to the benefit of the parties and their respective successors and assigns. 10. On or before the Effective Date, Foundation will convey to City marketable fee simple title to the Real Property free of liens and encumbrances by special warranty deed. 11. This Settlement Agreement shall be construed and interpreted in accordance with the laws of the state of Colorado. In the event of any litigation arising out of this Settlement Agreement, the court shall award to the prevailing party its costs, expenses and reasonable attorney fees. Venue for any such litigation shall be Pueblo, Colorado. All such litigation shall be filed in the District Court, County of Pueblo, State of Colorado, and each party submits to the jurisdiction of such District Court. To the extent allowed by law, each party waives its right to a jury trial. 12. Any notice hereunder shall be sufficiently given if given in writing personally or mailed by first class, registered or certified mail, postage prepaid, addressed: (a) if to City, City Manager, City of Pueblo, 1 City Hall Place, Pueblo, Colorado, 81003, with a copy to Thomas E. Jagger, City Attorney, 503 N. Main Street, Suite 127, Pueblo, Colorado, 81003, or (b) if to Company, EUPEC Risk Management Systems, Inc., 31965 United Avenue, Pueblo, Colorado, 8 100 1, with copy to Lawrence B. Rodman, Esq., Morrison Cohen, LLP, 909 Third Avenue, 27' Floor, New York, New York 10022, or (c) if to Foundation, Pueblo Development Foundation, Post Office Box 1663, Pueblo, Colorado, 81002, or to such other person or address as either party shall specify in written notice given to the other parties pursuant to this paragraph. 13. The provisions of this Settlement Agreement are for the exclusive benefit of the parties hereto, and no third party shall be a beneficiary, or have any rights by virtue of this Settlement Agreement. 14. This Settlement Agreementmaybe executedin anynumberof counterparts, and each counterpart shall be deemed for all purposes to be an original, and all such counterparts shall together constitute but one and the same original. MI shall together constitute but one and the same original. 15. All parties agree to cooperate fully and execute any and all supplementary documents and to take all additional actions which may be necessary or appropriate to consummate the transaction herein contemplated and to give full force and effect to the basic terms and intent of this Settlement Agreement. Executed at Pueblo, Colorado, the day and year first above written. PUEBLO, A MUNICIPAL CORPORATION PUEBLO DEVELOPMENT FOUNDATION By President of the City CmIncil Presidente�� C Attest: Attes City erk Secretary EUPEC RISK MANAGEMENT SERVICES, INC. esident Secretary ED City of Pueblo OFFICE OF THE CITY MANAGER November 14, 2005 TransWave International, Inc. 1551 Larimer Street, Suite 1902 Denver, Colorado 80202 EUPEC Risk Management Systems, Inc. C/o The Corporation Company 1675 Broadway Denver, Colorado 80202 EUPEC Risk Management Systems, Inc. 31965 United Avenue Pueblo, Colorado 81001 Re: Notice of Default Gentlemen: Pursuant to paragraph 4(d) of the Agreement dated August 26, 2002 between Pueblo, a municipal corporation ( "City") and EUPEC Risk Management Systems, Inc., as successor in interest to TransWave International, Inc. (collectively the "Company") and Amendment to Agreement dated August 25, 2002 (collectively the "Agreement "), City hereby gives notice to Company that Company has defaulted in its Employment Commitment as described in paragraph 3 of the Agreement for failure to employ since October 15, 2005 not less than seventy-five (75) Full - Time Employees at the Facility in the positions and at the salaries set forth in Exhibit "A" attached to the Agreement. Company is further notified that pursuant to paragraph 4(d) of the Agreement, as'amended, if such default is not cured within ninety (90) days after written notice specifying the default in Company's Employment Commitment is given to Company by City, City will declare the entire balance of Company's Repayment Obligation due and owing with interest thereon from the date of default at the rate of ten (10) percent per annum. All capitalized terms and words set forth in this Notice shall have the same meaning as given in the Agreement. Please address all correspondence with respect to this Notice to Thomas E. Jagger, Esq., 503 N. Main Street, Suite 127, Pueblo, Colorado, 81003, telephone number 1 -719- 545 -4412, fax number 1- 719- 454 -4301. EXHIBIT A _ P.O. Box 1427 Pueblo, Colorado 81002 -1427 17191 saa npnn Very truly yours, City of Pueblo, a Municipal Corporation By o, / City Manager cc: Morrison Cohen, LLP 750 Lexington Avenue New York, NY 10022 -4731 Attention: Lawrence B. Rodman, Esq. EUPEC RMS Property, Plant & Equipment Schedule General Ledger Account Name Asset Description OFFICE EQUIPMENT HEART DEFIB 2,496.00 FLO SRV OFFICE CUBICLES 709.55 PATIO FURNITURE 1,545.60 WOOD OFFICE DESKS SETS 23,298.32 IT DESK WORK STATION ( 1) 1,739.54 FRONT OFFICE WORK STATIONS ( 6) 11,657.77 ENGINEERING WORK STATIONS (12) 23,315.76 SKYE CHAIRS (9) 6,456.87 HIGH BACK OFC CHAIRS (30) 8,577.83 LOW BACK OFC CHAIRS (32) 7,196.79 OFC CHAIR WOOD - PATTERN FABRIC (12) 4,319.43 GARNET UPHOLSTERED CHAIRS (14) 5,337.90 BRYLEE RED CHAIRS (30) 8,417.53 ITALIAN RED LEATHER CHAIRS (3) 1,648.71 ITALIAN RED LEATHER RECLINER (1) 659.71 COGNAC LEATHER CHAIRS (2) 978.00 COGNAC LEATHER SOFA (1) 1,051.43 RACETRACK WOOD CONFERENCE TABLES (4) 10,341.49 ROUND WOOD TABLES (2) 1,850.80 GRAY FIXED BASE SEMINAR TABLES (10) 9,885.16 ARPEGGIO END TABLES (7) 3,003.00 ARPEGGIO END TABLE (1) 465.12 PRATO END TABLES (3) AND LAMPS (2) 695.40 UTILITY TABLE (1) 242.34 GREY ROUND TABLE (1) 386.99 LATERAL WOOD FILES (4) 2,476.64 FILING CABINETS METAL (5) 2,290.33 STORAGE CABINETS METAL (4) 1,574.30 STORAGE CABINETS /WARDROBE WOOD (5) 4,156.65 BOOKCASES AND SHELVES 5,596.24 LECTURN (1) 522.20 WOODCASE VENEER WHITEBOARDS (3) 2,286.44 WHITEBOARDS (19) 3,590.15 PLASTIC SEAT BENCHES (2) 622.74 SILK DECORATING PLANTS 2,621.91 ART WORK 1,776.09 OFFICE SIGNS 714.52 KITCHEN APPLIANCES 2,663.15 TELEPHONE /AUDIO SYSTEM 45,969.00 CAFETERIA FURNITURE 22,000.00 WINDOW COVERINGS 6,000.00 MISC OFFICE FURNISHINGS 10.736.60 Totals 251.874.00 EXHIBIT B Equipment American Furniture service /equipment Warehouse Office Furnishings American Furniture Misc office furnishings Gobin's Business S Down payment - office furniture Gobin's Business S Office Furnishings Gobin's Business 8 Accounting furniture Gobin's Business S Engineering furniture Imunications ITelephone service /equipment Chairman Cafeteria Furniture lee Thompson I iors Window coverings t start heart defib 22,688 4,516 15,000 99,705 18,500 15.000 Page 3 Fixed Assets Register EUPEC RMS 10- 2005e, Investments +f Page: I of I I 1III 11I IIIIIII 11111111111111111111111111111111 01/04/2006 04:28 SPECIAL WARRANTY DEED THIS DEED, dated December 12, 2005 between Pueblo Development Foundation a corporation duly organized and existing under and by virtue of the laws of the State of Colorado ,grantor,and City of Pueblo, a Municipal Corporation whose legal address is 1 City Hall Place, Pueblo, CO 81003 of the *County of Pueblo and State of Colorado , grantee(s): WITNESS, that the grantor, for and in consideration of the sum of Ten Dollars and other good and valuable consideration SEREM, the receipt and sufficiency of which is hereby acknowledged, has granted, bargained, sold and conveyed, and by these presents does grant, bargain, sell, convey and confirm unto the grantee(s) its MWK, successors and assigns forever, all the real property, together with improvements, if any, situate, lying and being in the County of Pueb and State of Colorado, described as follows: Lot 38, Pueblo Memorial Airport Industrial Park Subdivision Documentary Fee - none - Consideration less than $500.00 also known by street and number as: 31965 United Avenue, Pueblo, CO 81001 assessor's schedule or parcel number: 3 3 0 0 210 0 8 TOGETHER with all and singular the hereditaments and appurtenances thereunto belonging, or in anywise appertaining, the reversion and reversions, remainder and remainders, rents, issues and profits thereof, and all the estate, right, title, interest, claim and demand whatsoever of the grantor, either in law or equity, of, in and to the above bargained premises, with the hereditaments and appurtenances; TO HAVE AND TO HOLD the said premises above bargained and described with the appurtenances, unto the grantee(s), heirs, successors and assigns forever. The grantor, for itself, its successors and assigns does covenant and agree that it shall and will WAR- RANT AND FOREVER DEFEND the above bargained premises in the quiet and peaceable possession of the grantee(s), its I" successors and assigns, against all and every person or persons claiming the whole or any part thereof, by, through or under the the grantor has caused its corporate name to be hereunto subscribed by its Resident, and its fixed, attested by its Secretary, the day and year first above written. i 4 j=� f - Pueblo Development $ oundation Qy ! ♦ • S. Sretary 1t .. �.1. Prevdew ♦ �iiii111tI!tr STATE OF COLORADO l County of Pueblo ) as. The foregoing instrument was acknowledged before this e ) E. day of December y� z0 A 5 \ b Joseph A. Fortino as C + ' 4 j y .'32 4Pr7aenZ an d Robert L. Root as 14 w.StaCY. of Pueblo Development Foundation w 1��tf�Lae Witness my hand and official seal. My commission expires: .... nnl -If in Denver, insert "City and ". Name and Address of Persoo Creating Newly Created Legal lhscriptiov (§ 38- 35106.5, CRS.) No. 16B. Rev. 4-94. SPECIAL WARRANTY DEED (Corpontlon) J Bradford Publishing, 1743 Wazee Sr. Denven CO 80202 — (303) 292-2500 — www. bmdfordpubhAing.con, — 9 -01