HomeMy WebLinkAbout11717RESOLUTION NO. 11717
A RESOLUTION APPROVING THE AGREEMENT
BETWEEN PUEBLO, A MUNICIPAL CORPORATION, AND
BIG R STORES, INC. RELATING TO A JOB CREATING
CAPITAL IMPROVEMENT PROJECT, AUTHORIZING THE
PRESIDENT OF THE CITY COUNCIL TO EXECUTE
SAME, AND TRANSFERRING $564,000.00 FROM THE
1992 -2011 SALES AND USE TAX CAPITAL
IMPROVEMENT PROJECTS FUND THEREFOR
BE IT RESOLVED BY THE CITY COUNCIL OF PUEBLO, that:
SFrTinN 1
The City Council finds and determines that the expenditure of $564,000.00 for
the job creating capital improvement project with Big R Stores, Inc. described in the
attached Agreement, meets and complies with the criteria and standards established by
Ordinance No. 6381 and will create employment opportunities justifying the expenditure
of public funds.
SECTION 2.
The Agreement dated as of October 1, 2009 between the City of Pueblo and Big
R Stores, 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
Agreement in the name of the City and the City Clerk is directed to affix the seal of the
City thereto and attest same.
SFrTin i
Funds in an amount of $564,000.00 are hereby authorized to be transferred,
expended and made available to Big R Stores, Inc. out of the 1992 -2011 Sales and Use
Tax Capital Improvement Projects Fund for the sole purpose of the job creating capital
improvement project and in the manner described in the Agreement. The funds hereby
authorized to be transferred and expended shall be held by the City and released,
disbursed and paid by the Director of Finance to or for the benefit of Big R Stores, Inc.
after receipt of written requests for payment required by paragraph 2(c) of the
Agreement.
SECTION 4.
The officers of the City are directed and authorized to perform any and all acts
consistent with the intent of this Resolution and attached Agreement to effectuate the
transactions described therein.
SECTION 5.
This Resolution shall become effective upon final approval and passage.
A77TSTDD SY:
CITY CLERK
INTRODUCED: October 13, 2009
BY: Michael Occhiato
COUNCILPERSON
APPR 0' } �-
PRESIDENTaf City Council
ED
Background Paper for Proposed
RESOLUTION
AGENDA ITEM # R -1
DATE: October 13, 2009
DEPARTMENT: Law Department
TITLE
A RESOLUTION APPROVING THE AGREEMENT BETWEEN PUEBLO, A
MUNICIPAL CORPORATION, AND BIG R STORES, INC. RELATING TO A JOB
CREATING CAPITAL IMPROVEMENT PROJECT, AUTHORIZING THE
PRESIDENT OF THE CITY COUNCIL TO EXECUTE SAME, AND
TRANSFERRING $564,000.00 FROM THE 1992 -2011 SALES AND USE TAX
CAPITAL IMPROVEMENT PROJECTS FUND THEREFOR
ISSUE
Should City Council approve the Agreement between the City and Big R Stores,
Inc.?
RECOMMENDATION
PEDCO recommends that City Council approve the Agreement.
BACKGROUND
Big R Stores, Inc., a Colorado corporation ( "Company ") intends to locate a
distribution center and its business offices within either the City of Pueblo or the
Pueblo Memorial Airport Industrial Park. The Agreement authorizes the
expenditure of $564,000.00 from the 1992 -2011 Sales and Use Tax Capital
Improvement Projects Fund ( "Funds ") as an employment incentive for 40 full -time
employees whose annual compensation shall average at least $41,500. Funds
will be used for the purchase of equipment, building and /or building remodeling.
If Company defaults in its employment commitment, Company will repay the
Funds on a pro -rata basis. The employment commitment date is July 1, 2013
and the repayment period is 7 -years after the employment commitment date.
Company's repayment obligation will be secured by a first security interest in
equipment and second deed of trust herein on the building. The Company's
performance is also personally guaranteed by the owners of the Company.
FINANCIAL IMPACT
See Background.
AGREEMENT
THIS AGREEMENT entered into as of October 1, 2009 between Pueblo, a municipal
corporation (the "City ") and Big R of Lamar, Inc., a Colorado corporation (the "Company ").
WHEREAS, Company has expressed a willingness to locate a distribution center and its
business administration offices within the City of Pueblo or the Pueblo Memorial Airport Industrial
Park, and in furtherance thereof has through the Pueblo Economic Development Corporation made
application for funds with the City, and
WHEREAS, the City has approved such application and will make funds available to
Company subject to and upon the terms and conditions of this Agreement.
NOW, THEREFORE, in consideration of the foregoing and mutual covenants contained
herein, and other good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, City and Company agree as follows:
1. The following terms as used in this Agreement shall have the following meaning
unless the context clearly indicates otherwise:
"Continuing Guaranty" means the Continuing Guaranty attached hereto.
"Employment Commitment Date" means July 1, 2013.
"Equipment" means new business personal property and trade fixtures (including, but not
limited to forklifts, trucks, trailers, pickups, fixtures, racking, computers, office furniture, fax
machines, scanners, copiers, and other tangible personal property directly related to expenditures by
Company to begin operation of its business) acquired after August 2, 2009 and installed, kept,
maintained and used by Company in or in conjunction with the Facility having an exhaustible useful
life of more than five (5) years which can be determined or estimated with reasonable accuracy.
"Equipment" does not mean computer software or computer software development costs.
"Equipment" also includes the cost for the purchase of the building and the cost of building
remodeling, including but not limited to electrical, plumbing, lighting, heating, cooling and other
building improvements, new offices, docks, doors, paint and other direct improvements to the
Facility.
"Facility" means the distribution center and business administration offices located at the
Pueblo Memorial Airport Industrial Park, having a street address of 350 Keeler Parkway, Pueblo,
Colorado, 81001, or such other facility located within the City of Pueblo or the Pueblo Memorial
Airport Industrial Park, wherein Company will conduct its business operations.
"Full -Time Employee" means a person who actually performs work at the Facility for not less
than thirty -two (32) hours per week whether employed by Company or by an outside entity acting as
an agency to provide Full -Time Employees for Company.
"Quarter" means three consecutive calendar months commencing January 1, April 1, July I
and October 1 of each calendar year.
"Quarterly Employees" means the sum of the aggregate number of Full -Time Employees on
each business day of a Quarter, divided by the sum of the business days in such Quarter.
2. If Company is not in default under this Agreement, City will advance to or for the
benefit of Company funds in the amount of $564,000.00 (the "City Funds "), subject to and
contingent upon the following conditions and covenants which Company agrees to perform and
comply with:
(a) City Funds will be advanced by City to Company for the acquisition of
Equipment by Company at fair market value from a reputable vendor in an arms- length transaction.
Acquisition of equipment from any person or entity related to or a subsidiary of Company is not an
arms - length transaction.
(b) Company shall file in the office of the City Clerk copies of the following: (i)
Company's certificate or other evidence of authority to transact business in the State of Colorado
issued by the Colorado Secretary of State, (ii) certified copy of the resolution of the governing board
of Company approving this Agreement and the Security Agreement, and authorizing its officers to
execute and deliver this Agreement, Security Agreement, and related documents in the name of
Company, (iii) executed Continuing Guaranty, and (iv) evidence reasonably satisfactory to City that
Company will commence business operations at the Facility. The date of the last to occur of the
filings required under (i), (ii), (iii) and (iv) of this paragraph 2(f) shall be referred to herein as
"Closing." If Closing does not occur on or before December 31, 2009, or such later date as Company
and City shall mutually agree, City, at its sole option, may terminate this Agreement and City and
Company shall thereafter be released and discharged from all obligations hereunder.
(c) As a conditions precedent to the disbursement of City Funds for the
acquisition of Equipment, Company shall file (i) with the City Clerk the documents described in
Paragraph (b) above, and (ii) with the City's Director of Finance written request for payment certified
to be true and correct by an officer of Company that the amounts included in the request for payment
have not been included in any prior request for payment and are for the actual cost of Equipment,
identifying the Equipment for which payment is sought, including invoices therefor and certificates
of delivery and installation in the Facility, together with documentation, satisfactory to City,
establishing such Equipment has an exhaustible useful life of five (5) or more years. All City Funds,
if any, received by Company shall be deposited in a separate account and held in trust by Company
for the sole and only purpose of paying for the purchase of Equipment.
3. Company acknowledges and agrees that the primary purpose of City in entering into
this Agreement and the sole benefit to the City for making City Funds available to Company
hereunder is the creation of jobs. Therefore, Company represents, covenants, and agrees that
Company will on and after the Employment Commitment Date continuously conduct its business
operations at the Facility and employ not less than forty (40) Full -Time Employees at the Facility
whose annual compensation shall average at least $41,500.00. Company will use good faith efforts
in accordance with its sound business practices to employ residents of the City of Pueblo as Full-
2
Time Employees including, without limitation, engaging in reasonable programs and posting of
employment openings in the City of Pueblo (collectively the "Employment Commitment ").
4. Notwithstanding anything contained in this Agreement to the contrary, if Company
shall for any reason default in its Employment Commitment set forth in paragraph 3, Company shall
repay to City a pro -rata share of the City Funds advanced by City under paragraph 2 hereof based
upon the number of Full -Time Employees employed by Company at the Facility (the "Repayment
Obligation "), as follows:
(a) During the seven (7) year period starting on the Employment Commitment
Date and ending eighty -four (84) months thereafter (the "Repayment Period ") Company shall pay to
City an amount each Quarter equal to the Quarterly Employees less than forty (40) Full -Time
Employees employed at the Facility by Company multiplied by $503.57 (the "Company's Quarterly
Payments "). For example, if for the second Quarter of the third year after the Employment
Commitment Date such Quarterly Employees is 30, the amount payable by Company to City on or
before the fifteenth (15th) day of the next calendar month would be (40 - 30) x $503.57 = $5,035.70.
(b) Company's Quarterly Payments, if any, shall be paid to the City without
notice, demand, deduction or setoff on or before the fifteenth (15th) day of the month after the end of
each Quarter during the Repayment Period and for one month thereafter at the office of the Director
of Finance of City, 1 City Hall Place, Pueblo, Colorado, 81003, or such other person or location as
the City may designate. All past due Company's Quarterly Payments shall bear interest at the rate of
eight percent (8 %) per annum ( "Default Interest ") until paid.
(c) Within fifteen (15) days after the end of each Quarter after the Employment
Commitment Date and for one calendar month after the Repayment Period, Company will submit to
City's Director of Finance Company's statements showing the Quarterly Employees for the preceding
Quarter and their annual salary, together with the basis upon which Quarterly Employees and
Company's Quarterly Payment, if any, were computed certified by an officer of the Company to be
true and correct. For purposes of verifying Company's employment and salary, City shall have
access to Company's records relating to Company's employees employed at the Facility.
(d) Notwithstanding anything contained in this Paragraph 4 to the contrary, if
Company defaults in its Employment Commitment and Company's Repayment Obligation, and such
default is not cured within sixty (60) days after written notice specifying the default is given by City
to Company, then in such event, the entire balance of Company's Repayment Obligation shall
become due and payable, without notice, notice being hereby expressly waived, together with
Default Interest from the date of default, and for such purpose, the entire balance of Company's
Repayment Obligation shall be an amount equal to 40 times $503.57 multiplied by the remaining
Quarters of the Repayment Period plus the amount of Company's unpaid Quarterly Payments, if any,
but in no event more than the amount of City Funds advanced by City under paragraph 2 hereof plus
Default Interest as herein provided. Company's Repayment Obligation is absolute and unconditional
and shall not be abated, reduced, diminished, modified, withheld or otherwise offset for any cause or
reason whatsoever
5. Company's Repayment Obligation under this Agreement shall be deemed to be a debt
3
of Company payable to City until Company performs and discharges its obligations hereunder
including its Employment Commitment contained in Paragraph 3 and its Repayment Obligation
contained in Paragraph 4. Company's obligations under this Agreement including its Employment
Commitment and Repayment Obligation shall be secured by a perfected first security interest in the
Equipment. Contemporaneously with the execution of this Agreement, Company shall execute and
deliver to City Company's Security Agreement, Financing Statement and other documents required
to perfect a first security interest in the Equipment, and a second mortgage security interest in the
Facility, all in form and content approved by City's Attorney (the "Security Agreement ").
6. (a) Prior to instituting any proceeding to enforce Company's Repayment
Obligation under Paragraph 4, City shall notify Company in writing of its intention to institute such
proceedings. Company may request relief from its Repayment Obligation by delivering to City
within twenty (20) days after date of City's notice, Company's written request for relief specifying
the grounds upon which such relief is sought together with documents supporting said grounds.
Within ninety (90) days after receipt of Company's request, City will schedule a meeting with the
City Council at which Company may appear. City will notify Company of the time and place of the
meeting. Failure of Company to timely deliver its complete written request for relief or to appear at
the scheduled meeting with the City Council shall entitle City to immediately institute proceedings to
enforce Company's Repayment Obligation.
(b) City Council may or may not, in its sole and absolute discretion, relieve
Company, in whole or in part, from Company's Repayment Obligation. Any action taken by the City
Council relating to a request for relief shall be final and binding on Company, and not subject to
judicial review. Any such action by City Council is, and shall constitute, a legislative measure.
Nothing contained in this paragraph 6 shall grant or be construed to grant to Company any right or
claim to relief from its Repayment Obligation or hearing with respect thereto.
(c) No delay by the City in scheduling a meeting, or failure by City to exercise its
right to enforce this Agreement, including Company's Repayment Obligation, and no partial or single
exercise of that right, shall constitute a waiver of that right.
7. In the event of any litigation arising under this Agreement, the court shall award to the
prevailing party its costs and reasonable attorney fees. Exclusive venue for any such litigation shall
be Pueblo County, 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.
8. This Agreement expresses the entire understanding of the parties and supersedes and
abrogates any and all prior dealings and commitments, whether oral or written, with respect to the
subject matter of this Agreement and may not be amended or modified except in writing signed by
City and Company. Any waiver of any provision of this Agreement must be in writing and signed by
the party whose rights are being waived. No waiver of any breach of any provision hereof shall be or
be deemed to be a waiver of any preceding or subsequent breach of the same or any other provision
of this Agreement. The failure of either party to enforce or seek enforcement of the terms of this
Agreement following any breach shall not be construed as a waiver of such breach.
El
9. This Agreement shall be construed in accordance with and be governed by the laws of
the State of Colorado without regard to conflict of law principles.
10. Any notices 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, or
(b) if to the Company, Big R of Lamar, Inc., 310 East Washington Street, Lamar,
Colorado, 81052,
or to such other person or address as either party shall specify in written notice given to the other
party pursuant to the provisions of this paragraph 10.
11. Time is of the essence hereof. This Agreement shall be binding upon and inure to the
benefit of the parties and their respective successors and assigns, provided Company may not assign
this Agreement or any interest herein without the express written consent of the City, which consent
may be arbitrarily withheld, conditioned or delayed. Any assignment or attempted assignment of this
Agreement by Company without such consent shall be null and void. However, if Company
proposes to assign this Agreement to a purchaser of its business, the transaction is an arms- length
transaction, the purchaser assumes and agrees to perform Company's obligations under this
Agreement, and the assignment shall not waive, release or discharge Guarantor's obligations under
the Continuing Guaranty, then, in such events, the assignment may be made with the express written
consent of the City, which consent may not be unreasonably withheld. The City shall have the right
to determine that said proposed purchaser is credit worthy, has sufficient business experience in the
retail sector, and is capable of performing Company's obligations under this Agreement.
12. The persons signing this Agreement in the name of and on behalf of Company
represent and warrant that they and Company have the requisite power and authority to enter into,
execute, and deliver this Agreement, and that this Agreement is a valid legally binding obligation of
Company enforceable against Company in accordance with its terms.
13. Company represents and warrants that no person, entity, or organization has been
employed or retained or will receive or be paid, directly or indirectly, any commission, percentage,
contingent fee or any other remuneration payment or receipt of which is contingent upon approval of
this Agreement or City's advancement of City Funds to Company hereunder. For breach or violation
of this warranty, City shall have the right to terminate this Agreement, or recover the full amount of
such commission, percentage, contingent fee or other remuneration, and /or to seek such other
remedies legally available to City, which remedies shall be cumulative.
14. In no event shall City, its officers, agents or employees be liable to Company for
damages, including without limitation, compensatory, punitive, indirect, special or consequential
damages, resulting from or arising out of or related to this Agreement or the performance or breach
thereof by City or the failure or delay of City in the performance of any covenant or provision under
this Agreement on its part to be performed. In consideration of City entering into this Agreement,
Company hereby waives and discharges City, its officers, agents and employees from all claims for
any and all such damages. No breach, default, delay or failure of City under this Agreement shall be
or be construed to be a waiver, discharge or release of Company's Repayment Obligation under
paragraph 4 hereof with respect to the amount of City Funds actually advanced or paid by City to or
for the benefit of Company pursuant to paragraph 2 hereof.
Notwithstanding the above, in the event of breach of this Agreement by the City, Company
shall have the right to request specific performance of this Agreement by the City, but not damages.
15. If any provision of this Agreement is declared by a court of competent jurisdiction to
be invalid or unenforceable, such determination shall not affect the other provisions of this
Agreement which shall remain in full force and effect.
16. Neither party shall be, or hold itself out as, agent of the other or as joint venturers
under this Agreement.
17. Each party acknowledges that this Agreement was fully negotiated by the parties and,
therefore, no provision of this Agreement shall be interpreted against any party because such party or
its legal representative drafted such provision.
18. The provisions of this Agreement are for the exclusive benefit of the parties hereto
and their successors and permitted assigns, and no third party shall be a beneficiary, or have any
rights by virtue of this Agreement.
19. This Agreement may be executed in any number of counterparts, and each such
counterpart shall be deemed for all purposes to be an original, and all such counterparts shall
together constitute but one and the same original.
.Executed at Pueblo, Colorado, the day and year first above written.
[S -EAL] _
Attest �� 1
City t6erk
Pueblo, a Municipal Corporation
B �,e� t�7z
President of the City Counc'
[SEAL]
Attes
Name: Mike Carroll
Title: Secretary 46 7'
BIG R OF LAMAR, INC.
a Colora orporation
By
Name: Dave Blain
Title: President
0
1
CONTINUING GUARANTY
FOR VALUABLE CONSIDERATION, the receipt and sufficiency of which is hereby
acknowledged, and as inducement to the City of Pueblo, a municipal corporation (the "City ") to enter
into the attached Agreement dated as of October 1, 2009 between City and Big R of Lamar, Inc., a
Colorado corporation (the "Company ") (the "Agreement ") and to advance to or for the benefit of
Company the sum of $564,000.00 pursuant to the terms and covenants of the Agreement, the
undersigned Mike Carroll and Dave Blain (the "Guarantors "), individually and jointly,
unconditionally guarantee and promise to pay to City, or order, on demand, in lawful money of the
United States, the full amount of Company's Repayment Obligation described in and in accordance
with the terms and provisions of Paragraph 4 of the Agreement (the "Indebtedness ").
The liability of Guarantors under this Guaranty shall not exceed at any one time the principal
sum of $564,000.00. This is a continuing irrevocable guaranty relating to the Indebtedness,
including successive transactions which shall either continue the Indebtedness or from time to time
modify or renew it. Any payment by Guarantors shall reduce his maximum obligation hereunder.
The obligations of Guarantors hereunder are independent of the obligations of Company, and
a separate action or actions may be brought and prosecuted against Guarantors, individually or
jointly, whether action is brought against Company or whether Company bejoined in any such action
or actions. Guarantors acknowledge that the payment of the Indebtedness may extend beyond six (6)
years from the date of this Agreement. Guarantors hereby waive any defense to the enforcement of
this Guaranty based upon lathes or any statutory or other period of limitation, provided, however,
that any such action to enforce this Guaranty shall be commenced on or before December 31, 2020.
Guarantors authorize the City, without notice or demand and without affecting their liability
hereunder, from time to time to (a) renew, compromise, extend, accelerate or otherwise change the
time for payment of, or otherwise change or modify the terms of the Indebtedness or any part there-
of; (b) take and hold security for the payment of this Guaranty or the Indebtedness guaranteed, and
exchange, enforce, waive and release any such security; (c) apply such security and direct the order
or manner of sale thereof as City in its discretion may determine; and (d) release or substitute any
one or more of the Guarantors. City may without notice assign this Guaranty in whole or in part.
Guarantors waive any right to require City to (a) proceed against Company; (b) proceed
against or exhaust any security held from Company; or (c) pursue any other remedy in City's power
whatsoever. Guarantors waive any defense arising by reason of any disability or other defense of
Company or by reason of the cessation from any cause whatsoever of the liability of Company. Until
the Indebtedness of Company to City shall have been paid in full, Guarantors shall have no right of
subrogation, and waive any right to enforce any remedy which City now has or may hereafter have
against Company, and waive any benefit of, and any right to participate in any security now or
hereafter held by City. Guarantors waive all presentments, demands for performance, notices of non-
performance, protests, notices of protest, notice of dishonor, and notices of acceptance of this
Guaranty.
Any debts or other financial obligations of Company now or hereafter held by Guarantors are
hereby subordinated to the Indebtedness of Company to City and such debts or other financial
obligations of Company to Guarantors, if City so requests, shall be collected, enforced and received
by Guarantors as trustee for City and be paid over to City on account of the Indebtedness of Company
to City but without reducing or affecting in any manner the liability of Guarantors under the other
provisions of this Guaranty.
Guarantors agree that it is not necessary for City to inquire into the powers of Company or the
officers, directors, or agents acting or purporting to act on its behalf, and the Indebtedness made or
created in reliance upon the professed exercise of such powers is guaranteed hereunder.
Guarantors agrees to pay a reasonable attorneys' fee and all other costs and expenses which
may be incurred by City in the enforcement of this Guaranty.
Guarantors agree that this Guaranty is a contract entered into and to be performed in Pueblo
County, Colorado. The District Court for the County of Pueblo, State of Colorado shall have
exclusive jurisdiction over any suit or action which involves this Guaranty and exclusive venue for
any such suit or action shall be Pueblo County, Colorado. Guarantors consent to the personal
jurisdiction of that Court and agrees that service of process may be made upon Guarantor either
within or without the State of Colorado. Guarantors waive all rights to jury trial.
Any notice hereunder shall be sufficiently given if given personally or mailed by certified
mail, postage prepaid, addressed:
(a) if to City, City Manager, City of Pueblo, 1 City Hall Place, Pueblo, Colorado,
81003, or
(b) if to Guarantors, at the addresses shown after their respective signatures
hereon,
or to such other addresses as any party hereto shall specify in written notice to the other parties.
Time is of the essence hereof. This Guaranty shall be binding upon and inure to the benefit of
City and Guarantor and their respective heirs, personal representatives, successors and assigns. The
plural shall include the singular.
IN WITNESS WHEREOF the undersigned Guarantors have executed this Guaranty in Pueblo,
Colorado this Ist day of October , 2009.
Name: Mike Carroll Name: Dave ain
Signatur O Signature:
Address: (
!J — J Address: qll D W ✓VI U_ It h+� b
2 � /Pl Z
STATE OF COLORADO )
) ss.
COUNTY OF PUEBLO ) nn
The foregoing instrument was acknowledged before me this day of lllr
2009 by Mike Carroll and Dave Blain.
Witness my hand and official seal.
My commission expires:
[SEAL]
Notary Public