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Substitued Copy
September 20, 2013
Background Paper for Proposed
RESOLUTION
DATE: September 23, 2013 AGENDA ITEM # Q-2
DEPARTMENT: LAW DEPARTMENT
DANIEL C. KOGOVSEK, CITY ATTORNEY
TITLE
A RESOLUTION APPROVING AN AGREEMENT BETWEEN PUEBLO, A MUNICIPAL
CORPORATION, AND DUBWORKS SC, LLC, A COLORADO LIMITED LIABILTY
COMPANY RELATING TO A JOB CREATING CAPITAL IMPROVEMENT PROJECT,
AUTHORIZING THE PRESIDENT OF THE CITY COUNCIL TO EXECUTE SAID
AGREEMENT AND TRANSFERRING $545,000 FROM THE 1992-2016 SALES AND
USE TAX CAPITAL IMPROVEMENT PROJECTS FUND THEREFOR
ISSUE
Should City Council approve an agreement with Dubworks SC, LLC, a Colorado limited
liability company (“Company”) with a seven year employment commitment of twenty-
five (25) employees and the expenditure of $545,000 from the 1992-2016 Sales and
Use Tax Capital Improvement Projects Fund (“Half Cent Tax Fund”)?
BACKGROUND
The Company is a full service architectural woodworking business established in 1986.
Its business model is wood product manufacturing with a focus on commercial cabinetry
and millwork. The Company currently employs approximately 30 employees and
occupies an 18,000 square foot facility in Erie, CO. The Company wishes to open an
additional manufacturing plant in Pueblo.
The $545,000 incentive payment will be used to acquire manufacturing equipment. The
City will retain a security interest in the production equipment purchased with the
incentive proceeds. After a two-year ramp up, the Company commits to employ at least
twenty-five (25) full-time employees whose annual compensation shall average at least
$57,750 for seven (7) years. The Company qualifies for incentives under the City’s Half
Cent Tax Fund criteria ordinance because the vast majority of its products will be sold
outside of Pueblo County.
The incentive agreement is contingent upon the Company locating its manufacturing
facility in the City.
RECOMMENDATION
PEDCO recommends that City Council approve the agreement.
FINANCIAL IMPACT
Payment of $545,000 in Half Cent Tax Funds to Dubworks SC, LLC
Substitued Copy
September 20, 2013
RESOLUTION NO. 12796
A RESOLUTION APPROVING AN AGREEMENT
BETWEEN PUEBLO, A MUNICIPAL CORPORATION, AND
DUBWORKS SC, LLC, A COLORADO LIMITED LIABILTY
COMPANY RELATING TO A JOB CREATING CAPITAL
IMPROVEMENT PROJECT, AUTHORIZING THE
PRESIDENT OF THE CITY COUNCIL TO EXECUTE SAID
AGREEMENT AND TRANSFERRING $545,000 FROM THE
1992-2016 SALES AND USE TAX CAPITAL
IMPROVEMENT PROJECTS FUND THEREFOR
BE IT RESOLVED BY THE CITY COUNCIL OF PUEBLO, that:
SECTION 1.
The City Council finds and determines that the expenditure of $545,000 for the
job creating capital improvement project with Dubworks SC, LLC described in the
attached Agreement, meets and complies with the criteria and standards established by
Section 14-4-85 of the Pueblo Municipal Code and will create employment opportunities
justifying the expenditure of public funds.
SECTION 2.
The Agreement dated September 23, 2013 between Pueblo, a Municipal
Corporation and Dubworks SC, LLC, relating to a job creating capital improvement
project, a copy of which is attached hereto ("Agreement"), 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.
SECTION 3.
Funds in the aggregate amount of $545,000 are hereby authorized to be
transferred, expended and made available out of the 1992 – 2016 Sales and Use Tax
Capital Improvement Projects Fund for the sole purpose of the job creating capital
improvement project authorized herein 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 Dubworks SC, LLC.
SECTION 4.
The officers and staff of the City are directed and authorized to perform any and
all acts consistent with the intent of this Resolution and attached Agreement which are
necessary or desirable to effectuate the transactions described therein.
SECTION 5.
This Resolution shall become effective upon passage and approval.
INTRODUCED: September 23, 2013
BY: Eva Montoya
AGREEMENT
THIS AGREEMENT ( "Agreement ") is entered into as of September 23, 2013 between
Pueblo, a Municipal Corporation (the "City ") and Dubworks SC, LLC a Colorado limited
liability company (the "Company ").
WHEREAS, Company has expressed a willingness to locate a manufacturing facility
within the City of Pueblo, and in furtherance thereof has, through the Pueblo Economic
Development Corporation, made application for funds and other economic incentives to the City,
and
WHEREAS, Company's business plan is centered on manufacturing wood products for
distribution outside of Pueblo County, with some minimal level of sales in Pueblo County
( "Company's Business "), and
WHEREAS, the City has determined that Company's Business will create primary jobs
and will not materially and substantially compete with any existing activity or business within
the City, and
WHEREAS, in connection with its application, Company has committed to invest not
less than U.S. $585,000 in fixed assets in a manufacturing facility it will locate within the City of
Pueblo, and to provide the employment described in section 4 of this Agreement; and
WHEREAS, the City has approved such application and will make certain funds and
other economic incentives available to Company subject to and upon the terms and conditions of
this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the 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:
"Effective Date" means the date of approval of this Agreement by City Council of City.
"Employment Commitment Date" means April 1, 2014.
"Equipment" means the manufacturing equipment, including woodworking equipment
and other related machinery to be acquired, installed and maintained and used by Company in
the Facility and listed on Exhibit A attached hereto and incorporated by reference.
"Facility" means a manufacturing facility located within the City of Pueblo, wherein
Company will conduct its manufacturing operations for production of goods for distribution and
sale outside of Pueblo County, Colorado.
2346011 3
"Full -Time Employee" means a person who actually performs work at the Facility for not
less than thirty -five (35) hours per week whether employed by Company or by an outside entity
acting as an agency to provide Full -Time Employees for Company. The term "Full -Time
Employee" does not include independent contractors nor employees of independent contractors
except employees performing work at the Facility who are employees of an independent
contractor acting as an agency to provide Full -Time Employees for Company.
"Quarter" means three consecutive calendar months commencing January 1, April 1,
July 1 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 aggregate business days in such
Quarter.
"Salary" means direct compensation payable to an employee including vacation pay,
bonuses, overtime compensation and the amount of any pretax benefits paid by the employee
under flexible spending or other qualified plans. The term does not include employer paid
payroll taxes nor benefits such as employer paid health insurance.
"Security Agreement" has the meaning set forth in Section 6 of this Agreement.
2. If Company is not in default hereunder, City will, after the Effective Date,
disburse, for the benefit of Company, funds in an amount not to exceed U.S. $545,000 ( "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 disbursed by City to Company solely for
reimbursement for the acquisition of Equipment by Company at fair market value from a
reputable vendor in an arms- length transaction. Company shall grant to City a perfected first
security interest in all Equipment for which Company receives reimbursement from City by
execution of a Security Agreement which identifies the Equipment in accordance with Section 6
of this Agreement.
(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, together with Company's certificate of good
standing issued by the governmental jurisdiction of Company's formation, (ii) certified copy of
the resolution of the governing board of Company approving this Agreement and authorizing its
officers to execute and deliver this Agreement and related documents in the name of Company,
(iii) this Agreement executed by authorized officers of Company, and (iv) evidence reasonably
satisfactory to City that Company will commence manufacturing operations at the Facility. A
plant tour by representatives of the City after the equipment is installed and the plant is
operational will satisfy the requirement set forth in Subsection 2(b)(iv) of this Agreement. The
date of the last to occur of the filings required under (i), (ii), (iii), and (iv) of this section 2(a)
shall be referred to herein as "Closing ". If either the Effective Date or Closing does not occur on
or before January 1, 2014, or such later date as Company and City shall mutually agree, City, at
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its sole option, may terminate this Agreement and City and Company shall thereafter be released
and discharged from all obligations hereunder.
(c) As conditions precedent to the disbursement of City Funds for the
purchase of manufacturing equipment, (i) Company shall file with the City Clerk the documents
described in subsection (a) above, and (ii) Company shall file with the City's Director of Finance
periodic written requests for payment, certified to be true and correct by an officer of Company,
representing 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 manufacturing equipment, identifying the
specific equipment for which payment is sought, including paid invoices therefore and
certificates of delivery and installation in the Facility. Company shall not submit requests for
payment which exceed in the aggregate U.S. $545,000. The City agrees to disburse funds within
thirty (30) days of submission of the Company's written request for payment, accompanied by
supporting documentation as set forth herein.
3. City and Company stipulate and agree that the total economic incentives provided
by City to Company under this Agreement shall not exceed U.S. $545,000 (the "Total Economic
Incentives ").
4. (a) Company acknowledges and agrees that the primary purpose of City in
entering into this Agreement and the sole benefit to the City for making the Total Economic
Incentives available to Company hereunder is the creation of additional jobs within the City.
Therefore, Company represents, covenants, and agrees that Company will from the third
anniversary of the Employment Commitment Date to the tenth (10 anniversary of the
Employment Commitment Date, continuously conduct its business operations at the Facility and
employ not less than twenty -five (25) Full -Time Employees at the Facility whose annual salary
shall average at least U.S. $57,750 (or approximately $27.76 per hour) (collectively, the
"Employment Commitment ").
(b) Company will use good faith efforts in accordance with its sound business
practices to (i) employ residents of the City of Pueblo or (ii) residents of the County of Pueblo as
Full -Time Employees including, without limitation, engaging in reasonable programs and
posting of employment openings in the City of Pueblo.
5. Notwithstanding anything contained in this Agreement to the contrary, if
Company shall for any reason default in its Employment Commitment, Company shall repay to
City a pro -rata share of the Total Economic Incentives 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 second anniversary of the
Employment Commitment Date and ending eighty -four (84) months thereafter (the "Repayment
Period "), Company shall pay to City a compensating amount for each Quarter in the Repayment
Period calculated by subtracting the number of Quarterly Employees actually employed at the
Facility from the commitment of twenty -five (25) employees and then multiplying the result by
$778.57. For example, if for the second Quarter of the third year after the Employment
Commitment Date the number of Quarterly Employees is 19, the amount payable by Company to
City on or before the fifteenth (15th) day of the next calendar month would be (25 - 19) x
3
$778.57 = U.S. $4,671.42. In no event will Company's repayment obligation exceed the amount
of the economic incentive paid to Company.
(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 following
the end of each Quarter during the Repayment Period at the office of the Director of Finance of
City, 200 S. Main Street, 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 Company to be true and correct. For purposes of verifying Company's employment
and salary, for a period of three (3) years after receipt of a Quarterly Statement from the
Company, City shall have access to and the right to audit Company's records relating to
Company's employees employed at the Facility.
(d) If Company defaults in any of its obligations under this Agreement
including, without limitation, its Repayment Obligation, and such default is not cured within
thirty (30) 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. City may accelerate payment of Company's repayment payments and
Company shall pay to City in a lump sum the amount of all repayment payments which have
become due and would have become due during the remainder of the Repayment Period,
calculated based upon there being no Quarterly Employees for the duration of the Repayment
Period. 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.
6. Company's Repayment Obligation under this Agreement shall be deemed to be a
debt of Company payable to City until Company performs and discharges its obligations
hereunder including, without limitation, its Repayment Obligation. Company's obligations under
this Agreement including its Repayment Obligation shall be secured by a perfected first security
interest in the Equipment, which Equipment shall have a fair market value of not less than the
amount of the City Funds requested for reimbursement for Equipment at the time placed in the
Facility. Prior to any disbursement of funds by City for Equipment, 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 all in form and content approved by
City's Attorney (the "Security Agreement "). Company may be permitted from time to time to
substitute items of replacement Equipment for items of Equipment removed from the Facility,
provided that an amended Security Agreement meeting the requirements of this section is
executed and delivered identifying the substitute items of Equipment and deleting the item of
Equipment being replaced.
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7. (a) Prior to instituting any proceeding to enforce Company's Repayment
Obligation, 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
of City ( "City Council ") at which meeting 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 section 7 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.
8. 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
in and for the 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.
9. 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 any 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.
10. 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.
11. 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, 200 S. Main Street, Pueblo, CO,
81003 with a copy to City Attorney, 1 City Hall Place, Pueblo, CO 81003;
5
(b) if to Company, Jacob C. West, Manager, 5529 Maggiano Pl, Pueblo CO
81005;
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 section 11.
12. 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 City, which
consent shall not be unreasonably withheld. Any assignment or attempted assignment of this
Agreement by Company without such consent shall be null and void. No such assignment nor
City's consent thereto shall release or discharge Company from any obligation or liability under
this Agreement.
13. The persons signing this Agreement in the name of and on behalf of Company
and City each represent and warrant that they have the requisite power and authority on behalf of
their respective entity to enter into, execute, and deliver this Agreement, and that this Agreement
is a valid legally binding obligation of Company and City enforceable in accordance with its
terms.
14. (a) 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 providing the Total Economic Incentives hereunder, or
any part thereof. 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.
(b) Company agrees to indemnify, defend and hold City, its officers, agents
and employees harmless from and against all claims and actions arising from the purchase,
installation or use of the Equipment at the Facility.
15. 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. Except for the City's disbursement of City Funds
for the benefit of Company as provided in Paragraph 2 above, 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.
16. 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.
6
17. None of the parties shall be, or hold itself out as, agent of any other party or as a
partner or joint venturer under this Agreement.
18. 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.
19. 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.
20. 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.
[SEAL]
Attest: Pue • : a . icipal I ‘Vration
City rk
B `�. ��� •- .
President of the City Council
[S E A L]
Dubworks SC, LLC a Colorado limited
liability co • pany
Attest: By 0"■
Name: Name: acob C. West
Title: Title: anager
7
UCC Financing Statement
Colorado Secretary of State
Date and Time: 12/20/2013 15:19:55 PM
Master ID: 20132109830
Validation Number: 20132109830
Amount: $8.00
Debtor: (Organization)
Name: Dubworks SC LLC, a Colorado limited liability
company
Addressl : 5529 Maggiano Place
Address2:
City: Pueblo State: CO ZIP /Postal Code: 81001
Province: Country: United States
Secured Party: (Organization)
Name: Pueblo, a Colorado municipal corporation
Addressl : c/o City Manager
Address2: 1 City Hall Place
City: Pueblo State: CO ZIP /Postal Code: 81003
Province: Country: United States
Collateral
Description:
Skill 1536 C FT NBC Serial # 36067
Elix K3 Serial # 62435
Roxyl 5.5 Serial # 68549
Taylor Return Conveyor Serial # RC -054
Cyclone Dust collection Serial # N83963
Case Clamp Serial # 1512
Holzher sliding table saw Serial # 165/9 -905
Twin head V- Groover Serial # 546037
Compressed Air system (Kaeser) Multiple Serial # 1.8031.0.1003 and 339445
Page 1 of 4
STATE OF COLORADO
UNIFORM COMMERCIAL CODE — SECURITY AGREEMENT
Debtor:
Name: Dubworks SC LLC, a Colorado limited liability company
(Exact Legal Name Required)
Address:
Residence:
No. Street City State
Business: 5529 Maggiano Place Pueblo CO
No. Street City State
Secured Party:
Name: City of Pueblo, Colorado, a Colorado municipal corporation
Address: 1 City Hall Place Pueblo CO
No. Street City State
Debtor, for consideration, hereby grants to Secured Party a security interest in the following property and any and all additions,
accessions and substitutions thereto or therefor (hereinafter called the "COLLATERAL "):
The Collateral is described in Exhibit A which is attached hereto and is incorporated herein by reference.
To secure payment of the indebtedness evidenced by a certain promissory note of even date herewith, payable
to the Secured Party, or order, as follows:
Debtor and Secured Party entered into an Agreement dated September 23, 2013 (the "Agreement ") whereby Debtor
agreed to pay Secured Party the principal sum in an amount not to exceed $545,000.00 (the "Indebtedness ") and to
perform certain other obligations described in the Agreement. Debtor is desirous of securing payment of the
Indebtedness and performance of the Agreement on Debtor's part to be performed. Whenever the words "promissory
note" or "note" are used herein, they shall mean the Agreement.
DEBTOR EXPRESSLY WARRANTS AND COVENANTS:
1. That except for the security interest granted hereby Debtor is, or to the extent that this agreement states that the
Collateral is to be acquired after the date hereof, will be, the owner of the Collateral free from any adverse lien, security inter-
est or encumbrances; and that Debtor will defend the Collateral against all claims and demands of all persons at anytime
claiming the same or any interest therein.
2. The Collateral is used or bought primarily for:
❑ Personal, family or household purposes;
❑ Use in farming operations;
® Use in business.
3. That Debtor's residence, state of organization or chief executive office is as stated herein, and the Collateral will
be kept at
Pueblo Pueblo CO
No. and Street City County State
4. If any of the Collateral is oil, gas, or minerals to be extracted or timber to be cut, or goods which are or are to become
fixtures, said Collateral concerns the following described real estate situate in the County
of and State of Colorado, to wit:
No. eUCC 1205. Rev. 8 UNIFORM COMMERCIAL CODE — SECURITY AGREEMENT (Page 1 of 2)
Bradford Publishing, 1743 Wazee St., Denver, CO 80202 — (303) 292 -2500 — www.bradfordpublishing.com — eForm
5. Promptly to notify Secured Party of any change in the location of the Collateral.
6. To pay all taxes and assessments of every nature which may be levied or assessed against the Collateral.
7. Not to permit or allow any adverse lien, security interest or encumbrance whatsoever upon the Collateral and not
to permit the same to be attached or replevined.
8. That the Collateral is in good condition, and that Debtor will, at Debtor's own expense, keep the same in good
-.:-..sndition and from time to time, forthwith, replace and repair all such parts of the Collateral as may be broken, worn out, or
damaged without allowing any lien to be created upon the Collateral on account of such replacement or repairs, and that the
Secured Party may examine and inspect the Collateral at any time, wherever located.
9. That Debtor will not use the Collateral in violation of any applicable statutes, regulations or ordinances.
10. The Debtor will keep the Collateral at all times insured against risks of loss or damage by fire (including so- called
extended coverage), theft and such other casualties as the Secured Party may reasonably require, including collision in the case
of any motor vehicle, all in such amounts, under such forms of policies, upon such terms, for such periods, and written by such
companies or underwriters as the Secured Party may approve, losses in all cases to. be payable to the Secured Party and the
Debtor as their interest may appear. All policies of insurance shall provide for at least ten days' prior written notice of cancel-
lation to the Secured Party; and the Debtor shall furnish the Secured Party with certificates of such insurance or other evidence
satisfactory to the Secured Party as to compliance with the provisions of this paragraph. The Secured Party may act as attor-
ney for the Debtor in making, adjusting and settling claims under or cancelling such insurance and endorsing the Debtor's name
on any drafts drawn by insurers of the Collateral.
UNTIL DEFAULT Debtor may have possession of the Collateral and use it in any lawful manner, and upon default
Secured Party shall have the immediate right to the possession of the Collateral.
DEBTOR SHALL BE IN DEFAULT under this agreement upon the happening of any of the following events or con-
ditions:
(a) default in the payment or performance of any obligation, covenant or liability contained or referred to herein or
in any note evidencing the same;
(b) the making or furnishing of any warranty, representation or statement to Secured Party by or on behalf of Debtor
witicit proves to have been false in any material respect when made or furnished;
(c) loss, theft, damage, destruction, sale or encumbrance to or of any of the Collateral, or the making of any levy
seizure or attachment thereof or thereon;
(d) death, dissolution, termination of existence, insolvency, business failure, appointment of a receiver of any part of
the property of, assignment for the benefit of creditors by, or the commencement of any proceeding under any bankruptcy or
insolvency laws of, by or against Debtor or any guarantor or surety for Debtor.
UPON SUCH DEFAULT and at any time thereafter, or if it deems itself insecure, Secured Party may declare all
Obligations secured hereby immediately due and payable and shall have the remedies of a secured party under Article 9 of the
Colorado Uniform Commercial Code. Secured Party may require Debtor to assemble the Collateral and deliver or make it
available to Secured Party at a place to be designated by Secured Party which is reasonably convenient to both parties.
Expenses of retaking, holding, preparing for sale, selling or the like shall include Secured Party's reasonable attorney's fees
and legal expenses (including the allocated fees and expenses of in -house counsel) and such portion of the Secured Party's
overhead as it may in its reasonable judgment deem allocable to and includable in such expenses.
No waiver by Secured Party of any default shall operate as a waiver of any other default or of the same default on a
future occasion. The taking of this Security Agreement shall not waive or impair any other security Secured Party may have
or hereafter acquire for the payment of the above indebtedness, nor shall the taking of any such additional security waive or
impair this Security Agreement; but Secured Party may resort to any security it may have in the order it may deem proper, and
notwithstanding any collateral security, Secured Party shall retain its rights of set -off against Debtor.
All rights of Secured Party hereunder shall inure to the benefit of its successors and assigns; and all promises and
duties of Debtor shall bind Debtor's heirs, executors or administrators or Debtor's successors or assigns. If there be more than
one Debtor, their liabilities hereunder shall be joint and several.
Dated: September 23, 2013
Debtor:
Colorado
Debtor's state of organization, or if not a registered organization, chief executive officer
►44 20041342597
Debtor's State Identification No.
No. • UCC 1205. (Page 2 of 2 1
Exhibit A, for
State of Colorado
Uniform Commercial Code — Security Agreement
Debtor — Dubworks SC, LLC, a Colorado limited liability company
Secured Party — City of Pueblo, CO, a Colorado municipal corporation
"Debtor, for consideration, hereby grants Secured Party a security interest and the
following property and any and all additions, accessions and substitutions thereto
and thereafter (hereinafter called the "COLLATERAL "):
Skill 1536 C FT NBC Serial # 36067
Elix K3 Serial # 62435
Roxyl 5.5 Serial # 68549
Taylor Return Conveyor Serial # RC -054
Cyclone Dust collection Serial # N83963
Case Clamp Serial # 1512
Holzher sliding table saw Serial # 165/9 -905
Twin head V- Groover Serial # 546037
Compressed Air system (Kaeser) Multiple Serial # 1.8031.0.1003 and 339445