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HomeMy WebLinkAbout13160RESOLUTION NO. 13160 A RESOLUTION APPROVING AN EMPLOYMENT AGREEMENT BETWEEN PUEBLO, A MUNICIPAL CORPORATION AND GOODRICH CORPORATION, A UTC AEROSPACE SYSTEMS COMPANY AND SUBSIDIARY OF UNITED TECHNOLOGIES CORPORATION, A DELAWARE CORPORATION, RELATING TO A JOB CREATING CAPITAL IMPROVEMENT PROJECT AND AUTHORIZING THE PRESIDENT OF CITY COUNCIL TO EXECUTE SAID AGREEMENT AND TRANSFERRING $1,416,800 FROM THE 1992-2016 SALES AND USE TAX CAPITAL IMPROVEMENT PROJECTS FUND BE IT RESOLVED BY THE CITY COUNCIL OF PUEBLO, that: SECTION 1. The City Council finds and determines that the expenditure of $1,416,800 for the job creating capital improvement project with the Goodrich Corporation, a UTC Aerospace Systems Company and subsidiary of United Technologies Corporation, a Delaware Corporation, described in the attached employment agreement meets and complies with the criteria and standards established by Ordinance No. 7836 and will create employment opportunities justifying the expenditure of public funds. SECTION 2. The employment agreement dated as of February 2, 2015 between Pueblo, a Municipal Corporation and Goodrich Corporation, a UTC Aerospace Systems Company and subsidiary of United Technologies Corporation, a Delaware Corporation, relating to a job creating capital improvement project, a copy of which is attached hereto (“Employment Agreement”), having been approved as to form by the City Attorney, is hereby approved. The President of City Council is authorized to execute and deliver the Employment 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 $1,416,800 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 for training purposes as described in the Employment Agreement. The funds authorized to be transferred and expended shall be held by the City and released, disbursed and paid by the Director of Finance in accordance with the terms of the Employment Agreement. 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 the attached Employment Agreement which are necessary or appropriate to effectuate the transactions described therein. SECTION 5. This Resolution shall become effective immediately upon final passage. INTRODUCED: _ February 2, 2015 BY: Dennis Flores City Clerk’s Office Item # C-1 Background Paper for Proposed Resolution COUNCIL MEETING DATE: February 2, 2015 TO: President Stephen G. Nawrocki and Members of City Council CC: Sam Azad, City Manager VIA: Gina Dutcher, City Clerk FROM: Daniel C. Kogovsek, City Attorney SUBJECT: A RESOLUTION APPROVING AN EMPLOYMENT AGREEMENT BETWEEN PUEBLO, A MUNICIPAL CORPORATION AND GOODRICH CORPORATION, A UTC AEROSPACE SYSTEMS COMPANY AND SUBSIDIARY OF UNITED TECHNOLOGIES CORPORATION, DELAWARE CORPORATION, RELATING TO A JOB CREATING CAPITAL IMPROVEMENT PROJECT AND AUTHORIZING THE PRESIDENT OF CITY COUNCIL TO EXECUTE SAID AGREEMENT AND TRANSFERRING $1,416,800 FROM THE 1992-2016 SALES AND USE TAX CAPITAL IMPROVEMENT PROJECTS FUND SUMMARY: Attached is a Resolution which approves an employment agreement with Goodrich Corporation, a UTC Aerospace Systems Company and subsidiary of United Technologies Corporation, a Delaware corporation (“Goodrich”) and which also authorizes the expenditure of $1,416,800 from the Half-Cent Sales Tax Fund. PREVIOUS COUNCIL ACTION: None. BACKGROUND: Goodrich currently employs 198 employees at its manufacturing plant located at the Airport Industrial Park. The company commits to increasing the number of employees by forty-six (46) according to the following schedule: Employment Commitment Dates Minimum Number of Employees Year 1: 10-1-15 through 9-30-16 213 Year 2: 10-1-16 through 9-30-17 217 Year 3: 10-1-17 through 9-30-18 225 Year 4: 10-1-18 through 9-30-19 234 Year 5: 10-1-19 through 9-30-20 244 Years 6-10: 10-1-20 through 9-30-25 244 The total economic incentive of $1,416,800 will be expended as follows. $1,380,000 will be used by the company to acquire manufacturing equipment. The City will retain a security interest in the production equipment purchased with the incentive proceeds. The employment agreement also provides that the City will transfer $36,800 to the company for training purposes. FINANCIAL IMPLICATIONS: The expenditure of $1,416,800 from the City’s Half-Cent Sales Tax Fund. BOARD/COMMISSION RECOMMENDATION: Not applicable. STAKEHOLDER PROCESS: Not applicable. ALTERNATIVES: Failure to approve this Resolution will result in the company expanding its manufacturing operations in another location. RECOMMENDATION: The Pueblo Economic Development Corporation recommends approval of this Resolution. Attachments: February 2, 2015 Employment Agreement AGREEMENT THIS AGREEMENT entered into as of this 2nd day of February, 2015 between Pueblo, a municipal corporation (the "City") and Goodrich Corporation, a UTC Aerospace Systems Company, acting by and through its Landing Systems business unit (Wheels & Brakes) (the "Company"). WHEREAS, Company has expressed a willingness to expand its manufacturing facilities located at 110 William White Blvd., Pueblo, CO 81001 at 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, and WHEREAS, Company's business plan, as it pertains to Pueblo County, is centered on the manufacture of carbon fiber brake products for distribution outside of 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 $82 million in fixed assets in a manufacturing facility it will locate within the City of Pueblo or the Pueblo Memorial Airport Industrial Park, and to provide the employment described in section 4 of this Agreement; and 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 Years" means October 1, 2015 through September 30, 2025. "Equipment" means the manufacturing machinery and trade fixtures and other related personal property 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 the manufacturing center and business administration offices located at the Pueblo Memorial Airport Industrial Park, having a street address of 110 William White Blvd., 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-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 or 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. "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 One Million Four Hundred Sixteen Thousand Eight Hundred Dollars ($1,416,800) ("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, and (iii) this Agreement executed by authorized officers of Company. The date of the last to occur of the filings required under (i), (ii), and (iii) of this section 2(b) shall be referred to herein as "Closing". If either the Effective Date or Closing does not occur on or before December 31, 2014, 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 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 therefor and certificates of delivery and installation in the Facility. Company shall not submit requests for payment which exceed in the aggregate (a) U.S. $1,380,000 for manufacturing equipment and (b) U.S. $36,800 for training. 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 $1,380,000 for manufacturing equipment and $36,800 for training for a total of$1,416,800 (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 46 additional jobs at the Facility. The average salary of all Full-Time Employees at the Facility over the course of Employment Commitment Years 1 through 5, shall be $46,950 annually, not including benefits. The average salary shall include base salary, overtime and bonus and does not assume attrition of the new jobs during Years 1 through 5. Therefore, Company represents, covenants, and agrees it will continuously conduct its business operations at the Facility and employ the number of Full-Time Employees set forth below(collectively, the "Employment Commitment"): Employment Commitment Dates Minimum Number of Employees Year 1: 10-1-15 through 9-30-16 213 Year 2: 10-1-16 through 9-30-17 217 Year 3: 10-1-17 through 9-30-18 225 Year 4: 10-1-18 through 9-30-19 234 Year 5: 10-1-19 through 9-30-20 244 Years 6-10: 10-1-20 through 9-30-25 244 (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 fail to meet 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 ten (10) year period starting on the beginning of the first Employment Commitment Date and ending one hundred twenty (120) 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 employment commitment stated in Section 4 supra. and then multiplying the result by $770.00 For example, if for the second quarter of Year 3 the number of Quarterly Employees is 210, the amount payable by Company to City on or before the fifteenth (15th) day of the next calendar month would be (225 - 210) x $770.00 = $11,550.00. 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 by written notice to Company. 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 the 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 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, subject to sections 7(a) below, the entire balance of Company's Repayment Obligation shall become due and payable, upon written notice, 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"), such approval not to be unreasonably withheld. 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. 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 the 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 decision by the City Council of whether or not to grant request for relief from Company's Repayment Obligation shall be final and binding on Company, and not subject to judicial review. Any such decision 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. (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. 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, 3`d Floor, Pueblo, CO 81003; (b) if to Company, Attention: Plant Manager, 110 William White Blvd., Pueblo CO 81001; with copy to Crystal B. Gray, Associate General Counsel —Landing Systems, 2730 West Tyvola Rd, Charlotte,NC 28217 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. Notwithstanding the foregoing, Company may assign any and all of its rights and obligations hereunder upon notification to City to (i) any Company-affiliated entity; (ii) a third party pursuant to any sale or transfer of all or part of the assets or business of Company; or (iii) a third party pursuant to or in connection with any financing, merger, consolidation, change in control, reorganization or other business combination involving Company. 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, the 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. Except to the extent of the City's obligation to disburse City Funds for the benefit of Company in accordance with this Agreement, City, its officers, agents or employees shall not be liable to Company for other damages, and in no event shall City be liable for 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 the 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 failure to disburse City Funds for the benefit of Company as provided in Section 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. In no event shall Company be liable for 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 Company or the failure or delay of Company in the performance of any covenant or provision under this Agreement on its part to be performed. In consideration of the Company entering into this Agreement, City hereby waives and discharges City, its officers, agents and employees from all claims for any and all such damages. 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. 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. [S E A L] Attest: ' Puebl• -: 'mcipal Co 4p;•4-- 3 City rk President of the City Council [S E A L] Goodrich Corporation, a UTC Aerospace Systems Company, acting by and through its Landing Systems business unit (Wheels & Brakes) 1 Attest: 117.4 By 9J-J Name: Name: ,1 Title: 4042.A.-t,,,., Title: V E d Ce co I dr,S