Loading...
HomeMy WebLinkAbout14071RESOLUTION NO. 14071 A RESOLUTION APPROVING AN EMPLOYMENT AGREEMENT BETWEEN PUEBLO, A MUNICIPAL CORPORATION AND NEW CF&I INC. , A DELAWARE CORPORATION AND APPROVING A PRE-PAYMENT OF ESTIMATED TAXES AGREEMENT BETWEEN PUEBLO, A MUNICIPAL CORPORATION AND PALMER NORTH AMERICA, LLC, A DELAWARE LIMITED LIABILITY COMPANY RELATING TO A JOB CREATING CAPITAL IMPROVEMENT PROJECT, AUTHORIZING THE PRESIDENT OF THE CITY COUNCIL TO EXECUTE SAID AGREEMENTS; TRANSFERRING FIFTEEN MILLION DOLLARS ($15,000,000.00) FROM THE 1992-2021 SALES AND USE TAX CAPITAL IMPROVEMENT PROJECTS FUND AND GRANTING NEW CF&I INC., A DELAWARE CORPORATION, A VARIANCE FROM THE CRITERIA AND STANDARDS ESTABLISHED BY SECTION 14-4-85.3 OF THE PUEBLO MUNICIPAL CODE BE IT RESOLVED BY THE CITY COUNCIL OF PUEBLO, that: SECTION 1. The City Council finds and determines that the expenditure of $15 million for a job creating capital improvement project with New CF&I Inc., a Delaware corporation (“Company”) described in the attached agreements is for a public purpose and in furtherance of a municipal function and will create employment opportunities justifying the expenditure of public funds. SECTION 2. The City Council further finds that the incentives hereby granted to the Company seemingly fail to meet the criteria and standards established by Section 14-4-85 of the Pueblo Municipal Code (PMC) because most of the 1,000 jobs agreed to by the Company are not new primary jobs but are jobs held by current employees. However, the City Council further finds and concludes that PMC Sec. 14-4-85.3(c) of the Criteria Ordinance provides that the City Council “may grant a variance” of the new job requirement “if the City Council determines in its sole discretion” that the new rail mill will create employment opportunities for residents of the City justifying the expenditure of public funds. SECTION 3. The City Council further finds and concludes that good cause exists to grant the Company a variance from the criteria and standards established by Section 14-4-85 of the Pueblo Municipal Code because the retention of one thousand or more employees in the Pueblo workforce at pre-benefit salaries averaging between $60,000 to $65,000, which far exceeds the average salary in Pueblo County, will boost the local economy. SECTION 4. The following agreements dated October 22, 2018, between the City and the Company and Palmer NA, copies of which are attached hereto and incorporated herein by this reference, having been approved as to form by the City Attorney, are hereby approved: a. Employment Agreement with the Company b. Pre-Payment of Estimated Taxes Agreement with Palmer, NA The President of the City Council is authorized to execute and deliver said agreements in the name of the City and the Acting City Clerk is directed to affix the seal of the City thereto and attest same. SECTION 5. Funds in the aggregate amount of $15 million are hereby authorized to be transferred, expended and made available out of the 1992- 2021 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 attached agreements. The funds hereby authorized to be transferred and expended shall be released, dispersed and paid by the City’s Director of Finance as specified in the attached agreements. SECTION 6. The officers and staff of the City are authorized and directed to perform any and all acts consistent with this Resolution and the attached agreements which are necessary or appropriate to implement the transactions described therein. SECTION 7. This Resolution shall become effective immediately upon final passage and approval. INTRODUCED October 22, 2018 BY: Dennis E. Flores MEMBER OF CITY COUNCIL APPROVED: PRESIDENT OF CITY COUNCIL ATTESTED BY: ACTING CITY CLERK City Clerk’s Office Item # Q-1 Background Paper for Proposed Resolution COUNCIL MEETING DATE: October 22, 2018 TO: President Christopher A. Nicoll and Members of City Council CC: Sam Azad, City Manager VIA: Brenda Armijo, Acting City Clerk FROM: Daniel C. Kogovsek, City Attorney SUBJECT: A RESOLUTION APPROVING AN EMPLOYMENT AGREEMENT BETWEEN PUEBLO, A MUNICIPAL CORPORATION AND NEW CF&I INC. , A DELAWARE CORPORATION AND APPROVING A PRE-PAYMENT OF ESTIMATED TAXES AGREEMENT BETWEEN PUEBLO, A MUNICIPAL CORPORATION AND PALMER NORTH AMERICA, LLC, A DELAWARE LIMITED LIABILITY COMPANY RELATING TO A JOB CREATING CAPITAL IMPROVEMENT PROJECT, AUTHORIZING THE PRESIDENT OF THE CITY COUNCIL TO EXECUTE SAID AGREEMENTS; TRANSFERRING FIFTEEN MILLION DOLLARS ($15,000,000.00) FROM THE 1992-2021 SALES AND USE TAX CAPITAL IMPROVEMENT PROJECTS FUND AND GRANTING NEW CF&I INC., A DELAWARE CORPORATION, A VARIANCE FROM THE CRITERIA AND STANDARDS ESTABLISHED BY SECTION 14-4-85.3 OF THE PUEBLO MUNICIPAL CODE SUMMARY: Attached is a Resolution approving and authorizing the President of City Council to sign the following two (2) agreements:  Employment Agreement between the City of Pueblo and New CF&I Inc., a Delaware Corporation (the “Company”)  A Pre-Payment of Estimated Taxes Agreement between the City and an affiliate of the Company, called Palmer North America, LLC, a Delaware limited liability company (“Palmer NA”). PREVIOUS COUNCIL ACTION: Not applicable to this Resolution BACKGROUND: The Company has committed to invest approximately two-hundred million dollars ($200,000,000.00) in equipment, other fixed assets and tangible personal property in a new rail mill to be located on land which will be annexed into the City of Pueblo. The Company has also committed to employ a minimum of one-thousand (1,000) workers at an average annual pre- benefit salary of approximately $60,000 to $65,000 per employee between December 1, 2022 and November 30, 2029. To induce the Company to make the $200 million investment in a new rail mill, the attached Resolution authorizes the transfer of $15 million from the City’s so-called “Half-Cent Economic Development Fund” to help pay for the Company’s capital expenditures. FINANCIAL IMPLICATIONS: In addition to the $15 million in economic incentives, the City has also agreed to provide Palmer NA with a fifty percent (50%) sales and use tax exemption for the first ten years of the operation of the new rail mill. The attached Resolution also approves a Pre-Payment of Estimated Taxes Agreement between the City and Palmer NA in which Palmer NA agrees to make payments of the estimated taxes according to the following schedule: Date of Payment Amount of Payment 30 days following the date of the first $2,000,000.00 economic incentive payment to Palmer NA pursuant to the Employment Agreement First anniversary of the $2 million payment $1,200,000.00 Second anniversary of the $2 million payment $1,200,000.00 Total $4,400,000.00 Repayment of the City’s economic incentives, if necessary, will be secured by a First Deed of Trust on a portion of the Company’s manufacturing facilities having a fair market value of no less than $15 million. Most of the one thousand employees identified in the Employment Agreement will not be new employees but rather current employees whose jobs will be retained through November 30, 2029. PMC Sec. 14-4-85.3(b) of the Criteria Ordinance requires that economic incentive payments be made to an employer who creates new primary jobs. However, PMC Sec. 14-4-85.3(c) of the Criteria Ordinance provides that the City Council “may grant a variance” of the new employee requirement “if the City Council determines in its sole discretion” that the project will create employment opportunities justifying the expenditure of public funds. City staff is recommending that City Council grant the Company the requested variance because the retention of one thousand employees in the Pueblo workforce at pre-benefit salaries averaging more than $60,000 to $65,000 will boost the local economy. Salaries paid by the Company far exceed the average salaries in Pueblo County. BOARD/COMMISSION RECOMMENDATION: Not applicable to this Resolution. STAKEHOLDER PROCESS: Not applicable to this Resolution. ALTERNATIVES: If this Resolution is not approved, the Company will not construct its new rail mill manufacturing facility in the City of Pueblo. RECOMMENDATION: The Pueblo Economic Development Corporation recommends approval of this Resolution. Attachments: Proposed Resolution; proposed Employment Agreement; proposed Pre- Payment of Estimated Taxes Agreement EMPLOYMENT AGREEMENT THIS EMPLOYMENT AGREEMENT("Agreement")is entered into this 22nd day of October,2018 by and between the City of Pueblo,a Colorado municipal corporation(the"City") and New CF&I Inc., a Delaware corporation (the "Company"). The Company and the City are referred to collectively in this Agreement as the "Parties"and individually, without differentiation, each as a"Party." WHEREAS, the Company has expressed a willingness to expand its steel manufacturing facilities located in Pueblo County through the construction of a new rail mill to be annexed into the City of Pueblo and in furtherance thereof has, through the Pueblo Economic Development Corporation("PEDCO"), made application for economic incentive funds from the City; and WHEREAS, PEDCO has recommended to the City Council that City approve such application, and WHEREAS, the City Council, based on PEDCO's recommendation, 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 commercial sale of rails and other steel 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, the Company has committed to: (i) invest approximately Two Hundred Million Dollars ($200,000,000) in equipment, other fixed assets and tangible personal property in a new rail mill to be annexed into the City of Pueblo, and (ii) provide the employment described in Section 3 of this Agreement. NOW, THEREFORE, in consideration of the foregoing recitals 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 December 1, 2022 or an earlier date if mutually 1 agreed to by Parties as described in Section 3.2 below. "Facility" means the new rail mill to be annexed into the City of Pueblo,wherein Company will conduct its rail business operations. "Site"means the Facility plus the related assets owned by New CF&I Inc. "Full-Time Employee" means a person who actually performs work at the Site for not less than thirty-two (32) hours per week at an average annual pre-benefit salary of not less than $60,000.00 to $65,000.00 per employee. "Per Employee Payment"means an amount equal to (a)the Total Funds Advanced divided by 1,000(i.e. the Full Time Employees subject to the Employment Commitment), divided by(b)28 (i.e. the number of Quarters in the Repayment Period). "Property" means the Company's subdivided parcel of land to be annexed into the City of Pueblo, Pueblo County, State of Colorado, according to the recorded plat thereof to be filed in the records of the Pueblo County Clerk and Recorder. "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 number of business days in such Quarter. "Repayment Reduction" means for each Quarter an amount equal to the Total Funds Advanced divided by 28 (i.e. the number of Quarters in the Repayment Period). For example, if the Total Funds Advanced equals $15,000,000.00, the Repayment Reduction would be $15,000,000.00±28 = $ 535,714.29 per quarter. 2. On or after December 1, 2019, if Company is not in default under this Agreement, City will advance to or for the benefit of Company (each such advance, a"Funds Advance"and all such cumulative advances the "Total Funds Advanced") funds in the amount of Fifteen Million Dollars ($15,000,000.00) (the "City Funds"), subject to and contingent upon the following conditions and covenants which Company agrees to perform and comply with: (a) City Funds in an amount not to exceed Fifteen Million Dollars ($15,000.000.00) will be disbursed by City to Company's designated subsidiary, Palmer North America LLC solely for reimbursement for the actual costs of construction of the Facility and the acquisition of fixtures and equipment to be used in the Facility in accordance with Section 5 of this Agreement. 2 (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, and (ii) certified copies of the resolutions of the governing board of Company approving(A) this Agreement; (B) the Deed of Trust (referenced in Section 5 of this Agreement)and the Annexation Agreement; and authorizing its officers to execute and deliver said documents in the name of Company, and (iii) (A) this Agreement; and (B) the Deed of Trust and the Annexation Agreement, executed by authorized officers of Company or its subsidiary CF&I Steel, LP. The date of the last to occur of the filings required under (i), (ii) and (iii) of this Section 2(c) shall be referred to herein as "Closing." If Closing does not occur on or before December 1, 2019, 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. 2.1 The Parties agree that on or before December 1, 2019, Company, at its sole option, may terminate this Agreement and City and Company shall thereafter be released and discharged from all obligations hereunder. 2.2. The Parties agree that upon proper application therefor,the City agrees to reimburse Company in an amount not to exceed Eight Hundred Thousand Dollars ($800,000.00) for the purpose of providing employment training of Company's current and future employees at Pueblo Community College, Pueblo, CO ("PCC"). The maximum amount for training for each employee shall not exceed Eight Hundred Dollars ($800.00). The Parties further agree that reimbursement of training expenses is not addressed in or covered by this Agreement but will be the subject of a future amendment to this Agreement upon request of the Company. 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 it will after the date of this Agreement continuously conduct its business operations and employ Full-Time Employees at the Site as follows: (i) during the period from the date of this Agreement to the Employment Commitment Date, Company shall use commercially reasonable efforts in good faith to employ as many Full-Time Employees as reasonably justified by its business operations, and(ii) on and after the Employment Commitment Date, Company shall employ not less than 1,000 Full- Time Employees at the Site (the "Employment Commitment") for seven(7)years. 3.1 If the Parties agree in writing, the Employment Commitment Date can be advanced to a mutually agreeable date based on execution timing and performance of the Facility 4. Subject to the terms and conditions of Section 6(d) below, if Company shall for any reason default in its Employment Commitment set forth in Section 3, Company shall repay to City a pro-rata share of the City Funds advanced by City under Section 2 hereof based upon the number of Full-Time Employees employed by Company at the Site (the "Repayment Obligation"), as follows: 3 (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 1,000 Full -Time Employees employed at the Site by Company multiplied by the Per Employee Payment (the "Company's Quarterly Payments"). For example, if for the first Quarter of the first year after the Employment Commitment Date the Total Funds Advanced equals $15,000,000.00 and the number of such Quarterly Employees is 999, the amount payable by Company to City on or before the thirtieth(30th) day of the next calendar month would be $535.71. (b) Company's Quarterly Payments, if any, shall be paid to the City without notice, demand, deduction or setoff on or before the thirtieth (30th) 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, CO 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 (8) percent per annum ("Default Rate") until paid accruing from due date. (c) Within thirty (30) days after the end of each Quarter after the Employment Commitment Date and terminating one calendar month after the Repayment Period, Company will submit to City's Director of Finance Company's statements showing the Quarterly Employees and their aggregate salaries for the preceding Quarter and 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 sole purpose of verifying such employment, City shall have access to Company's payroll records relating to Company's employees employed at the Site. Except in the event of any action filed by City to enforce this Agreement, City shall treat such information as confidential and shall not disclose (except pursuant to a subpoena or court order) such information to any person other than those City employees who have a need to know such information. (d) Subject to the provisions of Section 6, if Company defaults in the performance of its 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, City may declare the entire balance of Company's Repayment Obligation due and owing together with interest thereon from the date of default at the Default Rate, and for such purpose,the entire balance of Company's Repayment Obligation shall be the amount calculated pursuant to Section 4(e)below. 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. (e) Except as otherwise provided in Section 6 hereof, City's damages for breach of Company's Repayment Obligation shall not exceed Total Funds Advanced plus interest, provided, however, that the Total Funds Advanced shall be reduced by the Repayment Reduction for each Quarter Company meets its Repayment Obligation during the Repayment Period by either (i)employing 1,000 Quarterly Employees at the Site, or(ii)paying Company's Quarterly Payments 4 as provided in Section 4(a) above for such Quarter. 5. All City Funds advanced to Company or its designated subsidiary by City under this Agreement shall be deemed to be a debt of Company payable to City until Company performs and discharges its obligations hereunder including its Repayment Obligation contained in Paragraph 4. The Company's performance under this Agreement including its Repayment Obligation contained in Paragraph 4 shall be secured by a Deed of Trust encumbering the Facility and Property. Company covenants with and warrants to the City that the Deed of Trust shall constitute a first priority lien or encumbrance and that there are and will be no senior liens or encumbrances against the Facility and Property. The form and content of the Deed of Trust shall be subject to the prior reasonable approval of counsel for the City and the Company. 5.1 During the Repayment Period, Company shall have the right,but not the obligation, to request that the City release the Deed of Trust by delivering to the City an Irrevocable Letter of Credit in a principal amount equal to then current amount of the Company's Repayment Obligation. The principal balance of the Letter of Credit will be decreased on a quarterly basis consistent with the Company's compliance with its Employment Commitment as set forth in Paragraph 3 of this Agreement. At the conclusion of the Repayment Period, provided that Company performs and discharges its obligations hereunder including its Repayment Obligation contained in Paragraph 4, the City shall surrender and return the Irrevocable Letter of Credit to the Company. The issuer and format of the Irrevocable Letter of Credit shall require the consent of the City, which consent shall not be arbitrarily withheld, conditioned or delayed. 6. (a) Prior to instituting any proceeding to enforce Company's Repayment Obligation under Section 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 thirty (30) 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. Upon receipt of Company's written request for relief, interest accruals specified in Section 4b shall be suspended. Within ninety (90) days after receipt of Company's request, City will schedule a meeting with the City Council at which Company must appear. City will notify Company of the time and place of the meeting at least ten (10) days before 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 6 shall grant or be construed to grant to Company any right or claim to relief from its Repayment Obligation or a hearing with respect thereto. 5 (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. (d) Notwithstanding Section 6 (a)—(c) above,the Parties agree that Company is competing in a globalized, highly competitive market and that the steel industry is subject to periodic downturns in the world economy. City agrees to look favorably upon and to grant, as necessary and appropriate, Company's requests for a "time out" and continuance of Company's Employment Commitment, based upon prevailing economic conditions beyond the Company's control. 7. 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. 8. In the event of any litigation arising under this Agreement, the court shall award to, and the prevailing Party shall recover its costs together with all reasonable and out-of-pocket expenses of any kind relating to the litigation including, but not limited to, reasonable attorney fees. 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 hereby irrevocably confesses the subject matter jurisdiction and submits to the personal jurisdiction of such District Court. To the full extent allowed by law, each Party hereby 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 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. 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 or Mayor, as applicable, City of Pueblo, 1 City Hall Place,2nd Floor,Pueblo,CO 81003,with copy to City Attorney, 1 City Hall Place,3`d Floor,Pueblo, CO 81003, or (b) if to the Company, Attn: General Manager, Evraz North America, 1612 E. Abriendo Ave., Pueblo, CO 81004, with a copy to EVRAZ North America, 200 East Randolph Street, Suite 7800, Chicago, IL 60601, Attn: General Counsel. 6 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 10. Notice shall be effective (i) upon receipt if delivered personally, or(ii)three (3) business days after deposit in the mails, if mailed. 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 will not be unreasonably withheld or delayed. Any assignment or attempted assignment of this Agreement by Company without such consent shall be null and void. No assignment of this Agreement or any interest herein by Company shall release or discharge Company from any of its obligations under this Agreement unless otherwise agreed by City at the time consent to assignment is given. 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 and 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 by City 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 and recover the full amount of such commission, percentage, contingent fee or other remuneration, or to seek such other remedies legally available to City, which remedies shall be cumulative. 14. (a) 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 City's 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 Section 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 Section 2 hereof. (b) Notwithstanding the above, in the event of breach of this Agreement by the City,Company shall have the right,pursuant to Section 8 above,to request specific performance of this Agreement by the City, and an injunction or a declaratory judgment, 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 7 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 partners or 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, this 22nd day of October, 2018. City of Pueblo, Colorado a Colorado Municipal Corporation [ SEAL ] ' Atte s�t.;,46UnC etCiLVYUL)ti �, By Acting City Clerk J Pre -n of the City Council 8 REST OF THIS PAGE LEFT INTENTIONALLY BLANK SIGNATURE PAGE TO FOLLOW New CF&I Inc. a Delaware corporation By: :ignatur- (Print Name) ! IWJ /L 114-5/LYE-rte (Print Title) SVP 2reF'C. STATE OF T-. It ss. COUNTY OF The foregoing instrument was acknowledged before me this 5 day of Pr'e0^1°cir- 2018 by A I e-x C index Llc�_s� l �`� as S V p d- c F° of New CF&I Inc., a Delaware corporation. Witness my hand and official seal. My commission expires: D-c-. , ?-`2 I . [ SEAL ] Notary Public ANITA L JAGUDEN SPENCER Official Seal Notary Public-State of Illinois My Commission Expires Dec 2,2019 9 TAX AGREEMENT THIS PRE-PAYMENT OF ESTIMATED TAXES AGREEMENT ("Agreement") is entered into as of October 22, 2018 by and between the City of Pueblo, a municipal corporation ("City") and Palmer North America, LLC a Delaware limited liability company, ("Palmer NA"). WITNESSETH, WHEREAS, Palmer NA will constnxt and equip a new rail mill to be annexed into the City of Pueblo ("Facility"); and WHEREAS, City and Palmer NA agree that the value of the construction materials, fixtures and equipment, used in the initial construction and equipping of the Facility will be approximately Two Hundred Million Dollars ($200,000,000.00); and WHEREAS, as an inducement for Palmer NA to construct the Facility within the City limits and to continue the employment of many steelworkers who reside in the City, City is willing to offer sales and use tax credits or refunds equal to 50% of any City 3% sales and use tax applicable to the Facility for a ten (10) year period; and WHEREAS, as a further inducement for Palmer NA to construct the Facility within the City limits and to continue the employment of many steelworkers who reside in the City, the City has agreed to provide Palmer NA with additional economic incentives as outlined in an Employment Agreement, of even date herewith, which is attached hereto for reference; and WHEREAS, Palmer NA desires to pay the sales and use tax on construction materials, fixtures and equipment, used in the initial construction and equipping of the Facility on an estimated percentage basis pursuant to section 14-4-87(2) and other provisions of the Pueblo Municipal Code, in advance in three(3)lump-sum payments instead of remitting the Taxes on a monthly basis during an estimated construction period of five (5) years,and WHEREAS, the City and Palmer NA have estimated the sales and use tax on construction materials, fixtures and equipment, used in the initial construction and equipping of the Facility to be Four Million Four Hundred Thousand Dollars ($4,400,000.00) ("Estmated Taxes") as demonstrated in the following chart: and Sales and Use Tax Equipment/personal property value $200,000,000 Tax Rate 0.03 6,000,000 Less tax credit C50%) (3,000,000) $3,000,000 Economic Development and Public Safety Taxes Equipment/personal property value $200,000,000 Tax Rate .007 $1,400,000 WHEREAS, the payment of the Estimated Taxes in advance in three (3) lump-sum payments will benefit the City by making such revenue available for immediate use for necessary and required public projects instead of receiving such revenue over a period of years; and WHEREAS, immediate availability of such revenues would save the City substantial moneys otherwise required to be paid as interest on financing for such public projects and future increased construction costs; and WHEREAS, the lump-sum payments in advance taking into consideration the foregoing and the discounted value of money is reasonable, equitable and fair to the City of Pueblo and Palmer NA. NOW, THEREFORE, in consideration of the foregoing and mutual covenants herein contained, City and Palmer NA agree as follows: 1. Within ninety (90) days after the completion of the Facility, Palmer NA shall complete and file with the City a sales and use tax return for the entire Facility, in accordance with and as required by Chapter 4, Title XIV of the Pueblo Municipal Code. 2. Nothwithstanding the exemptions to the sales and use taxes specified in Sec. 14-4- 76(24) and Sec. 14-4-77 (17) of the Pueblo Municipal Code, Palmer NA agrees to make payments of the Estimated Taxes according to the following schedule: Date of Payment Amount of Payment 30 days following the date of the first $2,000,000.00 economic incentive payment to Palmer NA pursuant to the Employment Agreement First anniversary of the $2 million payment $1,200,000.00 Second anniversary of the $2 million payment $1,200,000.00 Total $4,400,000.00 For the avoidance of doubt, no other Sales and Use Tax will be due to the City of Pueblo from Palmer NA for a period of ten years following operation of the Facility. 3. 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. 4. In the event of any litigation arising under this Agreement,the court shall award to, and the prevailing Party shall recover its costs together with all internal and out-of-pocket expenses of any kind relating to the litigation including, but not limited to, reasonable attorney fees. 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 hereby irrevocably confesses the subject matter jurisdiction of and submits to the personal jurisdiction of such District Court. To the full extent allowed by law, each Party hereby waives its right to a jury trial. 5. 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 Palmer NA. 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. 6. 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 or Mayor,as applicable, City of Pueblo, 1 City Hall Place, 2"d Floor, Pueblo, CO 81003, with copy to City Attorney, 1 City Hall Place, 3rd Floor, Pueblo, CO 81003, or (b) if to the Palmer NA,Attn: General Manager, Evraz North America, 1612 E. Abriendo Ave.,Pueblo, CO 81004 with a copy to Evraz North America,200 East Randolph Street, Suite 7800, Chicago, IL 60601, Attn: General Counsel. 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 10. Notice shall be effective (i) upon receipt if delivered personally, or(ii) three (3) business days after deposit in the mails, if mailed. 7. 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 Palmer NA may not assign this Agreement or any interest herein without the express written consent of the City which will not be unreasonably withheld or delayed. Any assignment or attempted assignment of this Agreement by Palmer NA without such consent shall be null and void. No assignment of this Agreement or any interest herein by Palmer NA shall release or discharge Palmer NA from any of its obligations under this Agreement unless otherwise agreed by City at the time consent to assignment is given. 8. The persons signing this Agreement in the name of and on behalf of Palmer NA represent and warrant that they and Palmer NA have the requisite power and authority to enter into, execute, and deliver this Agreement, and that this Agreement is a valid and legally binding obligation of Palmer NA enforceable against Palmer NA in accordance with its terms. 9. 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. 10. Neither Party shall be, or hold itself out as, agent of the other or as partners or joint venturers under this Agreement. 11. 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. 12. 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. 13. 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, this 22nd day of October, 2018. City of Pueblo, Colorado a Colorado Municipal Corporation [ SEAL ] Attes6—,LLE.I' d.,0 By Acting City Clerk tird/P°''oft' - City Council r REST OF THIS PAGE LEFT INTENTIONALLY BLANK SIGNATURE PAGE TO FOLLOW Palmer North America, LLC a Delaware limited liability company (Sign. ,re) (Print Name) 44—,{44/Dec.-17L 0/51L_—,YC/' (Print Title) -09 "1 STATE OF --I1I1Ekcsr`s ) ) ss. COUNTY OF L ak(4- ) The foregoing'instrument was acknowledged before me this Vli day of Dc,, , 2018 by 41 e'eanck t- Vas,I;EA/ as 5.V P -i- C, F:0 of Palmer North America, LLC Inc., a Delaware limited liability company Witness my hand and official seal. • — — — — — — — _ _ _ _ _ v 1 ANITA I.JAGUDEN SPENCER SEAL I Official Seal 1 Notary Public -State of Illinois I f My Commission Expires Dec 2,2019 0 My commission expires: Dec Z) Z6icl otaV Public Reception 2205247 12/17/2020 03:2339 PM DEED OF TRUST THIS INDENTURE ("Deed of Trust"), is made this 16th day of December, 2020 between CF&I Steel, L.P., d/b/a Evraz Rocky Mountain Steel, a Delaware limited partnership, 1612 E. Abriendo Ave., Pueblo, CO 81004 ("Grantor"), and the Public Trustee of the County of Pueblo, State of Colorado hereinafter referred to as ("Public Trustee") for the benefit of the City of Pueblo, a municipal corporation whose address is One City Hall Place, Pueblo, CO 81003 ("City of Pueblo"); WITNESSETH, THAT, WHEREAS, New CF&I, Inc. a Delaware corporation, which is affiliated with the Grantor ("New CF&I") and the City of Pueblo are parties to that certain Agreement dated October 22, 2018, a true, complete and correct copy of which is attached as Exhibit A hereto (the "Agreement"), whereby New CF&I agreed to comply with certain employment requirements enumerated in the Agreement in consideration of certain funds advanced from the City of Pueblo to New CF&I in an aggregate amount not to exceed Fifteen Million Dollars($15,000,000.00) (the"Replacement City Funds"); AND WHEREAS, as of the date hereof, the amount of the Replacement City Funds subject to a repayment obligation upon default by New CF&I under the Agreement shall be equivalent to the Repayment Obligation as defined in Section 4 of the Agreement. AND WHEREAS, by this instrument, the Grantor is desirous of securing payment of the Repayment Obligation of New CF&I to the extent outstanding and subject to the quarterly reductions pursuant to Section 4(e)of the Agreement (the"Obligations"). AND WHEREAS, the Grantor assumes the Obligations, as defined above, of New CF&I under the Agreement and Grantor agrees that any default on the part of New CF&I under the terms of the Agreement shall constitute a default by Grantor under this Deed of Trust, entitling the City of Pueblo, as beneficiary, to exercise the remedies specified in this instrument, in accordance with its terms. NOW THEREFORE, the Grantor, in consideration of the premises and for the purpose aforesaid, does hereby grant, bargain, sell and convey unto the said Public Trustee in trust until the full payment and performance of the Obligations ("Termination Date"), the following described property, to wit: A parcel of land located in a portion of the East one-half(1/2) of Sections 12, and 13, Township 21 South, Range 65 West of the 6th P.M. in the County of Pueblo and State of Colorado, being more particularly described as follows. Considering the South line of Block 39 in Lake Minnequa Addition as filed for record in the Pueblo County records to bear N. 88°54'21" E. and all bearings contained herein being relative thereto. 1 2205247 12/17/2020 03:23:39 PM • Page: 2 of 14 R 78.00 D 0.00 T 78.00 Gilbert Ortiz Clerk/Recorder, Pueblo County, Co If 11111 ��R' �I�BinW ' )11 01 :4�k iy 141111111i 11111 Commencing at the Southeast corner of said Block 39;thence N. 88°54'21" E., a distance of 125.00 feet to the east right-of-way line of the Denver and Rio Grande Railroad as presently located;thence N. 01°04'44" W. along said east right-of-way line, a distance of 300.00 feet to the Point of Beginning; thence N. 01°04'44" W. continuing along said east right-of-way line, a distance of 950.00 feet; thence N. 88°54'21" E., a distance of 226.00 feet; thence N. 40°24'00" E.,a distance of 636.00 feet; thence N. 88°54'21" E., a distance of 342.00 feet; thence S. 01°05'39" E., a distance of 90.00 feet; thence S. 88°54'21" W., a distance of 44.00 feet; thence S. 01°05'39" E., a distance of 190.00 feet; thence N. 88°54'21" E., a distance of 120.00 feet; thence S. 01°05'39" E., a distance of 1,711.00 feet; thence S. 88°54'21" W., a distance of 239.32 feet; thence S. 29°59'20" W., a distance of 84.44 feet; thence S. 01°05'39"E., a distance of 918.00 feet;thence S. 88°54'21" W., a distance of 471.00 feet; thence S. 01°05'39"E., a distance of 737.71 feet;thence S. 88°54'21" W., a distance of 175.00 feet; thence N. 01°05'39" W., a distance of 2292.65 feet; thence N. 88°54'21" E., a distance of 136.71 feet to the east right-of- way line of the Denver and Rio Grande Railroad as presently located and the Point of Beginning. Containing 59.16 acres, more or less TO HAVE AND TO HOLD the same, together with all and singular the privileges and appurtenances thereunto belonging, in trust nevertheless, that: a) in case of default by New CF&I of the Obligations under the Agreement, or in the payment of any interest thereon according to the tenor and effect of said Agreement, or in the payment of any prior encumbrances, principal or interest, if any, or b) in case default shall be made or violation or breach of any of the terms conditions, covenants or agreements herein contained, which is not cured within sixty(60) days after written notice specifying the default is given by the City of Pueblo to Grantor, the beneficiary hereunder or the legal holder of the indebtedness secured hereby may declare a violation of any of the covenants herein contained and may elect to advertise said property for sale, and demand such sale by filing a notice of election and demand for sale with the Public Trustee. Upon receipt of such notice of election and demand for sale, the Public Trustee shall cause such notice to be recorded in the recorder's office of the county in which said property is situated. The Public Trustee shall then give public notice of the time and place of sale by advertisement to be published for four weeks (once each week for four successive weeks) in some newspaper of general circulation at that time published in the county or counties in which said property is located. A copy of such notice shall be mailed to all persons entitled to receive notice as provided by law. It shall and may then be lawful for the Public Trustee to sell said property for the highest and best price the property will bring in cash and to dispose of the said property (en masse or in separate parcels, as the said Public Trustee may think best), together with all the right,title and interest of the Grantor therein, at public auction at any place as may be specified by statute and designated in the notice of sale. The Public Trustee shall make and give to the purchaser of such property at such sale, a certificate of purchase as required by law. Unless the property is redeemed, the public trustee shall execute and record a confirmation deed to the holder of the certificate of purchase no less than fifteen days after the date of sale or, if later, the expiration of all redemption periods and the receipt of all statutory fees and costs. 2 2205247 12/17/2020 03:23:39 PM Page: 3 of 14 R 78.00 D 0.00 T 78.00 Gilbert Ortiz Clerk/Recorder. Pueblo County Co 111111 irtilartiMiCHIMIIIONVIiiiigYi <iliik 1I III The Public Trustee shall, out of the proceeds of such sale and after first paying and retaining all fees, charges and costs of making said sale, pay to the beneficiary hereunder any amounts due pursuant to the Obligations under the Agreement, and all moneys advanced by such beneficiary for insurance, taxes and assessments, with interest thereon at eight per cent per annum, rendering the overplus, if any, unto those persons entitled thereto as a matter of law. Said sale as evidenced by the confirmation deed executed and recorded by the Public Trustee shall operate as a perpetual bar, both in law and equity, against the Grantor and all other persons claiming the said property, or any part thereof, by, from, through or under the Grantor. The City of Pueblo may purchase said property or any part thereof; and it shall not be obligatory upon the purchaser at any such sale to see to the application of the purchase money. For the purposes of calculating the proceeds and overplus of a sale as described above, the amount of the Repayment Obligation owed to the City of Pueblo as of the date of the sale shall be that amount which is outstanding under the Agreement at the time of such sale, taking into consideration the quarterly reduction of the amount of the Repayment Obligation pursuant to Section 4(e)of the Agreement. The Grantor covenants with and warrants to the Public Trustee, that at the time of the ensealing of and delivery of these presents the Grantor is well seized of the said lands, tenements and property in fee simple, and has good right, full power and lawful authority to grant, bargain, sell and convey the same in the manner and form as aforesaid; hereby fully and absolutely waiving and releasing all rights and claims the Grantor may have in or to said lands, tenements, and property as a Homestead Exemption, or other exemption, under and by virtue of any act of the General Assembly of the State of Colorado or of the United States Congress, now existing or which may hereafter be passed in relation thereto, and that the same are free and clear of all liens and encumbrances whatever as of the date hereof except liens, easements, conditions, restrictions, covenants and reservations of record. The Grantor further warrants to the Public Trustee the quiet and peaceable possession of said property against all persons who may lawfully claim the whole or any part thereof, and that the Grantor shall and will forever defend the title to said property against such person or persons subject to any liens, easements, conditions, restrictions, covenants and reservations of record. Until the Termination Date, the Grantor shall timely pay all taxes and assessments levied on the property; any and all amounts due on account of principal and interest or other sums on any junior encumbrances, if any; and will keep all improvements that may be on said lands insured against any casualty loss, including extended coverage, in a company or companies, meeting the net worth requirements of the beneficiary hereof in an amount which will yield to the holder of the indebtedness, after reduction by co-insurance provisions of the policy, if any, not less than the then total indebtedness. Each policy shall contain a loss payable clause naming the beneficiary as mortgagee and shall further provide that the insurance may not be canceled upon less than ten days written notice to the beneficiary. Should the Grantor fail to insure and deliver a certificate evidencing the required coverage under the policies or to pay taxes or assessments as the same fall due, or to pay any amounts payable upon junior encumbrances, if any,the beneficiary may make any such payments or procure any such insurance, and all monies so paid with interest thereon at the rate of eight per cent per annum shall be added to and become a part of the indebtedness secured by this Deed of Trust and may be paid out of the proceeds of the sale of the property if not paid by the Grantor. In addition, and at its option, the beneficiary 3 2205247 12/17/2020 03:23:39 PM Page: 4 of 14 R 78.00 D 0.00 T 78.00 Gilbert Ortiz Clerk/Recorder, Pueblo County, Co VIII romw6:1JL h4,1'MJ1'1,WM4'i,MNili l i+k' ti 11111 may declare the indebtedness secured hereby and this Deed of Trust to be in default for failure to procure insurance or make any of the payments required by this paragraph. If the Grantor, without beneficiary's prior written consent, hereafter sells or transfers all or any part of the property or an interest therein, excluding (a)the creation of a lien or encumbrance subordinate to this Deed of Trust, or (b)the grant of any leasehold interest of three years or less not containing an option to purchase, beneficiary may, at beneficiary's option, declare all the sums secured by this Deed of Trust to be immediately due and payable. Beneficiary shall have waived such option to accelerate if, prior to the sale or transfer, beneficiary and the person to whom the property is to be sold or transferred reach agreement in writing that the credit of such person is satisfactory to beneficiary and that the interest payable on the sums secured by this Deed of Trust shall be at such rate as beneficiary shall request. IN CASE OF ANY DEFAULT whereby the right of foreclosure occurs hereunder, the holder of said certificate of purchase shall at once become entitled to the possession, use and enjoyment of the property aforesaid, and to the rents, issues and profits thereof, from the accruing of such right and during the pendency of foreclosure proceedings and the period of redemption, if any. Such possession shall at once be delivered to the holder of said certificate of purchase on request. Upon refusal, delivery of such possession may be enforced by the holder of said certificate of purchase by any appropriate civil suit or proceeding. The holder of said certificate of purchase shall be entitled to a Receiver for said property, and of the rents, issues and profits thereof, after such default, including the time covered by foreclosure proceedings and the period of redemption, if any, and shall be entitled thereto as a matter of right without regard to the solvency or insolvency of the Grantor or of the then owner of said property and without regard to the value thereof. Such Receiver may be appointed by any court of competent jurisdiction upon ex parte application and without notice -- notice being hereby expressly waived -- and all rents, issues and profits, income and revenue therefrom shall be applied by such Receiver to the payment of the indebtedness hereby secured, according to the law and the orders and directions of the court. IN THE CASE OF ANY DEFAULT in any of said Obligations, according to the tenor and effect of said Agreement or any part thereof, or of a breach or violation of any of the covenants or agreements herein by the Grantor,the whole of said Obligations hereby secured and the interest thereon to the time of the sale may at once, at the option of the legal holder thereof, become due and payable, and the said property be sold in the manner and with the same effect as if said indebtedness had matured. If foreclosure be made by the Public Trustee, attorney's fees in a reasonable amount for services in the supervision of said foreclosure proceedings shall be allowed by the Public Trustee as a part of the cost of foreclosure; and if foreclosure be made through the courts, a reasonable attorney's fee shall be taxed by the court as a part of the cost of such foreclosure proceedings. IT IS FURTHER UNDERSTOOD AND AGREED that upon the Termination Date, the City of Pueblo shall execute a release of this Deed of Trust, such release document to be prepared by Grantor with Grantor paying the expense thereof. All of the covenants and agreements herein contained shall extend to and be binding upon the heirs, personal representatives, successors and assigns of the respective parties hereto; and that the singular number shall include the plural and the plural the singular. 4 Executed on the date first above written. GRANTOR: CF&I STEEL, L.P. a Delaware limited partnership By its General Partner, New CF&I Inc: < 1- fF ./1-/"Id) (Signature) (Print Name) Eileen Tierney (Print Title) General Counsel & Corp. Secretary STATE OF TZLI o15 ) ) ss. COUNTY OF C c>0 1<- The <The foregoing instrument was acknowledged before me this 4, day of cu J u , 2020 by Eileen Tierney as General Counsel and Corporate Secretary of NEW CF&l INC., a Delaware corporation. Witness my hand and official seal. My commission expires: 9c „„i2.623 [ SEAL] O4 ) pL '! Notary Public ANITA L JAGUDEN SPENCER Official Seal 0 Notary Public-State of Illinois My Commission Expires Dec 2, 2023 Areeprorimmomeemewwewseiwgera 2205247 12/17/2020 03:23:39 PM Mee g Pe: 50 of 14 R 78.00 D 0.00 T 78.00 ilbert Ortiz Clerk/Recorder Pueblo County, Co 1111131P.IFILIK 4,1114i60.1001a11,4'F:!'I Li 11111 5 EXHIBIT A 2205247 12/17/2020 03:23:39 PM Page: 6 of 14 R 78.00 D 0.00 T 78.00 Gilbert Ortiz Clerk/Recorder, Pueblo County, Co ■III Irj IlIijM II III EMPLOYMENT AGREEMENT THIS EMPLOYMENT AGREEMENT("Agreement")is entered into this 22nd day of October,2018 by and between the City of Pueblo,a Colorado municipal corporation(the"City") and New CF&I Inc., a Delaware corporation (the "Company"). The Company and the City are referred to collectively in this Agreement as the"Parties"and individually, without differentiation, each as a"Party." WHEREAS, the Company has expressed a willingness to expand its steel manufacturing facilities located in Pueblo County through the construction of a new rail mill to be annexed into the City of Pueblo and in furtherance thereof has, through the Pueblo Economic Development Corporation("PEDCO"),made application for economic incentive funds from the City;and WHEREAS, PEDCO has recommended to the City Council that City approve such application, and WHEREAS, the City Council, based on PEDCO's recommendation, 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 commercial sale of rails and other steel 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, the Company has committed to: (i) invest approximately Two Hundred Million Dollars ($200,000,000) in equipment, other fixed assets and tangible personal property in a new rail mill to be annexed into the City of Pueblo,and(ii)provide the employment described in Section 3 of this Agreement. NOW, THEREFORE, in consideration of the foregoing recitals 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 December 1, 2022 or an earlier date if mutually 1 2205247 12/17/2020 03:23:39 PM Paye: 7 of 14 R 78.00 D 0.00 T 78.00 Gilbert Ortiz Clerk/Recorder. Pueblo County, Co �PI1:111�,�• agreed to by Parties as described in Section 3.2 below. "Facility"means the new rail mill to be annexed into the City of Pueblo,wherein Company will conduct its rail business operations. "Site"means the Facility plus the related assets owned by New CF&I Inc. "Full-Time Employee" means a person who actually performs-work at the Site for not less than thirty-two (32) hours per week at an average annual pre-benefit salary of not less than $60,000.00 to $65,000.00 per employee. "Per Employee Payment"means an amount equal to(a)the Total Funds Advanced divided by 1,000(i.e.the Full Time Employees subject to the Employment Commitment),divided by(b)28 (i.e. the number of Quarters in the Repayment Period). "Property" means the Company's subdivided parcel of land to be annexed into the City of Pueblo, Pueblo County, State of Colorado, according to the recorded plat thereof to be filed in the records of the Pueblo County Clerk and Recorder. "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 number of business days in such Quarter. "Repayment Reduction" means for each Quarter an amount equal to the Total Funds Advanced divided by 28 (i.e. the number of Quarters in the Repayment Period). For example, if the Total Funds Advanced equals $15,000,000.00, the Repayment Reduction would be $15,000,000.00_28 =$ 535,714.29 per quarter. 2. On or after December 1, 2019, if Company is not in default under this Agreement, City will advance to or for the benefit of Company (each such advance,a"Funds Advance"and all such cumulative advances the "Total Funds Advanced") funds in the amount of Fifteen Million Dollars ($15,000,000.00) (the "City Funds"), subject to and contingent upon the following conditions and covenants which Company agrees to perform and comply with: (a) City Funds in an amount not to exceed Fifteen Million Dollars ($15,000.000.00) will be disbursed by City to Company's designated subsidiary, Palmer North America LLC solely for reimbursement for the actual costs of construction of the Facility and the acquisition of fixtures and equipment to be used in the Facility in accordance with Section 5 of this Agreement. 2205247 12/17/2020 03:23:39 PM Page: 8 of 14 R 78.00 D 0.00 T 78.00 Gilbert Ortiz Clerk/Recorder Pueblo County Co ■III 1 , l ��k� Tl�'���� H' ��� liI III (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, and (ii)certified copies of the resolutions of the governing board of Company approving(A)this Agreement; (B)the Deed of Trust(referenced in Section 5 of this Agreement)and the Annexation Agreement;and authorizing its officers to execute and deliver said documents in the name of Company, and (iii) (A) this Agreement; and (B) the Deed of Trust and the Annexation Agreement, executed by authorized officers of Company or its subsidiary CF&I Steel, LP. The date of the last to occur of the filings required under(i), (ii) and (iii) of this Section 2(c) shall be referred to herein as "Closing." If Closing does not occur on or before December 1, 2019,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. 2.1 The Parties agree that on or before December 1, 2019, Company, at its sole option, may terminate this Agreement and City and Company shall thereafter be released and discharged from all obligations hereunder. 2.2. The Parties agree that upon proper application therefor,the City agrees to reimburse Company in an amount not to exceed Eight Hundred Thousand Dollars ($800,000.00) for the purpose of providing employment training of Company's current and future employees at Pueblo Community College, Pueblo,CO("PCC"). The maximum amount for training for each employee shall not exceed Eight Hundred Dollars($800.00). The Parties further agree that reimbursement of training expenses is not addressed in or covered by this Agreement but will be the subject of a future amendment to this Agreement upon request of the Company. 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 it will after the date of this Agreement continuously conduct its business operations and employ Full-Time Employees at the Site as follows: (i) during the period from the date of this Agreement to the Employment Commitment Date, Company shall use commercially reasonable efforts in good faith to employ as many Full-Time Employees as reasonably justified by its business operations,and(ii) on and after the Employment Commitment Date, Company shall employ not less than 1,000 Full- Time Employees at the Site(the"Employment Commitment")for seven(7)years. 3.1 If the Parties agree in writing,the Employment Commitment Date can be advanced to a mutually agreeable date based on execution timing and performance of the Facility 4. Subject to the terms and conditions of Section 6(d)below, if Company shall for any reason default in its Employment Commitment set forth in Section 3, Company shall repay to City a pro-rata share of the City Funds advanced by City under Section 2 hereof based upon the number of Full-Time Employees employed by Company at the Site (the "Repayment Obligation"), as follows: 3 2205247 12/17/2020 03:23:39 PM Page: 9 of 14 R 78.00 0 0.00 T 78.00 Gilbert Ortiz Clerk/Recorder Pueblo County Co 11III K1'1111/211111MII1G1l1'F't�iii1,PITA�r'rir,E'�'l�'iY'� (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 1,000 Full -Time Employees employed at the Site by Company multiplied by the Per Employee Payment (the "Company's Quarterly Payments"). For example, if for the first Quarter of the first year after the Employment Commitment Date the Total Funds Advanced equals$15,000,000.00 and the number of such Quarterly Employees is 999, the amount payable by Company to City on or before the thirtieth(30th)day of the next calendar month would be$535.71. (b) Company's Quarterly Payments, if any, shall be paid to the City without notice, demand,deduction or setoff on or before the thirtieth(30th)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,CO 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(8)percent per annum ("Default Rate")until paid accruing from due date. (c) Within thirty (30) days after the end of each Quarter after the Employment Commitment Date and terminating one calendar month after the Repayment Period,Company will submit to City's Director of Finance Company's statements showing the Quarterly Employees and their aggregate salaries for the preceding Quarter and 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 sole purpose of verifying such employment, City shall have access to Company's payroll records relating to Company's employees employed at the Site. Except in the event of any action filed by City to enforce this Agreement, City shall treat such information as confidential and shall not disclose(except pursuant to a subpoena or court order)such information to any person other than those City employees who have a need to know such information. (d) Subject to the provisions of Section 6, if Company defaults in the performance of its 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, City may declare the entire balance of Company's Repayment Obligation due and owing together with interest thereon from the date of default at the Default Rate,and for such purpose,the entire balance of Company's Repayment Obligation shall be the amount calculated pursuant to Section 4(e)below. 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. (e) Except as otherwise provided in Section 6 hereof,City's damages for breach of Company's Repayment Obligation shall not exceed Total Funds Advanced plus interest, provided, however, that the Total Funds Advanced shall be reduced by the Repayment Reduction for each Quarter Company meets its Repayment Obligation during the Repayment Period by either (i)employing 1,000 Quarterly Employees at the Site,or(ii)paying Company's Quarterly Payments 4 2205247 12/17/2020 03:23:39 PM Page: 10 of 14 R 78.00 0 0.00 T 78.00 Gilbert Ortiz Clerk/Recorder, Pueblo County, Co 111111111111010161:44 INTIM , ,�} ,�� 111 II 1 as provided in Section 4(a) above for such Quarter. 5. All City Funds advanced to Company or its designated subsidiary by City under this Agreement shall be deemed to be a debt of Company payable to City until Company performs and discharges its obligations hereunder including its Repayment Obligation contained in Paragraph 4. The Company's performance under this Agreement including its Repayment Obligation contained in Paragraph 4 shall be secured by a Deed of Trust encumbering the Facility and Property. Company covenants with and warrants to the City that the Deed of Trust shall constitute a first priority lien or encumbrance and that there are and will be no senior liens or encumbrances against the Facility and Property. The form and content of the Deed of Trust shall be subject to the prior reasonable approval of counsel for the City and the Company. 5.1 During the Repayment Period,Company shall have the right,but not the obligation, to request that the City release the Deed of Trust by delivering to the City an Irrevocable Letter of Credit in a principal amount equal to then current amount of the Company's Repayment Obligation. The principal balance of the Letter of Credit will be decreased on a quarterly basis consistent with the Company's compliance with its Employment Commitment as set forth in Paragraph 3 of this Agreement. At the conclusion of the Repayment Period, provided that Company performs and discharges its obligations hereunder including its Repayment Obligation contained in Paragraph 4, the City shall surrender and return the Irrevocable Letter of Credit to the Company. The issuer and format of the Irrevocable Letter of Credit shall require the consent of the City,which consent shall not be arbitrarily withheld, conditioned or delayed. 6. (a) Prior to instituting any proceeding to enforce Company's Repayment Obligation under Section 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 thirty(30) 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. Upon receipt of Company's written request for relief,interest accruals specified in Section 4b shall be suspended. Within ninety (90) days after receipt of Company's request, City will schedule a meeting with the City Council at which Company must appear. City will notify Company of the time and place of the meeting at least ten (10) days before 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 6 shall grant or be construed to grant to Company any right or claim to relief from its Repayment Obligation or a hearing with respect thereto. 5 2205247 12/17/2020 03:23:39 PM Page: 11 of 14 R 78.00 D 0.00 T 78.00 Gilbert Ortiz ClerklRecorder, Pueblo County.. Co nimmfilliliitirWIJuiti 11111 (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. (d) Notwithstanding Section 6(a)—(c)above,the Parties agree that Company is competing in a globalized, highly competitive market and that the steel industry is subject to periodic downturns in the world economy. City agrees to look favorably upon and to grant, as necessary and appropriate, Company's requests for a "time out" and continuance of Company's Employment Commitment, based upon prevailing economic conditions beyond the Company's control. 7. 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. 8. In the event of any litigation arising under this Agreement, the court shall award to,and the prevailing Party shall recover its costs together with all reasonable and out-of-pocket expenses of any kind relating to the litigation including,but not limited to, reasonable attorney fees. 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 hereby irrevocably confesses the subject matter jurisdiction and submits to the personal jurisdiction of such District Court. To the full extent allowed by law,each Party hereby 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 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. 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 or Mayor,as applicable,City of Pueblo, 1 City Hall Place,2"d Floor,Pueblo,CO 81003,with copy to City Attorney, 1 City Hall Place,3° Floor,Pueblo, CO 81003,or (b) if to the Company, Atm: General Manager, Evraz North America, 1612 E. Abriendo Ave., Pueblo, CO 81004, with a copy to EVRAZ North America, 200 East Randolph Street, Suite 7800,Chicago,IL 60601, Attn: General Counsel. 6 2205247 12/17/2020 03:23:39 PM Page: 12 of 14 R 78.00 D 0.00 1 78.00 Gilbert Ortiz Clerk/Recorder, Pueblo County, Co 1111EirAtkili3CMIPI11111141011101ri 01111111i 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 10. Notice shall be effective (i) upon receipt if delivered personally,or(ii)three(3)business days after deposit in the mails, if mailed. 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 will not be unreasonably withheld or delayed. Any assignment or attempted assignment of this Agreement by Company without such consent shall be null and void. No assignment of this Agreement or any interest herein by Company shall release or discharge Company from any of its obligations under this Agreement unless otherwise agreed by City at the time consent to assignment is given. 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 and 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 by City 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 and recover the full amount of such commission,percentage, contingent fee or other remuneration,or to seek such other remedies legally available to City,which remedies shall be cumulative. 14. (a) 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 City's 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 Section 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 Section 2 hereof. (b) Notwithstanding the above, in the event of breach of this Agreement by the City,Company shall have the right,pursuant to Section 8 above,to request specific performance of this Agreement by the City,and an injunction or a declaratory judgment,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 7 2205247 12/17/2020 03:23:39 PM Page: 13 of 14 R 78.00 0 0.00 T 78.00 Gilbert Ortiz Clerk/Recorder, Pueblo County; Co lIII 14r11k't: '10'II 1111%110,1 1I II 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 partners or 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,this 22' day of October,2018. City of Pueblo,Colorado a Colorado Munici. Corporation [ SEAL] Attes't- QJ CLOT By Afill:10111" Acting City Clerk `resident o e City Council 8 2205247 12/17/2020 03:23:39 PM Page: 14 of 14 R 78.00 D 0.00 T 78.00 Gilbert Ortiz Clerk/Recorder, Pueblo County, Co ■III Fan:w dVil;1'16.17 1061 111111 REST OF THIS PAGE LEFT INTENTIONALLY BLANK SIGNATURE PAGE TO FOLLOW New CF&I Inc. a Delaware corporation 40 By: p.• ure) tt,, (Print Name) Qt C P - v-ILyE—if (Print Title) '3 " STATE OF ) ss. COUNTY OF L c.k-e. ) The foregoing innstrument was acknowledged before me this .5 44 day of 7e be ~ 2018 by A I S-v 10 .l- v as,I i'e' as S.V.? C. F.O. of New CF&I Inc.,a Delaware corporation. Witness my hand and official seal. My commission expires: Dec-. 2, 2,0 t! . [ SEAL] Notary Public ANITA L JAGUDEN SPENCER 1 Official Sed Notary Public-State of Illinois My Commission Expires Dec 2.2019 9