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HomeMy WebLinkAbout09650 ORDINANCE NO. 9650 AN ORDINANCE APPROVING AN AMENDMENT NO. 2 TO A LEASE AGREEMENT AND AN AMENDMENT NO. 2 TO AN EMPLOYMENT AGREEMENT BETWEEN THE CITY OF PUEBLO, A COLORADO MUNICIPAL CORPORATION AND ACTIVARMOR, LLC, A COLORADO LIMITED LIABILITY COMPANY AND AUTHORIZING THE MAYOR TO EXECUTE SAID AMENDMENTS BE IT ORDAINED BY THE CITY COUNCIL OF PUEBLO, that: SECTION 1. The Amendment No. 2 to Lease Agreement dated January 27, 2020 between the City of Pueblo, a Colorado municipal corporation (“City”) and ActivArmor, LLC, a Colorado limited liability company (the “Company”), a copy of which is attached hereto (“Lease Amendment No. 2”) having been approved as to form by the City Attorney, is hereby approved. The Mayor is authorized to execute and deliver the Lease Amendment No. 2 in the name of the City and the City Clerk is directed to affix the seal of the City thereto and attest same. SECTION 2. The Amendment No. 2 to Employment Agreement dated January 27, 2020 between the City and the Company, a copy of which is attached hereto (“Employment Amendment No. 2”), having been approved as to form by the City Attorney, is hereby approved. The Mayor is authorized to execute and deliver the Employment Amendment No. 2 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. The officers and staff of the City are authorized and directed to perform any and all acts consistent with this Ordinance and the attached amendments which are necessary or desirable to implement the transactions described therein. SECTION 4. This Ordinance shall become effective on the date of final action by the Mayor and City Council. Action by City Council: Introduced and initial adoption of Ordinance by City Council on January 13, 2020. Final adoption of Ordinance by City Council on January 27, 2020. President of City Council Action by the Mayor: ☒ Approved on January 29, 2020 . ☐ Disapproved on based on the following objections: Mayor Action by City Council After Disapproval by the Mayor: ☐ Council did not act to override the Mayor's veto. ☐ Ordinance re-adopted on a vote of , on ☐ Council action on __________________failed to override the Mayor’s veto. President of City Council ATTEST City Clerk City Clerk’s Office Item # R-10 Background Paper for Proposed Ordinance COUNCIL MEETING DATE: January 13, 2020 TO: Dennis E. Flores and Members of City Council CC: Mayor Nicholas A. Gradisar VIA: Brenda Armijo, City Clerk FROM: Daniel C. Kogovsek, City Attorney SUBJECT: AN ORDINANCE APPROVING AN AMENDMENT NO. 2 TO A LEASE AGREEMENT AND AN AMENDMENT NO. 2 TO AN EMPLOYMENT AGREEMENT BETWEEN THE CITY OF PUEBLO, A COLORADO MUNICIPAL CORPORATION AND ACTIVARMOR, LLC, A COLORADO LIMITED LIABILITY COMPANY AND AUTHORIZING THE MAYOR TO EXECUTE SAID AMENDMENTS SUMMARY: Attached is an Ordinance approving and authorizing the Mayor to sign second amendments to an Employment Agreement and Lease Agreement with ActivArmor, LLC, a Colorado limited liability company (the “Company”). PREVIOUS COUNCIL ACTION: On March 18, 2018, by Resolution No. 13921, City Council authorized the transfer of $250,000 from the 1992-2021 Sales and Use Tax Capital Improvement Projects Fund, for the benefit of the Company as follows:  Fifty thousand dollars ($50,000) for the purchase of equipment to be used and installed at Company’s manufacturing facility;  A rent abatement of Two Hundred Thousand Dollars ($200,000) for the lease of section “1 West” of the Pope Block Building, located at 317 North Main Street in downtown Pueblo and the payment of the Company’s rent at the Business and Technology Center, located at 301 N. Main Street in downtown Pueblo. On March 11, 2019, by Ordinance No. 9428, City Council approved first amendments to the Employment Agreement and Lease Agreement in order to accelerate the date of Company’s planned relocation to the Pope Block Building and also accommodate the Company’s plan to rent space in the “2 East” section of the Pope Block Building rather than the “1 West” section as previously approved. BACKGROUND: The Company’s business plan, as it pertains to Pueblo County, is centered on the manufacture and sale of 3-D printed personalized body casts and splints for distribution outside of Pueblo County. The Company has agreed to employ not less than twenty-three (23) full-time employees at its manufacturing and distribution center. The proposed second amendments to the Employment Agreement and Lease Agreement make two important changes. First, the allocation of economic development funds is changed to the following:  One Hundred Fifty Thousand Dollars ($150,000) for the purchase of equipment to be used and installed at Company’s manufacturing facility;  A rent abatement of One Hundred Thousand Dollars ($100,000) for the lease of space located in the Pope Block Building, located at 317 North Main Street in downtown Pueblo and the payment of the Company’s rent at the Business and Technology Center, located at 301 N. Main Street in downtown Pueblo. Second, the Company will reduce the amount of space rented in the Pope Block Building from 1,260 square feet to 500 square feet. FINANCIAL IMPLICATIONS: None. Under the two proposed amendments, the Company will not receive additional funds from the City of Pueblo. BOARD/COMMISSION RECOMMENDATION: Not applicable to this Ordinance. STAKEHOLDER PROCESS: Not applicable to this Ordinance. ALTERNATIVES: The Company’s plans to expand its operations in downtown Pueblo have changed. If this Ordinance is not approved, the Company’s new business plan will be inconsistent with the existing Lease Agreement as amended and Employment Agreement as amended. RECOMMENDATION: The Pueblo Economic Development Corporation recommends approval of this Ordinance. Attachments: Proposed Ordinance; proposed Amendment No. 2 to Lease Agreement; proposed Amendment No. 2 to Employment Agreement. AMENDMENT NO. 2 TO EMPLOYMENT AGREEMENT This Second Amendment to Employment Agreement (the "Amendment No. 2") is made as of this 27th day of January, 2020, by and between the City of Pueblo, a Colorado municipal corporation("City") and ActivArmor, LLC, a Colorado limited liability company ("Company"). Recitals WHEREAS, City and Company entered into that certain Employment Agreement dated March 12, 2018 (the "Agreement"); and WHEREAS,City and Company entered into that certain First Amendment to Employment Agreement dated February 25, 2019 ("Amendment No. 1"); and WHEREAS, City and Company desire to modify the Agreement and Amendment No. 1 pursuant to the provisions set forth herein. NOW, THEREFORE, in consideration of the foregoing premises, the mutual promises set forth herein and other good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, City and Company hereby agree to the following: Agreement 1. Amendment. Section 2 (a) 1 and 2 of the Agreement and Amendment No. 1 shall be deleted in their entirety and replaced with the following: 1. Advance to Company One Hundred Fifty Thousand Dollars ($150,000) for the purchase of equipment to be used and installed at the Facility; 2. Grant the Company a rent abatement of One Hundred Thousand Dollars ($100,000). 2. Successors and Assigns. This Amendment No. 2 shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns. 3. Ratification. Except as expressly stated herein, the Agreement and Amendment No. 1 shall remain in full force and effect. If there is any conflict between the Agreement and Amendment No. 1 and the terms of this Amendment No. 2, the terms of this Amendment No. 2 shall control. 4. Counterparts. This Amendment No. 2 may be executed in one or more counterparts, each of which shall be deemed an original and all of which shall constitute one and the same document with the same effect as if all parties had signed the same original. The parties further agree that transmission of this Amendment No. 2 by telecopy or via email in a PDF format shall be deemed transmission of the original Amendment No. 2 for all purposes. 9 IN WITNESS WHEREOF, the parties to this Amendment No. 2 have set forth their hand, to be effective upon final approval by the Mayor and City Council. City of Pueblo, Colorado a Colorado municipal corporation By: .24011�G�P/‘ ao��'r'mi Name: Nicholas A. Gra isar Title: Mayor Attested b • O. ! dii'A. L'VYYLA- City Clerk ii Approved as to form: 40t,Vt,Lti '' A<7Peat i -, Name: Daniel C. Kogovse Title: City Attorney COMPANY: ActivArmor, LLC a Coloriability ow. ___ado-Itniite5 `' c Name:l3iana E. Hall Title: Manager PERSONAL GUARANTY The Continuing Guaranty which I signed on or about March 12,2018 is hereby ratified and shall remain in full force and effect and is applicable to the Agreement,Amendment No. 1 and this Amendment No. 2. I personally guarantee the payment of the full amount of (a) Company's Repayment Obligation; and (b) Company's other financial obligations as described in and accordance with the Agreement, Amendment No. 1 and this Amendment No. 2. Dia . " . Ha 1, individually 9 STATE OF COLORADO ) ) ss. COUNTY OF PUEBLO ) The foregoing instrument was acknowledged before me this day of , 2020 by Diana E. Hall as Manager of ActivArmor, LLC, a Colorado limited liability ompany and in her individual capacity as it pertains to the Personal Guaranty. Witness my hand and official seal. seal. My commission expires: "Pa-zS,LD j2, . / [ SEAL ] ' NOELLE ROSE GUNTER Notary Public Notary Public—State of Colorado Notary 10 20144007034 My Commission Expires Feb 25 2022 9 AMENDMENT NO. 2 TO LEASE AGREEMENT This Amendment to Lease Agreement (the "Amendment No. 2") is made as of this 27th day of January, 2020, by and between the City of Pueblo, a Colorado municipal corporation ("Landlord") and ActivArmor, LLC, a Colorado limited liability company ("Tenant"). Recitals WHEREAS, Landlord and Tenant entered into that certain Lease dated March 12, 2018 (the "Agreement"); and WHEREAS, Landlord and Tenant entered into that certain Amendment to Lease Agreement dated February 25, 2019 ("Amendment No. 1"); and WHEREAS, Landlord and Tenant desire to modify the Agreement and Amendment No. 1 pursuant to the provisions set forth herein. NOW, THEREFORE, in consideration of the foregoing premises, the mutual promises set forth herein and other good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, Landlord and Tenant hereby agree to the following: Agreement 1. Articles 1, 2 and 3 of the Agreement shall be deleted in their entirety and replaced with the following: ARTICLE 1 BASIC DATA Each reference in this Lease to any of the terms contained in this Article or otherwise defined in this Agreement will be construed to incorporate the definitions or data stated under that term, defined as follows: 1.1. Building: Pope Block Building, 317 North Main Street, Pueblo, CO 81003 1.2. Leased premises: Rentable square feet (RSF) located section "2 East" of the Building, as follows: YEAR SQUARE FEET 1 1,260 2 500 3 TBD 4-10 TBD 1.3. Term: Initial term: 120 months Extended term: Two (2) five (5) year renewal options 1 1.4. Commencement date: February 1, 2019, subject to the availability of the space descried herein. Nothing contained herein requires Landlord to hold the availability of the facility for the Tenant. 1.5. Base rent: $12 per square foot, subject to the abatements described in Article 4 below. Tenant also agrees to pay its pro-rata share of Building's Operating Expenses as described in Article 4 below. 1.6. Renewal option: Tenant only upon written notice 90 days prior to termination date 1.7. Tenant improvement allowance: None 1.8. Agency disclosure and commission: None 1.9. Landlord address: Attn: Mayor 1 City Hall Place, 2"d Floor Pueblo, CO 81003 Phone: (719) 553-2655 1.10. Landlord's property management representative: Daniel C. Kogovsek City Attorney One City Hall Place, 3rd Floor Pueblo, CO 81003 Phone: (719) 562-3899 1.11. Tenant address: Attn: Diana E. Hall, 4400 Rawhide Road, #154, Pueblo, CO 81008 ARTICLE 2 LEASE OF PREMISES 2.1. Leased Premises. In consideration of the mutual covenants and agreements herein contained, Landlord hereby leases to Tenant the premises of approximately 500 rentable square feet("RSF") located in the Building (the"Leased Premises")together with all appurtenances. The Leased Premises are located in the following sections of the Building: 2 East. Notwithstanding anything to the contrary contained in this Agreement, neither the size nor location of the Leased Premises may be modified during the first year of occupancy without Tenant's prior written consent. 2.2. Common Areas. Tenant shall have, as appurtenant to the Leased Premises, the non- exclusive right to use, and permit its invitees to use in common with other tenants of the Building, public lobbies, hallways, stairways, elevators, walkways necessary for access to Leased Premises, 2 loading areas, pedestrian sidewalks and other areas or facilities which are in the Building which are public in nature. ARTICLE 3 TERM 3.1. Commencement Date; Term. This Lease shall have a ten (10) year term ("Term"). The Lease Term begins (the "Commencement Date") on February 1, 2019 and terminates on January 31, 2029 (the "Termination Date"). 3.2. Options. Provided Tenant is in full compliance with terms and conditions of this Lease, Tenant may extend the Term for an Extended Term as follows. Tenant may exercise two (2), five (5) year renewal options with 90 days prior notice to the Landlord. The rent and other terms and conditions of this Lease will remain unchanged for the renewal options. 2. Section 4.1 of the Agreement shall be deleted in its entirety and replaced with the following: 4.1. Base Rent. Tenant's base rent for the Term of this Lease is Twelve Dollars ($12.00) per square foot, subject to the following rent abatements: YEAR SQUARE FEET RENT PER RENT BASE RENT RENTED SQUARE FOOT ABATED OWED 1 1,260 $12.00 $15,120.00 $0 2 500 $12.00 $6,000.00 $0 3 TBD $12.00 Remaining TBD balance of $100,000 rent abatement commitment 4-10 TBD $12.00 Remaining TBD balance of $100,000 rent abatement commitment 2. Successors and Assigns. This Amendment shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns. 3. Ratification. Except as expressly stated herein, the Agreement and Amendment No. 1 shall remain in full force and effect. If there is any conflict between the Agreement and Amendment No. 1 and the terms of this Amendment No. 2, the terms of this Amendment No. 2 shall control. 4. Counterparts. This Amendment No. 2 may be executed in one or more counterparts, each of which shall be deemed an original and all of which shall constitute one and 3 the same document with the same effect as if all parties had signed the same original. The parties further agree that transmission of this Amendment No. 2 by telecopy or via email in a PDF format shall be deemed transmission of the original Amendment No. 2 for all purposes. IN WITNESS WHEREOF, the parties to this Amendment No. 2 have set forth their hand, to be effective upon final approval by the Mayor and City Council. LANDLORD City of Pueblo, Colorado a Colorado municipal corporation By: L Name: Nicholas A. Gr disar Title: Mayor Attested by: c3Utir\G Qv7 Crty Clerk Approved as to form: Name: Daniel C. Kogovsel Title: City Attorney TENANT: ActivArmor, LLC a Colorado.-Iimited�iability ny By Name: Diana E. Hall Title: Manager 4 PERSONAL GUARANTY The Continuing Guaranty which I signed on or about March 12,2018 is hereby ratified and shall remain in full force and effect and is applicable to the Agreement, Amendment No. 1 and this Amendment No. 2. I personally guarantee the payment of the full amount of(a) the Tenant's Base Rent Obligation; (b) the Tenant's Obligation to Pay a Pro Rata Portion of the Operating Expenses of the Pope Block Building; and (c) Tenant's other financial obligations as described in and in accordance with the Agreement, Amendment No. 1 and this Amendment No. 2. 1 Diana E. Hall, individually STATE OF COLORADO ) ) ss. • COUNTY OF PUEBLO ) The foregoing instrument was acknowledged before me this 3 day of m Q J , 2020 by Diana E. Hall as Manager of ActivArmor, LLC, a Colorado limited liability company and in her individual capacity as it pertains to the Personal Guaranty. Witness my hand and official seal. My commission expires: )a/at,)01 I . SCAL ". U �INDY J.CAPRITTA l NOTARY PUBLIC STATE OF COLORADO Notary Public NOTARY ID 19934016940 I fi OMISSION EXPIRES 12/20/2tiiJ 5