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HomeMy WebLinkAbout10414ORDINANCE NO. 10414 AN ORDINANCE APPROVING A SECOND AMENDMENT TO AN EMPLOYMENT AGREEMENT BETWEEN THE CITY OF PUEBLO, A COLORADO MUNICIPAL CORPORATION AND WALTER’S BEER, LLC, A COLORADO LIMITED LIABILITY COMPANY RELATING TO A JOB CREATING CAPITAL IMPROVEMENT PROJECT AND AUTHORIZING THE MAYOR TO EXECUTE SAID SECOND AMENDMENT BE IT ORDAINED BY THE CITY COUNCIL OF PUEBLO, that: SECTION 1. The City Council finds and determines that good cause exists for the amendment of the employment agreement between the City and Walter’s Beer, LLC, a Colorado limited liability (the “Company”). The Second Amendment to Employment Agreement, dated March 13, 2023 (“Second Amendment”) a copy of which is attached hereto and incorporated herein by this reference, having been approved as to form by the City Attorney, is hereby approved. The Mayor is authorized to execute and deliver said Second Amendment in the name of the City and the City Clerk is authorized to affix the seal of the City thereto and to attest same. SECTION 2. The officers and staff of the City are authorized to perform any and all acts consistent with this Ordinance and the attached Second Amendment which are necessary or desirable to implement the transactions described therein. SECTION 3. 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 February 27, 2023. Final adoption of Ordinance by City Council on March 13, 2023 . President of City Council Action by the Mayor: ☒ Approved on March 15, 2023 . □ 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 # R12 Background Paper for Proposed Ordinance February 27, 2023 COUNCIL MEETING DATE: TO: President Heather Graham and Members of City Council CC: Mayor Nicholas A. Gradisar VIA: Marisa Stoller, City Clerk FROM: Daniel C. Kogovsek, City Attorney SUBJECT: AN ORDINANCE APPROVING A SECOND AMENDMENT TO AN EMPLOYMENT AGREEMENT BETWEEN THE CITY OF PUEBLO, A COLORADO MUNICIPAL CORPORATION AND WALTER’S BEER, LLC, A COLORADO LIMITED LIABILITY COMPANY RELATING TO A JOB CREATING CAPITAL IMPROVEMENT PROJECT AND AUTHORIZING THE MAYOR TO EXECUTE SAID SECOND AMENDMENT SUMMARY: Attached is an Ordinance approving and authorizing the Mayor to sign a Second Amendment to an employment agreement with Walter’s Beer, LLC, a Colorado limited liability company (the “Company”). The attached amendment reduces the Company’s employment commitment from 11 to 4 employees but requires the Company to keep 4 employees on the payroll until September 30, 2032. The Company has also agreed to pay the City a one-time contract amendment fee of $5,000 if the City Council approves the attached Second Amendment. PREVIOUS COUNCIL ACTION: Company and City entered into an original Employment Agreement (“Employment Agreement”) dated September 9, 2013 which provided, inter alia, for the advancement of funds in the amount of $150,000 to the Company in exchange for the Company’s commitment to employ, for a seven (7) year period, eleven (11) full time employees whose annual salary would average at least $40,600; and Company and City entered into a 1st Amendment to Employment Agreement (“1st Amendment”) dated October 23, 2017, which provided for the extension of the Company’s Employment Commitment to October 1, 2021 and the Termination Date was extended to September 30, 2027. BACKGROUND: Company intends to continue to operate its manufacturing facility within the City through, at least, December 31, 2032. As a result of the COVID-19 pandemic and other business challenges, the Company has requested that the City extend the Company’s Employment Commitment Date as well as adjust the total number of employees guaranteed and also reduce the annual average salary required. The attached Second Amendment requires the Company to keep 4 employees continuously employed for twelve (12) years, from October 1, 2020 until September 30, 2032, at annual salaries which average at least $34,000.. FINANCIAL IMPLICATIONS: No additional “half cent” economic development incentives will be paid to the Company. The City will receive a one-time contract amendment fee of $5,000, if the City Council approves the attached Second Amendment. BOARD/COMMISSION RECOMMENDATION: Not applicable to this Ordinance. STAKEHOLDER PROCESS: Not applicable to this Ordinance. ALTERNATIVES: If this Ordinance is not approved, the Company’s proposed “work out” of its employment commitment will not be accepted. RECOMMENDATION: The Pueblo Economic Development Corporation recommends approval of this Ordinance. ATTACHMENTS: 1. Walters Beer -2nd Amended Agreement SECOND AMENDMENT TO EMPLOYMENT AGREEMENT THIS SECOND AMENDMENT TO EMPLOYMENT AGREEMENT ("2nd Amendment") is entered into this 13th day of March, 2023 between the City of Pueblo, a Colorado municipal corporation (the "City") and Walter's Beer, LLC, a Colorado limited liability company (the "Company"). WHEREAS, Company and City entered into an original Employment Agreement ("Employment Agreement") dated September 9, 2013 which provided, inter alia, for the advancement of funds in the amount of$150,000.00 to the Company in exchange for the Company's commitment to employ, for a seven (7) year period, eleven (11) full time employees whose annual salary would average at least $40,600.00; and WHEREAS, Company and City entered into a 1st Amendment to Employment Agreement ("1St Amendment") dated October 23, 2017, which provided for the extension of the Company's Employment Commitment to October 1, 2021 and the Termination Date was extended to September 30, 2027. WHEREAS, Company intends to continue to operate its manufacturing facility within the City through, at least, December 31, 2032; and WHEREAS, as a result of the COVID-19 pandemic and other business challenges, the Company has requested that the City extend and enlarge the Company's Employment Commitment Date as well as adjust the total number of employees guaranteed and also reduce the annual average salary required. NOW, THEREFORE, in consideration of the foregoing and the mutual covenants contained herein, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, City and Company agree as follows: 1. The Company's Employment Commitment Date is amended to commence October 1, 2020. 2. The Termination Date of the Company's Employment Commitment is enlarged and extended to September 30, 2032. 3. From October 1, 2020 to September 30, 2032, Company will continuously conduct its business operations at the Facility and employ, on a quarterly average, not less than four(4) Full-Time Employees at the Facility whose annual salary would average at least $34,000.00 ("Employment Commitment"). Such quarterly average shall be calculated using the sum of the aggregate number of Full-Time Employees on each business day of a Quarter, divided by the sum of the aggregate business days in such Quarter. 4. Notwithstanding anything contained in Employment Agreement and the 1st Amendment to the contrary, if Company shall fail to meet the Employment Commitment, Company shall pay to City compensating amounts calculated as follows. From October 1, 2020 to September 30, 2032 (the "Commitment Period") Company shall pay to City a compensating amount for each Quarter in the Commitment Period calculated by subtracting the number of Quarterly Employees from the commitment of four (4) Full- Time Employees and then multiplying the result by $781.25. For example, if for the second Quarter of 2024, the number of Quarterly Employees is 2 the amount payable by Company to City on or before the fifteenth (15th) day of the next calendar month would be (4 - 2) x $781.25 = $1 ,562.50. 5. Company further agrees to pay to City Five Thousand ($5,000.00) Dollars as consideration for the modifications to the Employment Agreement and 1st Amendment as set forth in this 2nd Amendment. Said monies shall be paid contemporaneously with the execution of this 2nd Amendment. Failure to pay said monies shall result in this 2nd Amendment becoming null and void. 6. The Employment Agreement between the Parties, which is incorporated herein by this reference, shall remain in full force and effect, except as amended by the 1st Amendment and this 2nd Amendment. Executed at Pueblo, Colorado, the day and year first above written. [ SEAL ] City of Pueblo, a Colorado municipal corporation Attest: I47--) By: 'tel City rk ayor Walter's Beer, LLC, a Colorado limited liability corporation Signature r1 C11 Print Name Ceo Print Title 2 SECOND AMENDMENT TO EMPLOYMENT AGREEMENT THIS SECOND AMENDMENT TO EMPLOYMENT AGREEMENT ("2nd Amendment") is entered into this 13th day of March, 2023 between the City of Pueblo, a Colorado municipal corporation (the "City") and Walter's Beer, LLC, a Colorado limited liability company (the "Company"). WHEREAS, Company and City entered into an original Employment Agreement ("Employment Agreement") dated September 9, 2013 which provided, inter alia, for the advancement of funds in the amount of$150,000.00 to the Company in exchange for the Company's commitment to employ, for a seven (7) year period, eleven (11) full time employees whose annual salary would average at least $40,600.00; and WHEREAS, Company and City entered into a 1st Amendment to Employment Agreement ("1St Amendment") dated October 23, 2017, which provided for the extension of the Company's Employment Commitment to October 1, 2021 and the Termination Date was extended to September 30, 2027. WHEREAS, Company intends to continue to operate its manufacturing facility within the City through, at least, December 31, 2032; and WHEREAS, as a result of the COVID-19 pandemic and other business challenges, the Company has requested that the City extend and enlarge the Company's Employment Commitment Date as well as adjust the total number of employees guaranteed and also reduce the annual average salary required. NOW, THEREFORE, in consideration of the foregoing and the mutual covenants contained herein, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, City and Company agree as follows: 1. The Company's Employment Commitment Date is amended to commence October 1, 2020. 2. The Termination Date of the Company's Employment Commitment is enlarged and extended to September 30, 2032. 3. From October 1, 2020 to September 30, 2032, Company will continuously conduct its business operations at the Facility and employ, on a quarterly average, not less than four(4) Full-Time Employees at the Facility whose annual salary would average at least $34,000.00 ("Employment Commitment"). Such quarterly average shall be calculated using the sum of the aggregate number of Full-Time Employees on each business day of a Quarter, divided by the sum of the aggregate business days in such Quarter. 4. Notwithstanding anything contained in Employment Agreement and the 1st Amendment to the contrary, if Company shall fail to meet the Employment Commitment, Company shall pay to City compensating amounts calculated as follows. From October 1, 2020 to September 30, 2032 (the "Commitment Period") Company shall pay to City a compensating amount for each Quarter in the Commitment Period calculated by subtracting the number of Quarterly Employees from the commitment of four (4) Full- Time Employees and then multiplying the result by $781.25. For example, if for the second Quarter of 2024, the number of Quarterly Employees is 2 the amount payable by Company to City on or before the fifteenth (15th) day of the next calendar month would be (4 - 2) x $781.25 = $1,562.50. 5. Company further agrees to pay to City Five Thousand ($5,000.00) Dollars as consideration for the modifications to the Employment Agreement and 1st Amendment as set forth in this 2nd Amendment. Said monies shall be paid contemporaneously with the execution of this 2nd Amendment. Failure to pay said monies shall result in this 2nd Amendment becoming null and void. 6. The Employment Agreement between the Parties, which is incorporated herein by this reference, shall remain in full force and effect, except as amended by the 1st Amendment and this 2nd Amendment. Executed at Pueblo, Colorado, the day and year first above written. [ SEAL ] City of Pueblo, a Colorado municipal corporation SAttest: Or By: egueesezotie-04 k City Walter's Beer, LLC, a Colorad• limited liab. ' ..oration 40 By. �- Signature / "at. Slea NC11•ez Print Name C Eo Print Title 2