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HomeMy WebLinkAboutResolution - 2007-R0027 - Settlement Agreement - Frito Lay Inc. & LEDC - Incentive Payback Commitments - 01/25/2007Resolution No. 2007-R0027 January 25, 2007 item No. 5.16 RESOLUTION BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF LUBBOCK: THAT the Mayor of the City of Lubbock BE and is hereby authorized and directed to execute for and on behalf of the City of Lubbock a Settlement Agreement with Frito Lay, Inc. and Market Lubbock Economic Development Corporation, dba Market Lubbock, Inc. to resolve and settle the incentive payback commitments made to the City and to Market Lubbock, Inc. in the December, 2002, three -party agreement and all related documents. Said Settlement Agreement is attached hereto and incorporated in this Resolution as if fully set forth herein and shall be included in the minutes of the Council. Passed by the City Council this 25th day of January _'2007. DAVID A. MILLER, MAYOR ATTEST: Reb ca Garza, City Secretary AS Rob Al ' n, sista rt£ -Manager Development Services APPROVED AS TO FORM: Linda L. Chamales, Senior Attorney Office Practice Section Le: cityatt/Linda! Res-Frito Lay Settlement January 18, 2007 Resolution No. 2007—R0027 Execution Version January 25, 2007 Item No. 5.16 AGREEMENT OF SETTLEMENT AND RELEASE This Agreement of Settlement and Release (hereinafter referred to as "Release") is made this 25th day of January, 2007, by and between FRTTO-LAY, INC., a Delaware corporation, having an office and principal place of business at 7701 Legacy Drive, Plano, Texas 75024, its parent, divisions, subsidiaries and affiliates (hereinafter referred to as "Frito-Lay"), the City of Lubbock, a municipal corporation, having an office and principal place of business at 1625 131j' Street, Lubbock, Texas 79457 (hereinafter referred to as the "City"), and Market Lubbock Economic Development Corporation d/b/a Market Lubbock Inc., a 501(c)4 corporation, having an office and principal place of business at 1500 Broadway, 6`h Floor, Lubbock, Texas 79401, its parent, divisions, subsidiaries and affiliates (hereinafter referred to as "Market Lubbock"). WHEREAS, Frito-Lay and the City entered into a Tax Abatement Agreement, executed November 26, 2002 (the "Tax Agreement"), whereby, as provided in more detail in the Tax Agreement, the City agreed to provide certain tax abatements and exemptions due to Frito-Lay making certain expansions and modernizations at its Frito-Lay Lubbock, Texas facility (the "Facility"); and WHEREAS, Frito-Lay and Market Lubbock entered into an Economic Development Grant and Contract, signed by Frito-Lay on December 14, 2002 and to be effective as of the Effective Date as defined therein (the "Grant Contract"), whereby, as provided in more detail in the Grant Contract, Market Lubbock agreed to provide certain economic development grants to Frito-Lay contingent upon Frito-Lay making certain upgrades and modifications at the Frito-Lay Lubbock, Texas facility (the "Facility") and maintaining certain payroll amounts at the Facility; and WHEREAS, Frito-Lay, the City, and Market Lubbock entered into a three -party Agreement, effective as of December 19, 2002 (the "2002 Agreement"), whereby the following matters were agreed, as provided in more detail in the 2002 Agreement: Frito-Lay agreed to invest a total of $6,000,000 in Facility upgrades including $2,500,000 for the installation of a wastewater primary clarifier system and to maintain an annual payroll of $9,500,000 at the Facility operations from January 1, 2003 to January 1, 2010; Market Lubbock agreed to provide certain economic development grants (the same as referred to in the Grant Contract) to Frito-Lay as a job retention incentive; and the City and Lubbock County had agreed to grant Frito-Lay a tax abatement and the City further agreed to provide Frito-Lay with certain credits for wastewater surcharges in 2002, 2003, and 2004 to be applied against the Facility's annual total bill for wastewater discharge; and WHEREAS, the 2002 Agreement provided that if Frito-Lay failed to maintain the agreed annual payroll until January 1, 2010, that Frito-Lay would annually pay the City a certain agreed amount, as further detailed in the 2002 Agreement; and WHEREAS, even though the Grant Contract expired on its terms, the 2002 Agreement provided that if Frito-Lay failed to maintain the agreed annual payroll until January 1, 2010, that Frito-Lay would forfeit certain portions of the economic development grants as detailed in the Grant Contract; and WHEREAS, the Tax Agreement provided that Frito-Lay was subject to certain obligations, including but not limited to, the expansion and modernization of the Facility, compliance with all applicable terms and conditions for recapture of abated tax, granting of Execution Version access to the Facility to the City, limiting the use of the Facility to commercial and/or industrial uses, each as more specifically described in the Tax Agreement; and WHEREAS, the Facility closed on or about December 15, 2006 and with such closure, Frito-Lay ceased its operations at the Facility; and WHEREAS, Frito-Lay has demonstrated its concern for the City and Market Lubbock by assisting in attracting another business or company to occupy and operate the vacated manufacturing facility previously known as the Facility, with the expectation that such business or company will also operate the wastewater pretreatment system previously installed by Frito- Lay at the Facility in 2003 pursuant to the 2002 Agreement and Grant Contract; and WHEREAS, the City, Market Lubbock, and Frito-Lay desire to resolve and settle, fully and completely, any and all outstanding obligations, penalties, recaptures, remedies, payments, claims, liabilities, forfeitures or other commitments made, or to be made, or paid, or to be paid, to the City and Market Lubbock by Frito-Lay or incurred, or to be incurred, by Frito-Lay pursuant to the 2002 Agreement, Tax Agreement, Grant Contract and/or any other agreements related to economic and tax incentives due to Frito-Lay ceasing operation of the Facility (collectively, the "Commitments"), existing prior to, after, or on the effective date of this Release, whether known or unknown, asserted in, arising out of, connected with or incidental to the Commitments; and NOW THEREFORE, it is agreed by and between the parties as follows: The representations, covenants and recitations set forth in the foregoing recitals are material to this Agreement and are hereby incorporated into and made a part of this Agreement as though they were fully set forth in this paragraph 1. 2. Frito-Lay agrees to pay to the City, and the City agrees to accept from Frito-Lay, one hundred seventy-one thousand, two hundred twenty-four and no one hundredths dollars ($171,224.00) within thirty (30) business days of the execution of this Release by all parties. If another business or company fails to purchase or lease the facility or property formerly known as the Facility and occupy such Facility for a period of twenty-four hours within one year of the date of this Agreement, Frito-Lay agrees to pay an additional one hundred sixty-seven thousand, four hundred sixty-sevcn dollars ($167,467.00) (the "Second Payment") before January 30, 2008, for a total of three hundred seventy-five thousand, six hundred thirty dollars ($375,630.00) when combined with the prior payment. The City acknowledges that upon another business or company purchasing or leasing the facility or property formerly known as the Facility and occupying such Facility for a period of twenty-four hours prior to January 30, 2008, the Second Payment debt shall be fully discharged and no other amounts shall be due and payable to the City from Frito-Lay in respect to the Commitments or otherwise. Upon Frito-Lay's request, the City shall promptly send notice of such discharge to Frito-Lay. 3. Frito-Lay agrees to pay to Market Lubbock, and Market Lubbock agrees to accept from Frito-Lay, six hundred thousand and no one hundredths dollars ($600,000.00) within thirty (30) business days of the execution of this Release by all parties. 4. Except for the agreements set forth herein, each of the City and Market Lubbock, and its directors, members, agents, attorneys, agents and affiliates, hereby RELEASE, ACQUIT AND FOREVER DISCHARGE Frito-Lay, and any of its affiliates, parent and subsidiary corporations, divisions, agents, officers, directors, attorneys, employees, insurers, 2 Execution Version shareholders, of and from any and all liability, actions, causes of action, damages, claims, demands, charges, costs, and expenses, known or unknown, accrued or which may ever accrue, whether based in contract or tort, statutory or common law, of every kind and nature whatsoever relating to the Commitments. 5. Each of the parties to this Release represents, warrants, and agrees as follows: a. Each party has received independent legal advice from legal counsel with respect to the advisability of making the settlement provided for herein, with respect to the advisability of executing this Release, and with respect to the releases, waivers, and all other matters contained herein. This Release is the product of the joint drafting efforts of all parties, with the assistance of their counsel. This Release shall not be presumptively construed either in favor of or against any party on the grounds that such party drafted this Release or any part thereof. b. Each of the officers executing this Release on behalf of their respective corporations is empowered to do so and thereby binds his or her respective corporation. c. The parties have not heretofore assigned, transferred, or granted, or purported to assign, transfer, or grant, any of the claims, demands, causes of action, obligations, damages, and liabilities disposed of by this Release.. 6. The parties agree that this Release has been negotiated and executed in order to compromise and settle the events leading to the Commitments. 7. The Release constitutes the entire and complete agreement between the parties and there are no other side, prior, or collateral agreements, oral or written, or representations or inducements other than as expressly set forth in this Release. Specifically, for the avoidance of doubt, the City and Market Lubbock agree and acknowledge that Frito-Lay has not made any agreements and assurances whatsoever regarding the scope or length of operations of any new business or company occupying or operating the facility or property formerly known as the Facility, each has not been induced to execute this Release other than as specifically stated in this Release, and this Release is not subject or contingent in any way to scope or length of occupation or operations of any new company or business occupying or operating the facility or property formerly known as the Facility. This Release supersedes any prior agreements, if any, made between the parties relative to such subject matter. 8. This Release may be executed in multiple counterparts, all of which taken together shall constitute one and the same document. 9. THIS RELEASE IS NOT SUBJECT TO REVOCATION UNLESS THOSE CERTAIN AMOUNTS ARE NOT PAID PURSUANT TO PARAGRAPHS TWO AND THREE HEREIN. [Signature Page Follows] 3 Execution Version IN WITNESS WHEREOF, the parties have executed this Release as of the day and year first written above. CITY OF LUBBOCK, TEXAS DAVID A. M LER, MAYOR /:11 -to III. I Rebecca Garza, City Secretary APPRO D A TO TENT: Rob Allis , sis i ager Development Services APPROVED AS TO FORM: Linda L. Chamales, Senior Attorney Office Practice Section 4 FRITO-LAY, INC. Rich Beck Senior Vice President, Operations Market Lubbock Economic ment Corporation dAbla Lubbock Inc. Title: CEO