Contract - Chatsworth Products - 12/20/2018 ECONOMIC DEVELOPMENT PROGRAM AGREEMENT
This Economic Development Program Agreement ("Agreement") is entered into this Z �day of
December, 2018, by and between the City of Round Rock, Texas, a Texas home rule municipal
corporation ("City"), and Chatsworth Products, a Delaware corporation ("Chatsworth").
WHEREAS, the City has adopted Resolution Nd �7*Aq attached as Exhibit A ("City
Resolution"), establishing an economic development program and authorizing the Mayor to enter
into this Agreement with Chatsworth in recognition of the positive economic benefits to the City
through Chatsworth's leasing space in a building located at 900 E. Old Settlers Blvd, in the City
Round Rock; and
WHEREAS, Chatsworth will employ at least forty (40) employees when the Facility (as
hereinafter defined) is complete, and during the term of this Agreement; and
WHEREAS,the purpose of this Agreement is to promote economic development as contemplated
by Chapter 380 of the Texas Local Government Code whereby Chatsworth will expend significant
sums to install improvements to and equip the Facility and lease, occupy, and operate the Facility
in conformance with the City's development approvals for the Facility; and
WHEREAS, the City agrees to provide performance based economic development grants to
Chatsworth to defray a portion of Chatsworth's expenses;
NOW, THEREFORE, in consideration of the mutual benefits and promises and for other good
and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the
City and Chatsworth agree as follows:
1. Authority. The City's execution of this Agreement is authorized by Chapter 380 of the
Texas Local Government Code, and the City Resolution, and constitutes a valid and
binding obligation of the City in the event Chatsworth proceeds with the lease and
occupation of the Facility. The City acknowledges that Chatsworth is acting in reliance
upon the City's performance of its obligations under this Agreement in making its decision
to commit substantial resources and money to lease, improve and occupy the Facility.
2. Definitions.
2.1 "Economic Incentive Payment(s)" ("EIPs") means the amount paid by the City
to Chatsworth under the Program.
2.2 "Effective Date" is the date this Agreement is executed to be effective by the City
and Chatsworth.
2.3 "Facility" means the portion of the building located at 900 E. Old Settlers Blvd,
Round Rock, Texas 78664 to be leased by Chatsworth.
2.4 "Improvements"means the finish out of and additions to the Facility,and personal
property and equipment with a minimum value of$1,200,000.00.
00413442.DOCX
2.5 "Program" means the economic development program established by the City
pursuant to Chapter 380 of the Texas Local Government Code and under the City
Resolution to promote local economic development and stimulate business and
commercial activity within the City.
2.6 "Recapture Liability" means the total amount of all EIP's that are paid as result
of this Agreement that are subject to recapture by the City from Chatsworth in the
event of a Chatsworth default.
3. Term. This Agreement shall become enforceable upon its Effective Date and shall
terminate on December 31, 2025.
4. Rights and Obligations of Chatsworth.
4.1 Lease of Facility. Chatsworth agrees to provide City with documentation showing
that it has leased the Facility until at least December 31, 2025.
4.2 Improvements. Chatsworth agrees to spend at least$1,200,000 to construct and/or
install the Improvements on or before December 31, 2019. Chatsworth agrees to
provide City with documentation showing that this obligation has been satisfied.
City shall have the right, following reasonable advance notice to Chatsworth, to
audit Chatsworth's records to verify that this obligation has been satisfied.
4.3 Jobs.
4.3.1 Job Creation and Creation. Within thirty (30) days after the City issues a
Certificate of Occupancy ("CO") for the Facility, Chatsworth agrees to employ in
the Facility at least 20 full-time employees and to add employees in accordance
with the following schedule:
Date Retain New Total
30 days after CO N/A 20 20
December 31, 2020 20 10 30
December 31, 2021 30 10 40
In addition, Chatsworth agrees to retain 40 full-time employees for the full term of
this Agreement.
4.3.2 Salaries and Benefits. Chatsworth agrees that the full-time jobs will have an
average annual salary of at least$45,000 including industry standard benefits.
4.3.3 Job Compliance Affidavit. Chatsworth agrees to provide to the City an annual
Job Compliance Affidavit by March 1 of each calendar year during the term of this
Agreement. A copy of the Job Compliance Affidavit form is attached hereto as
Exhibit B. City shall have the right, following reasonable advance notice to
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Chatsworth, to audit Chatsworth's records to verify that this obligation has been
satisfied.
4.4 Compliance with regulations. Chatsworth agrees that it will comply with the City's
development approval processes and shall lease the Facility and construct and
install the Improvements and occupy and operate the Facility consistent with City
ordinances, development regulations and requirements.
4.5 Continuous operation. Chatsworth agrees that it will continuously operate the
Facility and employ the number of employees set out in section 4.3.1 during the
term of this Agreement, including any extensions.
5. Rights and Obligations of the City.
In consideration of Chatsworth's compliance with this Agreement, the City agrees as
follows:
5.1 Economic Incentive Payment("EIP").
5.1.1 EIP. City shall, subject to Chatsworth's satisfaction of its obligation to
execute a lease for the building, invest$1,200,000 in Improvements by December
311 2019, and to employ the number of employees set forth in Section 4 above,
make EIPs to Chatsworth as follows:
Date Amount
April 1, 2020 $ 25,000.00
April 1, 2021 $ 2500.00
5.1.2 EIP Subject to Future Appropriations. This Agreement shall not be
construed as a commitment, issue or obligation of any specific taxes or tax revenues
for payment to Chatsworth. The EIP by the City under this Agreement is subject to
the City's appropriation of funds for such payments in the budget year for which
they are made. The EIP to be made to Chatsworth, if paid, shall be made solely
from annual appropriations from the general funds of the City or from such other
funds of the City as may be legally set aside for the implementation of Article III,
Section 52a of the Texas Constitution or Chapter 380 of the Local Government
Code or any other economic development or financing program authorized by
statute or home rule powers of the City under applicable Texas law, subject to any
applicable limitations or procedural requirements. In the event that the City does
not appropriate funds in any fiscal year for the EIP due under this Agreement, such
failure shall not be considered a default under Section 7.3, and the City shall not be
liable to Chatsworth for such EIP, however, the City shall extend this Agreement
for another year(s), until Chatsworth has received all of the EIPs provided for
herein. In addition, Chatsworth shall have the right but not the obligation to rescind
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this Agreement. To the extent there is a conflict between this paragraph and any
other language or covenant in this Agreement, this paragraph shall control.
6. EIP Recapture.In the event the City terminates this Agreement as a result of Chatsworth's
default, the City may recapture and collect from Chatsworth the Recapture Liability. Chatsworth
shall pay to the City the Recapture Liability within thirty (30) days after the City makes demand
for same, subject to any and all lawful offsets, settlements, deduction, or credits to which
Chatsworth may be entitled. Notwithstanding anything herein to the contrary, such Recapture
Liability shall not exceed, in the aggregate, an amount equal to all EIPs that were paid pursuant to
this Agreement from the Effective Date to the date of termination (together with interest thereon
to be charged at the statutory rate for delinquent taxes as determined by Section 33.01 of the
Property Tax Code of the State of Texas, but without the addition of a penalty). The City shall
have all remedies for the collection of the Recapture Liability as provided generally in the Tax
Code for the collection of delinquent property taxes.
7. Miscellaneous.
7.1 Mutual Assistance. The City and Chatsworth will do all things reasonably
necessary or appropriate to carry out the terms and provisions of this Agreement.
7.2 Representations and Warranties. The City represents and warrants to Chatsworth
that the Program and this Agreement are within its authority, and that it is duly
authorized and empowered to establish the Program and enter into this Agreement,
unless otherwise ordered by a court of competent jurisdiction. Chatsworth
represents and warrants to the City that it has the requisite authority to enter into
this Agreement.
7.3 Default. If either the City or Chatsworth should default in the performance of any
obligations of this Agreement, the other party shall provide such defaulting party
written notice of the default, and a minimum period of thirty(30)days to cure such
default, prior to instituting an action for breach or pursuing any other remedy for
default. If the City remains in default after notice and opportunity to cure,
Chatsworth shall have the right to terminate this Agreement by giving written
notice thereof to City and to pursue any remedy at law or in equity for the City's
breach. If Chatsworth remains in default after notice and opportunity to cure, City
shall have the right to terminate this Agreement by giving written notice thereof to
Chatsworth and to pursue any remedy at law or in equity for Chatsworth's breach,
in addition to the right of EIP recapture set forth above.
7.4 Attorney's Fees. In the event any legal action or proceeding is commenced in a
court of competent jurisdiction between the City and Chatsworth to enforce
provisions of this Agreement and recover damages for breach,the prevailing party
in such legal action shall be entitled to recover its reasonable attorney's fees and
expenses incurred by reason of such action, to the extent allowed by law.
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7.5 Entire Agreement. This Agreement contains the entire agreement between the
parties with respect to the EIP. This Agreement may only be amended, altered or
revoked by written instrument signed by the City and Chatsworth.
7.6 Binding Effect. This Agreement shall be binding on and inure to the benefit of the
parties, their respective successors and assigns.
7.7 Assignment. Chatsworth may not assign all or part of its rights and obligations to
a third party without the express written consent of the City, which consent shall
not be unreasonably withheld, conditioned or delayed, provided, however, that
Chatsworth may assign this Agreement without the consent of the to an entity which
controls, is controlled by or is under common control with Chatsworth, any
successor entity to Chatsworth by way of merger, consolidation or other non-
bankruptcy corporate reorganization,or an entity which acquires all or substantially
all of Chatsworth's assets,partnership or membership interests, or capital stock.
7.8 Amendment. This Agreement may be amended by the mutual written agreement
of the parties.
7.9 Termination. In the event Chatsworth elects not to lease the building as
contemplated by this Agreement, Chatsworth shall notify the City in writing, and
this Agreement and the obligations on the part of both parties shall be deemed
terminated and of no further force or effect.
7.10 Notice. Any notice and or statement required and permitted to be delivered shall
be deemed delivered by actual delivery, facsimile with receipt of confirmation, or
by depositing the same in the United States mail, certified with return receipt
requested, postage prepaid, addressed to the appropriate party at the following
addresses:
If to City: City of Round Rock
221 E. Main Street
Round Rock, TX 78664
Attn: City Manager
Phone: (512) 218-5400
Email: lhadleygroundrocktexas.gov
With a required copy to:
Sheets & Crossfield
309 E. Main Street
Round Rock, TX 78664
Attn: Stephan L. Sheets
Phone: (512) 255-8877
Email: steve?scrrlaw.com
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If to Chatsworth: Chatsworth Products
29899 Agoura Road, Suite 120
Agoura Hills, CA 91301
Attn: Lawrence W. Varblow
With a required copy to:
Chatsworth Products, Inc.
3004 South Austin Avenue
Georgetown,TX 78626
Attn: Henry Kubicek
Either party may designate a different address at any time upon written notice to the other party.
7.11 Interpretation. Each of the parties has been represented by counsel of their
choosing in the negotiation and preparation of this Agreement. Regardless of which
party prepared the initial draft of this Agreement,this Agreement shall, in the event
of any dispute, however its meaning or application, be interpreted fairly and
reasonably and neither more strongly for or against any party.
7.12 Applicable Law. This Agreement is made, and shall be construed and interpreted,
under the laws of the State of Texas and venue shall lie in Williamson County,
Texas.
7.13 Severability. In the event any provisions of this Agreement are illegal, invalid or
unenforceable under present or future laws, and in that event, it is the intention of
the parties that the remainder of this Agreement shall not be affected. It is also the
intention of the parties of this Agreement that in lieu of each clause and provision
that is found to be illegal, invalid or unenforceable, a provision be added to this
Agreement which is legal,valid or enforceable and is as similar in terms as possible
to the provision found to be illegal, invalid or unenforceable.
7.14 Paragraph Headings. The paragraph headings contained in this Agreement are for
convenience only and will in no way enlarge or limit the scope or meaning of the
various and several paragraphs.
7.15 No Third Party Beneficiaries. This Agreement is not intended to confer any rights,
privileges or causes of action upon any third party.
7.16 Force Majeure. Except as otherwise provided herein,an equitable adjustment shall
be made for delay or failure in performing if such delay or failure is caused,
prevented, or restricted by conditions beyond that Party's reasonable control (a
"force majeure event"). A force majeure event for the purposes of this Agreement
shall include, but not be limited to, acts of God, fire; explosion, vandalism; storm
or similar occurrences; orders or acts of military or civil authority; litigation;
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changes in law, rules, or regulations outside the control of the affected Party;
national emergencies or insurrections; riots; acts of terrorism; or supplier failures,
shortages or breach or delay. Except as otherwise expressly provided,herein,there
shall be an equitable adjustment allowed for performance under this Agreement as
the result of any event of force majeure.
7.17 No Joint Venture. It is acknowledged and agreed by the parties that the terms hereof
are not intended to and shall not be deemed to create any partnership or joint venture
among the parties. The City, its past, present and future officers, elected officials,
employees and agents of the City, do not assume any responsibilities or liabilities
to any third party in connection with the development of the Facility or the design,
construction or operation of any portion of the Facility.
7.18 Estoppel Certificate. Chatsworth may request an estoppel certificate from City so
long as the certificate is requested in connection with a bona fide business purpose
and requests commercially reasonable certifications. City agrees to promptly
execute and deliver any estoppel certificate reasonably requested pursuant to this
Section 7.18. The certificate, which will upon request be addressed to Chatsworth,
or a lessee, purchaser or assignee of Chatsworth, shall include, but not necessarily
be limited to, statements (qualified to the best knowledge of the City) that this
Agreement is in full force and effect without default(or if a default exists,the nature
of such default and any curative action which should be undertaken to cure same),
the remaining term of this Agreement, and such other matters reasonably requested
by the party(ies)to receive the certificate.
EXECUTED to be effective as of the day of , 2018 (the "Effective Date").
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CITY OF ROUND ROCK, TEXAS,
By:
Craig orgaN Mayor
Date: December 2.0 , 2018
AP ED as to fo
Stephan . Sheets, City Attorney
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Chatsworth Products, a Delaware corporation
By: ,
Name:
Its:
Date: ab U-AA. � g , 2018
9
EXHIBIT "A"
TO THE ECONOMIC DEVELOPMENT AGREEMENT
RESOLUTION NO. R-
WHEREAS, Chatsworth Products, a Delaware corporation ("Chatsworth")has expressed to the
City of Round Rock ("City") its desire to locate a facility to the City which will provide jobs and
additional tax base to the City, and
WHEREAS, §380.001 Local Government Code provides that a municipality may establish an
economic development program ("Program") to promote local economic development and to stimulate
business and commercial activity in the municipality, and
WHEREAS, the City Council has determined that the Program described in Exhibit "A" will
meet the goals set forth in said §380.001 and will be of mutual benefit to both parties,Now Therefore
BE IT RESOLVED BY THE COUNCIL OF THE CITY OF ROUND ROCK, TEXAS,
That the City offers to Chatsworth a §380.001 Program in exchange for Chatsworth locating an
office facility to the City, and
BE IT FURTHER RESOLVED
That the offer of the Program shall be as generally outlined in Exhibit "A" attached hereto and
incorporated herein for all purposes.
The City Council hereby finds and declares that written notice of the date,hour,place and subject
of the meeting at which this Resolution was adopted was posted and that such meeting was open to the
public as required by law at all times during which this Resolution and the subject matter hereof were
discussed, considered and formally acted upon, all as required by the Open Meetings Act, Chapter 551,
Texas Government Code, as amended.
RESOLVED this day of December, 2018.
CRAIG MORGAN, Mayor
City of Round Rock, Texas
ATTEST:
SARA L. WHITE, City Clerk
EXHIBIT A
TO THE RESOLUTION
ECONOMIC DEVELOPMENT PROGRAM
The terms of the §380.001 Economic Development Program to be offered to Chatsworth
Products, ("Chatsworth") in exchange for Chatsworth's locating a facility in the City of Round Rock are
as generally outlined below:
1. Chatsworth's obligations:
1.1. Chatsworth agrees to lease and occupy building located at 900 E. Old Settlers Blvd,
Round Rock, Texas (the "Facility").
1.2 Chatsworth agrees to invest at least $1,200,000 in Facility improvements and personal
property.
1.3 Chatsworth agrees to employ at least 40 full-time employees in the Facility.
2. City's obligations:
2.1 City shall, subject to Chatsworth's satisfaction of its obligation to execute a lease for the
office facility and to employ 40 employees, make the following EIP's to Chatsworth:
Date Amount
April 1, 2020 $255000.00
April 1, 2021 $25,000.00
3. The terms and provisions of this Program will be set out in more detail in the Economic
Development Program Agreement of even date herewith.
EXHIBIT "B"
TO THE ECONOMIC DEVELOPMENT AGREEMENT
JOB COMPLIANCE AFFIDAVIT
Before me, the undersigned authority, on this day personally appeared
(name) , known to me to be the person whose name is
subscribed below and after having been duly sworn, on his/her oat stated as follows:
1. "My name is . I am over the age of 21 years and am capable of
making this affidavit. The facts stated in this affidavit are within my personal knowledge and
are true and correct.
2. "1 am the (title) of CHATSWORTH PRODUCTS and I am
duly authorized to make this affidavit.
3. "As of December 31, 20CHATSWORTH PRODUCTS had the following job positions and
salaries:
Employee ID No. Job Position or Title Annual Salary
$
$
$
$
$
$
TOTAL JOBS AVG. SALARY$
4. "In addition to the salary, all full-time jobs included industry standard employee benefits.
Dated this day of -120—.
(Signature)
(Printed name)
(Title)
SUBSCRIBED AND SWORN TO before me on this the day of , 20
Notary Public, State of Texas
CERTIFICATE OF INTERESTED PARTIES
FORM 1.295
10f1
Complete Nos,1-4 and 6 if there are interested parties. OFFICE USE ONLY
Complete Nos.1,2,3,5,and 6 if there are no interested parties. CERTIFICATION OF FILING
1 Name of business entity filing form,and the city,state and country of the business entity's place Certificate Number:
of business. 2018-431584
Chatsworth Products
Georgetown,TX United States Date Filed:
2 Name of governmental entity or state agency that is a party to the contract for which the form is 12/06/2018
being filed.
City of Round Rock Date Acknowledged:
g Provide the identification number used by the governmental entity or state agency to track or identify the contract,and provide a
description of the services,goods,or other property to be provided under the contract.
000000
We are moving our electronics manufacturing into a new facility in Round Rock and are looking to enter into an an economic
development program with the city.
4
Nature of interest
Name of Interested Party City,State,Country(place of business) (check applicable)
Controlling I intermediary
5 Check only if there is NO Interested Party.
X
6 UNSWORN DECLARATION
My name is Gavin Kennedy
and my date of birth is
My address is
29899 Agoura Road Suite 120 Agoura Hills CA 91301 USA
(street) (city) (state) (zip code) (country)
it
it
I declare under penalty of perjury that the foregoing is true and correct.
Executed in Los Angeles County, State of California 7th December 18
y ,on the day of ,20
(month) (year)
Signature of authorized agent of contracting business entity
(Declarant)
Forms provided by Texas Ethics Commission www.ethics.state.tx.us Version V1.0.6711
CERTIFICATE OF INTERESTED PARTIES
FORM 1295
10f1
Complete Nos.1-4 and 6 if there are interested parties. OFFICE USE ONLY
Complete Nos.1,2,3,5,and 6 if there are no interested parties. CERTIFICATION OF FILING
1 Name of business entity filing form,and the city,state and country of the business entity's place Certificate Number:
of business. 2018-431584
Chatsworth Products
Georgetown,TX United States Date Filed:
2 Name of governmental entity or state agency that is a party to the contract for which the form is 12/06/2018
being filed.
City of Round Rock Date Acknowledged:
12/12/2018
3 Provide the identification number used by the governmental entity or state agency to track or identify the contract,and provide a
description of the services,goods,or other property to be provided under the contract.
000000
We are moving our electronics manufacturing into a new facility in Round Rock and are looking to enter into an an economic
development program with the city.
4 Nature of interest
Name of Interested Party City,State,Country(place of business) (check applicable)
Controlling T Intermediary
5 Check only if there is NO Interested Party.
X
6 UNSWORN DECLARATION
My name is and my date of birth is
My address is
(street) (city) (state) (zip code) (country)
I declare under penalty of perjury that the foregoing is true and correct.
Executed in County, State of on the day of 20
(month) (year)
Signature of authorized agent of contracting business entity
(Declarant)
Forms provided by Texas Ethics Commission www.ethics.state.tx.us Version V1.0.6711