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2015-251ORDINANCE NO. 2015-251 AN ORDINANCE ESTABLISHING AN ECONOMIC DEVELOPMENT PROGRAM UNDER CHAPTER 380 OF THE LOCAL GOVERNMENT CODE FOR MAKING GRANTS OF PUBLIC MONEY TO PROMOTE ECONOMIC DEVELOPMENT AND TO STIMULATE BUSINESS ACTIVITY IN THE CITY OF DENTON; APPROVING AN ECONOMIC DEVELOPMENT PROGRAM GRANT AGREEMENT WITH VICTOR EQUIPMENT COMPANY AND MOHR DENTON, LLC, SETTING FORTH THE GRANT CONDITIONS AND TERMS TO VICTOR EQUIPMENT COMPANY AND MOHR DENTON, LLC RECEIVING THE PROGRAM GRANT; PROVIDING FOR A SEVERABILITY CLAUSE; AND PROVIDING AN EFFECTIVE DATE. WHEREAS, Victor Equipment Company, ( "Grantee ") has made a request of the City of Denton to establish an economic development program under Chapter 380 of the Texas Local Government ( "Chapter 380 ") to stimulate the development of commercial property within the City of Denton; and WHEREAS, the City Council by this ordinance is establishing an economic development program under Chapter 380 which will stimulate business activity in the City and promote the public interest (the "Program "); WHEREAS, to effectuate the Program, the City and Grantee have negotiated an Economic Development Grant Agreement (the "Agreement "), a copy of which is attached hereto and made a part hereof by reference; and WHEREAS, the City Council finds that the Program and Agreement promote economic development and will stimulate commercial activity within the City of Denton for the benefit of the public; NOW, THEREFORE; THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS: SECTION 1. The recitals and findings contained in the preamble of this ordinance are incorporated into the body of this ordinance. SECTION 2. The City Manager, or his designee, is hereby authorized to execute the Agreement on behalf of the City of Denton and to carry out the City's responsibilities and rights under the Agreement, including without limitation the authorization to make the expenditures set forth in the Agreement. SECTION 3. This ordinance shall become effective immediately upon its passage and approval. Victor Ordinance (2).docx PASSED AND APPROVED this the ATTEST: JENNIFER WALTERS, CITY SECRETARY M'R I ED ANTO LEGAL FORM: ANITA BURGESS, CITY ATTORNEY � .. Page 2 day of _ 2015. C S ''ATTS, MAYOR ECONOMIC DEVELOPMENT AGREEMENT WITH VICTOR EQUIPMENT COMPANY This Economic Development Agreement ( "Agreement ") is made and entered into as of the effective date provided for below, by MOHR DENTON, LLC, a Texas Limited Liability Company, located at 14643 Dallas Pkwy., Suite 1000, Dallas, Texas 75254 ( "Owner "), VICTOR EQUIPMENT COMPANY, a Delaware corporation located at 2800 Airport Road, Denton, Texas 76201 ( "Tenant Grantee ")(Owner and Tenant Grantee are collectively referred to as the "Grantees" herein), and the CITY OF DENTON, a Texas municipal corporation, located at 215 E. McKinney Street, Denton, Texas 76201 (the "City ") for the purposes and considerations stated below: WHEREAS, this Agreement is authorized pursuant to Article III, Section 52 -a of the Texas Constitution and Chapter 380 of the Texas Local Government Code (the "Act ") to promote local economic development and to stimulate business and commercial activity in the City of Denton; and WHEREAS, Owner owns or is under contract to acquire two tracts of land located at 2800 Airport Road, Denton, Texas 76201, which are within the city limits of the City of Denton, Denton County, Texas and is more particularly described in Exhibit "A" attached hereto and incorporated by reference as if set forth at length herein (the "Property "); and WHEREAS, The ESAB Group, Inc., a Delaware Corporation, ( "ESAB ") and Victor Technologies International, Inc., a Delaware Corporation, ( "VTI ") are members of the ESAB group of companies under common ownership since 2014; and WHEREAS, Victor Equipment Company, a Delaware Corporation, ( "VEC" or "Tenant Grantee ") is a subsidiary of VTI and is the current leaseholder of the Property; and WHEREAS, VEC, ESAB, and VTI are a group of cooperating companies with varying degrees of shared ownership and are considered a "Related Party" to one another as that term is defined herein; and WHEREAS, Tenant Grantee anticipates entering into a lease on the Property with Owner for a term of at least 12 years; and WHEREAS, Grantees and Related Parties desire to construct a new 185,400 square foot facility and improve an existing facility within the City relocating approximately 100 jobs from an existing facility and create 100 new jobs over a three year period with an estimated Capital investment of approximately $30,000,000.00 ( "Project "); and Economic Development Agreement Page 1 of 20 Victor Equipment Company Mohr Denton, LLC WHEREAS, on or about March 13, 2015, Grantees submitted an application to the City concerning the contemplated use and development of the Property in order to request economic development incentives pursuant to the Act ( "Grant Application "), representing that the Project on the Property would not occur unless incentives are provided; and WHEREAS, the Grant Application was reviewed by the Economic Development Partnership Board ( "EDP board ") in accordance with the City of Denton's Tax Abatement and Incentive Policy on April 15, 2015 and the EDP board found the Project meets the qualifications for tax incentive and recommended approval of the incentive as outlined herein unanimously with a vote of 5 -0; and WHEREAS, the City Council of the City of Denton desires to provide an incentive in the form of a grant to Grantees to develop the Property and hereby finds that the contemplated use and development of the Property, the proposed improvements provided for herein, and the other terms and conditions of this Agreement, will promote economic development, increase employment, and stimulate business and commercial activity within the City of Denton for the benefit of the public and therefore meets the requirements under Chapter 380 of the Texas Local Government Code; and NOW, THEREFORE, the City and Grantees for and in consideration of the Property and the promises contained herein do hereby contract, covenant and agree as follows: I. GRANT CONDITIONS A. Grantees covenant and agree with the City that the City's obligations under this Agreement are subject to the fulfillment of the Grantees' obligations under this Agreement, and Grantees (themselves or through their Related Parties) hereby agree to perform and comply in all material respects to the terms, conditions, and provisions of this Agreement and in all other instruments and agreements between Grantees, Related Parties, and the City with respect to the financial or other incentives provided herein. B. Improvements to the Property shall be made in substantial compliance with the description of the Project as set forth in the Grant Application. "Improvements" are defined as the construction, renovation and equipping of the Property as set forth in the Grant Application, including but not limited to: (1) costs related to the development and improvement of the real estate, including, without limitation, construction costs and design and engineering costs; and (2) tangible personal property located on or at the Property owned or controlled by Grantees or a Related Party, excluding inventory, supplies, and vehicles. The City expressly is not obligated in any way to payment of costs and fees for the Improvements, and is only agreeing to payments as stated herein. The kind and location of the Improvements is more particularly described in the Grant Application. For the construction of Improvements and /or remodeling of existing improvements, Grantees and /or Related Parties shall comply with all applicable City of Economic Development Agreement Page 2 of 20 Victor Equipment Company Mohr Denton, LLC Denton Code of Ordinances, the City's Tax Abatement and Incentive Policy, Texas Department of Transportation Regulations and any other applicable federal, state, and local law. C. Notwithstanding anything contained in this Agreement to the contrary, no grant or payment shall be made to the Tenant Grantee under this Agreement unless and until Owner, Tenant Grantee and /or Related Parties have completed the Improvements to the Property no later than December 31, 2017, subject to force majeur delays as outlined in Section V.B herein, including but not limited to the new 185,400 square foot building to accommodate the Tenant Grantee which is relocating approximately 100 jobs from an existing facility and expected to create a minimum of 100 new jobs over a three year period with a straight average wage of at least $28.81 per hour, exclusive of health insurance and retirement benefits. Grantees and Related Parties estimate the total investment for the purchase, renovation and development of the Project shall be at least $30 million, of which $12 million shall be the cost to purchase the existing facility. As a grant condition, this capital investment shall generate a minimum increase of the assessed real estate Improvements and business personal property valuation over the existing Base Year Valuation in the amount of $6.5 million. The Denton Central Appraisal District's 2014 Certified Value will establish the "Base Year Valuation" for the assessed value and tangible business personal property (excluding land, inventory, supplies and vehicles) located at 2800 Airport Road. Contract Year No. 1 begins January 1St, following the year ending December 31St, in which a Certificate of Occupancy is issued, and subsequent Contract Years shall be numbered sequentially up to Contract Year No. 7 for the purposes of compliance as described in Section III.B herein. D. No grant or payment shall be made to the Tenant Grantee under this Agreement unless the Tenant Grantee and /or a Related Party maintains at least 85 percent of the existing jobs in any given year of compliance, beginning with the number of existing full time jobs outlined in the Grant Application, 414, plus an additional 100 jobs from a distribution center in Roanoke, which will move operations to the Property, for a total of 514 existing jobs. Moreover, should Tenant Grantee and /or a Related Party employ less than the minimum threshold of 100 new jobs before the end of Contract Year No. 3, or fail to provide an straight average wage of at least $28.81 per hour (for the newly created jobs), excluding health insurance and retirement benefits, for the same period as reflected in Exhibit `B ", the grant payment shall be reduced by the percent decrease of the actual employment or actual wage to the thresholds set within this Agreement. For example, if the number of jobs created equals 90, which is 10% less than the 100 jobs threshold, the grant payment will be reduced by 10 %. Or, if the average wage equals $25.93, which is 10% less than the average wage threshold, the grant payment will be reduced by 10 %. E. Grantees and /or Related Parties shall use good faith efforts to hire qualified residents of the City of Denton to work at the Project. In conjunction with the initial hiring of personnel for the new jobs created, the Grantees and /or Related Parties shall make good faith efforts to offer available existing positions to qualified Denton area residents over non - residents who are similarly qualified as determined by the Tenant Economic Development Agreement Page 3 of 20 Victor Equipment Company Mohr Denton, LLC Grantee consistent with business needs and its commitment to equal opportunity and subject to all applicable local, state and federal employment laws. Moreover, Grantees and /or Related Parties shall use a good faith effort to hire local Denton contractors and suppliers in constructing the Improvements where qualified and available. F. Grantees and /or Related Parties are duly authorized and existing under U.S. law and are in good standing under such laws, and are registered to do business in the State of Texas. G. Payments shall be issued to Victor Equipment Company unless an approved assignment occurs under Section V.M. herein, and in which case payment shall be directed to the entity assigned rights under this Agreement. Said entity would be considered the "Tenant Grantee" as denoted herein. H. The Property is not in an improvement project financed by tax increment bonds. I. Neither the Property nor any of the Improvements to the Property are owned or leased by any member of the City Council, nor any member of the City Planning and Zoning Commission. J. This Agreement is subject to rights of holders of outstanding bonds of the City, if any. K. In the event of any conflict between the City of Denton Code of Ordinances and federal, state, or other local regulations, and this Agreement, such ordinances and /or regulations shall control. L. The City shall have the right to terminate the grant if the Grantees or a Related Party do not occupy the Improvements continuously for the term of the grant for the purposes set forth in the Grant Application. In the event of such termination, all Grant payments for future years shall be terminated. M. The City agrees that any job created to be located at the Property or Improvement made to the Property by a Related Party of Grantees will be counted as if made by Grantees for the purposes of this Agreement and the calculation and payment of any Grant payment. The term "Related Party" shall mean any entity which, directly or indirectly, through one or more intermediaries, controls, is controlled by or is under common control with Tenant Grantee. N. In accordance with Chapter 2264 of the Texas Government Code, Grantees and /or Related Parties shall not knowingly employ any person for or at the Project who is not lawfully admitted for permanent residence to the United States or who is not authorized under law to be employed in the United States ( "Undocumented Worker "). During the term of this Agreement, Grantees shall notify City of any complaint brought against Grantees alleging that Grantees have knowingly employed Economic Development Agreement Page 4 of 20 Victor Equipment Company Mohr Denton, LLC Undocumented Workers. In the event that Grantees and /or Related Parties are convicted of a violation under federal law, grant payments shall be terminated. II. TERMS OF GRANT A. Subject to the terms and conditions of this Agreement, the City hereby agrees to pay to Tenant Grantee, annually for a period of seven years after January 1 following the first tax assessment after receipt by Tenant Grantee of the certificate of occupancy for the improved Property, an amount equal to (1) Sixty Five Percent (65 %) multiplied by (2) the increase in the City's ad valorem taxes received for the previous year versus those received for the Base Year associated with the Property and Improvements, exclusive of the taxable value of land or any increase in taxable value attributable to land, taxable value of inventory or vehicles (the "Annual Payments "). The Annual Payments shall be paid on or before 60 days after the City's receipt of all ad valorem taxes for the Property for the applicable tax year. The assessed value shall be established using the Denton County Appraisal District appraisal process. The City shall never be obligated to make any payment to the Tenant Grantee from any funds other than the tax revenues generated by the Project. B. The City's obligation to pay the payments provided in this Agreement is subject to the fulfillment of the General Conditions set forth in Article I above. C. Grantees or a Related Party shall have the right to protest and contest any or all appraisals or assessments by the Denton County Appraisal District for the Property, the Improvements or any other tangible personal property owned or controlled by Grantees or a Related Party and located on the Property. All calculations in this Agreement shall be based upon final assessed values after any such protest or contest. If the situation arises that the City or Denton County adjust the assessed value associated with Property or Improvement for which an associated Annual Payment has already been made to Tenant Grantee, and the adjustment is final and all associated protests and contests have been exhausted, then the following will occur: (1) if the result is that using the adjusted assessed value the Annual Payment would have been lesser than what the City actually paid to Tenant Grantee, then Tenant Grantee will repay to the City such excess of the Annual Payment within 60 days after both (i) a refund of the excess property taxes associated with the adjusted assessed value have been paid by the City and (ii) Tenant Grantee has received written notice detailing the calculation of the excess Annual Payment amount from the City; or (2) if the result is that using the adjusted assessment value the Annual Payment would have been greater than what the City actually paid to Tenant Grantee, then the City will pay to Tenant Grantee such shortfall of the Annual Payment within 60 days after the shortfall property taxes associated with the adjusted assessed value have been paid to the City. Economic Development Agreement Page 5 of 20 Victor Equipment Company Mohr Denton, LLC III. RECORDS, AUDITS, AND EVALUATION OF PROJECT A. Grantees shall provide access and authorize inspection of the Property by authorized City employees and allow sufficient inspection of financial information for the limited purpose of insuring that the Improvements are made according to the specifications and conditions of this Agreement. Such inspections shall be in addition to, and not in place of, any inspections required by ordinance for construction of the Improvements and the like. The financial information shall include, without limitation, an inventory listing the kind, number, and location of and the total investment value of all Improvements to the property, including the value of all buildings and other structures and permanent improvements installed, renovated, repaired or located on the Property. B. Tenant Grantee shall deliver to the City before February 28th of each year a Certificate of Compliance utilizing the form attached as Exhibit "C" to begin the year following the first anniversary of annual payment and each year thereafter during the term of this Agreement. Said certificate shall reflect all relevant information from the previous calendar year. The form is subject to revision by the City provided that such revision does not materially change Tenant Grantee's rights or obligations under this Agreement. In the Certificate of Compliance, Tenant Grantee shall warrant to the City that it (and /or its Related Parties) is in full compliance with each of its obligations under this Agreement, including the number of existing jobs and newly created jobs maintained by Tenant Grantee (and /or its Related Parties) for the preceding year period. The City and /or its representative(s), including third - parties contracted by the City, shall have the right to inspect all relevant records of Tenant Grantee as are reasonably necessary to verify compliance with all requirements of this Agreement. Such inspections shall be preceded by at least a one (1) week written notice to Tenant Grantee and shall not unreasonably interfere with Tenant Grantee's business activities. C. The City is not obligated to make any payments under this Agreement if Tenant Grantee fails to timely submit its Certificate of Compliance after receiving written notice of such failure from the City and having the opportunity to cure such deficiency within a three (3) business day period. If the City is unable to confirm Tenant Grantee's compliance for its obligations in any year of the Agreement due to Tenant Grantee not providing proof of compliance within one year from the due date of the Certificate of Compliance, then that year's annual payment will be irrevocably lost. IV. DEFAULT A. Each of the following shall constitute an Event of Default under this Agreement (except that if an Event of Default occurs only with respect to Owner but not Tenant Grantee, then this shall not be considered an Event of Default with respect to Tenant Grantee): Economic Development Agreement Page 6 of 20 Victor Equipment Company Mohr Denton, LLC I . Failure of the Tenant Grantee and /or Related Parties to continuously maintain and operate the Improvements on the Property for the seven (7) year term hereof and the Tenant Grantee and /or Related Parties do not cure such failure within thirty (30) days after written notice from the City to the Tenant Grantee describing such failure, or if such failure cannot be cured within such 30- day period in the exercise of all due diligence, then if the Tenant Grantee and /or Related Parties fail to commence such cure within such 30 -day period or fail to continuously thereafter diligently prosecute the cure of such failure. 2. Any warranty, representation or statement made or furnished to the City by or on behalf of Grantees and /or Related Parties, under this Agreement that is false or misleading in any material respect, either now or at the time made or furnished, and Grantees and /or Related Parties, fail to cure same within thirty (30) days after written notice from the City to the Grantees describing the violation, or if such violation cannot be cured within such 30 -day period in the exercise of all due diligence, then if Grantees and /or Related Parties fail to commence such cure within such 30 -day period or fail to continuously thereafter diligently prosecute the cure of such violation, or if Grantees and /or Related Parties learn that any such warranty, representation or statement has become false or misleading at the time that it was made, and Grantees and /or Related Parties fail to provide written notice to the City of the false and misleading nature of such warranty, representation or statement within ten (10) days after confirmed written notice to Grantees and /or Related Parties. 3. The dissolution or termination of Grantees' existence as a going business, Grantees' insolvency, appointment of receiver for any part of the Property, any assignment of all or substantially all of the assets of Grantees for the benefit of creditors of Grantees, any type of creditor workout for Grantees, or the commencement of any proceeding under any bankruptcy or insolvency laws by or against Grantees, unless, in the case of involuntary proceedings, such proceedings are discharged within sixty (60) days after filing. 4. Grantees and /or Related Parties allowing property taxes owed to the City to become delinquent and failing to timely and properly follow the legal procedures for protest and /or contest of such taxes and to cure such failure within thirty (30) days after written notice thereof from the City and or Denton Central Appraisal District. 5. Failure of Grantees and /or Related Parties to comply with or to perform any other term, obligation, covenant or condition contained in this Agreement or in any documents generated or otherwise created attendant to this Agreement or in any way related to this Agreement ( "Related Documents "), or failure of Grantees and /or Related Parties to comply with or to perform any other term, obligation, covenant or condition contained in any other agreement between the City and Grantees and /or Related Parties, fails to cure such failure within thirty (30) days after written notice from the City describing such failure, or if such failure cannot Economic Development Agreement Page 7 of 20 Victor Equipment Company Mohr Denton, LLC be cured within such 30 -day period in the exercise of all due diligence, then if Grantees and /or Related Parties fail to commence such cure within such 30 -day period or fail to continuously thereafter diligently prosecute the cure of such failure. B. If any Event of Default shall occur and Grantees and /or Related Parties fail to cure such default, all commitments of the City under this Agreement, including without limitation, payment of the Annual Payment, shall immediately terminate with respect to the year in which notice of the Event of Default is given and for all future years. Additionally, Grantees and /or Related Parties shall be obligated to repay the City an amount equal to fifty percent (50 %) of all previous payments made by the City under this Agreement to the Grantees and /or Related Parties under any compliance year. If Grantees and /or Related Parties are required to reimburse the City these amounts hereunder, the City shall notify the Grantees and /or Related Parties in writing of the amount to be repaid, and shall direct them to pay such amount directly to the City. All such amounts due hereunder shall be due upon demand by the City and if not paid within thirty (30) days following written demand hereunder, the unpaid amount due hereunder shall bear interest at the rate of 5% per annum after demand until paid. V. GENERAL PROVISIONS A. All improvements to the Property shall be consistent with all applicable federal, state and local law including the Denton Code of Ordinances as well as any other regulations or plans relative to the Property. This Agreement does not constitute a waiver by the City of any development ordinances or conditions. Further, Grantees and /or Related Parties acknowledge that by executing this Agreement, no entitlement or agreements concerning zoning or land use shall arise, either implied or otherwise. B. Grantees and /or Related Parties shall complete construction of all improvements to the Property within the timeframes provided for in this Agreement. Notwithstanding the foregoing, Grantees and /or Related Parties shall have such additional time to complete the Improvements as may be required in the event of force majeure if Grantees and /or Related Parties are diligently and faithfully pursuing completion of the Improvements. For this purpose, force majeure shall mean any contingency or cause beyond the reasonable control of Grantees and /or Related Parties, including, without limitation, acts of God or the public enemy, war, riot, civil commotion, insurrection, governmental or de facto governmental action (unless caused by acts or omissions of Grantees and /or Related Parties), fires, explosions or floods, strikes, and action of the elements, including without limitation, inappropriate temperature conditions, rainfall or other interfering precipitation or weather. In the event that Grantees and /or Related Parties require additional time due to an event of force majeure, such additional time shall not exceed 180 days, unless otherwise approved by City Council. Economic Development Agreement Page 8 of 20 Victor Equipment Company Mohr Denton, LLC C. GRANTEES, ESAB, AND VTI SHALL INDEMNIFY, SAVE AND HOLD HARMLESS THE CITY, ITS ELECTED OFFICIALS, OFFICERS, AGENTS, ATTORNEYS AND EMPLOYEES (COLLECTIVELY, THE "INDEMNITEES ") FROM AND AGAINST: (I) ANY ADMINISTRATIVE OR INVESTIGATIVE PROCEEDING BY ANY GOVERNMENTAL AUTHORITY DIRECTLY OR INDIRECTLY RELATED, TO A CLAIM, DEMAND, ACTION OR CAUSE OF ACTION, ARISING FROM GRANTEES' AND /OR RELATED PARTIES' PERFORMANCE OF ITS OBLIGATIONS HEREUNDER, IN WHICH THE CITY IS A DISINTERESTED PARTY; (II) ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION WHICH DIRECTLY OR INDIRECTLY CONTESTS OR CHALLENGES THE LEGAL AUTHORITY OF THE CITY OR GRANTEES, ESAB, AND VTI TO ENTER INTO THIS AGREEMENT; AND (III) ANY AND ALL LIABILITIES, LOSSES, COSTS OR EXPENSES (INCLUDING ATTORNEY'S FEES AND DISBURSEMENTS) THAT ANY INDEMNITEES SUFFER OR INCURS AS A RESULT OF ANY OF THE FOREGOING; PROVIDED, HOWEVER, THAT GRANTEES AND /OR RELATED PARTIES SHALL HAVE NO OBLIGATION UNDER THIS PARAGRAPH TO THE CITY WITH RESPECT TO ANY OF THE FOREGOING ARISING OUT OF THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF THE CITY OR THE BREACH BY THE CITY OF THIS AGREEMENT. IF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION IS ASSERTED AGAINST ANY INDEMNITEE, SUCH INDEMNITEE SHALL PROMPTLY NOTIFY GRANTEES, BUT THE FAILURE TO SO PROMPTLY NOTIFY GRANTEES SHALL NOT AFFECT GRANTEES' AND /OR RELATED PARTIES' OBLIGATIONS UNDER THIS PARAGRAPH UNLESS SUCH FAILURE MATERIALLY PREJUDICES GRANTEES' AND /OR RELATED PARTIES' RIGHT TO PARTICIPATE IN THE CONTEST OF SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION, AS HEREINAFTER PROVIDED. IF REQUESTED BY GRANTEES AND /OR RELATED PARTIES, IN WRITING, SO LONG AS NO EVENT OF DEFAULT SHALL HAVE OCCURRED AND BE CONTINUING, SUCH INDEMNITEE SHALL IN GOOD FAITH CONTEST THE VALIDITY, APPLICABILITY AND AMOUNT OF SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION AND SHALL PERMIT GRANTEES AND /OR RELATED PARTIES, TO PARTICIPATE IN SUCH CONTEST. ANY INDEMNITEE THAT PROPOSES TO SETTLE OR COMPROMISE ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION OR PROCEEDING FOR WHICH GRANTEES, ESAB, AND VTI, MAY BE LIABLE FOR PAYMENT OF INDEMNITY HEREUNDER SHALL GIVE GRANTEES WRITTEN NOTICE OF THE TERMS OF SUCH PROPOSED SETTLEMENT OR COMPROMISE REASONABLY IN ADVANCE OF SETTLING OR COMPROMISING SUCH CLAIM OR PROCEEDING AND SHALL OBTAIN GRANTEES' AND /OR RELATED PARTIES' WRITTEN CONCURRENCE THERETO. D. This Agreement, together with any Related Documents, constitutes the entire understanding and agreement of the parties as to the matters set forth in this Agreement. No alteration of or amendment to this Agreement shall be effective unless Economic Development Agreement Page 9 of 20 Victor Equipment Company Mohr Denton, LLC given in writing and signed by the party or parties sought to be charged or bound by the alteration or amendment. E. This Agreement shall be governed by and construed in accordance with the laws of the State of Texas, and all obligations of the parties created hereunder are performable in Denton County, Texas. Venue for any action arising under this Agreement shall lie in Denton County, Texas. F. The signatories hereto shall be subject to all ordinances of the City, whether now existing or in the future arising. This Agreement shall confer no vested rights, as defined and referenced in Chapter 245 of the Texas Local Government Code, as amended, on the Property or Grantees and /or Related Parties. G. This Agreement shall become a binding obligation on the signatories upon execution by all signatories hereto, including their respective successors and assigns and upon all future owners of the Property. The City warrants and represents that the individual executing this Agreement on behalf of the City has full authority to execute this Agreement and bind the City to the same. Grantees warrant and represent that the individual executing this Agreement on its behalf has full authority to execute this Agreement and bind Grantees to same. H. In the event any provision of this Agreement shall be determined by any court of competent jurisdiction to be invalid or unenforceable, the Agreement shall, to the extent reasonably possible, remain in force as to the balance of its provisions as if such invalid provision were not a part hereof. I. All notices required to be given under this Agreement shall be given in writing and shall be effective when actually delivered or when deposited in the United States mail, first class, postage prepaid, addressed to the party to whom the notice is to be given at the addresses shown below. Notices may be given via facsimile at the numbers below. Any party may change its address or fax no. for notices under this Agreement by giving written notice to the other parties, specifying that the purpose of the notice is to change the party's address. For notice purposes, each party agrees to keep the other informed at all times of its current address and fax no. Economic Development Agreement Page 10 of 20 Victor Equipment Company Mohr Denton, LLC GRANTEES: OWNER Mohr Denton, LLC Derith Jarvis, Managing Partner 14643 Dallas Pkwy. Suite 1000 Dallas, Texas 75254 TENANT GRANTEE Victor Technologies International, Inc. Larry Power, Vice President Global integrated Supply Chain 2800 Airport Road Denton, TX 76207 With a copy to: Victor Technologies International, Inc. Attn: General Counsel 420 National Business Parkway, 5th Floor Annapolis Junction, MD 20701 CITY: City Manager City of Denton 215 E. McKinney Denton, Texas 76201 J. Time is of the essence in the performance of this Agreement. K. Grantees represent that this Agreement is entered into by Grantees pursuant to authority granted by its Board of Directors to, in the case of Owner, its Managing Director and, in the case of Tenant Grantee, its specified officer. A copy of a corporate resolution of Grantees, authorizing this Agreement is attached hereto and made a part hereof as Exhibit 'T"', L. This Agreement is authorized by the City Council of the City at its Illectiag Oil the �, ... d'iy o1 2015, M111101 "iZilIg the City Manager to execute this Agreeiiiciit oil beliall of die City. A copy of the City ('OLITICH's or €iriaiice authorizing this Agreement is attached hereto and made a part hereof as Exhibit "E ". Economic Development Agreement Page 11 of 20 Victor Equipment Company Mohr Denton, LLC M. Except as provided herein, this Agreement may not be assigned in whole or in part without the prior written approval of the parties. This Agreement may be assigned in whole by Grantees, without the prior written approval of the City, for the limited purpose of merging or otherwise transferring assets to a Related Party. Partial assignments are permitted without the prior written consent of the City so long as the assignment occurs after the completion of the Improvements and the partial assignment is to an entity having fee simple title to the portion of the Property corresponding to the partial assignment. However, no assignment, whether in whole or in part will not take effect until City is provided written notice of such assignment and a copy of same. N. Grantees hereby agree that any land or property it donates to the City for any public improvements is roughly proportional to the need for such land and Owner hereby waives any claim therefore that it may have in regards to such improvement. Grantees further acknowledge and agree that all prerequisites to such a determination of rough proportionality have been met, and that any costs incurred relative to said donation are related both in nature and extent to the impact of the Project. Both Grantees, and the City further agree to waive and release all claims one may have against the other related to any and all rough proportionality and individual determination requirements mandated by the United States Supreme Court in Dolan v. City of Tigard, 512 U.S. 374 (1994), and its progeny, as well as any other requirements of a nexus between development conditions and the projected impact of this Project. O. All payments by the City to Grantees and /or Related Parties under this Agreement are subject to City's appropriation of funds for such payments in the budget year for which they are made. The payments to be made to Grantees and /or Related Parties, 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 and the Texas Constitution, subject to any applicable limitations or procedural requirements. In the event the City does not appropriate funds in any fiscal year for payments due to Tenant Grantee, under this Agreement, City shall not be liable to Grantees and /or Related Parties for such payments, and Grantees and /or Related Parties shall have the right but not the obligation to rescind this Agreement; provided however, Grantees and /or Related Parties shall not be obligated to refund any payments theretofore made to Grantees and /or Related Parties pursuant to this Agreement, as the payment by City of such payments shall be proof that the City duly appropriated the funds for the budget year in which such payments were made. To the extent there is a conflict between this paragraph and any other language or covenant in this Agreement, this paragraph shall control. P. It is agreed by the parties to this Agreement that the tenns of this Agreement are not intended to and shall not be deemed to create any partnership or joint venture among parties. The City, its past and future officers, elected officials, employees, and agents expressly do not assume any responsibilities or liabilities to any third party in Economic Development Agreement Page 12 of 20 Victor Equipment Company Mohr Denton, LLC connection with the Project or the design, construction, or operation of any portion of the Improvements. Q. Any party hereto may request an estoppel certificate from another party hereto so long as the certificate is requested in connection with a bona fide business purpose. The certificate, which if requested will be addressed to Victor Technologies International, Inc., shall include, but not necessarily be limited to, statements that this Agreement is in full force and effect without default (or if default exists the nature of default and curative action, which should be undertaken to cure same), the remaining Term of this Agreement, the levels and remaining Tenn of the Annual Payments in effect, and such other matters reasonably requested by the party(ies) to receive the certificates. R. Grantees, as a party to this Agreement, shall be deemed a proper and necessary party in any litigation questioning or challenging the validity of this Agreement or any of the underlying ordinances, resolutions, or City Council actions authorizing same and Grantees and /or Related Parties shall be entitled to intervene in said litigation. In no way is this provision meant to waive any defenses or immunity that the City may assert therein. S. This Agreement shall be effective as of the last date of signature of a party hereto as evidenced by the acknowledgment date for such signature (the "Effective Date "). Economic Development Agreement Victor Equipment Company Mohr Denton, LLC �P Page 13 of 20 CITY OF DENTON, TEXAS BY GIH RGr,E C. C MPI 'FLL CITY MANAGER ATTEST: JENNIFER WALTERS CITY SECRETARY BY: A l' P IZ 1�" 1::) AS TO FORM: ANITA BURGESS CITY ATTORNEY BY:�f� Cct:t 03 VICTOR EQUIPMENT COMPANY a Delaware Corporation By: C ._- --- - - - - -- ........ Its: W FAm VCF ,. 6 . . a Texas Economic Development Agreement Victor Equipment Company Mohr Denton, LLC vftj wjuc-' Page 14 of 20 ACKNOWLEDGMENTS STATE OF TEXAS COUNTY OF DENTON The foregoing Economic Development Agreement was executed before me on the ..8 day of , 2015 by George C. Campbell, City Manager of the City of Denton, Texas, a Texas municipal corporation, on behalf of said Municipal Corporation. Name: Notary Public in and for the State of Texas S 1 IT O1 1-'+A. A S 1� 1 T? e ib e oin I" ()a nnic Dcv clo 7nacnl Program A eentent was execute before me on. the dry 20 5 by of Nfictor. Equipiiient (,qW jII�at �' arYb l n� .. corporation. N(')TARY PUBLIC r)� state of maryB tes° 'p t I ep1ern er '1.9, 2015 Notary Public in and for the State of -Texas 044 /,t STATE OF TEXAS COUNTY OF DENTON The foregoing Economic Development Program Agreement was executed before me on the Mohr Denton�LLC, on behaliof said company. 2015 by �► n ..Sear �,,,,,,.._ of Name: Notary Public in and for the State of Texas My Caarr mrssaen Expires April 29, 2917 Economic Development Agreement Page 15 of 20 Victor Equipment Company Mohr Denton, LLC 1 *114: 11 mmm"7 . 11:11, I V Economic Development Agreement Page 16 of 20 Victor Equipment Company Mohr Denton, LLC EXHIBIT A LEASED PREMISES TRACT 1 BEING a 15.049 acre tract of land situated in the Eugene Puchalski Survey, Abstract No. 996, City of Denton, Denton County, Texas, and being known as that tract of land described as Tract 1 in a Deed to 2800 Airport Road Limited Partnership, as recorded in Document No. 2004- 158241 of the Official Records of Denton County, Texas, and being more particularly described as follows; BEGINNING at a 3/4 inch iron rod found for corner in the South line of F.M. Highway No. 1515 (a variable width right- of-way also known as Airport Road), said point being the Northeast corner of the above cited 2800 Airport Road tract and the Northwest corner of Lot 1, Block A of Victor Addition, as recorded in Cabinet G, Page 379 of the Plat Records of Denton County, Texas; THENCE South 00 °55'45" West (South 01'30'00" West —Deed) along the East line of said 2800 Airport Road tract and the West line of said Lot 1, for a distance of 602.36 feet (603.78 feet — Deed) to a 5/8 inch iron rod with cap stamped "TNP" set for corner at the Southeast corner of said 2800 Airport Road tract and the Southwest corner of said Lot 1, said point also being in the North line of a tract of land described as Tract 3 in Section 2 in a Deed to Rayzor Investments, Ltd., as recorded in Volume 1796, Page 601 of the Real Property Records of Denton County, Texas; THENCE North 88 157'29" West (North 88 °2348" West —Deed) along the South line of said 2800 Airport Road tract and the North line of said Rayzor tract, passing the most Easterly Northeast corner of Lot 2, Block A per the Conveyance Plat of Ryan Companies Addition, as recorded in Document No. 2010 -96 of the Plat Records of Denton County, Texas, at a distance of 266.37 feet, and continuing along the South line of said 2800 Airport Road tract and the most Easterly North line of said Lot 2, for a total distance of 378.04 feet (377.85 feet —Deed) to a 1/2 inch iron rod found for corner at the beginning of a non - tangent curve to the left; THENCE in a Southwesterly direction, along the South line of said 2800 Airport Road tract and the most Easterly North line of said Lot 2, and along said non - tangent curve to the left having a central angle of 25 °19'09 ", a radius of 1019.65 feet, a chord bearing of South 78 °20'23" West, a chord distance of 446.93 feet and an arc length of 450.59 feet (450.84 feet —Deed) to a 1/2 inch iron rod found for corner at the Southwest corner of said 2800 Airport Road tract and an interior ell corner of said Lot 2; THENCE North 33 °33'13" West (North 32 °5858" West. —Deed) along the West line of said 2800 Airport Road tract and the East line of said Lot 2, passing a 1/2 inch iron rod with cap stamped "Wier & Associates" found for the Northeast corner of a called 36.188 acre tract of land described as Tract 1 in a Deed to Paccar, Inc., as recorded in Document No. 2012 - 121616 of the Official Records of Denton County, Texas, at a distance of 246.15 feet, and continuing along the West line of said 2800 Airport Road tract, the East line of said Lot 2 and the East line of said Paccar tract, for a total distance of 705.97 feet (707.16 feet — Deed) to a 1/2 inch iron rod with cap stamped "Isbell" found for corner in the Southerly line of said F.M. Highway No. 1515 (a 90' wide right - of -way at this point); MHDocs 5983067 11 11680.43 THENCE in a Northeasterly direction, along the Southerly line of said F.M. Highway No. 1515, and along a non - tangent curve to the right having a central angle of 39 °07'03 ", a radius of 528.00 feet, a chord bearing of North 71119'54" East, a chord distance of 353.52 feet and an are length of 360.48 feet (360.38 feet — Deed) to a wooden highway monument found for corner at the end of said curve; THENCE South 88 °58'30" East (South 88 °30'00 " East —Deed) continuing along the South Iine of said F.M. Highway No. 1515, for a distance of 880.87 feet (881.31 feet —Deed) to the POINT OF BEGINNING, and containing 15.049 acres (15.071 Acres —Deed) of land, more or less. TRACT 2 Lot 1, Block A of Victor Addition, an addition to the City of Denton, Denton County, Texas, according to the plat thereof recorded in Cabinet G, Page 379, Plat Records of Denton County, Texas. fir! 1 r r. trc a r art rr mendet !11W -5j :31t� d I��d atrial leaf MHDocs 5983067_11 11680.43 EXHIBIT B (JOBS AND WAGES) Economic Development Agreement Page 17 of 20 Victor Equipment Company Mohr Denton, LLC EXHIBIT C (CERTIFICATE OF COMPLIANCE FORM) Economic Development Agreement Page 18 of 20 Victor Equipment Company Mohr Denton, LLC EXHIBIT D (CORPORATE RESOLUTION FOR AUTHORITY) Economic Development Agreement Page 19 of 20 Victor Equipment Company Mohr Denton, LLC EXHIBIT E (ORDINANCE AUTHORIZING AGREEMENT) Economic Development Agreement Page 20 of 20 Victor Equipment Company Mohr Denton, LLC VICTOR EQUIPMENT COMPANY Written Consent of the Sole Stockholder The undersigned, being the sole stockholder of Victor Equipment Company, a Delaware corporation (the "Corporation "), does hereby consent to and deem it advisable to and does adopt the following resolutions, and waives any requirement of a meeting or notice thereof, effective as of August 12, 2015: APPROVAL OF ECONOMIC DEVELOPMENT AGREEMENT WHEREAS, the management of the Corporation has determined that it is advisable and in the best interests of the Corporation to enter into that certain Economic Development Agreement ( "Agreement "), by and between the Corporation, and the City of Denton, Texas, a copy of which is attached hereto as Exhibit A, pursuant to which the Corporation would make certain commitments regarding capital investment and job growth in the City of Denton and the City of Denton would, in return, make cash grant payments to the Corporation associated with that capital investment (the "Incentives Program "). RESOLVED, that the Incentives Program, the Agreement and the other transactions contemplated by the Agreement are hereby authorized, approved and adopted. FURTHER RESOLVED, that David Wells, in his capacity as Vice President of Finance, is authorized to sign the Agreement on behalf of the Corporation. [SIGNATURE PAGE, FOLLOWS] THIS WRITTEN CONSENT, shall be effective as of the date first set forth above, and shall be filed with the records of the Corporation. VICTOR TECHNOLOGIES INTERNATIONAL, INC. By:__e_ Name: ark Paul Lelima.. .... n Title: "dice President and Assistant Secretary Economic Incentive Job and Wage Worksheet -New Employees Machine Operators and Assemblers 30 7 3 40 $21.25 Manufacturing Technicians and Support 12 1 1 14 $22.15 Manufacturing Managers /Engineers 10 1 1 12 $33.00 Global Operations Staff 2 2 $47.74 Customer Service 10 10 $14.29 Engineering 0 2 1 3 $37.53 Finance 7 7 $25.34 IT 3 2 5 $33.00 Sales & Marketing 4 3 7 $25.00 ,v CERTIFICATE OF COMPLIANCE Company: VICTOR EQUIPMENT COMPANY Reporting Year: January 1 — December 31, 20_ Contract Year No. of 7 L. Investment 1.1 Section I.C. of the Economic Development Agreement indicates that the grant is conditioned on the capital investment to generate a minimum increase of the assessed real estate Improvements and business personal property valuation over the existing Base Year Valuation in the amount of $6.5 million, which is a. The Grantees have invested $ in real estate Improvements for the Project on the Property for the reporting year ending December 31, 20 b. The increase in assessed valuation of the real estate Improvements for the year ending December 31, 20 over the Base Year Valuation is II. Employment 2.1 Section I.D. of the Economic Development Agreement provides that the Company shall retain at least 85 percent of the existing jobs as indicated on Exhibit B of the Agreement. Additionally, the Company shall create 100 new full -time jobs by December 31St of the Contract Year No. 3. The job creation schedule is as follows: a. Retain at least 436 jobs and create 78 new full time jobs by December 31' of Contract Year No. 1; b. Retain at least 503 jobs and create 16 new full time jobs by December 31" of Contract Year No. 2; c. Retain at least 516 jobs and create 6 new full time jobs by December 31St of Contract Year No. 3; d. Retain at least 521 jobs by December 31St of Contract Year No. 4; e. Retain at least 521 jobs by December 31St of Contract Year No. 5; f. Retain at least 521 jobs by December 31St of Contract Year No. 6; and g. Retain at least 521 jobs by December 31St of Contract Year No. 7. 2.2 Number of existing jobs retained as of December 31, 20 2.3 Number of new jobs created and filled as of December 31, 20 2.4 As of December 31, 20_, did the number of existing jobs retained or new jobs created fall below the numbers required under Sec. I.D. of the Agreement? ❑ YES ❑ NO Certificate of Compliance Page 1 of 3 2.5 Section I.D. of the Economic Development Agreement requires that the average hourly wage, excluding health insurance and retirement benefits, of the new jobs created to be at least $28.81 per hour. The average hourly wage, excluding health insurance and retirement benefits, of the new jobs created during the year ending December 31, 20 is: 2.6 Did the average hourly wage, excluding health insurance and retirement benefits, of the new jobs created during the year ending December 31, 20 equal or exceed the requirements in Section I.D. of the Agreement? ❑ YES ❑ NO 2.7 Section I.E. of the Economic Development Agreement requires the Company to use good faith efforts to hire qualified residents of the City of Denton to work at the Project. As part of this requirement, the Company must make a good faith effort to offer both available existing jobs and newly created jobs to qualified Denton residents, as well as to hire Denton contractors and suppliers in construction. 2.8 Did the Company comply with the recruiting requirements in Section I.E. of the Agreement in regards to offering available jobs to Denton residents during the year ending December 31, 20 ? ❑ YES ❑ NO 2.9 Did the Company comply with the recruiting requirements in Section I.E. of the Agreement in regards to hiring Denton contractors and suppliers in construction during the year ending December 31, 20 ? ❑ YES ❑ NO III. Additional Covenants 3.1 Section I.L. of the Economic Development Agreement requires the Company to occupy the Improvements continuously for the Agreement's term. Did the Company comply with the occupancy requirement of Section I.I. of the Agreement during the year ending December 31, 20 ? ❑ YES ❑ NO 3.2 Did the Company timely submit this Certificate of Compliance as required under Section III.13 of the Economic Development Agreement during the year ending December 31, 20 ? ❑ YES ❑ NO 3.3 Did the Company comply with the other provisions of the Agreement during the year ending December 31, 20 ? ❑ YES ❑ NO Certificate of Compliance Page 2 of 3 IV. Payment 4.1 The Economic Development Agreement provides annual Chapter 380 payments for up to seven years based on conditions being met. For years one through seven, the Agreement provides for annual Chapter 380 payments equal to 65% of the increase in the City's ad valorem taxes received from the Base Year, excluding the value of land, inventory or vehicles. 4.2 The City property taxes paid for January 1, 20 valuation are: Real Property Business Personal Property 4.3 The amount of Chapter 380 payment requested: 4.4 Please attach the most recent Property Tax Notice. I, the authorized representative for Victor Technologies International, Inc., hereby certify that the above information is correct and accurate pursuant to the terms of the Agreement. I further certify that the Company has fully complied with the Chapter 380 Economic Development Agreement during the year ending December 31, 20 , including compliance with the City of Denton Code of Ordinances, Texas Department of Public Safety Regulations, and other applicable federal, state, or local law. VICTOR TECHNOLOGIES INTERNATIONAL, INC. Signature:.... µw_ Printed Name: Title: Date: MOHR DENTON, LLC (ONLY AS TO SEC. I INVESTMENT) Signature: Printed Name: Title: Date: Certificate of Compliance Page 3 of 3