Res 014-2021 WFEDC Pamlico Air Amendment to Release LOC 2/2/2021 Resolution No. 14-2021
Resolution approving the programs and expenditures of the Wichita
Falls Economic Development Corporation (WFEDC) by amending the
existing incentive agreement of up to$2,278,200 with Cleanaire, LLC,
dba Pamlico Air, related to their manufacturing facility in Wichita
Falls
WHEREAS, Texas Local Gov't. Code §501.073(a) provides "The corporation's
authorizing unit will approve all programs and expenditures of a corporation and annually
review any financial statements of the corporation"; and,
WHEREAS, on November 7, 2019, the WFEDC approved the Project listed below
and as stated in its agenda.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY
OF WICHITA FALLS, TEXAS, THAT:
1 . The Wichita Falls Economic Development Corporation's approval and funding
of the following program modification as described below and in said corporation's
agenda, are approved:
Pamlico Air Project:
• The waiver of the letter of credit requirement securing the 1 .5 million dollar loan.
PASSED AND APPROVED this the 2nd day of February, 2021 .
MAYOR
ATTEST:
J/ e
City Clerk
WICHITA FALLS ECONOMIC DEVELOPMENT CORPORATION AGENDA
January 14, 2021
ITEM/SUBJECT: Pamlico Air request for Letter of Credit release
PROPOSED BY: Travis Haggard
ATTACHED: Pamlico Air Performance Agreement
COMMENTARY:
On December 19, 2019, the E.D.C. Board entered into a Performance Agreement with
Cleanaire, LLC, dba Pamlico Air. Pamlico Air is a new company to Wichita Falls, they
purchased the former Stanley Tools building. Pamlico Air manufacturers and assembles
air filters for residential, commercial, and industrial applications.
As part of the incentives within the Performance Agreement, Pamlico Air received a $1.5
million-dollar forgivable loan, that loan was secured with an irrevocable letter of credit,
hereinafter known as LOC). Pamlico Air pledged to hire 200 FTE's by October 1, 2021.
Currently Pamlico Air has 159 FTE's with an additional 115 Temp to Permanent
employees for a total of 274 currently employed at the facility.
CEO Travis Stephenson is asking for the EDC Board to release the LOC in order to free
up capital and allow them to invest more money into the Wichita Falls facility to hire
more people and purchase additional inventory and equipment.
Pamlico Air's investment to date:
Building $2,475,000.
Upfits (local contractor) $2,495,000.
Machinery& Equipment: $1,762,175.
Furniture& Fixtures: $54,942.
Leasehold Improvements: $133,124.
Total to date: $6,920,241.
Current Open Equipment POs $1,475,000.
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RECOMMENDATION:
From the inception of working with the Pamlico Air group they have done what they
said they were going to do,when they said they would do it. They have been an
excellent, reputable, and reliable group to work with. The expansion plans and the new
customers they have brought on will continue to create new jobs in the Wichita Falls
facility. I would recommend the EDC Board release the LOC to free up working capital
to insure the expansion and growth within the Wichita Falls facility.
Respectfully submitted,
Travis Haggard
Vice President of Business Retention and Expansion
Wichita Falls Chamber of Commerce
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Performance Agreement between the Wichita Falls Economic Development Corporation
and Cleanaire,LLC,dba Pamlico Air for Incentives to Create Primary Jobs at
2801 Production Boulevard in Wichita Falls,Texas
This Performance Agreement ("Agreement") is entered into on December 19, 2019, by and
between the Wichita Falls Economic Development Corporation ("WFEDC"), a Texas development
corporation authorized under the Texas Development Corporation Act of 1979, Section 4A,("Act"), and
Cleanaire,LLC, dba Pamlico Air,a Delaware limited liability company("Company").
Whereas,the Act authorizes the WFEDC to contract with companies whose activities are defined
as manufacturing and classified as 333413 by the North American Industry Classification System
(NAICS);and
Whereas, Company seeks to open a facility to make air filters at 2801 Production Boulevard,
Wichita Falls, Texas 76302-5920 in Wichita Falls, Texas (the "Facility"), and represents that the
Company's Facility will involve a capital investment of approximately $2,500,000, and employment of
approximately 200 net new full-time positions;and,
Whereas, Company and the WFEDC mutually find that the project could be located in
alternative facilities outside the Wichita Falls, Texas region, and is expected not to occur in the local
area unless it receives the support and investment from the City of Wichita Falls and the use of Type A
sales tax proceeds;and,
Whereas, Company will secure specified obligations herein with a promissory note to the
WFEDC, secured by a 24-month irrevocable letter of credit which must be approved by WFEDC legal
counsel.
Now, therefore, be it resolved, subject to the approval of the Wichita Falls City Council and the
execution of subsequent agreements to memorialize and obligate funds provided hereunder in the form
to be provided by the WFEDC,the parties agree as follows:
Definitions. As used in this Agreement,the following terms have the following meanings:
"New Position" means a permanent, full-time, Company, benefit-eligible employee working at
least 37.5 hours per week at the Facility who receives full-time wages paid by Company for a period of
at least 6 months at the Facility. To be a New Position, an employee must represent an increase in the
total,permanent level of employment at the Facility. Positions shall not be considered New Positions if
they replaced occupants of New Positions or full-time positions from an earlier reduction in the number
of full-time employees in Wichita County. New Positions must be Primary Jobs. Additionally, New
Positions will only be considered New Positions to the extent their additions increase the total
employment level by Company at the Facility at the time of the initiation of this agreement.
"Payroll Statement"means (i) a written statement setting forth the monthly,quarterly and annual
(as applicable) payroll at the Facility and the amount of wages paid to each full-time employee at the
Facility, and (ii) such other documentation as reasonably determined to be necessary by the WFEDC to
verify the number of New Positions created and continuing financial condition of the Company. Such
other documentation that Company may be required to provide to the WFEDC shall include compiled
income and expense statements for each quarter, balance sheets effective at the end of each quarter, and
copies of the Company's tax returns, income statements, state unemployment tax submissions, and
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federal unemployment tax submissions. The aforementioned documents may be redacted, modified, or
summarized by Company as reasonably necessary to protect the privacy of individuals and prevent the
disclosure of the Company's confidential and/or proprietary information.
"Primary Job"means a primary job as defined in Texas Local Gov't Code 501.002.
Incentives:
A. Loan: WFEDC's Total Maximum Obligation: $1,500,000
The WFEDC agrees to provide to Company a loan of $1,500,000.00 that the WFEDC will
forgive in its entirety if Company meets its obligations as set out in this Agreement.Prior to funding this
financing,Company shall execute and deliver a Promissory Note and related 24-month irrevocable letter
of credit, with an expiration date of December 20,2021.
1. Forgiveness of Loan. Company shall pay back this loan by paying a one-time
final payment of $1,500,000.00 in its entirety on or before October 1, 2021.
Should Company create and maintain the 200 New Positions at its Wichita Falls
Facility, the loan will be forgiven in its entirety. Should Company fail to create or
fail to maintain the 200 New Positions, Company will pay all or a portion of the-
loan payment then due as follows: $1,500,000 — (1,500,000 x Actual Jobs
Created/200). Should Company fail to pay to WFEDC the loan payment due
October 1,2021, the WFEDC will have the absolute right to demand payment of
monies due via the letter of credit, and Company will have no right to object to
said demand. This right does not limit the WFEDC's other remedies under this
agreement.
2. Documentation. On a quarterly basis,Company shall submit a Payroll Statement
and other documentation as required by the WFEDC,
Terms of Payment(principal and interest): The Principal Amount will be due
and payable in one final payment of$1,500,000 on October 1,2021,
Loan Disbursements: The WFEDC may disburse the loan amount to Company
at the time all agreements are signed and the letter of credit has been received and
approved. Such disbursements shall not exceed$1,500,000.
B. Skills Development Training Funds: WFEDC's Total Maximum Obligation:
$178,200
An application to the Texas Workforce Commission has been made for a Skills Development
Fund grant. If the grant is not funded by the Texas Workforce Commission or other government entity in
an amount of at least $178,200, then the WFEDC will provide funding for training under the grant
conditions in an amount sufficient to make up the amount of funds not provided, in a total amount not to
exceed the lower of(1) the amount to be provided if the grant were successfully funded, (2) $1,800 per
trainee, or(3) $178,200. This reimbursement does not include the wages of the trainees, but can include
the wages of Company employees involved in the training of those employees. The WFEDC funds will
be paid to Company within thirty (30) days from written request by Company upon completion of
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employee training. With each written request, Company will provide WFEDC with the information as
further detailed in Exhibit A.
C. Employee Relocation Assistance: WFEDC's Total Maximum Obligation: $600,000
Company will be eligible for a $3,000 per employee payment if the Company recruits employees
from outside of Wichita County and said employee relocates to Wichita County and remains a resident
of Wichita County for a minimum of six months. This incentive will be paid to Company after the sixth
consecutive month of employment and upon acceptable documentation of employment and residency.
D. General Conditions:
1. Maintenance of Operations. The WFEDC intends for any incentives to be used
to ensure that Company operates in Wichita Falls, In addition to other repayment
provisions herein, if Company ceases operations in Wichita Falls prior to 12
months from the date of receipt of any incentives payment, Company shall,within
60 days, repay the WFEDC the full amount of the applicable incentive paid by the
WFEDC to Company.
2. Use of Proceeds. Company agrees to use all of the funds received from WFEDC
pursuant to this Agreement for(or as reimbursement for) the "costs" (as that term
is defined in Tex. Loc. Gov't Code Aim. § 501.152, as of the date of this
Agreement) of this project related to the creation or retention of primary jobs as
provided by Tex. Loc. Gov't Code Ann. § 501.101.
3. Compliance with Tex. Gov't Code § 2264.001. In accordance with Tex. Gov't
Code §§ 2264.001 through 2264.101, Company does not and will not knowingly
employ an undocumented worker during the term of this Agreement in violation
of Texas or federal law. If, during the term of this Agreement, Company or a
branch, division, or department of Company is convicted of a violation under 8
U.S.C. Section 1324a(f), Company shall repay the entire amount of the public
subsidy with the addition of interest at the rate of 5% simple annual interest as
required by Tex. Gov't Code § 2264.053, not later than the 120th day after the
date the WFEDC notifies the business of the violation.
4. Compliance with Tex. Gov't Code §§ 501.156 through 501.158. The parties
agree this Agreement complies with Tex. Loc. Gov't Code §§ 501.156 through
501.158, by: (1) being intended to benefit the WFEDC, (2)providing that default
• on this Agreement is enforceable as provided by Tex. Loc. Gov't Code § 501.157,
in addition to retaining other enforcement remedies provided by Texas law, and
(3) providing a schedule as stated in this Agreement for additional jobs and
capital investment as consideration for direct incentives provided herein and
providing for repayment obligations.
5. No Waiver. No delay or omission by WFEDC in exercising any right that may
accrue to it pursuant to this Agreement will operate as a waiver of any other
WFEDC right that may accrue pursuant hereto.
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6. Disputes. In the event of a dispute, (1) neither party will be entitled to attorney's
fees incurred or paid in the enforcement of any provision of this Agreement,
regardless of any provision authorizing attorney's fees in Texas Local Gov't Code
§ 271.153(a)(3) or other statute, and (2) sole venue for any action based on this
Agreement or promise ancillary thereto shall be in Wichita County,Texas.
7. WFEDC Limitation of Liability. The WFEDC shall not be the guarantor of
Company's success, and shall not be liable for any failure to provide incentives
not specifically set forth in this Agreement. Any representations by WFEDC,the
City, or the Wichita Falls Chamber of Commerce and Industry concerning the
availability of incentives hereunder are subject to the approval of the governing
bodies entrusted by law to issue said incentives. Company certifies the truth of the
representations by its representatives to the WFEDC, the City, and the Wichita
Falls Chamber of Commerce and Industry. Company agrees to release the
WFEDC, the City, and the Wichita Falls Chamber of Commerce and Industry
from any and all claims, suits, and actions for damages, costs, and expenses to
persons or property (collectively "Claims") that may arise out of, or be
occasioned by or from any act,error or omission of the WFEDC,the City,and the
Wichita Falls Chamber of Commerce and Industry in the execution or
performance of this contract. The aforementioned release does not encompass
Claims attributable to the gross negligence or willful misconduct of the WFEDC,
the City,and/or the Wichita Falls Chamber of Commerce and Industry,
8. Term. The Term of this Agreement shall be from its execution until the later of:
a. December 20,2021,or
b. One year after the Company's repayment to the WFEDC of the final loan
payment described in this Agreement.
9. Default. During the Term of this Agreement, Company shall promptly notify
WFEDC if Company learns of the occurrence of: (i) any event which constitutes
an Event of Default; or(ii) any legal,judicial or regulatory proceedings affecting
Company's operations in Wichita Falls, Texas, and/or the Facility in which the
amount involved is in excess of$50,000 and is not covered by insurance.
10. Indemnity. Company shall indemnify, save and hold harmless WFEDC and the
City of Wichita Falls and their respective officers, directors, employees,
representatives and agents (collectively, the "Indemnified Parties") from and
against: (i) any and all claims, demands, actions, or causes of action that are
asserted against any Indemnified Party by any person or entity if the claim,
demand, action or cause of action directly or indirectly relates to a claim, demand,
action, or cause of action attributable to the acts or omissions of Company, any
affiliate of Company or any officer,employee or partner of Company; (ii) any and
all claims, demands, actions or causes of action that are asserted against any
Indemnified Party if the claim, demand, action or cause of action directly or
indirectly relates to funds received by Company pursuant to this agreement,
Company's use of the proceeds of funds received pursuant to this agreement or
the relationship of Company and WFEDC pursuant to this agreement; and (iii)
any and all liabilities, losses, costs or expenses (including attorneys' fees and
disbursements) that any Indemnified Party suffers or incurs as a result of any of
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the foregoing; provided, however, that Company shall have no obligation
pursuant to this provision to any Indemnified Party with respect to any of the
foregoing arising out of the gross negligence or willful misconduct of such
Indemnified Party. To the extent necessary to provide the Indemnified Parties full
protection in accordance with the terms of this Section, the indemnity provisions
set forth herein shall survive the termination of this Agreement.
11. Events of Default. Each of the following events shall be considered an Event of
Default of this agreement:
a. The failure of Company to pay any payment due to the WFEDC pursuant to
this agreement when due and the continuation of such failure for a period of
10 days after written notice thereof from WFEDC; or
b. If any representation or warranty by Company set forth herein or in any
certificate, report, request or other document furnished pursuant hereto is
incorrect in any material respect as of the date when made or deemed made; or
c. The failure of Company in its due observance and performance of any of the
covenants or agreements set forth in this agreement or any of documents
associated with this agreement and the continuation of such failure for a
period of 30 days after written notice thereof from WFEDC; or
d. If an involuntary case or other proceeding shall be commenced against
Company that seeks liquidation, reorganization or other relief pursuant to any
bankruptcy, insolvency or other similar law now or hereafter in effect or
seeking the appointment of a trustee, receiver, liquidator, custodian or other
similar official of it or them or any substantial portion of its or their property,
and if such involuntary case or other proceeding shall remain undismissed or
unstayed for a period of 30 days; or if an order for relief against Company
shall be entered in any such case under the Federal Bankruptcy Code;or
e. If Company shall commence a voluntary case or other proceeding seeking
liquidation, reorganization or other relief under any bankruptcy, insolvency or
other similar law now or hereafter in effect or seeking the appointment of a
trustee, receiver, liquidator, custodian or other similar official or shall consent
to any such relief or to the appointment of or taking possession by any such
official in an involuntary case or other proceeding commenced against it, or if
Company shall make a general assignment for the benefit of creditors or shall
fail generally or shall admit in writing its inability to pay its debts as they
become due; or
f. If Company shall fail within 30 days to pay, bond or otherwise discharge any
judgment or order for the payment of money in excess of$50,000 that is not
otherwise being satisfied in accordance with its terms and is not stayed on
appeal or otherwise being appropriately contested in good faith; or
g. If there shall be a dissolution of Company or a cessation of business
operations at the Facility; or
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h. If the Company is determined by WFEDC to be continually or repeatedly
violating a City ordinance or state law or regulation related to the operation of
the Facility.
12. Remedies. Upon the occurrence of any Event of Default described in Section 11.d
or 11.e above, the obligations of the Lender hereunder shall immediately
terminate and the entire principal amount of the Promissory Note then
outstanding, together with interest then accrued thereon, shall become
immediately due and payable,all without written notice and without presentment,
demand,protest,notice of protest or dishonor or any other notice of default of any
kind, all of which are hereby expressly waived by the Company. Upon the
occurrence and at any time during the continuance of any other Event of Default
specified in Section 11, the Lender may by written notice to the Company: (1)
declare the entire principal amount of all indebtedness then outstanding, together
with interest then accrued thereon to be immediately due and payable, without
presentment, demand, protest, notice of protest or dishonor, notice of intent to
accelerate or notice of acceleration or other notice of default of any kind, all of
which are hereby expressly waived by the Company; (ii) terminate all lending
obligations of the Lender pursuant hereto unless and until the Lender shall
reinstate same in writing; (iii) reduce any claim to judgment; or (iv) without
notice of default or demand pursue and enforce any of the Lender's rights and
remedies pursuant to the Promissory Note, this Agreement or any of the letter of
credit securing the Promissory Note.
13. Further Approvals Required. Any representations by WFEDC, the City of
Wichita Falls or the Wichita Falls Chamber of Commerce and Industry (or any
representatives of any of the foregoing) concerning the availability of incentives
hereunder are subject to the approval of the governing bodies entrusted by law to
issue said incentives,
14. Amendments. This agreement and said attachments, if any, may only be
amended, supplemented, modified or canceled by a duly executed written
instrument agreed to by both parties.
15. Company Liability Limits. Company's maximum aggregate liability under this
Agreement to WFEDC, the City of Wichita Falls, the Wichita Falls Chamber of
Commerce and Industry, any third party, and/or any Indemnified Party identified
in Section 10 shall not exceed the amount of funds provided to Company pursuant
to this Agreement.
Wichita Falls Economic Cleanaire,LLC,dba Pamlico Air
Development Corporation
•S u�wZ 12-13-19
Leo Lane,President Tr • s `14 :.n,CEO
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