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036-24 (PerformanceAgreementHPHoodLLC) Resolution HP Hood LLC WHEREAS, HP HOOD LLC has made known its intent to expand its operation by making new real property and machinery and tools improvements; and BE IT RESOLVED,that the Board of Supervisors for the County of Frederick, Virginia, does hereby approve a General Fund Supplemental Appropriation and an Economic Development Authority Supplemental Appropriation in the amount of$800,000.00 for a Local Economic Development Incentive Grant as stated in the executed Performance Agreement to assist in expanding the operation for HP HOOD LLC in Frederick County, Virginia, BE IT RESOLVED,that said funds are subject to an executed Performance Agreement outlining the required performance criteria. BE IT FURTHER RESOLVED,that the Board of Supervisors for the County of Frederick, Virginia, does authorize the County Administrator to execute the Performance Agreement on its behalf. Upon motion duly made by Vice Chairman Slaughter, seconded by Supervisor Lockridge , and on the votes hereafter recorded, ADOPTED,this 11"' day of December 2024 Josh E. Ludwig Aye Heather H. Lockridge Ave Judith McCann-Slaughter Aye Robert W. Wells Aye John F. Jewell Aye Robert T. Liero Aye Blaine P. Dunn Aye A COPY TESTE: Michael L. Bollhoe r Clerk, Board of ervisors Res. No. 036-24 n k Fre erlc VA ECONOMIC DEVELOPMENT AUTHORITY DATE: December 4, 2024 TO: Frederick County Board of Supervisors FROM: Patrick Barker, CEcD� a Executive Director CC: Michael Bollhoefer County Administrator RE: Performance Agreement for HP HOOD LLC Attached please find a resolution and performance agreement for the expansion of HP HOOD LLC. As you might recall, HP HOOD LLC will be expanding its operation in Frederick County. They will make a capital expenditure of approximately$86,268,634, of which approximately$52,557,599 will be invested in machinery and tools, and approximately$34,711,035 will be invested in real estate improvements. The company will be adding some new high efficiency lines and additional automated storage capacity. All parties' legal counsels (County, EDA and HP HOOD LLC) have reviewed and approved the performance agreement. Thank you for your support of this project. I am available if you have any questions or comments on the materials for this project. Attachment: • Performance Agreement • BOS Resolution YOUR MOVE.OUR COMMITMENT. 45 E.Boscawen St.Winchester,VA 22601 0 540-665-0973 0 YesFrederickVA.com LOCAL ECONOMIC DEVELOPMENT INCENTIVE GRANT PERFORMANCE AGREEMENT This PERFORMANCE AGREEMENT made and entered this 11th day of December 2024 by and among the COUNTY OF FREDERICK,VIRGINIA (the "Locality"), HP Hood LLC (the "Company"), and the ECONOMIC DEVELOPMENT AUTHORITY OF THE COUNTY OF FREDERICK, VIRGINIA (the "Authority"), a political subdivision of the Commonwealth. WITNESSETH: WHEREAS,the Locality wishes to make a Local Economic Development Incentive Grant in the amount of$800,000 (the"LEDIG")through the Authority to the Company for the purpose of inducing the Company to expand,equip,improve,and operate its production operations located in the Locality (the "Facility"), thereby making a significant Capital Investment, as such capitalized terms are hereinafter defined; WHEREAS, the Locality is willing to provide the funds to the Authority with the expectation that the Authority will provide the funds to or for the use of the Company,provided that the Company promises to meet certain criteria relating to Capital Investment; WHEREAS, the Locality, the Authority and the Company desire to set forth their understanding and agreement as to the payout of the LEDIG, the use of the proceeds of the LEDIG, the obligations of the Company regarding Capital Investment and the repayment by the Company of all or part of the LEDIG under certain circumstances; WHEREAS, the expansion, equipping, improvement, and operation of the Facility will entail a capital expenditure by or on behalf of the Company of approximately $86,268,634, of which approximately $52,557,599 will be invested in machinery and tools, and approximately $34,711,035 will be invested in construction to expand the Facility; WHEREAS, the stimulation of the additional tax revenue and economic activity to be generated by the Capital Investment constitutes a valid public purpose for the expenditure of public funds and is the animating purpose for payment of LEDIG to the Company: NOW, THEREFORE, in consideration of the foregoing, the mutual benefits, promises and undertakings of the parties to this Agreement, and other good and valuable consideration,the receipt and sufficiency of which are hereby acknowledged, the parties covenant and agree as follows. Section 1. Definitions. For the purposes of this Agreement, the following terms shall have the following definitions: HP Hood Inc LEDIG Performance Agreement Final 1 "Capital Investment" means a capital expenditure by or on behalf of the Company in taxable real property, taxable tangible personal property, or both, at the Facility, excluding existing real property improvements and existing personal property. The purchase or lease of furniture,fixtures,machinery and equipment, including under an operating lease,by or on behalf of the Company will qualify as Capital Investment. The Capital Investment will be calculated based upon taxable capital expenditures reported after December 31, 2023. The total expected capital expenditure of$86,268,634 is referred to in this Agreement as the"Capital Investment." "Performance Date" means June 30, 2026. The Performance Date shall not be subject to extension. "Target" means the Company's obligations to make Capital Investments at the Facility of at least$86,268,634 as of the Performance Date. "Virginia Code" means the Code of Virginia(1950, as amended). Section 2. Target; Statutory Criteria. (a) Target: The Company will expand, equip,improve, and operate the Facility in the Locality, and make Capital Investments at the Facility of at least $86,268,634 as of the Performance Date. Section 3. Disbursement of the LEDIG; Use of Proceeds (a) Disbursement of the LEDIG: As an inducement to the Company to achieve the Target at the Facility and provided that the Company is not in default under the terms of this Agreement, the Locality will disburse $800,000 of LEDIG proceeds through the Authority to the Company in two installments as follows: (i) An installment of$300,000 will be paid by the Locality to the Authority and by the Authority to the Company after April 1, 2025, but no later than June 30, 2025. (ii) An installment of $500,000 will be paid by the Locality to the Authority and by the Authority to the Company within sixty (60) days after the Performance Date provided that the final Progress Reports are timely filed and deemed acceptable to the Authority, in the Authority's sole and absolute discretion. The Progress Reports shall provide evidence of the achievement of the Target by the Company. Section 4. Repayment Obligation. (a) If the Company has met at least 90% of the Target as of the Performance Date, then and thereafter the Company is no longer obligated to repay any portion of the LEDIG. If the Company has not met at least 90% of its Target as of the Performance Date, the Company shall repay to the Authority that part of the LEDIG that is proportional to the Target for which there is a shortfall. For example, if at the Performance Date,the Capital Investment is only $64,701,475 HP Hood Inc LEDIG Performance Agreement Final 2 (reflecting achievement of 75% of the Target),the Company shall repay to the Authority 25% of the moneys allocated to the Target($200,000 of the LEDIG). Among other things, in the event that the Company should at any time file any amended tax return indicating, among other things, that the Company did not meet the Capital Investment, the Company shall be obligated to repay all or a portion of LEDIG, according to the formula set forth herein. The Company's repayment obligation hereunder shall survive the Performance Date to the extent that the Locality subsequently receives information to the effect that the Company did not meet the Target. (b) Determination oflnability to Comply: If at any time prior to the Performance Date (a "Determination Date") a material change in circumstances has occurred that causes the Company to be unable or unwilling to meet and maintain its Target by and through the Performance Date, and if the Locality or the Authority shall have promptly notified the Company of such determination and the Company has not provided reasonable reassurance that it is making commercially reasonable progress toward reaching the Target as of the Performance Date, the Company must repay to the Authority all of the proceeds of the LEDIG previously disbursed to the Company and the Authority shall be under no obligation to disburse any portion of the LEDIG that it has not already disbursed. Such material change will be based on such circumstances as a filing by, on behalf of or against the Company under the U.S. Bankruptcy Code, the liquidation of the Company, an abandonment of the Facility by the Company, appointment of a receiver, or other similar significant event that demonstrates that the Company will be unable or is unwilling to satisfy the Target for LEDIG. Upon such determination, then and in that event, the LEDIG proceeds previously disbursed to the Company will be required to be repaid as set forth in subsection 4(c). (c) Repayment: In the event that the Company is obligated to repay the LEDIG, or any portion thereof, as called for under the terms of this Agreement,the Company shall pay such sums within 30 days after notification of the amount of the sums to be repaid by the Company. Any LEDIG repayment shall be made as follows: (i) LEDIG: Any LEDIG moneys repaid by the Company to the Authority hereunder shall be repaid by the Authority to the Locality within 30 days after the repayment by the Company to the Authority. In the event that the Company fails or refuses to repay any of the LEDIG moneys as called for in this Section 4, such sums shall be assessed interest at the rate of 8.00%per annum until repaid in full by the Company. The Locality and the Authority shall use their best efforts to recover any proceeds of the LEDIG due, including judicial proceedings for any breach of this Agreement by the Company. (d) Attorney's Fees with Respect to Repayment: In the event that the Company fails to comply with the repayment obligations set forth in this Section 4,the Locality and the Authority shall be entitled to recover their reasonable attorney's fees and costs incurred in connection with such default by the Company, whether or not judicial proceedings are instituted to collect such funds. HP Hood Inc LEDIG Performance Agreement Final 3 Section 5. The Company Reporting. Commencing on April 1, 2025, and on April 1, 2026, the Company shall provide, at the Company's expense, reports on the progress of achievement of the Target("Progress Reports"). Such Progress Reports shall set forth the amount of Capital Investment made as of the date of each report. Such Progress Reports also shall include an affirmative statement signed by an authorized Company Officer or Director that the information provided in the report is true and correct and certifies the status of its efforts to achieve the Target. The Company shall provide such other reports on the progress of achievement of the Target at such other times as the Locality or the Authority may reasonably require. The Company hereby authorizes the Locality, including the Locality's Commissioner of the Revenue and Treasurer, to provide for review by the Locality or the Authority of the Company's real estate tax, business personal property tax and machinery and tools tax information. Such information shall be marked and considered confidential and proprietary and shall be used solely for verifying satisfaction of the Capital Investment Target. If the Locality or the Authority, the Office of the Commissioner of the Revenue, or the Office of the Treasurer should require additional documentation or consents from the Company to access such information, the Company shall promptly provide, at the Company's expense, such additional documentation or consents as the Locality or the Authority may reasonably request. In addition to the verification data described above, the Locality and the Authority may request such other documentation or audits as may reasonably be required to properly verify expenditure of the Capital Investment. Section 6. Notices. Formal notices and communications between the Parties shall be given either by (i) personal service, (ii) delivery by a reputable document delivery service that provides a receipt showing date and time of delivery, (iii) mailing utilizing a certified or first class mail postage prepaid service of the United States Postal Service that provides a receipt showing date and time of delivery, or (iv) delivery by facsimile or electronic mail (email)with transmittal confirmation and confirmation of delivery, addressed as noted below; provided, notices delivered by email to the Company must also be delivered by confirmed facsimile or one of the other methods specified in this Section to the copy address below. Notices and communications personally delivered or delivered by document delivery service shall be deemed effective upon receipt. Notices and communications mailed shall be deemed effective on the second business day following deposit in the United States mail. Notices and communications delivered by facsimile or email shall be deemed effective the next business day, not less than 24 hours, following the date of transmittal and confirmation of delivery to the intended recipient. Such written notices and communications shall be addressed to: HP Hood Inc LEDIG Performance Agreement Final 4 if to The Company, to: with a copy to: HP Hood LLC HP Hood LLC Six Kimball Lane Six Kimball Lane Lynnfield, MA 01940 Lynnfield, MA 01940 Facsimile: (617) 456-3590 Facsimile: (617) 241-2199 Email: kirsten.dotson@hphood.com Attention: General Counsel Attention: Sr. Director of Treasury if to the Locality, to: with a copy to: County of Frederick,Virginia County of Frederick, Virginia 107 North Kent Street 107 North Kent Street, 3rd Floor Winchester, Virginia 22601 Winchester, Virginia 22601 Facsimile: 540-667-0370 Facsimile: 540-667-0370 Email: rmichael.bollhoefer@fcva.us Email: austin.cano@fcva.us Attention: County Administrator Attention: Interim County Attorney if to the Authority,to: with a copy to: Economic Development Authority of the Economic Development Authority of the County of Frederick, Virginia. County of Frederick, Virginia. 107 North Kent Street 107 North Kent Street Winchester, Virginia 22601 Winchester, Virginia 22601 Facsimile: 540-722-0604 Facsimile: 540-722-0604 Email: mbryan@michaelbryanlaw.com Email: pbarker@yesfrederickva.com Attention: Authority Counsel Attention: Executive Director Section 7. Miscellaneous. (a) Entire Agreement;Amendments: This Agreement constitutes the entire agreement among the parties hereto as to the LEDIG and may not be amended or modified, except in writing, signed by each of the parties hereto. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns. The Company may not assign its rights and obligations under this Agreement without the prior written consent of the Locality and the Authority. (b) Governing Law; Venue: This Agreement is made,and is intended to be performed, in the Commonwealth of Virginia and shall be construed and enforced by the laws of the Commonwealth of Virginia. Jurisdiction and venue for any litigation regarding this Agreement shall lie in the Circuit Court of the County of Frederick, Virginia, and such litigation shall be brought exclusively in such court. HP Hood Inc LEDIG Performance Agreement Final 5 (c) Counterparts: This Agreement may be executed in one or more counterparts, each of which shall be an original, and all of which together shall be one and the same instrument. (d) Severability: If any provision of this Agreement is determined to be unenforceable, invalid or illegal, then the enforceability, validity and legality of the remaining provisions will not in any way be affected or impaired, and such provision will be deemed to be restated to reflect the original intentions of the parties as nearly as possible in accordance with applicable law. (e) Time: Time is of the essence as to all matters set forth in this Performance Agreement. (f) Attorney Fees: Except as noted in Section 4(d)above, attorney's fees shall be paid by the parry incurring such fees. (g) Interpretation: Should any provision of this Agreement require judicial interpretation, it is agreed that the Court interpreting the same shall not apply the presumption that the terms of any such provision shall be more strictly construed against one parry or the other by reason of the rule of construction that a document is to be construed most strictly against the party who itself or through its counsel prepared the same, it being agreed that counsel for the Locality, the Company and the Authority have participated in the preparation and review of this Agreement. [THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK] HP Hood Inc LEDIG Performance Agreement Final 6 IN WITNESS WHEREOF, the parties hereto have executed this Performance Agreement as of the date first written above. COUNTY OF FREDERICK,VIRGINIA By Name: Josh Ludwig Title: Chair, Board of Supervisors of the County of Frederick, Virginia Date: ECONOMIC DEVELOPMENT AUTHORITY OF THE COUNTY OF FREDERICK, VIRGINIA By Name: Richard Till Title: Chair, Economic Development Authority of the County of Frederick, Virginia Date: HP HOOD LLC By Name: Title: Date: HP Hood Inc LEDIG Performance Agreement Final 7