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HomeMy WebLinkAbout2013-441 EDC - Performance Agreement Between Orange County NC and Morinaga America Foods Inc. /0 -/5- 13 �"7 a STATE OF NORTH CAROLINA ORANGE COUNTY PERFORMANCE AGREEMENT BETWEEN ORANGE COUNTY, NC AND MORINAGA AMERICA FOODS, INCORPORATED This Agreement made and entered into this the o2 7'ay of October, 2013 by and between Orange County, a body politic existing under the laws of the State of North Carolina ("County") and Morinaga America Foods, Inc., a North Carolina corporation,with facilities to be located in Mebane,North Carolina ("Company"), for the purpose of incentivizing Company's investment in Orange County and Mebane. Company is a North Carolina corporation and a wholly-owned subsidiary of Morinaga& Co., Ltd., a confectionary company situated and doing business in Tokyo, Japan. Company's Mebane Facility shall manufacture confectionaries for distribution throughout the United States. Company represents it is duly authorized to conduct business in North Carolina. It is understood that the levels of performance required by this Agreement are to be met by this group (Company and Morinaga& Co, Ltd.) as a whole at its Facility in Orange County (Mebane). Accordingly,the term "Company" as used in this Agreement refers to the entire group at such Facility. WITNESSETH THAT WHEREAS, the County has offered to the Company an inducement package as hereinafter set forth; and WHEREAS, the State of North Carolina and the Town of Mebane, North Carolina have offered separate inducement packages to the Company; and WHEREAS, but for the offer of an inducement package the Company would not be locating its manufacturing Facility within Orange County; and WHEREAS, the Company has agreed to meet and continue meeting the minimum investment and employment requirements as hereinafter set forth; NOW, THEREFORE,the parties hereto in consideration of these mutual covenants and agreements passing from each to the other do hereby agree as follows: 1. DEFINITIONS. As used in this Agreement the terms below will have the following meanings: A. "Affiliate." A company that the Company controls,controls the Company, or is under common control with the Company. B. "Commencement Date. The date in which the Company begins actual production operations at the Subject Property, after having obtained applicable governmental approvals, certificates of zoning compliance, and certificates of occupancy. Unless 2054461.2 21896-200 Page 1 of 12 R —Please return this copy to the Clerk to the Board's — office for permanent agenda file. delayed by causes beyond the control of the Company,the Commencement Date is anticipated to be no later than December 1, 2015. C. "Company." Morinaga America Foods, Inc. and includes its affiliates, successors, and assigns. D. "Eligible Property." Includes(a)the Subject Property (as defined in Exhibit Al Legal Description of Real Property), other real property in the County, and all improvements the Company or an Affiliate of the Company constructs or installs, or causes to be constructed or installed, at the Subject Property or such other real property, including all buildings, building systems, and building improvements, and (b) all personal property (as defined in Exhibit C, Personal Property)the Company or an Affiliate of the Company purchases or leases and installs, at or relocates to, the Facility or such other real property. E. "Grant."An economic incentive grant to the County pursuant to Section 2C of this Agreement. F. "Inducement Grant." An economic development grant provided to Company for the purpose of securing the Company's location of its manufacturing facility in Orange County,North Carolina. - G. "Minimum Taxable Investment." The amount of$34,000,000 which represents eighty percent(80%) of an aggregate Qualifying Expenditure made by the Company of approximately$42,500,000. H. "Orange County Facility" "Mebane Facility," or"Facility." The Company constructed and/or owned primary and secondary structures, utilities, and operations and service areas situated on the Subject Property in Mebane, Orange County,North Carolina in and on which Company conducts its business, manufacturing, and/or operations. 1. "Person." Any individual,partnership, trust, estate, association, limited liability company, corporation,custodian, nominee, governmental instrumentality or agency, body politic or any other entity in its own or any representative capacity. J. "Personal Property." All personal property the Company or an Affiliate owns or leases located at the Facility, including all (a) machinery and equipment, (b) furniture, furnishings, and fixtures, (c)property that is capitalized for federal or state income tax purposes, (d) all additions to any of the foregoing, and all replacements of any of the foregoing in excess of$100,000. K. "Qualifying Expenditure." All expenditures the Company, an Affiliate, or lessor to the Company or an Affiliate makes for Eligible Property which is subject to Tax in the County and is not subject to an exemption from Tax that the Company uses. L. "State." The State of North Carolina. 2054461.2 21896-200 Page 2 of 12 M. "Subject Property." The property on which Company constructs and/or operates the Orange County Facility. N. "Tax" or"Taxes." Ad valorem property tax levied on real and personal property located in the Count y pursuant to Article 25, Chapter 105 of the North Carolina General Statutes or any successor statute relating to ad valorem property tax the County levies on property. Oc f"Q-1- O. "Term" or"Full Term." The duration of this Agreement meaning Septemb , 2013 through and including January 31, 2020. P. "Total Taxable Investment." The taxable value of all Qualifying Expenditures made by Company in and to its Orange County Facility as of January 31, 2020. 2. INDUSTRIAL INVESTMENT AND EMPLOYMENT AGREEMENT A. INVESTMENT 1. The Company anticipates it shall directly invest a Minimum Taxable Investment, in accordance with the investment plan attached as Exhibit B, in addition to 2015 assessments in real and taxable business personal property as described in Exhibit C, on or before January 31, 2018. If the Company does not make the Minimum Taxable Investment by on or before January 31, 2018 (and as may be extended below),the amount of the Grants will be adjusted as provided in Subsection 2A3. 2. The Company shall achieve the Minimum Taxable Investment by January 31, 2018. 3. If total increase of taxable investment falls below the minimum investment levels, due to failure to meet the investment goals set forth in Exhibit B or removal of equipment, as assessed by the Orange County Tax Assessor,the amount of the following annual installment will be reduced by a pro-rata percentage of the shortfall. The baseline for measuring whether the investment goals have been met(i.e. the 2015 tax assessments) shall be adjusted(1) upward, if there is an increase in the assessment of the Company's real property and (2) downward, to reflect the natural decline in the value of the Company's personal property (existing in 2015 and acquired thereafter in the course of the new investment) as measured by the depreciation of such property in accordance with generally accepted accounting principles. B. EMPLOYMENT 1. On or before January 31, 2018, at least 90 persons will be employed in full-time positions at the Mebane Facility ("Jobs Minimum"). The number of full-time positions shall be evidenced by one or more Quarterly Tax and Wage Reports (Form NCUI 10 1) filed with the N.C. Employment Security Commission. If 80%of the Jobs Minimum is not achieved on or before January 31, 2018 (or as extended as provided below), the amount of the Grants will be adjusted as provided in Section 6. 2. During the first year of operation after commencement of this Agreement, Company and County agree Company shall hire 18 full time employees at its Mebane Facility. During the second year of operation the Company shall hire an additional 67 full time 2054461.2 21896-200 Page 3 of 12 employees at its Mebane Facility. During the third year of operation the Company shall hire at a minimum an additional 5 full time employees at its Mebane Facility. At the expiration of this Agreement,the Company, and its subsidiaries, shall employ, at its Mebane Facility in Orange County, at least the equivalent of 90 full time employees in accordance with"Exhibit A". Ninety (90)new full time equivalent employees shall be hired at the Mebane Facility pursuant to the terms of this Agreement. Employees counted toward this total shall include only new employees of the Company employed and located at Company's Mebane Facility in Orange County, provided such employees are employed in Orange County on a full time basis. Employees of the Company will be eligible to participate in Company sponsored health insurance programs. For purposes of this section"90 full time equivalent employees" shall be defined as 90 actively employed individuals and shall not include vacant positions for which the Company is actively or otherwise recruiting. It is understood that vacancies occur and that when such occur the Company will immediately, or as soon as is reasonably possible thereafter, fill said vacancies. The mean wage of the 90 new full time equivalent employees shall be, as of the last day of this Agreement,at the annual rate of thirty-seven thousand nine hundred sixty-nine dollars ($37,969.00). C. DEVELOPMENT GRANT PARTICIPATION: Where applicable,the Company agrees to partner,through the commitment to create new jobs, with Orange County and other applicable agencies to apply for development grants that will improve and/or add water, sewer, road or other necessary infrastructure in order to facilitate the successful completion of this project. The Company agrees to meet with program representatives, and to participate in the grant request process as necessary to secure the required funding. D. GUARANTEED MINIMUM LEVEL OF PERFORMANCE: The Company agrees that its minimum level of performance pursuant to this Agreement shall be as set out in this Section 2. Furthermore, Company agrees that failure to meet the minimum level of new employment as reflected in Section 2B shall entitle the County to reductions in inducement installments paid to the Company in an amount of four hundred fifty dollars ($450.00)per employee not hired as reflected in Exhibit A. Company further agrees that failure to meet the minimum level of direct investment as reflected in Section 2A shall entitle County to pro rata reductions in inducement installments paid to the Company as set out in Section 3. It is agreed and understood by the parties hereto that the failure of the Company to meet the level of performance with respect to minimum level of investment or minimum level of new employment as specified herein shall not be considered a breach of this Agreement. E. STATUTORY COMPLIANCE: The Company understands that the County's participation is contingent upon authority found in North Carolina General Statute 158-7.1 and other relevant North Carolina General Statutes and that should such statutory authority be withdrawn by the North Carolina General Assembly County may terminate this Agreement without penalty to County and without further compliance with this Agreement. 3. INDUCEMENT PACKAGE A. COUNTY INDUCEMENT GRANT: Subject to Section 2A3 the County, upon execution of this Agreement, shall provide to the Company an inducement to offset Facility development, expansion, and acquisition costs in an amount estimated at One Million Ninety-three Thousand 2054461.2 21896-200 Page 4 of 12 Nine Hundred Fifty Dollars ($1,093,950)payable in five installments of approximately Two Hundred Eighteen Thousand Seven Hundred Ninety Dollars ($218,790) over a five year period. The first installment shall occur on August 1, 2015 upon receipt of proof, as described in Section 5 of this Agreement,that the minimum employment and investment numbers referenced in Section 2 of this Agreement have been met and that all outstanding local property taxes on the real and business personal property owned by the Company and located within Orange County for which a bill for such taxes have been issued to the Company, have been paid. Subsequent annual installments will occur during the month of January for the term of this Agreement with the final installment occurring in January 2019. No installment shall be required to be paid until such time as County receives proof of the payment of all outstanding property taxes and verification of employment and investment levels has been submitted to the County. Subject to Section 3C the final Inducement Grant Amount shall be determined based on the Company's Total Taxable Investment at the time of the final inducement installment and according to the formula in 3B. B. TOTAL COUNTY COMMITMENT: The amount of the Inducement Grant is based on a taxable investment by Company in an amount of Thirty-four Million Dollars ($34,000,000). Should Company make a taxable investment in an amount more than Thirty-four Million Dollars ($34,000,000) County shall adjust the Inducement Grant amount according to the following formula: Amount of investment divided by 100 multiplied by the then current ad valorem tax rate (currently $0.858 per$100 of valuation) multiplied by 0.75 (percentage of inducement) multiplied by five (number of years). Utilizing this formula a taxable investment currently estimated at Thirty-four Million Dollars ($34,000,000)would result in an Inducement Grant in the amount of One Million Ninety-three Thousand Nine Hundred Fifty Dollars ($1,093,950) payable in five installments of Two Hundred Eighteen Thousand Seven Hundred Ninety Dollars ($218,790). In the event the amount of taxable investment increases or decreases,the amount of inducement shall incease or decrease based on the formula specified herein, however the total amount of inducement shall be no more than One Million Five Hundred Forty-Five Thousand Dollars ($1,545,000.000). Further, this example assumes a static taxable investment of Thirty- four Million Dollars ($34,000,000)throughout the five-year term. The formula specified herein shall be applied to the taxable investment annually during the term to determine the actual amount of the five inducement installments. C. MAXIMUM COUNTY COMMITMENT: The Inducement Grant shall not exceed One Million Five Hundred Forty-five Thousand Dollars ($1,545,000.00),the inducement amount based on a Forty-eight Million Dollars ($48,000,000) investment by Company. 4. EXPANSION OPPORTUNITY Participation in this Agreement shall not exclude the Company from consideration for additional inducements from the County either during or upon completion of this Agreement. Future projects shall be considered on a case-by-case basis and induced at the discretion of the County based on new taxable investment and job creation in excess of the minimum levels outlined in Section 2 above. Any such agreement shall require a separate "Performance Agreement"which shall conform to all relevant North Carolina Statutes and/or Orange County Ordinances, Policies or Resolutions, shall be in writing, and shall be mutually agreed upon by the Parties. 2054461.2 21896-200 Page 5 of 12 5. PROOF AND CERTIFICATION The officials of Parties to this Agreement shall furnish the necessary reports and certificates to verify that each Party's respective goals are met. Once the Company maintains its investment and employment goals for the term of this Agreement it will no longer need to furnish these reports. Acceptable forms of proof for taxable investment shall be the records of the County Tax Administrator. Acceptable forms of proof of payment of taxes shall be in the form of cancelled checks, and receipts of payment from the County Tax Administrator. Acceptable forms of proof for employment numbers shall be in the form of a notarized statement from a North Carolina licensed Certified Public Accountant and shall be verified by the North Carolina Employment Security Commission. 6. REMEDY A. INDUCEMENT PACKAGE: If the County does not meet and maintain the terms set forth in the inducement package,the Company has the option to the rights set forth in Section I IA of this Agreement upon thirty (30)days written notice to the County. B. DELAY OF INDUCEMENT PACKAGE INITIATION: If the Company believes that it will not meet employment and investment goals that are to be met pursuant to this Agreement by December 31, 2018, the onset of this Agreement may be delayed one (1)year, at the option of the Company. Written notification of a request to delay onset must be received by the County no later than December 31, 2014. In that event this Agreement shall initiate no later than December 31, 2014 and shall expire no later than January 31, 2020. In the event the employment and investment goals are not met due to causes beyond the control of the Company, the period in which such employment and investment goals are to be met shall be tolled by the period of such delay caused by such causes beyond the control of the Company (for purposes of this Section 6B causes beyond the control of the Company are limited to delay in completion of public works construction such as access road, utilities, water and sewer lines). C. INVESTMENT AND EMPLOYMENT PACKAGE: If the Company does not meet and maintain either the investment or employment goals within the annual timetable set forth in this Agreement,and does not opt to delay the onset of this Agreement as described above,then the county will reduce the annual installment payment as set forth in Section 2D of this Agreement until such time as the Company once again meets both the investment and employment goals. Reduction shall be computed based on the percentage of the goal not met. In order to qualify for the full reimbursement, including recovery of any prior reductions, both investment and employment must meet or exceed the minimum standards outlined above prior to the natural termination of this Agreement. 7. SEVERABILITY If any term or provision of this Agreement is held to be illegal, invalid, or unenforceable,the legality,validity, or enforceability of the remaining terms, or provisions of this Agreement shall not be affected thereby; and in lieu of such illegal, invalid or unenforceable term or provision, 2054461.2 21896-200 Page 6 of 12 there shall be added by mutually agreed upon written amendment to this Agreement, a legal, valid, or enforceable term or provision, as similar as possible to the term or provision declared illegal, invalid,or unenforceable. 8. COMPLIANCE WITH THE LOCAL GOVERNMENT BUDGET AND FISCAL CONTROL ACT OF NORTH CAROLINA GENERAL STATUTES All appropriations and expenditures pursuant to this Agreement shall be subject to the provisions of the Local Government Budget and Fiscal Control Act of the North Carolina General Statutes for cities and counties and shall be listed in the annual report submitted to the Local Government Commission by the County. 9. GOVERNING LAWS & FORUM This Agreement shall be governed and construed by the Laws of the State of North Carolina. Any action brought to enforce or contest any term or provision of this Agreement shall be brought in the North Carolina General Court of Justice sitting in Orange County,North Carolina. The Parties hereto stipulate to the jurisdiction of said court. 10. INDEMNIFICATION The Company hereby agrees to indemnify, protect and save the County and its officers, directors, and employees harmless from all liability, obligations, losses, claims, damages, actions, suits, proceedings, costs and expenses, including reasonable attorneys' fees, arising out of, connected with, or resulting directly or indirectly from the business, construction, maintenance, or operations of the Company or the Company's Mebane Facility or the transactions contemplated by or relating to this Agreement, including without limitation, the possession, condition, construction or use thereof, insofar as such matters relate to events subject to the control of the Company and not the County. The County hereby agrees to indemnify, protect and save the Company and its officers, directors, and employees harmless from all liability, obligations, losses, claims, damages, actions, suits, proceedings, costs and expenses, including reasonable attorneys' fees, arising out of, connected with, or resulting directly or indirectly from the performance of this Agreement attributable to the negligence or misconduct of the County, its officers or employees. The indemnification arising under this Article shall survive the Agreement's termination. 11. TERMINATION A. COMPANY: Upon Company's meeting its Employment and Investment obligations as set out in Section 2 above and upon Company's certification to such and certification of the payment of all real and personal property taxes, as set out in Section 5 above, then upon the occurrence of any of the following events, the Company shall have the option of terminating this Agreement: Failure of the County, to provide the initial inducement installment as provided in Section 3 of this Agreement; or, under the same circumstances, failure of the County to make future inducement installments, as provided for in Section 3 of this Agreement. Should the Company exercise its option to terminate this Agreement,pursuant to this Section for failure by the County,the Company shall be entitled to retain all funds paid to or for the benefit of the Company pursuant to this Agreement. On the other hand, should the 2054461.2 21896-200 Page 7 of 12 Company terminate this Agreement for any reason other than the default by the County to provide for any inducement installment to the Company, the Company shall repay to the County all funds paid to or for the benefit of the Company pursuant to this Agreement. Thereafter,the County shall have no further obligation to make inducement installments annually or otherwise. Any such termination of this Agreement by the Company shall be in writing and shall meet notice requirements as set out herein. B. COUNTY: The County shall have the option of terminating this Agreement upon any Abandonment of Operations by the Company, without penalty to the County, which option shall be executed by giving written notice to the Company. Abandonment of Operations shall be defined as a period in excess of eight (8) weeks during which the Company's level of Full Time Equivalent Employees or Direct Investment goes below thirty percent(30%) of the guaranteed minimum levels of performance commitments for either Full Time Equivalent Employees or Direct Investment as reflected in Section 2 above. Notwithstanding the foregoing, if the aforesaid decline in the number of full time equivalent employees or the Company's failure to make the required direct investments is attributable to an overall national economic decline (as such may be recognized by the United States Bureau of Labor Statistics),this shall not be deemed an abandonment of operations entitling the County to terminate this Agreement, and the Company shall not be deemed in default. In such event, the Company's and the County's obligations shall be suspended for one year and resume thereafter. If after one year the aforesaid decline continues the County may declare an Abandonment of Operations and proceed as set forth herein. C. NATURAL: In any event, the above terms notwithstanding, this Agreement shall terminate upon the 31'day of January of the year in which the final financial inducement installment is made. 12. LIMITATION OF COUNTY'S OBLIGATION NO PROVISION OF THIS AGREEMENT SHALL BE CONSTRUED OR INTERPRETED AS CREATING A PLEDGE OF THE FAITH AND CREDIT OF THE COUNTY WITHIN THE MEANING OF ANY CONSTITUTIONAL DEBT LIMITATION. NO PROVISION OF THIS AGREEMENT SHALL BE CONSTRUED OR INTERPRETED AS DELEGATING GOVERNMENTAL POWERS NOR AS A DONATION OR A LENDING OF THE CREDIT OF THE COUNTY WITHIN THE MEANING OF THE STATE CONSTITUTION. THIS AGREEMENT SHALL NOT DIRECTLY OR INDIRECTLY OR CONTINGENTLY OBLIGATE THE COUNTY TO MAKE ANY PAYMENTS BEYOND THOSE APPROPRIATED IN THE COUNTY'S SOLE DISCRETION FOR ANY FISCAL YEAR IN WHICH THIS AGREEMENT SHALL BE IN EFFECT. NO PROVISION OF THIS AGREEMENT SHALL BE CONSTRUED TO PLEDGE OR TO CREATE A LIEN ON ANY CLASS OR SOURCE OF THE COUNTY'S MONEYS, NOR SHALL ANY PROVISION OF THE AGREEMENT RESTRICT TO ANY EXTENT PROHIBITED BY LAW, ANY ACTION OR RIGHT OF ACTION ON THE PART OF ANY FUTURE COUNTY GOVERNING BODY. TO THE EXTENT OF ANY CONFLICT BETWEEN THIS ARTICLE AND ANY OTHER PROVISION OF THIS AGREEMENT, THIS ARTICLE SHALL TAKE PRIORITY. 13. LIABILITY OF PUBLIC OFFICERS 2054461.2 21896-200 Page 8 of 12 No officer, agent or employee of the County or the Company shall be subject to any personal liability or accountability by reason of the execution of this Agreement or any other documents related to the transactions contemplated hereby. Such officers, agents, or employees shall be deemed to execute such documents in their official capacities only, and not in their individual capacities. This Section shall not relieve any such officer, agent or employee from the performance of any official duty provided by law. 14. MISCELLANEOUS A. ENTIRE AGREEMENT: This Agreement, including all exhibits attached, constitutes the entire contract between the parties, and this Agreement shall not be amended except in writing signed by the Parties. B. BINDING EFFECT: Subject to the specific provisions of this Agreement, this Agreement shall be binding upon and inure to the benefit of and be enforceable by the Parties and their respective successors and assigns. C. TIME: Time is of the essence in this Agreement and each and all of its provisions. D. CONSTRUCTION: Nothing in this Agreement shall be construed to the effect that the County has any right to influence the Company's business decisions or to receive business information from the Company (except as expressly provided in Section 2B and Section 5 hereof). 15. NOTICES Any notices pursuant to and/or required by this Agreement shall be in writing and shall be delivered via United States Mail, certified, return receipt requested: If to Orange County; If to Morinaga America Foods, Inc.; County Manager c/o Morinaga America, Inc. 200 S. Cameron Street 18552 MacArthur Blvd., Suite 360 Hillsborough,NC 27278 Irvine, CA 92612 Any addressee may designate additional or different addresses for communications by notice given under this Section to the other Party. 2054461.2 21896-200 Page 9 of 12 AGREEMENT REVIEWED AND ACCEPTED BY: /0/-2q 0 Date Attest: Date Masao Hoshino Tomoki ka No(caioytwR_ President Morinaga America Foods, Inc. i /2.2-'13 rry Jacobs Date Attest: Donna Baker Date Chair Clerk to the Board Orange C unty Co - ners Orange County Commissioners This instrument has been pre-audited in the manner required by the Local Government Budget and Fiscal Control Act. (IL� ,I, 4x,' Finance Director Approved as to fo nd legal sufficiency. ce of the ounty Attorney 2054461.2 21896-200 Page 10 of 12 Mi O� rill a.Lt � e�pp35 1`!(�; .aex"`.M,R.c°�'°",�ea+`°°�" �&29s 1 .•�F 5.. !� �I�AI� '' ,��A3 a � t;iyi•t}tIj'S s� 7 Zia�`i Viii{{l Q adps y� y,� 4+�• j4 �����g##'•ai�t(t�is�=3 .F.. 44 O4 cR LLI }S p y QOQ O�e�i ob p.� 2 Rj �� ...�" ,6p� ^-- em M �xt¢ f.wtiilf�.�;� „m+"° •rte t t Ulu W "Exhibit A" December 31 Baseline Employees New Employees Total Employees 2014 0 18 18 2015 67 85 2016 5 1 90 2017 2018 Total at Natural Termination of Agreement 1 90 90 2054461.2 21896-200 Page 11 of 12 Exhibit B unit: USD Year 2014 2015 2016 2017 2018 Total Land 1,000,000 1,000,000 Building 16,000,000 16,000,000 Equipment 15,000,000 3,000,000 18,000,000 Total 32,000,000 0 0 3,000,000 35,000,000 Exhibit C Personal Property No. Property 1 Office Furniture and Equipment 2 Glucose Syrup Tank 3 Glucose Syrup Pump 4 Primary Vegetable Oil Tank 5 Primary Vegetable Oil Pump 6 Sugar Silo 7 Vacuum Cooker 8 Kneader 9 Open Cooker 10 Fondant Plant 11 Cooling Plate 12 Batch Roll, Sizing, Forming 13 Cut&Wrapping Machine 14 Computer Scale 15 Bagger