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Agenda 10-03-23; 6-a - Renewal of Management Services Agreement for the Piedmont Food Processing Center
1 ORANGE COUNTY BOARD OF COMMISSIONERS ACTION AGENDA ITEM ABSTRACT Meeting Date: October 3, 2023 Action Agenda Item No. 6-a SUBJECT: Renewal of Management Services Agreement for the Piedmont Food Processing Center DEPARTMENT: Cooperative Extension ATTACHMENT(S): INFORMATION CONTACT: 1. PFPC FAQ Jonathon Smith, County Extension 2. PFPC Financial Information Director, 919-245-2057 3. Management Services Agreement Travis Myren, Deputy County Manager, 919-245-2300 PURPOSE: To consider renewal of two-year Management Services Agreement for Piedmont Food Processing Center. BACKGROUND: In 2011, Orange County was one of four county government partners that helped to establish the Piedmont Food and Agriculture Processing Center (PFPC). The Center has changed names, staff and leadership, and scope of services in the past 12 years. The County owns and maintains the facility in which Piedmont Food Processing Center (PFPC) operates shared kitchen spaces and provides food business incubator services. The County entered into the first management services agreement with PFPC in 2021. At that time, Board members requested additional information regarding who is using the facility and the stage of development for those clients. This information is provided as part of the attached "Frequently Asked Questions" document. The proposed management services agreement does not modify any of the provisions of the current agreement. It continues to define responsibilities for building usage and maintenance, financial reporting, and all other relevant needs related to operating PFPC services in a County owned facility. The renewal would extend the term of the agreement for two (2) years. FINANCIAL IMPACT: The County is responsible for building and property maintenance as well as capital improvements as defined in the agreement. The County's Asset Management Services Department will manage all relevant building and equipment needs using the same processes for other County assets. PFPC may occasionally use the County's language translation services at no charge provided that such services are available. Other financial impacts are defined in the agreement and include the following language: "PFPC shall receive no monetary compensation for services provided pursuant to this Agreement. Full compensation and consideration to PFPC for its services shall consist of PFPC's access to and use of the Facility and Capital Equipment." 2 SOCIAL JUSTICE IMPACT: There is no Orange County Social Justice Goal associated with this item. ENVIRONMENTAL IMPACT: There is no Orange County Environmental Responsibility Goal impact associated with this item. RECOMMENDATION(S): The Manager recommends that the Board approve and authorize the Chair to sign the attached Management Services Agreement renewal for the Piedmont Food Processing Center. 3 PIEDMONT FREQUENTY ASKED QUESTIONS ' and few that aren't but should be. IN"`your Best`Food`Forward WHAT IS PIEDMONT FOOD PROCESSING CENTER ? The Piedmont Food Processing Center (PFPC) is first and foremost a community of entrepreneurs and small business owners. PFPC sits at a nexus of the food ecosystem. We connect farmers, producers, institutional users, education and job training, community food access, food safety, food policy, and economic growth. We impact all these aspects of the food system through the work we do to inspire, guide, and launch food-related businesses. WHAT DOES YOUR SHARED KITCHEN DO ? Businesses at PFPC benefit from three critical functions: Co-working Space: Much like office co-working spaces, PFPC offers access on an "as needed" basis to the resources that a food business requires to operate— kitchens and equipment. The small businesses only pay for what they need. Access to these resources is essential to any startup food business and critical for food trucks and caterers, which by regulation, are required to work from an inspected facility. Entrepreneurial Incubator: PFPC's primary function is as a business incubator, helping entrepreneurs launch food businesses. The small businesses that come to PFPC need help with business formation, product development, packaging, regulatory guidance, distribution, and marketing. With our support, companies launch with a higher likelihood of survival and success. Business Accelerator: In the food industry, a company strives to graduate from making cases of their product to making pallets of products. It's a formidable challenge. PFPC is unique in providing guidance to help entrepreneurs take this critical step in the growth of their food company. This accelerator function is why PFPC has launched six national brands and dozens of strong regional food companies. The success of these services has positioned PFPC as a leader in the state. It is reflected in the more than 300 food-related businesses that have been launched over the last twelve years and the continuing growth of our education programs. 4 Piedmont Food Processing Center- FAQ WHO IS SERVED BY PFPC? Food brings people of all cultures and backgrounds together—food creates community. Often it is through food that people with limited resources find a means to make a living. We see a broad diversity in the entrepreneurs and small businesses we serve. These graphs show the gender and ethnicity of our client businesses. Our businesses represent a more diverse group than the general population of our region. Business Ownership-Gender Business Ownership- Race Non-White 12% lFemale Black 29 o WHERE DO THESE CLIENTS COME FROM AND WHY? PFPC is such a unique resource in our state that we draw entrepreneurs from a two-hour radius. These companies come not just for the facilities and equipment but for the expertise and guidance we provide, as well as the community of other food businesses. The graph shows the counties of residence of the business owners. Note: these are all Orange County businesses with manufacturing done in Orange County. County of Residence-Owner 3oD 36 ®'m C7emn�eans.�,�a .,nEan,w ® o ♦ .ar� ® awneme e< e�a�6 wnnn ®® °�a�s n raw R,.er M c 30 Greensboro ©wnirae,i ° .Doan, Hzwrre us ''r' ® snasom 25 20 �O m nenss,ce onv leC L Dap sr ® ake Garut careen s P •"' .a� omesea °a� 15 10 Lere eroaa °m ui ao sn°w_ p n ens t, se Rn« 10 soh Y e a<- eie99©' M�,00k 5 3 3 °' ma,r sgn D ® rvv(W caiman Orange Wake Durham Alamance Guilford Other es 2 9/14/23 5 Piedmont Food Processing Center- FAQ WHAT TYPES OF BUSINESSES WORK OUT OF PIEDMONT FOOD PROCESSING CENTER? Food trucks and caterers are required by the local health department to work from an inspected facility. Those companies make up about a third of our users. Over the last two years we have expanded our services and outreach to farmers. While they make up less than ten percent of our current users, that number is growing. The majority of our companies are making a consumer packaged good —something you would find on a grocer's shelf. The following graph illustrates the make-up of the businesses using PFPC this year. Client Type _ Caterer _ _ 5V 12% -_ Packaged GoodsT Food Truck _ 25% 6. PIEDMONT HOW MANY BUSINESSES USE PIEDMONT FOOD PROCESSING CENTER AND HOW LONG DO THEY STAY? Since COVID, we have consistently served between 62 and 68 businesses at any one time. Over the course of a year, we see 80 to 85 businesses using the facility. The types of businesses are varied, and each has different needs and different timelines. For example, starting a business making a packaged good takes several months before the product is finalized, passes inspection, and is ready for sale. Meanwhile caterers and food trucks are producing and selling as soon as they receive their permits from the health department. The graph on the next page illustrates the median length of time the current PFPC companies have been using the facility. The graph on the right illustrates the new companies that onboard at PFPC each year. This number is broken down by startups and existing companies that move to PFPC to benefit from the accelerator function we provide. (Note the 2023 data is through August). 3 9/14/23 6 Piedmont Food Processing Center- FAQ Median Tenure at PFPC in months Companies Launching or Joining 26.5 PFPC by Year 26 ■New Companies O Existing Companies 25.5 '^ 20 25 0 24.5 15 q 3 24 10 23.5 3 5 23 Food Caterers CPG Farmers All Clients 0 Trucks 2019 2020 2021 2022 2023 IS PIEDMONT FOOD PROCESSING CENTER OPERATING AT FULL CAPACITY? The answer to this question is yes and no. We receive an average of twelve new inquiries per month. We try to accommodate these prospective businesses although it may mean they only have access to the facility on nights and weekends. The downside is that this demand limits our ability to provide key services such as bottling, blast freezing, packaging, storage, and distribution. While we have the expertise and the equipment, we don't have the space to offer these services. WHAT SERVICES ARE PROVIDED BY PIEDMONT FOOD PROCESSING CENTER? Business Coaching Assistance with Regulatory Guidance on Packaging& Issues Labeling Preparation for Help with Sourcing and Advice on Working with Regulatory Inspections Controlling Costs of Goods Distributors and Retailers Advice on Equipment and Networking Opportunities with Referrals to Qualified Manufacturing Processes Potential Partners Professional Services Notifications on Grants Introductions to Local Retailers Preparations for moving beyond and Loan Programs PFPC 4 9/14/23 7 Piedmont Food Processing Center- FAQ HOW DOES PFPC WORK WITH LOCAL FARMERS? PFPC prides itself on being a resource to local farms and farmers. Our businesses buy from local producers and promote local farms. PFPC works with farm support organizations like Carolina Farm Stewardship Association (CSFA) and NC Extension Services to provide education and resources to local farmers. We regularly participate in the CFSA conference, the Orange County Ag Conference, and the Northern Piedmont Farm School. Our online course on "How to Start a Food Business" has been well received by farmers statewide who are looking to create added value farm products. HOW IS PIEDMONT FOOD PROCESSING CENTER FUNDED? PFPC manages the facility at 500 Valley Forge Road in Hillsborough under a management services contract with Orange County. Orange County maintains the building while PFPC manages the operation of the facility, maintains equipment, and is responsible for general maintenance. PFPC is self-sustaining, deriving its operating revenues from kitchen and storage rentals. We produce additional revenue from on-line classes including our "How to Launch a Food Business" course. PFPC pursues grant funding to purchase new equipment and cover the costs of its educational programs. We maintain about three months of operating capital and manage cash flow to end the tax year near the break-even point. WHAT ECONOMIC IMPACT DOES PFPC HAVE? • The companies at PFPC generates between $2M and $3M annually in retail value. • PFPC companies account for over 150 jobs, at least a third of which are full time. • Of the companies that have used PFPC during the last five years, more than 70% are still in business. 5 9/14/23 8 Piedmont Food Processing Center- FAQ The intangible impacts from PFPC are reflected in a vibrant and active local foods community that supports other companies and organizations up and down the local food chain. WHAT OTHER ORGANIZATIONS DOES PFPC WORK WITH? EDUCATION PARTNERS Durham Tech WE Small Business SBC WE Power Food POWER Center Food F r--- CO-1:11 11 11 North Carolina Small Business Network of Technology Incubator Development sbj dc basiness.Better. Kitchens Center of Chapel Hill The Service sc-,o1 F g Carolina Farm Corp of Retired Stewardship • FOR 741E LIFE OF YOWR SIPSWESS - , # Executives Association V-'CU LT URER,Ib NC Dept of of Agriculture, 11 NC Dept ofONCDHHS Consume ; Health and ServicesHuman Services Division �` F�UNU�.0�8�7 FUNDING PARTNERS N C I D E AM No—C,Ro IN. ORANGE COUNTY ADFP TRUST FUND NORTH CfAROLINA street Durham � WpMarket 1Golden Grocery & Cafe USDA Rural Development U.S. DEPARTMENT OF AGRICULTURE 6 9/14/23 9 Piedmont Food Processing Center, Inc. Profit and Loss January - December 2022 Total Income In-Kind Income(Waived Rent by OC) 26,000 Interest Income 3 Services Kitchen and Space Rental 298,219 Teaching&Consulting Income 6,450 Total Services 304,669 Total Income 330,672 Gross Profit 330,672 Expenses Total Expenses 328,442 Net Operating Income 2,230 Other Income Gain/Loss on Sale of Asset(Termination of Printer Contract) 1,544 Total Other Income 1,544 Other Expenses Depreciation Expense 4,719 Total Other Expenses 4,719 Net Other Income -3,175 Net Income -945 Tuesday,Sep 19,2023 09:58:22 AM GMT-7-Accrual Basis 10 Piedmont Food Processing Center, Inc. Balance Sheet As of December 31, 2022 Total ASSETS Current Assets Bank Accounts Checking Account#2731 $ 43,669 Clearing Account $ 0 Money Market(SBA Loan of$25,000) $ 25,782 Total Bank Accounts $ 69,452 Accounts Receivable Accounts Receivable(A/R) $ 0 Total Accounts Receivable $ 0 Other Current Assets Inventory Asset $ 0 Undeposited Funds $ 0 Total Other Current Assets $ 0 Total Current Assets $ 69,452 Fixed Assets Accumulated Depreciation -$ 54,130 Computers&Equipment $ 6,246 Furniture&Fixtures $ 1,100 Machinery&Equipment $ 49,587 Total Fixed Assets $ 2,803 TOTAL ASSETS $ 72,255 LIABILITIES AND EQUITY Liabilities Current Liabilities Accounts Payable Accounts Payable(A/P) $ 1,122 Total Accounts Payable $ 1,122 Other Current Liabilities North Carolina Department of Revenue Payable $ 0 Payroll Clearing $ 0 Payroll Tax Payable $ 0 Total Other Current Liabilities $ 0 Total Current Liabilities $ 1,122 Long-Term Liabilities Notes Payable Loan-SBA EIDL $ 24,726 Loan-SBA PPP $ 0 Note Payable-Orange County(Equipment Purchases) $ 16,693 Total Notes Payable $ 41,419 Total Long-Term Liabilities $ 41,419 Total Liabilities $ 42,541 Equity Opening Balance Equity $ 0 Retained Earnings $ 30,659 Net Income -$ 945 Total Equity $ 29,714 TOTAL LIABILITIES AND EQUITY $ 72,255 Tuesday,Sep 19,202310:00:06 AM GMT-7-Accrual Basis 11 Attachment 3 MANAGEMENT AGREEMENT BETWEEN ORANGE COUNTY,NORTH CAROLINA AND PIEDMONT FOOD PROCESSING CENTER, INC. Dated as of 12 MANAGEMENT AGREEMENT THIS MANAGEMENT AGREEMENT (this "Agreement") dated as of the by and between Orange County,North Carolina, P.O. Box 8181, Hillsborough, NC 27278, a political subdivision of the State of North Carolina("the County"), and Piedmont Food Processing Center, Inc. 500 Valley Forge Road, Hillsborough NC 27278 ("PFPC"). BACKGROUND The County is the owner of a food processing facility ("Facility") intended to serve as an economic development incubator for food businesses. PFPC is engaged in the business of providing management services, including operations services and consultation for regional food startup businesses. The County desires to engage PFPC, and PFPC desires to accept such engagement, to provide management services for the Facility on the terms and conditions set forth herein. The County and PFPC intend to work in mutual accord in order to ensure provision of high quality management services, thereby enhancing the use and enjoyment of the Facility. NOW,THEREFORE, in consideration of the mutual premises, covenants and agreements herein contained, the parties hereto, intending to be legally bound,hereby agree as follows: 1. Definitions For purposes of this Agreement, the following terms have the meanings referred to in this Section 1: "ADA" -the Americans with Disabilities Act, 42 U.S.C. Sections 12101-12213 as amended by the Civil Rights Act of 1991 (42 U.S.C. Section 1981(a)) and the ADA Amendment Act of 2008, as it now exists and as it may be amended in the future by statute or judicial interpretation. "Capital Equipment" -any and all furniture, fixtures, machinery or equipment, either additional or replacement, having a per item original cost of$2,500 or more and an expected useful life or more than one year. "Capital Improvements" -any and all building additions, alterations,renovations, repairs or improvements that have an initial dollar cost of not less than $2,500 per project. "County" -as defined in the first paragraph of this Agreement. 2 13 "Contract Administrator" -the designated administrative official of County appointed by County to act on matters pertaining to this Agreement. "Facility" -as defined in the first paragraph of the Background section of this Agreement. "Facility Policy Manual" -the policy manual provided by PFPC to the County containing certain operating and employment policies customarily utilized by PFPC in connection with the management of a publicly owned facility. "Fiscal Year" - a one year period beginning January 1 and ending December 31. "Laws" -all federal, state, local and municipal regulations, ordinances, statutes, rules, laws and constitutional provisions. "Losses" - any and all losses, liabilities, claims, damages and expenses (including reasonable attorneys fees and costs). "Management Term" -as defined in Section 3.1 hereof. "Operating Expenses" - any and all expenses and expenditures incurred by PFPC in providing food processing, food storage, and operational support to startup food processing businesses and maintaining the facility, including, but not limited to: employee compensation and related expenses, employee benefits, parking and other fringe benefits, supplies, material and parts costs, costs of any interns and independent contractors, advertising, marketing and public relations costs and commissions,janitorial and cleaning expenses, information technology costs, dues, subscriptions and membership costs related to operating the Facility, the costs of procuring, administering and maintaining the insurance referred to in Section 7 below(including, without limitation, the amount of any premium or deductible under any such policy), amounts expended to procure and maintain permits and licenses, charges, taxes, excises, penalties and fees,professional fees, printing and stationery costs. Operating Expenses shall not include expenses or expenditures in connection with Capital Improvements and Capital Equipment purchases. "Operating Revenues" - any and all revenues of any kind or nature derived from operating and managing the Facility, including,but not limited to: license, lease and rentals, facility user fees, and food service and concession revenues. "Renewal Term" -the additional period for which this Agreement may be renewed at the option of the County in accordance with Section 3.1 hereof beyond the Management Term. "PFPC" -as defined in the first paragraph of this Agreement. 3 14 2. PFPC Scope of Services and Revenues 2.1 Ensa2ement. (a) General Scone. The County hereby engages PFPC to provide management services by operating commercial kitchen space at the Facility in order to enable local food and agricultural entrepreneurship. At the Facility, PFPC will also manage, maintain and provide spaces for dry, refrigerated and frozen storage, and office space available for rent to food enterprises engaged with PFPC. (b) Manager of the Facility. Subject to the terms of this agreement, PFPC shall be the sole and exclusive manager to manage, operate and promote the Facility during the Management Term and the Renewal Term, if any. In such capacity, PFPC shall have authority over the day-to- day operation of the Facility and all activities therein; provided that PFPC shall follow all policies and guidelines of the County hereafter established or modified by the County that the County notifies PFPC in writing are applicable to the Facility. (c) Approval of the County. To the extent that the approval of the County is required under the terms of this Agreement, the written approval of the Contract Administrator shall constitute the approval of the County, except to the extent the approval of another party is expressly required by the terms of this Agreement. (d) Standards for Measurement of PFPC's Performance. The County is entering into this Agreement in part based upon PFPC's expertise and experience in managing and promoting PFPC and that PFPC will utilize all of its good-faith commercially reasonable efforts to manage the Facility in a first-class, high-quality, fiscally responsible manner and in the County's best interest. It is the intention of the parties hereto that PFPC will use its good faith commercially reasonable efforts to improve the quality of operations and programming at the Facility. 2.2 Scope of Services --Generally. PFPC shall take all reasonable precautions to prevent damage to the Facility, from fire or other causes, to prevent bodily and other personal injury, and to prevent loss from theft or other causes. Such precautions shall include taking any action required by the County's or PFPC's insurance carriers. PFPC shall, upon daily opening and closing the Facility, inspect the Facility with reasonable care to ensure dangerous or unsafe conditions are addressed and to the extent possible remediated. 2.3 Specific Services. Without limiting the generality of the foregoing, and subject to the provisions hereof, PFPC shall provide, and shall have the authority to provide without(except as otherwise 4 15 expressly provided herein) any prior approval by the County, all of the following management services for the Facility: (a) Administer relationships with all food enterprises engaged with PFPC in any manner whatsoever; (b) Negotiate, execute in its own name, deliver and administer any and all licenses, occupancy agreements,rental agreements,advertising agreements, supplier agreements, service contracts (including, without limitation, contracts for cleaning, waste disposal, general maintenance and inspection of all systems, equipment, and other safety equipment, staffing and personnel needs, and other services which are necessary or appropriate and all other contracts and agreements in connection with the management, promotion and operation of the Facility; (c) The County shall be responsible for: (1) general maintenance and inspection of the fire control system located at the Facility; (2)the timely removal of snow from the walkways and ADA parking area; (3)undertaking all Capital Improvements and Capital Equipment as provided in Section 4; (d) Establish and adjust leases and user fees. In determining such fees and rate schedules, PFPC shall evaluate comparable charges for similar services at similar and/or competing facilities; (e) After consultation with the County, institute or defend,with counsel agreed to by both parties, such legal actions or proceedings as PFPC shall deem necessary or appropriate in connection with the operation of the Facility, including, without limitation, to collect charges, rent, user fees, or other revenues due or to cancel, terminate or sue for damages under, any license, or service agreement for the breach thereof or default thereunder by any licensee or user of the Facility; (f) Provide day-to-day administrative services in support of its management activities pursuant to annual plans described herein, including, but not limited to, the acquisition of services, equipment, supplies and facilities; internal budgeting and accounting; maintenance and property management, personnel management; record-keeping; collections and billing; and similar services; (g) PFPC may occasionally use the County's language translation services at no charge provided that such services are available; (h) Engage in such advertising and promotional activities as PFPC deems necessary or appropriate to develop the potential of the Facility and the cultivation of broad community support. PFPC shall work with the Orange County Economic Development Department, Chamber of Commerce, alliance of business groups and government groups as designated by County through the Contract Administrator to market the Facility. In connection with its activities under this Agreement, including without limitation advertising relating to the Facility, 5 16 PFPC shall be permitted to use the terms "Orange County Piedmont Food Processing Center" and logos for such names in its advertising, subject to the approval of the County; (i) In consultation with the County, evaluate and adjust the operational structure of the Facility as needed; 0) As set forth herein, submit all financial and other reports detailing PFPC's activities regarding the Facility to the County in a timely manner; (k) The County will provide to the Facility such recycling facilities and services as it provides to other County buildings for use by PFPC for recyclable materials generated at the Facility. PFPC agrees to operate the Facility in conformance with the County's recycling policies and procedures as communicated by the Contract Administrator. 2.4 Right of Entry Reserved. Representatives of the County designated in writing by the Contract Administrator shall have the right at appropriate times, to enter all portions of the Facility to inspect same,to observe the performance of PFPC of its obligations under this Agreement, to install, remove, adjust, repair, replace or otherwise handle any equipment, utility lines, or other matters in, on, or about the premises, or to do any act or thing which the County may be obligated or have the right to do under this Agreement or otherwise. Nothing contained in this Section is intended or shall be construed to limit any other rights of the County under this Agreement. The County shall not unreasonably interfere with the activities of PFPC hereunder, and the County's actions shall be conducted such that disruption of PFPC's work shall be kept to a minimum. Nothing in this Section shall impose or be construed to impose upon the County any independent obligation to inspect, construct or maintain or make repairs, replacements, alterations, additions or improvements or create any independent liability for any failure to do so. 2.5 Compensation and Revenues. (a) PFPC shall receive no monetary compensation for services provided pursuant to this Agreement. Full compensation and consideration to PFPC for its services shall consist of PFPC's access to and use of the Facility and Capital Equipment. PFPC acknowledges the receipt and sufficiency of such consideration. (b) Operating Revenues. PFPC shall provide annual financial reports, or more frequently as requested by the County, that demonstrate that all revenue and resources generated by the Facility is reinvested in the operations, maintenance, improvement, and expansion of services to the local food system. PFPC shall endeavor to provide a third party annual financial audit as revenues allow. 6 17 3. Term and Renewal. 3.1 Management Term and Renewal Term. (a) The "Management Term" of this Agreement shall commence on the date the County signs this agreement with PFPC and continue for a period of two (2)years unless earlier terminated pursuant to the provisions of this Agreement. The County shall have the right, in its sole discretion without penalty or cause, to terminate the Management Term effective as of the first anniversary of the date on which the Management Term began by giving not less than one hundred and twenty(120) days prior written notice of such termination to PFPC. (b) The County may extend the term hereof on the same terms and conditions for additional periods as agreed by County and PFPC (each a "Renewal Term") commencing immediately after the Management Term or any Renewal Term,as applicable, by giving not less than one hundred and twenty(120) days prior written notice of such extension to PFPC. For each Renewal Term, the County shall have the right, in its sole discretion, to terminate the Renewal Term on the anniversary of the date on which the Renewal Term began by giving not less than sixty (60) days prior written notice of such termination to PFPC hereof. 3.2 New Contract. (a) The County intends,upon termination or expiration of the Management Term or Renewal Term to continue to provide management at the Facility through a private provider and (ii)this Agreement has not been terminated upon a default by PFPC, then the County may during the final year of the Management Term(unless the County exercises its option to renew under Section 3.2) or Renewal Term, as the case may be, negotiate and discuss in good faith a new contract or arrangement with PFPC for the provision of such services following the completion of such term. The obligation to negotiate with PFPC is not intended to guarantee any contract rights for a future contract with PFPC or any specific terms of a new contract. The County may contract with PFPC or extend a contract with PFPC in its sole and absolute discretion. 4.0 Capital Improvements; Capital Equipment. (a) The obligation to pay for, and authority to perform, direct and supervise Capital Improvements and Capital Equipment purchases shall remain with the County and will not be considered Operating Expenses. The County shall retain the sole discretion to determine whether and to what level to fund Capital Improvements and Capital Equipment purchases to the Facility. If PFPC is able to fund Capital Improvements or Capital Equipment using the organization's own resources, the County will need to approve these actions prior to any installations or improvements. (b) The County shall maintain, repair, and replace as necessary the following items at the facility (see section 4.0 of the user's agreement): Roof and gutters, Exterior walls, Exterior doors and hardware, Electronic access control systems, Fire controls and life safety systems, Heating, ventilation, and air-conditioning 7 18 systems, Foundation, Paved parking area and front entrance to the building, Dumpster corral (c) PFPC shall maintain and repair at its own expense the following items: Refrigeration and freezer systems,Exhaust systems related to kitchen operation, Interior flooring and finishes, Interior plumbing and drainage systems. Kitchen equipment, including any equipment associated with the prepping, cooking, and storage of food. Including but not limited to steam generators, steam kettles, gas ranges,blast freezers, bottle fillers, slicers, food processors, dehydrators,bottle filters, etc... (d) The repair of county-maintained equipment due to negligence of PFPC staff or affiliates will be the responsibility of PFPC. (e) PFPC will make no substantial alteration, addition or improvement to the facility without the prior written consent of the County. (f) PFPC shall not remove or alter any vegetation on the facility's exterior without the prior written consent of the County. 5 Funds for Emergency Repairs. PFPC shall have the right to act,with the written consent of the County, in situations which PFPC and the County determine to be an emergency with respect to the safety, welfare and protection of the Facility's users or the general public. PFPC shall contact the Contract Administrator or other responsible party at the County for prior approval and determination. If the emergency requires immediate action and prior notice cannot reasonably be given, PFPC shall inform the Contract Administrator immediately following such action. 6. Records, Audits and Reports. 6.1 Records and Audits. (a) PFPC shall keep full and accurate accounting records relating to its activities at the Facility in accordance with generally accepted United States accounting principles. PFPC shall maintain a system of bookkeeping adequate for its operations hereunder and sufficient to allow the County to determine PFPC's financial stability, PFPC's compliance with this Agreement, and the Facility's complete financial status and performance at any time.PFPC shall adjust its accounting procedures upon request by the County to conform with any applicable requirements of state or federal law or with the reasonable recommendations of the County's Chief Financial Officer. PFPC shall give the County's authorized representatives access to all books and accounting records at any reasonable time.PFPC shall keep and preserve all books and accounting records for at least three (3) years following each Fiscal Year Operating Revenues and Operating Expenses for such period. In addition, on or before ninety (90) days following each Fiscal Year for which PFPC is managing the Facility hereunder, PFPC shall furnish to the County a balance sheet, a statement of profit or loss, and a statement of cash flows for the Facility for the preceding Fiscal Year,prepared in accordance with generally accepted United States accounting principles to be audited by the County's independent auditor or other independent auditor chosen by the County. The audit shall contain an opinion expressed by the 8 19 independent auditor of the accuracy of financial records kept by PFPC. The audit shall also provide a certification of Operating Revenues and Operating Expenses as defined in this Agreement for such Fiscal Year. The costs of such audit shall be borne by the County. 7. Indemnification and Insurance. 7.1 Indemnification. (a) PFPC shall indemnify, defend and hold harmless the County, its elected and appointed officials, officers, agents and employees from and against any and all Losses arising from any material default or breach by PFPC of its obligations specified herein or other Losses incurred by or threatened against County arising from or in connection with a third parry law suit alleging wrongdoing by PFPC in connection with PFPC's management of the Facility; provided, however, that the foregoing indemnification provision shall not extend to Losses to the extent such Losses (i) arise from any breach or default by the County of its obligations under Section 7.l(b)below, or(ii) arise out of a failure by the County to secure and maintain insurance as required in this Section 7. (b) The County shall,to the extent permitted by North Carolina law and,with respect to personal injury liability and property damage liability, to the extent covered by liability insurance maintained by the County from time to time, indemnify, defend and hold harmless PFPC, its partners, officers, agents and employees from and against any and all Losses arising from(i) any material default or breach by the County of its obligations specified herein, (ii) any structural defect with respect to the Facility or the premises occupied by the Facility prior to,as of or after the commencement of the Management Term hereunder, or(iii) any act or omission carried out by PFPC at the specific written direction or written instruction of the County and where PFPC follows such written direction, its agents or employees;provided,however,that the foregoing indemnification shall not extend to Losses to the extent such Losses arise from any default or breach by PFPC of its obligations specified herein. (c) The provisions set forth in subparagraphs (a) and(b) above shall survive termination of this Agreement; provided, however,that a claim for indemnification pursuant to Section 7.1 shall be valid only if the party entitled to such indemnification provides written notice thereof to the other party prior to three (3)years following the date of termination or expiration of this Agreement. (d) The terms of all insurance policies referred to in Section 7, including without limitation(i)the property insurance policies of the County, and(ii) the policies of any independent contractors retained by the County or hired by PFPC shall preclude subrogation claims against PFPC, its partners, the County and their respective officers, directors, employees and agents. PFPC and the County hereby release each other from and against any and all loss or damage to property arising out of or incident to any peril required to be insured against herein. The effect of such release is not limited to the amount of insurance actually carried or required to be carried, to the actual proceeds received after a loss or to any deductibles applicable thereto. Each parry shall have the insurance company include an endorsement acknowledging this 9 20 waiver, if necessary. Either party's failure to carry the required insurance shall not invalidate this waiver. 7.2 Liability Insurance. (a) PFPC shall secure and deliver to the Contract Administrator prior to the commencement of the Management Term and shall keep in force at all times during any period in which PFPC has operations at the Facility, a commercial liability occurrence insurance policy, including public liability and property damage, covering the premises and the operations hereunder, in the amount of One Million Dollars ($1,000,000.00)for bodily injury and One Million Dollars ($1,000,000.00) for property damage, including products and completed operations and independent contractors. (b) PFPC shall also maintain Property Damage Insurance with a single limit of not less than One Million Dollars ($1,000,000.00)per occurrence. (c) PFPC shall also maintain Umbrella liability insurance from these limits up to no less than a limit of Five Million Dollars ($5,000,000). PFPC shall be the named insured under all such policies. The County shall be an additional insured under the foregoing insurance policies, as its interests may appear, and said policies shall contain a provision covering the parties' indemnification liabilities to each other. (d) Certificates of insurance naming County and evidencing all the policies required of PFPC hereunder along with copies of the paid receipts therefor shall be delivered to the Contract Administrator prior to the commencement of this Agreement. Notwithstanding the provisions of this Section 7.2,the parties hereto acknowledge that the above policies may contain exclusions from coverage which are reasonable and customary for policies of such type. Each such policy or certificate shall contain a valid provision or endorsement stating, "This policy will not be canceled or materially changed or altered without first giving thirty (30) days'written notice thereof to Orange County, North Carolina, Attention: [Contract Administrator],P.O. Box 8181, Hillsborough,NC 27278, sent by certified mail, return receipt requested." (e) With respect to policies procured by it, PFPC shall deliver to the Contract Administrator satisfactory evidence of such renewal of such policies prior to a policy's expiration date except for any policy expiring on the termination or expiration date of this Agreement or thereafter. (f) Except as provided in Sections 7.5 and 7.6, all insurance procured by PFPC in accordance with the requirements of this Agreement shall be primary over any insurance carried by the County and shall not require contribution by the County. 10 21 7.3 Worker's Compensation Insurance. Unless explicitly exempted under law, PFPC shall at all times maintain worker's compensation insurance (including occupational disease hazards)with an authorized insurance company or through the North Carolina State Compensation Insurance Fund or through an authorized self-insurance plan approved by the State of North Carolina insuring its employees at the Facility in amounts equal to or greater than required under law. 7.4 Fidelity Insurance. PFPC shall maintain during the term of this Agreement Fidelity Insurance covering all of PFPC's personnel under this Agreement in the amount of Five Hundred Thousand Dollars ($500,000.00) for each loss,to reimburse the County for losses experienced due to the dishonest acts of PFPC's employees. 7.5 Property Insurance. PFPC shall maintain sufficient property damage or loss insurance to cover personal property owned by PFPC at the Facility and shall maintain such insurance beginning as of the date hereof and continuing throughout all periods in which PFPC has any operations at the Facility. The County shall maintain property insurance covering the premises of the Facility. Certificates evidencing the existence of the policies shall be delivered to PFPC and to the Contract Administrator prior to the commencement of the Management Term. Notwithstanding the provisions of this Section 7.5, the parties hereto acknowledge that the above policies may contain exclusions from coverage which are reasonable and customary for policies of such type. With respect to policies procured by it,the Contract Administrator on behalf of the County shall deliver to PFPC satisfactory evidence of such renewal of such policies at least twenty (20)days after a policy's expiration date except for any policy expiring on the termination date of this Agreement or thereafter. 7.6 Certain Other Insurance. (a) If any of the Pre-existing Agreements consist of agreements with independent contractors to provide services in respect of the Facility, the County shall use its best efforts to cause such contractors to name PFPC as an additional insured under any insurance maintained by such contractors pursuant to the terms of such Pre-existing Agreements and in such event to deliver to PFPC promptly after request therefor a certified copy of such policy and a certificate evidencing the existence thereof. In addition, if PFPC enters into any agreements during the Management Term and any Renewal Term with any independent contractors for the provision of services hereunder, PFPC shall have the right to require such contractors to name PFPC as an additional insured under any insurance required by PFPC thereunder and to deliver to PFPC prior to the performance of such services a certified copy of such policy,plus a certificate evidencing the existence thereof, which policy contains the same type of endorsements and provisions as provided in Sections 7.2(c) and 7.2(d). If PFPC does require such contractors to name PFPC as an additional insured under any insurance required by PFPC, it shall also require such contractors to name the County as an additional insured and such policies shall contain the same type of endorsements and provisions as provided in Sections 7.2(c) and 7.2(d). 11 22 (b) PFPC shall, within ninety (90) days of the date of this Agreement and at least yearly thereafter, review the insurance carried by the County and PFPC covering the Facility or any of PFPC's or the County's operations at the Facility, or required of third parties using the Facility, with regard to PFPC's experiences at other similar facilities, and shall within fifteen(15) days of such review advise the County in writing of the results of its review and of any changes, additions or increases to the insurance requirements hereunder or applicable to third parties which are advisable under best facility management practices. (c) The parties hereto shall each immediately notify the other, along with any applicable insurance carrier(s), in writing of any occurrence or discovery which could result in an insurance claim hereunder. (d) PFPC shall require reasonable liability insurance from all third-party users of the Facility and shall enforce the provisions contained in all third party contracts entered into in connection with the Facility, including the insurance requirement contained in all County approved event license, concessionaire, subcontractor and other similar agreements. Such liability insurance shall name PFPC and Orange County as additional insureds. 8. Ownership of Assets. 8.1 Ownership. The ownership of buildings and real estate, technical and office equipment and facilities, furniture, displays, fixtures, and similar tangible property located at the Facility shall remain with the County. Ownership of and title to all intellectual property rights of whatsoever value, related to the Facility in any way shall remain the sole property of the County, with the exception of any inventions, original works of authorship, developments, improvements, trade secrets, or proprietary software developed by PFPC prior to the date of this Agreement or after the date of this Agreement("PFPC Inventions"). PFPC Inventions are not assigned to the County pursuant to this Agreement. Ownership of equipment, furnishings, materials or fixtures not considered to be real property and other personal property purchased by PFPC with County funds for use at and for the Facility shall vest in the County automatically and immediately upon purchase or acquisition; however, those purchased by PFPC with its own funds shall vest in PFPC automatically and immediately upon purchase or acquisition. The assets of the County as described herein shall not,by PFPC or anyone other than the County, contracting with PFPC, be pledged, liened, encumbered or otherwise alienated or assigned other than in the ordinary course of business of the Facility. All Capital Equipment attached in or to the Facility is owned by the County and ownership of all Capital Equipment that may be purchased, regardless of funding source, and installed in the Facility during the term of this Agreement shall vest in the County automatically. 8.2 County Obligations. Except as herein otherwise set forth,throughout the term of this Agreement, the County will maintain full beneficial use and ownership of the Facility and will pay, keep, observe and 12 23 perform all payments,terms,covenants, conditions and obligations under any bonds,debentures or other security agreements or contracts relating to the Facility to which the County may be bound, and PFPC shall reasonably cooperate with the County in this regard. 9. Assignment;Affiliates. 9.1 Assignment. Neither this Agreement nor any of the rights or obligations hereunder may be assigned by either party hereto without the prior written consent of the other party hereto, which consent shall be given or not within the sole and absolute discretion of the party from whom consent is sought. The party being asked to consent shall not delay in its response to the request for consent. 10. Laws and Permits. 10.1 Permits, Licenses. Taxes and Liens. PFPC shall procure any permits and licenses required for the business to be conducted by it hereunder. The County shall cooperate with PFPC in applying for such permits and licenses, but the County itself shall not necessarily be a licensee or permittee unless required by the applicable license or permit or unless required by the County for other reasons. PFPC shall deliver copies of all such permits and licenses to the Contract Administrator. PFPC shall pay promptly all taxes, excises, license fees and permit fees of whatever nature arising from its operation, promotion and management of the Facility. PFPC shall use reasonable efforts to prevent mechanic's or materialman's or any other lien from becoming attached to the premises or improvements at the Facility, or any part or parcel thereof, by reason of any work or labor performed or materials furnished by any mechanic or materialman,so long as the work, labor or material was provided at PFPC's direction and the County has supplied funds for the payment of charges therefor in accordance with this Agreement. 10.2 Governmental Compliance. PFPC, its officers, agents and employees shall comply with all Laws applicable to PFPC's management of the Facility hereunder. With respect to the ADA, PFPC will comply with Title III of the ADA and the provision of such auxiliary aids or alternate services as may be required by the ADA. Nothing in this Section 10.2 or elsewhere in this Agreement shall,however, require PFPC to undertake any of the foregoing compliance activity, nor shall PFPC have any liability under this Agreement therefor, if(a) such activity requires any Capital Improvements, unless the County provides funds for such Capital Improvements pursuant to Section 4.0 hereof, or(b)any Pre-existing Agreement fails to require any licensee, lessee, tenant, or user of any portion of the Facilities to comply, and to be financially responsible for compliance, with Title III of the ADA in connection with any activities of such licensee, lessee, tenant, or user at the Facilities. Furthermore, PFPC shall have the right to require any licensee, lessee, tenant, or user of any portion of the Facility to comply, and to be financially responsible for compliance, with Title III 13 24 of the ADA in connection with any activities of such licensee, lessee, tenant, or user at the Facility. 10.3 No Discrimination in Employment. In connection with the performance of work under this Agreement, PFPC shall not refuse to hire, discharge, refuse to promote or demote, or discriminate in matters of compensation or use of the Facility against, any Person otherwise qualified, solely because of age (as defined in the Orange County Civil Rights Ordinance), race, ethnicity, color, national origin, religion, creed, sex, sexual orientation, gender, gender identity, gender expression, marital status, familial status, source of income, disability,political affiliation, veteran status, disabled veteran status. 11. Termination. 11.1 Termination Upon Default. Either party may terminate this Agreement upon a default by the other party hereunder. A party shall be in default hereunder such party fails in any material respect to perform or comply with any of the other terms, covenants, agreements or conditions hereof and such failure continues for more than thirty (30) days after written notice thereof from the other party. In the event that a default(other than a default in the payment of money) is not reasonably susceptible to being cured within the thirty (30) day period, the defaulting party shall not be considered in default if it shall within such thirty (30) day period have commenced with due diligence and dispatch to cure such default and thereafter completes with dispatch and due diligence the curing of such default. 11.2 Termination Other than Upon Default. (a) Either party may terminate this Agreement upon sixty(60)days written notice to the other party unless otherwise set forth herein. (b) Either party may terminate this Agreement under the circumstances specified in Section 11.6(c). 11.3 Surrender of Premises. Upon termination of this Agreement (termination shall, for all purposes in this Agreement, include termination pursuant to the terms of this Section 11.3 and any expiration of the term hereof), PFPC shall surrender and vacate the Facility upon the effective date of such termination. The Facility and all equipment and furnishings shall be returned to the County in good repair,reasonable wear and tear excepted, to the extent funds were made available therefor by the County. All reports, records, including financial records, and documents maintained by PFPC at the Facility relating to this Agreement other than materials containing PFPC's Confidential Information shall be immediately surrendered to the County by PFPC upon 14 25 termination. The term"Confidential Information" means any and all non-public information or material concerning any aspect of PFPC's Prior Inventions. 11.3 No Agency. Partnership or Joint Venture. PFPC is an independent contractor, hereunder, and is not intended to be or to act as the agent of the County for purposes of the law of agency. Nothing herein contained is intended or shall be construed in any way to create or establish the relationship of partners or a joint venture between the County and PFPC. None of the officers, agents or employees of PFPC shall be or be deemed to be employees or agents of the County for any purpose whatsoever. 11.4 Entire Agreement. This Agreement contains the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior agreement and understandings with respect thereto. No other agreements, representations,warranties or other matters, whether oral or written, will be deemed to bind the parties hereto with respect to the subject matter hereof, unless in writing executed by the parties after the date hereof and referring to this Agreement. 11.5 Written Amendments. This Agreement shall not be altered, modified or amended in whole or in part, except in writing executed by each of the parties hereto. 11.6 Force Majeure. (a) No party will be liable or responsible to the other party for any delay, damage, loss, failure, or inability to perform caused by "Force Majeure" if notice is provided to the other party within ten (10) days of date on which such party gains actual knowledge of the event of "Force Majeure" that such party is unable to perform. The term "Force Majeure" as used in this Agreement means the following: an act of God, strike,war,public rioting, lightning, fire, storm, flood, inability to obtain materials or supplies due to a Force Majeure, epidemics, landslides, earthquakes, civil disturbances, breakage or accident to machinery or lines of equipment, temporary failure of equipment, freezing of equipment, terrorist acts, and any other cause whether of the kinds specifically enumerated above or otherwise which is not reasonably within the control of the party whose performance is to be excused and which by the exercise of due diligence could not be reasonably prevented or overcome. (b) Neither party hereto shall be under any obligation to supply any service or services if and to the extent and during any period that the supplying of any such service or services or the provision of any component necessary therefor shall be specifically prohibited or rationed by any Law. (c) In the event of damage to or destruction of the Facility by reason of fire, storm or other casualty or occurrence of any nature or any regulatory action or requirements that, in either 15 26 case,is expected to render the Facility materially unusable, either party may terminate this Agreement upon written notice to the other. 11.7 Binding Upon Successors and Assigns:No Third-Party Beneficiaries: Subordination. (a) This Agreement and the rights and obligations set forth herein shall inure to the benefit of, and be binding upon, the parties hereto and each of their respective successors and permitted assigns. (b) This Agreement shall not be construed as giving any Person, other than the parties hereto and their successors and permitted assigns, any legal or equitable right, remedy or claim under or in respect of this Agreement or any of the provisions herein contained, this Agreement and all provisions and conditions hereof being intended to be, and being, for the sole and exclusive benefit of the parties hereto and their successors and permitted assigns and for the benefit of no other Person. (c) This Agreement shall, at all times, be and remain subordinate to any deed of trust or other security interest which uses the Facility and the land upon which the Facility is located as security for funds borrowed by the County for the purchase or any addition to or expansion of the Facility, and the land upon which the Facility is located; or borrowed for any other public purpose of the County, now or in the future. PFPC agrees to execute any acknowledgement of this subordination reasonably requested by a County lender. 11.8 Notices. Any notice, consent or other communication given pursuant to this Agreement must be in writing and will be effective either(a)when delivered personally to the party for whom intended, provided a delivery receipt is secured by the deliverer, (b) on the second business day following mailing by an overnight courier service that is generally recognized as reliable, (c) on the fifth day following mailing by certified or registered mail, return receipt requested, postage prepaid, or(d)on the date transmitted by telecopy as shown on the telecopy confirmation therefor as long as such telecopy transmission is followed by mailing of such notice by certified or registered mail, return receipt requested, postage prepaid, in any case addressed to such party as set forth below or as a party may designate by written notice given to the other party in accordance herewith. To the County: County Manager's Office P.O. Box 8181 Hillsborough,NC 27278 With a copy(which shall not constitute notice)to the County Attorney. 16 27 To PFPC: Piedmont Food Processing Center 500 Valley Forge Rd Hillsborough NC 27278 Attention: Executive Director With a copy(which shall not constitute notice)to: Attention: 11.9 Section Headings and Defined Terms. The section headings contained herein are for reference purposes only and shall not in any way affect the meaning and interpretation of this Agreement. The terms defined herein and in any agreement executed in connection herewith include the plural as well as the singular and the singular as well as the plural, and the use of masculine pronouns shall include the feminine and neuter. Except as otherwise indicated, all agreements defined herein refer to the same as from time to time amended or supplemented or the terms thereof waived or modified in accordance herewith and therewith. 11.10 Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original copy of this Agreement, and all of which, when taken together, shall be deemed to constitute but one and the same agreement. 11.11 Severability. The invalidity or unenforceability of any particular provision, or part of any provision, of this Agreement shall not affect the other provisions or parts hereof, and this Agreement shall be construed in all respects as if such invalid or unenforceable provisions or parts were omitted. 11.12 Non-Waiver. A failure by either party to take any action with respect to any default or violation by the other of any of the terms, covenants, or conditions of this Agreement shall not in any respect limit,prejudice, diminish, or constitute a waiver of any rights of such party to act with respect to any prior, contemporaneous, or subsequent violation or default or with respect to any continuation or repetition of the original violation or default. 17 28 11.13 Consent and Signatures. Wherever the consent or approval of a party is required under the terms of this Agreement, the party whose consent or approval is required shall not unreasonably withhold, condition or delay such consent or approval. Each party hereto consents to the use of electronic signatures. This Agreement together with any amendments or modifications may be executed electronically. All electronic signatures affixed hereto evidence the consent of the parties to utilize electronic signatures and the intent of the parties to comply with Article 11A and Article 40 of North Carolina General Statute Chapter 66 11.14 Certain Representations and Warranties. (a) The County represents and warrants to PFPC the following: (i) all required approvals have been obtained, and the County has full legal right, power and authority to enter into and perform its obligations hereunder, and(ii) this Agreement has been duly executed and delivered by the County and constitutes a valid and binding obligation of the County, enforceable in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization or similar laws affecting creditors'rights generally or by general equitable principles. (b) PFPC represents and warrants to the County the following: (i) all required approvals have been obtained, and PFPC has full legal right,power and authority to enter into and perform its obligations hereunder, and(ii) this Agreement has been duly executed and delivered by PFPC and constitutes a valid and binding obligation of PFPC, enforceable in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization or similar laws affecting creditors' rights generally or by general equitable principles. 11.15 Governing Law: Consent to Venue and Jurisdiction. This Agreement will be governed by and construed in accordance with the internal laws of the State of North Carolina, without giving effect to otherwise applicable principles of conflicts of law. The parties hereby expressly agree that this Agreement is made and is to be performed solely in Orange County,North Carolina, and hereby consent to the subject matter and personal jurisdiction of the North Carolina state courts sitting in Orange County,North Carolina and to venue in Orange County,North Carolina. SIGNATURES ARE ON THE FOLLOWING PAGE. 18 29 IN WITNESS WHEREOF, this Agreement has been duly executed by the parties hereto as of the day and year first above written. Orange County,North Carolina Jamezetta Bedford, Chair Orange County Board of Commissioners ATTEST: Laura Jensen, Clerk to the Board of Commissioners Piedmont Food Processing Center Name: Title: Executive Director, Piedmont Food Processing Center This instrument has been pre-audited in the manner required by the Local Government Budget and Fiscal Control Act. Finance Director 19