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R-05-12-15-9E1 - 12/15/2005RESOLUTION NO. R -05-12-15-9E1 WHEREAS, the City Council, on the 13th day of September, 2001, in Ordinance No. G -01-09-13-14D1, created Reinvestment Zone No. 19A in the City of Round Rock, Texas, and WHEREAS, in accordance with Chapter 312, Tax Code, V . A . T . S . as amended, the City desires to enter into a tax abatement agreement with Toppan Photomasks, Inc., regarding property located in Reinvestment Zone No. 19A, and WHEREAS, the Council has determined that all requirements of the guidelines and criteria adopted by Ordinance No. G -04-02-26-7B1 have been complied with, Now Therefore BE IT RESOLVED BY THE COUNCIL OF THE CITY OF ROUND ROCK, TEXAS, That the Mayor is hereby authorized and directed to execute on behalf of the City a Tax Abatement Agreement with Toppan Photomasks, Inc., a copy of said agreement being attached hereto as Exhibit "A" and incorporated herein. The City Council hereby finds and declares that written notice of the date, hour, place and subject of the meeting at which this Resolution was adopted was posted and that such meeting was open to the public as required by law at all times during which this Resolution and the s-Ubj ect matter hereof were discussed, considered and formally acted upon, all as required by the Open Meetings Act, Chapter 551, Texas Government Code, as amended. RESOLVED this 15th day of December, 2005. .101F X L, Mayor Ci y of Round Rock, Texas @PFDesktop\::ODMA/WORLDOX/O:/WDOX/RESOLUTI/R51215E1.WPD/rmc ST: le CHRISTINE R. MARTINEZ, City Secret 2 Y PROPERTY TAX ABATEMENT AGREEMENT This Property Tax Abatement Agreement (this "Agreement") is entered into by and between the City of Round Rock, Texas (the "City"), a Texas home rule municipal corporation, and Toppan Photomasks, Inc., a Delaware corporation ("Toppan"). RECITALS WHEREAS, Toppan desires to purchase a lithography tool and support equipment for the Advanced 90nm/65nm Prototype Production Line Project as described in Exhibit A (the "Equipment") and to rework its cleanroom Suite C to meet the requirements of the Equipment, as described in Exhibit B (the "Improvements); WHEREAS, by entering into this Agreement, Toppan confirms its intent to purchase the Equipment and to construct the Improvements, thereby resulting in new economic development in City; and WHEREAS, on the 13th day of September, 2001, the City Council, of the City of Round Rock, Texas, adopted Ordinance No. G -01-09-13-14D1 establishing Reinvestment Zone No. 19A (the "Reinvestment Zone") City of Round Rock, Texas for commercial/industrial tax abatement, hereinafter referred to as "Ordinance No. G -01-09-13-14D1", as authorized by the Texas Property Redevelopment and Tax Abatement Act, Chapter 312, Tax Code, V.A.T.S. as amended (the "Tax Abatement Act") ; and WHEREAS, the City has adopted Ordinance No. G -04-02-26-7B1, which Ordinance adopted appropriate guidelines and criteria governing reinvestment zones and tax abatement agreements to be entered into by the City as contemplated by the Tax Abatement Act; and WHEREAS, the City has determined that the contemplated use of the Equipment and Improvements (as hereinafter defined) as well as the terms of this Agreement are consistent with encouraging development in the Reinvestment Zone in accordance with the purposes for its creation and are in compliance with Ordinance No. G -04-02-26-7B1 and the guidelines and criteria adopted by the City and all applicable laws; and WHEREAS, the Equipment and Improvements constitute a major investment within the Reinvestment Zone that will substantially increase the appraised value of the property within the Reinvestment Zone; and will contribute to the retention of primary and secondary employment within the City; and WHEREAS, the City finds that there will be no substantial adverse effects on the provision of governmental services or on its tax base and that the planned use of the Premises will not constitute a hazard to public safety, health, or welfare, NOW THEREFORE, the parties hereto do mutually agree as follows: 1. Authorization. This Agreement is authorized by the Tax Abatement Act, and by Resolution of the City Council of the City of Round Rock, Texas dated December , 2005. PROPERTY TAX ABATEMENT AGREEMENT 1 CITY OF ROUND ROCK / TOPPAN PROPERTY, INC. 93595 2. Definitions. As used in this Agreement, the following terms shall have the meanings set forth below: (a) "Abatement Value" means the assessed value of the Eligible Property as determined annually by the Williamson County Appraisal District on behalf of the City less the amount of the Base Year Value. (b) "Abatement" means the full or partial exemption from ad valorem taxes of certain property in the Reinvestment Zone as more particularly set forth in Section 4. (c) "Affiliate of Toppan" means all companies under common control with, controlled by, or controlling Toppan Photomasks, Inc. For purposes of this definition, "control" means 50% or more of the ownership determined by either value or vote. (d) "Base Year Value" means the assessed value of the Eligible Property on January 1, 2005 (or on January 1 of the year of execution of this Agreement if determined to be otherwise required by applicable law), as such value is determined by the Williamson County Appraisal District on behalf of the City. (e) "City Guidelines" means the Guidelines and Criteria for Granting Tax Abatement in Reinvestment Zones created in Round Rock, Texas. (f) "Eligible Property" means collectively the Equipment and Improvements. (g) "Equipment" means the lithography tool and support equipment for the Advanced 90nm/65nm Prototype Production Line Project. (h) "Facility" means Toppan's manufacturing facility located on the Toppan RZ Tract. (i) "Improvements" means the rework of cleanroom Suite C, and installation of capital equipment, which will result in a Sub Class 1 cleanroom environment that will meet the Equipment's facility requirements. (j) "Ineligible Property" means Toppan's existing facility and personal property that was located in the Reinvestment Zone at any time before the period covered by this Agreement. (k) "Reinvestment Zone" the reinvestment zone established on the 13th day of September, 2001, in Ordinance No. G -01-09-13-14D1 establishing Reinvestment Zone No. 19A (1) "Toppan Tract" means the real property owned by Toppan not located in the Reinvestment Zone and described as Crystal Park, Block E, Lot 3. (m) "Toppan RZ Tract" means the real property owned by Toppan located in the Reinvestment Zone. PROPERTY TAX ABATEMENT AGREEMENT 2 CITY OF ROUND ROCK / TOPPAN PROPERTY, INC. 93595 3. Subject Property. During the Abatement Period, the Toppan RZ Tract shall be used consistent with the general purpose of encouraging development or redevelopment within the Reinvestment Zone. The Toppan RZ Tract is not located in an improvement project financed by tax increment bonds and does not include any property that is owned or leased by a member of the City Council or by a member of the City Planning and Zoning Commission. 4. Grant of Abatement. Subject to the terms and conditions contained herein, and subject to the rights of the holders of any outstanding bonds of the City, the City hereby grants an abatement on the Abatement Value of the Eligible Property located on or at the Toppan RZ Tract (the "Abatement") as follows: (a) Year 1 (b) Year 2 (c) Year 3 90% 85% 80% 5. Term of Abatement. Toppan shall receive the Abatement commencing January 1 of the year immediately following the installation of the Equipment (the "Effective Date of Abatement") and continuing for three (3) years, the "Abatement Period"). Notwithstanding anything herein to the contrary, the Effective Date of Abatement shall be January 1 of the year immediately following substantial completion of the Improvements if determined to be otherwise required by applicable law. 6. Taxable Property. During the Abatement Period, taxes shall be payable on the Eligible Property and the Ineligible Property located within the Reinvestment Zone as follows: (a) The value of the Ineligible Property as defined herein shall be fully taxable; and (b) The Base Year Value of the Eligible Property as determined by the Williamson County Appraisal District shall be fully taxable. Toppan agrees that regardless of anything contained herein to the contrary, the value of the Ineligible Property, plus the Base Year Value of the Eligible Property, plus that portion of the Eligible Property that is not abated, plus the value of the Toppan Tract and improvements located thereon shall be no less than $45,000,000.00. 7. Toppan's Development Covenants. In consideration of the City's agreement to enter into this Agreement, Toppan represents that it intends to construct the Improvements and install the Equipment for the purpose of operating its manufacturing facility in the City and Toppan acknowledges that the City's obligations hereunder are conditioned upon Toppan's continued operation of said manufacturing facility. In the event Toppan fails to substantially complete the Improvements and install the Equipment by December 31, 2005 (subject to delays caused by events of Force Majeure), the City may terminate this Agreement by giving Toppan written notice of such termination. As additional consideration, Toppan agrees and covenants to provide and retain at least 223 jobs during the term of this Agreement. Toppan agrees to provide PROPERTY TAX ABATEMENT AGREEMENT 3 93595 CITY OF ROUND ROCK / TOPPAN PROPERTY, INC. to the City annual manpower reports on the form attached hereto as Exhibit C within sixty (60) days following the end of the calendar year. 8. Default. In the event that Toppan (a) allows its ad valorem taxes related to the property to become delinquent and fails to timely and properly follow the legal procedures for their protest and/or contest; or (b) violates any of the material terms and conditions of this Agreement, Toppan shall be considered in default. In the event that Toppan defaults under this Agreement, the City shall give Toppan written notice specifying such default. If Toppan has not cured the default within thirty (30) days after its receipt of such written notice, the City may pursue any of its remedies for the collection of delinquent property taxes as provided generally in the Tax Code. 9. Abatement Recapture. In the event the City terminates this Agreement as a result of Toppan's default, the City may recapture and collect from Toppan the ad valorem taxes that were abated as a result of this Agreement (the "Recapture Liability"). Toppan shall pay to the City the Recapture Liability within thirty (30) days after the date of termination, subject to any and all lawful offsets, settlements, deduction, or credits to which Toppan may be entitled. Notwithstanding anything herein to the contrary, such Recapture Liability shall not exceed an amount equal to all taxes which were abated pursuant to this Agreement from the Effective Date of Abatement to the date of termination (together with interest thereon to be charged at the statutory rate for delinquent taxes as determined by Section 33.01 of the Property Tax Code of the State of Texas, but without the addition of a penalty). The City shall have all remedies for the collection of the Recapture Liability as provided generally in the Tax Code for the collection of delinquent property taxes. 10. Certification and Inspections. Toppan must certify annually to the City that Toppan is in compliance with each applicable term of this Agreement and the City Guidelines and, if not in compliance, the steps Toppan intends to take to be in compliance or a statement from Toppan explaining in reasonable detail why compliance cannot be achieved. Toppan agrees that the WCAD and the City, their agents and employees, shall, upon reasonable notice, have reasonable right of access to the Toppan RZ Tract in order to ensure that the installation of the Equipment and the construction of the Improvements to the Toppan RZ Tract is in accordance with this Agreement and all applicable state and local laws and regulations or valid waiver thereof. All inspections will be made with one or more representatives of Toppan and in accordance with Toppan's security and safety requirements. At the time of annual certification, upon the City's written request, Toppan shall also provide a calculation of the aggregate amount of economic benefit Toppan has previously received pursuant to this Agreement and the Development Agreement. In order to efficiently administer the Abatement Toppan agrees also to provide annually, before April 15, a full asset listing of personal property located on the Toppan Tract and the Toppan RZ Tract to the WCAD and such other information as may be reasonably necessary for the Abatement and assessment of the assets for tax purposes, including any information required by the City Guidelines. 11. Rendition of the Toppan Tract and Improvements, and the Toppan RZ Tract and Facility. Prior to January 31 of each year of this Agreement, Toppan shall submit to the Williamson County Appraisal District, a real property rendition for the Toppan Tract and the Toppan RZ Tract and a personal property rendition. The real property rendition shall provide the PROPERTY TAX ABATEMENT AGREEMENT 4 93595 CITY OF ROUND ROCK / TOPPAN PROPERTY, INC. cost and description of the Improvements as described in Exhibit B. The personal property rendition shall include the year of acquisition, cost and description of the Equipment, as described in Exhibit A. Toppan shall submit the foregoing real property and personal property rendition forms to the Williamson County Appraisal District, in the minimum amount necessary so that the taxable value after applying the abatement provided for herein, of the Toppan Tract and improvements, the Toppan RZ Tract and the Facility in such year following Substantial Completion of the Improvements shall be no less than $45,000,000.00 (the "Designated Value"). 12. Annual Tax Application. It shall be the responsibility of Toppan, pursuant to V.T.C.A., Tax Code, § 11.43, to file an annual exemption application form with the Williamson County Appraisal District. The Chief Appraiser of the Williamson County Appraisal District shall annually determine and record both the abated taxable value and the full taxable value of the Eligible Property in the appraisal records. The full taxable value figure listed in the appraisal record shall be used to compute the amount of abated taxes that are required to be recaptured and paid in the event this Agreement is terminated in a manner that results in recapture pursuant to Section 9. Each year Toppan shall furnish the Chief Appraiser with such information outlined in V.T.C.A., Tax Code, Chapter 22, as may be necessary for the administration of the abatement specified herein. Toppan shall be entitled to appeal any determination of the Chief Appraiser in accordance with the provisions of the Texas Tax Code. 13. Assignment. Toppan may assign this Agreement to a new owner or lessee of the Facility with the written consent of the City Council of the City, which consent shall not be unreasonably withheld, conditioned or delayed. An assignment to an Affiliate of Toppan shall not require such written consent. Any assignment shall be in writing, and shall provide that the assignee shall irrevocably and unconditionally assume all the duties and obligations of the assignor upon the same terms and conditions as set out in this Agreement. 14. Notice. All notices and other communications hereunder shall be in writing (whether or not a writing is expressly required hereby), and shall be deemed to have been given and become effective (a) if given by either party or its counsel via an express mail service or via courier or via receipted facsimile transmission (but only if duplicate notice is also given via express mail service or via courier or via certified mail), then if and when delivered to and received (or refused) by the respective parties at the below addresses (or at such other address as a party may hereafter designate for itself by notice to the other party as required hereby), or (b) if sent via certified mail by either party or its counsel, then on the third business day following the date on which such communication is deposited in the United States mails, by first class certified mail, return receipt requested, postage prepaid, and addressed to the respective parties at the below addresses (or at such other address as a party may hereafter designate for itself by notice to the other party as required hereby). Any notice provided for under the terms of this Agreement by either party to the other shall be in writing and may be effected by registered or certified mail, return receipt requested. PROPERTY TAX ABATEMENT AGREEMENT 5 93595 CITY OF ROUND ROCK / TOPPAN PROPERTY, INC. If to City: City of Round Rock 221 E. Main Street Round Rock, TX 78664 Attn: City Manager Phone: (512) 218-5400 Fax: (512) 218-7097 With a required copy to: Sheets & Crossfield 309 E. Main Street Round Rock, TX 78664 Attn: Stephan L. Sheets Phone: (512) 255-8877 Fax: (512) 255-8986 If to Toppan: Toppan Photomasks, Inc. 131 Old Settlers Blvd. Round Rock, Texas 78664 Attn: Virginia A. Bryant Phone: (512)310 -6597 Fax: (512)310-6503 15. Applicable Law. This Agreement is made and shall be construed and interpreted under the laws of the State of Texas and shall be performable in Williamson County, Texas. 16. No Liability. It is understood and agreed between the parties that Toppan, in performing its obligations hereunder, is acting independently, and the City assumes no responsibility or liability to third parties in connection therewith. It is further understood and agreed among the parties that the City, in performing its obligations hereunder, is acting independently, and Toppan assumes no responsibility or liability to third parties in connection therewith. 17. Estoppel Certificate. Any party hereto may request an estoppel certificate from another party hereto so long as the certificate is requested in connection with a bona fide business purpose. Each party agrees to promptly execute and deliver any estoppel certificate requested pursuant to this Section 17. The certificate, which will upon request be addressed to Toppan, or a lessee, purchaser or assignee of Toppan, shall include, but not necessarily be limited to, statements (qualified to the best knowledge of the party providing the estoppel) that this Agreement is in full force and effect without default (or if a default exists, the nature of such default and any curative action which should be undertaken to cure same), the remaining term of this Agreement, and such other matters reasonably requested by the party(ies) to receive the certificate. PROPERTY TAX ABATEMENT AGREEMENT 6 93595 CITY OF ROUND ROCK / TOPPAN PROPERTY, INC. 18. Legal Construction. In case any one or more of the provisions contained in this Agreement shall for any reason be held to be invalid, illegal, or unenforceable in any respect, such invalidity, illegality, or unenforceability shall not affect any other provision thereof and this Agreement shall be considered as if such invalid, illegal or unenforceable provision had never been contained in this Agreement. 19. Force Majeure. Whenever a period of time is prescribed for the taking of an action by Toppan, the period of time for the performance of such action shall be extended by the number of days that the performance is actually delayed due to strikes, acts of God, shortages of labor or materials, war, terrorist attacks (including bio -chemical attacks), civil disturbances and other causes beyond the reasonable control of Toppan ("Force Majeure"). However, events of Force Majeure shall not extend any period of time for the payment of sums payable by Toppan. 20. Entire Agreement. This Agreement embodies the complete agreement of the parties hereto, superseding all oral or written previous and contemporary agreements between the parties and relating to matters in this Agreement, and except as otherwise provided herein cannot be modified, amended, altered or revoked without written agreement of the parties hereto. 21. Recordation of Agreement. A certified copy of this Agreement, or a memorandum summarizing this Agreement, in recordable form may be recorded in the Deed of Records of Williamson County, Texas. 22. Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns. 23. Authority. The individuals executing this Agreement on behalf of the respective parties hereto represent to each other and to others that all appropriate and necessary action has been taken to authorize the individual who is executing this Agreement to do so for and on behalf of the party for which his or her signature appears, that there are no other parties or entities required to execute this Agreement in order for the same to be an authorized and binding agreement on the party for whom the individual is signing this Agreement and that each individual affixing his or her signature hereto is authorized to do so, and such authorization is valid and effective on the date hereof. 24. Multiple Counterparts. This Agreement may be executed in a number of identical counterparts, each of which shall be deemed an original and all of which, when taken together, shall constitute one and the same instrument. 25. Time of Essence. Time is of the essence in this Agreement. 26. Joint Drafting. The parties agree this Agreement has been drafted jointly by the parties and their legal representatives. 27. Exhibits. All exhibits to this Agreement are incorporated herein by reference for all purposes wherever reference is made to the same. IN WITNESS WHEREOF, the parties have executed this Agreement and caused this Agreement to be effective on the latest date as reflected by the signatures below (the "Effective Date"). PROPERTY TAX ABATEMENT AGREEMENT 7 93595 CITY OF ROUND ROCK / TOPPAN PROPERTY, INC. THE CITY OF ROUND ROCK, TEXAS, a Texas municipal corporation By: Nyle Maxwell, Mayor Date: Attest: Christine Martinez, City Secretary APPROVED AS TO FORM: Stephan L. Sheets, City Attorney TOPPAN PHOTOMASKS, INC. a Delaware corporation By: Its: Date: PROPERTY TAX ABATEMENT AGREEMENT 8 93595 CITY OF ROUND ROCK / TOPPAN PROPERTY, INC. EXHIBIT A DESCRIPTION OF EQUIPMENT Summary of tools, and support equipment for the advanced 90mn/65nm Prototype Production Line Project: 1) Lithography (J11) 2) Inspection (k 577) 3) Advanced Repair System 4) Dry Etcher (Process) PROPERTY TAX ABATEMENT AGREEMENT 9 93595 CITY OF ROUND ROCK / TOPPAN PROPERTY, INC. EXHIBIT B IMPROVEMENTS Rework of cleanroom Suite C, which is composed of architectural (cleanroom walls, flooring, and ULPA filtration); mechanical (airhandlers, process piping, and fire suppression); instrumentation and electrical (uninterrupted power supply and environmental controls.) The estimated cost of the cleanroom rework is $1,500,000.00. PROPERTY TAX ABATEMENT AGREEMENT 93595 10 CITY OF ROUND ROCK / TOPPAN PROPERTY, INC. PROPERTY TAX ABATEMENT AGREEMENT 93595 Exhibit "C" Manpower Report 11 CITY OF ROUND ROCK / TOPPAN PROPERTY, INC. DATE: December 7, 2005 SUBJECT: City Council Meeting - December 15, 2005 ITEM: 9.E.1. Consider a resolution authorizing the Mayor to execute a Property Tax Abatement Agreement with Toppan Photomasks, Inc. Department: Administration Staff Person: Joe Vining, Executive Director of Community Development Justification: Toppan Photomasks, Inc. (formerly Dupont Photomasks) will make a $30 million investment in new technology at their world headquarters site in Round Rock. Funding: Cost: None Source of funds: N/A Outside Resources: Toppan Photomasks, Inc. Background Information: This will be the third tax abatement agreement with this company. They are located in the Reinvestment Zone 19A that was approved on September 13, 2001. Public Comment: N/A PROPERTY TAX ABATEMENT AGREEMENT This Property Tax Abatement Agreement (this "Agreement") is entered into by and between the City of Round Rock, Texas (the "City"), a Texas home rule municipal corporation, and Toppan Photomasks, Inc., a Delaware corporation ("Tappan"). RECITALS WHEREAS, Toppan desires to purchase a lithography tool and support equipment for the Advanced 90nm/65nm Prototype Production Line Project as described in Exhibit A (the "Equipment") and to rework its cleanroom Suite C to meet the requirements of the Equipment, as described in Exhibit B (the "Improvements); WHEREAS, by entering into this Agreement, Toppan confirms its intent to purchase the Equipment and to construct the Improvements, thereby resulting in new economic development in City; and WHEREAS, on the 13th day of September, 2001, the City Council, of the City of Round Rock, Texas, adopted Ordinance No. G -01-09-13-14D1 establishing Reinvestment Zone No. 19A (the "Reinvestment Zone") City of Round Rock, Texas for commercial/industrial tax abatement, hereinafter referred to as "Ordinance No. G -01-09-13-14D1", as authorized by the Texas Property Redevelopment and Tax Abatement Act, Chapter 312, Tax Code, V.A.T.S. as amended (the "Tax Abatement Act") ; and WHEREAS, the City has adopted Ordinance No. G -04-02-26-7B1, which Ordinance adopted appropriate guidelines and criteria governing reinvestment zones and tax abatement agreements to be entered into by the City as contemplated by the Tax Abatement Act; and WHEREAS, the City has determined that the contemplated use of the Equipment and Improvements (as hereinafter defined) as well as the terms of this Agreement are consistent with encouraging development in the Reinvestment Zone in accordance with the purposes for its creation and are in compliance with Ordinance No. G -04-02-26-7B1 and the guidelines and criteria adopted by the City and all applicable laws; and WHEREAS, the Equipment and Improvements constitute a major investment within the Reinvestment Zone that will substantially increase the appraised value of the property within the Reinvestment Zone; and will contribute to the retention of primary and secondary employment within the City; and WHEREAS, the City finds that there will be no substantial adverse effects on the provision of governmental services or on its tax base and that the planned use of the Premises will not constitute a hazard to public safety, health, or welfare, NOW THEREFORE, the parties hereto do mutually agree as follows: 1. Authorization. This Agreement is authorized by the Tax Abatement Act, and by Resolution of the City Council of the City of Round Rock, Texas dated December 15, 2005. R-05-12.-15-161 PROPERTY TAX ABATEMENT AGREEMENT 1 CITY OF ROUND ROCK / TOPPAN PROPERTY, INC. 93595 2. Definitions. As used in this Agreement, the following terms shall have the meanings set forth below: (a) "Abatement Value" means the assessed value of the Eligible Property as determined annually by the Williamson County Appraisal District on behalf of the City less the amount of the Base Year Value. (b) "Abatement" means the full or partial exemption from ad valorem taxes of certain property in the Reinvestment Zone as more particularly set forth in Section 4. (c) "Affiliate of Toppan" means all companies under common control with, controlled by, or controlling Toppan Photomasks, Inc. For purposes of this definition, "control" means 50% or more of the ownership determined by either value or vote. (d) "Base Year Value" means the assessed value of the Eligible Property on January 1, 2005 (or on January 1 of the year of execution of this Agreement if determined to be otherwise required by applicable law), as such value is determined by the Williamson County Appraisal District on behalf of the City. (e) "City Guidelines" means the Guidelines and Criteria for Granting Tax Abatement in Reinvestment Zones created in Round Rock, Texas. (f) "Eligible Property" means collectively the Equipment and Improvements. (g) "Equipment" means the lithography tool and support equipment for the Advanced 90nm/65nm Prototype Production Line Project. (h) "Facility" means Toppan's manufacturing facility located on the Toppan RZ Tract. (i) "Improvements" means the rework of cleanroom Suite C, and installation of capital equipment, which will result in a Sub Class 1 cleanroom environment that will meet the Equipment's facility requirements. (j) "Ineligible Property" means Toppan's existing facility and personal property that was located in the Reinvestment Zone at any time before the period covered by this Agreement. (k) "Reinvestment Zone" the reinvestment zone established on the 13th day of September, 2001, in Ordinance No. G -01-09-13-14D1 establishing Reinvestment Zone No. 19A (1) "Toppan Tract" means the real property owned by Toppan not located in the Reinvestment Zone and described as Crystal Park, Block E, Lot 3. (m) "Toppan RZ Tract" means the real property owned by Toppan located in the Reinvestment Zone. PROPERTY TAX ABATEMENT AGREEMENT 2 CITY OF ROUND ROCK / TOPPAN PROPERTY, INC. 93595 3. Subject Property. During the Abatement Period, the Toppan RZ Tract shall be used consistent with the general purpose of encouraging development or redevelopment within the Reinvestment Zone. The Toppan RZ Tract is not located in an improvement project financed by tax increment bonds and does not include any property that is owned or leased by a member of the City Council or by a member of the City Planning and Zoning Commission. 4. Grant of Abatement. Subject to the terms and conditions contained herein, and subject to the rights of the holders of any outstanding bonds of the City, the City hereby grants an abatement on the Abatement Value of the Eligible Property located on or at the Toppan RZ Tract (the "Abatement") as follows: (a) Year 1 90% (b) Year 2 (c) Year 3 80% 85% 5. Term of Abatement. Toppan shall receive the Abatement commencing January 1 of the year immediately following the installation of the Equipment (the "Effective Date of Abatement") and continuing for three (3) years, the "Abatement Period"). Notwithstanding anything herein to the contrary, the Effective Date of Abatement shall be January 1 of the year immediately following substantial completion of the Improvements if determined to be otherwise required by applicable law. 6. Taxable Property. During the Abatement Period, taxes shall be payable on the Eligible Property and the Ineligible Property located within the Reinvestment Zone as follows: (a) The value of the Ineligible Property as defined herein shall be fully taxable; and (b) The Base Year Value of the Eligible Property as determined by the Williamson County Appraisal District shall be fully taxable. Tappan agrees that regardless of anything contained herein to the contrary, the value of the Ineligible Property, plus the Base Year Value of the Eligible Property, plus that portion of the Eligible Property that is not abated, plus the value of the Toppan Tract and improvements located thereon shall be no less than $45,000,000.00. 7. Toppan's Development Covenants. In consideration of the City's agreement to enter into this Agreement, Toppan represents that it intends to construct the Improvements and install the Equipment for the purpose of operating its manufacturing facility in the City and Toppan acknowledges that the City's obligations hereunder are conditioned upon Toppan's continued operation of said manufacturing facility. In the event Toppan fails to substantially complete the Improvements and install the Equipment by December 31, 2005 (subject to delays caused by events of Force Majeure), the City may terminate this Agreement by giving Toppan written notice of such termination. As additional consideration, Toppan agrees and covenants to provide and retain at least 223 jobs during the term of this Agreement. Toppan agrees to provide PROPERTY TAX ABATEMENT AGREEMENT 3 CITY OF ROUND ROCK / TOPPAN PROPERTY, INC. 93595 to the City annual manpower reports on the form attached hereto as EXHIBIT ,C within sixty (60) days following the end of the calendar year. 8. Default. In the event that Toppan (a) allows its ad valorem taxes related to the property to become delinquent and fails to timely and properly follow the legal procedures for their protest and/or contest; or (b) violates any of the material terms and conditions of this Agreement, Toppan shall be considered in default. In the event that Toppan defaults under this Agreement, the City shall give Toppan written notice specifying such default. If Toppan has not cured the default within thirty (30) days after its receipt of such written notice, the City may pursue any of its remedies for the collection of delinquent property taxes as provided generally in the Tax Code. 9. Abatement Recapture. In the event the City terminates this Agreement as a result of Toppan's default, the City may recapture and collect from Toppan the ad valorem taxes that were abated as a result of this Agreement (the "Recapture Liability"). Toppan shall pay to the City the Recapture Liability within thirty (30) days after the date of termination, subject to any and all lawful offsets, settlements, deduction, or credits to which Toppan may be entitled. Notwithstanding anything herein to the contrary, such Recapture Liability shall not exceed an amount equal to all taxes which were abated pursuant to this Agreement from the Effective Date of Abatement to the date of termination (together with interest thereon to be charged at the statutory rate for delinquent taxes as determined by Section 33.01 of the Property Tax Code of the State of Texas, but without the addition of a penalty). The City shall have all remedies for the collection of the Recapture Liability as provided generally in the Tax Code for the collection of delinquent property taxes. 10. Certification and Inspections. Toppan must certify annually to the City that Toppan is in compliance with each applicable term of this Agreement and the City Guidelines and, if not in compliance, the steps Toppan intends to take to be in compliance or a statement from Toppan explaining in reasonable detail why compliance cannot be achieved. Toppan agrees that the WCAD and the City, their agents and employees, shall, upon reasonable notice, have reasonable right of access to the Toppan RZ Tract in order to ensure that the installation of the Equipment and the construction of the Improvements to the Toppan RZ Tract is in accordance with this Agreement and all applicable state and local laws and regulations or valid waiver thereof. All inspections will be made with one or more representatives of Toppan and in accordance with Toppan's security and safety requirements. At the time of annual certification, upon the City's written request, Toppan shall also provide a calculation of the aggregate amount of economic benefit Toppan has previously received pursuant to this Agreement and the Development Agreement. In order to efficiently administer the Abatement Toppan agrees also to provide annually, before April 15, a full asset listing of personal property located on the Toppan Tract and the Toppan RZ Tract to the WCAD and such other information as may be reasonably necessary for the Abatement and assessment of the assets for tax purposes, including any information required by the City Guidelines. 11. Rendition of the Toppan Tract and Improvements, and the Toppan RZ Tract and Facility. Prior to January 31 of each year of this Agreement, Toppan shall submit to the Williamson County Appraisal District, a real property rendition for the Toppan Tract and the Toppan RZ Tract and a personal property rendition. The real property rendition shall provide the PROPERTY TAX ABATEMENT AGREEMENT 93595 4 CITY OF ROUND ROCK / TOPPAN PROPERTY, INC. Formatted: Underline ) Formatted: Font: Bold, Underline cost and description of the Improvements as described in Exhibit B. The personal property rendition shall include the year of acquisition, cost and description of the Equipment, as described in Exhibit A. Toppan shall submit the foregoing real property and personal property rendition forms to the Williamson County Appraisal District, in the minimum amount necessary so that the taxable value after applying the abatement provided for herein, of the Toppan Tract and improvements, the Toppan RZ Tract and the Facility in such year following Substantial Completion of the Improvements shall be no less than $45,000,000.00 (the "Designated Value"). 12. Annual Tax Application. It shall be the responsibility of Toppan, pursuant to V.T.C.A., Tax Code, § 11.43, to file an annual exemption application form with the Williamson County Appraisal District. The Chief Appraiser of the Williamson County Appraisal District shall annually determine and record both the abated taxable value and the full taxable value of the Eligible Property in the appraisal records. The full taxable value figure listed in the appraisal record shall be used to compute the amount of abated taxes that are required to be recaptured and paid in the event this Agreement is terminated in a manner that results in recapture pursuant to Section 9. Each year Toppan shall furnish the Chief Appraiser with such information outlined in V.T.C.A., Tax Code, Chapter 22, as may be necessary for the administration of the abatement specified herein. Toppan shall be entitled to appeal any determination of the Chief Appraiser in accordance with the provisions of the Texas Tax Code. 13. Assignment. Toppan may assign this Agreement to a new owner or lessee of the Facility with the written consent of the City Council of the City, which consent shall not be unreasonably withheld, conditioned or delayed. An assignment to an Affiliate of Toppan shall not require such written consent. Any assignment shall be in writing, and shall provide that the assignee shall irrevocably and unconditionally assume all the duties and obligations of the assignor upon the same terms and conditions as set out in this Agreement. 14. Notice. All notices and other communications hereunder shall be in writing (whether or not a writing is expressly required hereby), and shall be deemed to have been given and become effective (a) if given by either party or its counsel via an express mail service or via courier or via receipted facsimile transmission (but only if duplicate notice is also given via express mail service or via courier or via certified mail), then if and when delivered to and received (or refused) by the respective parties at the below addresses (or at such other address as a party may hereafter designate for itself by notice to the other party as required hereby), or (b) if sent via certified mail by either party or its counsel, then on the third business day following the date on which such communication is deposited in the United States mails, by first class certified mail, return receipt requested, postage prepaid, and addressed to the respective parties at the below addresses (or at such other address as a party may hereafter designate for itself by notice to the other party as required hereby). Any notice provided for under the terms of this Agreement by either party to the other shall be in writing and may be effected by registered or certified mail, return receipt requested. PROPERTY TAX ABATEMENT AGREEMENT 5 CITY OF ROUND ROCK / TOPPAN PROPERTY, INC. 93595 If to City: City of Round Rock 221 E. Main Street Round Rock, TX 78664 Attn: City Manager Phone: (512) 218-5400 Fax: (512) 218-7097 If to Toppan: With a required copy to: Sheets & Crossfield 309 E. Main Street Round Rock, TX 78664 Attn: Stephan L. Sheets Phone: (512) 255-8877 Fax: (512) 255-8986 Toppan Photomasks, Inc. 131 Old Settlers Blvd. Round Rock, Texas 78664 Attn: Virginia A. Bryant Phone: (512)310 -6597 Fax: (512)310-6503 15. Applicable Law. This Agreement is made and shall be construed and interpreted under the laws of the State of Texas and shall be performable in Williamson County, Texas. 16. No Liability. It is understood and agreed between the parties that Toppan, in performing its obligations hereunder, is acting independently, and the City assumes no responsibility or liability to third parties in connection therewith. It is further understood and agreed among the parties that the City, in performing its obligations hereunder, is acting independently, and Toppan assumes no responsibility or liability to third parties in connection therewith. 17. Estoppel Certificate. Any party hereto may request an estoppel certificate from another party hereto so long as the certificate is requested in connection with a bona fide business purpose. Each party agrees to promptly execute and deliver any estoppel certificate requested pursuant to this Section 17. The certificate, which will upon request be addressed to Toppan, or a lessee, purchaser or assignee of Toppan, shall include, but not necessarily be limited to, statements (qualified to the best knowledge of the party providing the estoppel) that this Agreement is in full force and effect without default (or if a default exists, the nature of such default and any curative action which should be undertaken to cure same), the remaining term of this Agreement, and such other matters reasonably requested by the party(ies) to receive the certificate. PROPERTY TAX ABATEMENT AGREEMENT 6 CITY OF ROUND ROCK / TOPPAN PROPERTY, INC. 93595 18. Legal Construction. In case any one or more of the provisions contained in this Agreement shall for any reason be held to be invalid, illegal, or unenforceable in any respect, such invalidity, illegality, or unenforceability shall not affect any other provision thereof and this Agreement shall be considered as if such invalid, illegal or unenforceable provision had never been contained in this Agreement. 19. Force Majeure. Whenever a period of time is prescribed for the taking of an action by Tappan, the period of time for the performance of such action shall be extended by the number of days that the performance is actually delayed due to strikes, acts of God, shortages of labor or materials, war, terrorist attacks (including bio -chemical attacks), civil disturbances and other causes beyond the reasonable control of Toppan ("Force Majeure"). However, events of Force Majeure shall not extend any period of time for the payment of sums payable by Toppan. 20. Entire Agreement. This Agreement embodies the complete agreement of the parties hereto, superseding all oral or written previous and contemporary agreements between the parties and relating to matters in this Agreement, and except as otherwise provided herein cannot be modified, amended, altered or revoked without written agreement of the parties hereto. 21. Recordation of Agreement. A certified copy of this Agreement, or a memorandum summarizing this Agreement, in recordable form may be recorded in the Deed of Records of Williamson County, Texas. 22. Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns. 23. Authority. The individuals executing this Agreement on behalf of the respective parties hereto represent to each other and to others that all appropriate and necessary action has been taken to authorize the individual who is executing this Agreement to do so for and on behalf of the party for which his or her signature appears, that there are no other parties or entities required to execute this Agreement in order for the same to be an authorized and binding agreement on the party for whom the individual is signing this Agreement and that each individual affixing his or her signature hereto is authorized to do so, and such authorization is valid and effective on the date hereof. 24. Multiple Counterparts. This Agreement may be executed in a number of identical counterparts, each of which shall be deemed an original and all of which, when taken together, shall constitute one and the same instrument. 25. Time of Essence. Time is of the essence in this Agreement. 26. Joint Drafting. The parties agree this Agreement has been drafted jointly by the parties and their legal representatives. 27. Exhibits. All exhibits to this Agreement are incorporated herein by reference for all purposes wherever reference is made to the same. IN WITNESS WHEREOF, the parties have executed this Agreement and caused this Agreement to be effective on the latest date as reflected by the signatures below (the "Effective Date"). PROPERTY TAX ABATEMENT AGREEMENT 7 CITY OF ROUND ROCK / TOPPAN PROPERTY, INC. 93595 Attest: APPROV D AS TO FO THE CITY OF ROUND ROCK, TEXAS, a Texas m icip1 co • oration 4 By: �. axw- r!yor Date: a -15-O5 ‘-j-naktLA.(11—. Christine Martinez, City Secretary Stephan . Sheets, City Attorney PROPERTY TAX ABATEMENT AGREEMENT 93595 TOPPAN PHOTOMASKS, INC. a Delaware corporation By: A( /r, Its: 77e4's(1r41' VP Date: /" Z./9/65' V. 8 CITY OF ROUND ROCK / TOPPAN PROPERTY, INC. EXHIBIT A DESCRIPTION OF EQUIPMENT Summary of tools, and support equipment for the advanced 90mn/65nm Prototype Production Line Project: 1) Lithography (J11) 2) Inspection (k 577) 3) Advanced Repair System 4) Dry Etcher (Process) PROPERTY TAX ABATEMENT AGREEMENT 9 CITY OF ROUND ROCK / TOPPAN PROPERTY, INC. 93595 EXHIBIT B IMPROVEMENTS Rework of cleanroom Suite C, which is composed of architectural (cleanroom walls, flooring, and ULPA filtration); mechanical (airhandlers, process piping, ironme and fire tal controls suppression); instrumentation and electrical (uninterrupted power supply and he estimated cost of the cleanroom rework is $1,500,000.00. PROPERTY TAX ABATEMENT AGREEMENT 93595 10 CITY OF ROUND ROCK / TOPPAN PROPERTY, INC. PROPERTY TAX ABATEMENT AGREEMENT 93595 Exhibit "C" Manpower Report 11 CITY OF ROUND ROCK / TOPPAN PROPERTY, INC.