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R-07-10-11-13D2 - 10/11/2007 RESOLUTION NO. R-07-10-11-13D2 WHEREAS, the City of Round Rock ( "City" ) has established an Economic Development Program to encourage Accretech USA, Inc. ( "Accretech" ) to locate a product development and manufacturing center in the City, and WHEREAS, to further promote economic development, the City wishes to enter into an Economic Development Program Agreement ( "Agreement" ) with Accretech regarding Accretech' s development of a center in the City of Round Rock, 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, an Economic Development Program Agreement with Accretech, a copy of same being attached hereto as Exhibit "A" and incorporated herein for all purposes . 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 subject 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 11th day of October, 0 NY W L, Mayor ACity o ound Rock, Texas T T: CHRISTINE R. MARTINEZ, City Secre ary 0:\wdox\RES0LUTI\R71011D2.WPD/rmc ECONOMIC DEVELOPMENT PROGRAM AGREEMENT This Economic Development Program Agreement ("Agreement") is entered into this day of , 2007, by and between the City of Round Rock, Texas, a Texas home rule municipal corporation ("City"), and Accretech USA, Inc., a corporation("Accretech"). WHEREAS, the City has adopted (a) Resolution No. attached as Exhibit A ("Program Resolution"), establishing an economic development program and Resolution No. , attached hereto as Exhibit B (the "Authorizing Resolution"), authorizing the Mayor to enter into this Agreement with Accretech in recognition of the positive economic benefits to the City through Accretech's development of approximately 3.265 acres of land, as more particularly described on the attached Exhibit C ("Property") as a precision measurement systems and semiconductor equipment manufacturer containing approximately forty-three thousand eight hundred eighty-three ( 43,883 ) square feet of manufacturing facility, including related office, warehouse and assembly space as set forth on the Site Plan described in the attached Exhibit D ("Project") (the Program Resolution and the Authorizing Resolution being collectively referred to herein as the "City Resolutions"); and WHEREAS, the purpose of this Agreement is to promote economic development as contemplated by Chapter 380 of the Texas Local Government Code whereby Accretech intends to construct, develop and operate the Project, or cause the Project to be operated, in conformance with the City's development approvals for the Project, and; WHEREAS, the City agrees to provide performance based economic development grants to Accretech to defray a portion of the Project's costs. NOW, THEREFORE, in consideration of the mutual benefits and promises and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the City and Accretech agree as follows: 1. Authority. The City's execution of this Agreement is authorized by Chapter 380 of the Texas Local Government Code and the City Resolutions, and constitute a valid and binding obligation of the City in the event Accretech proceeds with the development of the Property. The City acknowledges that Accretech is acting in reliance upon the City's performance of its obligations under this Agreement in making its decision to commit substantial resources and money to develop the Property. 2. Defmitions. 2.1 "Assessed Value" means the assessed value of the Eligible Property as determined annually by either the Williamson Central Appraisal District, or the Travis Central Appraisal District on behalf of the City. 2.2 "Accretech Tract"means the property described in Exhibit C. . EXHIBIT "All 2.3 "Base Year Value"means the assessed value of the Eligible Property on January 1, 2005, which is agreed to be$4,075,312 . 2.4 "Economic Incentive Payment(s)" ("EIPs") means payments of the amount required to be paid by the City to Accretech under the Program and this Agreement. 2.5 "Effective Date" is the date this Agreement is executed to be effective by the City and Accretech. 2.6 "Eligible Property" means collectively the Accretech Tract, Improvements and the Personal Property. 2.7 "Improvements" means the buildings, structures, or portions thereof, and other site improvements, including without limitation, fixed machinery and equipment used for commercial or industrial purposes that are erected by Accretech as part of an approximately 43,883 square feet manufacturing facility development, including related office, warehouse and assembly space to be constructed Property; the type, number and location of such Improvements being more particularly identified on Exhibit D. 2.8 "Ineligible Property" means such personal property that was located on the Accretech Tract at any time before January 1, 2005. 2.9 "Personal Property" means taxable non-real property which is purchased or leased for the exclusive use by Accretech in the operation of, or in connection with, the Facility and for which Accretech is obligated by law or by lease terms or other private contractual provision to pay the ad valorem taxes, but excluding any Ineligible Property. Except for removals caused by routine maintenance and replacement, Personal Property shall be located on the Accretech Tract for the exclusive use or benefit of Accretech from the time installed on the Accretech Tract through the duration of this Agreement. 2.10 "Program" means the economic development program established by the City pursuant to Chapter 380 of the Texas Local Government Code and under the City Resolution to promote local economic development and stimulate business and commercial activity within the City. 2.11"Project" means Accretech's planned development of the Property which shall consist of internal improvements to an existing building and related facilities. The Project shall include approximately forty-three thousand eight hundred eighty-three (43,883 ) square feet of manufacturing space, including related office, warehouse and assembly space. 2,12"Property Tax Revenues" means the amount of real and personal property tax collected by the City arising from the Project. The term "Property Tax Revenues" shall include any taxes authorized by the State in the future that are intended to replace property tax revenues currently available to the City. 3. Term. This Agreement shall become enforceable upon its Effective Date. This Agreement shall terminate on December 31, 2010. ECONOMIC DEVELOPMENT PROGRAM AGREEMENT 2 CITY OF ROUND ROCK/ACCRETECH PROPERTY,INC. 4019866v.5 4. Rights and Obligations of Accretech. In consideration of the City's compliance with this Agreement, Accretech agrees as follows: 4.1 Compliance with Development Regulations and Other Ordinances. Accretech shall comply with the City's development approval processes and shall develop the Project on the Property consistent with City ordinances, City-approved zoning ordinance for the Property, City-approved development regulations, and other City development requirements. 4.2 Accretech Accounting. Accretech shall maintain complete books and records showing all property taxes paid to the City, which books and records shall be deemed complete if kept in accordance with generally acceptable accounting principles. Such books and records shall be available for examination by the duly authorized officers or agents of the City during normal business hours upon request made not less than ten (10) business days prior to the date of such examination. Accretech shall maintain such books and records throughout the term of this Agreement and for four(4) years thereafter. 4.3 Submission of Data. Within thirty (30) days of the end of each calendar year, Accretech shall submit to the City a schedule detailing the amount of Property Tax Revenues for the preceding calendar year. As backup for the schedule, Accretech shall submit such other data as the City may determine reasonably appropriate to evidence the Property Tax Revenues. 4.4 Accretech's Development Covenants. In consideration of the City's agreement to enter into this Agreement, Accretech represents that it intends to construct the Improvements and install the Equipment for the purpose of operating its facility in the City and Accretech acknowledges that the City's obligations hereunder are conditioned upon Accretech's continued operation of said facility. In the event Accretech fails to substantially complete the Improvements and install the Equipment by December 31, 2007 (subject to delays caused by events of Force Majeure), the City may terminate this Agreement by giving Accretech written notice of such termination. As additional consideration, Accretech agrees and covenants to provide and/or retain at least the number of jobs within the Facility according to the following schedule: Date Retain New Total On December 31, 2007 50 0 50 On December 31, 2008 50 10 60 On December 31, 2009 60 5 65 On December 31, 2010 65 2 67 Accretech agrees to provide to the City annual manpower reports on the form attached hereto as Exhibit E within thirty(30) days following the end of the calendar year. Accretech agrees that regardless of anything contained herein to the contrary, during the term of this Agreement, the Assessed Value shall be no less than $4,075,312. 5. Rights and Obligations of the City. In consideration of Accretech's compliance with this Agreement, the City agrees as follows: ECONOMIC DEVELOPMENT PROGRAM AGREEMENT 3 CITY OF ROUND ROCK/ACCRETECH PROPERTY,INC. 4019866v.5 5.1 Economic Incentive Payments. 5.1.1 City Payments. City shall pursuant to Chapter 380 of the Texas Local Government Code, but subject to the conditions set out here, make annual EIPs to Accretech within thirty (30) days after Accretech submits to the City the report and data for such calendar year as required in Section 4.3 and Section 4.4 above. The EIPs are to be calculated as follows: (a) Calculations will be based upon actual Property Tax Revenues received by the City directly related to the Project; (b) The EIPs will be amounts calculated as follows: Tax Year 1 (Assessed Value)—(Base Year Value) x 100% x City Tax Rate for the (2006) applicable Tax Year Tax Year 2 (Assessed Value)—(Base Year Value) x 100% x City Tax Rate for the (2007) applicable Tax Year Tax Year 3 (Assessed Value)—(Base Year Value) x 75% x City Tax Rate for the (2008) applicable Tax Year Tax Year 4 (Assessed Value)—(Base Year Value) x 50% x City Tax Rate for the (2009) applicable Tax Year Tax Year 5 (Assessed Value)—(Base Year Value) x 25% x City Tax Rate for the (2010) applicable Tax Year The City will independently verify that taxes have been paid in full and will pay the EIP's only on tax accounts in good standing and not delinquent. Any adjustments to Assessed Value or Property Tax Revenues resulting in a credit or refund of taxes are to be reflected as a corresponding adjustment to the EIP's or reimbursed to the City, regardless of the date of adjustment. 5.1.2 Payments Subject to Future Appropriations. Although certain payments under this Agreement are calculated based on a formula applied to Property Tax Revenues, this Agreement shall not be construed as a commitment, issue or obligation of any specific taxes or tax revenues for payment to Accretech. All payments by the City under this Agreement are subject to the City's appropriation of funds for such payments in the budget year for which they are made. The payments to be made to Accretech, if paid, shall be made solely from annual appropriations from the general funds of the City or from such other funds of the City as may be legally set aside for the implementation of Article 111, Section 52a of the Texas Constitution or Chapter 380 of the Local Government Code or any other economic development or financing program authorized by statute or home rule powers of the City under applicable Texas law, subject to any applicable limitations or procedural requirements. In the event that the City does not appropriate funds in any fiscal year for payments due under this Agreement, such failure ECONOMIC DEVELOPMENT PROGRAM AGREEMENT 4 CITY OF ROUND ROCK/ACCRETECH PROPERTY,INC. 4019866v.5 shall not be considered a default under Section 6.3, and the City shall not be liable to Accretech for such payments otherwise due during such fiscal year; however, the term of this Agreement shall be extended one (1) year for each year the City fails to appropriate funds for payments otherwise due under this Agreement. Accretech shall also have the right but not the obligation to rescind this Agreement. To the extent there is a conflict between this paragraph and any other language or covenant in this Agreement, this paragraph shall control. 5.1.3 Utility Services for the Property. The City shall provide water and wastewater to Accretech for the Project, subject to the same fees and service charges assessed fpr water and waste water to similarly situated properties. 5.1.4 Permitting. The City shall cooperate with Accretech to expeditiously process all City permit applications and City inspections. 6. Miscellaneous. 6.1 Mutual Assistance. The City and Accretech will do all things reasonably necessary or appropriate to carry out the terms and provisions of this Agreement, and to aid and assist each other in carrying out such terms and provisions in order to put each other in the same economic condition contemplated by this Agreement regardless of any changes in public policy, the law, or taxes or assessments attributable to the Property. 6.2 Representations and Warranties. The City represents and warrants to Accretech that the Program and this Agreement are within its authority, and that it is duly authorized and empowered to establish the Program and enter into this Agreement, unless otherwise ordered by a court of competent jurisdiction. Accretech represents and warrants to the City that it has the requisite authority to enter into this Agreement. 6.3 Default. If either the City or Accretech should default in the performance of any obligations of this Agreement, the other party shall provide such defaulting party written notice of the default, and a minimum period of thirty (30) days to cure such default, prior to instituting an action for breach or pursuing any other remedy for default. If the City remains in default after notice and opportunity to cure, Accretech shall have the right to pursue any remedy at law or in equity for the City's breach. If Accretech remains in default after notice and opportunity to cure, the City's remedy shall initially be limited to suspension of the EIPs that accrue after the date of such default until such default is cured. After any such default is cured, the City shall promptly forward any such suspended payment to Accretech. If Accretech's default is not cured within sixty (60) days after Accretech's receipt of a second notice of default from the City that clearly and conspicuously indicates the City's intention to terminate this Agreement, the City may terminate this Agreement by giving Accretech written notice of such termination prior to the date Accretech cures such default. Any EIPs from City to Accretech which is not timely paid by City (unless due to Accretech's default) shall incur interest at the highest rate per annum allowed by the applicable law of the State of Texas from the date such EIPs are due until paid. Any funds owed by Accretech to the City which are not timely paid by Accretech shall incur interest at the highest rate per annum allowed by the applicable law of the State of Texas from the date such funds are due until paid. ECONOMIC DEVELOPMENT PROGRAM AGREEMENT 5 CITY OF ROUND ROCK/ACCRETECH PROPERTY,INC. 4019866v.5 6.4 EIP Recapture. In the event the City terminates this Agreement as a result of Accretech's default, the City may recapture and collect from Accretech the EIP's that were paid as a result of this Agreement (the "Recapture Liability"). Accretech 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 Accretech may be entitled. Notwithstanding anything herein to the contrary, such Recapture Liability shall not exceed an amount equal to all EIP's which were paid pursuant to this Agreement from the Effective Date 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. 6.5 Attorney's Fees. In the event any legal action or proceeding is commenced between the City and Accretech to enforce provisions of this Agreement and recover damages for breach, the prevailing party in such legal action shall be entitled to recover its reasonable attorney's fees and expenses incurred by reason of such action, to the extent allowed by law. 6.6 Entire Agreement. This Agreement contains the entire agreement between the parties. This Agreement may only be amended, altered or revoked by written instrument signed by the City and Accretech. 6.7 Binding Effect. This Agreement shall be binding on and inure to the benefit of the parties, their respective successors and assigns. 6.8 Assignment. Accretech may not assign all or part of its rights and obligations to a third party without the express written consent of the City (which consent shall not be unreasonably withheld, conditioned or denied). 6.9 Amendment. This Agreement may be amended by the mutual written agreement of the parties. 6.10 Termination. In the event Accretech elects not to proceed with the Project as contemplated by this Agreement, Accretech shall notify the City in writing of such election, and this Agreement and the obligations on the part of both parties shall thereafter be deemed terminated and of no further force or effect. Notwithstanding the above, in the event Accretech does not substantially complete the construction of the Project and open for the business by December 31, 2008 (subject to delays caused by an event of force majuere), the City may terminate this Agreement by giving Accretech notice thereof prior to the date the Project is opened for business. 6.11 Notice. Any notice and or statement required and permitted to be delivered shall be deemed delivered by actual delivery, facsimile with receipt of confirmation, or by depositing the same in the United States mail, certified with return receipt requested, postage prepaid, addressed to the appropriate party at the following addresses: ECONOMIC DEVELOPMENT PROGRAM AGREEMENT 6 CITY OF ROUND ROCK/ACCRETECH PROPERTY,INC. 4019866v.5 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 Accretech: Accretech USA, Inc. 2600 Telegraph Road, Suite 180 Bloomfield Hills, MI 48302 Attn: President Phone: (248)332-0100 Fax: (248)332-0700 With required copies to: Attn: Phone: �)_- Fax: ( ) - Either party may designate a different address at any time upon written notice to the other party. 6.12 Interpretation. Each of the parties have been represented by counsel of their choosing in the negotiation and preparation of this Agreement. Regardless of which party prepared the initial draft of this Agreement, this Agreement shall, in the event of any dispute, however its meaning or application, be interpreted fairly and reasonably and neither more strongly for or against any party. 6.13 Applicable Law. This Agreement is made, and shall be construed and interpreted, under the laws of the State of Texas and venue shall lie in Williamson County, Texas. ECONOMIC DEVELOPMENT PROGRAM AGREEMENT 7 CITY OF ROUND ROCK/ACCRETECH PROPERTY,INC. 4019866v.5 6.14 Severability. In the event any provisions of this Agreement are illegal, invalid or unenforceable under present or future laws, and in that event, it is the intention of the parties that the remainder of this Agreement shall not be affected. It is also the intention of the parties of this Agreement that in lieu of each clause and provision that is found to be illegal, invalid or unenforceable, a provision be added to this Agreement which is legal, valid or enforceable and is as similar in terms as possible to the provision found to be illegal, invalid or unenforceable. 6.15 Paragraph Headings. The paragraph headings contained in this Agreement are for convenience only and will in no way enlarge or limit the scope or meaning of the various and several paragraphs. 6.16 No Third Party Beneficiaries. This Agreement is not intended to confer any rights,privileges or causes of action upon any third party. 6.17 Force Majeure. Except as otherwise provided herein, an equitable adjustment shall be made for delay or failure in performing if such delay or failure is caused, prevented, or restricted by conditions beyond that Party's reasonable control (an "event of force majeure"). An event of force majeure for the purposes of this Agreement shall include, but not be limited to, acts of God, fire; explosion, vandalism; storm or similar occurrences; orders or acts of military or civil authority; litigation; changes in law, rules, or regulations outside the control of the affected Party; national emergencies or insurrections; riots; acts of terrorism; or supplier failures, shortages or breach or delay. Except as otherwise expressly provided, herein, there shall be an equitable adjustment allowed for performance under this Agreement as the result of any event of force majeure. 6.18 Exhibits. The following Exhibits A -E are attached and incorporated by reference for all purposes: Exhibit A: City Resolution No. Exhibit B: City Resolution No. Exhibit C: Accretech Property Description Exhibit D: Project Description with Improvements Exhibit E Manpower Reports 6.19 No Joint Venture. It is acknowledged and agreed by the parties that the terms hereof are not intended to and shall not be deemed to create any partnership or joint venture among the parties. The City, its past, present and future officers, elected officials, employees and agents of the City, do not assume any responsibilities or liabilities to any third party in connection with the development of the Project or the design, construction or operation of any portion of the Project. ECONOMIC DEVELOPMENT PROGRAM AGREEMENT 8 CITY OF ROUND ROCK/ACCRETECH PROPERTY,INC. 4019866x.5 EXECUTED to be effective as of the day of 2007 (the "Effective Date"). ' CITY OF ROUND ROCK, TEXAS, a home rule city and municipal corporation By: Nyle Maxwell, Mayor APPROVED as to form: Stephan L. Sheets, City Attorney ACCRETECH USA INC., a corporation By: Its: Date: By: Its: Date: ECONOMIC DEVELOPMENT PROGRAM AGREEMENT 9 CITY OF ROUND ROCK/ACCRETECH PROPERTY,INC. 4019866x.5 EXHIBIT A CITY RESOLUTION NO. EXHIBIT B CITY RESOLUTION NO. EXHIBIT C ACCRETECH PROPERTY DESCRIPTION Lot 4B, Replat of Lot 4, Corridor Park I 3.265 ac. , Corridor Park I, Lot 4B, a Replat of Lot 4 3500 Wadley Place Adrk r Qr0 r N Greer1a�n 9LQ 0 �aa� 0� m EXHIBIT D PROJECT SITE PLAN WITH IMPROVEMENTS F x. d s J Y,. f 6. I f ' M r 't f Y x\ \ '' EXHIBIT E MANPOWER REPORT ECONOMIC DEVELOPMENT PROGRAM AGREEMENT 14 CITY OF ROUND ROCK/ACCRETECH PROPERTY,INC. 4019866v.5 EXHIBIT "E" MANPOWER REPORT I, Dean R. Chmiel, Treasurer and Controller of Accretech USA, Inc. do certify that on December 31, 2006 there were 40 full time employees at Accretech USA, Inc.'s facility located at 3500 Wadley Place, Building A, in Round Rock,Texas. Signature Printed Name: Dean R. Cluniel Title: Treasurer and Controller Date: September 24, 2007 STATE OF MICHIGAN § § COUNTY OF MACOMB § BEFORE ME,the undersigned Notary Public, on this day personally appeared Dean R. Chmiel of Accretech USA, Inc. , being by me duly sworn on his oath deposed and said that he is duly qualified and authorized in all respects to make this affidavit;and that every statement contained in the Manpower Report is within his knowledge and true and correct. SUBSCRIBED AND SWORN TO BEFORE ME on the a4i-h day of � �� , 200-1 to certify which witness my hand and official seal. Notary Public,State of Michi ran Printed Name: i1'1 { My Commission Expires: JOAN HALL NOTARY PUBLIC-MICHIGAN MACOMB COUNTY MY COMMISSION EXPIRES FEBRUARY 18,2812 DATE: October 4, 2007 SUBJECT: City Council Meeting - October 11, 2007 ITEM: 13D2. Consider a resolution authorizing the Mayor to execute an Economic Development Program Agreement with Accretech USA, Inc. Department: Administration Staff Person: David Kautz, Assistant City Manager/CFO Justification: Accretech is a precision measurement systems and semiconductor equipment manufacturer located in 44,000 sq. feet of manufacturing facility at 3500 Wadley Place in Round Rock. The Chamber Economic Development Office and the City have been developing an economic development incentive program for the company in exchange for locating here. The program proposes to rebate a portion of City property taxes paid over a 5-year period on new taxable value added by the company. Funding• Cost: N/A Source of funds: N/A Outside Resources: N/A Background Information N/A Public Comment: N/A EXECUTED DOCUMENT FOLLOWS ECONOMIC DEVELOPMENT PROGRAM AGREEMENT This Eco omic Development Program Agreement ("Agreement") is entered into this day of ( , 2007, by and between the City of Round Rock, Texas, a Texas home rule municipal corporation ("City"), and Accretech USA, Inc., a Michigan corporation("Accretech"). WHEREAS, the City has adopted (a) Resolution No.94R-io-iI-IPattached as Exhibit A ("Program Resolution"), establishing an economic development program and Resolution � No.R-o -w-ir, attached hereto as Exhibit B (the "Authorizing Resolution"), authorizing the Mayor to enter into this Agreement with Accretech in recognition of the positive economic benefits to the City through Accretech's development of approximately 3.265 acres of land, as more particularly described on the attached Exhibit C ("Property") as a precision measurement systems and semiconductor equipment manufacturer containing approximately forty-three thousand eight hundred eighty-three ( 43,883 ) square feet of manufacturing facility, including related office, warehouse and assembly space as set forth on the Site Plan described in the attached Exhibit D ("Project") (the Program Resolution and the Authorizing Resolution being collectively referred to herein as the "City Resolutions"); and WHEREAS, the purpose of this Agreement is to promote economic development as contemplated by Chapter 380 of the Texas Local Government Code whereby Accretech intends to construct, develop and operate the Project, or cause the Project to be operated, in conformance with the City's development approvals for the Project, and; WHEREAS, the City agrees to provide performance based economic development grants to Accretech to defray a portion of the Project's costs. NOW, THEREFORE, in consideration of the mutual benefits and promises and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the City and Accretech agree as follows: 1. Authority. The City's execution of this Agreement is authorized by Chapter 380 of the Texas Local Government Code and the City Resolutions, and constitute a valid and binding obligation of the City in the event Accretech proceeds with the development of the Property. The City acknowledges that Accretech is acting in reliance upon the City's performance of its obligations under this Agreement in making its decision to commit substantial resources and money to develop the Property. 2. Definitions. 2.1 "Assessed Value" means the assessed value of the Eligible Property as determined annually by either the Williamson Central Appraisal District, or the Travis Central Appraisal District on behalf of the City. 2.2 "Accretech Tract"means the property described in Exhibit C. 0-"- toll- L 3 brz- 2.3 "Base Year Value"means the assessed value of the Eligible Property on January 1, 2005, which is agreed to be $4,075,312 . 2.4 "Economic Incentive Payment(s)" ("EIPs") means payments of the amount required to be paid by the City to Accretech under the Program and this Agreement. 2.5 "Effective Date" is the date this Agreement is executed to be effective by the City and Accretech. 2.6 "Eligible Property" means collectively the Accretech Tract, Improvements and the Personal Property. 2.7 "Improvements" means the buildings, structures, or portions thereof, and other site improvements, including without limitation, fixed machinery and equipment used for commercial or industrial purposes that are erected by Accretech as part of an approximately 43,883 square feet manufacturing facility development, including related office, warehouse and assembly space to be constructed Property; the type, number and location of such Improvements being more particularly identified on Exhibit D. 2.8 "Ineligible Property" means such personal property that was located on the Accretech Tract at any time before January 1, 2005. 2.9 "Personal Property" means taxable non-real property which is purchased or leased for the exclusive use by Accretech in the operation of, or in connection with, the Facility and for which Accretech is obligated by law or by lease terms or other private contractual provision to pay the ad valorem taxes, but excluding any Ineligible Property. Except for removals caused by routine maintenance and replacement, Personal Property shall be located on the Accretech Tract for the exclusive use or benefit of Accretech from the time installed on the Accretech Tract through the duration of this Agreement. 2.10 "Program" means the economic development program established by the City pursuant to Chapter 380 of the Texas Local Government Code and under the City Resolution to promote local economic development and stimulate business and commercial activity within the City. 2.11"Project" means Accretech's planned development of the Property which shall consist of internal improvements to an existing building and related facilities. The Project shall include approximately forty-three thousand eight hundred eighty-three (43,883 ) square feet of manufacturing space, including related office, warehouse and assembly space. 2,12"Property Tax Revenues" means the amount of real and personal property tax collected by the City arising from the Project. The term "Property Tax Revenues" shall include any taxes authorized by the State in the future that are intended to replace property tax revenues currently available to the City. 3. Term. This Agreement shall become enforceable upon its Effective Date. This Agreement shall terminate on December 31, 2010. ECONOMIC DEVELOPMENT PROGRAM AGREEMENT 2 CITY OF ROUND ROCK/ACCRETECH PROPERTY,INC. 4019866v.5 4. Rights and Obligations of Accretech. In consideration of the City's compliance with this Agreement, Accretech agrees as follows: 4.1 Compliance with Development Regulations and Other Ordinances. Accretech shall comply with the City's development approval processes and shall develop the Project on the Property consistent with City ordinances, City-approved zoning ordinance for the Property, City-approved development regulations, and other City development requirements. 4.2 Accretech Accounting. Accretech shall maintain complete books and records showing all property taxes paid to the City, which books and records shall be deemed complete if kept in accordance with generally acceptable accounting principles. Such books and records shall be available for examination by the duly authorized officers or agents of the City during normal business hours upon request made not less than ten (10) business days prior to the date of such examination. Accretech shall maintain such books and records throughout the term of this Agreement and for four(4) years thereafter. 4.3 Submission of Data. Within thirty (30) days of the end of each calendar year, Accretech shall submit to the City a schedule detailing the amount of Property Tax Revenues for the preceding calendar year. As backup for the schedule, Accretech shall submit such other data as the City may determine reasonably appropriate to evidence the Property Tax Revenues. 4.4 Accretech's Development Covenants. In consideration of the City's agreement to enter into this Agreement, Accretech represents that it intends to construct the Improvements and install the Equipment for the purpose of operating its facility in the City and Accretech acknowledges that the City's obligations hereunder are conditioned upon Accretech's continued operation of said facility. In the event Accretech fails to substantially complete the Improvements and install the Equipment by December 31, 2007 (subject to delays caused by events of Force Majeure), the City may terminate this Agreement by giving Accretech written notice of such termination. As additional consideration, Accretech agrees and covenants to provide and/or retain at least the number of jobs within the Facility according to the following schedule: Date Retain New Total On December 31, 2007 50 0 50 On December 31, 2008 50 10 60 On December 31, 2009 60 5 65 On December 31, 2010 65 2 67 Accretech agrees to provide to the City annual manpower reports on the form attached hereto as Exhibit E within thirty(30) days following the end of the calendar year. Accretech agrees that regardless of anything contained herein to the contrary, during the term of this Agreement, the Assessed Value shall be no less than $4,075,312. 5. Rights and Obligations of the City. In consideration of Accretech's compliance with this Agreement, the City agrees as follows: ECONOMIC DEVELOPMENT PROGRAM AGREEMENT 3 CITY OF ROUND ROCK/ACCRETECH PROPERTY,INC. 4019866v.5 5.1 Economic Incentive Payments. 5.1.1 City Payments. City shall pursuant to Chapter 380 of the Texas Local Government Code, but subject to the conditions set out here, make annual EIPs to Accretech within thirty (30) days after Accretech submits to the City the report and data for such calendar year as required in Section 4.3 and Section 4.4 above. The EIPs are to be calculated as follows: (a) Calculations will be based upon actual Property Tax Revenues received by the City directly related to the Project; (b) The EIPs will be amounts calculated as follows: Tax Year 1 (Assessed Value)—(Base Year Value) x 100% x City Tax Rate for the (2006) applicable Tax Year Tax Year 2 (Assessed Value)—(Base Year Value) x 100% x City Tax Rate for the (2007) applicable Tax Year Tax Year 3 (Assessed Value)—(Base Year Value) x 75% x City Tax Rate for the (2008) applicable Tax Year Tax Year 4 (Assessed Value)—(Base Year Value) x 50% x City Tax Rate for the (2009) applicable Tax Year Tax Year 5 (Assessed Value)—(Base Year Value) x 25% x City Tax Rate for the (2010) applicable Tax Year The City will independently verify that taxes have been paid in full and will pay the EIP's only on tax accounts in good standing and not delinquent. Any adjustments to Assessed Value or Property Tax Revenues resulting in a credit or refund of taxes are to be reflected as a corresponding adjustment to the EIP's or reimbursed to the City, regardless of the date of adjustment. 5.1.2 Payments Subject to Future Appropriations. Although certain payments under this Agreement are calculated based on a formula applied to Property Tax Revenues, this Agreement shall not be construed as a commitment, issue or obligation of any specific taxes or tax revenues for payment to Accretech. All payments by the City under this Agreement are subject to the City's appropriation of funds for such payments in the budget year for which they are made. The payments to be made to Accretech, if paid, shall be made solely from annual appropriations from the general funds of the City or from such other funds of the City as may be legally set aside for the implementation of Article III, Section 52a of the Texas Constitution or Chapter 380 of the Local Government Code or any other economic development or financing program authorized by statute or home rule powers of the City under applicable Texas law, subject to any applicable limitations or procedural requirements. In the event that the City does not appropriate funds in any fiscal year for payments due under this Agreement, such failure ECONOMIC DEVELOPMENT PROGRAM AGREEMENT 4 CITY OF ROUND ROCK/ACCRETECH PROPERTY,INC. 4019866v.5 shall not be considered a default under Section 6.3, and the City shall not be liable to Accretech for such payments otherwise due during such fiscal year; however, the term of this Agreement shall be extended one (1) year for each year the City fails to appropriate funds for payments otherwise due under this Agreement. Accretech shall also have the right but not the obligation to rescind this Agreement. To the extent there is a conflict between this paragraph and any other language or covenant in this Agreement, this paragraph shall control. 5.1.3 Utility Services for the Property. The City shall provide water and wastewater to Accretech for the Project, subject to the same fees and service charges assessed for water and waste water to similarly situated properties. 5.1.4 Permitting. The City shall cooperate with Accretech to expeditiously process all City permit applications and City inspections. 6. Miscellaneous. 6.1 Mutual Assistance. The City and Accretech will do all things reasonably necessary or appropriate to carry out the terms and provisions of this Agreement, and to aid and assist each other in carrying out such terms and provisions in order to put each other in the same economic condition contemplated by this Agreement regardless of any changes in public policy, the law, or taxes or assessments attributable to the Property. 6.2 Representations and Warranties. The City represents and warrants to Accretech that the Program and this Agreement are within its authority, and that it is duly authorized and empowered to establish the Program and enter into this Agreement, unless otherwise ordered by a court of competent jurisdiction. Accretech represents and warrants to the City that it has the requisite authority to enter into this Agreement. 6.3 Default. If either the City or Accretech should default in the performance of any obligations of this Agreement, the other party shall provide such defaulting party written notice of the default, and a minimum period of thirty (30) days to cure such default, prior to instituting an action for breach or pursuing any other remedy for default. If the City remains in default after notice and opportunity to cure, Accretech shall have the right to pursue any remedy at law or in equity for the City's breach. If Accretech remains in default after notice and opportunity to cure, the City's remedy shall initially be limited to suspension of the EIPs that accrue after the date of such default until such default is cured. After any such default is cured, the City shall promptly forward any such suspended payment to Accretech. If Accretech's default is not cured within sixty (60) days after Accretech's receipt of a second notice of default from the City that clearly and conspicuously indicates the City's intention to terminate this Agreement, the City may terminate this Agreement by giving Accretech written notice of such termination prior to the date Accretech cures such default. Any EIPs from City to Accretech which is not timely paid by City (unless due to Accretech's default) shall incur interest at the highest rate per annum allowed by the applicable law of the State of Texas from the date such EIPs are due until paid. Any funds owed by Accretech to the City which are not timely paid by Accretech shall incur interest at the highest rate per annum allowed by the applicable law of the State of Texas from the date such funds are due until paid. ECONOMIC DEVELOPMENT PROGRAM AGREEMENT 5 CITY OF ROUND ROCK/ACCRETECH PROPERTY,INC. 4019866v.5 6.4 EIP Recapture. In the event the City terminates this Agreement as a result of Accretech's default, the City may recapture and collect from Accretech the EIP's that were paid as a result of this Agreement (the "Recapture Liability"). Accretech 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 Accretech may be entitled. Notwithstanding anything herein to the contrary, such Recapture Liability shall not exceed an amount equal to all EIP's which were paid pursuant to this Agreement from the Effective Date 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. 6.5 Attorney's Fees. In the event any legal action or proceeding is commenced between the City and Accretech to enforce provisions of this Agreement and recover damages for breach, the prevailing party in such legal action shall be entitled to recover its reasonable attorney's fees and expenses incurred by reason of such action, to the extent allowed by law. 6.6 Entire Agreement. This Agreement contains the entire agreement between the parties. This Agreement may only be amended, altered or revoked by written instrument signed by the City and Accretech. 6.7 Binding Effect. This Agreement shall be binding on and inure to the benefit of the parties, their respective successors and assigns. 6.8 Assignment. Accretech may not assign all or part of its rights and obligations to a third party without the express written consent of the City (which consent shall not be unreasonably withheld, conditioned or denied). 6.9 Amendment. This Agreement may be amended by the mutual written agreement of the parties. 6.10 Termination. In the event Accretech elects not to proceed with the Project as contemplated by this Agreement, Accretech shall notify the City in writing of such election, and this Agreement and the obligations on the part of both parties shall thereafter be deemed terminated and of no further force or effect. Notwithstanding the above, in the event Accretech does not substantially complete the construction of the Project and open for the business by December 31, 2008 (subject to delays caused by an event of force majeure), the City may terminate this Agreement by giving Accretech notice thereof prior to the date the Project is opened for business. 6.11 Notice. Any notice and or statement required and permitted to be delivered shall be deemed delivered by actual delivery, facsimile with receipt of confirmation, or by depositing the same in the United States mail, certified with return receipt requested, postage prepaid, addressed to the appropriate party at the following addresses: ECONOMIC DEVELOPMENT PROGRAM AGREEMENT 6 CITY OF ROUND ROCK/ACCRETECH PROPERTY,INC. 4019866v.5 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 Accretech: Accretech USA, Inc. 2600 Telegraph Road, Suite 180 Bloomfield Hills, MI 48302 Attn: Treasurer Phone: (248)332-0100 Fax: (248)332-0700 With required copies to: Dennis M. Pousak, P.C. 19079 Van Road Livonia, MI 48152 Attn: Dennis M. Pousak Phone: (248) 615-1931 Fax: (248) 615-8520 Either party may designate a different address at any time upon written notice to the other party. 6.12 Interpretation. Each of the parties has been represented by counsel of their choosing in the negotiation and preparation of this Agreement. Regardless of which party prepared the initial draft of this Agreement, this Agreement shall, in the event of any dispute, however its meaning or application, be interpreted fairly and reasonably and neither more strongly for or against any party. 6.13 Applicable Law. This Agreement is made, and shall be construed and interpreted, under the laws of the State of Texas and venue shall lie in Williamson County, Texas. ECONOMIC DEVELOPMENT PROGRAM AGREEMENT 7 CITY OF ROUND ROCK/ACCRETECH PROPERTY,INC. 4019866v.5 6.14 Severability. In the event any provisions of this Agreement are illegal, invalid or unenforceable under present or future laws, and in that event, it is the intention of the parties that the remainder of this Agreement shall not be affected. It is also the intention of the parties of this Agreement that in lieu of each clause and provision that is found to be illegal, invalid or unenforceable, a provision be added to this Agreement which is legal, valid or enforceable and is as similar in terms as possible to the provision found to be illegal, invalid or unenforceable. 6.15 Paragraph Headings. The paragraph headings contained in this Agreement are for convenience only and will in no way enlarge or limit the scope or meaning of the various and several paragraphs. 6.16 No Third Party Beneficiaries. This Agreement is not intended to confer any rights, privileges or causes of action upon any third party. 6.17 Force Majeure. Except as otherwise provided herein, an equitable adjustment shall be made for delay or failure in performing if such delay or failure is caused, prevented, or restricted by conditions beyond that Party's reasonable control (an "event of force majeure"). An event of force majeure for the purposes of this Agreement shall include, but not be limited to, acts of God, fire; explosion, vandalism; storm or similar occurrences; orders or acts of military or civil authority; litigation; changes in law, rules, or regulations outside the control of the affected Party; national emergencies or insurrections; riots; acts of terrorism; or supplier failures, shortages or breach or delay. Except as otherwise expressly provided, herein, there shall be an equitable adjustment allowed for performance under this Agreement as the result of any event of force majeure. 6.18 Exhibits. The following Exhibits A -E are attached and incorporated by reference for all purposes: Exhibit A: City Resolution No. Exhibit B: City Resolution No. Exhibit C: Accretech Property Description Exhibit D: Project Description with Improvements Exhibit E Manpower Reports 6.19 No Joint Venture. It is acknowledged and agreed by the parties that the terms hereof are not intended to and shall not be deemed to create any partnership or joint venture among the parties. The City, its past, present and future officers, elected officials, employees and agents of the City, do not assume any responsibilities or liabilities to any third party in connection with the development of the Project or the design, construction or operation of any portion of the Project. ECONOMIC DEVELOPMENT PROGRAM AGREEMENT 8 CITY OF ROUND ROCK/ACCRETECH PROPERTY,INC. 4019866v.5 EXECUTED to be effective as of the Pt day of 2007 (the "Effective Date"). CITY OF ROUND ROCK, TEXAS, a home rule city and municipal corporation By: e Maxw , Mayor APPROVED as to form: Stephan . Sheets, City Attorney ACCRETECH USA INC., a Michigan corporation By: C��� �s� Dean R. Chmiel Its: Corporate Con roller and Treasurer Date: By: Its: Date: ECONOMIC DEVELOPMENT PROGRAM AGREEMENT 4019866v.5 9CITY OF ROUND ROCK/ACCRETECH PROPERTY,INC. EXHIBIT A CITY RESOLUTION NO. RESOLUTION NO. R-07-10-11-13D1 WHEREAS, Accretech USA, Inc. ( "Accretech" ) is a leading manufacturer of precision measuring and semiconductor manufacturing equipment, and WHEREAS, Accretech has expressed to the City of Round Rock ( "City") its desire to locate an Accretech Product Development and Manufacturing Center in the City which will provide hundreds of new jobs, and WHEREAS, §380 . 001 Local Government Code provides that a municipality may establish a program ( "Program") to promote local economic development and to stimulate business and commercial activity in the municipality, and WHEREAS, the City Council has determined that the Program described in Exhibit "A" will meet the goals set forth in said §380 . 001 and will be of mutual benefit to both parties, Now Therefore BE IT RESOLVED BY THE COUNCIL OF THE CITY OF ROUND ROCK, TEXAS, That the Mayor is hereby authorized and directed to offer to Accretech a §380 . 001 Program in exchange for Accretech locating an Accretech center in the City of Round Rock, and BE IT FURTHER RESOLVED That the offer of the Program shall be as generally outlined in Exhibit "A" attached hereto and incorporated herein for all purposes. 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 0:\wd=\RES0LUTI\R71011D1.WPD/MC the subject 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 11th day of Octobe 2 ELL, Mayor C' y of Round Rock, Texas AT ST: le. JI)aA& CHRISTINE R. MARTINEZ, City Se retary 2 EXHIBIT B CITY RESOLUTION NO.-R-0 - (y-(I- 13D-2, RESOLUTION NO. R-07-10-11-13D2 WHEREAS, the City of Round Rock ( "City,,) has established an Economic Development Program to encourage Accretech USA, Inc. ( "Accretech" ) to locate a product development and manufacturing center in the City, and WHEREAS, to further promote economic development, the City wishes to enter into an Economic Development Program Agreement ( "Agreement") with Accretech regarding Accretech' s development of a center in the City of Round Rock, 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, an Economic Development Program Agreement with Accretech, a copy of same being attached hereto as Exhibit "A" and incorporated herein for all purposes . 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 subject 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 11th day of October, 0 NY roluund L, Mayor AT T: City o Rock, Texas CHRISTINE R. MARTINEZ, City Sere y car 0:\wdox\RESOLUTI\R71O11D2.WPD/rmc EXHIBIT C ACCRETECH PROPERTY DESCRIPTION Lot 413, Replat of Lot 4, Corridor Park I EXHIBIT D PROJECT SITE PLAN WITH IMPROVEMENTS lop 4 DIN AF R p r • EXHIBIT "E" MANPOWER REPORT I, Dean R. Chmiel, Treasurer and Controller of Accretech USA, Inc. do certify that on December 31, 2006 there were 40 full time employees at Accretech USA, Inc.'s facility located at 3500 Wadley Place, Building A, in Round Rock, Texas. Signature Printed Name: Dean R. Chmiel Title: Treasurer and Controller Date: October 9, 2007 STATE OF MICHIGAN § § COUNTY OF MACOMB § BEFORE ME, the undersigned Notary Public, on this day personally appeared Dean R. Chmiel of Accretech USA, Inc. , being by me duly sworn on his oath deposed and said that he is duly qualified and authorized in all respects to make this affidavit; and that every statement contained in the Manpower Report is within his knowledge and true and correct. SUBSCRIBED AND SWORN TO BEFORE ME on the G Iti day of (x-�xrr 20 0-1 to certify which witness my hand and official seal. Notary Public, State of Michigan Printed Name: �` rl vk-�� My Commission Expires: JOAN HALL NOTARY PUBLIC-MICHIGAN MACOMB COUNTY MY COMMISSION EXPIRES FEBRUARY 18,2012