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RE 2015-1013.2RESOLUTION NO. 2015-1013.2 A RESOLUTION OF THE CITY OF COPPELL, TEXAS, APPROVING THE TERMS AND CONDITIONS OF A TAX ABATEMENT AGREEMENT BY AND BETWEEN THE CITY OF COPPELL, TEXAS, AND VIRA INSIGHT, LLC, A TEXAS LIMITED LIABILITY COMPANY; AUTHORIZING ITS EXECUTION BY THE MAYOR; AND PROVIDING AN EFFECTIVE DATE. WHEREAS, the City Council has been presented a proposed Tax Abatement Agreement by and between the City of Coppell, Texas, and VIRA Insight, LLC, a Texas limited liability company, a copy of which is attached hereto and incorporated herein by reference; and WHEREAS, upon full review and consideration of the Agreement, and all matters related thereto, the City Council is of the opinion and finds that the terms and conditions thereof should be approved, and that the Mayor should be authorized to execute the Agreement on behalf of the City of Coppell, Texas; NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF COPPELL, TEXAS, THAT: SECTION 1. The Agreement attached hereto having been reviewed by the City Council of the City of Coppell, Texas, and found to be acceptable and in the best interest of the City and its citizens, be, and the same is hereby, in all things approved, and the Mayor is hereby authorized to execute the Agreement on behalf of the City of Coppell, Texas. SECTION 2. The Council finds that the improvements proposed to be built upon the Premises described in the Agreement will enhance the economic vitality of the community through a combination of new capital investment, increased sales tax revenues, and the creation of additional job opportunities. SECTION 3. The tax abatement to be granted by the Agreement will not include inventory. SECTION 4. The improvements proposed for the Premises will accomplish the tax abatement guidelines of the City of Coppell, Texas. 1 SECTION 5. The City Manager delivered to the presiding officer of the governing body of each taxing unit in which the property subject to the Agreement is located, a written notice that the City of Coppell, Texas, intends to enter into the Agreement. The notice given by the City Manager included a copy of the Agreement approved by this Resolution. SECTION 6. This Resolution and the Tax Abatement Agreement are hereby approved by the affirmative vote of the majority of the members of the City Council of the City of Coppell, Texas, at a regularly scheduled meeting of the City Council. SECTION 7. This Resolution shall become effective immediately from and after its passage. DULY RESOLVED AND ADOPTED by the City Council of the City of Coppell, Texas, on this the 13�day of FO CITY ATTORNE (PGS:7-3-14:TM 66990) ATTEST: RISTEL PETTINOS, CITY StCRETARY 4 Exhibit "A" (copy of Tax Abatement Agreement to be attached) STATE OF TEXAS TAX ABATEMENT AGREEMENT COUNTY OF DALLAS This Tax Abatement Agreement (the "Agreement") is entered into by and between the City of Coppell, Texas (the "City"), and VIRA Insight, LLC, a Texas limited liability company (the "Lessee") (each a "Party" and collectively the "Parties"), acting by and through their authorized representatives. WITNESSETH: WHEREAS, the City Council of the City of Coppell, Texas (the "City Council"), passed an Ordinance (the "Ordinance") establishing Tax Abatement Reinvestment Zone No. 94 (the "Zone"), for the real property described in Exhibit "A" (the "Land"), for commercial/industrial tax abatement, as authorized by the Property Redevelopment and Tax Abatement Act, Chapter 312 of the Texas Tax Code, as amended (the "Tax Code"); and WHEREAS, the City has adopted guidelines for tax abatement (the "Tax Abatement Guidelines"); and WHEREAS, the Tax Abatement Guidelines contain appropriate guidelines and criteria governing tax abatement agreements to be entered into by the City as contemplated by the Tax Code; and WHEREAS, the City has adopted a resolution stating that it elects to be eligible to participate in tax abatement; and WHEREAS, in order to maintain and enhance the commercial and industrial economic and employment base of the Coppell area, it is in the best interests of the taxpayers for the City to enter into this Agreement in accordance with said Ordinance, the Tax Abatement Guidelines and the Tax Code; and WHEREAS, Lessee has or intends to enter into a lease of approximately 143,309 square feet of industrial manufacturing distribution space in Point West Building on the Land, located at 120 Dividend Drive, Coppell, Texas 75019 (the "Leased Premises"), for a period of at least five (5) years (the "Lease"), and intends to locate certain Tangible Personal Property (hereinafter defined) at the Leased Premises; and WHEREAS, Lessee's development efforts described herein will create permanent new jobs in the City; and WHEREAS, the City Council finds that the contemplated use of the Leased Premises (hereinafter defined), set forth in this Agreement, and the other terms hereof are consistent with encouraging development of the Zone in accordance with the purposes for its creation and/or in Page 1 Tax Abatement Agreement City of Coppell and Insight Merchandising, Inc. (TM 66989) compliance with the Tax Abatement Guidelines, the Ordinance adopted by the City, the Tax Code and all other applicable laws; and WHEREAS, the City Council finds that the Leased Premises sought are feasible and practicable and would be of benefit to the Zone and to the City after expiration of this Agreement; and WHEREAS, a copy of this Agreement has been furnished, in the manner prescribed by the Tax Code, to the presiding officers of the governing bodies of each of the taxing units in which the Leased Premises is located; NOW, THEREFORE, in consideration of the mutual benefits and promises contained herein and for other good and valuable consideration, the adequacy and receipt of which is hereby acknowledged, including the expansion of primary employment, the attraction of major investment in the Zone, which contributes to the economic development of Coppell and the enhancement of the tax base in the City, the Parties agree as follows: Article I Definitions Wherever used in this Agreement, the following terms shall have the meanings ascribed to them: "Bankruptcy or Insolvency" shall mean the dissolution or termination of a Lessee's existence as a going business, insolvency, appointment of receiver for any part of a Lessee's property and such appointment is not terminated within ninety (90) days after such appointment is initially made, any general assignment for the benefit of creditors, or the commencement of any proceeding under any bankruptcy or insolvency laws by or against such Lessee, and such proceeding is not dismissed within ninety (90) days after the filing thereof. "Base Year" shall mean the year in which this Agreement is executed (2015). "City" shall mean the City of Coppell, Texas. "Effective Date" shall mean the last date of execution of this Agreement. "Expiration Date" shall mean March l of the calendar year following the fifth (5th) anniversary date of the First Year of Abatement. "First Year of Abatement" shall mean January 1 of the calendar year immediately following the date of issuance of a certificate of occupancy for Lessee's occupancy of the Leased Premises. "Force Majeure" shall mean any contingency or cause beyond the reasonable control of a Party including, without limitation, acts of God or the public enemy, war, riot, civil commotion, Page 2I Tax Abatement Agreement City of Coppell and Insight Merchandising, Inc. (TM 66989) insurrection, adverse weather, government or de facto governmental action (unless caused by acts or omissions of such Party), fires, explosions or floods, strikes, slowdowns or work stoppages. "Freeport Goods" shall have the same meaning as assigned by Section 11.251 of the Tax Code and Article VIII, Section 1 j of the Texas Constitution. Freeport Goods does not include "Goods in Transit" as defined by Tax Code, Section 11.253. "Goods in Transit" shall have the same meaning assigned by Tax Code, Section 11.253. "Land" means the real property described in Exhibit "A". "Lease" shall mean the lease of the Leased Premises for a period of at least five (5) years. "Lease Inception Date" shall mean the date the term of the Lease commences but not later than February 13, 2015. "Leased Premises" shall mean approximately 143,309 square feet of industrial manufacturing distribution space located in the Point West Building on the Land located at 120 Dividend Drive, Coppell, Texas 75019. "Lessee" shall mean VIRA Insight, LLC, a Texas limited liability company. "Related Agreement" shall mean any agreement by and between the City and the Company, or its affiliates, other than this Agreement. "Required Use" shall mean the continuous occupancy of the Leased Premises and operation of the Lessee's fixture and informative display merchandise design and manufacturing company open to the public and serving the citizens of the City. "Tangible Personal Property" shall mean furniture, fixtures and equipment owned or leased by the Lessee and located at the Leased Premises, subsequent to the execution of this Agreement. Tangible Personal Property shall not include other inventory, Freeport Goods or Goods in Transit located at the Leased Premises. "Taxable Value" means the appraised value as certified by the Appraisal District as of January 1 of a given year. Article II General Provisions 2.1 Lessee has or intends to enter into the Lease of the Leased Premises, which Leased Premises is located within the city limits of the City and within the Zone. Lessee intends to locate and maintain Tangible Personal Property at the Leased Premises following the Lessee's occupancy thereof. Page 3 Tax Abatement Agreement City of Coppell and Insight Merchandising, Inc. (TM 66989) 2.2 The Leased Premises are not in an improvement project financed by tax increment bonds. 2.3 This Agreement is entered into subject to the rights of the holders of outstanding bonds of the City. 2.4 The Leased Premises are not owned or leased by any member of the Coppell City Council or any member of the Coppell Planning and Zoning Commission. 2.5 Lessee shall, before May 1 of each calendar year that the Agreement is in effect, certify in writing to the City that it is in compliance with each term of the Agreement. 2.6 The Leased Premises shall at all times be used in the manner (i) that is consistent with the City's Comprehensive Zoning Ordinance, as amended, and (ii) that, during the period taxes are abated hereunder, is consistent with the general purposes of encouraging development or redevelopment within the Zone. Article III Tax Abatement Authorized 3.1 This Agreement is authorized by the Tax Code and in accordance with the City Tax Abatement Guidelines, and approved by resolution of the City Council. 3.2 Subject to the terms and conditions of this Agreement, and provided the Taxable Value for the Tangible Personal Property, is at least One Million Seven Hundred Thousand Dollars ($1,700,000.00) (the "Minimum Taxable Value") as of January 1 of the First Year of Abatement and as of January 1 of each year thereafter that this Agreement is in effect, the City hereby grants Lessee an abatement of seventy-five percent (75%) of the Taxable Value of the Tangible Personal Property for a period of five (5) consecutive years, beginning with the First Year of Abatement. The actual percentage of Taxable Value of the Tangible Personal Property subject to abatement for each year this Agreement is in effect will apply only to the Tangible Personal Property located at the Leased Premises subsequent to the execution of this Agreement. The failure of the Tangible Personal Property to have a Taxable Value equal to or greater than the Minimum Taxable Value for any given tax year during the term of this Agreement shall result in the forfeiture of the tax abatement for such tax year. The failure of the Tangible Personal Property to have a Taxable Value equal to or greater than the Minimum Taxable Value for any given tax year during the term of this Agreement shall not be an event of default subject to termination and recapture of the abated taxes as provided in Article V hereof provided the Lessee is not otherwise in breach of this Agreement. 3.3 The period of tax abatement herein authorized shall be for a period of five (5) consecutive years. Page 4 Tax Abatement Agreement City of Coppell and Insight Merchandising, Inc. (TM 66989) 3.4 During the period of tax abatement herein authorized, Lessee shall be subject to all taxation not abated, including but not limited to, sales tax and ad valorem taxation on Land, inventory, and supplies. 3.5 The Lessee agrees, subject to events of Force Majeure or Casualty to continuously lease and occupy the Leased Premises for a period of at least five (5) consecutive years beginning with the Lease Inception Date. 3.6 During the term of this Agreement following the Lease Inception Date and continuing thereafter until the Expiration Date, the Leased Premises shall not be used for any purpose other than the Required Use and the operation and occupancy of the Leased Premises in conformance with the Required Use shall not cease for more than thirty (30) days except in connection with and to the extent of an event of Force Majeure. 3.7 The term of this Agreement shall begin on the Effective Date and shall continue until the Expiration Date, unless sooner terminated as provided herein. 3.8 The Lessee agrees to locate and maintain Tangible Personal Property not otherwise exempt from ad valorem taxation at the Leased Premises with a Taxable Value of at least One Million Seven Hundred Thousand Dollars ($1,700,000.00) as of the First Year of Abatement and as of January 1 of each calendar year thereafter during the term of this Agreement. The failure of the Tangible Personal Property to have a Taxable Value equal to or greater than the Minimum Taxable Value for any given tax year during the term of this Agreement shall result in the forfeiture of the tax abatement for such tax year. The failure of the Tangible Personal Property to have a Taxable Value equal to or greater than the Minimum Taxable Value for any given tax year during the term of this Agreement shall not be an event of default subject to termination and recapture of the abated taxes as provided in Article V hereof provided the Lessee is not otherwise in breach of this Agreement. Article IV Leased Premises 4.1 Lessee intends to enter into the Lease and to locate Tangible Personal Property at the Leased Premises. Nothing in this Agreement shall obligate Lessee to enter into the Lease or to locate Tangible Personal Property at the Leased Premises, but said actions are conditions precedent to tax abatement for such Lessee pursuant to this Agreement. 4.2 As conditions precedent to the initiation of the Lessee's tax abatement pursuant to this Agreement (1) Lessee agrees to enter into the Lease on or before February 13, 2015; and (2) Lessee agrees to occupy the Leased Premises on or before the Lease Inception Date. 4.3 Lessee agrees to maintain the Leased Premises during the term of this Agreement in accordance with all applicable state and local laws, codes, and regulations. Page 5 Tax Abatement Agreement City of Coppell and Insight Merchandising, Inc. (TM 66989) 4.4 The City, its agents and employees shall have the right of access to the Leased Premises at reasonable times and with reasonable notice to Lessee, and in accordance with visitor access and security policies of the Lessee, in order to insure that the Lessee is in compliance with the terms and conditions of this Agreement. Article V Default: Recapture of Tax Revenue 5.1 In the event Lessee: (i) fails to occupy the Leased Premises in accordance with this Agreement or in accordance with applicable State or local laws, codes or regulations; (ii) has delinquent ad valorem or sales taxes owed to the City (provided Lessee retains its right to timely and properly protest such taxes or assessment); (iii) suffers an event of "Bankruptcy or Insolvency"; or (iv) breaches any of the terms and conditions of this Agreement, or a Related Agreement, which is not otherwise cured within the applicable cure period, then Lessee, after the expiration of the notice and cure periods described below, shall be in default of this Agreement. As liquidated damages in the event of such default, the Lessee shall, within thirty (30) days after termination, pay to the City all taxes which otherwise would have been paid by the Lessee to the City without benefit of a tax abatement for the property the subject of this Agreement at the statutory rate for delinquent taxes as determined by Section 33.01 of the Tax Code, as amended, but without penalty. The Parties acknowledge that actual damages in the event of default termination would be speculative and difficult to determine. The Parties further agree that any abated tax, including interest, as a result of this Agreement, shall be recoverable against the Lessee, its successors and assigns and shall constitute a tax lien against the Tangible personal Property, and shall become due, owing and shall be paid to the City within thirty (30) days after notice of termination. 5.2 Upon breach by Lessee of any of the obligations under this Agreement, the City shall notify Lessee in writing, which shall have thirty (30) days from receipt of the notice in which to cure any such default. If the default cannot reasonably be cured within such thirty (30) day period, and the Lessee has diligently pursued such remedies as shall be reasonably necessary to cure such default, then the City may extend the period in which the default must be cured. 5.3 If the Lessee fails to cure the default within the time provided as specified above or, as such time period may be extended, then the City, at its sole option, shall have the right to terminate this Agreement by providing written notice to the Lessee. 5.4 Upon termination of this Agreement by City, all tax abated as a result of this Agreement, shall become a debt to the City as liquidated damages, and shall become due and payable not later than thirty (30) days after a notice of termination is provided. The City shall have all remedies for the collection of the abated tax provided generally in the Tax Code for the collection of delinquent property tax. The City, at its sole discretion, has the option to provide a repayment schedule. The computation of the abated tax for the purposes of the Agreement shall be based upon the full Taxable Value of the Tangible Personal Property without tax abatement for the years in which tax abatement hereunder was received by the Lessee, as determined by the Appraisal District, multiplied by the tax rate of the years in question, as calculated by the City Page 6 Tax Abatement Agreement City of Coppell and Insight Merchandising, Inc. (TM 66989) Tax Assessor -Collector. The liquidated damages shall incur penalties as provided for delinquent taxes and shall commence to accrue after expiration of the thirty (30) day payment period. Article VI Annual Application for Tax Exemption It shall be the responsibility of the Lessee, pursuant to the Tax Code, to file an annual exemption application form for the Tangible Personal Property with the Chief Appraiser for each Appraisal District (or its successor) in which the eligible taxable property has situs. A copy of the respective exemption application shall be submitted to the City upon request. Article VII Annual Rendition The Lessee shall annually render the value of the Tangible Personal Property to the Appraisal District, and shall provide a copy of the same to the City upon written request. Article VIII Miscellaneous 8.1 Notice. Any notice required or permitted to be delivered hereunder shall be deemed received three (3) days thereafter sent by United States Mail, postage prepaid, certified mail, return receipt requested, addressed to the Party at the address set forth below or on the day actually received if sent by courier or otherwise hand delivered: If intended for City, to: Attn: City Manager City of Coppell, Texas P. O. Box 478 Coppell, Texas 75019 If intended for Lessee, to: Attn: Peter Rozes Executive VP of Operations VIRA Insight, LLC 120 Dividend Drive Coppell, Texas 75019 With a copy to: Peter G. Smith Nichols, Jackson, Dillard, Hager & Smith, L.L.P. 1800 Ross Tower 500 N. Akard Dallas, Texas 75201 8.2 Authorization. This Agreement was authorized by resolution of the City Council approved by its Council meeting authorizing the Mayor to execute this Agreement on behalf of the City. Page 7I Tax Abatement Agreement City of Coppell and Insight Merchandising, Inc. (TM 66989) 8.3 Severability. In the event any section, subsection, paragraph, sentence, phrase or word herein is held invalid, illegal or unconstitutional, the balance of this Agreement shall stand, shall be enforceable and shall be read as if the Parties intended at all times to delete said invalid section, subsection, paragraph, sentence, phrase or word. 8.4 Governing Law. This Agreement shall be governed by the laws of the State of Texas without regard to any conflict of law rules. Exclusive venue for any action under this Agreement shall be the State District Court of Dallas County, Texas. The Parties agree to submit to the personal and subject matter jurisdiction of said court. 8.5 Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original and constitute one and the same instrument. 8.6 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 the matters in this Agreement, and except as otherwise provided herein cannot be modified without written agreement of the Parties to be attached to and made a part of this Agreement. 8.7 Recitals. The determinations recited and declared in the preambles to this Agreement are hereby incorporated herein as part of this Agreement. 8.8 Exhibits. All exhibits to this Agreement are incorporated herein by reference for all purposes wherever reference is made to the same. 8.9 Assignment. This Agreement shall be binding on and inure to the benefit of the parties to it and their respective heirs, executors, administrators, legal representatives, successors, and permitted assigns. This Agreement may not be assigned by the Lessee without the prior written consent of the City Manager. 8.10 Employment of Undocumented Workers. During the term of this Agreement, the Lessee agrees not to knowingly employ any undocumented workers and, if convicted of a violation under 8 U.S.C. Section 1324a (f), the Lessee shall repay the taxes abated herein, and any other funds received by the Lessee from the City as of the date of such violation within one hundred twenty (120) days after the date the Lessee is notified by the City of such violation, plus interest at the rate of four percent (4%) compounded annually from the date of violation until paid. 8.11 Right of Offset. The City may at its option, offset any amounts due and payable under this Agreement against any debt (including taxes) lawfully due to the City from the Lessee, regardless of whether the amount due arises pursuant to the terms of this Agreement, a Related Agreement or otherwise, and regardless of whether or not the debt due the City has been reduced to judgment by a court. Page 8 Tax Abatement Agreement City of Coppell and Insight Merchandising, Inc. (TM 66989) 8.12 Conditions Precedent. This Agreement is subject to and conditioned upon the following conditions which are conditions precedent to the obligations of the Parties: (i) Lessee entering into the Lease on or before February 13, 2015; and (ii) Lessee occupying the Leased Premises on or before the Lease Inception Date. [Signature Page to Follow] Page 9 Tax Abatement Agreement City of Coppell and Insight Merchandising, Inc. (TM 66989) EXECUTED in duplicate originals the )� day of Cc -4-,,l e-. , 2015. CIT) LN Attest: B Christel Pettin s WitySecretary Agreed as to Form: By: kil i y Attorney EXECUTED in duplicate originals th day of 6049C '2015. VIRA Insight, LLC By: Peter owes, Exec i VP of Operations Page 10I Tax Abatement Agreement City of Coppell and Insight Merchandising, Inc. (TM 66989) Exhibit "A" Lot 4, Block A, Duke Lesley Addition (13.272 acres) Page 11 Tax Abatement Agreement City of Coppell and Insight Merchandising, Inc. (TM 66989)