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R2006-168 10-09-06RESOLUTION NO. R2006 -168 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PEARLAND, TEXAS, AUTHORIZING THE CITY MANAGER OR HIS DESIGNEE TO ENTER INTO A TAX ABATEMENT AGREEMENT WITH KEMLON PRODUCTS AND DEVELOPMENT COMPANY, LTD. "KEMLON FINDING AND DETERMINING THAT TERMS OF SAID AGREEMENT MEET THE REQUIREMENTS OF CHAPTER 312 OF THE TAX CODE, V.A.T.S. AS AMENDED, ORDINANCE NO. 1299, ESTABLISHING REINVESTMENT ZONE #15, AND THE GUIDELINES AND CRITERIA FOR GOVERNING REINVESTMENT ZONES AND TAX ABATEMENT AGREEMENTS SET FORTH IN RESOLUTION NO. R2006 -121. BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF PEARLAND, TEXAS; Section 1. That certain Tax Abatement Agreement, by and between the City of Pearland and Kemlon, a copy of which is attached hereto as Exhibit "A" and incorporated herein for all purposes, is hereby authorized and approved. Section 2 The City Council finds and determines that the Tax Abatement Agreement and the property subject to this agreement meet the requirements of Chapter 312 of the Tax Code, V.A.T.S. as amended, Ordinance No. 1299, which established Reinvestment Zone #15, and the Guidelines and Criteria for Governing Reinvestment Zones and Tax Abatement Agreements set forth in Resolution No, R2006- 121. Section 3 The City Manager or his designee is hereby authorized to execute, and the City Secretary to attest, said Tax Abatement Agreement and any counterparts thereof. PASSED, APPROVED, AND ADOPTED this the 9 day of October, A.D., 2006. REID MAYOR RESOLUTION NO. 2006 -168 ATTEST: Al APPROVED AS TO FORM: Q X..- /1" 6.4, DARRIN M. COKER CITY ATTORNEY THE STATE OF TEXAS COUNTIES OF BRAZ.ORIA, FORT BEND, AND HARRIS TAX ABATEMENT AGREEMENT This Tax Abatement Agreement "Agreement is entered into by and between the City of Pearland, Texas, a home rule city and Municipal Corporation of Brazoria, Fort Bend, and Harris Counties, Texas, duly acting by and through its City Manager "City and Kemlon Products and Development Company LTD., duly acting by and through its Vice President, Russell Ring, and Pearland Building II Limited Partnership, duly acting by and through its President, John Ring "Kemlon WITNESSETH: WHEREAS, on the 25` day of September, 2006 the City Council of the City of Pearland, Texas, passed Ordinance No. 1299 establishing Reinvestment Zone #15 in the City of Pearland, Texas, for general business tax abatement, as authorized by Chapter 312, Tax Code, V.A.T.S. as amended "Code and WHEREAS, the City previously adopted Resolution No. R2006 -121, which established appropriate guidelines and criteria for governing reinvestment zones and tax abatement agreements to be entered into by the City as contemplated by the Code; and WHEREAS, the City's objective is to maintain and/or enhance the general business economic and employment base of the Pearland area for the long term interest and benefit of the City, in accordance with Resolution No. R2006 -121 and the Code; and WHEREAS, the contemplated use of the Premises, as hereinafter defined, the contemplated improvements to the Premises in the amount as set forth in this Agreement and the other terms hereof are consistent with encouraging development of said Reinvestment Zone in accordance with the purposes for its creation and are in compliance with Resolution No. 2006 -121 and the guidelines and criteria adopted by the City and all applicable law; and WHEREAS, the Improvements as defined below constitute a major investment within the Reinvestment Zone that will substantially increase the appraised value of property within the zone and will contribute to the retention or expansion of primary and secondary employment within the City; and WHEREAS, there will be no substantial adverse affect on the provision of city services or on its tax base and the planned use of the Premises will not constitute a hazard to public safety, health, or welfare; now, THEREFORE: For and in consideration of the mutual agreements and obligations set forth below, the sufficiency of which is hereby acknowledged by the parties hereto, Kemlon and City mutually agree as follows: 1. The property to be the subject of this Agreement shall be that property described by metes and hounds and map attached hereto as Exhibit "A" "Premises 2. Construction of Kemlon's improvements on the Premises, described in Exhibit "B" "Improvements will cost approximately four million dollars ($4,000,000.00) and is to be substantially complete on or about June 6, 2007; provided, that Kemlon shall have such additional time to complete the Improvements as may be required in the event of "force majeure" if Kemlon is diligently and faithfully pursuing completion of the Improvements. For this purpose, "force majeure" shall mean any contingency or cause beyond the reasonable control of Kemlon including, without limitation, acts of God or the public enemy, war, riot, civil commotion, insurrection, governmental or de facto governmental action (unless caused by acts or omissions of Kemlon), fires, explosions or floods, and strikes. The date of completion of the Improvements shall be defined as the date a Certificate of Occupancy is issued by the City of Pearland. 3. Kemlon agrees and covenants that it will diligently and faithfully, in a good and workmanlike manner, pursue the completion of the Improvements as agood and valuable considera- tion of this Agreement. Kemlon further covenants and agrees that all construction of the Improvements will be in accordance with all applicable state and local laws and regulations or valid waiver thereof. In further consideration, Kemlon shall thereafter, from the date a Certificate of Occupancy is issued until the expiration of this Agreement, continuously operate and maintain the Premises as Kemlon, limiting the use of said Premises to that use which is consistent with the terms of this Agreement and the general purpose of encouraging development or redevelopment of the Reinvestment Zone during the period that the property tax exemptions evidenced herein are in effect. 4. Kemlon agrees and covenants that the improvements shall provide a minimum of twenty (20) jobs during the period of the abatement. Accordingly, Kemlon shall provide to the City annual manpower reports (Exhibit "D within sixty (60) days following the end of each calendar year. 5. Subject to the terms and conditions of this Agreement, and subject to the rights and holders of any outstanding bonds of the City, a portion of ad valorem property taxes assessed to the Property and otherwise owed to the City shall be abated. City hereby acknowledges that it is not aware of any terms or conditions of any outstanding bonds, which would invalidate this Agreement. Said abatement shall be an amount equal to fifty percent (50 of the taxes assessed upon the increased value of the improvements and Fixed Equipment, annually for a period of seven (7) years beginning January 1, 2007, and ending December 31, 2013, in accordance with the terms of this Agreement and all applicable state and local regulations. The taxable value shall be determined on a uniform and equal basis of assessment by the methods used by the Brazoria County Tax Appraisal District, which information necessary for abatement shall be provided by Kemlon to the chief appraiser of said district. Estimated values, estimated abated values, and estimated base year values for the Improvements are listed in Exhibit "B 6. Kemlon further agrees that the City, its agents and employees shall have the right to enter upon the Premises at any reasonable time and to inspect the Improvements in order to determine whether the construction of the Improvements is in accordance with this Agreement and all applicable federal, state, and local laws, ordinances, and regulations or valid waiver thereof. After completion of the Improvements, the City shall have the continuing right to enter upon and inspect the Premises at any reasonable time, after 24 hours' notice has been given, to determine whether the Premises are thereafter maintained and operated in accordance with this Agreement and all applicable federal, state, and local law, ordinances, and regulations. The City shall conduct at least one inspection annually to ensure compliance with the guidelines contained in Resolution No. R2006 -121. Notwithstanding any other provision of this Agreement, if the City determines that a violation of a federal, state, or local law, ordinance or regulation exists on the Premises, the City may, in addition to any other authorized enforcement action, provide to Kemlon written notice of such violation. For the purposes of this Agreement, Kemlon shall have ten (10) days from the date of the notice to cure or remedy such violation. If Kemlon fails or refuses to cure or remedy the violation within the ten (10) day period, Kemlon is subject to the forfeiture, at the discretion of the City, of any right to any tax abatement for a portion of the period or the entire period covered by this Agreement. 7. Kemlon agrees and covenants that the information provided in the attached Application for Tax Abatement (Exhibit "C is true and correct and that any materially false or mis- leading information that is provided to the applicable taxing jurisdictions may be grounds for termination of the agreement with possible liability for recovery of abated taxes. 8. In the event that (1) the Improvements for which an abatement has been granted are not completed in accordance with this Agreement; or (2) Kemlon allows its ad valorem taxes owed to the applicable taxing jurisdictions to become delinquent and fails to timely and properly follow the legal procedures for protest and/or contest of any such ad valorem takes; or (3) Kemlon breaches any of the terms or conditions of this Agreement, then this Agreement shall be in default. In the event that Kemlon defaults in its performance of (1), (2), or (3) above, then the City shall give Kemlon written notice of such default, which notice shall be delivered by personal delivery or certified mail to; Kemlon Products and Development Company, 1424 North Main, Pearland, Texas 77581. If Kemlon has not cured such default within sixty (60) days of said written notice, this Agreement may be modified or terminated by the City. Notwithstanding the provisions set forth herein, this Agreement may be terminated at any time after the execution hereof by agreement of both parties. 4. In the event that the facility is completed and begins producing product or service, but subsequently discontinues producing product or service for any reason except fire, explosion or other casualty or accident or natural disaster for a period of one year during the abatement period, then this Agreement shall be in default and shall terminate. The abatement of taxes for the calendar year during which the facility no longer produces shall also terminate. 10. As liquidated damages in the event of default and in accordance with Section 312.205, Tax Code, V.A.T.S., as amended, all taxes which otherwise would have been paid to the City without the benefit of abatement (but without the addition of penalty; interest will be charged at the statutory rate for delinquent taxes as determined by Section 33.01 of the Tax Code) will become a debt to the City and shall be due, owing and paid to the City within sixty (60) days of the expiration of the cure period or the termination date, whichever is applicable. The City shall have all remedies for the recapture and collection of the lost tax revenue as provided generally in the Tax Code for the collection of delinquent property taxes and in accordance with Resolution No. R2006 -121. 11. The City represents and warrants that the Premises does not include any property that is owned by a member of its council or boards, agencies, commissions, or other governmental bodies approving, or having responsibility for the approval of, this Agreement. 12. The terms and conditions of this Agreement are binding upon the successors and assigns of all parties hereto. This Agreement may be transferred or assigned by Kemlon only upon written permission by the City in accordance with Resolution 82006 -121, which permission shall not be unreasonably withheld. No assignment shall be approved if the assignor or assignee are indebted to the City for ad valorem taxes or other obligations. 13. It is understood and agreed between the parties that Kemlon, in performing its obligations hereunder, is acting independently, and the City assumes no responsibilities or liabilities in connection therewith to third parties. 14. KEMLON ITS OFFICERS, AGENTS, SUCCESSORS AND ASSIGNS HEREBY RELEASE, ACQUIT, AGREE TO INDEMNIFY, AND HOLDS HARMLESS THE CITY, ITS OFFICERS, AGENTS, EMPLOYEES, SUCCESSORS, AND ASSIGNS, FROM ANY AND ALL KINDS OF CLAIMS, DEMANDS, LOSSES, DAMAGES, INJURIES, RIGHTS, CAUSES OF ACTION, OR JUDGMENTS OF WHATSOEVER CHARACTER OR NATURE, INCLUDING ATTORNEYS' FEES, WHICH MAY ARISE AS A RESULT OF THIS AGREEMENT. THE PROVISIONS OF THIS SECTION REFLECT THE EXPRESSED INTENTIONS OF KEMLON AND THE CITY AND SHALL SURVIVE THE TERMINATION, EXPIRATION, OR CANCELLATION OF THIS AGREEMENT. 15. It is understood and agreed by the City and Kemlon that if the Premises has been designated and taxed as agricultural land pursuant to Chapter 23, Subchapter C, Tax Code, V.A.T.S., that this Agreement shall not be effective and no abatement granted until Kemlon has removed the 4 agricultural use designation and all taxes due pursuant to Section 23.55, Tax Code, V.A.T.S., as amended, (roll back taxes) have been paid. 16. This Agreement La; authorized by Resolution of the City Council at its council meeting on the S day of*06-�2006, authorizing the City Manager to execute the Agreement on behalf of the City. 17. This Agreement is entered into by Kemlon pursuant to authority granted by its v toe President, R•+scall R: nom_ on the 27� day of N w-4 c..-.be r 20m6. 18. This shall constitute a valid and binding Agreement between the City and Kemlon when executed in accordance herewith. 19. This Agreement is performable in Brazoria County, Texas. 20. Kemlon agrees and covenants to certify annually to the City, while this Agreement is in effect, that Kemlon is in compliance with each applicable term of this Agreement. Witness our hands this 27 day of I L 2-046 ATTEST: By: By: ou orfi C City ecretary CITY OF PEARLAND Bill Eisen City Manager APPROVED AS TO FORM: By: _(Z n=-A, w Darrin M. Coker City Attorney ,�IIIN1E11fd�p ePO �V o e w s 1 t ATTEST: Kemlon Products and Development Company A By: r�. �c�� i�� B Printed Name: Cjc Printed Name: k Y S 5 E L L k- L, Title: �.s, pie s1 Title: L, )uU(, Ca�Pc��.p7�v� �fL CS ix:! G h) r K M vv Vfz b u c l S A b "CL. P -AL C`r} LT r7 Pea4Buil Il Limited Par tnership gy. Pri Title: VQc,\ THE STATE OF TEXAS COUNTIES OF BRAZORIA, FORT BEND, AND HARRIS TAX ABATEMENT AGREEMENT This Tax Abatement Agreement "Agreement is entered into by and between the City of Pearland, Texas, a home rule city and Municipal Corporation of Brazoria, Fort Bend, and Harris Counties, Texas, duly acting by and through its City Manager "City and Kemlon Products and Development Company LTD., duly acting by and through its Vice President, Russell Ring, and Pearland Building II Limited Partnership, duly acting by and through its President, John Ring "Kemlon WITNESSETH: WHEREAS, on the 25` day of September, 2006 the City Council of the City of Pearland, Texas, passed Ordinance No. 1299 establishing Reinvestment Zone #15 in the City of Pearland, Texas, for general business tax abatement, as authorized by Chapter 312, Tax Code, V.A.T.S. as amended "Code and WHEREAS, the City previously adopted Resolution No. 82006 -121, which established appropriate guidelines and criteria for governing reinvestment zones and tax abatement agreements to be entered into by the City as contemplated by the Code; and WHEREAS, the City's objective is to maintain and/or enhance the general business economic and employment base of the Pearland area for the long term interest and benefit of the City, in accordance with Resolution No. R2006 -121 and the Code; and WHEREAS, the contemplated use of the Premises, as hereinafter defined, the contemplated improvements to the Premises in the amount as set forth in this Agreement and the other terms hereof are consistent with encouraging development of said Reinvestment Zone in accordance with the purposes for its creation and are in compliance with Resolution No. 2006 -121 and the guidelines and criteria adopted by the City and all applicable law; and WHEREAS, the Improvements as defined below constitute a major investment within the Reinvestment Zone that will substantially increase the appraised value of property within the zone and will contribute to the retention or expansion of primary and secondary employment within the City; and WHEREAS, there will be no substantial adverse affect on the provision of city services or on its tax base and the planned use of the Premises wil I not constitute a hazard to public safety, health, or welfare; now, THEREFORE: For and in consideration of the mutual agreements and obligations set forth below, the sufficiency of which is hereby acknowledged by the parties hereto, Kemlon and City mutually agree as follows: 1. The property to be the subject of this Agreement shall be that property described by metes and bounds and map attached hereto as Exhibit "A" "Premises 2. Construction of Kemlon's improvements on the Premises, described in Exhibit "B" "Improvements will cost approximately four million dollars ($4,000,000.00) and is to be substantially complete on or about June 6, 2007; provided, that Kemlon shall have such additional time to complete the Improvements as may be required in the event of "force majeure" if Kemlon is diligently and faithfully pursuing completion of the Improvements. For this purpose, "force majeure" shall mean any contingency or cause beyond the reasonable control of Kemlon including, without limitation, acts of God or the public enemy, war, riot, civil commotion, insurrection, governmental or de facto governmental action (unless caused by acts or omissions of Kemlon), fires, explosions or floods, and strikes. The date of completion of the Improvements shall be defined as the date a Certificate of Occupancy is issued by the City of Pearland. 3. Kemlon agrees and covenants that it will diligently and faithfully, in a good and workmanlike manner, pursue the completion of the Improvements as a good and valuable considera- tion of this Agreement. Kemlon further covenants and agrees that all construction of the Improvements will be in accordance with all applicable state and local laws and regulations or valid waiver thereof. In further consideration, Kemlon shall thereafter, from the date a Certificate of Occupancy is issued until the expiration of this Agreement, continuously operate and maintain the Premises as Kemlon, limiting the use of said Premises to that use which is consistent with the terms of this Agreement and the general purpose of encouraging development or redevelopment of the Reinvestment Zone during the period that the property tax exemptions evidenced herein are in effect. 4. Kemlon agrees and covenants that the Improvements shall provide a minimum of twenty (20) jobs during the period of the abatement. Accordingly, Kemlon shall provide to the City annual manpower reports (Exhibit "D within sixty (60) days following the end of each calendar year. 5. Subject to the terms and conditions of this Agreement, and subject to the rights and holders of any outstanding bonds of the City, a portion of ad valorem property taxes assessed to the Property and otherwise owed to the City shall be abated. City hereby acknowledges that it is not aware of any terms or conditions of any outstanding bonds, which would invalidate this Agreement. Said abatement shall be an amount equal to fifty percent (50 of the taxes assessed upon the increased value of the Improvements and Fixed Equipment, annually for a period of seven (7) years beginning January 1, 2007, and ending December 3I, 2013, in accordance with the terms of this Agreement and all applicable state and local regulations. The taxable value shall be determined on a uniform and equal basis of assessment by the methods used by the Brazoria County Tax Appraisal District, which information necessary for abatement shall be provided by Kemlon to the chief appraiser of said district. Estimated values, estimated abated values, and estimated base year values for the Improvements are listed in Exhibit "B b. Kcmlon further agrees that the City, its agents and employees shall have the right to, enter upon the Premises at any reasonable time and to inspect the Improvements in order to determine whether the construction of the Improvements is in accordance with this Agreement and all applicable federal, state, and local laws, ordinances, and regulations or valid waiver thereof. After completion of the Improvements, the City shall have the continuing right to enter upon and inspect the Premises at any reasonable time, after 24 hours' notice has been given, to determine whether the Premises are thereafter maintained and operated in accordance with this Agreement and all applicable federal, state, and local law, ordinances, and regulations. The City shall conduct at least one inspection annually to ensure compliance with the guidelines contained in Resolution No. R2006-121. Notwithstanding any other provision of this Agreement, if the City determines that a violation of a federal, state, or local law, ordinance or regulation exists on the Premises, the City may, in addition to any other authorized enforcement action, provide to Kemlon written notice of such violation. For the purposes of this Agreement, Kemlon shall have ten (10) days from the date of the notice to cure or remedy such violation. If Kemlon fails or refuses to cure or remedy the violation within the ten (10) day period, Kemlon is subject to the forfeiture, at the discretion of the City, of any right to any tax abatement for a portion of the period or the entire period covered by this Agreement. 7. Kemlon agrees and covenants that the information provided in the attached Application for Tax Abatement (Exhibit "C is true and correct and that any materially false or mis- leading information that is provided to the applicable taxing jurisdictions may be grounds for termination of the agreement with possible liability for recovery of abated taxes. 8. In the event that (1) the Improvements for which an abatement has been granted are not completed in accordance with this Agreement; or (2) Kemlon allows its ad valorem taxes owed to the applicable taxing jurisdictions to become delinquent and fails to timely and properly follow the legal procedures for protest and/or contest of any such ad valorem taxes; or (3) Kemlon breaches any of the terms or conditions of this Agreement, then this Agreement shall be in default. In the event that Kemlon defaults in its performance of (1), (2), or (3) above, then the City shall give Kemlon written notice of such default, which notice shall be delivered by personal delivery or certified mail to: Kemlon Products and Development Company, 1424 North Main, Pearland, Texas 77581. If Kemlon has not cured such default within sixty (60) days of said written notice, this Agreement may be modified or terminated by the City. Notwithstanding the provisions set forth herein, this Agreement may be terminated at any time after the execution hereof by agreement of both parties. 9. In the event that the facility is completed and begins producing product or service, but subsequently discontinues producing product or service for any reason except fire, explosion or other casualty or accident or natural disaster for a period of one year during the abatement period, then this Agreement shall be in default and shall terminate. The abatement of taxes for the calendar year during which the facility no longer produces shall also terminate. 10. As liquidated damages in the event of default and in accordance with Section 312.205, Tax Code, V.A.T.S., as amended, all taxes which otherwise would have been paid to the City without the benefit of abatement (but without the addition of penalty; interest will be charged at the statutory rate for delinquent taxes as determined by Section 33.01 of the Tax Code) will become a debt to the City and shall be due, owing and paid to the City within sixty (60) days of the expiration of the cure period or the termination date, whichever is applicable. The City shall have all remedies for the recapture and collection of the lost tax revenue as provided generally in the Tax Code for the collection of delinquent property taxes and in accordance with Resolution No. 82006 -121, 11. The City represents and warrants that the Premises does not include any property that is owned by a member of its council or boards, agencies, commissions, or other governmental bodies approving, or having responsibility for the approval of, this Agreement. 12. The terms and conditions of this Agreement are binding upon the successors and assigns of all parties hereto. This Agreement may be transferred or assigned by Kemlon only upon written permission by the City in accordance with Resolution 82006 -121, which permission shall not be unreasonably withheld. No assignment shall be approved if the assignor or assignee are indebted to the City for ad valorem taxes or other obligations. 13. It is understood and agreed between the parties that Kemlon, in performing its obligations hereunder, is acting independently, and the City assumes no responsibilities or liabilities in connection therewith to third parties. 14. KEMLON ITS OFFICERS, AGENTS, SUCCESSORS AND ASSIGNS HEREBY RELEASE, ACQUIT, AGREE TO INDEMNIFY, AND HOLDS HARMLESS THE CITY, ITS OFFICERS, AGENTS, EMPLOYEES, SUCCESSORS, AND ASSIGNS, FROM ANY AND ALL KINDS OF CLAIMS, DEMANDS, LOSSES, DAMAGES, INJURIES, RIGHTS, CAUSES OF ACTION, OR JUDGMENTS OF WHATSOEVER CHARACTER OR NATURE, INCLUDING ATTORNEYS' FEES, WHICH MAY ARISE AS A RESULT OF THIS AGREEMENT. THE PROVISIONS OF THIS SECTION REFLECT THE EXPRESSED INTENTIONS OF IEMLON AND THE CITY AND SHALL SURVIVE THE TERMINATION, EXPIRATION, OR CANCELLATION OF THIS AGREEMENT. 15. It is understood and agreed by the City and Kemlon that if the Premises has been designated and taxed as agricultural land pursuant to Chapter 23, Subchapter C, Tax Code, V.A.T. S., that this Agreement shall not be effective and no abatement granted until Kemlon has removed the 4 agricultural use designation and all taxes due pursuant to Section 23.55, Tax Code, V.A.T.S., as amended, (roll back taxes) have been paid. 16. This Agreement Va authorized by Resolution of the City Council at its council meeting on the day of� ~2006, authorizing the City Manager to execute the Agreement on behalf of the City. 17. This Agreement is entered into by Kemlon pursuant to authority granted by its V t c s President, K.+scal% R: n!�3 on the V day of N0%4C -P%b e r 2004. 18. This shall constitute a valid and binding Agreement between the City and Kemlon when executed in accordance herewith. 19. This Agreement is performable in Brazoria County, Texas. 20. Kemlon agrees and covenants to certify annually to the City, while this Agreement is in effect, that Kemlon is in compliance with each applicable term of this Agreement. Witness our hands this 27 y day of I t, zOOb ATTEST: i r• City CITY OF PEARLAND r Bill Eisen City Manager APPROVED AS TO FORM: B A- Y Darrin M. Coker City Attorney iif9 ?Pf�,�� 7 N A a ,,hpf'rlto 11 era ATTEST: KemIon Products and Development Company B y: C��` Cam[ -G�+L l C��1 x- PL By: Printed Name: (fc- d <<i Printed Name; I� i) S 5 c LL k. ti 6 Title: t,3,- cs-1 Title: l�yZ L�} rVD zL1J 1A-,? b izv L L P /,,I L T t7 Pearlan ng Il Limited Partnership By: -z4 ,A-� S 6�s- Printed e• 0-V( Z tJL Title: -y RICKARD MAGNESS Fitst Assistant MARY ALDOUS Chief Criminal Division ,�aer r ,pr 1 ov JERI YENNE CRIMINAL DISTRICT ATTORNEY BRAZORIA COUNTY JIM WIGINTON Chief Civil Division JOHN BLANKENSHIP Chief Investigator TO: Cheryl Evans via email and inter office mail Chief Appraiser, Brazoria County Appraisal District FROM: Henry W. Prejean DATE: March 17, 2008 RE: Kemlon Products Development Co. Ltd. Tax Abatement -(City of Pearland RZ) Notification of (1) Commissioners' Court Order Rescinding Grant of Tax Abatement and Brazoria County's Termination and Disaffirmance of Tax Abatement Agreement (2) Brazoria County's Request to Disallow any Tax Abatement Exemptions for Kemlon as to County Taxes MEMORarrours As discussed, enclosed please find a copy of Commissioners' Court Order No. 64 of February 26, 2008 which rescinds Court Order No. 35 of February 27, 2007 granting tax abatement to Kemlon Products and Development Co. Ltd, Also enclosed, please find a copy of Texas Attorney General Opinion No. GA -0600 of January 29, 2008 which brought the points of law discussed herein to the County's attention and upon which the Court's recent action is based, as stated in Court Order No. 64. Texas Attorney General Opinion, GA -0600 addresses, among other matters, the subject and question of whether or not a lessee's improvements and fixtures are authorized for abatement under Texas statutory law. This opinion concludes, with respect to the statutory law on county- initiated tax abatements, Section 312. 402 Tax Code, that: (1) A County is not authorized to enter into a tax abatement agreement covering a lessee's interest in improvements or fixtures located on taxable real property; and (2) A County's authority to abate taxes on lessee -owned property is limited to improvements or fixtures located on tax exempt real property. COUNTY COURTHOUSE, 111 E. LOCUST, SUITE 408A, ANGLETON, TEXAS 77515 Angleton Area Brazosport Area Houston Area Fax Criminal Division Fax -Civil Division 19791 864-1230 (979) 388 -1230 (281► 756 -1230 {979) 864-1525 (979) 849 -1712 The above same conclusions are applicable to a county's authority under Section 312.206 Tax Code regarding city initiated abatements within a city's taxing jurisdiction because a city's authority under Section 312.204, Tax Code to abate a lessee's improvements and fixtures is limited in the same manner as a county's authority under Section 312.402. A county's authority to enter into tax abatement agreements for projects located within a city is limited to and derivative of the city's authority to do so. The conclusions stated above mean that the current County abatement agreement with the lessee, Kemlon Products and Development, Co., Ltd. and relative to a City of Pearl and-initiated reinvestment zone is a void, legally unauthorized abatement because that agreement abates lessee -owned improvements and fixtures located on taxable real property (owned by Pearland Building II). The Kcmlon abatement agreement was executed 04 -27 -07 and became effective beginning 01- 01 -07. The County has authorized recovery of 2007 abated taxes and the County will seek payment of that amount from Kemlon either by direct payment from Kemlon or through deduction of that amount from a refund of economic development fees to be refunded to Kemlon. In accord with the above, the County requests that you terminate and disallow any further tax abatement exemptions as to County taxes on the improvements and fixtures that were previously abated pursuant to the County's tax abatement agreement (Brazoria CAD Property ID No. 594763, Tax Office Account No. ABATKEML002). Thank you for your attention to this matter ATTORN GENERAL O F TEXAS GREG ABBOTT The Honorable William J. Stroman, Jr. Sterling County Attorney Box 88 Sterling City, Texas 76951 Dear Mr. Stroman: January 29, 2008 Opinion No. GA -0600 Re: Whether a county commissioners court is prohibited from executing a tax abatement agreement with a wind turbine company for its fixtures and improvements to be located on a commissioner's real property; whether a commissioner who will receive royalties from a wind turbine company must abstain from voting on a tax abatement agreement with the company (RQ- 0612 -GA) Section 312.402(a) ofthe Tax Code authorizes a county to execute tax abatement agreements with the owners of taxable property located in a reinvestment zone, but subsection (d) expressly excludes property owned or leased by a member of a commissioners court as subjects of such agreements. See TEX. TAX CODE ANN. 312.402(a), (d) (Vernon Supp. 2007). You ask whether subsection (d)'s exclusion prohibits a county commissioners court from executing a tax abatement agreement with a wind turbine company for its fixtures and improvements to be located on a commissioner's real property.' You also ask whether the commissioner, who will receive royalties and other payments from the wind turbine company, must abstain from voting on a tax abatement agreement with the company. Stroman Brief, supra note 1, at 2. You explain that Sterling County has created reinvestment zones to grant tax abatements to wind turbine companies. Id. The companies obtain a leasehold from a property owner, construct wind turbines on the property, and pay the owner a royalty on the electricity generated by the turbines. Id. One such company has petitioned the commissioners court for a tax abatement agreement for the fixtures and improvements it plans to construct on real property belonging to a member of the commissioners court. Id. You state that the tax abatement agreement would concern only the fixtures and improvements owned by the wind turbine company but not the underlying real property owned by the commissioner. Id. at 4--5. Because the fixtures and improvements are owned by the wind turbine company, not by a member of the commissioners court, you reason that the fixtures and improvements qualify for tax abatement under section 312.402. See id. at 5 -6. 'See Letter and Brief from Honorable William J, Stroman, Jr., Sterling County Attorney, to Honorable Greg Abbott, Attorney General of Texas, at 2 (July 31, 2007) (on file with the Opinion Committee, also available at http:l/ www.oag.state.tx.us) [hereinafter Stroman Brief]. The Honorable William J. Stroman, Jr. Page 2 (GA -0600) 1. Background As your question suggests, Texas law generally recognizes separate ownership of improvements located on leased land. See Travis Cent. Appraisal Dist. v. Signature Flight Support Corp., 140 S.W.3d 833, 837 (Tex. App. Austin 2004, no pet.) (citing Wright v. Maedonell, 30 S.W. 907, 909 (Tex. 1895)). The tax treatment of real property, a leasehold interest in the real property, and improvements on the property depends on specific circumstances, including the taxable status of the various interests. Ordinarily, "the lessor rather than the lessee is responsible for taxes on the full value of the property." Cherokee Water Co. v. Gregg County Appraisal Dist., 801 S.W.2d 872, 875 (Tex. 1990); see also TEX. TAX CODE ANN. 25.06(a) (Vernon Supp. 2007). Lessors and lessees commonly reallocate the tax burden, but that is a contractual matter between themselves. A. J. Robbins Co. v. Roberts, 610 S.W.2d 854, 856 (Tex. Civ. App. Amarillo 1980, writ ref d n.r.e.). If, however, tax exempt real property is encumbered with a nonexempt leasehold or other possessory interest, the leasehold or possessory interest is generally subject to ad valorem taxation. See TEX. TAX CODE ANN. 25.07(a) (Vernon Supp. 2007). Similarly, improvements may be listed on the tax rolls in the name of the owner of real property without regard to actual ownership of the improvements. Id. 25.08(a).' But if the real property is tax exempt, generally the improvements must be listed in the name of the owner of the improvements. Id. 25.08(b). And either the owner of the land or the owner of the improvement may request that the land and the improvement receive separate tax treatment. Id. 25.08(c). The tax abatement statute that you reference, section 312.402, is located in subchapter C of the Property Redevelopment and Tax Abatement Act. Id. 312.402; see also 312.001 (Vernon While you ask about "fixtures and improvements," the Tax Code's definition of an "improvement" includes a "fixture." Tex. TAx CODE ANN. 1.04(3)(A) (Vernon Supp. 2007). 'Section 25.08 provides in part: (a) Except as provided by Subsections (b) through (0, an improvement may be listed in the name of the owner of the land on which the improvement is located. (b) if a person who is not entitled to exemption owns an improvement on exempt land, the improvement shall be listed in the name of the owner of the improvement. (c) When a person other than the owner of an improvement owns the land on which the improvement is located, the land and the improvement shall be listed separately in the name of the owner of each if either owner files with the chief appraiser before May I a written request for separate taxation on a form furnished for that purpose together with proof of separate ownership.... TEx. TAx CODE ANN. 25.08(a)—(c) (Vernon Supp. 2007). 'See also id. 25.04 (Vernon 2001) (stating the general rule that "when different persons own land and improvements in separate estates or interests, each separately owned estate or interest shall be listed separately in the name of the owner of each if the estate or interest is described in a duly executed and recorded instrument of title The Honorable William J. Stroman, Jr. Page 3 (GA -0600) 2002) (short title of the act). Under section 312.401 of the subchapter, a county commissioners court may "designate as a reinvestment zone an area of the county that does not include area in the taxing jurisdiction of a municipality." Id. 312.401(a). Section 312.402 authorizes a commissioners court to execute tax abatement agreements with owners of taxable real property and with owners of leasehold interests in or improvements on tax- exempt real property in the designated zone: (a) The commissioners court may execute a tax abatement agreement with the owner of taxable real property located in a reinvestment zone designated under this subchapter [i.e., subchapter C], The court may execute a tax abatement agreement with the owner of a leasehold interest in tax- exempt real property or leasehold interests or improvements on tax exempt real property that is located in a reinvestment zone designated under this subchapter to exempt a portion of the value of tangible personal property or leasehold interests or improvements on tax exempt real property located on the real property.... Id. 312.402(a) (Vernon Supp. 2007) (emphasis added). Generally, a commissioners court may not enter into a tax abatement agreement with one of its members: Except as otherwise provided by this subsection, property that is located in a reinvestment zone designated by a county under this subchapter and that is owned or leased by a person who is a member of the commissioners court may not be subject to a tax abatement agreement made under this section. Id. 312.402(d). Thus, a member of a commissioners court is generally disqualified from the tax abatement agreements that owners of taxable real property and owners of leaseholds may otherwise receive under subsection (a). See id. The exception is for property subject to a tax abatement agreement in effect when the property owner becomes a member of the commissioners court membership on the court does not cause such property to lose its eligibility. Id. 1I. Analysis You ask specifically whether section 312.402(d) prohibits a county from executing a tax abatement agreement with a wind turbine company for its fixtures and improvements located on a commissioner's real property. Stroman Brief, supra note 1, at 2; see also TEX. TAX CODE ANN. 312.402(d) (Vernon Supp. 2007). Before we may address the applicability of subsection (d), however, we must consider your assumption that" [w] ithin the reinvestment zone the commissioners court may enter into a tax abatement agreement with any landowner or leaseholder." Stroman Brief, supra note 1, at 4 (emphasis added). Determining whether property of a particular landowner or The Honorable William J. Stroman, Jr. Page 4 (GA -0600) leaseholder may be the subject of a tax abatement agreement requires a construction of the commissioners court's statutory authority to execute such an agreement. The primary objective of statutory construction is to effectuate the Legislature's intent, to be discerned, if possible, from the language chosen. State v. Shumake, 199 S.W.3d 279, 284 (Tex. 2006). We must presume that every word of a statute was used for a purpose. Cameron v. Terrell Garrett, Inc., 618 S.W.2d 535,540 (Tex. 1981). Likewise, we must presume that words excluded from a statute were excluded for a purpose. Id. Here, we are construing the commissioners court's authority to exempt a portion of the value of a leaseholder's property or interests by tax abatement agreement. See TEX. TAX CODE ANN. 312.402(a) (Vernon Supp. 2007). Statutory tax exemptions must be strictly construed "because they undermine equality and uniformity by placing a greater burden on some taxpaying businesses and individuals rather than placing the burden on all taxpayers equally." NorthAlamo Water Supply Corp. v. Wiliacy CountyAppraisal Dist., 804 S.W.2d 894,899 (Tex. 1991). With these rules of construction in mind, we turn to the authority granted in section 312.402(a). The first sentence of section 312.402(a) authorizes a county to "execute a tax abatement agreement with the owner of taxable real property." TEX. TAX CODE ANN. 312.402(a) (Vernon Supp. 2007). The Tax Code's definition of taxable "real property" includes fixtures and improvements. See id. 1.04 (2)(B) (defining "real property" to include "an improvement"), (3)(A) (defining "improvement" as including "a building, structure, fixture, or fence erected on or affixed to land Fixtures and improvements owned by the owner of real property are also real property, but ordinarily improvements owned by the lessee are personalty. See Travis Cent. Appraisal Dist, 140 S.W.3d at 838 (observing that parties may agree that improvements are to remain the personal property of lessee); Tex. Att'y Gen. Op. No. JC- 0150'(1999) at 3-4 (opining that improvement that remains the property of a lessee is taxable as personalty).' Thus, fixtures and improvements owned by the wind turbine company as personal property would not be "real property" that may be the subject of a tax abatement agreement under the first sentence of section 312.402(a). See TEX. TAX CODE ANN. 312.402 (a) (Vernon Supp. 2007). The second sentence of section 312.402(a) authorizes a tax abatement agreement for leasehold interests in or improvements on real property that is tax exempt. See id. By expressly authorizing a tax abatement agreement for property located on tax- exempt real property, we must assume the Legislature did not intend to authorize such an agreement for property located on taxable real property. See State v. Mauritz -Wells Co., 175 S.W.2d 238, 241 (Tex. 1943) (holding that "the express mention or enumeration of one person, thing, consequence, or class is equivalent to an 'Also cf. Norris v. Thomas, 215 S.W.3d 851, 855 (Tex. 2407) (holding that an object cannot bean improvement to real property entitled to homestead protection unless it is annexed to the real property with the intent that it be a permanent addition to the realty); Sharkey v. Hollums, 400 S.W.2d 353,355 (Tex. Civ. App. Amarillo 1966, writ refd n. r. e.) (holding in landlord– tenant dispute that improvements remained property of tenant pursuant to agreement). But cf Tex. Att'y Gen. Op. No. JC -0282 (2000) at 5 (concluding that "[s]ection 1.04(3)(B) of the Tax Code does not foreclose as a matter of law the possibility that a travel trailer attached to someone else's property is an improvement within the meaning of section 1.04(3XA) The Honorable William J. Stroman, Jr. Page 5 (GA -0600) express exclusion of all others."),' Neither section 312.402(a), nor any other statute of which we are aware, authorizes acomrnissioners court to execute atax abatement agreement for leasehold interests in or improvements on taxable real property. You do not intimate that the commissioner's property is tax exempt for any reason. Stroman Brief, supra note 1, at 2, 4-5. If the commissioner's property is not tax exempt, the second sentence of section 312.402(a) would not authorize a tax abatement agreement for the wind turbine company's fixtures or improvements to be located on the commissioner's property. Thus, it seem unlikely that the fixtures or improvements you describe would qualify for a tax abatement agreement under either sentence of section 312.402(a). But because we cannot conclude as a matter of law that the property would not qualify under any possible facts and circumstances, we will address your question concerning the disqualification in section 312.402(d). If the wind turbine company's "fixtures and improvements" constitute "improvements on tax- exempt real property that is located in a reinvestment zone" under section 312.402(a), then subsection (d) would not prohibit a tax abatement agreement for such property merely because the commissioner owns the underlying real property, The disqualification of subsection (d) expressly applies to "property owned or leased by a person who is a member of the commissioners court." See TEX. TAX CODE ANN. 312.402(d) (Vernon Supp. 2007). As you describe the facts, the fixtures and improvements owned by the wind turbine company are not "property owned or leased by a person who is a member of the commissioners court," and thus theplain terms of the disqualification in subsection (d) would not apply. See id.; see also Stroman Brief, supra note 1, at 5 -6. You also ask if the commissioner must abstain from voting on the proposition to execute a tax abatement agreement with the wind turbine company for its fixtures and improvements located 'Our understanding that section 312.402 of the Tax Code authorizes a tax abatement agreement with a leaseholder for improvements located on tax- exempt property but not on taxable real property is further supported by legislative history of the statute. The second sentence of subsection (a) of the statute was added by the Seventy- seventh Legislature, See Act of May 23, 2001, 77th Leg., R.S., ch. 640, 3, 2001 Tex. Gen. Laws 1205, 1206. The analysis of the bill as enrolled explained that the purpose was to allow tax abatement agreements with the lessee of city or county owned land and buildings; For some time now, it has been the practice for cities and counties throughout the state of Texas to allow companies to lease city-owned or county-owned land and buildings, and provide these companies with tax abatements for equipment and other tangible personal property located on the property. However, a recent attomey general opinion determined that cities and counties did not have the authority to abate taxes for companies holding leasehold interests, which may compromise city and county tax abatement agreements. House Bill 1448 clarifies state law by authorizing the governing body of a municipality to provide a tax abatement agreement, for a period not to exceed 14 years, to an owner of a leasehold interest in specified tax- exempt real property that is located in a reinvestment zone. HousE COMM. ON WAYS MEANS, BILL ANALYSIS, TEX. H.B. 1448, 77th Leg., R.S. (2001). The Honorable William J. Stroman, Jr. Page 6 (GA -0600) on the commissioner's real property. Stroman Brief, supra note 1, at 2. Under section 171.004 of the Local Government Code, a member of a commissioners court generally may not participate in a vote on a matter involving the commissioner's real property "if it is reasonably foreseeable that an action on the matter will have a special economic effect on the value of the property, distinguishable from its effect on the public." TEx. Loc. GOVT CODE ANN. 171.004(a)(2), (c) (Vernon 1999); see also id. 171.001(1) (defining "local public official" to include a member of a county commissioners court). You state that the commissioner is to receive royalties on electricity generated by the turbines on his property and will receive payment for damages to his surface estate from the wind turbine company. Stroman Brief, supra note 1, at 5. While it seems likely that the tax abatement agreement will have a "special economic effect" on the value of the commissioner's real property, that is a fact issue that an attorney general opinion cannot resolve. See Tex. Att'y Gen. Op. No. GA -0337 (2005) at 5 (stating that "[o]rdinarily, the attorney general cannot decide in the opinion process whether a governmental entity's action will have a special economic effect on a business entity or the value of real property distinguishable from its effect on the public, because this decision requires the investigation and resolution of fact questions. see id. at 6 (noting that local official must determine, in the first instance, whether the official is required to file an affidavit of interest and abstain from voting on particular matter). The Honorable William J. Stroman, Jr. Page 7 (GA -0600) SUMMARY A county may enter into a tax abatement agreement with the owner of taxable real property located in a reinvestment zone, and with the owner of a Ieasehold interest in or improvements on tax exempt property located in a reinvestment zone. Assuming that the "fixtures and improvements" owned by a wind turbine company constitute "improvements on tax- exempt real property that is located in a reinvestment zone" under section 312.402 of the Tax Code, the mere fact that a member of a commissioners court owns the real property on which the fixtures and improvements will be located does not prohibit fixtures and improvements from being the subject of a tax abatement agreement. A member of a commissioners court generally must abstain from a vote on a matter if it is reasonably foreseeable that an action on the matter will have a special economic effect on the value of the property distinguishable from its effect on the public. Whether a vote on a particular tax abatement agreement will have such a special economic effect is generally a question of fact that cannot be resolved in an attorney general opinion. i rs, u BBOTT eral of Texas KENT C. SULLIVAN First Assistant Attorney General ANDREW WEBER Deputy Attorney General for Legal Counsel NANCY S. FULLER Chair, Opinion Committee William A. Hill Assistant Attorney General, Opinion Committee ORDER NO. 64 RE: ORDER RESCINDING COURT ORDER NO. 35 OF FEBRUARY 27, 2007 GRANTING TAX ABATEMENT TO KEMLON PRODUCTS AND DEVELOPMENT CO. LTD. AND AUTHORIZING NOTIFICATION OF TERMINATION AND DISAFFIRMANCE OF TAX ABATEMENT Motion by Commissioner Payne, seconded by Commissioner Rhodenbaugh that the Court approves rescinding and does hereby rescind Court Order No. 35 of February 27, 2007 that granted tax abatement to Kemlon Products and Development Co. Ltd. This Order is rescinded due to the finding that a County lacks legal authority to enter into tax abatement agreements for lessee -owned improvements or fixtures located on taxable real property (as determined by the conclusion(s) reached in Texas Attorney General Opinion GA -0600 dated Jan. 29, 2008). Further, the Court approves termination and disaffirmance of the tax abatement Agreement dated May 7, 2007 between Srazoria County and Kemlon Products and Development Co. Ltd. and notification to Kemlon of the County's disaffirmance and termination of that abatement. Taxes abated for 2007 are authorized to be recovered. Motion carried, all present voting aye. STATE OF TEXAS COUNTY OF BRAZORIA I, Joyce Hudman, Clerk County Court and Ex- Officio Clerk of the Commissioners' Court of Brazoria County, Texas, do hereby certify that the foregoing is a true and correct copy of that certain; ORDER NO. 64 RE: ORDER RESCINDING COURT ORDER NO. 35 OF FEBRUARY 27, 2007 GRANTING TAX ABATEMENT TO KEMLON PRODUCTS AND DEVELOPMENT CO. LTD. AND AUTHORIZING NOTIFICATION OF TERMINATION AND DISAFFIRMANCE OF TAX ABATEMENT as passed by the Commissioners' Court on the 26TH day of FEBRUARY, A.D., 2008, REGULAR Term of Commissioners' Court and as the same appear(s) in the Commissioners' Court Records of Brazoria County, Texas, GIVEN UNDER MY HAND AND SEAL OF OFFICE, this the 10TH DAY OF MARCH A. D., 2008 JOYCE HUDMAN, Clerk County Court and Ex- Officio Member of the Commissioners' Court of Brazoria County, Texas By: A4��2 eWeSS� DeputyO AFFIDAVIT OF PUBLICATION The Pearland Reporter News 2404 South Park Pearland, Texas 77581 State of Texas Brazoria and Harris Counties I, Lloyd Morrow, hereby certify that the notice hereby appended was published in THE REPORTER NEWS, a newspaper of general circulation in Brazoria, Harris and Galveston Counties, for / issues, as follows: No. l Date jaq 20�. No. Date 20 No.. Date 20 No. Date S 20 No. Date 20. CFO Subscribe and swor . • before me this /7 day of Go "" G A. �0WI URA ANN Ee' •i.iiii• LA Notary Public, State of exas ''toots, Commission Expires 09-09-2006: ra-w•fa•y-•i f.i�. v"r i►i/i! ri,.i i'i•+ ..� - Laura Ann Emmons, Publisher Notary Public State of Texas d og - /Ai d p -KewilOY) ,��0®4 ®/, ----- 191-1-— KewilbY m ' r-ruousneaRugust"16,and-" I August 23,2006 • - - - -NOTICE-OF-PUBLIC- HEARING OF THE CITY "OF PEARLAND . Notice is hereby given that on the 11th dayi of September, 2006, of;6:30 p.m.,the City Council of the City of Pearland, Brazoria, Fort Bend, and Harris Counties; Texas, will 'con- - duct a Public Hearing in the Council. Chambers, 'City Hall, 3519 Liberty Dive, Pearland,Texas,to consider the creation of a reinvest-' ment zone and tax abate- ment for Kemlon Products and Development Company in accordance with Section 312.201 of the Tax Code and City of .Pearland's Guidelines For Granting Taxing Abatements. At said hearing all interested parties shall have the right and opportunity to appear and be heard on the sub- ject. Is! Young Lorfing, TRMC , City Secretary `This site is accessible to ldis- abled individuals. Forspe- cial'assistance, please'call Young Lorfing at(281)-652- I, 1655,prior to the meeting so, that-appropriate arrange- . R ments can be made. 0 , . AFFIDAVIT OF PUBLICATION The Pearland Reporter News • 2404 South Park - • I Pearland, Texas 77581 • • State of exas grazoria Ind Harris Counties • • 1;14oyd orrow, hereby certify that the notice hereby appended was published in THE -EPORTER NEWS a newspaper of general circulation in Brazoria, Harris • and Gal eston Counties, for - 4 issues, as follows:. , • • No / Date 7 --,24. . - - -20 No .- Date • 20 • • . Date No . • 20 -No .Date • 20 • No • Date - 20 • '1} • • : . la p / t F.0411/11. •4 .. 4 • ‘.______ • ' • i . . Subscn and'sworn to before me this ) day of ^ LAMA Atilt EIVINIONSs 1 t (.....) j ". . .4, l'. Nom Public,state°t 0T9e.loos: . . " . sion tApIreS 09- t • raw,- Laura Ann Emmons, Publisher , . • Notary.Public, State of Texas • • 7I-1-- 1<ewilon ' Published August 16,and j August 23,.2006 NOTICE OF-PUBLIC 1 HEARING OF THE CITY OF PEARLAND l i Notice is hereby given that on the 11th day of September, 2006, at 6:30, p.m.,the City Council of the' City of Peadand, Brazoria, Fort Bend, and--Harris Counties, Texas, will con- duct a Public Hearing in the. Council Chambers, City; Hall, 3519 Liberty I Drive, Peadand,Texas,to consider • the creation of a reinvest-' ment zone and tax abate- ment for Kemlon Products and Development Company' in accordance with Section' I 312.201 of the Tax Code' and City of Pearland's Guidelines For Granting Taxing,Abatements. At said hearing all interested parties shall have the right and opportunity to.appear and be heard on the sub- ject. Is/ Young Lolling, TRMC' City Secretary This site is accessible to dis- abled individuals. For spe- cial assistance, please call! Young Lorfing at(281)652-' 11655,prior to the meeting so' that appropriate arrange=' . ments can be made. • EXHIBIT Exhibit page 1 of 3 pages ;46, • County: Brazoria Project: Kemlon Pearland M.S.G.No.: 061338 Job Number: 1201 FIELD NOTES FOR 11.505 ACRES Being a tract of land containing 11.505 acres, located in the H.T.& B. R.R. Company Survey, Section 2, Abstract 542, and the H.T.& B. R.R. Company Survey, Section 3, Abstract 232, in Brazoria County, Texas; Said 11.505 acres being all of a call 10.06 acre tract of land as described in Brazoria County Clerk's File.(B.C.C.F.)Number 98-021423 and being out of a call 29.90 acre tract of land recorded in the name of Pearland Building II Limited Partnership in B.C.C.F.Number 97-022679 and being out of Lots 64 and 65 of the Zycblinski Subdivision as recorded in Volume 29, Page 43, of the Brazoria County Deed Records (B.C.D.R.); Said 11.505 acres being more particularly described by metes and bounds as follows (bearings are based on.the description of said 29.90 acre tract of land as recorded in B.C.C.F.Number 97-022679): BEGINNING at a concrete monument found on the west right-of-way line of State Highway 35 (one hundred feet wide) at the southeast corner of said 29.90 acre tract and said 10.06 acre tract and the northeast corner of a call 6.0460 acre tract of land recorded in the name of Brazoria County Drainage District No. 4 in B.C.C.F.Number 95-033401; Thence, with the south line of said 29.90 acre tract and said 10.06 acre tract and the north lines of said 6.0460 acre tract and a tract of land recorded in the name of John Ward Williams in. Volume 752, Page 405, of the B.C.D.R., South 89 degrees 59 minutes 42 seconds West, at_731.00 feet pass a 1/2 inch iron rod found at the southwest corner of said 10.06 acre tract and continuing an overall distance of 836.39 feet to a 5/8 inch iron rod set for the southwest corner of the herein described tract; Thence, through and across said 29.90 acre tract, North 00 degrees 03 minutes 54 seconds West, a distance of 599.34 feet to a 5/8 inch iron rod set for the northwest comer of the herein described tract on the north line of said 29.90 acre tract and the south line of a tract of land recorded in the name of Raymond Haak in Volume (91)922, Page 738, of the B.C.D.R.; Thence, with the north line of said 29.90 acre tract and the south line of said Haak tract, South 89 degrees 59 minutes 00 seconds East, at 105.39 feet pass a 1/2 inch iron rod found at the northwest corner of said 10.06 acre tract and continuing an overall distance of 836.39 feet to a 1/2 inch iron rod found on the west right-of-way line of said State Highway 35 at the northeast corner of said.29.90 acre tract and said 10.06 acre tract; Exhibit page 2 of 3 pages Thence,with said west right-of-way line and the east line of said 29.90 acre tract and said 10.06 acre tract, South 00 degrees 03 minutes 54 seconds East, a distance of 599.02 feet to the POINT OF BEGINNING and containing 11.505 acres of land. • iE°f.re* Mic ael Hall,R.P.L.S. MICHAEL HALL • Texas Registration No. 5765 =10 5765 4��. ' o a. 0 01R 1 ** • Miller Survey Group Ph: (713)413-1900 July 20,2006 061338 EXHIBIT , PAGE 3 OF 3 PAGES M'M'�o p�730• v O. SET 5/r IR S89'59'001 838.39' FHO yr 1R;� 105.30' FND 1/2 IR 731.00' �.✓ cNs 7a aca4 µ �N 10.05 A pitA� • oNy Na.St.. q 81•<C�• I'"CO 11.505 ACRES tt ,9 m IE a O O O to 41 105.30' „( 1/2'IR 731.00' s"f r ve'�R V �µs 589'59'42*W 838.89 V 6 Me 4 O.a. aanl iB.Gyin P 46. 0 oiso s- FND CON.WON. VVOL. A 0 pu. LEGEND FND = FOUND CON. = CONCRETE MON. = MONUMENT VOL - VOLUME PG. = PAGE No. = NUMBER IR = IRON ROD P.O.C. = POINT OF COMMENCEMENT EXHIBIT P.O.B. - POINT OF BEGINNING R.O.W. = RIGHT—OF—WAY BRAZORIA COUNTY DEED RECORDS BEING 11.505 ACRES LOCATED WITHIN THE B.C.C.F. = BRAZORIA COUNTY CLERK'S FILE H.T. & B.R.R. COMPANY SURVEY, SECTION 3, A-232, AND THE H.T. & B.R.R. COMPANY SURVEY, SECTION 2, A-542 AND BEING OUT OF A CALLED 29.90 ACRE TRACT OF LAND AS DESRCIBED IN B.C.C.F. No. 97-022679 IN BRAZORIA COUNTY, TEXAS NOTES: A BEARINGS ARE BASED CT THE DESCRIPTION O5. C CALL 10.08 ACRE TRACT AS RECORDED IN B.C.C.F. No. 9B-021423. SUBJECT EAS EASS AND EMENT HASSBEENDESCRIPTION REPAREDFBY MILLER SURVEY*GROUP SURVEY GROUP AND ACCOMPANIES THIS EXHIBIT. 1760 WEST SAM HOUSTON PARKWAY NORTH HOUSTON,TEXAS 77043 PHONE 713-413-1900 FAX 713-413-1944 JOB NO.: 1201 SCALE: 1'=200' DATE: 07-20-06 FIELD BOOK: N/A DWG.NO.: 1201—EXH1 DRAWN BY: PBC CHID BY: MWH /AB NO.: 061336 EXHIBIT a 11) C. Other Estimated Taxes Generated by Project (1) Sales Taxes: 20 : $ /� �3a 20 : $ !�/ ` 9 20 : $ , 20 : $ 20 : $ 20 : $ 20 : $ 20 : $ (2) Other Taxes or fees (if known, impact fees, building fees, etc.): D. Estimated Appraised Value on Site: Building Bus. Personal Land &Fixed Property Equipment & Inventory I. Total of pre-existing value 1,310 s6O 767 I).c) 3)2/c 'Di U©D (Jan 1 preceding abatement) II. Estimated value of NEW land added /WOO Estimated value of NEW improvements 3/560/v oQ i j o a)/�v0 Estimated value of NEW fixed Uj vdd equipment Estimated value of NEW personal property and inventory added Total of NEW value added (Total columns in Sec. II above) ,/bUv,vUv III. Total value at end of Tax Abatement /f'(aOQ 4 7c7J Ian 9i`/J4006 (Total Part I &II) TAX ABATEMENT REQUESTED % of eligible property for a term of years (Or) ( Requesting Staggered Tax Abatement Terms as follows: EXHIBIT APPLICATION FOR TAX ABATEMENT IN THE 2 C CITY OF PEARLAND It is recommended that this application be filed at least 90 days prior to the beginning of construction of the installation of equipment. The filing of this document acknowledges familiarity and conformance with Guidelines and Criteria for Granting Tax Abatement in a Reinvestment Zone Created in the City of Pearland (attached). Please review Instructions attached before executing this application. This application will become part of the agreement and any knowingly false representations will be grounds for the City to void the agreement. Original copy of this request should be submitted to the Pearland Economic Development Corp. Executive Director, City of Pearland, 3519 Liberty Drive, Pearland, Texas 77581. Please attach exhibits and additional information. APPLICANT INFORMATION do-ri cam,I Application Date 7- 7- Company Name_be re/erzte,i -di 0 Number of Current Employees a& Address Ay,727 4/ i-Y/a,. Annual Sales (10 96 06)P } Consecutive years in business Corporation ( ) Partnership ( Proprietorship ( ) Please submit financial statements for the prior two years. PROJECT INFORMATION Type of facility: Manufacturing (v' Reg. Distribution Center ( ) (See Instructions) Regional Service ( ) Reg. Entertainment Center ( ) Other Basic Industry ( ) Location address and description of area to be designated as reinvestment zone (attach map showing site and legal description): /y a i( /✓o r i, 410, R�r f 64 A, Description of eligible improvements (real property) to be constructed (This includes fixed equipment, buildings, parking lots, etc.): 824,5 ex paw,�,6� Y lD�r k.rCo /I/0 Wi j7. .i, Fitt,L�1 i T a✓�, C A rl i '' >r�/a4 r rye'sd--t�� CY G3vc d i17' _ /-_1lrLtT!✓? Cent ?_le1�Z_� Description of ineligible property to be included in project. (This includes inventory and personal property.): Will this project require any permits by other federal, state or county agencies? If so, please list the name of the permit, the permitting agency and a description of why and what the permit is needed for: /}74 • The proposed reinvestment zone is located in: City County >?A- Z R s 4- School District P ,¢�L¢�� College District M Other Taxing Jurisdictions 23Rq zi-R/"3. D D Tax ID number cam,, ce): 9 64-3o o, 3 .ov-- - / 6 Description of product(s) or service to be provided (proposed use): /00 Description of operations, processes involved, general overview: ,./fg,-i,�, ., ‹,j1 1.D€ , s S ce.u.a �� r r� e rei p‘41 ; ( ,J ATTACH A STATEMENT explaining the general nature and extent of the project, describing existing site and improvements; describe all proposed improvements and provide list of improvements and equipment for which abatement is requested. Include a proposed time schedule for undertaking and completing the planned improvements as well as the company officials and agents who will oversee the construction. Describe other sites that are under consideration. NEW PLANT ( ) EXPANSION (v) MODERNIZATION ( ) ECONOMIC INFORMATION A. Construction Estimates IF MODERNIZATION: Commencement Date: /Yv rY / o& Estimated Economic Life of Construction Man Years: / Existing Plant: 30 Years Completion Date: A-fir[r ' 6 7 Added Economic Life from ° Peak Construction Jobs .�"5-'d Modernization: • .'�.� Years B. Permanent Employment Estimates (FTE's) C.9 L/ c-c. / Current Employment 35 S p Current Annual Payroll -1/67 & 7-// )4. average annual or hourly salary ,i Number of jobs retained (4 )/ ) created ( SO) at start/opening of this project 45 in year a G o 7 5 years into operation in year U / 0 Local Transfer Total Est. Salaries , 20 c>7 5 l S . .0 1 c?a0 20 �fr 0 a S.3e) 000 , 20v5 .20 c 30, a67-0 C. Other Estimated Taxes Generated by Project (1) Sales Taxes: 20 : $ 20 : $ /*2-)9 >IjZei 20 : $ Litt 20 $ "A-4 20 : $ 20 : $ 20 : $ 20 : $ 20 : $ (2) Other Taxes or fees (if known, impact fees, building fees, etc.): D. Estimated Appraised Value on Site: Building Bus. Personal Land &Fixed Property Equipment & Inventory I. Total of pre-existing value 1310,S60, 2 .762, / 3;2/(1'4 toe (Jan 1 preceding abatement) II. Estimated value of NEW land added `WOO Estimated value of NEW improvements 3,<5'�C�,v�D i o ev, csro Estimated value of NEW fixed 67,0/Odd equipment Estimated value of NEW personal ___-____ property and inventory added Total of NEW value added (Total columns in Sec. II above) /boo, III. Total value at end of Tax Abatement /L/(.0(a)13 4 '7v 7/ 1 aQ yi yd'at DO() (Total Part I &II) TAX ABATEMENT REQUESTED % of eligible property for a term of years (Or) ( Requesting Staggered Tax Abatement Terms as follows: EXHIBIT"D" MANPOWER REPORT I, of Kemlon Products and Development Company,do certify that on ,20 there were individuals employed full time at Kemlon Products and Development Company. Printed Name: Title: Date: THE STATE OF TEXAS § COUNTY OF § BEFORE ME, the undersigned Notary Public, on this day personally appeared of Kemlon Products and Development Company,being by me duly sworn on his/her oath deposed and said that he/she is duly qualified and authorized in all respects to make this affidavit;and that every statement contained in the Manpower Report is within his/her knowledge and true and correct. SUBSCRIBED AND SWORN TO BEFORE ME on the day of , to certify which witness my hand and official seal. NOTARY PUBLIC, STATE OF TEXAS Printed Name: My Commission Expires: COPY THE STATE OF TEXAS § COUNTIES OF BRAZORIA, § FORT BEND, AND HARRIS § TAX ABATEMENT AGREEMENT This Tax Abatement Agreement("Agreement") is entered into by and between the City of Pearland, Texas, a home rule city and Municipal Corporation of Brazoria, Fort Bend, and Harris Counties,Texas,duly acting by and through its City Manager("City"),and Kemlon Products and Development Company LTD.,("Kemlon"),duly acting by and through its WITNESSETH': WHEREAS, on the 25th day of September, 2006 the City Council of the City of Pearland, Texas, passed Ordinance No. 1299 establishing Reinvestment Zone #15 in the City of Pearland, Texas, for general business tax abatement, as authorized by Chapter 312, Tax Code, V.A.T.S. as amended ("Code"); and WHEREAS, the City previously adopted Resolution No. R2006-121, which established appropriate guidelines and criteria for governing reinvestment zones and tax abatement agreements to be entered into by the City as contemplated by the Code; and WHEREAS,the City's objective is to maintain and/or enhance the general business economic and employment base of the Pearland area for the long term interest and benefit of the City, in accordance with Resolution No. R2006-121 and the Code; and WHEREAS,the contemplated use of the Premises,as hereinafter defined,the contemplated improvements to the Premises in the amount as set forth in this Agreement and the other terms hereof are consistent with encouraging development of said Reinvestment Zone in accordance with the purposes for its creation and are in compliance with Resolution No.2006-121 and the guidelines and criteria adopted by the City and all applicable law; and WHEREAS, the Improvements as defined below constitute a major investment within the Reinvestment Zone that will substantially increase the appraised value of property within the zone and will contribute to the retention or expansion of primary and secondary employment within the City; and WHEREAS,there will be no substantial adverse affect on the provision of city services or on its tax base and the planned use of the Premises will not constitute a hazard to public safety,health, or welfare; now, 1 THEREFORE : For and in consideration of the mutual agreements and obligations set forth below, the sufficiency of which is hereby acknowledged by the parties hereto,Kemlon and City mutually agree as follows: 1. The property to be the subject of this Agreement shall be that property described by metes and bounds and map attached hereto as Exhibit"A" ("Premises"). 2. Construction of Kemlon's improvements on the Premises,described in Exhibit"B" ("Improvements") will cost approximately four million dollars ($4,000,000.00) and is to be substantially complete on or about June 6,2007; provided,that Kemlon shall have such additional time to complete the Improvements as may be required in the event of"force majeure"if Kemlon is diligently and faithfully pursuing completion of the Improvements. For this purpose, "force majeure"shall mean any contingency or cause beyond the reasonable control of Kemlon including, without limitation, acts of God or the public enemy, war, riot, civil commotion, insurrection, governmental or de facto governmental action(unless caused by acts or omissions of Kemlon),fires, explosions or floods, and strikes. The date of completion of the Improvements shall be defined as the date a Certificate of Occupancy is issued by the City of Pearland. 3. Kemlon agrees and covenants that it will diligently and faithfully, in a good and workmanlike manner,pursue the completion of the Improvements as a good and valuable considera- tion of this Agreement. Kemlon further covenants and agrees that all construction of the Improvements will be in accordance with all applicable state and local laws and regulations or valid waiver thereof. In further consideration, Kemlon shall thereafter, from the date a Certificate of Occupancy is issued until the expiration of this Agreement, continuously operate and maintain the Premises as Kemlon,limiting the use of said Premises to that use which is consistent with the terms of this Agreement and the general purpose of encouraging development or redevelopment of the Reinvestment Zone during the period that the property tax exemptions evidenced herein are in effect. 4. Kemlon agrees and covenants that the Improvements shall provide a minimum of twenty(20)jobs during the period of the abatement. Accordingly,Kemlon shall provide to the City annual manpower reports (Exhibit"D") within sixty (60) days following the end of each calendar year. 5. Subject to the terms and conditions of this Agreement, and subject to the rights and holders of any outstanding bonds of the City,a portion of ad valorem property taxes assessed to the Property and otherwise owed to the City shall be abated. City hereby acknowledges that it is not aware of any terms or conditions of any outstanding bonds,which would invalidate this Agreement. Said abatement shall be an amount equal to fifty percent (50%) of the taxes assessed upon the increased value of the Improvements and Fixed Equipment,annually for a period of seven(7)years beginning January 1, 2007, and ending December 31, 2013, in accordance with the terms of this 2 Agreement and all applicable state and local regulations. The taxable value shall be determined on a uniform and equal basis of assessment by the methods used by the Brazoria County Tax Appraisal District, which information necessary for abatement shall be provided by Kemlon to the chief appraiser of said district. Estimated values,estimated abated values,and estimated base year values for the Improvements are listed in Exhibit "B". 6. Kemlon further agrees that the City, its agents and employees shall have the right to enter upon the Premises at any reasonable time and to inspect the Improvements in order to determine whether the construction of the Improvements is in accordance with this Agreement and all applicable federal, state, and local laws, ordinances, and regulations or valid waiver thereof. After completion of the Improvements, the City shall have the continuing right to enter upon and inspect the Premises at any reasonable time, after 24 hours' notice has been given, to determine whether the Premises are thereafter maintained and operated in accordance with this Agreement and all applicable federal, state, and local law, ordinances, and regulations. The City shall conduct at least one inspection annually to ensure compliance with the guidelines contained in Resolution No. R2006-121. Notwithstanding any other provision of this Agreement, if the City determines that a violation of a federal, state, or local law, ordinance or regulation exists on the Premises, the City may, in addition to any other authorized enforcement action,provide to Kemlon written notice of such violation. For the purposes of this Agreement,Kemlon shall have ten(10) days from the date of the notice to cure or remedy such violation. If Kemlon fails or refuses to cure or remedy the violation within the ten(10) day period,Kemlon is subject to the forfeiture, at the discretion of the City,of any right to any tax abatement for a portion of the period or the entire period covered by this Agreement. 7. Kemlon agrees and covenants that the information provided in the attached Application for Tax Abatement(Exhibit"C")is true and correct and that any materially false or mis- leading information that is provided to the applicable taxing jurisdictions may be grounds for termination of the agreement with possible liability for recovery of abated taxes. 8. In the event that(1)the Improvements for which an abatement has been granted are not completed in accordance with this Agreement; or(2)Kemlon allows its ad valorem taxes owed to the applicable taxing jurisdictions to become delinquent and fails to timely and properly follow the legal procedures for protest and/or contest of any such ad valorem taxes;or(3)Kernlon breaches any of the terms or conditions of this Agreement,then this Agreement shall be in default. In the event that Kemlon defaults in its performance of(1), (2), or (3) above, then the City shall give Kemlon written notice of such default,which notice shall be delivered by personal delivery or certified mail to: Kemlon Products and Development Company, 1424 North Main, Pearland, Texas 77581. If Kemlon has not cured such default within sixty(60) days of said written notice,this Agreement may be modified or terminated by the City. Notwithstanding the provisions set forth herein, this Agreement may be terminated at any time after the execution hereof by agreement of both parties. 3 9. In the event that the facility is completed and begins producing product or service,but subsequently discontinues producing product or service for any reason except fire,explosion or other casualty or accident or natural disaster for a period of one year during the abatement period,then this Agreement shall be in default and shall terminate. The abatement of taxes for the calendar year during which the facility no longer produces shall also terminate. 10. As liquidated damages in the event of default and in accordance with Section 312.205,Tax Code,V.A.T.S.,as amended,all taxes which otherwise would have been paid to the City without the benefit of abatement (but without the addition of penalty; interest will be charged at the statutory rate for delinquent taxes as determined by Section 33.01 of the Tax Code) will become a debt to the City and shall be due, owing and paid to the City within sixty (60)days of the expiration of the cure period or the termination date, whichever is applicable. The City shall have all remedies for the recapture and collection of the lost tax revenue as provided generally in the Tax Code for the collection of delinquent property taxes and in accordance with Resolution No. R2006-121. 11. The City represents and warrants that the Premises does not include any property that is owned by a member of its council or boards,agencies,commissions,or other governmental bodies approving, or having responsibility for the approval of, this Agreement. 12. The terms and conditions of this Agreement are binding upon the successors and assigns of all parties hereto. This Agreement may be transferred or assigned by Kemlon only upon written permission by the City in accordance with Resolution R2006-121,which permission shall not be unreasonably withheld. No assignment shall be approved if the assignor or assignee are indebted to the City for ad valorem taxes or other obligations. 13. It is understood and agreed between the parties that Kemlon, in performing its obligations hereunder,is acting independently,and the City assumes no responsibilities or liabilities in connection therewith to third parties. 14. KEMLON ITS OFFICERS, AGENTS, SUCCESSORS AND ASSIGNS HEREBY RELEASE,ACQUIT,AGREE TO INDEMNIFY,AND HOLDS HARMLESS THE CITY,ITS OFFICERS,AGENTS,EMPLOYEES, SUCCESSORS,AND ASSIGNS,FROM ANY AND ALL KINDS OF CLAIMS, DEMANDS, LOSSES, DAMAGES, INJURIES, RIGHTS,CAUSES OF ACTION,OR JUDGMENTS OF WHATSOEVER CHARACTER OR NATURE, INCLUDING ATTORNEYS' FEES, WHICH MAY ARISE AS A RESULT OF THIS AGREEMENT. THE PROVISIONS OF THIS SECTION REFLECT THE EXPRESSED INTENTIONS OF KEMLON AND THE CITY AND SHALL SURVIVE THE TERMINATION, EXPIRATION, OR CANCELLATION OF THIS AGREEMENT. 15. It is understood and agreed by the City and Kemlon that if the Premises has been designated and taxed as agricultural land pursuant to Chapter 23,Subchapter C,Tax Code,V.A.T.S., that this Agreement shall not be effective and no abatement granted until Kemlon has removed the 4 agricultural use designation and all taxes due pursuant to Section 23.55, Tax Code, V.A.T.S., as amended, (roll back taxes)have been paid. 16. This Agreement was authorized by Resolution of the City Council at its council meeting on the day of , 2006, authorizing the City Manager to execute the Agreement on behalf of the City. 17. This Agreement is entered into by Kemlon pursuant to authority granted by its President, , on the day of , 20 18. This shall constitute a valid and binding Agreement between the City and Kemlon when executed in accordance herewith. 19. This Agreement is performable in Brazoria County, Texas. 20. Kemlon agrees and covenants to certify annually to the City,while this Agreement is in effect,that Kemlon is in compliance with each applicable term of this Agreement. Witness our hands this day of , ATTEST: CITY OF PEARLAND By: By: Young Lolling, TRMC Bill Eisen City Secretary City Manager APPROVED AS TO FORM: By: Darrin M. Coker City Attorney 5 ATTEST: Kemlon Products and Development Company. By: By: Printed Name: Printed Name: Title: Title: 6 THE STATE OF TEXAS § COUNTY OF BRAZORIA § BEFORE ME, the undersigned Notary Public, on this day personally appeared Bill Eisen, City Manager for the City of Pearland, known to me to be the person whose name is subscribed to the foregoing instrument and acknowledged to me that he executed the same for the purposes and consideration therein expressed. GIVEN UNDER MY HAND AND SEAL OF OFFICE THIS DAY OF , A.D., 20 NOTARY PUBLIC, STATE OF TEXAS Printed Name: Commission Expires: THE STATE OF TEXAS § COUNTY OF § BEFORE ME, the undersigned Notary Public, on this day personally appeared of Kemlon Products and Development Company,known to me to be the person whose name is subscribed to the foregoing instrument and acknowledged to me that he executed the same for the purposes and consideration therein expressed. GIVEN UNDER MY HAND AND SEAL OF OFFICE THIS DAY OF , A.D., 20 . NOTARY PUBLIC, STATE OF TEXAS Printed Name: My Commission Expires: 7 EXHIBIT"A" Page 1 of Property Description [description] 8 Exhibit. "B" IMPROVEMENTS The project will be the expansion of existing facilities for Kemlon Products and Development Company. The Company shall have a minimum number of 20 employees on site during the period of the abatement. Tax abatement will be sought on all items allowed by law.The improvements are expected to cost approximately EXHIBIT "C" APPLICATION FOR TAX ABATEMENT IN THE CITY OF PEARLAND [INSERT] EXHIBIT"D" MANPOWER REPORT I, of Kemlon Products and Development Company,do certify that on ,20 there were individuals employed full time at Kemlon Products and Development Company. Printed Name: Title: Date: THE STATE OF TEXAS § COUNTY OF § BEFORE ME, the undersigned Notary Public, on this day personally appeared of Kemlon Products and Development Company,being by me duly sworn on his/her oath deposed and said that he/she is duly qualified and authorized in all respects to make this affidavit;and that every statement contained in the Manpower Report is within his/her knowledge and true and correct. SUBSCRIBED AND SWORN TO BEFORE ME on the day of , to certify which witness my hand and official seal. NOTARY PUBLIC, STATE OF TEXAS Printed Name: My Commission Expires: • INSTRUCTIONS Applicants and projects must meet the requirements established by the City of Pearland Guidelines and Criteria for Granting Tax Abatement in a Reinvestment Zone found in • Resolution No. R98-59 (attached) in order to receive positive consideration. Section 2 of the Guidelines, for example, sets out regulations governing eligible facilities, eligible and ineligible improvements, terms and economic qualifications. Conformance with all sections, however, is required for eligibility. APPLICANT INFORMATION The taxing unit may consider applicant financial capacity in determining whether to enter into an abatement agreement. Established companies for which public information is available, or the wholly owned businesses of such companies, should include with the application a copy of their latest annual report to stockholders. Other applicants and new companies should attach a statement showing when the company was established, business references (name, contact and telephone number of principal bank, accountant and attorney) and may be required to submit • an audited financial statement and business plan. PROJECT INFORMATION Only facilities listed in Section 2(a) of the Guidelines may receive abatement without applying for a variance. Check guideline definitions in Section 1 to see if project qualifies. If project is a Regional Entertainment Facility, Regional Service Facility, Regional Distribution Center Facility or Other Basic Industry, the application should include market studies, business plans, agreements or other materials demonstrating that the facility is intended to serve a market the majority of which is outside of the City of Pearland region. ECONOMIC INFORMATION Permanent Employment Estimates - In estimating the permanent employment, include the total number of jobs retained or created at this site by your firm as well as known permanent jobs of service contractors required for operation. Estimated Appraised Value on Site - The value as of January 1 immediately preceding abatement should be the value established by the Brazoria County Appraisal District. If the applicant must estimate value because the taxable value is not known or is combined with other properties under a single tax account, please so state. Projections of value should be a "best estimate" based on taxability in Texas. The projection of project values not abated should include personal property and ineligible project-related improvements such as office space in excess of that used for plant administration, housing, etc. SAMPLE PROJECT DESCRIPTION The project will be the construction of a new manufacturing facility that will also include our sales and engineering staff. We expect to have approximately 150-160 employees on site. We expect the project will require the construction of a building of approximately 70,000 square feet at a cost of approximately $2.6-$2.8 million. It is anticipated that fixed manufacturing equipment of approximately $1,500,000 will be included in the project. Tax abatement will be sought on all items allowed by law. SAMPLE TIME SCHEDULE September - Dec 31, 2001 Legal work, conceptual phase, contractor selection January 1 - Jan 30, 2002 Wetlands study, 15t phase architecture, soils engineering, topographical mapping, detention pond engineering February 1-February 28, 2002 Architectural drawings, final engineering, permits and applications March 1 - March 30, 2002 Bids and initial site work April 1-November 15, 2002 Construction November 16 - December 25, 2002 Move-in, start up December 30, 2002 Completion DO NOT WRITE IN THIS AREA -- FOR PROCESSING PURPOSES ONLY 1. EDC contact 2. Precinct 3. Jurisdictions notified / / 4. Initial review completed 5. Review circulated / / 6. ISD concurrence? 7. College concurrence? 8. City concurrence? 9. Letter of Intent / / . 10. Hearing noticed on agenda / / 1.1. Public hearing 12. ISD action 13. College action / / 14. City action / . / 15. Agreement signed / / Kemlon Products & Development Co., Ltd. P.O. Box 2189 Pearland, TX 77588-2189 Ph. (281) 997-3300 fax (281) 997- 1300 July 1, 2006 Mr. Fred Welch, Executive Director Mr. Eric W. Gage, Marketing Manager Pearland Economic Development Corporation 3519 Liberty Drive Pearland, TX 77581 Dear Messer Welch and Gage, Thank you for meeting with me a few weeks ago. As.,I mentioned, Kemlon is considering expanding its manufacturing facility at the Pearland location on North Main. This will involve the construction of an additional 43,000 square feet of manufacturing space. The construction will be architecturally identical to our existing structure and will compliment an already aesthetically pleasing site. We will have two components for this transaction. Kemlon will be the first component and will occupy the building as the tenant. Kemlon will add leasehold improvements to the new expansion building and capital equipment in the form of manufacturing equipment. Typically this covers lathes, mills, saws, EDMs, welders and other metal working personal property. Kemlon employs approximately 239 people at the site at this time. We would expect this to grow over time. We would expect our growth to follow the growth of the oil industry. The second component will involve the landlord. The landlord is Pearland Building II Limited Partnership (Pearland Building II). Pearland Building II is the current owner of the existing site and will be the owner of the 43,000 square foot expanded site. Pearland Building II will contract to build the expansion. Preliminary estimates place the cost of the expansion at somewhere between $2.5 mil and $3.2 mil. Pearland Building II has no employees. Kemlon will be adding additional production equipment in the amount of at least $500,000.00 initially so that the project will produce an additional taxable value of between $3.0 to $3.5 mil initially and perhaps more. The current site already has a taxable value of$6.395 mil. This expansion would ultimately increase the taxable value to almost $10.0 mil, Because there are 2 entities involved, I am enclosing Applications for both. In reality Kemlon and Pearland Building II are related parties and should be viewed as one. Two entities were listed but treated as one in our 1998 application for the first building project. There are many ways in which the PEDC could be of assistance to us in this proposed expansion. These include: 1. Assistance in satisfying the City's Permitting process with an expedited decision making on the part of the City of Pearland. • 2. Making available Regional Detention if possible so that no more on site detention is required. 3. Tax abatements with the City, County, and other taxing entities where available. 4. Others deemed valuable by the PEDC. There may be other ways in which we can work together to make this project beneficial to both which we would like to consider as we proceed. I think by any standard it is clear that Kemlon was good for Pearland and I can say that Pearland has been good for Kemlon. With this expansion we may be able to add as many as 175 people over the years and millions of dollars in plant and equipment. All of this would benefit the taxpayers, businesses and residents of Pearland and Brazoria County. Please take time to look at what we have provided and let us know if we are heading in the right direction. If we need more information let us know. I look forward to meeting with you in the near future. • Very truly yours, John H. Ring Vice President and General Counsel • • Kemlon Products & Development Company Sept 30,2005 II Sept 30,2001 Sept 30,2002 Sept 30,2003 Sept 30,2004 Preliminary INCOME STATEMENT • Sales $18,261,756.00 $18,262,331.86 $18,024,884.42 $19,949,461.59 $26,981,401.29 Less cost of goods sold 7,659,085.32 7,153,076.19 7,177,737.95 9,008,475.08 11,298,322.07 Gross profit $10,602,670.68 $11,109,255.67 $10,847,146.47 $10,940,986.51 $15,683,079.22 Operating Expenses $1,978,230.87 $1,356,038.38 $1,475,027.26 $1,746,605.87 $2,003,128.53 Depreciation/Amortization 885,342.00 1,121,198.24 927,271.11 1,366,336.23 1,016,952.21 Rent 450,470.76 461,396.38 460,924.43 503,516.83 581,349.25 Salaries and wages 4,139,633.31 2,593,507.18 2,713,938.50 2,992,782.45 3,320,062.68 Taxes and insurance 1,231,075.13 1,461,819.98 1,485,632.00 1,629,187.44 1,977,860.90 Subtotal $8,684,752.07 $6,993,960.16 $7,062,793.30 $8,238,428.82 $8,899,353.57 Net operating profit,<Ioss> $1,917,918.61 $4,115,295.51 $3,784,353.17 $2,702,557.69 $6,783,725.65 Other income & expense 214,901.37 105,840.22 89,191.38 72,661.25 153,243.06 Total income before tax $2,132,819.98 $4,221,135.73 $3,873,544.55 $2,775,218.94 $6,936,968.718. Provision for income tax: 996,714.46 0.00 0.00 0.00 00 Net income $1,136,105.52 $4,221,135.73 $3,873,544.55 $2,775,218.94 $6,936,968.71 , Kemlon Products & Development Company 1 Sept 30,2005 I Sept 30,2001 Sept 30,2002 Sept 30,2003 Sept 30,2004 Preliminary ASSETS Cash &cash equivalents $3,515,491.64 $5,288,452.20 $7,681,320.44 $6,903,393.74 $9,559,427.55 Accounts receivable 2,372,094.95 1,724,924.64 1,953,927.06 2,300,759.85 3,262,710.72 Inventory 766,744.44 847,790.48 :1,131,641.33 1,198,324.08 1,198,324.08 Prepaid expenses & deposits 196,016.12 316,327.88 ' 293,620.40 360,050.47 477,920.15 Total current assets $6,850,347.15 $8,177,495.20 $11,060,509.23 $10,762,528.14 $14,498,382.50 i Equipment. $ 3,747,563.45 $ 3,308,243.19 $2,775,916.70 $ 3,103,775.83 $3,828,778.00 Stocks 2,204.20 2,204.20 2,205.20 2,205.20 2,205,20 Total assets $10,600,114.80 $11,487,942.59 $13,838,631.13 $13,868,509.17 $18,329,365.70 LIABILITIES Current portion Notes payable $66,073.94 $63,924.84 . $11,795.36 $12,323.62 $12,855.52 Accounts payable 348,452.18 411,772.68 ' 259,301.30 424,030.47 542,088.36 Other accrued liabilities 571,007.48 444,698.78 553,026.11 291,373.94 292,071.77 Total current liabilities • $985,533.60 $920,396.30 $824,122.77 $727,728.03 $847,015.65 Long term portion Notes payable banks $0.00 $0.00 $0.00 $0.00 $0.00 Other secured parties 81,686.40 23,885.10 18,507.37 12,910.50 7,580.01 Total liabilities $1,067,220.00 $944,281.40 $842,630.14 $740,638.53 $854,595.66 CAPITAL Capital stock $1,000.00 $1,000.00 $1,000.00 $1,000.00 $1,000.00 Retained earnings 9,531,894.80 10,542,661.19 12,995,000.99 13,126,870.64 17,473,770.04 Total capital and liabilities $10,600,114.80 $11,487,942.59 $13,838,631.13 $13,868,509.17 $18,329,365.70 PEARLAND BUILDING II, L.P. STATEMENT OF FINANCIAL CONDITION As of December 31, 2004 and 2005 (unaudited) 2004 2005 — ASSETS Cash and Cash Equivalents 203,013 202,233 Receivables 400 400 Escrow Accounts 64,200 73,783 Total Current Assets 267,613 276,416 Building, net of depreciation 1,780,052 1,725,672 Land 257,285 257,285 2,037,337 1,982,957 TOTAL ASSETS 2,304,950 2,259,373 LIABILITIES Notes Payable 1,564,919 1,427,811 Lessee Deposits 67,014 67,014 TOTAL LIABILITIES 1,631,933 1,494,825 PARTNERS CAPITAL Contributions 284,663 284,663. Retained Earnings 388,354 479,885 TOTAL PARTNERS CAPITAL 673,017 764,548 TOTAL LIABILITIES AND PARTNERS CAPITAL 2,304,950 2,259,373 PEARLAND BUILDING II, L.P. _ STATEMENT OF INCOME For the Twelve Months Ending December 31, 2004 and 2005 (unaudited) 2004 2005 Rental Revenue 467,749 514,591 Interest Expense, net 126,613 116,349 Depreciation 54,381 54,381 Income 286,755 343,861 Pro Forma Net Income: Income 286,755 343,861 Federal Income Tax @ 35% 100,364 120,351 Pro Forma Net Income 186,391 223,510 P511760 Datasheet http://www.txcountydata.com/datasheetasp?County-----020&Proper P511760 Property Description • Datasheet Prop ySit n Assessment - Owner Address us SoRledaelr I dliin ito:c•:h ca•s Address Legal Description 5ellingRoackeLleirdelit14-04,1 History CommOdkial4tateb :KEMLON PRODUCTS i 1424 N MAIN ;FURN EQUIP OTHER Buiktcwunuitocomatk,,, Land .DEVELOPMENT CO !PEARLAND,TX 77581 PERSONAL PROPERTY S12.77564120 Information ..„ &WHK FAMILY 3o8mxthwat & net w.Improvements :INTEREST LTD • .• faX512-755,1601 •• ce11.512-756-3220 Improvement •%JOHN H RING Sketch .• • r:Location Map :PEARLAND,TX .77588-2189 Brazoria Taxing Entities 0 Exemptions 0 Deed .County Info • Account Search ,GBC-Brazoria County Book: .Owner Search RDB-Road&Bridge :Page: • Address Search .SPL-Pearland ISD Type:! r ;CPL-City Pearland • Property ID • DR4-Braz Co Drain ! Search :#4 Search New County Account Number Abstract/Subdivision Neighborhood w 0:-:0 •jr. 8900-2600-000 Assistance FAQs 5 5 1 s 07 •:0 Links Value Information Forms Type • Value : 9 1 + • :Total Land HS/NHS •-?7;6 CI -I,- . • Total Productivity Market $0 C 4 . •:• -I- - • •••••• •.- • •• Total Improvement HS/NHS $3,481,870 6 . 9 •• • • •• •••• • ••••• •- • • . . ..... Total Market Value $3,481,870 *This value information is preliminary and not certified.These values should not be used in the estimation of taxes as they are subject to change.Prior year certified value information can be obtained by selecting the"Assessments"option. • Main Area Building Attributes . . ......... ........ ....... ........ .............. Cont Style (4 Foundation 0 Ext.Finish a ! Int.Finish 0 - • • • • . . Roof Style 0 Flooring 0 Heat/AC 0 Plumbing • . Fireplace ' Builtins ; Rooms ; Bedrooms •" '" • • '" • • c Tyler Technologies, Inc. I The Software Group Division Copyright 0 2005 Tyler Technologies,Ino.12be&Mtwara Group Division.AA rIghlo reserved.For lechnieel problems WM Pis Web elle.Memo smell the Webrnesler. • • • • R177106 Datasheet http://www.txcountydata.com/datasheet.asp?County=p20&Propel R177106 Property Description 0 Alan Mau t duoctami c Datasheet ... rty Situs .. ........ .. AerlTstale• Owner Address � P • Legal Description yU r.Assessment ropeAddress •M?RparhSRialderlfo.;and • Historyt lat ,.. (ATNledd Ym otek .. Uprna(WAYkrMq Zj rem n Land FEARLAND BUILDING 1424 N MAIN ST HWY A0542 H T&B R R, II LIMITED 35 TRACT 64A,ACRES 512-7S6.1120 Information .PARTNERSHIP `PEARLAND,TX 77581 9.12 3113 North Water.Burnet e Improvements ,202 E VIE]O DR ciis i 75615001 e Improvement Sketch FRIENDS WOOD,TX • • v Location Map 77546-5549 • Taxing Entities Q - Exemptions Q Deed Brazoria c County Info GEC--Brazoria County Book:97 e Account Search RDB-Road&Bridge Page:022679 a Owner Search SPL-Pearland ISD Type:DV ' I,Address Search ,CPL-City Pearland 07/02/97 c Property ID DR4-Braz Co Drain , Search #4 Search . Account Number • Abstract/Subdivision Neighborhood r New County 0542-0050-000 :A0542-H T&B R R SPL.4-Spl Abst/Strata •4 Assistance FAQs ...... . . ... .. . ._......... v Links Value Information Forms Type Value • • Total Land HS/NHS $136,800 Total Productivity Market $0 Total Improvement HS/NHS $2,570,320 Total Market Value $2,707,120 *This value information is preliminary and not certified.These values should not be used in the estimation of taxes as they are subject to change.Prior year certified value information can be obtained by selecting the"Assessments"option. Main Area Building Attributes Cont Style 0 Foundation Q Ext.Finish Q Int.Finish Q Roof Style Q Flooring Q Heat/AC Q • Plumbing . Fireplace Builtins Rooms Bedrooms • • Tyler Technologies, Inc. I The Software Group Division Copyright 0 7006 Tyler Technologies,Inc"The Software croup Division.M rights reserved.For technical problems with pas Wob site.please omell the Webmester. R165711 Datasheet http://www.txcountydata.com/datas11eet.asp?County=020&Proper • R165711. Property p rty Description Datasheet ... ... .. .. .. ...... ..... .. ...... .......... ....... ....... ............. Stan rd7Wodatcs falda Owner Address Property Situs Rea/Astale Assessment Legal Description Address Sr91ngB Raefmtia(•arM History • Caro ed5taicla . n Land -PEARLAND BUILDING- 'HWY 35 OFF .A0232 H T&B R R, arm rtroImabrnnzsram Information II LIMITED .PEARLAND,TX 77581 ,!TRACT 65,ACRES S12-7561120 r, ma Information Improvements 'PARTNERSHIP i19.76 3GB Northwater•Burnet 202 E VIEJO DR fax512-756;1601 r,Improvement renslzast 3z2o • Sketch FRIENDSWOOD,TX e Location Map i 77546-5549 • • Brazoria ' Taxing Entities Q , Exemptions Q Deed County Info • !GBC-Brazoria County `Book:97 e.Account Search TRDB-Road&Bridge ' Page:022679 • F Owner Search °SPL-Pearland ISD Type:DV • e Address Search CPL-City Pearland 07/02/97 E Property ID ;DR4-Braz Co Drain • • • Search #4 I Search • Account Number 1 Abstract/Subdivision Neighborhood c New County 0232-0029-000 'A0232-H T&B R R j SPL.6-Spl Assistance • Abst/Strata6 e FAQs e.Links Value Information n Forms - TypeValue Total Land HS/NHS $197,600 Total Productivity Market $0 Total Improvement HS/NHS $0 Total Market Value $197,600 • *This value Information is preliminary and not certified.These values should not be used in the estimation of taxes as they are subject to •change.Prior year certified value information can be obtained by selecting the"Assessments"option. Main Area Building Attributes Cont Style 0 ` Foundation © • Ext.Finish Int.Finish Roof Style 0 Flooring Q Heat/AC Q Plumbing Fireplace Builtins Rooms Bedrooms • - cE Tyler Technologies, Inc. The Software Group Division Copyright O 2006 Tyler Technologies.Ine.I The Software Group DMsion.AP tighIs reserved.For technical problems rit this Web silo,please email the Webmasler. R508341 Datasheet http://www.txcountydata.com/datasheet.asp?County=020&Propel R508341 Property Description @lam Saida&Associate r:Datasheet .. ......... P ............._. .. Pro a Situs • . .. .. ..._...... .Ma{Idute• E.Assessment Owner Address Address Legal Description SNIIeyRoarksReee'irlaGwd .. ........ .......... ... .. 'ema[talRea rtg eln' History ra m Land PEARLAND BUILDING HWY 35 OFF A0232 H T&B R R, sumetradna?rocamm Information II LIMITED PEARLAND,TX 77581 'TRACT 65B,ACRES s12456-1120 PARTNERSHIP :.94 309 Nash Water•Ouenei Improvements fax 512asbi 501 202 E VIEJO DR cg11517-75e-3220 e Improvement Sketch FRIENDS WOOD,TX • • e Location Map 7.7546-5549 Brazoria Taxing Entities Exemptions 0 Deed_ County Info GBC-Brazoria County !Book: Account Search ,RDB-Road&Bridge Page: Owner Search SPL-Pearland ISD . j Type: e Address Search CPL-City Pearland m Property ID :DR4 DR4-Braz Co Drain Search #4 Search Account Number . Abstract/Subdivision • Neighborhood New County 0232-0029-120 ;A0232-H T&B R R SPL.1-Spl Abst/Strata 1 Assistance eFAQs . .. • •••••.. ... ..• . .... .. .. . .. ... Links Value Information m Forms Type Value Total Land HS/NHS $9,400 Total Productivity Market $0 • .Total Improvement HS/NHS $0 Total Market Value $9,400 *This value Information Is preliminary and not certified.These values should not be used in the estimation of taxes as they are subject to change.Prior year certified value information can be obtained by selecting the"Assessments"option. Main Area Building Attributes • Cont Style Q Foundation 0 Ext.Finish O Int.Finish p Roof Style Q Flooring 0 Heat/AC Q . Plumbing Fireplace Builtins Rooms Bedrooms Tyler Technologies, Inc. The Software Group Division Copyright 0 TON Tyler Tecrnobgfee.Inca The ooibWre Grout D icion.A➢,Iohto reserved.For technical problems NiN bOo Web site,pleas,emell Ire Webmeeler. Exhibit page 1 of 3 pages County: Brazoria Project: Kemlon Pearland M.S.G.No.: 061338 Job Number: 1201 FIELD NOTES FOR 11.505 ACRES Being a tract of land containing 11.505 acres, located in the H.T.& B. R.R. Company • Survey, Section 2, Abstract 542, and the H.T.& B. R.R. Company Survey, Section 3, Abstract 232, in Brazoria County, Texas; Said 11.505 acres being all of a call 10.06 acre tract of land as described in Brazoria County Clerk's File (B.C.C.F.) Number 98-021423 and being out of a call 29.90 acre tract of land recorded in the name of Pearland Building II Limited Partnership in B.C.C.F. Number 97-022679 and being out of Lots 64 and 65 of the Zycblinski Subdivision as recorded in Volume 29, Page 43, of the Brazoria County Deed Records (B.C.D.R.); Said 11.505 acres being more particularly described by metes and bounds as follows (bearings are based on the description of said 29.90 acre tract of land as recorded in B.C.C.F.Number 97-022679): BEGINNING at a concrete monument found on the west right-of-way line of State Highway 35 (one hundred feet wide) at the southeast corner of said 29.90 acre tract and said 10.06 acre tract and the northeast corner of a call 6.0460 acre tract of land recorded in the name of Brazoria County Drainage District No. 4 in B.C.C.F.Number 95-033401; Thence, with the south line of said 29.90 acre tract and said 10.06 acre tract and the north lines of said 6.0460 acre tract and a tract of land recorded in the name of John Ward Williams in Volume 752, Page 405, of the B.C.D.R., South 89 degrees 59 minutes 42 seconds West, at 731.00 feet pass a 1/2 inch iron rod found at the southwest corner of said 10.06 acre tract and continuing an overall distance of 836.39 feet to a 5/8 inch iron rod set for the southwest corner of the herein described tract; Thence, through and across said 29.90 acre tract, North 00 degrees 03 minutes 54 seconds West, a distance of 599.34 feet to a 5/8 inch iron rod set for the northwest corner of the herein described tract on the north line of said 29.90 acre tract and the south line of a tract of land recorded in the name of Raymond Haak in Volume (91)922, Page 738, of the B.C.D.R.; Thence, with the north line of said 29.90 acre tract and the south line of said Haak tract, South 89 degrees 59 minutes 00 seconds East, at 105.39 feet pass a 1/2 inch iron rod found at the northwest corner of said 10.06 acre tract and continuing an overall distance of 836.39 feet to a 1/2 inch iron rod found on the west right-of-way line of said State Highway 35 at the northeast corner of said 29.90 acre tract and said 10.06 acre tract; • Exhibit page 2 of 3 pages Thence, with said west right-of-way line and the east line of said 29.90 acre tract and said 10.06 acre tract, South 00 degrees 03 minutes 54 seconds East, a distance of 599.02 feet to the POINT OF BEGINNING and containing 11.505 acres of land. • �E o..,rF � •��ST c0elcr R9s - .*yam Michael Hall,R.P.L.S. MICHAEL HALL. • Texas Registration No. 5765 s o 5765 .0�:Q, • • • • Miller Survey Group Ph: (713)413-1900 July 20,2006 061338 EXHIBIT _ PAGE 3 OF 3 PAGES Bpy11ot 4 15B' (IpA.P• SET 0/s'IR S89'59'00"E 838.39' IND Itr 1 O 105.30' FHD 1/2'IR 731.00' 90 F5 6 ,,,OW2 1D1N p PF�,'"' 4A o g71p7�10 w 104 y 1 A g"o�+k0 o ya 11.505 ACRES g ;4 o m 105.30' n4D 1/Y IR 731.OD' a r 5/6'RI p 55 S89'59'42"W 838.39 !� WtRD 6 W CNL 80 o.4 P.O.B. ,}yAy Ytl..�gpA� Go5Q53401 / I FRO cqv.MOH. BP•GF• LEGEND FND = FOUND CON. = CONCRETE MON. = MONUMENT VOL. = VOLUME PG. = PAGE No, = NUMBER IR = IRON ROD P.O.C. = POINT OF COMMENCEMENT EXHIBIT ��''[�� -IBIT P.O.B. = POINT OF BEGINNING R.O.W. = RIGHT—OF—WAY B.C.D.R. = BRAZORIA COUNTY DEED RECORDS BEING 11.505 ACRES LOCATED WITHIN THE B.C.C.F. = BRAZORIA COUNTY CLERK'S FILE H.T. & B.R.R. COMPANY SURVEY, SECTION 3, A-232, AND THE H.T. & B.R.R. COMPANY SURVEY, SECTION 2, A-542 AND BEING OUT OF A CALLED 29.90 ACRE TRACT OF LAND AS DESRCIBED IN B.C.C.F. No. NOTES: • 97-022679 1N BRAZORIA COUNTY, TEXAS 1. BEARINGS ARE BASED THE DESCRIPTION OF A CALL0.08 ACRE TRACT AS RECORDED IN B.C.C.F. No.. 98-021423. 2. A E SUBJECTEASEMENT HAS S AND SBEEN CPR PARED BYRIPTION OF {MILLER SURVEYCGROUP SURVEY GROUP AND ACCOMPANIES THIS EXHIBIT. 1760 WEST SAM HOUSTON PARKWAY NORTH • HOUSTON,TEXAS 77043 PHONE 713-413-1900 FAX 713-413-1944 JOB NO.: 1201 SCALE: 1.' 200' DATE: 07-20-05 FIELD BOOK: N/A DWG.NO.: 1201—EXH1 DRAWN BY:.PBC 0HK. BY: MWH Md B NO.: 061336 • Exhibit page 1 of 3 pages • County: Brazoria Project: Kentlon Pearland M.S.G. No.: 061338 Job Number: 1201 FIELD NOTES FOR 11.505 ACRES Being a tract of land containing 11.505 acres, located in the H.T.& B. R.R. Company • Survey, Section 2, Abstract 542, and the H.T.& B. R.R. Company Survey, Section 3, Abstract 232, in Brazoria County, Texas; Said 11.505 acres being all of a call 10.06 acre tract of land as described in Brazoria County Clerk's File (B.C.C.F.) Number 98-021423 and being out of a call 29.90 acre tract of land recorded in the name of Pearland Building II Limited Partnership in B.C.C.F. Number 97-022679 and being out of Lots 64 and 65 of the Zyclili„ski Subdivision as recorded in Volume 29, Page 43, of the Brazoria County Deed Records (B.C.D.R.); Said 11.505 acres being more particularly'described by metes and bounds as follows (bearings are based on the description of said 29.90 acre tract of land as recorded in B.C.C.F.Number 97-022679): BEGINNING at a concrete monument found on the west right-of-way line of State Highway 35 (one hundred feet wide) at the southeast corner of said 29.90 acre tract and said 10.06 acre tract and the northeast corner of a call 6.0460 acre tract of land recorded in the name of Brazoria County Drainage District No. 4 in B.C.C.F.Number 95-033401; Thence, with the south line of said 29.90 acre tract and said 10.06 acre tract and the north lines of said 6.0460 acre tract and a tract of land recorded in the name of John Ward Williams in Volume 752, Page 405, of the B.C.D.R., South 89 degrees 59 minutes 42 seconds West, at 731.00 feet pass a 1/2 inch iron rod found at the southwest corner of said 10.06 acre tract and continuing an overall distance of 836.39 feet to a 5/8 inch iron rod set for the southwest corner of the herein described tract; Thence, through and across .said 29.90 acre tract, North 00 degrees 03 minutes 54 seconds West, a distance of 599.34 feet to a 5/8 inch iron rod set for the northwest corner of the herein described tract on the north line of said 29.90 acre tract and the south line of a tract of land recorded in the name of Raymond Haak in Volume (91)922, Page 738, of the B.C.D.R.; Thence, with the north line of said 29.90 acre tract and the south line of said Haak tract, South 89 degrees 59 minutes 00,seconds East, at 105.39 feet pass a 1/2 inch iron rod found at the northwest corner of said .10.06 acre tract and continuing an overall distance of 836.39 feet to a 1/2 inch iron rod found on the west right-of-way line of said State Highway 35 at the northeast corner of said 29.90 acre tract and said 10.06 acre tract; Exhibit page 2 of 3 pages Thence, with said west right-of-way line and the east line of said 29.90 acre tract and said 10.06 acre tract, South 00 degrees 03 minutes 54 seconds East, a distance of 599.02 feet to the POINT OF BEGINNING and containing 11.505 acres of land. 'CE OF,reir • Michael Hall,R.P.L.S. MICHAEL HALL • Texas Registration No. 5765 %•<, 6765 Y: '9 ;.Poss)040 SUR • • Miller Survey Group Ph: (713)413-1900 July 20,2006 061338 EXHIBIT ___, PAGE 3 OF 3 PAGES v1<,11.apR, SET 5/5'IR S89'69'001 838.99' 83D yr 105,39' �-FND 1/2'IR 731.00' ..._J+[} I &O,O.F.11 I -ry 03 11.505 ACRES g c ppqqgi ILI m o 0 0 o m rn 0 z 105.39' 6 FND 1/2'IR 751.00' MT 5/8-91 d 01`, S89'S9'42"iP 838.39 / N�IFs 4 O 73 3 7 A �55 i y°1,01 / I FNO CDR.MOH. 7p . LEGEND FND = FOUND CON. = CONCRETE MON. = MONUMENT VOL = VOLUME PG. = PAGE No. = NUMBER IR = IRON ROD P.O.C. = POINT OF COMMENCEMENT EXHIBIT P.0,13. = POINT OF BEGINNING R.O.W. = RIGHT-OF-WAY B.C.D.R. = BRAZORIA COUNTY DEED RECORDS BEING 11.505 ACRES LOCATED WITHIN THE B.C.C.F. = BRAZORIA COUNTY CLERK'S FILE H.T. & B.R.R. COMPANY SURVEY, SECTION 3, A-232, AND THE H.T. & B.R.R. COMPANY SURVEY, SECTION 2, A-542 AND BEING OUT OF A CALLED 29.90 ACRE TRACT OF LAND AS DESRCIBED IN B.C.C.F. No. 97—D22679 IN BRAZORIA COUNTY, TEXAS NOTES: 1. BEARINGS ARE BASED THE DESCRIPTION OF A CALL 10.08 ACRE TRACT AS RECORDED IN B.C.C.F. Iiiiiii.i.�� No. 9B-021423. 2. A E SUBJECTEA EASEMENT HAS S AND SBEEN CPR PARED BRIPTION OF Y�MILLER SURVEY*GROUP SURVEY GROUP AND ACCOMPANIES THIS EXHIBIT. 1760 WEST SAM HOUSTON PARKWAY NORTH HOUSTON,TEXAS 77043 PHONE 713-413-1900 FAX 713.413-1944 JOB NO.: 1201 SCALE: 1'=Z00. DATE: 07-20-06 FIELD BOOK: N/A DWG.N0: 1201-EXHI DRAWN BY: PBC CHK. BY: MWr! 1A&O NO.: 057335 PattalittEdbibliikilibirowioewo post x Assistance Application Form Applicant Information Company Name: KE 1-4Lo to NA.C TS . - -i) Co , L-T Address: F. Zl 8' ' • I Lt24 Company Official: J o ► l N.) G Title: U P / (7 c�N E'2 Telephone: n 1 - q 9 -1- 3 0 v FAX: g i - q R L 3 O v Please submit third party reviewed financial statements or IRS tax filings for the prior two years. Project Description Applicant MUST attach a statement fully explaining the project. Describe future site improvements, business operations, and economic impacts of the proposed project. If the company will be required to obtain any State or Federal permits,please detail which permits and why they are required. The company must ask for assistance from the PEDC. Description of Facility(Select those that apply) Corporation( ) Partnership Proprietorship( ) New Plant ( ) Expansion ( ) Modernization ( ) Manufacturing( ) Sales ( ) Office/Professional ( ) Other Industry ( ) Distribution Center ( ) Project Location(Attach site plan): k ` _4 N • Ft i-, tJ EE Total Capital Investment(Excluding Land Value): $ 3: D N 3, 5 .044,a_ '- S Fe-A,A, Estimated Expenses of Bringing Utilities to Site: $ 0 Building Size (Sq.Ft.): 4 5( 00ro Estimated Moving Expenses: $ Estimated Annual Sales Tax Contribution: $ Estimated Value of Fixed Equipment: $ 50 r 0 D Sales Tax Sent to State of Texas (Last year): $ Company Profile:Employment: q a,,S J ((02 LamS , '^z Current Employment: 2 Employment in 5 years: $Gross Annual Payroll: $10, t fl Li-,00 o Annual Payroll in 5 years: $ %Average Hourly Wage: $ I : 5 Avg.Wage in 5 years: $ Za S ack o _ La..* y Q a r- - R.A.GE'-c 61 I 0/0 : ?e10.xxa d E0011:9 ,c RWOION eti et Ratio Assistance Application Form Applicant Information Company Name: L-A-NJ D 1-3 (1.-i>i ni 6,7 `T L i AA t z VthL-t Address: t `t M,, , Ik A t IJ • p` O6 ZI .9 FE-fh2 L Acav t. l V--. Company Official: Jo i*-A) A . . RA tJ 6.7 . Title: V • P- / 0 lA3 N ETR_ Telephone: z- S ( - ci 9 -i - 3 3 o U FAX: 2 2 I - 6 5 Z. - 9 •3 3 o Please submit third party reviewed financial statements or IRS tax filings for the prior two years. Project Description Applicant MUST attach a statement fully explaining the project. Describe future site improvements, business operations, and economic impacts of the proposed project. If the company will be required to obtain any State or Federal permits,please detail which permits and why they are required. The company must ask for assistance from the PEDC. Description of Facility(Select those that apply) Corporation( ) Partnership ( ) Proprietorship( ) New Plant ( ) Expansion N Modernization ( ) Manufacturing Sales ( ) Office/Professional ( ) Other Industry ( ) Distribution Center ( ) Project Location(Attach site plan): I LI Z(4 NJ • M A-i n-1 , pEy...,,,,,,,, Total Capital Investment(Excluding Land Value): $ '3 i 0 '„', 3- AAA- . - .Sc t Estimated Expenses of Bringing Utilities to Site: $ 0 KrM`ok3 Building Size (Sq.Ft.): 4 3,00c.) Estimated Moving Expenses: $ 0 ,Estimated Annual Sales Tax Contribution: $ -IN/0L. Estimated Value of Fixed Equipment: $ .�5 4. Sales Tax Sent to State of Texas (Last year): $ rn/ L Company Profile:Employment: Current Employment: Employment in 5 years: Gross Annual Payroll: $ Annual Payroll in 5 years: $ Average Hourly Wage: $ Avg.Wage in 5 years: $ EXHIBIT"D" MANPOWER REPORT I, of Kemlon Products and Development Company,do certify that on ,20 there were individuals employed full time at Kemlon Products and Development Company. Printed Name: Title: Date: THE STATE OF TEXAS § COUNTY OF § BEFORE ME, the undersigned Notary Public, on this day personally appeared of Kemlon Products and Development Company,being by me duly sworn on his/her oath deposed and said that he/she is duly qualified and authorized in all respects to make this affidavit;and that every statement contained in the Manpower Report is within his/her knowledge and true and correct. SUBSCRIBED AND SWORN TO BEFORE ME on the day of , to certify which witness my hand and official seal. NOTARY PUBLIC, STATE OF TEXAS Printed Name: My Commission Expires: