HomeMy WebLinkAboutResolution - 2011-R0252 - Tax Abatement Agreement - Cymbet Corp. And X-Fab Texas Inc. - 06_09_2011Resolution No. 2011-RO252
June 9, 2011
Item No. 5.17
RESOLUTION
BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF LUBBOCK:
THAT the Mayor of the City of Lubbock BE and is hereby authorized and
directed to execute for and on behalf of the City of Lubbock a Tax Abatement Agreement
with Cymbet Corporation and X-Fab Texas, Inc. and all related documents. Said
Agreement is attached hereto and incorporated in this Resolution as if fully set forth
herein and shall be included in the minutes of the Council.
Passed by the City Council on June 9 , 2011.
� ,/fit• „r
TOM MARTIN, MAYOR
ATTEST:
AQ . _D'Z-
Reb ca Garza, City Secreta
APPR VED AS TO CONTENT:
r'
_0
Rob Allis , t City Manager
Development Services
APPROVED AS TO FORM:
Linda L. Chamales,
Economic Development Attorney
LC: cityatt / Linda / Res -Tax Abatement Cymbct
April 11, 2011
AGREEMENT
STATE OF TEXAS §
COUNTY OF LUBBOCK §
Contract: 10266
Resolution No. 2011-RO252
This Agreement made this 9th day of June , 2011, by and
between the City of Lubbock, Texas, a home rule municipality of the State of Texas
(hereinafter called "City"), and with CYMBET Corporation (hereinafter called
"Cymbet") and X-Fab Texas, Inc. (hereinafter called "X-Fab");
WITNESSETH:
WHEREAS, City received from Cymbet on the 5th day of June, 2010 an
application for tax abatement for improvements to real property owned by X-Fab and for
tangible personal property(equipment) improvements to be owned by Cymbet located at
2301 N. University Avenue, Lubbock, Lubbock County, Texas which is further described
in Exhibit "A"; and
WHEREAS, upon review of the above application it was determined that the
facility and real property is located in the Reinvestment Zone designated by the City in
Ordinance No. 2011-00043 covering the above described property; and
WHEREAS, the Guidelines and Criteria Governing Tax Abatement For Industrial
Projects in the City of Lubbock was adopted by Resolution No. 2009-RO445 of the City
Council of the City of Lubbock. A copy of the Guidelines and Criteria Governing Tax
Abatement for Industrial Projects in the City of Lubbock is attached as Exhibit "B" and
incorporated herein as if fully set forth; and
WHEREAS, the City complied with all the requirements set forth in V.T.C.A.,
Tax Code, Section 312.201; and
WHEREAS, the City complied with all the criteria and guidelines as set forth in
the Guidelines and Criteria Governing Tax Abatement for Industrial Projects in the City
of Lubbock; and
WHEREAS, the City passed Ordinance No. 2011-00043 creating a reinvestment
zone for commercial and industrial tax abatement, said zone including the area which is
described in the attached Exhibit "A"; and
AGREEMENT - CYMBET CORPORATION PAGE 1
WHEREAS, the application received by City from Company is an application for
the expansion of an existing facility, more specifically, building improvements to the
existing facility and the addition of tangible personal property (equipment); and
WHEREAS, V.A.T.C., Tax Code, Sec. 312.002 specifically states that such a
purpose is to be included in the guidelines for tax abatement and to be eligible for such
treatment; and
WHEREAS, Section IV of the Guidelines and Criteria governing Tax Abatement
for Industrial Projects in the City of Lubbock recognizes expansion of an existing facility
and addition of personal property as being eligible for tax abatement status; and
WHEREAS, the City Council does hereby find that all of the Guidelines and
Criteria Governing Tax Abatement, as adopted by Resolution No. 2009-RO445 have
been, or will be, met by Company; and
WHEREAS, the location of the facility and surrounding real property, which are
to be the subject matter of this Agreement, are attached hereto as Exhibit "A" and made a
part of this Agreement for all purposes; and
NOW THEREFORE, for and in consideration of the premises and of the mutual
terms, covenants and conditions herein contained the City, X-FAB and Cymbet do hereby
agree as follows:
SECTION 1. Term. This Agreement shall commence January 1 of the tax year
after the required improvements are substantially completed and shall expire and be of no
further force and effect five (5) years after such date.
SECTION 2. Base Year. The base year applicable to real and personal property,
which is the subject of this Agreement, shall be 2011, and the assessed value of the real
and personal property shall be the assessed value applicable to such property for said
year.
SECTION 3. Base Year Taxes. The taxes upon the real and personal property
shall be paid in accordance with the assessed value of such property for the base year.
Base year taxes upon the real property are thus not abated.
SECTION 4. Abatement of Increase in Base Year Tax. Because the real property
described in Exhibit A has been the subject of a previous ten year tax abatement, real
property taxes applicable to the real property subject to this Agreement shall not be
abated, even to the extent the value for any given year within the term of this Agreement
exceeds the base year taxes.
SECTION 5. Property Ineligible for Tax Abatement. The property described and
set forth in Section IV(6) of the Guidelines and Criteria Governing Tax Abatement for
AGREEMEN'r - CYMBE'r CORPORATION PAGE 2
Industrial Projects in the City of Lubbock (Exhibit "B") is incorporated by reference
herein as if fully set out in this Agreement and fully describes the property ineligible for
tax abatement.
SECTION b. Exemption from Tax. The City covenants and agrees to exempt
from taxation, in accordance with the appropriate Sections above, the following
properties:
(a) All eligible tangible personal property (equipment), owned by
Cymbet, placed in or upon the real property set forth in Exhibit "A",
which does not include any equipment and personal property owned by X-
Fab and already located in the existing facility.
SECTION 7. Economic Qualifications. Cymbet agrees to expend funds
necessary to qualify for tax abatement by expanding and modernizing the existing facility
owned by X-Fab, as set forth in Section IV(3)(b) of the Guidelines and Criteria
Governing Tax Abatement for Industrial Projects in the City of Lubbock (Exhibit "B") on
the property described in Exhibit "A". A description of the kind, number and location of
all proposed improvements is attached in Cymbet's application, Exhibit "C" and
incorporated herein as if fully set forth.
SECTION 8. Value of Improvements. In accordance with V.A.T.C., Tax Code,
Section 312.204(a), which requires the owner of the property to make specific
improvements or repairs to the property in order to be eligible for tax abatement, Cymbet
will expend approximately eight hundred thousand dollars for the expansion of an
existing facility owned by X-Fab and four million three hundred fifty eight thousand two
hundred dollars on new equipment to be located within the reinvestment zone created by
Ordinance No. 2011-00043. In accordance with the agreement between X-Fab and
Cymbet, attached hereto as Exhibit "D," X-Fab hereby agrees to allow Cymbet to make
the improvements or repairs to the property described in Exhibit "A."
SECTION 9. Product Distribution. Cymbet will certify to City that 5011/o or more
of their products are distributed outside of Lubbock County within 24 months of the start
of operation of the new equipment, as required in Section IV 1(b) of the Guidelines and
Criteria Governing Tax Abatement for Industrial Projects in the City of Lubbock.
SECTION 10. Ci1y Access to Property. Cymbet and X-Fab covenant and agree
that City shall have access to the property, which is the subject matter of this Agreement,
upon reasonable notice and during normal business hours, and that municipal employees
shall be able to inspect the property and documents necessary to insure compliance with
the terms and conditions of Company's application for tax abatement, attached as Exhibit
"C", and this Agreement.
AGREEMENT - CYMBET CORPORATION PAGE 3
SECTION 11. Portion of Tax Abated. City agrees, during the term of this
Agreement, to abate taxes on eligible property according to the following schedule.
Year 1:
100%
Year 2:
80%
Year 3:
60%
Year 4:
40%
Year 5:
20%n
SECTION 12. Type of Improvements. Cymbet proposes to modify X-Fab's
existing facility as described in Exhibit "C". Cymbet further states that the proposed
improvements to the property above mentioned shall commenced on June 12, 2010, and
shall be completed May 15, 2011. Cymbet may request an extension of the above date
from City in the event circumstances beyond the control of Cymbet necessitate additional
time for completion of such improvements and such consent shall not unreasonably be
withheld. Cymbet shall provide proof of completion within ten days of completion of
improvements.
SECTION 13. Limitation on Use. X-Fab and Cymbet agree to limit the use of the
property set forth in Exhibit "A" to commercial and/or industrial uses as those terms are
defined in the zoning ordinances of the City of Lubbock and to limit the uses of the
property to uses consistent with the general purpose of encouraging development of the
enterprise zone during the term of this agreement.
SECTION 14. Recapture. Cymbet agrees to be bound by and comply with all the
terms and provisions for recapture of abated taxes in the event of default by Company
pursuant to law and as set forth in Guidelines and Criteria for Tax Abatement in Exhibit
«B „
SECTION 15. Certification. Cymbet agrees to certify annually in writing to the
governing body of each taxing unit that the owner is in compliance with the terms of the
Agreement.
SECTION 16. Compliance. The City may cancel or modify this Agreement if
Cymbet fails to comply with the Agreement.
SECTION 17. Notices. Notices required to be given by this Agreement shall be
mailed, certified mail return receipt requested, to the following addresses:
CITY OF LUBBOCK
Assistant City Manager
Development Services
P.O. Box 2000
Lubbock. Texas 79457
CYMBET CORPORATION.
18326 Joplin Street NW
Elk River, MN 55330
Phone: (763) 633 1790
Fax: (763) 633 1799
AGREEMENT - CYMBET CORPORATION PAGE 4
X-FAB
2301 N. University Ave
Lubbock, Texas 79415
SECTION 18. Effective Date. Notwithstanding anything contained herein to the
contrary, this Agreement shall not be effective until such time as it has been finally
passed and approved by the City Council.
EXECUTED this 9th day of
CYMBET CORPORATION
Monte Johnson & CFO
X-FAB TEXAS, INC.
Lloyd hetzel, Press ent & CE O
U: cityatt/Linda/ Tar Abatement Agmt — Cymbet
April 11, 2011
June , 2011.
CITY OF LU 3BOCK
A Municipal Corporation
TOM MARTIN, MAYOR
ATTEST:
Pa,-e-r� -
Rebe a Garza, City Secretary
APPROVED AS TO CONTENT:
Rob A rson, Assis nt City Manager
Development Services
APPROVED AS TO FORM:
Linda L. Chamales, Economic
Development Attorney
AGREEMENT - CYMBET CORPORATION PAGE 5
Resolution No. 2011-RO252
Exhibit A
Resolution No. 2011-R0252
Exhibit B
Guidelines and Criteria Governing Tax Abatement For
Industrial Projects In The City of Lubbock
SECTION]. General Purpose:
The City of Lubbock is committed to the promotion of high quality development in all parts of the City of
Lubbock, Texas; and to an ongoing improvement in the quality of life for the citizens residing within the
Affected Jurisdiction. The Affected Jurisdiction recognize that these objectives are generally served by
enhancement and expansion of the local economy. The Affected Jurisdiction will, on a case by case basis,
give consideration to providing tax abatement, as authorized by V.T.C.A., Tax Code, Chapter 312, as
stimulation for economic development within the Affected Jurisdiction. It is the policy of the Affected
Jurisdiction that said consideration will be provided in accordance with the guidelines and criteria herein set
forth and in conformity with the Tax Code.
Nothing contained herein shall imply, suggest or be understood to mean THAT the Affected Jurisdiction is
under any obligation to provide tax abatement to any applicant and attention is called to V.T.C.A., Tax
Code, Section 312.002(d). With the above rights reserved all applications for tax abatement will be
considered on a case by case basis.
SECTION 11. Definitions:
As used within these guidelines and criteria, the following words or phrases shall have the following
meaning:
1. Abatement of Taxes: To exempt from ad valorem taxation all or part of the value of certain
Improvements placed on land located in a reinvestment zone designated for economic
development purposes as of the date specified in the Tax Abatement Agreement for a period
of time not to exceed ten (10) years.
2. Affected Jurisdiction: City of Lubbock.
3. Abatement Agreement: (1) A contract between a property owner and an Affected
Jurisdiction for the abatement of taxes on qualified property located within a reinvestment
zone, or, (2) a contract for the abatement of taxes between an Affected Jurisdiction and a
certified air carrier who owns or leases Real Property located within the reinvestment zone or
Personal Property or both as authorized by V.T.C.A., Tax Code, Section 312.204(e)
4. Advanced Technologies: advanced manufacturing which requires higher skills and results in
higher wages and investment.
5. Base Year Value: The assessed value of property eligible for tax abatement as of January l
preceding the execution of an Abatement Agreement as herein defined.
6. Distribution Center Facility: A building or structure including Tangible Personal Property
used or to be used primarily to receive, store, service or distribute goods or materials.
7. Expansion of Existing Facilities or Structures: The addition of buildings, structures,
machinery or equipment to a Facility.
8. Existing Facility or Structure: A facility as of the date of execution of the Tax Abatement
Agreement, located in or on Real Property eligible for tax abatement.
2009 Industrial Tax Abatement Guidelines
October 20, 2009
9. Facility: The improvements made to Real Property eligible for tax abatement and including
the building or structure erected on such Real Property and/or any Tangible Personal Property
to be located in or on such property.
10. Information and Data Center: Facility used to house computer systems and associated
components, such as telecommunications and storage systems. The main purpose of the
facility is running applications that handle the core business and operational data of
organizations, off -site backups and other informational operations.
11. Improvements to Real Property or Improvements: Shall mean the construction, addition to,
structural upgrading of, replacement of, or completion of any facility located upon, or to be
located upon, Real Property, as herein defined, or any Tangible Personal Property placed in or
on said Real Property.
12. Manufacturing Facility: A Facility which is or will be used for the primary purpose of the
production of goods or materials or the processing or change of goods or materials to a
finished product.
13. Medical Services: Facilities such as hospitals, specialty hospitals and other like facilities that
are classified under North American Industrial Classification System Code 622.
14. Modernization/Renovation of Existing Facilities: The replacement or upgrading of existing
facilities.
15. New Facility: The construction of a Facility on previously undeveloped real property eligible
for tax abatement.
16. New Permanent Job: A new employment position created by a business that has provided
employment to an employee of at least 1,820 hours annually and intended to be an
employment position that exists during the life of the abatement.
17. Other Basic Industry: A Facility other than a distribution center facility, a research facility, a
regional service facility or a manufacturing facility which produces goods or services or which
creates new or expanded job opportunities and services a market of which 50% of revenues
come from outside of Lubbock County, Texas.
18. Owner: The record title owner of Real Property or the legal owner of Tangible Personal
Property. In the case of land leased from an Affected Jurisdiction or buildings leased from a
private party or tax exempt property, the lessee shall be deemed the owner of such leased
property together with all improvements and Tangible Personal Property located thereon.
19. Productive Life: The number of years a Facility is expected to be in service.
20. Real Property: Land on which Improvements are to be made or fixtures placed.
21. Regional Services Facility: A Facility, the primary purpose of which is to service or repair
goods or materials and which creates job opportunities within the Affected Jurisdictions.
22. Reinvestment Zone: Real Property designated as a Reinvestment Zone under the provisions
of V.T.C.A., Tax Code, Section 312.202.
2009 Industrial Tax Abatement Guidelines
October 20, 2009
23. Research Facility: A Facility used or to be used primarily for research or experimentation to
improve or develop new goods and/or services or to improve or develop the production
process for such goods and/or services.
24. Tangible Personal Property: Any Personal Property, not otherwise defined herein and which
is necessary for the proper operation of any type of Facility.
SECTION III. Intent of Criteria and Guidelines:
The Intent of the criteria and guidelines, as herein set forth, is to establish the minimum standards which an
applicant for tax abatement must meet in order to be considered for such status by the Affected Jurisdiction.
SECTION IV. Criteria and Guidelines for Tax Abatement:
Any type of Facility will be eligible for tax abatement consideration provided such Facility meets the
following guidelines and criteria:
1. To qualify for Tax Abatement, the company must meet both of the following criteria:
a) The modernization or expansion of an existing facility of any type as herein defined or
construction of a new facility of any type as herein defined.
b) Producer, manufacturer or distributor of goods and services of which 50 percent or more
are distributed outside of Lubbock County.
2. In addition to the aforementioned, the taxing jurisdiction will consider abatement only if the
company meets one of the following criteria:
a) One of the following target industries:
i) Advanced Technologies and Manufacturing
ii) Value-added Agricultural Production including Food Processing and Machinery
iii) Research and Development
iv) Medical Services (as defined in Section 11 Definitions)
v) Warehouse/Distribution
vi) Corporate Headquarters of a RegionaVNational Service Center
vii) Information and Data Centers
b) The project is not included as a target industry, but has the potential of generating
additional significant economic development opportunities to Lubbock
3. The company must meet one of the following criteria:
a) The project will add at least $1 million in real property improvements, or $2
3
2009 Industrial Tax Abatement Guidelines
October 20, 2009
million in new personal property , or 25 new permanent jobs if the
facility is a new company to LubhocIL
b) The project will add at least $500,000 in real property improvements, or $1 million in
new personal property, or 15 new permanent jobs if the facility is an existing company.
4. New or existing facilities,of any type herein defined, located in a reinvestment zone or upon
Real Property eligible for such status will be eligible for consideration for tax abatement status
provided that all other criteria and guidelines are satisfied
5. improvements to Real Property are eligible for tax abatement status.
6. The following types of Property shall be ineligible for tax abatement status and shall be fully
taxed.
a) Real Property;
b) inventories or supplies;
c) tools;
d) furnishings and other forms of movable personal property;
e) vehicles;
f) aircraft,
g) housing;
h) boats;
i) hotel accommodations;
j) motel accommodations;
k) retail businesses;
1) property owned by the State of Texas or any State agency; and,
m) property owned or leased by a member of the affected Jurisdiction that did not have an
active tax abatement in place before they became a member of the governing body or
commission.
7. In order for a Facility to qualify for abatement, the following conditions must apply:
a) The owner or leaseholder of real property must make eligible improvements to the real
property; and,
b) In the case of lessees, the leaseholder must have a lease commitment of at least five (5)
years.
4
2009 Industrial Tax Abatement Guidelines
October 20. 2009
c) It is recommended that facilities located within the certificated territory of the City's
municipally owned electric utility, Lubbock Power and Light (LP&L) utilize LP&L for
electrical services during the term of the abatement.
In reinvestment zones, the amount and term of abatement shall be determined on a case by
case basis, however, in no event shall taxes be abated for a term in excess of ten (10) years.
The amount of the taxable value of Improvements to be abated and the term of the abatement
shall be determined by the municipality in all cases where the property for which tax
abatement is applied for is within the City limits of the City or by the County of Lubbock in all
cases where the property for which tax abatement is applied for is outside of the City limits of
a municipality, but within the County of Lubbock, except that a reinvestment zone that is a
state enterprise zone is designated for the same period as a state enterprise zone as provided
by Chapter 2303, Government Code. The authority of all other taxing units shall be as set
forth in V.T.C.A., Tax Code, Section 312.206.
In enterprise zones, the governing body of each taxing jurisdiction may execute a written
agreement with the owner of the property. The agreement may, but is not required to, contain
terms that are identical to those contained in the agreement with the municipality, county, or
both, whichever applies, and the only terms for the agreement that may vary are the portion of
the property that is to be exempt from taxation under the agreement and the duration of the
agreement.
No property shall be eligible for tax abatement unless such property is located in a
reinvestment zone in accordance with V.T.C.A., Tax Code, Section 312.202 and the tax
abatement application is filed with the taxing jurisdiction before construction begins.
10. Notwithstanding any of the requirements set forth in Section IV Subsection 3, the governing
body of an Affected Jurisdiction upon the affirmative vote of a three -fourths (3/4) of its
members may vary any of the above requirements when variation is demonstrated by the
applicant for Tax Abatement that variation is in the best interest of the Affected Jurisdiction to
do so and will enhance the economic development of the Affected Jurisdiction. By way of
example only and not by limitation the governing body of an Affected Jurisdiction may
consider the following or similar terms in determining whether a variance shall be granted:
a) That the increase in productivity of the Facility will be substantial and hence directly
benefit the economy.
b) That the increase of goods or services produced by the Facility will be substantial and
directly benefit the economy.
c) That the employment maintained at the Facility will be increased.
d) That the waiver of the requirement will contribute and provide for the retention of
existing jobs within the Affected Jurisdiction.
e) Any other evidence tending to show a direct economic benefit to the Affected
Jurisdiction.
11. Taxability;
a) The portion of the value of Improvements to be abated shall be abated in accordance with
the terms and provisions of a Tax Abatement Agreement executed between the Affected
Jurisdiction and the owner of the Real Property and/or Tangible Personal Property,
2009 Industrial Tar Abatement Guidelines
October 20, 2009
(which agreement shall be) in accord with the provisions of V.T.C.A., Tax Code, Section
312.205.
b) All ineligible property, if otherwise taxable as herein described, shall be fully taxed.
12. The governing body of each Affected Jurisdiction shall have total discretion as to whether tax
abatement is to be granted. Such discretion, as herein retained, shall be exercised on a case by
case basis. The adoption of these guidelines and criteria by the governing body of an Affected
Jurisdiction does not:
a) Limit the discretion of the governing body to decide whether to enter into a specific tax
abatement agreement;
b) Limit the discretion of the governing body to delegate to its employees the authority to
determine whether or not the governing body should consider a particular application or
request for tax abatement; or,
c) Create any property, contract, or other legal right in any person to have the governing
body consider or grant a specific application or request for tax abatement.
13. The burden to demonstrate that an application for tax abatement should be granted shall be
upon the applicant. Each Affected Jurisdiction to which the application has been directed
shall have full authority to request any additional information from the applicant that the
governing body of such Affected Jurisdiction deems necessary to assist it in considering such
application.
SECTION V. Criteria and Guidelines for Creation of Reinvestment Zone:
1. No Property shall be eligible for tax abatement unless such property is located in a
reinvestment zone designated as such in accordance with V.T.C.A., Tax Code, Section
312.202. To be designated as a reinvestment zone an area must meet one of the following;
a) Substantially arrest or impair the sound growth of the municipality or county creating the
zone, retard the provision of housing accommodations, or constitute an economic or
social liability and be a menace to the public health, safety, morals, or welfare in its
present condition and use because of the presence of
1. a substantial number of substandard, slum, deteriorated, or deteriorating structures;
2. the predominance of defective or inadequate sidewalks or streets;
3. faulty size, adequacy, accessibility or usefulness of lots;
4. unsanitary or unsafe conditions;
5. the deterioration of site or other improvements;
6. tax or special assessment delinquency exceeding the fair value of the land;
7. defective or unusual conditions of title;
8. conditions that endanger life or property by fire or other cause; or,
2009 Industrial "fax Abatement Guidelines
October 20. 2009
9. any combination of these factors;
a) Be predominantly open and, because of obsolete platting, deterioration of
structures or site improvements, or other factors, substantially impair or arrest
the sound growth of the municipality;
b) Be in a federally assisted new community located in a home rule municipality or
in an area immediately adjacent to a federally assisted new community located in
a home rule municipality;
c) Be located entirely in an area that meets the requirements for federal assistance
under Section 119 of the Housing and Community Development Act of 1974 (42
U.S.C. Section 5318);
d) Encompass signs, billboards, or other outdoor advertising structures designated
by the governing body of the municipality for relocation, reconstruction, or
removal for the purpose of enhancing the physical environment of the
municipality, which the legislature declares to be a public purpose: or,
c) Be reasonably likely as a result of the designation to contribute to the retention
or expansion of primary employment or to attract major investment in the zone
that would be a benefit to the property and that would contribute to the economic
development of the municipality.
2. For purposes of this Section, federally assisted new community is a federally assisted area:
a) That has received or will receive assistance in the form of loan guarantees under Title X
of the National Housing Act (12 U.S.C., Section 1749aa et seq); and,
b) A portion of which has received grants under Section 107 (a)(1) of the Housing and
Community Development Act of 1974, as amended.
3. The governing body of a municipality, as required by Section 312.201, or a county, as
required by V.T.C.A., Tax Code, Section 312.401, shall hold a public hearing on the
designation of an area within its jurisdiction as a reinvestment zone. The burden shall be on
the owner of the property sought to be included in the zone or applicant for the creation of the
reinvestment zone to establish the following:
a) That the requirements of Subsection 1 of this Section have been met.
b) That the improvements sought are feasible and practical.
4. No later than the seventh day before the date set for the above public hearing notice of such
hearing shall be:
a) Published in a newspaper having general circulation in the Affected Jurisdiction.
b) Delivered in writing to the presiding officer of the governing body of each taxing unit that
includes in its boundaries Deal Property that is to be included in the reinvestment zone.
5. At the public hearing above described in Subsection 3 above, any interested person is entitled
to speak and present evidence for or against the designation of such reinvestment zone.
2009 Industrial Tax Abatement Guidelines
October 20, 2009
6. At the conclusion of the hearing described in Subparagraph 3 above, the governing body shall
enter its findings as follows:
a) That the applicant or owner has or has not met his burden as hereinabove set forth, and/or,
b) That the improvements sought are or are not feasible and practical.
c) That the proposed improvements sought will or will not be a benefit to the land to be
included in the reinvestment zone and to the Affected Jurisdiction after the expiration of
an agreement entered into under V.T.C.A., Tax Code, Section 312.204.
7. An application for the creation of a reinvestment zone shall not be granted unless the Affected
Jurisdiction considering such application enters affirmative findings to Subparagraphs a, b,
and c of Subsection 6 above set forth.
8. At the conclusion of the public hearing herein required and upon the affirmative finding of the
goveming body as required by Subsection 7 above set forth, the goveming body may
designate a reinvestment zone in accordance with the provisions of V.T.C.A., Tax Code,
Sections 312.201 or 312.401, whichever Section shall be applicable under the premises.
9. The designation of a reinvestment zone expires five years after the date of the designation and
may be renewed for periods not to exceed five years, except that a reinvestment zone that is a
state enterprise zone is designated for the same period as a state enterprise zone as provided
by Chapter 2303, Government Code. The expiration of the designation does not affect an
existing tax abatement agreement made in accordance with V.T.C.A., Tax Code, Section
312.201 through Section 312.209.
10. Designation of an area as an enterprise zone under the Texas Enterprise Zone Act, Chapter
2303, Subchapter C, Texas Government Code, constitutes designation of the area as a
reinvestment zone under Subchapter B of the Property Redevelopment and Tax Abatement
Act without further hearing or other procedural requirements other than those provided by the
Texas Enterprise Zone Act, Chapter 2303, Subchapter C, Texas Government Code.
SECTION V1. Tax Abatement Agreement:
After the creation of a reinvestment zone as hereinabove authorized a Tax Abatement
Agreement may be executed between the owner and any Affected Jurisdiction. A Tax
Abatement Agreement shall:
a) Establish and set forth the Base Year assessed value of the property for which tax
abatement is sought.
b) Provide that the taxes paid on the base year assessed value shall not be abated as a result
of the execution of said Tax Abatement Agreement.
c) Provide that ineligible property as subscribed in Section IV, Subsection 6, hereinabove
shall be fully taxed,
d) Provide for the exemption of Improvements in each year covered by the agreement only
to the extent the value of such Improvements for each such year exceeds the value for the
year in which the agreement is executed.
2009 Industrial Tax Abatement Guidelines
October 20, 2009
e) Fully describe and list the kind, number and location of all of the improvements to be
made in or on the Real Property.
f) Set forth the estimated value of all improvements to be made in or on the Real Property.
g) Clearly provide that tax abatement shall be granted only to the extent:
I. The Improvements to Real Property increase the value of the Real Property for the
year in which the Tax Abatement Agreement is executed; and,
2. That the Tangible Personal Property improvements to Real Property were not located
on the Real Property prior to the execution of the Tax Abatement Agreement.
h) Provide for the portion of the value of the improvements to Real Property of
improvements to be abated. This determination is to be made consistent with the
provisions of Section IV, Subsection 6, of these guidelines and criteria as hereinabove set
forth.
i) Provide for the commencement date and the termination date. In no event shall said dates
exceed a period of ten years.
j) Describe the type and proposed use of the improvements to Real Property or
improvements including:
l . The type of facility.
2. Whether the improvements are for a new facility, modernization of a facility, or
expansion of a facility.
3. The nature of the construction, proposed time table of completion, a map or drawings
of the improvements above mentioned.
4. The amount of investment and the commitment for the creation of new jobs.
5. A list containing the kind, number and location of all proposed Improvements.
6. Any other information required by the Affected Jurisdiction.
k) Provide a legal description of the Real Property upon which improvements are to be
made.
1) Provide access to and authorize inspection of the Real Property or improvements by
employees of the Affected Jurisdiction, who have executed a Tax Abatement Agreement
with owner to insure improvements are made according to the specifications and
conditions of the Tax Abatement Agreement.
m) Provide for the limitation of the uses of the Real Property or improvements consistent
with the general purpose of encouraging development or redevelopment of the zone
during the period covered by the Tax Abatement Agreement.
n) Provide the contractual obligations in the event of default by owner, violation of the terms
or conditions by owner, recapturing property tax revenue in the event owner defaults or
M
2009 Industrial Tar Abatement Guidelines
October 20, 2009
otherwise fails to make improvements as provided in said Tax Abatement Agreement, and
any other provision as may be required or authorized by State Law.
o) Contain each term agreed to by the owner of the property.
p) Require the owner of the property to certify annually to the governing body of each taxing
unit that the owner is in compliance with each applicable term of the agreement.
q) Provide that the governing body of the municipality may cancel or modify the agreement
if the property owner fails to comply with the agreement.
2. Not later than the seventh day before a municipality or the County of Lubbock(as required by
V.T.C.A., Tax Code, Section 312.2041 or Section 312.402) enters into an agreement for tax
abatement under V.T.C.A., Tax Code, Section 312.204, the governing body of a municipality
or a designated officer or employee thereof or the governing body of the county of Lubbock or
a designated officer or employee thereof shall deliver to the presiding officer of the governing
body of each of the taxing units in which the property to be subject to the agreement is
located, a written notice that the municipality or the County of Lubbock as the case may be,
intends to enter into the agreement. The notice must include a copy of the proposed Tax
Abatement Agreement.
3. A notice, as above described in Subparagraph 2, is presumed delivered when placed in the
mail, postage paid and properly addressed to the appropriate presiding officer. A notice
properly addressed and sent by registered or certified mail for which a return receipt is
received by the sender is considered to have been delivered to the addressee.
4. Failure to deliver the notice does not affect the validity of the agreement.
SECTION VI1. Application
I . Any present owner of taxable property located within an Affected Jurisdiction may apply for
tax abatement by filing an application with the county of Lubbock, when the Real Property or
Tangible Personal Property for which abatement is sought is located within the County of
Lubbock but outside of the City limits of any City or with the appropriate City when the Real
Property or Tangible Personal Property for which abatement is sought is located within the
City limits of a municipality located wholly or partially within Lubbock County.
2. The application shall consist of a completed application form accompanied by:
a) A general description of the improvements to be undertaken.
b) A descriptive list of the improvements for which tax abatement is requested.
c) A list of the kind, number and location of all proposed improvements of the Real Property
Facility or Existing Facility.
d) A map indicating the approximate location of improvements on the Real Property Facility
or Existing Facility together with the location of any or all Existing Facilities located on
the Real Property or Facility.
e) A list of any and all Tangible Personal Property presently existing on the Real Property or
located in an existing facility.
10
2009 Industrial Tax Abatement Guidelines
October 20. 2009
f) A proposed time schedule for undertaking and completing the proposed improvements.
g) A general description stating whether the proposed improvements are in connection with:
1. the modernization of a facility (of any type herein defined); or,
2. construction of a new facility (of any type herein defined); or,
3. expansion of a facility (of any type herein defined); or,
4. any combination of the above.
h) A statement of the additional value to the Real Property or Facility as a result of the
proposed improvements.
i) A statement of the assessed value of the Real Property, Facility or Existing Facility for the
Base Year.
j) Information concerning the number of new jobs that will be created or information
concerning the number of existing jobs to be retained as result of the improvements
undertaken.
k) Any other information which the Affected Jurisdiction, to which the application has been
directed, deems appropriate for evaluating the financial capacity of the applicant and
compatibility of the proposed improvements with these guidelines and criteria.
1) Information that is provided to an Affected Jurisdiction in connection with an application
or request for tax abatement and which describes the specific processes or business
activity to be conducted or the equipment or other property to be located on the property
for which tax abatement is sought is confidential and not subject to public disclosure until
the Tax Abatement Agreement is executed. Information in the custody of an Affected
Jurisdiction after the agreement is executed is not confidential. (V.T.C.A., Tax Code,
Section 312.003).
m) The Affected Jurisdiction to whom the application for tax abatement has been directed
shall determine if the property described in said application is within a designated
reinvestment zone. If the Affected Jurisdiction determines that the property described is
not within a current reinvestment zone then they shall so notify the applicant and said
application shall then be considered both as an application for the creation of a
reinvestment zone and a request for tax abatement to be effective after the zone is created.
SECTION VI11. Default Options
In the event that the applicant, owner or lessee has entered into a tax abatement agreement to
make improvements as defined in Section IV.2 above, but fails to undertake or complete such
improvements; fails to create all or a portion of the new jobs provided by the Tax Abatement
Agreement; or is in default of any of the terms or conditions contained in the Tax Abatement
Agreement; then in such event the Affected Jurisdiction to whom the application for tax
abatements was directed shall give the applicant or owner sixty (60) days notice of such
failure. The applicant or owner shall demonstrate to the satisfaction of the Affected
Jurisdiction above mentioned that the applicant or owner has commenced to cure such failure
2009 Industrial Tax Abatement Guidelines
October 20, 2009
within the sixty (60) days above mentioned. In the event the applicant owner, or lessee fails to
demonstrate that he is taking affirmative action to cure his failure, the Affected Jurisdiction
shall have three options:
(a) The Affected Jurisdiction may renegotiate the Agreement with the applicant, owner or
lessee, in which case the current Guidelines and Criteria Governing Tax Abatement for
Industrial Projects in the City of Lubbock shall apply to the new Agreement, or
(b) The Affected Jurisdiction may determine that good cause exists to cancel the Agreement
and all abatement of taxes shall terminate immediately; or
(c) The Affected Jurisdiction may terminate the Agreement and recapture taxes abated under
Section V1I1. Recapture.
In any of the three options in subparagraph I above, the Affected Jurisdiction to which the
application for tax abatement was directed shall determine whether default has occurred by the
applicant, owner or lessee in the terms and conditions of the Tax Abatement Agreement and
shall so notify all other Affected Jurisdictions. Cancellation or termination of the Tax
Abatement Agreement by the Affected Jurisdiction to which the application for tax abatement
was directed shall constitute simultaneous action to all Tax Abatement Agreements of all other
Affected Jurisdictions.
SECTION IX. Recapture
In the event that any type of facility, (as defined in Section 11, Subparagraphs 5, 6, 7, 8, 10, 11,
12, 14, 18, 20) is completed and begins producing goods or services, but subsequently
discontinues producing goods or services for any reason, excepting fire, explosion or other
casualty or accident or natural disaster or other event beyond the reasonable control of
applicant or owner for a period of 180 days during the term of a tax abatement agreement,
then in such even the Tax Abatement Agreement shall terminate and all abatement of taxes
shall likewise terminate. Taxes abated during the calendar year in which termination takes
place shall be payable to each Affected Jurisdiction by no later than January 31st of the
following year. Taxes abated in years prior to the year of termination shall be payable to each
Affected Jurisdiction within sixty (60) days of the date of termination. The burden shall be
upon the applicant or owner to prove to the satisfaction of the Affected Jurisdiction to who the
application for tax abatement was directed that the discontinuance of producing goods or
services was as a result of fire, explosion, or other casualty or accident of natural disaster or
other event beyond the control of applicant or owner. In the event that applicant or owner
meets this burden and the Affected Jurisdiction is satisfied that the discontinuance of the
production of goods or services was the result of vents beyond the control of the applicant or
owner, then such applicant or owner shall have a period of one Year in which to resume the
production of goods and services. In the event that the applicant or owner fails to resume the
production of goods or services within one year, then the Tax Abatement Agreement shall
terminate and the Abatement of all taxes shall likewise terminate. Taxes abated during the
calendar year in which termination takes place shall be payable to each Affected Jurisdiction
by no later than January 31 st of the following year. Taxes abated in years prior to the year of
termination shall be payable to each Affected Jurisdiction within sixty (60) days of the date of
termination. The one year time period, hereinabove mentioned, shall commence upon written
notification from the Affected Jurisdiction to the applicant or owner.
12
2009 Industrial Tax Abatement Guidelines
October 20, 2009
2. In the event that the applicant or owner has entered into a tax abatement agreement to make
improvements to a facility of any type described in Section I above, but fails to undertake or
complete such improvements or fails to create all or a portion of the number of new jobs
provided by the Tax Abatement Agreement, then in such event the Affected Jurisdiction to
whom the application for tax abatement was directed shall give the applicant or owner sixty
(60) days notice of such failure. The applicant or owner shall demonstrate to the satisfaction
of the Affected Jurisdiction, above mentioned, that the applicant or owner has commenced to
cure such failure within the sixty (60) days above mentioned. In the event that the applicant or
owner fails to demonstrate that he is taking affirmative action to cure his failure, then in such
event the Tax Abatement Agreement shall terminate and all abatement of taxes shall likewise
terminate. Taxes abated during the calendar year in which termination takes place shall be
payable to each Affected Jurisdiction by no later than January 31 st of the following year.
Taxes abated in years prior to the year of termination shall be payable to each Affected
Jurisdiction within sixty (60) days of the date of termination.
In the event that the Affected Jurisdiction to whom application for tax abatement was directed
determines that the applicant or owner is in default of any of the terms or conditions contained
in the Tax Abatement Agreement, then in such even the Affected Jurisdiction, shall give the
applicant or owner sixty (60) days written notice to cure such default. In the event such
default is not cured to the satisfaction of the Affected Jurisdiction within the sixty (60) days
notice period, then the Tax Abatement Agreement shall terminate and all abatement of taxes
shall likewise terminate. Taxes abated during the calendar year in which termination takes
place shall be payable to each Affected Jurisdiction by no later than January 31st of the
following year. Taxes abated in years prior to the year of termination shall be payable to each
Affected Jurisdiction within sixty (60) days of the date of termination.
In the event that the applicant or owner allows ad valorem taxes on property ineligible for tax
abatement owed to any Affected Jurisdiction, to become delinquent and fails to timely and
properly follow the legal procedures for their protest or contest, then in such even the Tax
Abatement Agreement shall terminate and all abatement of taxes shall likewise terminate.
Taxes abated during the calendar year in which termination, under this subparagraph, takes
place shall be payable to each Affected Jurisdiction by no later than January 31 st of the
following year. Taxes abated in years prior to the year of termination shall be payable to each
Affected Jurisdiction within sixty (60) days of the date of termination.
In the even that the applicant or owner, who has executed a tax abatement agreement with any
Affected Jurisdiction, relocates the business for which tax abatement has been granted, to a
location outside of the designated reinvestment zone, then in such event, the Tax Abatement
Agreement shall terminate after sixty (60) days written notice by the Affected Jurisdiction to
the Owner/Applicant. Taxes abated during the calendar year in which termination, under this
subparagraph takes place shall be payable to each Affected Jurisdiction by no later than
January 31 st of the following year. Taxes abated in years prior to the year of termination shall
be payable to each Affected Jurisdiction within sixty (60) days of the date of termination.
The date of termination as that term is used in this Subsection VIII shall, in every instance, be
the 60th day after the day the Affected Jurisdiction sends notice of default, in the mail to the
address shown in the Tax Abatement Agreement to the Applicant or Owner. Should the
default be cured by the owner or Applicant within the sixty (60) day notice period, the
Owner/Applicant shall be responsible for so advising the Affected Jurisdiction and obtaining a
release from the notice of default from the Affected Jurisdiction, failing in which, the
abatement remains terminated and the abated taxes must be paid.
13
2009 Industrial Ta.K Abatement Guidelines
October 20. 2009
In every case of termination set forth in Subparagraphs 1, 2, 3, 4 and 5 above, the Affected
Jurisdiction to which the application for tax abatement was directed shall determine whether
default has occurred by Owner (Applicant) in the terms and conditions of the Tax Abatement
Agreement and shall so notify all other Affected Jurisdictions. Termination of the Tax
Abatement Agreement by the Affected Jurisdiction to which the application for tax abatement
was directed shall constitute simultaneous termination of all Tax Abatement Agreements of all
other Affected Jurisdictions.
In the event that a tax abatement agreement is terminated for any reason what so ever and
taxes are not paid within the time period herein specified, then in such event, the provisions of
V.T.C.A., Tax Code, Section 33.01 will apply.
SECTION X. Miscellaneous:
l . Any notice required to be given by these criteria or guidelines shall be given in the following
manner:
a) To the owner or applicant: written notice shall be sent to the address appearing on the Tax
Abatement Agreement.
b) To an Affected Jurisdiction: written notice shall be sent to the address appearing on the
Tax Abatement Agreement.
2. The Chief Appraiser of the Lubbock Central Appraisal District shall annually assess the Real
and Personal Property comprising the reinvestment zone. Each year, the applicant or owner
receiving tax abatement shall furnish the chief Appraiser with such information as may be
necessary for the abatement. Once value has been established, the Chief Appraiser shall
notify the Affected Jurisdictions which levy taxes of the amount of assessment.
3. Upon the completion of improvements made to any type of Facility as set forth in Section
Vl1I, Subparagraph 1 of these criteria and guidelines a designated employee or employees of
any Affected Jurisdiction having executed a tax abatement agreement with applicant or owner
shall have access to the Facility to insure compliance with the Tax Abatement Agreement.
4. A tax abatement agreement may be assigned to a new owner but only after written consent has
been obtained from all Affected Jurisdictions which have executed such an agreement with the
applicant or owner.
5. These guidelines and criteria are effective upon the date of their adoption by an Affected
Jurisdiction and shall remain in force for two years. At the end of the two year period these
guidelines and criteria may be readopted, modified, amended or rewritten as the conditions
may warrant.
6. Each Affected Jurisdiction shall determine whether or not said Affected Jurisdiction elects to
become eligible to participate in tax abatement. In the even the Affected Jurisdiction elects by
resolution to become eligible to participate in tax abatement, then such Affected Jurisdiction
shall adopt these guidelines and criteria by separate resolution forwarding a copy of both
resolutions to all other Affected Jurisdictions.
7. In the event of a conflict between these guidelines and criteria and V.T.C.A., Tax Code,
Chapter 312, then in such event the Tax Code shall prevail and these guidelines and criteria
interpreted accordingly.
14
2009 Industrial Tax Abatement Guidelines
Ocloher 20, 2009
8. The guidelines and criteria once adopted by an Affected Jurisdiction may be amended or
repealed by a vote of three -fourths of the members of the governing body of an Affected
Jurisdiction during the two year term in which these guidelines and criteria are effective.
15
Exhibit C 4et- r�i 1- /d /l
Resolution No. 2011—RO252
APPUCATION FOR INDUSTRIAL TAX ABATEMENT IN LUBBOCK COUNTY
�1
ORIGINAL COPY OF THIS APPLICATION AND ATTACHMENTS SHOULD BE SUBMITTED TO:
City of Lubbock
Business Development Department
P.Q. Box 2000
1625 1 e Street, Suite 105
Lubbock, TX 79457
(806) 775-2019
f w77
Data of Application: 06f05J2010
Applicant Name: Bill Prieerh
Company Name: Cymbet Corporation and Cymbet Technologies, LLC
Address: 18326 Joplin Street NW; Elk River, MN 65330
Phone: (7631633-1790 Fax: (763) 633-17"
Applicants Representative on tale project: Monte Johnson
Name: Monte Johnson
Address: 18326 Joplin SMW NW; Ek River, MN
Phone: (763) 635-17377_
Type of Ownership: [X I Corporation () Partnership [ ] Proprietorship
Total Current Number Employees: 0
Corporate Annual Sales Per Year. This is a new y
Annual Report Submitted? [ I Yes (X I No
INDAPP20M
Exhibit C
fnduamar tax Abatement AppHmWan
Payw 2
a..
Place a check mark in the box on those statements which are applieWs to your company:
(a) This application Is for a: [ ] New Facility [ ] Expansion [X] Modemization
(b) Is the company a producer, manufacturer or distributor of goods and services of which 50 percent or more are
distributed outside of Lubbock ?(If yes, provide documentation as Attachment 1)
[X ] Yes [ ) No
(c) Check the following target industry which is applicable to your company
[X ] Manufacturing Frttcifity: Elecftwio tEle t ical/Assembly, Semiconductor Fabrication
[ ] Value-added Agricultural Production Including Food Processing and Machinery
[ ] Mod Tech ReeeafcWanufacturing/Assembly
[ ] Aviation/Avionics Production/Rehab
[ ] Warehouse/Distrlbution
(] Corporate Headquarters of a Regional/National Service Center
[ ] The project is not included in the above target industries, but has the potential of generating additional
significant economic development opportunities in Lubbock. (Provide documentation)
(d) [X I The existing facility to be rnodemized or expanded or the property where the new facility is to be built is
located in a designated Enterprise Zone.
(a) [XI New Company to Lubbock
[ ] Existing Company
(f) If New Company checked, which of the following statements apply to the project:
[ ] The project will add at least $1 million in real estate assessed valuation
[X] The project will add at least $2 million of personal property assessed valuation
[ ] The project will add at least 25 new permanent jabs
(g) If Existing Company checked. which of the following statements apply to the project:
[ ] The project will add at least $500,000 in real estate assessed valuation
( ] The project will add at least $1 minion of personal property assessed valuation
[ ] The project will add at least 20 new permanent jobs
(h) Address of proposed facility: 2311 N. University Ave, Lubbock TX 79415
(I) Legal description of proposed facW. See Afiachteki
Q) The proposed facility is located In:
School Disfrlct: LISD
City: Lubbock
Exhibit C
Industrial Tax Abatanvnt Aopfk&Wn
Page 3
(k) Describe product or service to be provided: Establish a monthly manufacturing capacity of 4166 6' Wafers
Please attach the following.
Attachment 2
(a) A general description of the improvements to be undertaken (example: modernization of manufacturing facility
located at 4501 Peach Street and purchase of new manufacturing equipment).
(b) A descriptive list of the improvements for which tax abatement is requested, including:
(1) description of construction and location of all proposed improvements of the Real
Property or Existing Facility, and:
(2) list of new equipment and cost of the equipment.
(c) A list of any and all Tangible Personal Property presently existing on the Real Property or located in an existing
facility.
(d) A proposed time schedule for undertaking and completing the proposed improvements.
Attachment 3
(a) A site map indtoating the approximate location of improvements on the Real Property Facility or Existing Facility
together with the location of any or all Existing Facilities located an the Real Property or Facility.
Attachment 4
(a) A statement of the additional value to the Real Property or Facility as a result of the proposed improvements.
(b) A statement of the assessed value of the Real Property, Facility or Existing Facility for the base year (attach tax
assessment for property from the Lubbock Central Appraisal District).
Part A — Currant Investmertt In Ex"ng Improvements: $6,165,M
Part 0 — Perrnanent Employmmrt Estimates:
(1) if existing facility, what is the current plant employment:
(2) Estimates number of new jam to be created and time frame for creatim of jobs:
New Jobs 75+ Time Frame 12 to 18 months 27 (within X-Fabl
Exhibit C
1»dra trial Tax Abatement AWWaition
Page 4
(3) Opening of Improvements: (Month) March of (Year) 2011_.
Part C — Permanent Payroll Estimates:
(1) If existing facility, what Is the current plant payroll:
(2) Estimated amount of new payroll : $1,185k+ (in 2011)
Part D -- Construction and Employment Estimates: Part D Is not snalicable
(1) Construction start: Month Year
(2) Number of construction Jobs: At Start Peak _
(3) Number of man-years:
Part E — School District Impact Estimates: Part E Is apt 221RU
Give Estimated number of: Families transferred to area
Children added to iSD's
Part F -- City Impact Estimates: P
Finish
(1) Volume of treated water required from City gallons per day.
(2) Volume of effluent to be treated by City gallons per day.
(3) Please provide a statement on planned water and sewer treatment methods, and disposal of effluent if
the facility Is to be located outside City systems,
(4) Has permitting been started? 0 Yes 0 No
Part G — Estimated Appraised Value on Site:
LAND PERSONAL IMPROVEMENTS
PROPERTY
Value of Existing Facility
Before New Constriction
(From Central Appraisal District)
Value of New Improvements NA 4.358.200 800.000
Estimated Total Value After
Improvements 4,360,200 __ 800,000
Exhibit C
lndustrk V Tax Abatement AppWahan
Page 5
Part H — Variance:
(a) Is a variance being sought under Section IV 9(d) of the 'Guidelines"? [ ] Yes [X ] No
(b) If "Yes", attach any supplementary information required.
(a) Has applicant made application for abatement of this facility by other taxing jurisdictions or counties?
[ ] Yes [X] No
(b) If "Yes", please provide:
(1) Dates of Application:
(2) Hearing Dates:
(3) Name of Jurfsdiction(s):
(4) Name of Contact(s):
(4) Attach any letters of intent to abate.
Background Information:
i
To the best of my knowledge, the above Information is an accurate description of project details.
>
•.. Ar . J;'
Printed Name of Company Oftfttial
Title of Company Official
Exhibit C
ATTACHMENT 1
2011 Product Distribution Profile
Outside of Lubbock County 100%
Outside of Texas 98%
Exhibit C
Section II —subsection (i)
EXHIBIT "A" LEGAL
DESCRIPTION
SITUATED in the City of Lubbock and being all of Tract A, Texas Instruments Addition, an
addition to the City of Lubbock according to the map, plat and/or dedication deed thereof,
recorded in Volume 1363, Page 977, Deed Records of Lubbock County, Texas (D.R.L.C.T.)
and all of that abandoned Drake Street as described by Correction Quit Claim Deed from the
City of Lubbock to Texas Instruments Incorporated, a Delaware corporation, recorded in
Volume 1541, Page 32, D.R.L.C.T. and being more particularly described by metes and bounds
as follows:
BEGINNING at an aluminum disk monument found at the Northeast corner of said Drake Street on
the South line of Block 1, Lubbock State School Addition, an addition to the City of Lubbock,
according to the map, plat and/or dedication deed thereof, recorded in Volume 1143, Page 677,
D.R.L.C.T. and also being North 0 deg. 01 min. 09 sec. East - 10.00 feet from the Northwest corner
of Lot 1, Lawson Addition, an addition to the City of Lubbock, according to the map, plat and/or
dedication deed thereof, recorded in Volume 838, Page 211, D.R.L.C.T.
THENCE South 0 deg. 01 min. 09 sec. West, along the East line of said abandoned Drake Street, at
10.00 feet, passing the Northwest comer of said Lawson Addition, continuing along the West line of
said Lawson Addition, at 60.00 feet, passing the Southeast comer of said abandoned Drake Street
and the most Northerly Northeast corner of said Texas Instruments Addition, continuing on for a
total distance of 139.91 feet to an aluminum disk monument found for the Southwest corner of said
Lawson Addition;
THENCE South 89 deg. 58 min. 01 sec. East, along the North line of said Texas Instruments
Addition and the South line of said Lawson Addition, a distance of 143.27 feet to an aluminum disk
monument found for the most Easterly Northeast corner of said Texas Instruments Addition and the
Southeast comer of said Lawson Addition on the West Right-of-way of University Avenue (F.M.
1264, variable width R.O. W.);
THENCE South 0 deg. 32 min. 04 sec_ Last, along the Fast line of said Texas Tnstruments
Addition and the West Right-of-way of said University Avenue, a distance of 2422.31 feet to a
1/2 inch iron rod set for comer;
THENCE North 89 deg. 27 rain. 56 sec. East, along the East line of said Texas Instruments Addition
and the West Right-of-way of said University Avenue, a distance of 10.00 feet to a 112 inch iron rod
set for comer in the North Right-of-way of Loop 289 at the beginning of a curve to the right having a
radius that bears North 89 deg. 50 min. 33 sec. West, a distance of 215.00 feet;
THENCE Along the North Right-of-way of said Loop 289 and along said curve to the right, with
a chord that bears South 42 deg. 01 min. 23 sec. West - 286.98 feet, through a central angle of 83
deg. 43 min. 52 sec. and an arc length of 314.20 feet to a concrete Right-of-way marker found for
corner at the end of said curve;
Exhibit C
THENCE South 84 deg. 14 min. 24 sec. West, along the North Right-of-way of said Loop 289,
a distance of 833.14 feet to an aluminum disk monument found for corner at the beginning of a
curve to the left having a radius that bears South OS deg. 45 min. 28 sec. East, a distance of
5879.65 feet;
THENCE Along the North Right-of-way of said Loop 289 and along said curve to the left,
with a chord that bears South 82 deg. 04 min. 50 sec. West - 443.52 feet, through a central
angle of 04 deg. 19 min. 23 sec. and an arc length of 443.63 feet to an aluminum disk
monument found - for corner at the end of said curve;
THENCE South 83 deg. 47 min. 51 sec. West, along the North Right -of --way of said Loop
289,. a distance of 766.83 feet to a concrete Right-of-way marker found for corner;
THENCE South 73 deg. 26 min. 45 sec. West, along the North Right-of-way of said Loop 289,
a distance of 266.20 feet to an aluminum disk monument found for corner:
THENCE South 89 deg. 52 min. 26 sec. West, along the North Right-of-way of said Loop 289,
a distance of 599.04 feet to an aluminum disk monument found for the Southwest corner of
said Texas Instruments Addition and the Southeast corner of a called 286.15 acre tract of land
conveyed to the City- of Lubbock as described in a deed recorded in Volume 370, Page 55,
D.R.L.C.T.;
THENCE North 0 deg. 00 min. 37 sec. East, along the West line of said Texas Instruments
Addition and the East line of said 286.15 acre tract, a distance of 2318.79 feet to an
aluminum disk monument found for the most Westerly Northwest corner of said Texas
Instruments Addition,
THENCE South 89 deg. 56 min. OS sec. East, a distance of 100.19 feet to an aluminum disk
monument found for an inside ell corner of said Texas Instruments Addition;
THENCE North 0 deg. 00 min. OS sec. West, along the West line of said Texas Instruments
Addition and the East line of said 286.15 acre tract, at 706.65 feet, passing the Southwest
corner of the above mentioned abandoned Drake Street and continuing for a total distance of
766.65 feet to an aluminum disk monument found for the most Northerly Northwest corner of
said Texas Instruments Addition and the Northwest corner of said abandoned Drake comer on
the South line of the above mentioned Block 1. Lubbock State School Addition'.
THENCE South 89 deg. 53 min. 30 sec. Fast, along the North line of said Drake Street and
the South line of Block 1, Lubbock State School Addition, a distance of 2800.50 feet to the
POINT OF BEGINNING and containing 203.377 acres of land.
Exhibit C
SECTION III — Facility Description
Attachment 2
a) Establish a monthly manufacturing capacity 4166 6" wafers.
b) Proposed improvements of the Real Property
(1) Proposed improvements of the Real Property
-Facilities renovations $800,000.00
(2) List of new equipment
Make 1 Model
Usage
Unit Price
Qty
Total
Cost
Denton / UPON
UPON Dep9sition Tool
$1,900,000
1
$1,900,000
Denton / LiCO
LiCO Deposition Tool
$1,000 000
1
$1,000,000
Semitool I SAT
Metal Etch Cathode Definition
$200,000
2
$400,000
Semitool I Equinox
Electrolyte Etch
$600,000
1
$600,000
SVG 186X - refurb
Negative Resist, Polymide
Coal/Develop
$300,000
1
$300,000
Mettler / Toledo AB135-s
Scale, LiCo Deposition
$5,000
1
$5 000
Tenor / AI ha step 2000
Thickness Metal Films
$25,200
1
$25 200
Rudolph / Ellipsometer
Refractive Index Measurement
$15.000
1
$15,000
Omnima 1 RS35C
Metal Resistivity Measurement
$25 000
1
$25,000
Nanos ec 1210
S larity Measurement
$18.500
1
$18 500
Tencor / ELX-5200
Stress Measurement
$29,500
1
$29 500
Leica I Inspection Scope
Visual Inspections
$20,000
2
$40,000
Total Consigned Equipment Coat
$4,358,200
c) A list of any and all Tangible Personal Property presently existing on
the Real Property or located in an existing facility
-None
d) A proposed time schedule for undertaking and completing the proposed
improvements.
-Facility Renovation: 6/12/2010 to 10/30/2010
-Equipment Installation: 9/30/2010 to 5/15/2011
Exhibit C
ATTACHMENT 4
(a) The proposed facility renovations will allow us to establish a environment
conducive for the manufacturing of our product. And as such should add
initial value to the facility. Determination of the ultimate facility value
however will be handled by the county or the counties agent.
Exhibit D Resolution No. 2011—RO252
Service and Wafer Supply Agreement
(the "Agreement")
concluded by and between
X-FAB Texas Inc.
2301 N. University Ave
Lubbock, Texas 79415
USA
hereinafter "X-FAB"
and
CYMBET Corporation
or Cymbet Technologies, LLC
18326 Joplin Street NW
Elk River, MN 55330
USA
hereinafter "CYMBET"
(In this Agreement, X-FAB and CYMBET shall also be referred to jointly as "Parties" or
individually as "Party", respectively)
Preamble
This Agreement shall outline the terms and conditions in ordering process services,
engineering runs, product modifications and products and subsequently their delivery.
This document is CYMBET Corporation and X-FAB Inc. Confidential and Proprietary Information as is not be released
to any individual outside the Parties
Exhibit D
List of Contents
1. DEFINITIONS..................................................................................................................................2
1.1 PROCESS........................................................................................................................................2
1.2 WAFERS.........................................................................................................................................
2
1.3 LEAD-TIMES............................................................................................................
.................... ... 2
1.4 RISK PRODUCTION..........................................................................................................................
2
1.5 CONSIGNED EQUIPMENT..................................................................................................................
2
1.6 CYMBET TECHNOLOGY..................................................................................................................
2
2. PRODUCTS AND SERVICES........................................................................................................
2
2.1 BUSINESS ENGAGEMENT MODEL......................................................................................................
2
2.2 FACILITY IMPROVEMENTS AND EQUIPMENT INSTALLATION..................................................................
3
2.3 PROCESS SERVICES........................................................................................................................
3
2.4 ENGINEERING RUNS.........................................................................................................................
3
2.5 WAFERS..........................................................................................................................................4
2.6 OTHER SERVICES............................................................................................................................
4
2.7 RISK PRODUCTION...........................................................................................................................
4
3. COMMERCIAL AND PROCEDURAL ISSUES..............................................................................4
3.1 FORECAST .................................. .......................... .................. ..................
.......................... ............. 4
3.2 PURCHASE ORDER AND PURCHASE ORDER RELEASE... .........................................................
........... 5
3.3 PRODUCTION LEAD-TIME..................................................................................................................
5
3.4 ORDER AND ORDER ACKNOWLEDGEMENT.........................................................................................
5
3.5 SCHEDULING AND DELIVERY.............................................................................................................
6
3.6 DELAY IN DELIVERY. ................................ ........... .......................................
...... ..................... ....... 6
3.7 VARIATION IN QUANTITIES................................................................................................................
7
3.8 PRICING..........................................................................................................................................
7
3.9 TERMS FOR PAYMENT AND DELIVERY ................ ............... ,................................................................
7
110 TAXES...........................................................................................................
.................... ........... 8
3.11 PURCHASING VOLUME....................................................................................................................
8
4. CO-OPERATION AND CONTACTS....................................................................................I.........
8
4.1 Initial Cleanroom modifications and Enerchip Process Transfer
4.2 Quarterly Business Review meetings
4.3 Contacts
5. QUALITY AND ACCEPTANCE CRITERIA ...............................................
5.1 DEFECTIVITY EXPECTATIONS............................................................................................................
9
5.2 CHANGES........................................................................................................................................
9
6. DEFECTS AS TO QUALITY...........................................................................................................
9
7. TITLE TO PROPRIETARY INFORMATION.................................................................................10
8. ON -SITE INSPECTION AND VENDOR INFORMATION.............................................................10
9. LIABILITY.....................................................................................................................................11
10. FORCE MAJEUR.....................................................................................................................11
11. LEGAL ISSUE..........................................................................................................................11
11.1 CONFIDENTIALITY.........................................................................................................................
11
11.2 SEVERABILITY..............................................................................................................................
12
11.3 MODIFICATION OF AGREEMENT.....................................................................................................
12
11.4 EXPORT REGULATIONS................................................................................................................
12
11.5 GENERAL CONDITIONS.................................................................................................................
12
12. TERM OF AGREEMENT..........................................................................................................13
13. APPENDICES...........................................................................................................................13
1
This document is X-FAB Inc. and CYMBET Confidential and Proprietary Information
Exhibit D
1. Definitions
1.1 Process
1.2 Wafers
1.3 Product Lead-time
"Product Lead-time"is defined as the sum of queuing -time and production span
time for volume production. For this Agreement the Product Lead Time is
defined in Appendix A.
1.4 Risk Production
"Risk Production" is defined as manufacture and delivery without release for
production.
1.5 Consigned Equipment
is defined as
These tools will
be operated by X-FAB employees. X-FAB will maintain the consigned
equipment.
1.6 CYMBET Technology
2. Products and Services
2.1 Business Engagement Model
K
This document is X-FAB Inc. and CYMBET Confidential and Proprietary Information
Exhibit D
2.2 Facility Improvements and Equipment Installation
Costs and timelines for this conversion are included in Appendix F. X-FAB shall
retain ownership of all facility improvements described in Appendix F and shall
be responsible for maintenance of this space.
X-FAB shall be responsible for maintaining, and servicing the consigned
equipment, and keeping appropriate records regarding such use, maintenance
and service during the term of this Supply Agreement. CYMBET will maintain
insurance on the equipment consigned to X-FAB and X-FAB will confirm
insurance coverage for any events that may occur at the premises that could
cause damage to the customer equipment on their premises. The cost of this
service is contemplated and included in the quoted wafer price.
2.3 Process Services
CYMBET will be res onsible for providing to X-FAB all necessary and relevant
information
CYMBET will also
provide, to the best of its ability, all known information
required for continuous manufacturing
of wafers using such Process.
2.4 Engineering runs
Engineering runs are defined as wafers produced under engineering control for
the purpose of qualification of a new mask set, exploration of yield improvement
or other cost improvements or CYMBET requested changes.
CYMBET shall reimburse X-FAB for its expenses for any new mask set made
for CYMBET and for its standard tooling and set-up charges that are specifically
attributable to such request.
This document is X-FAB Inc. and CYMBET Confidential and Proprietary Information
Exhibit D
2.5 Wafers
=Every Wafer shipped to satisfy a production order shall be subject to
acce tance criteria
The pass/fail limits for electrical tests will be jointly agreed to by X-FAB and
CYMBET.
If a Wafer fails the acceptance criteria, the Wafer can be accepted by CYMBET
against a written waiver. If CYMBET does not accept the wafer, it will be
returned to X-FAB.
The X-FAB's labels will indicate the product, lot number and the number of
wafers in the shipment.
2.6 Other Services
The manufacture of Wafers by X-FAB in any non-standard procedure, such as
manufacture under accelerated production schedules Quick -Turn Around=
will
increase the purchase price otherwise payable to X-FAB. At CYMBET's
request, X-FAB will quote the additional charges; provided, however, that X-
FAB's foundry capacity and scheduling may not allow X-FAB to employ such a
non-standard procedure and X-FAB shall have no obligation to employ such
procedure unless expressly requested in CYMBET's purchase orders and
accepted by X-FAB in writing.
2.7 Risk Production
If CYMBET places an order for the manufacture and delivery without release
for production X-FAB makes the delivery subject to the Terms and conditions
for the manufacture and delivery of a product without release for production"
(see Appendix B).
3. Commercial and Procedural Issues
3.1 Forecast
Such forecast shall be updated and given to X_FAB no later than ten (10)
business days before the end of each successive calendar month.
4
This document is X-FAB Inc. and CYMBET Confidential and Proprietary Information
Exhibit D
3.2 Purchase Order and Purchase Order Release
CYMBET will
orders)
urchase
All purchase orders must reference this
Agreement and are subject to acceptance by X-FAB. X-FAB must accept all
purchase orders and purchase order modifications which comply with the terms
of this Agreement
purchase order shall be deemed to be an offer by CYMBET to purchase the
Product pursuant to the terms of this Agreement and, when accepted by X-FAB,
shall give rise to a contract under the terms set forth in this Agreement to the
exclusion of any additional or contrary terms set forth in such purchase order or
purchase order release, notification of acceptance, or any other document not
signed by both parties.
Purchase orders may not be modified if the delivery date for that purchase order
is less than the Product Lead-time New purchase order volumes or
modifications to existing purchase order volumes that fall beneath the minimum
purchase volumes identified in Section 3.11 will trigger the penalty fee
mechanisms identified in Section 3.11. These penalties will be handled under a
separate transaction and will not affect the acceptance or execution of these
purchase orders.
In case the end -of -life of a product is foreseeable, both Parties shall agree on a
production ramp down phase according the forecast scheme in Section 3.1 to
minimise production losses.
3.3 Production Lead-time
When placing its orders, CYMBET shall make due allowance for the Product
Lead-time. Review of the Product Lead-time shall take place at each quarterly
Business review as well as in the 6 month pricing review outlined in Section 3.8
and Appendix A-
lf X-FAB realizes based upon CYMBET's forecast and other business
indications a change in the Product Lead-time, X-FAB will notify CYMBET in
writing. Should the Product Lead-time be increased as provided by written
notification, CYMBET shall be given the opportunity to order - on the basis of
the consumption of the previous period and the former Product Lead-time - the
shortfall resulting from such increased lead-time.
3.4 Order and Order Acknowledgement
All purchases by CYMBET hereunder shall be authorized only upon X-FAB's
receipt of CYMBET's written Purchase Order ("Purchase Order") and X-FAB's
written confirmation ("Order Acknowledgement") of such Purchase Orders.
Each Purchase Order shall make specific reference to this Agreement and shall
contain the following information:
quantity purchases
This document Is X-FAB Inc. and CYMBET Confidential and Proprietary Information
Exhibit D
delivery schedule
price
latest delivery date
The conditions of this Agreement shall apply to all orders of CYMBET placed
during the term of this Agreement regarding the products derived from the
Processes.
X-FAB and CYMBET will mutually agree on a production lot size that optimizes
equipment and throughput efficiencies. Except for pilot runs, CYMBET shall
issue orders in wafer quantities that are multiples of this agreed production lot
size. Any smaller quantities per run will be subject to additional charges.
X-FAB will use its best efforts to notify CYMBET of its acceptance or rejection of
any Purchase Order within seventy-two hours after receipt.
Unless CYMBET's Purchase Order conspicuously states a delivery date not in
conflict with the agreed Product Lead-time, the order is for immediate release to
production.
Acknowledged purchase orders may only be modified under the terms listed in
Section 3.2.
3.5 Scheduling and Delivery
X-FAB's obligation to deliver Wafers within the standard Product Lead-time is
upon X-FAB's and CYMBET's prior completion of a
qualification process and other materials and information required by X-FAB for
the production of the Wafers.
3.6 Delay in Delivery
If X-FAB has reason to believe that it will not be able to deliver in time, X-FAB
shall inform CYMBET in writing about this immediately, giving full reason for the
delay and an updated delivery date. X-FAB shall make best efforts to find
feasible recovery measures to minimise extent of potential delay and to
eliminate queuing and transport delays.
"Notwith standing the
foregoing, the total amount of a penalty must not I of the purchase
price of the respective underlying purchase order in delay.
The right to claim a penalty according to this section shall not arise in the event
the delivery delay was caused by CYMBET or circumstances covered by Force
6
This document is X-FAB Inc. and CYMBET Confidential and Proprietary Information
Exhibit D
Majeure (Acts of God). Price reduction shall not apply to the extent CYMBET
has granted an extension of the delivery time in writing.
3.7 Variation in Quantities
X-FAB shall have the right to make partial shipments before the scheduled
Purchase Order due date. A Purchase Order is fulfilled when shipments are
within
3.8 Pricing
X-FAB and CYMBET agree to negotiate pricing on a 6 month basis (to be
completed by June 1st for the second half of the calendar year and December
1 st for the first half of the next calendar year) , or as required based on changing
market or cost conditions. The following principles will be used as a foundation
for these negotiations.
• Both Parties agree to drive cost reduction activities in order to meet these
pricing targets referenced in Appendix A.
2011 pricing and future target pricing and projected volumes are included in
Appendix A.
3.9 Terms for Payment and Delivery
Prices shall be in USD ("$"). Payments shall be by wire transfer of funds to a
bank elected by X-FAB.
Delivery and prices shall be ex works X-FAB's fabrication facility (Incoterms
2000), 30 days net, excluding customs duties and taxes but including
packaging.
CYMBET shall pay for each invoice received for delivered product that
conforms to the product acceptance criteria. CYMBET shall notify X-FAB in
writing concerning any credits for product that did not pass the acceptance tests
(outlined in Sections 2 and 5) or disputed claims against its payment obligations
under any invoice for a Wafer shipment.
Invoices shall be deemed paid not earlier than on the first day on which X-FAB
can freely dispose of the amounts received from CYMBET. Any amount not
received when due and payable shall bear interest at a rate of one (1) per cent
per month, until the amount is paid in full.
X-FAB hereby reserves the right to reassert title to all Wafers delivered to
CYMBET that have not been paid for within 60 days of when otherwise due.
X-FAB will package, label, mark and otherwise prepare the Wafers for shipment
in a manner consistent with good commercial practices and in accordance with
international regulations.
7
This document is X-FAB Inc. and CYMBET Confidential and Proprietary Information
Exhibit D
3.10 Taxes
All prices stated in this Agreement shall be exclusive of value added tax and
other duties. Where such taxes are levied by a government with respect to this
Agreement or the services and products foreseen by this Agreement, they shall
either be added to the prices stated in this Agreement and paid by CYMBET, or
CYMBET shall provide an official certificate of tax exemption.
3.11 Purchasing Volume
4. Co-operation and Contacts
4.1 Initial cleanroom modifications and
Required meetings
shall take via Web -based conferences or as on site project meetings scheduled
as necessary in light of major project milestone reviews.
4.2 Quarterly Business Reviews
Parties agree to Quarterly Business Review meetings to facilitate and document
on -going production schedules, production results, performance metrics
(including ramp schedule) , Product Lead-time, modifications or improvements,
as well as other pertinent information.
4.3 Contacts
X-FAB:
Name: Andy Wilson
Function: Business Development Manager
Tel. no.: (806) 747-4400 ext. 2240
Fax no.: (806) 747-3111
Address: 2301 N. University Ave.
Lubbock, TX 79415
USA
E-mail andy.wilson(cxfab.com
CYMBET
:
Name:
Morgan Thoma
Function:
VP Engineering and
Manufacturing
Tel. no.:
763-635-1712
Fax no.:
763-633-1799
Address:
18326 Joplin St. NW
Elk River, MN 55330
USA
Glenda Campbell
Customer Service Manager
(806) 747-4400 ext. 2466
(806)747-3111
2301 N. University Ave.
Lubbock, TX 79415
USA
glenda.campbell@xfab.com
Monte S. Johnson
VP & CFO
763-635-1737
763-633-1799
18326 Joplin St. NW
Elk River, MN 55330
USA
This document is X-FAB Inc. and CYMBET Confidential and Proprietary Information
Exhibit D
E-mail mthoma(d.cymbet.com mjohnsonCa-cvmbet.com
5. Quality and Acceptance Criteria
X-FAB has implemented and will maintain a quality assurance system that is
certified to meet the requirements of DIN ISO 9001: 2000 (Quality Management
Systems -Requirements).
CYMBET shall inspect all shipments of Wafers and perform the acceptance
criteria noted in Section 2.5 promptly after receipt. Unless CYMBET notifies X-
FAB in writing of any shortage or non-conformance of the Wafers within thirty
(30) calendar days after receipt, all such claims will be excluded and CYMBET's
remedies shall be limited to the rights specified in clause 6, below. CYMBET
shall not reject delivered Wafers even in the case of minor deficiencies, unless
the Wafers substantially fail to conform to CYMBET's specifications as listed in
the relevant Process documentation. All accept/reject criteria shall be X-FAB
Standard Acceptance and Visual Inspection Specifications, and all critical
dimensions and process tolerances shall be X-FAB Standard Tolerances. Any
Wafer that meets all acceptance criteria, described in clause 2.5, shall be
deemed accepted.
5.1 Defectivity Expectations
CYMBET expects consistent, high quality processing from X-FAB, such that a
die yield expectation can be predicted for CYMBET's products. It is understood
that CYMBET's design and specifications also influence this metric. Once a
baseline of yield has been established a Yield agreement will be put into place
defining the yield expectations and conditions of acceptance.
5.2 Changes
Before making any major change in its manufacturing process or materials
used for and in the manufacture of Wafers, X-FAB shall give CYMBET an
engineering change notice in accordance with X-FAB standard quality
procedures (major change). Such a major change requires a new approval
procedure prior to release to production.
X-FAB will notify CYMBET of any possible changes that will influence the critical
PCM electrical tests according the existing and installed Quality System.
6. Defects as to Quality
Wafers delivered hereunder will meet the applicable specifications and shall be
free from defects in material and workmanship under normal use and services.
• X-FAB is notified in writing upon discovery of any defect in the Wafers,
including a detailed description of such defect;
such Wafers are returned to X-FAB's facility; and
This document is X-FAB Inc. and CYMBET Confidential and Proprietary Information
Exhibit D
• X-FAB's examination of such Wafers discloses that such Wafers are
defective and such defects are not caused by accident, abuse, misuse„
improper installation, repair or alteration by someone other than X-FAB,
improper testing or use contrary to any instructions issued by X-FAB,
then X-FAB shall, at X-FAB's sole option, either repair, replace or credit
CYMBET for such Wafers. X-FAB shall return any Wafers repaired or replaced
under this provisions to CYMBET, transportation prepaid, and reimburse
CYMBET for the transportation charges paid by CYMBET for such Wafers. The
performance of these provisions does not extend the limitation period for any
Wafers beyond that period applicable to the Wafers originally delivered unless
such performance is not completed within ninety (90) days of original shipment.
THE FOREGOING PROVISIONS CONSTITUTE X-FAB'S EXCLUSIVE
LIABILITY, AND THE EXCLUSIVE REMEDY OF CYMBET, FOR ANY
BREACH OF ANY NONCONFORMITY OF THE WAFERS. THIS PROVISION
IS EXCLUSIVE AND IN LIEU OF ALL OTHER WARRANTIES, EXPRESS,
IMPLIED OR STATUTORY, INCLUDING BUT NOT LIMITED TO THE
WARRANTIES FOR MERCHANTABILITY AND FITNESS FOR A
PARTICULAR PURPOSE, WHICH ARE HEREBY EXPRESSLY DISCLAIMED.
Prior to any return of Wafers by CYMBET pursuant to this Section CYMBET
shall afford X-FAB the opportunity to inspect such Wafers at CYMBET's
location, and any such Wafers so inspected shall not be returned to X-FAB
without its prior written consent (RMA in accordance with X-FAB's standard
procedures).
X-FAB shall immediately advise CYMBET by written notice whenever X-FAB
has reason to believe that Wafers may not conform to the applicable
specifications.
7. Title to Proprietary Information
-AII Proprietary Information and a
ies thereof are and will remain the
- As noted in Section 4 CYMBET and X-FAB agree to Quarterly
Business Review meetings to review and document such improvements and/or
modifications. Notwithstanding the foregoing, such masks not used for volume
production within a period of two years or more may be disposed of by X-FAB.
S. On -Site Inspection and Vendor Information
CYMBET's representatives shall be allowed to visit X-FAB's fabrication and test
facilities during normal working hours upon reasonable notice to X-FAB.
=Upon CYMBET's request, X-FAB will allow CYMBET to perform an audit of X-
FAB's manufacturing facility, and X-FAB will provide CYMBET during the audit
with process control information,
10
This document is X-FAB Inc. and CYMBET Confidential and Proprietary Information
Exhibit D
9. Liability
Save as provided under this Agreement, in no event shall either Party be liable
for any indirect, special, incidental or consequential damages resulting from its
performance or failure to perform under this Agreement, or the furnishing,
performance, or use of any goods or services sold pursuant hereto, whether
due to a breach of contract, breach of warranty, or such Party's negligence.
10. Force Majeure
Neither Party shall be liable to pay damages or be entitled to terminate the
Agreement on the grounds of any delay or non-performance during the term of
this Agreement, provided such delay or non-performance is due to
circumstances outside its control, including force majeure, the imposition of
duties by a competent authority or enduring domestic or international problems
(such as war or rebellion, strikes, natural disasters, stoppage of work and
embargoes. However, the aforesaid shall apply with the restriction that both
Parties shall be entitled to terminate this Agreement in writing if the delay or
non-performance of the other Party for the above named reasons should last for
more than 6 months.
11. Legal Issue
11.1 Confidentiality
The Parties shall treat as strictly confidential any confidential information
associated with or related to this Agreement, be it in writing, such as
documents, illustrations, drawings and data media, or oral, whether or not such
material is patentable or protected by copyright. Furthermore, the Parties shall
refrain from disclosing such information to third parties and shall only provide its
employees with confidential information insofar as same is required for the
purpose of the present Agreement and the execution thereof.
=In addition, the obligation of keeping confidential information secret and in
particular the protection of the intellectual property of the Parties shall be set out
in a separate Mutual Nondisclosure Agreements.
Pursuant to this the Parties agree to develop a process to further address
confidential information and trade secrets and to mitigate the disclosure of such
to parties without a need t know. This process shall be reviewed as part of
each Quarterly Business Review noted in section 4.2.
11
This document is X-FAB Inc. and CYMBET Confidential and Proprietary Information
Exhibit D
11.2 Jurisdiction and applicable law
This Agreement is subject to the laws of Texas without regard to its conflicts of
laws, provisions and to the exclusion of the United Nations Convention on
Contracts for the International Sale of Goods (CISG).
X-FAB's domicile shall be the sole court of competent jurisdiction for all disputes
arising directly or indirectly from the contractual relationship. Notwithstanding
the foregoing, Supplier shall be entitled to initiate legal proceedings at
CYMBET's domicile. Each, CYMBET and X-FAB hereby irrevocably waive their
option to request a jury trial in case of any kind of litigation.
11.3 Severability
Should any provision of this Agreement contravene compulsory regulations and
become null and void as a result, the validity of the remaining provisions of the
Agreement shall remain unaffected. The Parties shall in this case replace the
ineffective provisions with such provisions which, while being enforceable, most
closely reflect the original intention of the Agreement.
Should any provisions of this Agreement contravene another agreement
between the Parties and become ineffective as a result, the remaining
provisions of this Agreement shall remain unaffected.
11.4 Modification of Agreement
It is agreed between the Parties that no amendment, deletion from or addition to
this Agreement shall be valid unless made in writing and expressed to be
supplemental to the Agreement.
11.5 Export Regulations
CYMBET is aware that X-FAB is subjected to the EU and US Export Control
Regulations whereby the delivery of several products to certain countries is
banned. CYMBET declares that it shall not export, neither directly nor indirectly,
any such products or documentation relating thereto without first having
obtained all necessary approvals from the US Department of Commerce or from
other US authorities, together with all required permits from the corresponding
authorities of the EU and its member states.
If CYMBET should violate any laws relating to Export and/or Trade and/or by
any Governmental body then X-FAB shall be entitled to terminate this Service
and Wafer Supply Agreement. Upon such occurrence, CYMBET shall have no
further rights, especially X-FAB shall not be held liable for any consequential,
incidental, special, punitive or other kind of damages.
11.6 General Conditions
Neither Party may assign its rights or obligations under this Agreement without
the prior consent of the other, and any purported assignment without such
consent shall have no force or effect, except that a Party may assign this
Agreement incident to the transfer of all or substantially all of its business.
12
This document is X-FAB Inc. and CYMBET Confidential and Proprietary Information
Exhibit D
Subject to the foregoing, this Agreement shall bind and inure to the benefit of
the respective Parties hereto and their successors and assigns.
Neither Party is authorised to act for or on the behalf of the other Party under
this Agreement. Without limiting the generality of the foregoing, each Party is an
independent contractor, and no principal/agent or partnership relationship is
created between them by this Agreement.
No failure or delay by either Party to enforce or take advantage of any provision
or right under this Agreement shall constitute a subsequent waiver of that
provision or right, nor shall it be deemed to be a waiver of any of the other terms
and conditions of this Agreement.
The prevailing part in any legal action arising out of, or related to this
Agreement shall be entitled in addition to any other rights and remedies it may
have, to reimbursement for its expenses incurred in such action, including court
costs and reasonable attorney's fees.
In the event that any provision of this Agreement is prohibited by any law
governing its construction, performance or enforcement, such provision shall be
ineffective to the extent of such prohibition without invalidating thereby any of
the remaining provisions of the Agreement. The captions of sections herein are
intended for convenience only, and the same shall not be interpretative of the
content of such section.
This Agreement, including exhibits, constitutes the entire Agreement between
the Parties as to the subject matter hereof, and supersedes and replaces all
prior or contemporaneous agreements written or oral, regarding such subject
matter, and shall take precedence over any additional or conflicting terms which
may be contained in either Party's Purchase Orders or order acknowledgement
forms.
12. Term of Agreement
The Agreement may be terminated immediately by either Party if the other Parry
• breaches any material provisions of this Agreement and does not remedy
such breach within ninety (90) days of notice breach; or
becomes insolvent via a formal bankruptcy declaration.
13. Appendices
Appendix A - Volumes and Prices for Wafers including Minimum Purchasing
Volume
Appendix B -
Terms and Conditions for the manufacture and delivery of a
product without release for production
Appendix C -
List of Equipment Consigned by CYMBET to X-FAB
Appendix D -
EnerChip Cleanroom Specifications
Appendix E -
EnerChip Cleanroom Construction Plan
Appendix F -
EnerChip Process Transfer Plan
13
This document is X-FAB Inc. and CYMBET Confidential and Proprietary Information
Exhibit D
IN WITNESS WHEREOF this document has been executed by the Parties on the day
and date herein above written.
X-FAB Texas, Inc.
BY
signature of authorised representative
Lloyd Whetzel
printed name
President & CEO
title
date
CYMBET Corporation
BY
signature of authorised representative
William Priesmeyer
printed name
CEO
title
date
This document is X-FAB Inc. and CYMBET Confidential and Proprietary Information
14
Exhibit D
Appendix A
Volumes and Prices for Wafers
Performance Metrics
Pricing Review
Ml
All prices are given in USD ($)_
Mill M
Performance Metrics
Agreed to every six months in conjunction with Pricing review — reviewed each quarter as part
of Quarterly Business Review:
Pricing Review
Wafer pricing shall he agreed to every six months
15
This document is X-FAB Inc. and CYMBET Confidential and Proprietary Information
Exhibit D
Appendix B
>�< FAB
MIXED -SIGNAL FOUNDRY EXPERTS
Terms and conditions for the manufacture and delivery of a product without
release for production (risk production)
by
X-FAB Texas Inc. Lubbock (X-FAB) )
X-FAB processes wafers for customers for the manufacture of circuits or other electronic components_ The
development of the electronic components includes a fitting at X-FAB, which is completed upon delivery of a
sample, and testing at the customer, followed by a written release for production from the customer to X-FAB. The
development stage is completed upon written release of production. Before completion of the development stage,
statements cannot be made with certainty on the function of the product and the risks related to using the product.
Any production prior to the written release for production from the customer entails a risk that the manufactured
products may contain defects which would have been found and removed if the development had been duly
completed.
If the customer places an order for the manufacture and delivery without release for production (risk production),
X-FAB makes the delivery subject to the following conditions:
1. X-FAB manufactures and delivers non -cleared products to the customer, i.e- products which are still under
development and have not been sufficiently tested and which are not designated to be utilized by third
parties, e.g. within a consumer market (hereinafter: products without release).
2. The delivered products without release may be used at the customer for development and testing
purposes only. In the event that the customer nevertheless uses the products in the field, e.g. within a
consumer market, the customer assumes all the liability for any resulting loss and damages and
indemnifies X-FAB from all claims and whatsoever based on product liability. The customer shall take
precautions to rule out any danger to health and life, and any damage to property.
3. The customer expressly undertakes to purchase the ordered products without release even if defects or
potential for improvement are detected for the product after placement of the order and the customer
cannot or does not wish to use the ordered products without release.
4. X-FAB shall assume no guarantee that the delivered products without release exhibit the properties
intended with the development or that they are suitable for any specific purpose. This includes, but is not
limited to X-FAB not being liable for any specific function of the product. Any claims on grounds of defects
are excluded.
5. Any claims for damages against X-FAB in connection with the manufacture, delivery or use of the products
without release are excluded unless liability is mandatory on account of intent or gross negligence.
6. The delivery of products without release shall be subject to the substantive law of the State of Texas The
sole court of competent jurisdiction in this case is the district court of Lubbock, Texas, USA.
7. Should individual clauses of this contract for the delivery of products without release be invalid, the
remaining parts of the contract shall remain binding.
8_ The General Terms & Conditions for Foundry Services of X-FAB, which are made available to the
customer upon request, shall apply as a supplement to these terms and conditions for the delivery of
products without release to the extent that these terms and conditions do not contain an express provision.
16
This document is X-FAB Inc. and CYMBET Confidential and Proprietary Information
Exhibit D
Appendix C
List of Equipment Consigned by CYMBET to X-FAB
Expected
delivery
date
Total Cost
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This document is X-FAB Inc. and CYMBET Confidential and Proprietary Information
Exhibit D
Appendix D
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This document is X-FAB Inc. and CYMBET Confidential and Proprietary Information
Exhibit D
Appendix E
Cleanroom Construction Plan
Item
No.
1
Description of Work
Scheduled
Value
4
6
7
8
9
10
11
12
13
14
16
17
Note: Does not Include Installation
Tools
Item Unit Cost Quantity Total
1
_w
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This document is X-FAB Inc. and CYMBET Confidential and Proprietary Information
Exhibit D
Item Unit Cost Quantity Total
1
1
1
1
1
1
1
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This document is X-FAB Inc. and CYMBET Confidential and Proprietary Information
Exhibit D
Item Unit cost Ouaplift Total
1
1
1
1
1
1
1
i
_ROW
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This document is X-FAB Inc. and CYMBET Confidential and Proprietary Information
Exhibit D
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This document is X-FAB Inc. and CYMBET Confidential and Proprietary Information
Exhibit D
Appendix F
Process Transfer Plan
X-FAB will coordinate the transfer of the' process according to our
corporate guideline G1103. The costs for the process transfer are as follows.
Fallowing is a list of the major items to be addressed in each phase of the Process
Installation.
Stage 1: Planning
• Production ramp -up plans are defined.
• Product characterization and qualification should be agreed with the customer.
Stage 2: Feasibility
Stage 3: Verification
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This document is X-FAB Inc. and CYMBET Confidential and Proprietary Information
Exhibit D
Stage 4: Characterization
Stage 5: Validation
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This document is X-FAB Inc. and CYMBET Confidential and Proprietary Information