2003-136ORDINANCE NO.
AN ORDINANCE ESTABLISHING AN ECONOMIC DEVELOPMENT PROGRAM UNDER
CHAPTER 380 OF TIlE LOCAL GOVERNMENT CODE FOR MAKING GRANTS OF
PUBLIC MONEY TO PROMOTE ECONOMIC DEVELOPMENT AND TO STIMULATE
BUSINESS ACTIVITY IN THE CITY OF DENTON; APPROVING AN ECONOMIC
DEVELOPMENT PROGRAM GRANT AGREEMENT WITH SALLY BEAUTY COMPANY,
INC. REGARDING THE DEVELOPlVIENT OF AN APPROXIMATE 24 ACRE PARCEL OF
LAND LOCATED NORTH OF THE INTERSECTION OF BRINKER ROAD AND
COLORADO BOULEVARD IN THE J. WHITE SURVEY, ABSTRACT NO. 1433, IN THE
CITY OF DENTON, TEXAS; AUTHORIZING THE EXPENDITURE OF FUNDS
THEREFOR; AND PROVIDING AN EFFECTIVE DATE.
WHEREAS, Sally Beauty Company. ("SBC") has made a request of the City of Denton
to establish an economic development program under Chapter 380 of the Texas Local
Government ("Chapter 380") to stimulate the development of commercial property within the
City of Danton; and
WHEREAS, the City Council by this ordinance is establishing an economic development
program under Chapter 380 which will stimulate business activity in the City and promote the
public interest (the "Program");
WHEREAS, to effectuate the Program the City and DCP have negotiated an Economic
Development Grant Agreement (the "Agreement"), a copy of which is attached hereto and made
a part hereof by reference; and
WHEREAS, the City Council finds that the Program and Agreement promote economic
development and will sflmulate commercial activity within the City of Denton for the benefit of
the public; NOW, THEREFORE;
THE COUNCIL OF THE CITY OF DENTON, TEXAS HEREBY ORDAINS:
SECTION 1. The recitals and findings contained in the preamble of this ordinance are
incorporated into the body of this ordinance.
SECTION 2. The City Manager, or his designee, is hereby authorized to execute the
Agreement on behalf of the City of Denton and to carry out the City's responsibilities and rights
under the Agreement, inclucFmg without limitation the authorization to make the expenditures s~t
forth in the Agreement.
SECTION 3. This ordinance shall become effective immediately upon its passage and
approval.
PASSED AND APPROVED this the
ATTEST:
JENNIFER WALTERS, CITY SECRETARY
HERBERT L. PROUTY, CITY ATTORNEY
EULINE BROCK, MAYOR
,2003.
Page 2
ECONOMIC DEVELOPMENT PROGRAM GRANT AGREEMENT WITH
SALLY BEAUTY COMPANY, INC.
This Economic Development Program Grant Agreement ("Agreement") is made
and entered into as of the effective date provided for below, by and between SALLY
BEAUTY COMPANY, INC. ("SBC"), a Delaware corporation, and the CITY OF
DENTON (the "City"), a Texas municipal corporation, for the purposes and
considerations stated below:
WHEREAS, this Agreement is authorized by and made pursuant to the economic
development program provisions of Chapter 380 of the Texas Local Government Code
(the "Act") to promote local economic development and to stimulate business and
commercial activity in the City of Denton; and
WHEREAS, SBC is contemplating the development of that certa'm real property
located within the city limits of the City as more particularly described in Exhibit "A"
attached hereto and made a part hereof by reference (the "Property"); and
WHEREAS, on the 8~h day of April, 2003, SBC submitted an application for
economic development incentives with various attachments to the City concerning the
contemplated use and development of the Property, which is on file in the City's Office
of Economic Development, a copy of which is attached hereto and made a part hereof by
reference as Exhibit "B" (thc "Application for Economic Development Incentives); and
WHEREAS, the City Council finds that the contemplated use and development of
the Property, the proposed improvements provided for herein and the other terms and
conditions of this Agreement will promote economic development and will stimulate
development activity within the City of Denton for the benefit of the public;
NOW, THEREFORE, the City and SBC for and in consideration of the premises
and the promises contained herein do hereby contract, covenant and agree as follows:
CONDITIONS OF THE GRANT
The City's obligations under this Agreement are subject to the fulfillment of the
following conditions (the "Grant Conditions"):
A. No later than March 1, 2005, (subject to force majeure delays not to
exceed 180 days), SBC shall make a capital investment of at least $20 million for the
construction, equipping and furnishing of a build'mg or build'mgs and other improvements
to be constructed or placed on the Property as more particularly described in the
Application for Economic Development (the "Improvements"). The Improvements
include the obligation of SBC to: (i) construct a building or buildings of least 200,000
square feet, and including at least 185,000 square feet of Class A office space, along with
other improvements to be constructed on the Property, with an estimated assessed value
of $17 million (the "Building"); and (ii) purchase and install tangible personal property
valued at approximately $3 million, for a total increased assessed value of $20 million, as
finally determined by the Denton County Appraisal District (subject to statutory appeals
and any compromise settlements). The Improvements shall be substantially completed no
later than March 1, 2005 (subject to force majeure and other reasonable delays not to
exceed 180 days). The Building, once completed and furnished, shall be occupied by
SBC or an affiliate as an administrative center, for the duration of the term of this
Agreement. Throughout the term of this Agreement, the Building shall be continuously
operated and maintained as Class A office space (with appurtenant space for other
purposes as reasonably necessary) so that the uses of the Property shall be consistent with
the general purpose of encouraging development or redevelopment of the City of Denton,
except as otherwise authorized or modified by this Agreement.
B. SBC shall satisfy all of the provisions and requirements for the project as
set forth in the Application for Economic Development Incentives including the
requirement that the Improvements shall be used in accordance with the description of
the project set forth in the Application for Economic Development Incentives; and
C. As of January 1, 2003, there were no Improvements on the Property.
GENERAL PROVISIONS
A. The Property is not in an improvement project financed by tax increment
bonds.
B. Neither the Property nor any of the Improvements are owned or leased by
any member of the City Council, any member of the City Planning and Zoning
Commission of the City or any member of the governing body of any taxing units joining
in or adopting this Agreement or similar agreement affecting the Property.
C. This Agreement is subject to rights of holders of outstanding bonds of the
City, if any.
D. In the event of any conflict between the City zoning ordinances, or other
City ordinances or regulations, and this Agreement, such ordinances or regulations shall
control, provided however the City shall not diminish the benefits to SBC under this
Agreement through ordinances or regulations.
TERMS AND CONDITIONS OF GRANT
A. Subject to the terms and conditions of this Agreement, the City hereby
agrees to pay to SBC annually, after the first assessment following receipt by SBC of the
2
certificate of occupancy, an amount equal to 40% of the difference between: (a) the City
ad valorem taxes for the Property and the Improvements, excluding all tangible personal
property (including inventory and supplies) transferred to the Building from other
locations in the City of Denton, Texas (the excluded property being the "Transferred
Property"); over, (b) City ad valorem taxes payable for the Property as of January 1, 2003
(with the resulting payments known as the "Annual Payments"), such Annual Payments
to be subject to the following terms and conditions. The assessed value shall be
established using the Denton County Appraisal District appraisal process.
B. SBC shall have the right to protest and contest any or all appraisals or
assessments by the Denton County Appraisal District for the Property, the Improvements
or any other tangible personal property owned by SBC and located on the Property. All
calculations in this Agreement shall be based upon final assessed values after any such
protest or contest.
C. The Annual Payments shall be for a term of ten (10) years with the first
payment being due and payable on or before 60 days after the City is in receipt of all City
ad valorem taxes due and payable for the Property and Improvements as of January 1 of
the year following the calendar year in which a certificate of occupancy is issued by the
City for the Building (the "Beginning Date"), and, unless sooner terminated as herein
provided, shall end after the tenth Annual Payment. All subsequent Annual Payments
shall be due and payable on or before 60 days after the City is in receipt of all ad valorem
taxes due and payable for the Property and Improvements as of January 1 for subsequent
years.
D. The City's obligation to pay the Annual Payments is subject to the
fulfillment of the Grant Conditions. Nothwithstanding the foregoing, the City agrees to
pay to SBC reduced Annual Payments so long as the total minimum assessed value of the
Improvements (exclusive of Transferred Property) is not less than $10,000,000 as
determined by the Denton County Appraisal District valuation process. Such reduced
Annual Payments will be reduced by the percentage of reduction between the anticipated
and actual increase in assessed value. For example, if the total increase in assessed value
is $19 million, the total assessed value is 95 per cent of what was originally anticipated
(that is, $20 million). 95 per cent of 40 per cent is 38 per cent. Therefore, in such case
SBC would receive an Annual Payment equal to 38 per cent of the eligible ad valorem
taxes paid, a reduction of 2 percent.
RECORDS, AUDITS, AND EVALUATION OF PROJECT
A. No later than 60 days after the issuance of a certificate of occupancy for
the Building, SBC shall deliver an affidavit to the City signed by an authorized officer of
SBC certifying to a list and description of Transferred Property. Such list is subject to
verification and audit by the City at all reasonable times. SBC shall cooperate with the
City in providing any and all verifications that may be required by the City to establish
accuracy of the affidavit. When rendering its tangible personal property located on the
Property for ad valorem taxes for the year applicable to the first Annual Payment, SBC
shall segregate and list the values of the Transferred Property separate from other
tangible personal property located on the Property so that the City and Denton County
Appraisal District will be able to calculate the value attributable solely to the Transferred
Property (the "Value of the Transferred Property"). For subsequent Annual Payments,
the Value of the Transferred Property will be reduced by one-fifth per year (to account
for depreciation) until reduced to zero and will be simply deducted f~om the total
assessed value of all tangible personal property located on the Property, in determining
the mount of the Annual Payment.
B. During normal office hours throughout the term of this Agreement, after
providing reasonable notice to SEC, the City shall have access, on a reasonable number
of occasions, to the Improvements by City employees, consultants and authorized agents
for the purpose of inspecting the Improvements to ensure that the Improvements are
made in accordance with the specifications and conditions of this Agreement and to
verify that the conditions of this Agreement are being complied with, provided that such
inspection shall not unreasonably interfere with SBC's normal business operations.
FAILURE TO MEET CONDITIONS
In the event (i) SBC allows its ad valorem real property taxes owed to the City
with respect to the Property or Building, or its ad valorem taxes owed to the City with
respect to any tangible personal property owned by SEC which are located in the
Building, to become delinquent and fails to timely and properly follow the legal
procedures for protest and/or contest of any such ad valorem real property or tangible
personal property taxes; or, (ii) any other material conditions of this Agreement are not
substantially met (and subject to the provisions of paragraph Eli (D)), including the Grant
Conditions, then a "Condition Failure" shall be deemed to have occurred. It is understood
that a Condition Failure shall not be deemed to occur merely because at a particular time
it cannot be determined whether such condition will be met, but shall occur only if at a
particular time it can be determined that such condition will not be met. In the event that
a Condition Failure occurs, the City shall give SEC written notice of such Condition
Failure and if the Condition Failure has not been cured or satisfied within ninety (90)
days of said written notice, this Agreement may be terminated by the City; provided,
however, that if such Condition Failure is not reasonably susceptible of cure or
satisfaction within such ninety (90) day period and SEC has commenced and is pursuing
the cure or satisfaction of same, then after first advising the City of efforts to cure or
satisfy same, SEC may utilize such additional time as may be reasonably required to
cure such Condition Failure, but not less than ninety (90) days nor more than one hundred
eighty (180) days. Time in addition to the foregoing may be authorized by the City
Council. If a Condition Failure is not cured or satisfied after the expiration of the
applicable notice and cure or satisfaction periods (''Condition Failure Default"), as City's
sole and exclusive remedy, the Annual Payments shall be terminated with respect to the
year in which notice of the Condition Failure is given and for all future years, and SEC
shall repay to the City portions of the Annual Payments previously paid in accordance
4
with the following criteria: In the event of a Condition Failure Default after receipt of the
first Annual Payment, SBC shall repay to the City 80% of the Annual Payment received;
for a Condition Failure Default after receipt of the second Annual Payment, SBC shall
repay to the City 70% of the Annual Payments previously received; after receipt of the
third, 60%; after receipt of the fourth, 50%; after receipt of the fifth, 40%; after receipt of
the sixth, 30%; after receipt of the seventh, 20%; after receipt of the eighth, 10%; and
thereafter no repayment is required.
VI.
ASSIGNMENT
This Agreement and SBC's rights and obligations hereunder may not be assigned
without the City's prior written approval, which will not be unreasonably witheld.
Provided, however, SBC may, without City's prior written approval, assign the Property
and this Agreement to any affiliate.
VII.
NOTICE
All notices called for or required by this Agreement shall be addressed to the
following, or such other party or address as either party designated in writing, by certified
mail postage prepare or by hand delivery:
SALLY BEAUTY COMPANY, INC.
Attn.: President
w/copy: Attn: General Counsel
Sally Beauty Company, Inc.
3900 Morse Street
Denton, TX 76208
The notice address shall automatically change to that of the Property upon
issuance ora permit of occupancy.
CITY:
City Manager
City of Denton
215 E. McKinney
Denton, Texas 76201
VIII.
cITY council, AUmOmZ^T O
This Agreement is authorized by the City Council at its meeting on the /,.~-~
day of c~ , 2003, authorizing the City Manager to execute this Agreement on
behalf of th~ City.
BOARD OF DIRECTORS AUTHORIZATION
SBC represents that this Agreement is entered into by SBC pursuant to authority
granted by its Board of Directors to its President. An opinion of counsel supporting this
representation is attached hereto and made a part hereof as Exhibit C.
SEVERABIILTY
In the event any section, subsection, paragraph, sentence, or phrase is held
invalid, illegal or unconstitutional, the balance of this Agreement shall stand, shall be
enforceable and shall be read as if the parties intended at all times to delete said invalid,
illegal or unconstitutional provision.
XI.
ESTOPPEL CERTIFICATE
Any party hereto may request an estoppel certificate fi.om another party hereto so
long as the certificate is requested in connection with a bona fide business purpose. The
certificate, which if requested will be addressed to SBC, shall include, but not necessarily
be limited to, statements that this Agreement is in full fome and effect without default (or
if default exists the nature of default and curative action, which should be undertaken to
cure same), the remaining term of this Agreement, the levels and remaining term of the
Annual Payments in effect, and such other matters reasonably requested by the party(ies)
to receive the certificates.
XII.
SBC STANDING
SBC, as a party to this Agreement, shall be deemed a proper and necessary party
in any litigation questioning or challenging the validity of this Agreement or any of the
underlying ordinances, resolutions, or City Council actions authorizing same and SBC
shall be entitled to intervene in said litigation.
XIII.
APPLICABLE LAW
This Agreement shall be construed under the laws of the State of Texas. Venue
for any action under this Agreement shall be the appropriate court serving Denton
County, Texas. This Agreement is fully performable in Denton County, Texas.
RECORDATION OF AGREEMENT
A fully executed original counterpart of this Agreement or a Memorandum of
Agreement, in recordable form, shall be recorded in the Deed Records of Denton County,
Texas.
AMENDMENT
This Agreement is the entire agreement of the parties and may only be modified
by a written instrument executed by both parties.
XVI.
EFFECTIVE DATE
This Agreement is effective as of the/~day of
,2003.
ATTEST:
JENNII~ER WALTERS, C[FY SECRETARY
APPROVED AS TO FORM:
HERBERT~UTY,J~ITY ATTORNEY
~ SALLY BEAUTY COMPANY, INC.
BY:
Michael l~enzulh
Its President
7
ACKNOWLEDGMENTS
STATE OF TEXAS
COUNTY OF DENTON }
The fh~regoing Eco, n~omic Development Program Agreement was executed before
me on the/,~-#/day of ~/,/'//'].(,~, ,2003 by Michael A. Conduff, City Manager
of the City of Denton, Tex~,~ Texas municipal corporation, on behalf of said municipal
corporation.
~" "~ Notary Public, State of Texas
~ My Commission Expires
~_L ,,,;~ ~ ,:,,,,;,,- June 27, 2005
Notary Public in and for the
State of Texas
STATE OF TEXAS
COUNTY OF DENTON }
The foregoing Economic Development Program Agreement. was exec.uted before
me on theOl_~ day of ~.~ ,2003 by {'~:~ (~ .~, President
of Sally Beauty Company, Inc., a Delaware corporati , on behalf of said_corporation.
~&;N ;L?I.~S~I; ~ Notary Public in and for the
NOTARY PUBLIC ~ State of Texas
STATE OF TEXAS ~
8
E~IBIT "A"
CAINET U, ~ ~ P.R,D.C.T4
1NEN~ N.O~ SND ~Y Rllfr-aF-V/M UI~ OF IIK~ RO~ MID .~Ogg 5ND
CUR~ TO 1HE LEFt H~gg A DELTA ~ OF
85.47 rcr. i, )~4D AN ~ LENSIH OF ~8.47 I'~r.I TO A
O(r (XXOIIAIX) IXJLk'~IO~ ,ANO g~NO IN A NON,-lr~ CU~ TO 111 IgIff' H/MNO A
28'17'4~ W, gl&~. r,-i'. MD MI ~1~ LENIH OF g35.~ r,~l TO A I/2' IR~ ROD ~
N 08'-'~q°44' It~ 1~0.00 r~,' TO A 1/2' IRON RIX) ~'r 1IH A
A~OO. INC.; BING THE BEINNII~ OF A ~lJllVE TO THE LEFT H/~I~ A IIIB Git MO.01
~ N 50'4T12" E, ~ THE ~Y I~-~ ~ ~ ~
(~ I 774.11 FEL:T 10 A 1/'~' I1011 I1~0 ~Lrr I1H A ;IP I 'IiR
1HEN~ S 41'28'40" E ~ 11~ SOUIIIESTE~Y
TRNLS. ~16.1~ rr~.~ TQ A 1/2".IRON RO0 FOUND
THENC~ S 48'~'21" W )L~N~ ~ ~Y UNE (Ilt ~ LOT 1, 3'J5.40 r--~l ~ A
1/2' ~ ~ S~'I' lil~ AC~P I ~ &I ~';
'JHENCE S ,18'12',1e' E N. ONO THE SOUI~Y ~ OF SNO LOT 1, ~81.84 r-*l TO
EXHIBIT "B"
City of Demon
Tax Abatement Application
City of Denton
Economic D6velopment Depm'tment
Denton, TeXas 76201
(940) 349-8305
(940) 349-8518 FAX
APPLICATION FOR TAX ABATEMF, NT
CITY OF DENTON
o
.Property Owne~: Sallv Beauty Company, Inc.
Company or Project Name: .
M~iling Address: 3900 Morse Size, et
Denton, Texa~ 76208
Telephone: (940) 898-7500
Fax: (940) 898-7501
Company representative to be contacted:
Name and rifle: Gary Robinson, Senior Vice President, CFO
Ma;llng Address: 3900 Morse Street
Denton, Texas 76208
Telephone: (940) 898-7500
Fax: (940) 484-6114
Provide a chronology of plant openlng~ dosing.and relocations over past 15 years:
In excess of 2,750 stores opened and closed in the last 15 years. Will make available to City's Financial
Advisor ff required.
Provide a record of mergers and financial restructuring during the last five years.
There h~ been in excess of 30 acquisitions in the last 15 years that have contributed to the Company's
growth. These have been throughout the US, Canada, United Kingdom, Germany, and Mexico. Will make
available to City's Financial Advisor if required.
Will the occupants of the project be owner or lessees? If lessees, are occupancy commitments already
existing?
_Owner
Is the project a relocarion, expansion of existing facility, or new facility to expand operations. If
relocation, give current location. New facility.
If existing Denton business, will project result in abandonment of existing facility. · If so; value of ex~ting
facility will be subtracted from value of new facility to arrive at total project value.
The company will vacate the existing facility, however a significant portion of the existing furniture and
fixtures will remain in the existing facility. It is the company's intent to either lease or sell the existing
property. In any case, the value of the property will remain on the tax roils. '
Eligib'flity Criteria- (I)escribe how the project meets the tax abatement p0~icY'criteria):
The project invests over $20 million into the community and adds approximately 180~000 square feet of Cihss
A office space and 20,000 square feet of storage space to ~e mx rolls. The company plans to-re*~i- a number
of native trees so that the facility will have a campus a0pearance - located at the southern gateway o£Denton.
8. Property Description:
EDfraxAbatememApp.doc
Page 1 of 4
Property Description:
· Attach copy of deed (or surveyor's notes) detailing property's metes and bounds.
· Attach map of project including al/roadways, land use and zoning w~thi. 500 feet of site. See Exl~oit 1, 2
and 3 for site &awings.
Current Value: Attach copy of latest property tax statement from Denton County Appraisal District (include
both real and personal property). See Exhibit 4 for existing Sally office statements.
Increased Value- Estimated Total Cost of Project:
A. Structures $ 23,000,000 C. Site Development $1,000,000
B. Personal Property $ 5,000,000 D. Other Improvements $
Briefly describe these investments (i.e, building square footage, types of personal property, type of site
development planned for this location, and other improvements):.
11.
12.
For each taxing entity, indicate the amount of tax abatement requested.
City of Denton - 50 % of Increased Value - 10 years
Denton County- 50% of Increased Value- 10 years
Gi~e a brief description of the activities to be performed at thi~ location, indudlng a description of
products to be produced and/or services to be provided:
This location is the corporate headquarters in support of the Worldwide operations of 2,750 stores. Support
provided at this location encompasses Finance, Legal, Marketing, Real Estate, Merchandising, H.man
Resources, Information Systems, Advertising, and Logistics Support.
13.
Project .Construction Phase:
A. F_~th.ate percentage of Project Development and ConSa'Uctian Dollars to be spent with Denton
based Contractors or Sub-Contractors: Unknown %
Construction l*~mployment ~timat. es:
1. Start (Month/Year)
2. Completion Date:
3. Number of Construction Jobs:
4. Estimated Total Construction Payroll:
Summer/2003
Late 2004
Unknown
Unknown
C. Descn'be Any Off-Site Infrastructure Requirements:
Water: None
Sanitary Sewer: None
Streets: Curb cuts .
Drainage: None
Other: None
14. Project Operation Phase
EMPLOYMENT INFORMATION Existing At Project In the fifth year of In the tenth year of
Operation (if Start Date operation . operation
applicable)
(month)
(year)
A. Total number of Permanent, Full- 391 450 500
time jobs
B. Employees Transferred From 0 0 0
Outside Denton
C. Net Permanent Full-time Jobs (A 391 450 500
minus B)
D. Percentage of Net Jobs (C.
above) filled by Denton
residents*
E. Total Ann,n! Payroll for all $19,064-,000 21,704,000 23,984,000
Permanent, Full-time Jobs (A.
above)
*~ch application will be reviewed on its merits. However, absent extrnordin.nry ¢ircumsta~..es, a m~imum of 25% of new employees should be
Deeton residents. Company shall report ~h~mlly and, ffpercentage is not met, a prorata reduction of the abatemem may ~:cur.
F. Types of Jobs Created (Job Titles)
The proposed office construction is expected to provide the capability to expand the corporate staff as it grows to support
the increasing international sales and stores. Current profile of positions are approximately:
57 % professional with an average salary of $60,000
43% clerical with an average salary of $ 24,000
Job 'positions encompass the full range from clerical admlnigtration to vice president. Positions will be in accounting,
marketing, human resources, MIS, finance, advertising, real estate, and training. Salaries will be from $20,000 to
$150,000.
Eafimate utility usage for project: Current Usage
Gas: $10,800
Electric: _$ 200,000
Water: Included
Solid Waste: Included
Increase'will be in proportion to increased office and occupancy uriliv~fion.
15. Descr~e any. other direct benefits to the City of Denton as a result of this project (e.g., sales tax revenue):
The Company increases the sales tax base not only through employee growth i~/loc~ spending bu~ through the
number of travelers (othe~ business partners and mamlfacturers) who meet regularly with. Company
professionah. The Company performs on-site training for retail store ma'naqement' from across the nation,' ' ..
with individuals generating commerce for Denton's hotel and restaurants.
16. Is Property Zoned Appropriately? Yes X No
Current Zoning: RCC-N Regional Center Commercial Neighborhood
Required Zoning: same
ED/TaxAbammen~pp.doe Page 3 of 4
17.
Is Property Platted? Yes__ No ~X
Will Replatting be Necessary? Yes X No ~
18. Discuss any environmental impacts created by the project.
A. List any .permits for which applicant must apply. Applicant will be required to provide City with
copies of all applications for environmental permits upon completion.
19.
20.
Provide record of compllar, ce to all environmental regulations for the past five years:
Sally Beauty Company, Inc. has not been notified of any non-compliance with environmental
regulations.
Provide specific detail of any businesses/residents that will be displaced and assistance that will be
available from requesting entity.
Not Applicable.
Provide description of any historically si~nificant area included with the project's area.
detail of how the historically si~onlfleant area w~l be preserved.
Not Applicable.
If any, give
21.
Justification for Tax Abatement Request (Substantiate and more fully describe the justification for this
request. Include the amount of the. abatement requested and show how it will contribute to the ~nanelal
viability of the project. Submit attachments ff necessary.)
See impact study.
23.
Financial Information: Attach a copy of the latest audited financial statement or, in the case of a new
project, a business plan. . .
Will m~ke available to City's Financial Advisor.
This tax abatement application is submitted with the acknowledgement that additional certified financial
information may be required.
ED/TaxAl~e~App.doc
-Page 4 of 4
EXHIBIT 'C'
May 6, 2003
Honorable Euline Brock
Mayor
City of Denton, Texas
215 East McKinney
Denton, Texas
Dear Mayor Brock:
The City of Denton has asked that I render an opinion as to the authority of Michael Renzulli,
President, to bind Sally Beauty Company, Inc. ("Sally") to the terms and conditions of the
Economic Development Program Grant Agreement With Sally Beauty Company, Inc., expected
to be dated in May, 2003 (the "Agreement").
I am familiar with the provisions of the Agreement and have examined copies of the Certificates
of Incorporation and By-Laws of Sally, resolutions adopted by the Board of Directors of Sally
and such other documents and data as I deemed relevant. Based on the foregoing, and in reliance
thereon, subject to the limitations set forth below, it is my opinion that Michael Renzulli,
President, is authorized to bind Sally to all the terms of the Agreement.
I am admitted to practice in the State of Texas. The opinion expressed herein is limited to the
laws of the State of Texas and the United States of America, and I express no opinion as to the
laws of any other jurisdiction.
This opinion is rendered solely for the City of Denton's use in connection with the transactions
contemplated by the Agreement, and may not be relied upon by other persons or for any other
purposes. This opinion may not be quoted or used, in whole or in part, for any other purpose or
delivered to any other person, except with my prior written consent.
Vice President and General Counsel
P.O. Box 490 (76202) 3900 Morse St. (76208) Denton, Texas (940) 898-7500
ECONOMIC DEVELOPMENT PROGRAM GRANT AGREEMENT WITH
SALLY BEAUTY COMPANY, INC. 07 ~}25 6
This Economic Development Program Grant Agreement ("Agreement") is made
and entered into as of the effective date provided for below, by and between SALLY
BEAUTY COMPANY, INC. ("SBC"), a Delaware corporation, and the CITY OF
DENTON (the "City"), a Texas municipal corporation, for the purposes and
considerations stated below:
WHEREAS, this Agreement is authorized by and made pursuant to the economic
development program provisions of Chapter 380 of the Texas Local Government Code
(the "Act") to promote local economic development and to stimulate business and
commercial activity in the City of Denton; and
WHEREAS, SBC is contemplating the development of that certain real property
located within the city limits of the City as more particularly described in Exhibit "A"
attached hereto and made a part hereof by reference (the "Property"); and
WHEREAS, on the 8th day of April, 2003, SBC submitted an application for
economic development incentives with various attachments to the City concerning the
contemplated use and development of the Property, which is on file in the City's Office
of Economic Development, a copy of which is attached hereto and made a part hereof by
reference as Exhibit "B" (the "Application for Economic Development Incentives); and
WHEREAS, the City Council finds that the contemplated use and development of
the Property, the proposed improvements provided for herein and the other terms and
conditions of this Agreement will promote economic development and will stimulate
development activity within the City of Denton for the benefit of the public;
NOW, THEREFORE, the City and SBC for and in c~onsideration of the premises
and the promises contained herein do hereby contract, covenant and agree as follows:
CONDITIONS OF THE GRANT
The City's obligations under this Agreement are subject to the fulfillment of the
following conditions (the "Grant Conditions"):
A. No later than March 1, 2005, (subject to force majeure delays not to
exceed 180 days), SBC shall make a capital investment of at least $20 million for the
construction, equipping and furuishing of a building or buildings and other improvements
to be constructed or placed on the Property as more particularly described in the
Application for Economic Development (the "Improvements"). The Improvements
include the obligation of SBC to: (i) construct a building or buildings of least 200,000
square feet, and including at least 185,000 square feet of Class A office space, along with
other improvements to be constructed on the Property, with an estimated assessed value
of $17 million (the "Building"); and (ii) purchase and install tangible personal property
valued at approximately $3 million, for a total increased assessed value of $20 million, as
finally determined by the Denton County Appraisal District (subject to statutory appeals
and any compromise settlements). The Improvements shall be substantially completed no
later than March 1, 2005 (subject to force majeure and other reasonable delays not to
exceed 180 days). The Building, once completed and furnished, shall be occupied by
SBC or an affiliate as an administrative center, for the duration of the term of this
Agreement. Throughout the term of this Agreement, the Building shall be continuously
operated and maintained as Class A office space (with appurtenant space for other
purposes as reasonably necessary) so that the uses of the Property shall be consistent with
the general purpose of encouraging development or redevelopment of the City of Denton,
except as otherwise authorized or modified by this Agreement.
B. SBC shall satisfy all of the provisions and requirements for the project as
set forth in the Application for Economic Development Incentives including the
requirement that the Improvements shall be used in accordance with the description of
the project set forth in the Application for Economic Development Incentives; and
C. As of January 1, 2003, there were no Improvements on the Property.
II.
GENERAL PROVISIONS
A. The Property is not in an improvement project financed by tax increment
bonds.
B. Neither the Property nor any of the Improvements are owned or leased by
any member of the City Council, any member of the City Planning and Zoning
Commission of the City or any member of the governing body, of any taxing units joining
in or adopting this Agreement or similar agreement affecting the Property.
C. This Agreement is subject to rights of holders of outstanding bonds of the
City, if any.
D. In the event of any conflict between the City zoning ordinances, or other
City ordinances or regulations, and this Agreement, such ordinances or regulations shall
control, provided however the City shall not diminish the benefits to SBC under this
Agreement through ordinances or regulations.
III.
TERMS AND CONDITIONS OF GRANT
A. Subject to the terms and conditions of this Agreement, the City hereby
agrees to pay to SBC annually, after the first assessment following receipt by SBC of the
2
certificate of occupancy, an amount equal to 40% of the difference between: (a) the City
ad valorem taxes for the Property and the Improvements, excluding all tangible personal
property (including inventory and supplies) transferred to the Building from other
locations in the City of Denton, Texas (the excluded property being the "Transferred
Property"); over, (b) City ad valorem taxes payable for the Property as of January 1, 2003
(with the resulting payments known as the "Annual Payments"), such Annual Payments
to be subject to the following terms and conditions. The assessed value shall be
established using the Denton County Appraisal District appraisal process.
B. SBC shall have the right to protest and contest any or all appraisals or
assessments by the Denton County Appraisal District for the Property, the Improvements
or any other tangible personal property owned by SBC and located on the Property. All
calculations in this Agreement shall be based upon final assessed values after any such
protest or contest.
C. The Annual Payments shall be for a term of ten (10) years with the first
payment being due and payable on or before 60 days after the City is in receipt of all City
ad valorem taxes due and payable for the Property and Improvements as of January 1 of
the year following the calendar year in which a certificate of occupancy is issued by/he
City for the Building (the "Beginning Date"), and, unless sooner terminated as herein
provided, shall end after the tenth Annual Payment. All subsequent Annual Payments
shall be due and payable on or before 60 days after the City is in receipt of all ad valorem
taxes due and payable for the Property and Improvements as of January 1 for subsequent
years.
D. The City's obligation to pay the Annual Payments is subject to the
fulfillment of the Grant Conditions. Nothwithstanding the foregoing, the City agrees to
pay to SBC reduced Annual Payments so long as the total minimum assessed value of the
Improvements (exclusive of Transferred Property) is not less than $10,000,000 as
determined by the Denton County Appraisal District valuation process. Such reduced
Annual Payments will be reduced by the percentage of reduction between the anticipated
and actual increase in assessed value. For example, if the total increase in assessed value
is $19 million, the total assessed value is 95 per cent of what was originally anticipated
(that is, $20 million). 95 per cent of 40 per cent is 38 per cent. Therefore, in such case
SBC would receive an Annual Payment equal to 38 per cent of the eligible ad valorem
taxes paid, a reduction of 2 percent.
IV.
RECORDS, AUDITS, AND EVALUATION OF PROJECT
A. No later than 60 days after the issuance of a certificate of occupancy for
the Building, SBC shall deliver an affidavit to the City signed by an authorized officer of
SBC certifying to a list and description of Transferred Property. Such list is subject to
verification and audit by the City at all reasonable times. SBC shall cooperate with the
City in providing any and all verifications that may be required by the City to establish
accuracy of the affidavit. When rendering its tangible personal property located on the
3
Property for ad valorem taxes for the year applicable to the first Annual Payment, SBC
shall segregate and list the values of the Transferred Property separate from other
tangible personal property located on the Property so that the City and Denton County
Appraisal District will be able to calculate the value attributable solely to the Transferred
Property (the "Value of the Transferred Property"). For subsequent Annual Payments,
the Value of the Transferred Property will be reduced by one-fifth per year (to account
for depreciation) until reduced to zero and will be simply deducted from the total
assessed value of all tangible personal property located on the Property, in determining
the amount of the Annual Payment.
B. During normal office hours throughout the term of this Agreement, after
providing reasonable notice to SBC, the City shall have access, on a reasonable number
of occasions, to the Improvements by City employees, consultants and authorized agents
for the purpose of inspecting the Improvements to ensure that the Improvements are
made in accordance with the specifications and conditions of this Agreement and to
verify that the conditions of this Agreement are being complied with, provided that such
inspection shall not unreasonably interfere with SBC's normal business operations.
FAILURE TO MEET CONDITIONS
-In the event (i) SBC allows its ad valorem real property taxes owed to the City
with respect to the Property or Building, or its ad valorem taxes owed to the City with
respect to any tangible personal property owned by SBC which are located in the
Building, to become delinquent and fails to timely and properly follow the legal
procedures for protest and/or contest of any such ad valorem real property or tangible
personal property taxes; or, (ii) any other material conditions of this Agreement are not
substantially met (and subject to the provisions of paragraph III (D)), including the Grant
Conditions, then a "Condition Failure" shall be deemed to have occurred. It is understood
that a Condition Failure shall not be deemed to occur merely because at a particular time
it cannot be determined whether such condition will be met, but shall occur only if at a
· particular time it can be determined that such condition will not be met. In the event that
a Condition Failure occurs, the City shall give SBC writte~ notice of such Condition
Failure and if the Condition Failure has not been cured or satisfied within ninety (90)
days of said written notice, this Agreement may be terminated by the City; provided,
however, that if such Condition Failure is not reasonably susceptible of cure or
satisfaction within such ninety (90) day period and SBC has commenced and is pursuing
the cure or satisfaction of same, then after first advising the City of efforts to cure or
satisfy same, SBC may utilize such additional time as may be reasonably required to
cure such Condition Failure, but not less than ninety (90) days nor more than one hundred
eighty (180) days. Time in addition to the foregoing may be authorized by the City
Council. If a Condition Failure is not cured or satisfied after the expiration of the
applicable notice and cure or satisfaction periods ("Condition Failure Default"), as City's
sole and exclusive remedy, the Annual Payments shall be terminated with respect to the
year in which notice of the Condition Failure is given and for all future years, and SBC
shall repay to the City portions of the Annual Payments previously paid in accordance
4
with the following criteria: In the event of a Condition Failure Default after receipt of the
first Annual Payment, SBC shall repay to the City 80% of the Annual Payment received;
for a Condition Failure Default after receipt of the second Annual Payment, SBC shall
repay to the City 70% of the Annual Payments previously received; after receipt of the
third, 60%; after receipt of the fourth, 50%; after receipt of the fifth, 40%; after receipt of
the sixth, 30%; after receipt of the seventh, 20%; after receipt of the eighth, 10%; and
thereafter no repayment is required.
VI.
ASSIGNMENT
This Agreement and SBC's rights and obligations hereunder may not be assigned
without the City's prior written approval, which will not be unreasonably witheld.
Provided, however, SBC may, without City's prior written approval, assign the Property
and this Agreement to any affiliate.
VII.
NOTICE
All notices called for or required by this Agreement shall be addressed to the
following, or such other party or address as either party designated in writing, by certified
mail postage prepare or by hand delivery:
SALLY BEAUTY COMPANY, 1NC.
Attn.: President
w/copy: Attn: General Counsel
Sally Beauty Company, Inc.
3900 Morse Street
Denton, TX 76208
The notice address shall automatically change to that of the Property upon
issuance ora permit of occupancy.
CITY:
City Manager
City of Denton
215 E. McKinney
Denton, Texas 76201
VIII.
CITY COUNCIL AUTHORIZATION
This Agreement is authorized by the City Council at its meeting on the
day of ~/~/2~'j/-~ , 2003, authorizing the City Manager to execute this Agreement on
behalf of th[ City.
0 37 '
IX.
BOARD OF DIRECTORS AUTHORIZATION
SBC represents that this Agreement is entered into by SBC pursuant to authority
granted by its Board of Directors to its President. An opinion of counsel supporting this
representation is attached hereto and made a part hereof as Exhibit C.
SEVERABIILTY
In the event any section, subsection, paragraph, sentence, or phrase is held
invalid, illegal or unconstitutional, the balance of this Agreement shall stand, shall be
enforceable and shall be read as if the parties intended at all times to delete said invalid,
illegal or unconstitutional provision.
XI.
ESTOPPEL CERTIFICATE
Any party hereto may request an estoppel certificate from another party hereto so
long as the certificate is requested in connection with a bona fide business purpose. The
certificate, which if requested will be addressed to SBC, shall include, but not necessarily
be limited to, statements that this Agreement is in full force and effect without default (or
if default exists the nature of default and curative action, which should be undertaken to
cure same), the remaining term of this Agreement, the levels and remaining term of the
Annual Payments in effect, and such other matters reasonably requested by the party(ies)
to receive the certificates.
XII.
SBC STANDING
SBC, as a party to this Agreement, shall be deemed a proper and necessary party
in any litigation questioning or challenging the validity of this Agreement or any of the
underlying ordinances, resolutions, or City Council actions,authorizing same and SBC
shall be entitled to intervene in said litigation.
XlII.
APPLICABLE LAW
This Agreement shall be construed under the laws of the State of Texas. Venue
for any action under this Agreement shall be the appropriate court serving Denton
County, Texas. This Agreement is fully performable in Denton County, Texas.
6
XIV.
RECORDATION OF AGREEMENT
A fully executed original counterpart of this Agreement or a Memorandum of
Agreement, in recordable form, shall be recorded in the Deed Records of Denton County,
Texas.
XV.
AMENDMENT
This Agreement is the entire agreement of the parties and may only be modified
by a written instrument executed by both parties.
XVI.
EFFECTIVE DATE
This Agreement is effective as of the/~ ~ay of
2003.
ATTEST:
JENNIFER WALTERS, CITY SECRETARY
APPROVED AS TO FORM:
HERBER~PI~UTY,~TY ATTORNEY
7
SALLY BEAUTY COMPANY, 1NC.
Michael Ren~ull~ ~
Its President
7
ACKNOWLEDGMENTS
STATE OF TEXAS
COUNTY OF DENTON }
The f9regoing Eco0omic Development Program Agreement was executed before
me on thq/~day of ~fftY~.~.~ ,2003 by Michael A. Conduff, City Manager
of the C~ty of Denton, Texa~,/(Texas mummpal corporatmn, on behalf of smd mummpal
corporation.
JANE E RICHARDSON
NoIaW Pubhc, Stale of Texas
My Comm~sion Expires
June 27,
Notary Public in and for the
State of Texas
STATE OF TEXAS
COUNTY OF DENTON }
The foregoing Economic Development Program Agreement was exe~cuted before
me on theq~day of ~ ,2003 by (~,~ ~..t~'at~.~, President
of Sally Beauty Company, Inc., a Delaware corporatckn, on behalf of smut co-' rporation.
Notary Public in and for the
State of Texas
NOTARY PUBLIC
STATE OF TEXAS
My Comm. Exp. 8-8-2003
~x~ 'w' ~ 3 3 7 P. Ii 3 7 7
N 06'.t5'44' ~o 100.00 rr~m TO A
AS~C. INC.: BBNO THE
SAID CURWIC TO THE LEFT HAVINg A DE.I'A ANgZ OF 2J"J~42; k ~ ~ N
lr20'0~' W. ~-~ FE~T, ~ M ~ LENmH OF ~ r--s TO A 1/~" MON ROD
~ N 50'47'12" [, ~ ~ SOUI'HEA~ie.m.Y RI~IT-OF'-WAY UNE OF SAID
Ol]LOi~O0 BOIJLEMm~D, 774.11 rr~, TO A 1/2' IRON ROI) ~'r v41H A OAP ~
THENCE S 41'26'40" E ~ 'lHE SOUIIg~SIE~Y Ri~IT-OF-JWAY UNE OF SAg) ~ FOR
~ 61~.1e rr.~J TO A I/2".IRON ~ FOUNO e A CAP ~l'jl~l) ~ il ~
~ $ 4~',%Y21' W ~ ~ ~Y LJNE OF ~ LOT 1. ~5.40 r'~.s TO A I:~.
' ~00 I UN'O lo
EXHIBIT "B"
City of Denton
Tax Abatement Application
City of Denton
Economic D~velopment Department
Denton, Texas 76201
(940) 349-8305
(940) 349-8518 FAX
APPLICATION FOR TAX ABATEMENT
OITY OF DENTO~
B 379
o
.Property Owne~: Sa/Iv Beauty Company, Inc.
Company or Project Name: .
Mailing Address: 3900 Morse Street
Denton, Texas 76208
Telephone: (940) 898-7500 Fax: (940) 898-7501
Company representative to be contacted:
Name and rifle: Gary Robinson, Senior Vice President, CFO
Mailing Address: 3900 Morse Street
Denton, Texas 76208
Telephone: (940) 898-7500
Fax: (940) 484-6114
Provide a chronology of plant openings, closIng and relocations over past 15 years:
In excess of. 2,750 stores opened and closed in 'the last 15 years. Will make available to City's FInancial
Advisor if required.
Provide a..record of mergers and financial restructuring during the last five years.
There h'~e been in excess of 30 acquisitions in the last 15 years that have contributed to the Company's
growth. These have been throughout the US, Canada, United Kingdom, Germany, and Mexico. Will make
available to City's Financial Advisor if required.
W'dl the occupants of the project be owner or lessees? If lessees, are occupancy commitments already
exhtlag?
Owner
Is the project a relocation, expansion .of existing facility, or new facility to expand operations. If
relocation, give current location. New facility.
If existing Denton business, will project result In abandonment of existing facility. · If so; value of existing
facility will be subtracted from value of new facility to arrive at totai project value.
The company will vacate the existing facility, however a significant portion of the existin~ furniture and
fixtures will remain in the existing facility. It is the company's intent to either lease or sell the existing
property. In any case, the value of the property Mid remain on the tax rolls.
Eligibility Criteria- (Describe how the project meets the tax abatement p61icy criteria): ,
The proiect invests over $20 mi/lion into the community and adds approximateB) 180~000 square feet of Class
A office space and 20,000 square feet of storage space to-the tax rolls. The company plans to.retain a number
of native trees so that the facility will have a campus appearance - located at the southern gateway of Denton.
8. Property Description:
ED/TaxA. batemenrApp.do c
Page 1 of 4
Property DescriptiOn:
· Atlach copy of deed (or surveyor's notes) detailing property's metes and bounds.
· Attach map of project including all roadways, land use and zoning within 500 feet of site. See Exhibit 1, 2
and 3 for site drawings.
Current Value: Attach copy of latest property tax statement from Denton County Appraisal District (include
both real and personal property). See Exkibit 4 for existing Sally office statements.
Increased Value- Estimated Total Cost of Project:
A. Slructures $ 23,000,000 C. Site Development $1,000,000
B. Persona[ Property $ 5,000,000 D. Other Improvements $
Briefly describe these investments (i.e. building square footage, types of personal property, type of site
development planned for this location, and other improvements):
11.
12.
For each taxing entity, indicate the mount of tax abatement requested.
Ci~ of Denton - 50% of Increased Value - 10 years
DentOn Countg - 50% of Increased Value - 10 years
Give a brief description of the actiyities to be performed at this location, InCluding a description of
products to be produced and/or services to be provided:
This location is the corporate headquarters in support of the Worldwide operations of 2,750 stores. Support
provided at this location encompasses Finance, Legal, Marketing, Real Estate, Merchandising, Human
Resources, Information Sgstems, Advertising, and Logistics Support.
13.
Project .Construction Phase:
A. Estimate percentage of Project Development and. ConStrUction Dollars to be spent with Denton
based Contractors or Sub-Contractors: Unknown
Construction Employment Estimates:
1. Start (Montl~ear)
2. Completion Date:
3. Number of Construction Jobs:
4. Estimated Total Construction Payroll:
Summer/2003
Late 2004
Unknown
Unknown
DeScribe Any Off-Site Infrastructure Requirements:
Water: None
Sarfitary Sewer: None
Streets: Curb cuts
Drainage: None
Other: None
EDF/'~maem~ ntApp .d ac Page 2 of 4
14. Project Operation Phase
EMPLOYMENT INFORMATION Existing At Project In the ~ year of In the tenth year of
Operation (if Start Date opera~on operation
applicable) ,
(month)
· (year)
A. Total number of Permanent, Full- 391 450 500
time jobs
B. Employees Transferred From 0 0 0
Outside Denton
C. Net Permanent Pull-time Jobs (A 391 450 500
minus B)
D. Percentage of Net Jobs (C.
above) filled by Denton
residents*
E. Total .Anmlal Payroll for all $19,064,000 21,704,000 23,984,000
Permanent, Full-time Jobs (A.
above)
*Each application will be reviewed on its merits. However, absent extraordinary circumstances, a mlnhmma of 25% of new employees should be
Denton residents. Company shall report anrnmlly and, if percentage is not met, a prorata reduction of the abatement may occur.
F. Types of Jobs Created (Job Titles)
The proposed office coustmction is expected to provide the capability to expand the corporate staff as it grows to support
the increasing international sales and stores. Current profile ofpositions are approximately:
57% professional with an average salary of $60,000
43% clerical with an average salary ors 24,000
Job positions encompass the full range fi:om clerical admini.q~afion to vice president. Positions will be in accounting,
marketing, hnrnan resources, MIS, finance, advertising, real estate, and training. Salaries will be fi:om $20,000 to
$150,000.
G. Estimate utility usage for project: Current Usage
Gas: __$10,800
Electric: _$ 200,000
Water: Included_
Solid Waste: Included
Increase'will be in proportion to increased office and occupancy utilization. '
15. DeserVe any. other direct benefits to the City of Denton as a rean~t of thi~ project (e.g., sales tax revenue):
The Company increases the sales tax base not only through employee growth ih local spending but'through the
number of travelers (othef business'partners and manufacturers) who meet regularly'~,ith. Cdmpan¥ '
professionals. The Company performs on-site training for retail store management'fi:om ac[oss the nation,' · .
with individuals generating commerce for Denton's hotel and restaurants.
16. Is Property Zoned Appropriately? Yes X No
Current Zoning: RCC-N Regional Center Commercial Neighborhood
Requked Zoning: same
EDrraxAbmemen~App.doc Page 3 of 4
17.
Is Property Platted? Yes __ No ~X
Will Replatting be Necessai'y? Yes X No ~
18. Discuss any environmental impacts created by the project.
A. List any .permits for which applicant must apply. Applicant will be required to provide City with
copies of all applications for environmental permits upon completion.
None
19.
20.
Provide record of compliance to all environmental regulations for the past five years:
Sally Beauty Company, Inc. has not been notified of any non-compliance with environmental
regulations.
' Provide specific detail of any businesses/residents that will be displaced and assistance that wili be
available from requesting entity.
Not Applicable.
Provide description of any historically slEnificant area included with the project's area. If any, give
detail of how the historically significant area will be preserved.
Not Applicable.
21.
Justification for Tax Abatement Request (Substantiate and more fully describe the justification for this
request. Include the amount of the abatement requested and show how it will contribute to the flnancia]
viability of the project. Submit attachments ff necessary.)
See impact study..
23.
Financial IIlformation: Attach a copy of the latest audited financial statement or, in the case of a new
project, a bu~iness phm. .
Will make available tO City's Financial Advisor.
This tax abatement application is submitted v~th the acknowledgement that additional certified financial
information may be required.
EDfYaxAba~men~App.dee
-Page 4 of 4
EXhiBiT 'c' 5 3 3 ]
V®BEAUTY
COMPANY,, Jc.
Bk383
May 6, 2003
Honorable Euline Brock
Mayor
City of Denton, Texas
215 East McKinney
Denton, Texas
Dear Mayor Brock:
The City of Denton has asked that I render an opinion as to the authority of Michael Renzulli,
President, to bind Sally Beauty Company, Inc. ("Sally") to the terms and conditions of the
Economic Development Program Grant Agreement With Sally Beauty Company, Inc., expected
to be dated in May, 2003 (the "Agreement").
I am familiar with the provisions of the Agreement and have examined copies of the Certificates
of Incorporation and By-Laws of Sally, resolutions adopted by the Board of Directors of Sally
and such other documents and data as I deemed relevant. Based on the foregoing, and in reliance
thereon, subject to the limitations set forth below, it is my opinion that Michael Renzulli,
President, is authorized to bind Sally to all the terms of the Agreement.
I am admitted to practice in the State of Texas. The opinion expressed herein is limited to the
laws of the State of Texas and the United States of America, and I express no opinion as to the
laws of any other jurisdiction.
This opinion is rendered solely for the City of De.nton's use in connection with the transactions
contemplated by the Agreement, and may not be relied upon by other persons or for any other
purposes. This opinion may not be quoted or used, in whole or in part, for any other purpose or
delivered to any other person, except with my prior written consent.
Raal H. Roos
Vice President and General Counsel
P.O. Box 490 (76202) 3900 Morse St. (76208] Denton, Texas (940) 898-7500
¢TM +~-'~ '5- Iol
aue£- ~4ndao
: ad~l/~oo
9~26100B-~BO~ : mnN/oo~
00'9 : ~w6N/ooQ
00'E~ :6u~p~ooa~
md~£:~ ~U
~00~ ~2 ^eN uo
HB393 AINnOD ~99~H31IW UIHINA3