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HomeMy WebLinkAboutContract 56926 � c, ECONOMIC DEVELOPMENT NT PROGF" AGREEMENT c`r sc� This ECONOMIC DEVELOPMENT PROGRAM AGREEMENT ("Agreement") is entered into by and between the CITY OF FORT WORTH, TEXAS (the "City"), a home rule municipality organized under the laws of the State of Texas, and LINEAR LABS, INC. ("Company"), a Delaware corporation. RECITALS The City and Company hereby agree that the following statements are true and correct and constitute the basis upon which the City and Company have entered into this Agreement: A. Company is in the business of developing fully modular electric motors and generators that will deliver greater performance than those manufactured under existing technology. Company currently is working to create innovative technological and manufacturing practices that, once implemented, will allow for large-scale domestic production of its products at an economical level. Development of these advanced manufacturing techniques as well as new products themselves will require significant and sustained research and development investment. B. In an effort to streamline large-scale domestic production of its products, to develop industry-leading manufacturing systems, and to continue its development of new technologies and applications for its products, Company has proposed to locate its primary manufacturing facility and the center for the substantial majority of all its research and development activities in the City (more specifically defined hereinafter as the "Subject Property") (collectively, the "Project") and to locate its corporate headquarters at a location in the City, either at the Subject Property as part of the Project or at another location in the corporate limits of the City deemed more suitable by Company, in return for the economic development incentives offered under this Agreement (more specifically defined as "Subject Property Locations"). C. The Project Improvements and Company's operations on the Subject Property Locations will benefit the City by fostering research and development activities in a Target Industry (as defined in the Policy referenced herein) and increasing the scope of an important commercial operation in the City with significant opportunities for employment and tax base growth. As recommended by the City's 2020 Comprehensive Plan, adopted by the City Council pursuant to Ordinance No. 24071-03-2020 (the "Comprehensive Plan"), and in accordance with the Economic Development Program Policy (defined hereinafter as the "Policy"), the City has established an economic development program pursuant to which the City will, on a case-by-case basis, offer economic incentives authorized by Chapter 380 of the Texas Local Government Code that include monetary loans and grants of public money, as well as the-� �.r% on 0 personnel and services of the City, to businesses and entities that the Q ni 4 I6Xf WJC0RD CITY SECRETARY Economic Development Program Agreement Between City of Fort Worth and Linear Labs,Inc. FT. WORM,,TX determines will promote state or local economic development and stimulate business and commercial activity in the City in return for verifiable commitments from such businesses or entities to cause specific employment and other public benefits to be made or invested in the City (the 11380 Program"). The economic development grants set forth in this Agreement (defined in hereinafter as the "Program Grants") specifically are authorized by Section 6 (Research and Development Projects) of the Policy. D. The City Council has determined that the feasibility of the Project is contingent on Company's receipt of the Program Grants and the Company's ability to assign those Program Grants to third-party Assignees, as more specifically outlined in this Agreement. The City Council has determined that the Project and use of the Project Improvements will benefit and stimulate the local economy and that the 380 Program is an appropriate means to achieve the Project. In addition,the City Council has determined that by entering into this Agreement the potential economic benefits that will accrue to the City are consistent with the City's economic development objectives, as outlined in the Comprehensive Plan and the Policy. This Agreement is authorized by Chapter 380 of the Texas Local Government Code. NOW, THEREFORE, in consideration of the mutual benefits and promises contained herein and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agree as follows: AGREEMENT 1. OVERVIEW. 1.1. Incorporation of Recitals. The City Council has found, and the City and Company hereby agree; that the recitals set forth above are true and correct and form the basis upon which the parties have entered into this Agreement. 1.2. General Structure of the Agreement Terms. 1.2.1 This Agreement is predicated on the results of an Economic Development Strategic Plan that was commissioned by the City Council in 2017 and whose findings were formally accepted by the City Council on December 12, 2017 pursuant to Mayor and Council (M&C) Communication G-19192. Pursuant to recommendations in the Economic Development Strategic Plan, in January 2019, the City Council adopted an Economic Development Program Policy (more specifically defined hereinafter as the "Policy") that, among other things, focused on the provision of economic development incentives to targeted businesses and industries (defined in the Policy as "Target Industries") that undertake research and development activities in the City. This activity, in turn, potentially will help the City develop and attract individuals working Economic Development Program Agreement Between City of Fort Worth and Linear Labs,Inc. 2 of 60 within these Target Industries, establishing a talent base that will lead other Target Industries to center more of their business operations in the City. 1.2.2. This Agreement differs from many of the City's previous Economic Development Program Agreements that were executed pursuant to earlier iterations of the 380 Program. Those agreements generally were structured to encourage businesses to develop or redevelop real property in the City and to provide jobs from those locations. In return, the City would pay those businesses annual economic development program grants that were based on a percentage of new ad valorem tax revenues that the City received as a result of increased taxes from the development or redevelopment projects. 1.2.3. However, this Agreement is structured to encourage Company to expend Qualified Expenses in the City to help develop its Project Operations. In other words, the Program Grants payable under this Agreement comprise an investment by the City not in real property development, but in the development of a specific Target Industry and the expenditure of research and development costs in the City that will support that Target Industry. Thus, as the Agreement is structured, the more Company expends in Qualified Expenses, the higher the annual Program Grants that Company can receive. The reimbursement rate is 50% for Central Business 1 Innovation District; 35% for Designated Investment Zones; and 25% for other Fort Worth locations, all of which are subject to change by the City Council. Generally speaking, if the Subject Property is in a 25% zone, the Company can receive $1.00 in Program Grants for every $4.00 in Qualified Expenses that it expends (a 1:4 ratio). 1.2.4. In order to structure payment of the Program Grants in this manner, this Agreement establishes that each annual Program Grant will be paid on the basis of the "Qualified Expenses Balance" as hereinafter defined. 1.2.5. This Agreement places a number of limits on exactly how much Company can receive in Program Grants. a. First, only 10 consecutive years' worth of Qualified Expenses are counted, beginning with Company's First Operational Year in the City. After 10 years, no additional Qualified Expenses may be added to the Qualified Expenses Balance. b. Second, although Company can manage to recover 100% of its Qualified Expenses through Program Grants, it must meet Economic Development Program Agreement Between City of Fort Worth and Linear Labs,Inc. 3 of 60 certain minimum levels established with regard to the amount of Qualified Expenses it expends in the City during the Term of the Agreement as well as to meet other specific commitments, some annually, related to the construction of the Project Improvements, provision of Full-time Equivalent Jobs, and wage, salary, and benefit offerings to individuals holding those Full-time Equivalent Jobs. If those various commitments are not met, the amount of certain Program Grants could be lower than 100% of Company's Qualified Expenses, and, potentially as little as 50% of those in later years. Section 6 of this Agreement outlines in detail the manner in which the annual Program Grants payable to Company are calculated. 1.2.6. In order to provide the City with a manageable revenue source to pay these Program Grants, the amounts of the Program Grants are still capped by incremental ad valorem property taxes from the Subject Property, in this case, at 75% of annual incremental tax revenues received by the City and attributable to the Subject Property. But because the Program Grants are designed to encourage higher spending on Qualified Expenses by Company in its early years, rather than encouraging real property improvements that will result in a higher tax base, the City will pay Program Grants for a period of 15 years, even though only 10 years' worth of Company's Qualified Expenses will be counted. This gives Company an additional 5 years to recover more of its Qualified Expenses from what, potentially, could be a more limited funding source (revenue amounts equal to incremental ad valorem tax revenues). However, in order to protect the City from unintended budgetary consequences, a Program Cap of$68.9 million has been established. If that Program Cap is hit before a Ul 15 years of Program Grant payments are made, the Agreement expires. 1..2.7. A unique feature of this Agreement is Company's ability to assign all or a portion of its Program Grants to one or more Assignees. Presumably, Company could make an Assignment to an Assignee that agrees to provide upfront funding to Company as an investment. Upon such an Assignment, the City would pay the Assignee a specified amount or percentage of Company's Program Grants (whether 100% in the case of a full Assignment or a lower percentage in the case of a partial Assignment). While the amount of a Program Grant to an Assignee will still be dependent both on the overall amount of Qualified Expenses expended by Company, as reflected in the annual Qualified Expenses Balance, as well as the extent to which Company meets its other commitments under this Agreement, the big difference between Program Grants payable to Company and those payable to an Assignee is that the Assignee's Program Grants will be capped at 75% of the annual incremental ad valorem tax revenues received by the City and attributable Economic Development Program Agreement Between City of Port Worth and Linear Labs,Inc. 4 of 60 to real property in the City owned by the Assignee (defined in this Agreement as the "Assignee Subject Property'), and not the Company's Subject Property. 1.2.8. As a result, owners of large real estate holdings in the City have the potential to earn a significant return on their investment with Company in the form of Program Grants payable to them as Assignees. And while they are dependent on Company's continued performance under this Agreement, they also have some control over the amount of tax increment generated by their properties by developing those properties. The number of Program Grants available to an Assignee will depend on when Company makes the Assignment, as this Agreement will still expire after the 15th consecutive year in which the City makes Program Grant payments. In order for an Assignee to receive 15 annual Program Grants, Company would have to make the Assignment before the City had paid out any Program Grants at all. Thus, if Company receives Program Grants for 2 years before making a particular Assignment, the Assignee could not receive more than 13 annual Program Grants (and, potentially, only 12, depending on what time of year the Assignment was made). 1.2.9. The other main difference between Program Grants payable to Assignecs and those payable to Company is that the other cap on the amount of any annual Program Grant, which is the cap on the Qualified Expenses Balance, is 5 percentage points less than that calculated for Program Grants to Company. In other words, whereas the maximum percentage of the Qualified Expenses Balance for Program Grants payable to Company is 100%, it is 95% for those payable to Assignees. This 5 percentage point difference is defined in this Agreement as the "5% Assignee Set-Aside," the withholding of which, among other things, will allow the City to cover its additional costs in administering this Agreement and a potential multitude of Consent to Assignment Agreements. 1.2.10. Of course, another inherent difference is that the cap on the maxunum percentage of the Qualified Expenses Balance for Program Grants payable to an Assignee is that the maximum percentage is also limited by the amount or percentage of the Assignment of Company's Program Grants, which is defined in this Agreement as the "Assignee Percentage." For a complete Assignment, the Assignee Percentage would be 100%, but for a partial Assignment, it would be less. For example, if Company makes an Assignment to a particular Assignee of 45% of Company's Program Grants, and retains the other 55% interest, then the Assignee Percentage for that Assignee would be 45% and the cap on the Qualified Expenses Balance for each annual Program Grant payable to the Assignee would be a maximum of 42.75% (.45 x .95), with Company receiving a maximum of 55% (.55 x 1.00). Economic Development Program Agreement Between City of Fort Worth and Linear Labs,be. 5 of 60 1.2.11. In order to provide clarity to any situation where Company has made an Assignment, in whole or in part, of its Program Grants to an Assignee, the City, Company, and the Assignee must all execute a Consent to Assignment Agreement so that the parties clearly understand, among other things, specifically which Assignee Subject Properties are covered by the arrangement, what Company's continuing obligations under this Agreement will be, and what the Assignee's obligations will be. Section 7 of this Agreement outlines in detail the manner in which the annual Program Grants payable to Assignees are calculated. 1.2.12. This Section 1.2 is intended only to provide a general overview of this Agreement's terms and conditions. Any conflict between a statement in this Section 1.2 and another provision of this Agreement will be resolved in favor of that other provision. 2. DEFINITIONS. In addition to terms defined in the body of this Agreement, the following terms shall have the definitions ascribed to them as follows: 380 Program has the meaning ascribed to it in Recital C. 5%Assignee Set-Aside has the meaning assigned to it in Section 7.1. Additional Employment Commitment has the meaning ascribed to it in Section 4.2. Additional Employment Reduction Percentage has the meaning ascribed to it in Section 6.3, and, for purposes of calculating Program Grants payable to an Assignee, is also outlined in Section 7.3. Advanced Manufacturing R&D Work means the investment in costs to provide market research, technical research, market development, technical development, manufacturing research, and manufacturing development and any related support to enable query, research, investigation, and experimentation into manufacturing processes, techniques, tools, materials, and general know how for the benefit of the needs of the Company to further its goals to of developing fully modular electric motors and generators that will deliver greater performance than those manufactured under existing technology. Affiliate means any entity, incorporated or otherwise, under common control with, controlled by or controlling Company. For purposes of this definition, "control" means fifty percent(54%) or more of the ownership determined by either value or vote. Economic Development Program Agreement Between City of Fort Worth and Linear Labs,Inc. n of 60 Annual Qualif ed Expenses Report has the meaning ascribed to it in Section 4.5. Assignee means any individual or entity to whom Company assigns any of its Program Grants, in whole or in part, pursuant to and in accordance with this Agreement, as confirmed in a Consent to Assignment Agreement executed by and between the City, Company, and the Assignee. Assignee Assumption Agreement has the meaning ascribed to it in Section 9.10. Assignee investment Amount has the meaning ascribed to it in Section 9.1.0. Assignee New Taxable Tangible Personal Property means any business personal property that (i) is subject to ad valorem taxation and is rendered for that purpose to the appraisal district having jurisdiction over the Assignee Subject Property; (ii) is located on the Assignee Subject Property; (iii) is owned or leased by an Assignee or tenant of Assignee; (iv) was not located in the City prior to the effective date of the Assignment (as stated in the applicable Consent to Assignment Agreement executed by the City in accordance with this Agreement); and (v) that is confirmed by the City to meet the requirements of this definition on the basis of reports submitted by the Assignee pursuant to this Agreement and the Consent to Assignment Agreement executed by the City in accordance with this Agreement. Any Assignee New Taxable Tangible Personal Property located on Assignee Subject Property that subsequently is sold to another party will still be considered as Assignee New Taxable Tangible Personal Property for purposes of calculating any Program Grants payable to an Assignee, provided that the property remain in the corporate boundaries of the City of Fort Worth and that the Assignee is able to include the information required by reports submitted by the Assignee pursuant to this Agreement. Assignee Percentage means a percentage, or if a specified monetary amount an effective percentage, of the Program Grants to which Company is entitled to receive hereunder, whether in whole (100%) or in part (less than 100%) that Company has assigned to an Assignee in accordance with this Agreement, as confirmed in a Consent to Assignment Agreement executed by and between the City, Company, and the Assignee. Assignee Qualified Expenses Balance means the product of the Assignee Percentage and the Qualified Expenses Balances multiplied by 95% or, otherwise expressed as a formula: (Assignee Percentage x Qualified Expenses Balance) x .95. Assignee Subject Property means real property located in the City, and any improvements thereon, that (i) is owned by an Assignee (and, subject to Section 7.2, not by another other party, including an Affiliate of the Assignee) at the time that a Notice of Intent to Assign is received by the City and a Consent to Assignment Agreement is executed by and between Company, the Assignee, and the City; (ii) is not zoned for Residential use, as provided under the then-current zoning regulations under the City Code (except where such zoning may be changed to facilitate new development) with the Economic Development Program Agreement Between City of Fort Worth and Linear Labs,Inc. 7 of 60 exception that any property zoned Mixed-Use (including any part of a form-based code) or properties that are zoned Planned Development shall be allowable; (iii) is not subject to an existing and active City incentive agreement that is based on ad valorem taxation, such as, without limitation, an Economic Development Program Agreement, Tax Abatement Agreement, or Enhanced Community Facilities Agreement; and (iv) is confirmed by the City to meet the requirements of this definition on the basis of reports submitted by the Assignee pursuant to this Agreement and the Consent to Assignment Agreement. Any Assignee Subject Property that subsequently is sold to another party will still be considered as Assignee Subject Property for purposes of calculating any Program Grants payable to an Assignee, provided that the Assignee is able to include the information required by reports submitted by the Assignee pursuant to this Agreement and the Consent to Assignment Agreement. Real property acquired by an Assignee at any time after the Notice of Intent to Assign is received by the City will not be included as part of the Assignee Subject Property for any purposes under this Agreement. Assignee Subject Property Tax Revenues means the sum of (i) revenues from ad valorem taxes on the Assignee Subject Property and any improvements thereon paid by the Assignee and received by the City minus the amount of ad valorem taxes payable on the Assignee Subject Properly for the tax year in which the completed Notice of Intent to Assign was submitted to the City in accordance with this Agreement (as confirmed in the applicable Consent to Assignment Agreement executed by the City in accordance with this Agreement) based on the taxable assessed value of the Assignee Subject Property for the tax year in which the completed Notice of Intent to Assign was submitted to the City in accordance with this Agreement, as established solely by the appraisal district that has jurisdiction over the Assignee Subject Property at the time, plus (ii) revenues from ad valorem taxes on Assignee New Taxable Tangible Personal Property paid by the Assignee and received by the City, based on the taxable assessed value of such Assignee New Taxable Tangible Personal Property, minus the amount of ad valorem taxes payable on the Assignee New Taxable Tangible Personal Property for the tax year in which in which the completed Notice of Intent to Assign was submitted to the City in accordance with this Agreement (as confirmed in the applicable Consent to Assignment Agreement executed by the City in accordance with this Agreement), as established solely by the appraisal district that has jurisdiction over the Assignee Subject Property at the time. Assignment means an assignment by Company of any of its Program Grants, in whole or in part, to an Assignee pursuant to and in accordance with this Agreement, as confirmed in a Consent to Assignment Agreement executed by the City in accordance with this Agreement. Base Employment Commitment has the meaning ascribed to it in Section 4.2. Base Percentage has the meaning ascribed to it in Section 6.3, and, for purposes of calculating Program Grants payable to an Assignee, is also outlined in Section 7.3._ Economic Development Program Agreement Between City of Fort Worth and Linear Labs,Inc. 8 of 60 Business Equity Firm ("BEF")has the meaning assigned to it in the City of Fort Worth's Business Equity Ordinance (Chapter 20, Article X of the City Code), as amended. BEF Construction Spendinp, Commitment has the meaning ascribed to it in -Section 4.1 . BEF Reduction Percentage has the meaning ascribed to it in Section 6.3, and, for purposes of calculating Program Grants payable to an Assignee, is also outlined in Section 7.3. Calendar Year means the period of time comprised of twelve consecutive months beginning on January 1 and ending on December 31. Certificate of Initial Project Completion has the meaning ascribed to it in Section 5.1. Certificate of Final Project Completion has the meaning ascribed to it in Section 5.2. Company_New Taxable Tangible Personal Property means any personal property that (i) is subject to ad valorem taxation and is rendered for that purpose to the appraisal district having jurisdiction over the Subject Property; (ii) is located on the Subject Property; (id) is owned or leased by Company or an Affiliate; and (iv) was not located in the City prior to the Effective Date of this Agreement. Completion Date means the date as of which a temporary or permanent certificate of occupancy has been issued for all space on the Subject Property that is being occupied and used by Company for the Project. Completion Deadline means December 31, 2023. Comprehensive Plan has the meaning ascribed to it in Recital C. Consent to Assignment Agreement has the meaning ascribed to it in Section T2. Construction Costs means the aggregate of the following any and all costs expended or caused to be expended by Company for the Project Improvements: actual site development and construction costs, general contractor and subcontractor fees, and the costs of supplies, materials and construction labor; engineering fees; and architectural and design fees; zoning fees; building permit fees; permit service fees; courier fees; costs for fire suppression, fire detection and water systems; costs for HVAC systems; costs for electrical systems; costs to comply with certificate of occupancy or use of premises as may be required by code or any agency; any required environmental mitigation or abatement costs; sewer basin fees; water and sewer tap fees; water, wastewater and Economic Development Program Agreement Between City of Fort Worth and Linear Labs,Inc. of 60 thoroughfare impact fees; other costs and fees customarily incidental to construction of a commercial project; and insurance and taxes directly related to the construction of the Project Improvements; provided, however, that Construction Costs specifically excludes (i) any costs associated with the acquisition or lease of the Subject Property and (ii) any costs associated with the purchase and installation of a Photovoltaic Solar Energy System. Corporate Headquarters means the administrative office of Company or successor, and which houses Company's Chief Executive or successor. Direct Labor Worker means all employees hired directly by the Company working in Fort Worth, including any such employees engaged for the Company through a Professional Employment Organization or temporary labor agency, as labor that can be directly attributed to Cost of Manufacturing or other Direct Costs to provide labor for the Project. An example of this is an operator of a machine. Director means the director of the City's Economic Development Department or that person's authorized designee. Effective Date has the meaning ascribed to it in Section 3. Events of Force Majeure has the meaning ascribed to it in Section 22. Final Project Completion Re ort has the meaning ascribed to it in Section 4.5. Final Property Improvement Commitment has the meaning ascribed to it in Section 4.1. First Operational Year means the first year in which Company actively is conducting Project Operations on the Subject Property, which, at Company's election, will either be (i) the Calendar Year in which the Completion Date occurred, or (ii) the Calendar Year fallowing the year in which the Completion Date occurred. Company's election of which Calendar Year comprises its First Operational Year will be memorialized in the Notice of Project Operations Commencement submitted by Company to the Director pursuant to and in accordance with this Agreement. Full-time Equivalent Job means a job on the Subject Property Locations provided by Company to one or more individuals for, collectively, (i) at least forty (40) hours per week or (ii) less than forty (40) hours per week if such other measurement is used to define fill-time employment by Company in accordance with its then-current personnel policies and regulations. For example, if Company has a Company-wide policy that considers full-time employment to be thirty-five (35) hours per week, then a Full- time Equivalent Job on the Subject Property to one or more individuals for, collectively, at least thirty-five (35) hours per week shall be considered a Full-time Equivalent Job for purposes of this Agreement. Economic Development Program Agreement Between City of Port Worth and Linear Labs,Inc. I u of 60 Full-time Equivalent Job — Advanced Manufacturing R&D means a Full- Time Equivalent Job specializing in Advanced Manufacturing R&D Work. Full-time Equivalent Job — All Other means a Full-Time Equivalent Job that does not include Advanced Manufacturing R&D Work or Product R&D. Full-time Equivalent Job — Product R&D means a Full-Time Equivalent Job specializing in Product R&D. Healthcare Benefits means the standard medical benefits provided by the Company to individuals holding a Full-Time Equivalent Job. Indirect Labor Workers means all employees, hired directly by the Company in Fort Worth, including any such employees engaged for the Company through a Professional Employment Organization or temporary labor agency, as labor that can be indirectly attributed to Cost of Manufacturing or other Indirect Costs to provide labor for the Project. Examples of this are a Supply Chain team member or Maintenance Technician. Initial Project Completion Report has the meaning ascribed to it in Section 4.5. Initial Property Improvement Commitment has the meaning ascribed to it in Section 4.1. Investor Assignee has the meaning ascribed to it in Section 9.10. Laws means federal, state, and local statutes, ordinances, rules, and regulations. Mobility Innovation District means any district, zone, or other geographically determinate area of and within the City of Fort Worth formally organized, established, and promoted with the specified purpose of supporting the clustering of leading-edge anchor institutions, companies, start-ups, business incubators and accelerators that develop, test, scale, and commercialize advanced mobility technology and business models. To qualify under this Agreement, the district must be formally recognized as such by the City Council of the City of Fort Worth by resolution or some other act of formal approval or identification. Notice of Intent to Assign has the meaning ascribed to it in Section 7.2. Notice of Project Operations Commencement has the meaning ascribed to it in Section 4.5. Operational Year means a Calendar Year in which Company actively is conducting Project Operations on the Subject Property, beginning with the "First Operational Year", as more specifically defined herein, and with subsequent Operational Economic Development Program Agreement Between City of Fort Worth and Linear Labs,Inc. i i of 60 Years during the Term of this Agreement individually defined sequentially herein (e.g. "Second Operational Year,""Third Operational Year," "Fourth Operational Year," etc.). Photovoltaic Solar EneM System means an energy generation system composed of one or more solar panels combined with an inverter and other electrical and mechanical hardware that use energy from the sun to generate electricity. Policy means the Economic Development Program Policy adopted by the City Council that specifically governs the 380 Program and this Agreement, as set forth in City Council Resolution No. 5039-01-2019, as amended by Resolution Nos. 5241-06- 2020 and 5338-01-2021 and as may subsequently be amended by the City Council. Product means electric motors, generators, controllers, Internet of Things, or IoT, devices and software, sensors, and embedded controls software, and software that could operate with motors or generators. Product R&D Work means all work-related activities directly and indirectly associated with Research and Development of the Product. Program Cap means the total aggregate amount of Program Grants that the City is obligated to pay under this Agreement, both to Company and all Assignees, if any, which amount is Sixty-eight Million Nine Hundred Thousand Dollars and Zero Cents ($68,900,000.00), gross, as applied in accordance with this Agreement. Program Grants means the annual economic development grants paid by the City to Company and to any Assignees in accordance with this Agreement and as part of the 380 Program. Program Year means a Calendar Year in which the City is obligated pursuant to this Agreement to pay a Program Grant or Program Grants (if Company has made one or more Assignments), beginning with the Calendar Year comprising the Second Operational Year. For purposes of this Agreement, individual Program Years will be defined sequentially. Thus, "Program Year 1" (the Second Operational Year) will be the first Calendar Year in which the City is obligated to pay a Program Grant or Program Grants; "Program Year 2" will be the second Calendar Year in which the City is obligated to pay a Program Grant or Program Grants; and continuing annually through Program Year 15, when this Agreement will expire. Project has the meaning ascribed to it in Recital B. Project Improvements means those tenant improvements and all other real property improvements constructed on the Subject Property by or on behalf of Company as part of the Project. Project Milestones has the meaning ascribed to it in Section 4.4. Economic Development Program Agreement Between City of Fort Worth and Linear Labs,Inc. 12 of 60 Project Operations means all business operations associated with the Project, including, but not limited to, all employment, research and development activities, and minimum investment required under this Agreement, but excludes Company's Corporate Headquarters operations. Qualified Expenses means those costs and expenses of Company that are accrued or expended within the City including (i) Product R&D Work, (ii)"qualified expenses" under Section 41 of the Internal Revenue Code (the Research and Experimentation Tax Credit), (iii) promotional and market research activities to support the Project and any research and development activities thereunder including to promote the Technology Center of Excellence, (iv) product commercialization, (vi) competitive analysis of manufacturing activities, (vii) competitive analysis of research and development activities; or (viii) any direct expenses for research and development, manufacturing, utility patent generation, creation of other forms of intellectual property (such as trade secrets), technological feasibility, technology commercialization, or spinoff incubation costs as approved by the City. _Qualified Ex eases Balance, except as otherwise set forth below, means twenty- five percent (25%) of all Qualified Expenses expended by Company for a period of ten (10) Calendar Years, beginning January 1 of the First Operational Year and ending December 31 of the Ninth Operational Year, multiplied by the applicable percentage reduction for any unmet Project Milestones minus the aggregate amount of all Program Grants paid by the City pursuant to this Agreement during the same timeframe (whether to Company or any Assignee).This amount will be tallied and confirmed annually in the Qualified Expenses Balance Certificates issued by the Director and used as a basis for calculating the amount of future Program Grants payable by the City; provided, however, that if the City Council amends the Policy authorizing a percentage that is Nigher than twenty-five percent (25%) or if the Subject Property is ever located in an area that qualifies for a percentage higher than twenty-five percent (25%) under the Policy (for instance if that area is established as an Innovation District) then that percentage which is higher than twenty-five percent (25%) of Company's Qualified Expenses will be counted for purposes of calculating the Program Grants payable hereunder beginning in the Calendar Year in which the Policy was amended or the Subject Property qualifies for the higher percentage by virtue of its location and ending with the Ninth Operational Year, the Qualified Expenses Balance will be calculated to reflect that higher percentage, with the understanding that, in the event of an amendment to the Policy, Company and the City must execute an amendment to this Agreement reflecting that change (not to be unreasonably delayed or withheld by the City) and that the Qualified Expenses Balance for previous Calendar Years will not be adjusted to reflect such higher percentage. In the event that, after payment of any Program Grants, the resulting sum of the Qualified Expenses Balance is greater than zero at the end of any Program Year, that amount will carry over to the following year and will be included in the Qualified Expenses Balance in that year for purposes of calculating any Program Grants. Qualified Expenses Balance Certificate has the meaning ascribed to it in Section 5.3. Economic Development Program Agreement Between City of Fort Worth and Linear Labs,Inc. V%of 60 Salary means all cash payment or remuneration made to a Company employee with a Full-Time Equivalent Job, including paid time off for vacation, sick, or leave, commissions, overtime, incentive compensation, and bonuses. A Salary does not include any costs covered by the employer for employee benefits, such as health insurance premiums or retirement plan contributions by the employer, or reimbursements for employee expenses. Subject Property means (i) the real property at 2600 NE Loop 820 and on which the Project Improvements are constructed, or, alternatively, (ii) such other real property located in the City and on which the Project Improvements are constructed, as mutually agreed to in writing by Company and the City after the Effective Date. "Subject Property" does not include any property in the City that is owned or leased by Company and that is separate and apart from the real property on which the Project Improvements are constructed. This exclusion applies to any real property on which the Corporate Headquarters are located if the Corporate Headquarters are located on real property other than the real property on which the Project Improvements are constructed. Subject Property Locations has the meaning ascribed to it in Recital B. Subject Property Tax Revenues means the sum of(i)revenues from ad valorem taxes on the Subject Property and any improvements thereon, including the Project Improvements, paid by Company and received by the City minus the amount of ad valorem taxes payable on the Subject Property and any improvements located thereon for the 2020 tax year, based on the taxable assessed value of the Subject Property and any improvements located thereon for the 2020 tax year, as established solely by the appraisal district that has jurisdiction over the Subject Property at the time, plus (ii) revenues from ad valorem taxes on Company New Taxable Tangible Personal Property paid by Company and received by the City, based on the taxable assessed value of such Company New Taxable Tangible Personal Property, as established solely by the appraisal district that has jurisdiction over the Subject Property at the time. If the Subject Property is leased by Company, then in order for ad valorem taxes on the Subject Property and any improvements thereon to be included as "Subject Property Tax Revenues," Company must provide the City with a copy of its lease demonstrating that Company is required to pay those ad valorem taxes as part of its rent or as otherwise provided under such lease. If only a fraction of the Subject Property is leased by Company, then only a percentage of the revenues from ad valorem taxes on the Subject Property and any improvements thereon will be counted for purposes of calculating the Subject Property Tax Revenues, which percentage will equal the proportion of the Subject Property that is under lease to Company (and provided, again, that Company's lease requires Company to pay those ad valorem taxes as part of its rent or as otherwise provided under such lease). Term has the meaning ascribed to it in Section 3. Technology Center of Excellence means a publicly promoted institution, academic or industry partnership, shared facility, or formally established team or entity Economic Development Program Agreement Between City of Fart Worth and Linear Labs,Inc. A of 60 that provides thought leadership, best practices, facilitated research, advocacy, professional conference, and other support or training for a specific commercial or academic area of focus that features a significant emphasis on the development or application of new technologies. Wage, Salary, and Benefit Commitment has the meaning ascribed to it in Section 4.3. 3. TERM. This Agreement is effective as of June 16, 2020 ("Effective Date") and, unless terminated earlier in accordance with this Agreement, will expire on the earlier of(i) the date in Program Year 15 as of which the City has paid all Program Grants required hereunder, as more specifically set forth in Sections G and 7, or (ii) the date as of which the aggregate amount of all Program Grants paid by the City hereunder to both Company and any Assignees equals the Program Cap, applied in accordance with this. Agreement ("Term"). 4. COMPANY OBLIGATIONS, GOALS AND COMMITMENTS. 4.1. Real Property Improvements and Uses. 4.1.1. Initial Property Improvement Commitment. The Completion Date for the Project Improvements must occur on or before the Completion Deadline, and Company must have expended or caused the expenditure of at least Two Hundred Fifty Thousand Dollars and Zero Cents ($250,000.00) in Construction Costs for the Project Improvements by December 31 of the Calendar Year comprising the First Operational Year, as confirmed in a Certificate of Initial Project Completion ("Initial Property Improvement Commitment"). If the Initial Real Property Improvement Commitment is not met, a default under this Agreement will occur, in which case Section 9.1 will apply. 4.1.2. Final Property Improvement Commitment. Company must have (i) expended or caused the expenditure of at least Two Million Seven Hundred Fifty Thousand Dollars and Zero Cents ($2,750,000.00) in total Construction Costs for the Project Improvements and (ii) installed Company New Taxable Tangible Personal Property at the Subject Property equal in value to at least One Million Two Hundred Fifty Thousand Dollars and Zero Cents ($1,250,000.00) by December 31 of the Calendar Year comprising the Fifth Operational Year, as confirmed in the Certificate of Final Project Completion, with the understanding that this amount includes the amount all Construction Costs and Company New Tangible Personal Property as part of and counted toward the Initial Real Economic Development Program Agreement Between City of Port Worth and Linear Labs,Inc. 15 of 60 Property Improvement Commitment ("Final Property Improvement Commitment"). In the event that expenditures for either the Construction Costs for the Project Improvements or the installed Company New Taxable Tangible Personal Property are less than otherwise required under this Section 4.1.2., the Final Property Improvement Commitment will be satisfied if their combined value is at least Four Million Dollars and Zero Cents ($4,000,000.00). If the Final Property Improvement Commitment is not met, a default under this Agreement will occur, in which case Section 9.2 will apply. 4.1.3. BEF Construction Spending Commitment. a. At least fifteen percent (15%) of all Construction Costs for the Project Improvements that are counted for purposes of the Initial Property Improvement Commitment, regardless of the total amount of such Construction Costs, and at least fifteen percent (15%) of all Construction Costs for the Project Improvements that are counted for purposes of the Final Property Improvement Commitment, regardless of the total amount of such Construction Costs, must be expended with BEFs ("BEF Construction Spending Commitment"), b. Compliance with the BEF Construction Spending Commitment will be measured by the City twice, first when ascertaining compliance with the Initial Property Improvement Commitment, and second when ascertaining compliance with the Final Property Improvement Commitment and will be reflected in the respective Certificates of Completion issued pursuant to this Agreement. C. Construction Cost expenditures with BEFs that were counted for purposes of the Initial Property Improvement Commitment will also be counted for purposes of calculating total Construction Cost expenditures with BEFs for purposes of the Final Property Improvement Commitment. If the BEF Construction Spending Commitment at either or both junctures is not met, a default will not occur under this Agreement, but the amount of any Program Grants payable by the City throughout the Term of this Agreement will be reduced, as more specifically outlined below. 4.1A. Project Operations at Subject Property. Beginning with the First Operational Year and throughout the remainder of the Term, Project Operations must be conducted on the Subject Property. Economic Development Program Agreement Between City of Fort Worth and Linear Labs,Inc. l6 of 60 4.1.5. Corporate Headquarters in City. Beginning with the First Operational Year and throughout the remainder of the Term, Company must maintain its Corporate Headquarters in the City at the Subject Locations. 4.2. Employment Commitments. Compliance with all of the employment commitments set forth in this Section will be based on the annual employment reports filed by Company in accordance with this Agreement, and the City's verification of the information contained therein. 4.21. Base Employment Commitment. Company must provide and fill at least twenty-five (25) Full-time Equivalent Jobs for any Company department on the Subject Property Locations as of December 31 of the Calendar Year comprising the First Operational Year and in all subsequent Calendar Years ("Base Employment Commitment"). If the Base Employment Commitment is not met as of December 31 of the First Operational Year or in any subsequent Calendar Year, a default under this Agreement will occur, in which case Section 9.3 will apply. 4.2.2. Additional Employment Commitments. Receipt of the maximum available Program Grant amount each year is dependent on Company's attainment of the additional employment commitments set forth below (for each year, the "Additional Employment Commitment"). Full-time Equivalent Jobs counted for purposes of the Base Employment Commitment will also be counted for purposes of the Additional Employment Commitment applicable to a given Calendar Year. If the applicable Additional Employment Commitment in a given Calendar Year is not met, a default under this Agreement will not occur, but the amount of any Program Grant payable by the City in the following year will be reduced, as more specifically outlined in Sections 6 and 7 below. a. Third and Fourth Operational Years. in order to meet the Additional Employment Commitment for the Calendar Years comprising the Third Operational Year and the Fourth Operational Year, Company must provide and fill at least sixty (60) Full-time Equivalent Jobs for any Company Economic Development Program Agreement Between City of Fort Worth and Linear Labs,Inc. 17 of 60 department on the Subject Property Locations as of December 31 of each such Calendar Year. b. Fifth through Seventh Operational Years. In order to meet the Additional Employment Commitment for the Calendar Years comprising the Fifth Operational Year, Sixth Operational Year, and Seventh Operational Year, Company must provide and fill at least two hundred forty (240) Full-time Equivalent Jobs for any Company department on the Subject Property Locations as of December 31 of each such Calendar Year. C. Eighth and All Subsequent Operational Years. In order to meet the Additional Employment Commitment for the Calendar Years comprising the Eighth Operational Year and each subsequent Operational Year for the remainder of the Term, Company must provide and fill at least one thousand two hundred (1,200) Full-time Equivalent Jobs for any Company department on the Subject Property Locations as of December 31 of each such Calendar Year. 4.3. Wage, Salary, and Benefit Commitments for Full-time Equivalent Jobs. Beginning in the Calendar Year comprising the First Operational Year and in each Calendar Year thereafter for the remainder of the Term, Company must meet all of the commitments set forth in Sections 4.3.1, 4.3.2, and 4.3.3 relating to wages, salaries, and benefits provided to individuals holding Full-time Equivalent Jobs for any Company department on the Subject Property Locations (collectively, the "Wage, Salary, and Benefit Commitment"). If, in any such Calendar Year, one or more of the three commitments set forth in Sections 4.3.1, 4.3.2, and 4.3.3 are not met, then the Wage, Salary, and Benefit Commitment applicable to that Calendar Year will not be met. In this event, a default under this Agreement will not occur, but any Program Grant that would otherwise be payable by the City in the following year, both to Company and any Assignees, will be forfeited entirely, with the understanding that if the Wage, Salary, and Benefit Commitment is met in a subsequent Calendar Year, the City's obligation to pay any Program Grants in the year following such Calendar Year will resume, all as more specifically outlined below. Compliance with the Wage, Salary, and Benefit Commitment will be based on the annual employment reports filed by Company in accordance with this Agreement and the City's verification of the information contained therein. 4.3.1. Minimum Average Hourly Wages for Full-time Equivalent Jobs Held by Non-Exempt Employees. Economic Development Program.Agreement Between City of Fort Worth and Linear Labs,Inc. l a of 60 All Full-time Equivalent Jobs at the Subject Property that are performed by Direct Labor Workers must pay average blended hourly wages of at least Fifteen Dollars and Zero Cents ($15.00) per hour, inclusive of any bonuses, overtime wages, and incentive compensation actually paid during such Calendar Year. 4.3.2. Minimum Average Annual Salary for Full-time Equivalent Jobs Held by Exempt Employees. All Full-time Equivalent Jobs at the Subject Property that are performed by individuals other than those classified as Direct Labor Workers or Indirect Labor Workers who are defined as "non-exempt" under the Fair Labor Standards Act must pay average annual Salaries of at least Seventy Thousand Dollars and Zero Cents ($70,000.00). 4.3.3. Benefits Provided to Individuals Holding Full-time Equivalent Jobs. Except to the extent prohibited by applicable Laws, Company must offer and make available Healthcare Benefits to all individuals working in Full-time Equivalent Jobs at the Subject Property, with the understanding that some individuals may elect to not receive such Healthcare Benefits. 4.4. Project Operations Milestones. 4.4.1. The City recognizes, and Company agrees, that in order for the City to realize its goal in promoting and incentivizing businesses engaged in technologically-significant research and development operations, as described in the Policy, Company must strategically structure its workforce so that an appropriate balance of individuals working in Full-time Equivalent Jobs on the Subject Property are best positioned to help the City and Company achieve such goal. Therefore, in addition to the overall Base Employment Commitment and Additional Employment Commitments and the overall Wage, Salary, and Benefits Commitment, Company must meet the minimum total for Full-Time Equivalent Jobs and Qualified Expenses, amounts specified in the "Project Milestones" table below in each of the following Calendar Years, as set forth below (for each Operational Year described, the "Project Milestones"). 4A.2. A chart outlining the Project Milestones is in this Section below and attached as Exhibit "A". If, in any given Operational Year for which a Project Milestone is to be evaluated, the Project Milestones for Minimum Total R&D Full-Time Equivalent Jobs and the Qualified Expenses applicable to that Operational Year, as set forth below, as the case may be, are not met, a default under this Agreement will not occur, but the percentage of Qualified Expenses established in the Qualified Expenses Balance that the City will use in calculating Economic Development Program Agreement Between City of Fort WortL and Linear Labs,Inc. l9 of 60 the amount of any Program Grant payable by the City in the following year will be reduced, as more specifically outlined in Sections 6 and 7. Project Milestones operational Year: YEAR 1 YEAR 3 YEAR 5 YEAR 8 Minimum R&D Full-thne Equivalent lobs Product R&D Full-time Equivalent Jobs 15 35 100 400 Advanced Manufacturing R&D Full-time Equivalent Jobs 2 4 40 200 Full-time Equivalent Jobs for All Other Qualified Expenses 8 11 60 500 Minimum Total R&D-related Full-time Equivalent Jabs 25 so 200 1,100 Average Wastes Product R&D Average Wages $ 90,000 $ 90,000 $ 90,000 $ 90,000 Advanced Manufacturing R&D Average Wages $ 70,000 $ 70,000 $ 70,000 $ 70,000 Average Wages for All Other Qualified R&D Expenses $ 70,000 $ 70,000 $ 70,000 $ 70,000 Total Annual Qua ftied R&D E7 ern uses $ 3,800,000 $ 9,000,000 $ 28,000,000 $ 135,00.0,000 Cap to Qualified Expenses If Milestone Unmet {percent of maximum for year} 95% 80% 65% 50% 4.5. Reports and Filings by Company. 4.5.1. Notices of Completion and Project Operations Commencement. a. Completion Date. Company promptly will notify the City in writing once the Completion Date has occurred. b. Initial Property Improvement Commitment. Following attainment of the Initial Property Improvement Commitment, Company must provide a written report to the City, in a form reasonably acceptable to the Director, that specifically outlines the total Construction Costs expended for the Project Improvements as of the date of such report, as well as the total Construction Costs expended with BEFs for the Project Improvements as of the date of such report, together with information reasonably necessary to demonstrate that such amounts were actually paid ("Initial Project Completion Report"). Company may submit the Initial Project Completion Report at any time it elects, provided that it is on or before December 31 of the Calendar Year comprising the First Operational Year; provided, however, that Company will have the right to supplement the Initial Project Completion Report with any additional Construction Cost expenditure documentation for a period of ninety (90) calendar days following submission of the Economic Development Program Agreement Between City of Fort Worth and Linear Labs,Inc. ::of 60 Initial Project Completion Report, so long as all Construction Costs included in any supplement were actually expended on or before December 31 of the Calendar Year comprising the First Operational Year. To the extent available, the City may provide Company an example of each required report hereunder and the Parties may agree upon the form of report(s) to be provided under this Section 4. C. Notice of Project Operations Commencement. i. Company must provide the Director with a notice stating which Calendar Year it elects to comprise the First Operational Year under this Agreement, with the understanding that the First Operational Year may only be (i) the Calendar Year in which the Completion Date occurred, or (ii) the Calendar Year following the year in which the Completion Date occurred ("Notice of Project Operations Commencement"). U. Company understands and agrees that numerous commitments required by this Agreement will be measured as of the Calendar Year comprising the First Operational Year, and that the timing of payment of Program Grants will be determined by which Calendar Year comprises the First Operational Year. If Company wishes the Calendar Year in which the Completion Date occurred to be the First Operational Year, Company must submit the Notice of Project Operations Commencement to the Director by not later than December 31 of that same year. If Company fails to submit a Notice of Project Operations Commencement to the Director by December 31 of the year in which the Completion Date occurred, then Company shall be deemed to have selected the Calendar Year following the year in which the Completion Date occurred to be the First Operational Year. d. Final Property Improvement Commitment. i. Following attainment of the Final Property Improvement Commitment, Company must provide a written report to the City, in a form reasonably acceptable to the Director, that specifically outlines the total Construction Costs expended for the Economic Development Program Agreement Between City of Fort Worth and Linear Labs,Inc. ;I of 60 Project Improvements and the value of Company New Taxable Tangible Personal Property installed on the Subject Property as of the date of such report (excluding any Construction Costs and Company New Taxable Tangible Personal Property that were included in the Initial Project Completion Report with the understanding that all such Construction Costs and Company New Taxable Tangible Personal Property will be included for purposes of assessing whether the Final Property Improvement Commitment was met as of the date of such report), as well as the total Construction Costs expended with BEFs for the Project Improvements as of the date of such report (excluding any Construction Costs that were included in the Initial Project Completion Report, with the understanding that all such Construction Costs will be included for purposes of assessing whether the BEF Construction Commitment was met as of the date of such report), together with supporting invoices and other documents reasonably necessary to demonstrate that such amounts were actually paid ("Final Project Completion Report"). ii. Company may submit the Final Project Completion Report at any time it elects, provided that it is on or before December 31 of the Calendar Year comprising the Fifth Operational Year; provided, however, that Company will have the right to supplement the Final Project Completion Report with any additional Construction Cost expenditure and Company New Taxable Tangible Personal Property documentation for a period of ninety (90) calendar days following submission of the Final Project Completion Report, so long as all Construction Costs and Company New Taxable Tangible Personal Property installations included in any supplement were actually expended or installed, as applicable, on or before December 31 of the Calendar Year comprising the Fifth Operational Year. 4.5.2. Annual Oualified Expenses Report. On or before April 15 of the Calendar Year comprising the Second Operational Year and of each subsequent Calendar Year thereafter, Economic Development Program Agreement Between City of Fort Worth and Linear Labs,Inc. 1,2 of 60 Company must submit a report to the Director, in a form reasonably acceptable to the Director,. which outlines all Qualified Expenses expended by Company in the previous Calendar Year, and including other reasonable supporting documentation from the Company's books and records as recorded in its accounting system ("Annual Qualified Expenses Report"). 4.5.3. Annual Employment Report. a. On or before February 1 of the Calendar Year comprising the Second Operational Year and of each of the 14 subsequent Calendar Years thereafter, Company must submit a report to the Director, in a form reasonably acceptable to the Director, which sets forth all of the following: L the total number of individuals who held Full-time Equivalent Jobs on the Subject Property as of December 31 (or such other date requested by Company and reasonably acceptable to the City) of the previous Calendar Year,. plus (a) for Full-time Equivalent Jobs performed by Direct Labor Workers, the blended hourly wages paid for each such Full-time Equivalent Job during that Calendar Year, and (b) for all other Full-time Equivalent Jobs, the annual Salary paid for each such Full-time Equivalent Job during that Calendar Year, together with reasonable supporting documentation; ii. the total number of individuals who held Full-time Equivalent Jobs on the Subject Property dedicated to Product R&D, Advanced Manufacturing R&D, and All Other as of December 31 (or such other date requested by Company and reasonably acceptable to the City) of the previous Calendar Year, plus the annual Salary paid for each such Full-time Equivalent Job during that Calendar Year, together with reasonable supporting documentation; and ui. a certificate confirming that Healthcare Benefits were offered to individuals working in Full-time Equivalent Jobs on the Subject Property, together with reasonable supporting documentation. iv. Company is not required to provide any personally identifiable information with the reports provided hereunder. Economic Development Program Agreemont Between City of Fort Worth and Linear Labs,Inc. 23 of 61) 4.6. Annual Property Reports. On or before April 15 of the Calendar Year comprising the Second Operational Year and of each of the 14 subsequent Calendar Years thereafter, Company must submit a report to the Director, in a form reasonably acceptable to the Director, that states the total ad valorem taxes on the Subject Property and on Company New Taxable Tangible Personal Property paid to the City in the Twelve-Month Period ending in the same Calendar Year, together with reasonable supporting documentation. 4.7. Communily En a ement. 4.7.1. By not later than eighteen months (1 S) from the final date of execution of this Agreement, Company must submit a plan to the City that outlines commercially reasonable efforts that will be pursued by Company to establish and promote a Mobility Innovation District in Fort Worth (or certain operations or physical components located within it individually or in association with other nearby assets) as a Technology Center of Excellence. 4.7.2 By not later than thirty months (30) from the final date of execution of this Agreement„ Company must also have established an industry-relevant speakers series in City that will have fum dates and that will be made open to participation by the general public (with reasonable restrictions that accommodate the Center for Disease Control ("CDC") guidelines in the event of a health emergency or pandemic or other emergency declared by any Federal, State or Local authority, to comply with Company policies to provide a safe workplace for employees, and to meet any restrictions on such gathering mandated by insurance carrier of the Company, or any restrictions on such gathering mandated by landlord for use of facility and grounds), as evidenced by reasonable supporting documentation submitted to the City by the same date. 4.7.3 By not later than forty-two months (42) from the final date of execution of this Agreement„ Company will submit a plan to the City under which Company will assist the City and its partners in the establishment, development, and promotion of a Mobility Innovation District and facilitate the dissemination of non-proprietary knowledge produced as a result of Company's research and development activities. 4.8. Audits. 4.8.1 Not more than one time in any consecutive twelve month period, provided at least sixty (60) business days' notice is given and to the extent necessary to verify compliance with the terms of this Agreement or to otherwise administer the terms of this Agreement, the City will have the Economic Development Program Agreement Between City of Dort Worth and Linear Tabs,Inc. 14 of 60 right throughout the Term to review and inspect the relevant financial and business records of Company that relate to the Project Improvements, Project Operations, expenditures of Qualified Expenses, and any other financial and business records of Company that are reasonably necessary to evaluate compliance with this Agreement or with the commitments set forth in this Agreement. Such request will be provided in writing inclusive of the documentation required to conduct such verification at the time the notice is provided to the Company. Each party will have the responsibility for their own costs to comply with such review. 4.8.2 Company will use reasonable efforts to make all such records requested in the verification notice in this Section available to the City at Company's offices in the City or at another location in the City acceptable to both parties and shall otherwise cooperate fully or cause full cooperation with the City during any review and inspection. In the event that there is a pandemic, health emergency or other emergency then such inspection may need to be done remotely and not in person, which will be determined in the reasonable discretion of the City's Auditor. 4.8.3 Company shall require that all individuals reviewing the financial and business records of Company must first sign a reasonable confidentiality agreement under which they agree to not discuss or publicize information contained in those records except as necessary for them to complete a review and inspection of such records in accordance with this Agreement. 4.9. Inspections of Subject Property and Project Improvements. 4.9.1. At any time during Company's normal business hours throughout the Term and following at least thirty (30) business days' prior written notice to Company, the City will have the right to inspect and evaluate the Subject Property and the Project Improvements, and Company will provide reasonable access to the same, solely in order for the City to monitor or verify compliance with the terms and conditions of this Agreement. Company will reasonably cooperate with the City during any such inspection and evaluation. 4.9.2 Notwithstanding the foregoing, Company will have the right to require that any representative of the City be escorted by a representative or security personnel of Company during any such inspection and evaluation, and Company shall be able to exercise its reasonable discretion in scheduling time and date for any requested inspection so as not to interfere with its ongoing business operations on the Subject Property Locations. In addition, any representative of the City visiting the Subject Property Locations shall comply with the Company's standard visitor policies and procedures. In the event that there is a pandemic, health Economic Development Program Agreement Between City of Fort Worth and Linear Labs,Inc. 15 of 60 emergency or other emergency such inspection may need to be done remotely and not in person, which will be determined in the reasonable discretion of the City's Auditor. 4.9.3. Company shall require that all individuals reviewing the financial and business records of Company must first sign a reasonable confidentiality agreement under which they agree to not discuss or publicize information contained in those records except as necessary for them to complete a review and inspection of such records in accordance with this Agreement. 5. CERTIFICATES ISSUED TO COMPANY. 5.1. Certificate of Initial Project Completion. 5.1.1. Within sixty (60) calendar days following receipt by the City of the Initial Project Completion Report submitted by Company, including any supplements thereto, and assessment by the City of the information contained therein, if the City is able to verify that (i) the Completion Date occurred on or before the Completion Deadline, (ii) at least Two Hundred Fifty Thousand Dollars and Zero Cents ($250,000.00) in Construction Costs were expended for the Project Improvements by December 31 of the First Operational Year, the Director will issue Company a certificate confirming that the Initial Property Improvement Commitment has been met("Certificate of Initial Project Completion"). 5.1.2 The Certificate of Initial Project Completion will also state the total Construction Costs that the City has verified were expended for the Project Improvements as of the date of the Initial Project Completion Report and whether the BEF Construction Commitment was met for purposes of calculating all Program Grants payable from the date of such report until the date of receipt by the City of the Final Project Completion Report submitted by Company. 5.2. Certificate of Final Project Completion. 5.2.1. Within sixty (60) calendar days following receipt by the City of the Final Project Completion Report submitted by Company, including any supplements thereto, and assessment by the City of the information contained therein, if the City is able to verify (i) that at least Two Million Seven Hundred Fifty Thousand Dollars and Zero Cents ($2,750,000.00) in Construction Costs were expended for the Project Improvements by December 31 of the Fifth Operational Year (inclusive of all Construction Costs expended as part of and counted toward the Initial Property Improvement Commitment, as confirmed in the Certificate of Initial Project Completion issued by the City) and (ii) that Company New Economic Development Program Agreement Between City of Fort worth and Linear Labs,Inc. ',b of 60 Taxable Tangible Personal Property equal in value to at least One Million Two Hundred Fifty Thousand Dollars and Zero Cents ($1,250,000.00) was installed at the Subject Property by December 31 of the Fifth Operational Year (inclusive of all Company New Taxable Tangible Personal Property installed, the Director will issue Company a certificate confirming that the Final Property Improvement Commitment has been met ("Certificate of Final Project Completion"). 5.2.2. The Certificate of Final Project Completion will also state the total Construction Costs that the City has verified were expended for the Project Improvements as of the date of the Final Project Completion Report and whether the BEF Construction Commitment was met for purposes of calculating all Program Grants payable after the date of such report. 5.3. Annual Qualified E enses Balance Certificate. Within thirty (30) calendar days following receipt by the City of an Annual Qualified Expenses Report submitted by Company,the Director will issue Company a "Qualified Expenses Balance Certificate" confirming the following: 5.3.1. the aggregate amount of all Qualified Expenses expended by Company as of December 31 of the previous Calendar Year; 5.3.2. the base amount of such Qualified Expenses that will be used to measure calculation of the Program Grant payable in the current Calendar Year (25% of Qualified Expenses or, if applicable, such higher percentage as may apply in accordance with the definition of"Qualified Expenses"); and 5.3.3. if the applicable Project Milestones for the previous Calendar Year were not met, then the percentage reduction to the base amount of such Qualified Expenses that is to be applied for the Program Grant or Grants to be paid in that Calendar Year, as more specifically set forth below. 6. PROGRAM GRANTS TO COMPANY. 6.1. Number of Program Grants and Timing of Payments. 6.1.1. Subject to the terms and conditions of this Agreement, and further subject to any reduction on account of an Assignment or Assignments, as more specifically outlined in Section 7, provided that both the Initial Property Improvement Commitment was met (as confirmed in the Certificate of Initial Project Completion issued by the City), and the Base Economic Development Program Agreement Between City of Fort Worth and Linear Labs,Inc, 1-1 of 60 Employment Commitment is met, Company will be entitled to receive from the City fifteen(15) annual Program Grants, 6.1.2. The first Program Grant payable to Company hereunder will be paid by the City on or before June 1 of the Second Operational Year (i.e., the Calendar Year following the First Operational Year). 6.2. GeneraI Method of Calculation (.Overview). 6.2.1. The amount of each annual Program Grant payable to Company hereunder will equal a percentage, not to exceed 75%, of the Subject Property Tax Revenues received by the City for the Twelve-Month Period ending in the Calendar Year in which the Program Grant is payable. This percentage of the Subject Property Tax Revenues is subject to reduction if particular construction and annual employment commitments under this Agreement are not met. Specifically, the percentage of the Subject Property Tax Revenues available for inclusion in the calculation of each annual Program Grant will equal the Base Percentage, minus the BEF Reduction Percentage, minus the Additional Employment Reduction Percentage. a. For example, in the event that Company paid $1 miIlion in Subject Property Taxes to the City for a given Calendar Year, the City would be obligated to pay a maximum Program Grant to Company in the subsequent Calendar Year (the Program Year) in the amount of$750,000.00 (assuming no reductions). 6.2.2. Notwithstanding the foregoing, the amount of each annual Program Grant will be capped by the Qualified Expenses Balance. a. For example, in the event that Company earned the maximum Program Grant outlined in the example provided in Section 6.2.1.a. and the Qualified Expenses Balance equaled $1 million, then the full $750,000.00 payable to Company as outlined above would be delivered as the Program Grant for that Program Year and the remaining $250,000.00 of Qualified Expenses would be added to the Qualified Expenses Balance for the following Program Year. If, however, the Qualified Expenses Balance equaled $500,000.00, the maximum Program Grant payable to Company would be$500,000.00. 6.2.3. The amount of each Program Grant payable to Company under this Agreement in any given year will equal the lesser of (i) a specified percentage of the Subject Property Tax Revenues received by the City in the Twelve-Month Period ending in the Calendar Year in which the Program Grant is payable, or (ii) the Qualified Expenses Balance, which Economic Development Program Agreement Between City of Fort Worth and Linear Labs,Inc. so of 60 will be tallied as of December 31 of the preceding Calendar Year. In other words, in no event will Company receive a Program Grant that exceeds a specified percentage of its ad valorem property taxes for the preceding year or that exceeds the Qualified Expenses Balance. 6.2.4. This Section 6 primarily, though not entirely, governs Program Grants payable to the Company, and not to Assignees. fn the event of any Assignment, the amount of any Program Grant payable to an Assignee will be calculated in accordance with the provisions of Section 7 of this Agreement. 6.3. Base Percentage (75% of Subject Property Tax Revenues). The maximum amount of any annual Program Grant payable to Company hereunder will be 75% of the Subject Property Tax Revenues received by the City during the Twelve-Month Period ending in the same Calendar Year in which the Program Grant is payable to Company ("Base Percentage"), but not to exceed the Qualified Expenses Balance existing as of December 31 of the previous Calendar Year, as confirmed in the Qualified Expenses Balance Certificate issued by the City in the same Calendar Year in which the Program Grant is payable. 6.3.1. Reduction to Base Percentage if BEF Construction Spending_ Commitment Not Met(10% Reduction). a. If the BEF Construction Spending Commitment is not met, the Base Percentage applicable to each Program Grant otherwise payable under this Agreement will be reduced by an amount equal to ten(10)percentage points ("BEF Reduction Percentage"). i. For example, if Company met all commitments set forth in this Agreement except the M/WBE Construction Spending Commitment, then the maximum amount of all Program Grants payable under this Agreement would equal 65% of the Subject Property Tax Revenues (the 75% Base Percentage minus the 10% BEF Reduction Percentage) received by the City during the Twelve- Month Period ending in the same Calendar Year in which the Program Grant was due, subject to the cap established by the then-applicable Qualified Expenses Balance and the Program Cap. ii. If the BEF Construction Spending Commitment was met or exceeded, then the BEF Reduction Economic Development Program Agreement Between City of Fort Worth and Linear Labs,Inc. z9 of 60 Percentage applicable to all Program Grants payable under this Agreement will be deemed to be 0%. b. if the BEF Construction Commitment is not met as part of the Initial Property Improvement Commitment, as confirmed in the Certificate of Initial Project Completion issued by the City, but was met as part of the Final Property Improvement Commitment, as confirmed in the Certificate of Final Project Completion issued by the City, then the BEF Reduction Percentage will only be applied to reduce the amount of any Program Grant payable prior to the issuance of the Certificate of Final Project Completion, and an BEF Reduction Percentage of 0% will be applied to all subsequent Program Grants payable by the City. 6.3.2. Reduction to Base Percentage if Applicable Additional Employment Commitments Not Met(Up to 25% Reduction). a. The Base Percentage for each annual Program Grant will also be subject to reduction if the Additional Employment Commitment applicable to the previous Calendar Year was not met. The amount of such reduction will equal the product of 25% multiplied by the percentage by which the applicable Additional Employment Commitment was not met in the previous Calendar Year, which will be calculated by subtracting (i) a fraction, to be expressed as a percentage, where (a) the numerator is the number of Full-time Equivalent Jobs provided and filled by Company on the Subject Property as of December 31 of the previous Calendar Year and (b) the denominator is number of Full-time Equivalent Jobs comprising the Additional Employment Commitment, from (ii) 100% ("Additional Employment Reduction Percentage"). L For example, the Additional Employment Commitment applicable to the Calendar Year comprising the Fourth Operational Year is sixty (60) Full-time Equivalent Jobs. If, in such Calendar Year, Company instead provided and filled only forty (40) Full-time Equivalent Jobs on the Subject Property, then the Additional Employment Reduction Percentage applicable to the Program Grant payable in the fallowing year would be 8.3333% or= 100 x [25%x (1- (40/60))] ii. If the Additional Employment Commitment for the previous Calendar Year was met or exceeded, then the Additional Employment Reduction Percentage Economic Development Program Agreement Between City of Fort Worth and Linear Labs,Inc. 30 0£60 applicable to the Program Grant payable in the following year will be deemed to be 0%. 6.4. Cap to Qualified Expenses Balance 6.4.1. In the event that the applicable Project Milestones are not met, then the percentage of aggregate Qualified Expenses necessary to calculate the Qualified Expenses Balance as of December 31 of the applicable Operational Year will be calculated as follows: a. First or Second Operational Years - 95% of the percentage of aggregate Qualified Expenses necessary to calculate the Qualified Expenses Balance. b. Third or Fourth Operational Years - 80% of the percentage of aggregate Qualified Expenses necessary to calculate the Qualified Expenses Balance. C. Fifth through Seventh Operational Years - 65% of the percentage of Qualified Expenses necessary to calculate the aggregate Qualified Expenses Balance. d. Eighth or Any Subsequent Operational Years - 50% of the percentage of Qualified Expenses necessary to calculate the aggregate Qualified Expenses Balance. 6.4.2. By way of example only, if Subject Property is located in a 25% zone for the period being measured and the Company has incurred a total of $100,000 in Qualified Expenses in Third Operational Year and has received $10,000 in Program Grant Payments to date, then the Program Grant Payable to the Company in the Fourth Operational Year may not exceed$10,000: $100,000 (Aggregate Qualified Expenses) x25% (Percentage of Qualified Expenses) $25,000 (25% of the aggregate Qualified Expenses) x(1-.2)(20%a Reduction) =$20,000 —$10,_000 (Program Grant Payments to date) $10,000 Program Grant Payable 6.4.3. Reductions Applied Only Annually; No Rollovers Permitted. a. For the removal of any doubt, it is understand and agreed that any reduction applied to the percentage of the Qualified Expenses Balance that will act as a cap on the amount of any Economic Development Program Agreement Between City of Fort Worth and Linear Labs,Inc. 11 of 6o Program Grant payable to Company in a given Calendar Year will apply only to that particular Program Grant, and will not be applied to any Program Grant payable in a future Calendar Year unless the Project Milestones applicable to such future Calendar Year were also not met. i. For example, if the Project Milestones were not met in the Third Operational Year, for purposes of calculating the Program Grant payable in the following Calendar Year, the percentage of the Qualified Expenses Balance that would act as a cap on the amount of that Program Grant would be reduced from 100% to 80% of the Qualified Expenses Balance. However, if the Project Milestones were met in the Fourth Operational Year, then the percentage of the Qualified Expenses Balance that would act as a cap on the amount of the Program Grant payable in the following Calendar Year would once again be restored to 100%. b. At the same time, however, if Company exceeds one or more of the Project Milestones in a given Calendar Year, it cannot apply the excess as a credit to a future Calendar Year. i. For example, if Company expended $12 million in Qualified Expenses in the Third Operational Year, but only $8 million in Qualified Expenses in the Fourth Operational Year, the percentage of the Qualified Expenses Balance that would act as a cap on the amount of the Program payable to Company in the following Calendar Year would still be reduced to 80%. 6.5. Annual Program Grant Cap Based on Qualified Expenses Balance. Notwithstanding anything to the contrary herein, the amount of each annual Program Grant payable to Company hereunder is capped by the Qualified Expenses Balance. 6.6. Forfeiture on Annual Basis if Wage, Salary, and Benefit Commitment Net Met. 6.6.1. If the Wage, Salary, and Benefit Commitment is not met in any given Calendar Year, then any Program Grant payable in the following Economic Development Program Agreement Between City of Fort worth and Linear Labs,Inc. 3Z of 60 Calendar Year will be forfeited in full, meaning that the City will be relieved of its obligation to pay any Program Grant in that Calendar Year. 6.6.2. Nevertheless, for purposes of measuring the 15-year Term of this Agreement, the City will be credited as having paid any such Program Grant in that Calendar Year. 6.6.3 For example, if the Wage, Salary, and Benefit Commitment was not met in the Seventh Operational Year, then any Program Grant payable in Program Year S would be forfeited. Nevertheless, the City would be credited with having paid all Program Grants due in Program Year 8. Assuming that the Wage, Salary, and Benefit Commitment was met in every other Calendar Year, then over the course of 15 Program Years, while the City actually would have paid only 14 annual Program Grants, the City still would nevertheless be credited with having paid 15 annual Program Grants over that period of time for purposes of measuring the Term, so that the Term of this Agreement would expire upon payment of any Program Grants due in Program Year 15. 6.7. Program Cap. 6.7.1. Application. a. As stated elsewhere in this Agreement, in no event will the City be required to pay aggregate Program Grants, both to Company and all Assignees, if any, in excess of the Program Cap. b. Notwithstanding anything to the contrary herein, for purposes of measuring the Program Cap, the City will be credited as having paid annual Program Grants in the amounts that would have been payable without application of any reductions to Program Grants paid to Assignees resulting from the imposition of the 5%Assignee Set-Aside and imposed through application of the formula for calculation of those Program Grants. L For example, if a particular Program Grant payable in a given year to an Assignee would have been $1 million, but because of the 5% Assignee Set-Aside, the amount of that Program Grant was reduced to $950,000.00, the City nevertheless will be credited as if it paid a Program Grant to the Assignee of $1 million for purposes of measuring the Program Cap. 6.7.2. Prorated Final Program Grant of Necessary. Economic Development Program Agreement Between City of Fort Worth and Linear Labs,Inc. 53 of 60 In the event that the amount of any Program Grant payable in a given year would cause the aggregate amount of Program Grants paid by the City, to exceed the Program Cap, then the amount of any such Program Grant that the City is required to pay will be reduced by the amount to which the Program Cap will be met,but not exceeded. 6.8. Reductions Due to Assignments. Notwithstanding anything to the contrary herein, for the sake of clarity, it is understood and agreed that any Program Grant payable to Company in a given year will be reduced by the aggregate amount or percentage, as applicable, by which Company has assigned that Program Grant to one or more Assignees, as more specifically set forth in Section 7. 6.9. Source of Funds. 6.9.1. It is understood and agreed that all Program Grants paid pursuant to this Agreement will come from currently available general revenues of the City and not directly from Subject Property Tax Revenues or Assignee Subject Property Tax Revenues. 6.9.2. Any revenues of the City other than those dedicated for payment of any Program Grant pursuant to this Agreement may be used by the City for any lawful purpose that the City deems necessary in the carrying out of its business as a home rule municipality and will not serve as the basis for calculating the amount of any future Program Grant or any other obligation to Company or any Assignee. 7. PROGRAM GRANTS TO ASSGINEES. 7.1. General Concept and Method of Calculation (Overview). 7.1.1. As stated in Section 1.2, a major component of this Agreement is Company's ability to assign all or portions of its Program Grants to third. party Assignees. As part of any assignment, Company may specify the term of that assignment so that Program Grants are only assigned up to a predetermined number of subsequent Program Years. 7.1.2. If Company wishes to make an Assignment that is less than 100% of all of Company's Program Grants, or if Company wishes to make multiple Assignments of its Program Grants, whether or not collectively comprising 100% of Company's Program Grants, Company's Assignment must take the form of a percentage of the amount or a specified amount of the Program Grant or Grants that Company wishes to assign to the Assignee. Economic develupment Program Agreement Between City of Fort Worth and Linear Labs,Inc. 34 of 60 a. For example, Company could assign 45% of its Program Grants to Assignee A and 55% of its Program Grants to Assignee B; or Company could assign 50% of its Program Grants to an Assignee and retain the other 50% for itself. 7.1.3. Company may also make an Assignment with a specific dollar cap, applied either annually or overall across several or all years, with the Assignment expiring on the earlier of the year in which any overall cap is reached or the specified term of the Assignment has ended. a. For example, Company could assign 75% of its Program Grants to an Assignee, but not to exceed $5 million in the aggregate, after which Company would resume receiving 100% of its annual Program Grants. The percentage of Company's Program Grants that are assigned to a particular Assignee are referred to in this Agreement as the"Assignee Percentage". 7.1.4. However Company structures its Assignments, the amount of each Program Grant payable to an Assignee significantly will depend on a combination of the following: a. The aggregate amount of Qualified Expenses expended by Company, as reflected in the Qualified Expenses Balance and confirmed in the Qualified Expenses Balance Certificate issued by the City; and b. Company's performance under this Agreement, including the following: i. whether the Initial Property Improvement Commitment and Final Property Improvement Commitment have been met; ii. BEF Construction Spending Commitment are met; iii. whether or the extent to which the Base Employment Commitment and Additional Employment Commitment are met in any given year; iv. whether the Wage, Salary, and Benefit Commitment is met in a given year; and V. whether the applicable Project Milestones set forth in Section 4.4 are met in a given year. Economic Development Program Agreement Between City of Fork Worth and Linear Labs,Inc. 35 of bll 7.1.5. The major difference between Program Grants payable to Company and Program Grants payable to Assignees under this Agreement is that Program Grants payable to Company are, in part, capped by a specified percentage of the Subject Property Tax Revenues (in other words, ad valorem taxes attributable to the property owned or occupied by Company for its Project Operations), whereas Program Grants payable to an Assignee are, in part, capped by a specified percentage of the Assignee Subject Property Tax Revenues. As a result, to the extent that Assignee Subject Property Tax Revenues are higher than Subject Property Tax Revenues, the amount of annual Program Grants payable to an Assignee could be higher in value than those Program Grants payable to Company, but all depending on how much property in the City that the Assignee owns, the incremental taxable appraised value of that property, and the extent to which Company has assigned its Program Grants to Assignee. 7.1.6. Thus, the amount of each annual Program Grant payable to an Assignee hereunder will equal a percentage, not to exceed 75%4, of the Assignee Subject Property Tax Revenues received by the City in the Twelve-Month Period ending in the Calendar Year in which the Program Grant is payable, which percentage is subject to reduction if the same construction and annual employment commitments applicable to Company's Program Grants are not met by C'«irpaiiy. Specifically, the percentage of the Assignee Subject Property Tax Revenues available for inclusion in the calculation of each annual Program Grant to the Assignee will equal the Base Percentage applicable to the Assignee in question, as set forth in Section 7.3, minus the BEF Reduction Percentage and minus the Additional Employment Reduction Percentage. 7.1.7. Notwithstanding the foregoing, the amount of each annual Program Grant payable to an Assignee will be capped at the Assignee Qualified Expenses Balance. Company understands and agrees that the Assignee Qualified Expenses Balance includes a 5% reduction from the Qualified Expenses Balance applicable to the Company in order to allow the City to retain 5% of the amount of any Program Grants payable to Assignees (115% Assignee Set-Aside"). Company further understands and agrees that the 5% Assignee Set-Aside is not an administrative fee imposed by the City, but, rather, is an amount that has been agreed to by and between the City and Company as part of the arms-length negotiations under this Agreement and is no different from the other caps and limitations on the amounts of Program Grants that have been established by this Agreement. Although the City intends to use revenue comprising the 5% Assignee Set-Aside to cover the City's additional costs in administering this Agreement, it legally is not required to do so, and the City may elect, in its sole and absolute discretion, to use the 5% Assignee Set-Aside for any lawful purpose,just as it has the right to do so with any other Subject Property Tax Revenues or Assignee Subject Property Tax Economic Development Program Agreement Between City of Fort Worth and Linear Labs.Inc. 36 of 60 Revenues. Nevertheless, for purposes of calculating the Program Cap, Company understands and agrees that the aggregate amount of any sums equaling the 5% Assignee Set-Aside will still be counted as a reduction to any Program Grants paid to Assignees and will still be counted toward the Program Cap. 7.1.8. In summary, the amount of each Program Grant payable to an Assignee under this Agreement in any given year will equal the lesser of (i) a specified percentage of the Assignee Subject Property Tax Revenues received by the City in the Twelve-Month Period ending in the Calendar Year in which the Program Grant is payable, or(ii)the Assignee Qualified Expenses Balance, which will be tallied as of December 31 of the preceding Calendar Year. 7.1.9. It is important to keep in mind that, although this Agreement provides for 15 annual Program Grants to Company, the number of annual Program Grants available to an Assignee will depend upon when Company made the Assignment in question. The Term of this Agreement will still expire upon payment of all Program Grants in Program Year 15. 7.1.10.For the sake of clarity, this Section 7 outlines the step-by-step process used to calculate Program Grants payable to Assignees in the same general format as used in Section 6 for calculation of Program Grants payable to Company. 7.2. Process for Assignments. 7.2.1. Notice of Intent to Assign. a. If Company wishes to assign all or any portion of its Program Grants to an Assignee, Company must submit a written notification, signed by both Company and the proposed Assignee, to the City that includes the following: i. the legal name of the proposed Assignee; ii. a legal description of and any tax account numbers for all parcels intended to be included as part of the Assignee Subject Property; iii. the current zoning classification for each parcel intended to be included as part of the Assignee Subject Property; iv. the taxable appraised value of each parcel intended to be included as part of the Assignee Subject Economic Development Program Agreement Between City of Fort Worth and Linear Labs,Iuc. 37 of 60 Property, as determined by the appraisal district having jurisdiction over each such parcel for the same tax year as that in the notice is submitted(with the understanding that this information may be supplemented if the proposed Assignee has not yet received such appraisals) (to be provided in order for the City to calculate a base value against which future taxable appraised values of the Assignee Subject Property are counted for purposes of calculating Assignee Subject Property Tax Revenues each year); V. renditions of all taxable business personal property owned or leased by the proposed Assignee for the same tax year as that in the notice is submitted and that is located on all parcels intended to be included as part of the Assignee Subject Property (to be provided in order for the City to calculate a base value against which future taxable appraised values of the Assignee New Taxable Tangible Personal Property are counted for purposes of calculating Assignee Subject Property Tax Revenues each year); A. a sworn affidavit or affidavits, in a form acceptable to the City and signed by the proposed Assignee, that the proposed Assignee (and no other party, including any Affiliates) is the sole owner of record of all of the Assignee Subject Property and that none of the Assignee Subject Property is zoned for Residential use, as provided under the then-current zoning regulations under the City Code except where such zoning may be changed to facilitate new development and with the exception that any property zoned Mixed-Use (including any part of a form-teased code) or properties that are zoned Planned Development shall be allowable; and vii. the Assignee Percentage, and any cap on the number or dollar amount of Program Grants that Company is requesting (a "Notice of Intent to Assign"). b. Company agrees promptly to supply the City with any additional relevant or supplemental information and documentation as may be requested and is reasonably necessary for the Director to Economic Development Program Agreement Between City of Fort worth and Linear Labs,Inc. 38 of 60 evaluate the Notice of Intent to Assign. Such approval of Notice of Intent to Assign by the Director will be provided promptly and will not be delayed due to the pandemic or any other similar emergency. 7.2.2. Consent to Assignment Agreement. a. Within forty-five (45) calendar days following receipt of a Notice of Intent to Assign, and verification of any supporting documentation and information required for the City's evaluation thereof, Company, the proposed Assignee, and the City must all execute a document that outlines, at a minimum, the following information: i. a list of the parcels comprising the Assignee Subject Property; H. the total taxable appraised value of the Assignee Subject Property, and the amount of ad valorem taxes payable to the City on the Assignee Subject Property, for the tax year in which the completed Notice of Intent to Assign was submitted to the City in accordance with Section 7.2.1.; Hi the total taxable appraised value of the Assignee New Taxable Tangible Personal Property, and the amount of ad valorem taxes payable to the City on the Assignee New Taxable Tangible Personal Property, for the tax year in which the completed Notice of Intent to Assign was submitted to the City in accordance with Section 7.2.1; iv. the Assignee Percentage, together with any caps on the aggregate value or number of payments of Program Grants payable to the Assignee; V. the first Calendar Year in which a Program Grant will be paid to Assignee and, if ascertainable based on the structure of the Assignment, the number of Program Grants remaining to be paid until expiration of the Term; vi. an acknowledgement by the Assignee that Assignee is required to submit annual property reports that state the total ad valorem taxes on the Assignee Subject Property and on Assignee New Taxable Economic Development Program Agreement Between City of Fort Worth and Linear Labs,Inc. of 60 Tangible Personal Property paid to the City in the Twelve-Month Period ending in the same Calendar Year, together with reasonable supporting documentation, and any other relevant information; vii, an acknowledgement by the Assignee that no Assignee Subject Property, including any Assignee Subject Property that is later acquired by another party, will be eligible for any incentives from the City that are based on the ad valorem taxes generated by specific Assignee Subject Property during the term of the Assignment for any year in which Assignee is due to receive a Program Grant for the relevant portion or parcel of the Assignee Subject Property, with the understanding that Assignee may waive the right to receive a Program Grant under this Agreement in any given Program Year and with the further understanding that Assignee may specifically exclude the affected property from the Assignee Subject Property in any given Program Year in order to permit the receipt by Assignee or another party of the other economic development incentive from the City in relation to such affected property; vm. an acknowledgement by the Assignee (and corresponding release to the City) that the exact amounts of any Program Grants payable to the Assignee will depend, to a significant, if not complete, extent, on the amount of Qualified Expenses expended by Company, and, in particular, the amount of the annual Qualified Expenses Balance, as well as the extent to which Company's various commitments under this Agreement are met, and specifically as to whether the Initial Property Improvement Commitment and Final Property improvement Commitment are met; whether or the extent to which the Base Employment Commitment and Additional Employment Commitment are met in a given year; whether the Wage, Salary, and Benefit Commitment is met in a given year; and whether the applicable Project Milestones are met in a given year; ix. an acknowledgement by the Assignee that, subject to Section 9.10, any termination or expiration of this Economic Development Program Agreement Between City of Fort worth and Linear Labs,Inc. a of 60 Agreement will constitute an immediate and contemporaneous termination of the Consent to Assignment Agreement; and X. any other information reasonably deemed necessary by the City to clarify the arrangement by and between the City, Company, and the Assignee (a "Consent to Assignment Agreement"). b. The City will not have discretion to deny an Assignment or unreasonably withhold or delay execution of a Consent to Assignment Agreement in accordance with this Section 7.2.2 if the City received a completed Notice of Intent to Assign that meets all requirements under Section 7.2.1. The City may agree to execute a Consent to Assignment Agreement on terms and conditions that deviate from those outlined in this Agreement (provided that such terms and conditions are not contrary to Mayor and Council Communication (M&C) 20-0421, the City Council agenda item under which the City Council authorized this Agreement and any subsequent M&Cs concerning this Agreement), with the explicit understanding that the City is not required to agree to, and exercises full authority to deny, any such alternative terms and conditions. 7.2.3. Timing of Program Grant Payments to Assignees. a. Timing of First Program Grant Payment. i. In order to allow the City to responsibly manage its annual budgets, which are based on the City's fiscal year (October I — September 30), the first Calendar Year in which a Program Grant is payable to an Assignee will depend upon when the City receives a completed Notice of Intent to Assign. ii. If the City receives a completed Notice of Intent to Assign on or before June 30 of a Calendar Year, the first Program Year in which a Program Grant will be payable to the Assignee will be in the immediately following Calendar Year. iii. If the City receives a completed Notice of Intent to Assign after June 30 of a Calendar Year, the first Program Year in which a Program Grant will be payable to the Assignee will be in the second full Calendar Year following the Calendar Year in Economic Development Program Agreement Between City of Port Worth and Linear Labs,Inc. 41 of 60 which the Notice of Intent to Assign was received. Notwithstanding the foregoing, for the initial annual Grant (Fiscal Year 2021-2022), the Company will have up to 365 days from the execution date of this Agreement to notify the City. iv. For example, if the City receives a completed Notice of Intent to Assign on June 1, 2025, then the first Program Grant payable to the Assignee would be in Calendar Year 2026. However, if the City receives a completed Notice of Intent to Assign on August 1, 2025, then the first Program Grant payable to the Assignee would be in Calendar Year 2027. b. Previous Program Years Still Counted Toward Term. i. Regardless of the timing of the first payment to an Assignee, if the City has already paid at least one Program Grant under this Agreement at the time the Notice of Intent to Assign is received, or if the City is obligated to pay its first Program Grant in the same Calendar Year as the Notice of Intent to Assign is received, then the Calendar Years in which those Program Grants are paid will still count as Program Years for purposes of measuring the Term of this Agreement. ii. For example, using the illustrations set forth in Section 7.2.3.a, if when the City received the Notice of Intent to Assign on June 1, 2025 the City had already paid Program Grants for two Program Years, 2024 (Program Year 1) and 2025 (Program Year 2), or if the City had had paid Program Grants for 2024 (Program Year 1) and was still obligated to pay Program Grants for 2025 (Program Year 2), then the first Program Grant payable to Assignee in 2026 (Program Year 3) would constitute a Program Grant paid in Program Year 3. As a result, the maximum number of annual Program Grants that the Assignee could possibly receive under this Agreement would be 13 instead of 15, due to payment of Grants in Program Years 1 and 2 prior to payment of the Assignee's first Program Grant in Program Year 3. To complete the example, if the Notice of Intent to Assign was received on August Economic Development Program Agreement Between City of Fort Worth and Linear Labs,Inc. 42 of 60 1, 2025, then the maximum number of annual Program Grants that the Assignee could possibly receive under this Agreement would only be 12, because in that situation, as outlined in Section 7.2.3. the Assignee's first Program Grant would not be payable until 2027 (Program Year 4). 7.3. Base Percentage 75% of Assignee Subject Properly Tax Revenues). The Base Percentage for any annual Program Grant payable to an Assignee hereunder (in other words, the maximum amount of any annual Program Grant payable to an Assignee) will be 75% of the Assignee Subject Property Tax Revenues received by the City during. the Twelve-Month Period ending in the same Calendar Year in which the Program Grant is payable to the Assignee, but not to exceed the Assignee Qualified Expenses Balance existing as of December 31 of the previous Calendar Year. 7.3.1. Reduction to Base Percentage if BEF Construction Spending Commitment Not Met by Company (10% Reduction). a. If the BEF Construction Spending Commitment is not met by Company, the Base Percentage applicable to each Program Grant otherwise payable to an Assignee will be reduced by the BEF Reduction Percentage, which is an amount equal to 10% . i. For example, if Company met all commitments set forth in this Agreement except the BEF Construction Spending Commitment, then the maximum amount of all Program Grants payable under this Agreement to an Assignee would equal 65% of the Assignee Subject Property Tax Revenues (the 75%Base Percentage minus the 10% BEF Reduction Percentage) received by the City during the Twelve-Month Period ending in the same Calendar Year in which the Program Grant was due, subject to the cap established by the then-applicable Qualified Expenses Balance and the Program Cap, applied in accordance with Section 6.7. ii. If the BEF Construction Spending Commitment was met or exceeded, then there is no reduction to the Program Grants. For illustration, the BEF Reduction Percentage applicable to all Program Grants payable under this Agreement to an Assignee will be deemed to be 0%. Economic Development Program Agreement Between City of Fort Worth and Linear Labs,Inc. 43 of 60 b. If the BEF Construction Commitment was not met as part of the Initial Property Improvement Commitment, as confirmed in the Certificate of Initial Project Completion issued by the City, but was met as part of the Final Property Improvement Commitment, as confirmed in the Certificate of Final Project Completion issued by the City, then the BEF Reduction Percentage will only be applied to reduce the amount of any Program Grant payable to any Assignee prior to the issuance to Company of the Certificate of Final Project Completion, and an there will be no BEF Reduction Percentage applied to all subsequent Program Grants payable by the City to any Assignees. 7.3.2. Reduction to Base Percentage if Applicable Additional Employment Commitments Not Met by Company " to 25% Reduction). a. The Base Percentage for each annual Program Grant payable to an Assignee will also be subject to reduction if the Additional Employment Commitment applicable to the previous Calendar Year was not met by Company. The amount of such reduction will equal the Additional Employment Reduction Percentage, which, is an amount equal to the product of 25% multiplied by the percentage by which the applicable Additional Employment Commitment was not met in the previous Calendar Year, and which shall be calculated by subtracting (i) a fraction, to be expressed as a percentage, where (ca) the numerator is the number of Full-time Equivalent Jobs provided and filled by Company on the Subject Property as of December 31 of the previous Calendar Year and (b) the denominator is number of Full- time Equivalent Jobs comprising the Additional Employment Commitment, from(ii) 100%. k For example, the Additional Employment Commitment applicable to the Calendar Year comprising the Fourth Operational Year is sixty (60) Full-time Equivalent Jobs. If in such Calendar Year, Company instead provided and filled only forty (40) Full-time Equivalent Jobs on the Subject Property, then the Additional Employment Reduction Percentage applicable to the Program Grant payable to an Assignee in the following year would be 8.3333% or= 100 x [25% x (1- (40160))]. ii. If the Additional Employment Commitment for the previous Calendar Year was met or exceeded, then the there will be no Additional Employment Economic Development Program Agreement Between City of Fort Worth and Linear Labs,Inc. 44 of 60 Reduction Percentage applicable to the Program Grant payable to an Assignee in the following year , for illustration, the Additional Employment leduction Percentage will be deemed to be 0%. 7.4. Annual Program Grant Cap Based on Qualified Expenses Balance. Notwithstanding anything to the contrary herein, the amount of each annual Program Grant payable to an Assignee hereunder will be capped at 95% of the Assignee Qualified Expenses Balance. 7.5. Forfeiture on Annual Basis if Wage,-Salary,and Benefit Commitment Not Met._ If the Wage, Salary, and Benefit Commitment is not met by Company in any given Calendar Year, then any Program Grant payable to an Assignee in the following Calendar Year will be forfeited in full, meaning that the City-will be relieved of its obligation to pay any Program Grant in that Calendar Year. Nevertheless, for purposes of measuring the 15-year Term of this Agreement, the City shall be credited as having paid any such Program Grant in that Calendar Year, and regardless of the number of annual Program Grants that otherwise would have been payable to a particular Assignee. 7.6. Program Cap Applies. Notwithstanding anything to the contrary herein, the City's obligation to pay Program Grants to Assignees is subject to application of the Program Cap. 7.7. Limitation on Overall Number of Assignments. The number of total Assignments that Company may make pursuant to this Agreement may not exceed 10 separate Assignments for every $10 million value of Grants, with an overall maximum of 30 Assignments for the Term of the Agreement. 7.8. Amendment of Assignments by Com an . 7.8.1. Once a Consent to Assignment Agreement has been executed by and between the City, Company, and the Assignee, the terms and conditions governing the payment of Program Grants from the City to the Assignee may not be amended unless the City, Company, and the Assignee agree and execute an amendment to the Consent to Assignment Agreement. 7.8.2. Notwithstanding anything to the contrary herein, an amendment to the Consent to Assignment Agreement may not add any real property to Economic Development Program Agreement Between City of Fort Worth and Linear Labs,Inc. t5 of 60 the Assignee Subject Property that was not included in the original Consent to Assignment Agreement. 7.9. Assignment of Program Grants by an Assignee. 7.9.1. An Assignee may not make an assignment of any Program Grants it is entitled to receive to another party without the express agreement and consent of Company and the City, in which case an amendment to the Consent to Assignment Agreement must be executed by the City, Company, the Assignee, and the party to whom the Assignee wishes to assign its Program Grants. 7.9.2. In no event may an assignment by an Assignee grant another party rights that are greater than or different from those received by the Assignee under the Consent to Assignment Agreement to which the Assignee is a parry. 8. APPLICATION FEE AND FEE CREDIT. 8.1. Company has paid an economic development incentive application fee of $5,000.00. Of this, $2,000.00 is non-refundable and will be used to offset costs incurred by City staff in processing the application and preparing this Agreement. 8.2. In accordance with Section 18.2 of the Policy, the remaining $3,000.00 may be used by Company for application toward any fees charged by the City in connection with the Project Improvements on or before December 31 of the Fourth Operational Year; provided, however, that any such fees that become payable after one (1) year following Company's submission of the economic development incentive application will be eligible for this credit only upon written confirmation by the Director that substantive construction on the Project Improvements have commenced as of such date. 8.3. After December 31 of the Fourth Operational Year, any unused balance of this credit will be refunded to Company within thirty (30) calendar days following receipt of a written request from Company, but only if such written request is submitted to the Director by not later than March 31 of the Fifth Operational Year. 9. DEFAULT TERMINATION AND CONSEQUENCES IF VARIOUS DEADLINES AND COMMITMENTS ARE NOT MET. Subject to Section 9.10, it is understood and agreed that the termination or expiration of this Agreement will also cause the contemporaneous termination of all Assignments and Consent to Assignment Agreements as of the effective date of termination or expiration of this Agreement. Economic Development Program Agreement Between City of Fort Worth and Linear Labs,Inc. 46 of 60 9.1. If Initial Properly Improvement Commitment Is Not Met. Subject to Section 9.10, if Company fails to comply with the Initial Properly Improvement Commitment in a timely manner, then the City will have the right to terminate this Agreement immediately by providing written notice to Company without further obligation to Company and all Assignees hereunder. 9.2. If Final Property Improvement Commitment Is Not Met. 9.2.1. Subject to Section 9.10, if the Company fails to comply with the Final Property Improvement Commitment in a timely manner, then the City will have the right to terminate this Agreement immediately by providing written notice to Company and all Assignees. 9.2.2. In this event, any Program Grants paid by the City prior to December 31 of the Fifth Operational Year will be retained by Company or the Assignec(s), if any, to whom such Program Grants were paid, but the City shall have no further obligations to Company or any Assignee hereunder. 9.3. Failure to Meet Base Employment Commitment. Subject to Section 9.10, if the Company fails to comply with the Base Employment Commitment in a timely manner, then the City will have the right to terminate this Agreement immediately by providing written notice to Company and all Assignees without further obligation to Company or any Assignee hereunder. 9.4. Annual Forfeiture if Wage, Salary, and Benefit Commitment Not Met in any Year. 9.4.1. Subject to Section 9.10, if the Company fails to comply with the Wage, Salary, and Benefit Commitment, then a default under this Agreement will not occur, but any Program Grants that would otherwise be payable by the City in the following Calendar Year, both to Company and any Assignees, will be forfeited in their entirety. Attainment of the Wage, Salary, and Benefit Commitment will be measured annually. 9.4.2. If Program Grants in any given Program Year are forfeited pursuant to this Section 9.4 on account of Company's failure to comply with the Wage, Salary, and Benefit Commitment in the preceding Calendar Year, but Company meets the Wage, Salary, and Benefit Commitment in a subsequent Calendar Year, then the Program Grants payable in that following Calendar Year will resume in accordance with the calculations otherwise provided by this Agreement. Economic Mvetopment Program Agreement Between City of Fort Worth and Linear Labs,Inc. 47 of 60 9.5 Failure to Maintain Project Operations at Subject Properly. 9.5.1. Subject to Section 9.10, if Company fails to maintain its Project Operations on the Subject Property in accordance with this Agreement for a period of more than one hundred and eighty (180) consecutive calendar days for a reason other than Events of Force Majeure or on account of renovation or remodeling of the Project Improvements (provided that such renovation or remodeling is diligently being undertaken without unreasonable delays), the City will provide written notice of default to Company. 9.5.2. If Company's Project Operations have not resumed on the Subject Property within ninety (90) calendar days following receipt of the City's notice, the City shall have the right to terminate this Agreement by providing written notice to Company and all Assignees, in which case the City shall have no fiuther obligations to Company or any Assignee hereunder. 9.6. Failure to Maintain Corporate Headquarters in the City. 9.6.1. Subject to Section 9.10, if Company fails to maintain its Corporate Headquarters at the Subject Property Locations for a period of more than one hundred and eighty (180) consecutive calendar days for a reason other than Events of Force Majeure, the City will provide written notice of default to Company. 9.6.2 1f Company fails to cure by commencing or resuming the operation of its Corporate Headquarters at the Subject Property Locations within ninety (90) calendar days following receipt of the City's notice, the City will have the right to terminate this Agreement immediately by providing written notice to Company and all Assignees, in which case the City will have no further obligations to Company or any Assignee hereunder. 9.7. Foreclosure. Subject to Section 9.10, upon the occurrence of any of the following events, the City will have the right to terminate this Agreement immediately upon provision of written notice to Company and all Assignees: (i) the completion of an action to foreclose or otherwise enforce a lien, mortgage or deed of trust on the Subject Property or improvements located on the Subject Property; (ii) the involuntary conveyance to a third party of the Subject Property or improvements located on the Subject Property; (iii) execution by Company or an Affiliate of any assignment of the Subject Property or improvements located on the Subject Property or deed in lieu of foreclosure to the Subject Property or improvements located on the Subject Property; or(iv) the appointment of a trustee or receiver for Economic Development Program Agreement Between City of Fort Worth and Linear Labs,Inc. 48 of 60 the Subject Property or improvements located on the Subject Property. This section does not apply to Assignee Subject Property. 9.8. Failure to Submit Reports. 9.8.1. If Company fails to submit any report required by and in accordance with this Agreement, the City will provide written notice to Company and all Assignees. Such written notice to be provided as specified in Section 12 below. If Company fails to provide any such report within sixty (60) calendar days following receipt of such written notice, the City will provide a second written notice to Company and all Assignees. 9.8.2. Subject to Section 9.10, if Company fails to provide any such report within thirty (30) calendar days following receipt of this second written notice, the City will have the right to withhold any Program Grant payments until the applicable reports are provided. 99. General Breach. Subject to Section 9.10, and unless and to the extent stated elsewhere in this Agreement, a party will be in default under this Agreement if that party breaches any material term or condition of this Agreement and such breach remains uncured after ninety (90) calendar days following receipt of written notice from the other party referencing this Agreement (or, if the party in breach has diligently and continuously attempted to cure following receipt of such written notice but reasonably requires more than sixty (60) calendar days to cure, then such additional amount of time as is reasonably necessary to effect cure, as determined by both parties mutually and in good faith), the non-breaching party will have the right to terminate this Agreement immediately by providing written notice to the other as will also retain all other available rights and remedies under the law. In the event that Company is the breaching party, the City will also provide notices required hereunder to all Assignees. 9.10. Limited Right to Cure by Certain Assignees. 9.10.1. Eligible Assignees. Notwithstanding anything to the contrary herein, in the event that the City terminates this Agreement at any time during the first forty-eight (48) months of the Term pursuant to any provision of this Section 9, this Agreement, and any corresponding Consent to Assignment Agreement, nevertheless will remain in effect in accordance with and to the extent provided in this Section 9.10 as to any Assignee that provided Company with actual funding of at least Six Million Eight Hundred Ninety Thousand Dollars and Zero Cents ($6,890,.000.00), which is 10% of the Program Cap, Economic Development Program Agreement Between City of Fort Worth and Linear Labs,Inc. 49 of 60 within the first eighteen (18) months following execution of the Agreement by the City ("Investor Assignee"), but only if the Investor Assignee or Investor Assignees collectively and strictly comply with this Section 9.10. 9.10.2. Execution of Assignee Assumption AgLreement. a. In accordance with this Section 9, upon the occurrence of any default under this Agreement, the City must provide written notice to Company and any Assignees. In order for the benefits offered by this Section 9.10 to apply, any Assignee that asserts its status as an Investor Assignee must provide written notice to the City not later than sixty (60) calendar days following the effective date of termination of this Agreement that it wishes to invoke its rights under this Section 9.10. The notice to the City must include a summary of the amount of actual funding provided by the Investor Assignee, together with reasonable supporting documentation (such actual funding being defined herein as the "Assignee Investment Amount"). b. Upon receiving any such notice or notices from an Investor Assignee, and verification by the City of the amount of funding provided by the Investor Assignee to Company, the City and the Investor Assignee or Investor Assignees must execute a written agreement that outlines the obligations of the Investor Assignee(s) and the City's obligation to pay such Investor Assignee(s) Program Grants in accordance with this Section 9.10 (an "Assignee Assumption Agreement"). C. If there is more than one Investor Assignee, all Investor Assignees must be a party to a single Assignee Assumption Agreement in order to address performance responsibilities required by this Section 9.10 and any other pertinent matters that are unique to the situation at that time. The parties must use reasonable efforts to execute the Assignee Assumption Agreement within one hundred and twenty (120) calendar days of the effective date of termination of this Agreement. d. In the event that the City and Investor Assignee(s) cannot agree to the terms and conditions of an Assignee Assumption Agreement that must be addressed in order for the intent of this Section 9.10 to be met, then (i) the City will have the right to terminate negotiations and any rights that might accrue to an Investor Assignee under this Section 9.10 will expire or (ii) if there is more than one Investor Assignee, and the City is able to reach agreement with one or more, but not all, Investor Assignees, the City and the Investor Assignee(s) who are able to reach agreement Economic Development Program Agreement Between City of Fort Worth and Linear Labs,Inc. 50 of 6o may execute an Assignee Assumption Agreement, and the rights under this Section 9.10 that might accrue to any Investor Assignee who is not able to reach agreement will terminate immediately upon execution of such Assignee Assumption Agreement. 9.10.3. Responsibilities of Investor Assignee(s). a. In order to receive the benefits offered by this Section 9.10, the Investor Assignee or Investor Assignees collectively must demonstrate to the City that they have, on a date after execution of this Agreement but no later than five years (5) after the Completion Deadline, constructed or caused to be constructed to their Assignee Subject Property(either directly or through an affiliate or tenant) the following: L new capital improvements equal to, or greater in value than, the Initial Property Improvement Commitment.; H. new capital improvements equal to, or greater in value than, the Final Property Improvement Commitment; iii. that the capital improvements described above result in new Full-Time Equivalent Jobs in an amount and earning an annual salary equal to or greater than that which is required under Sections 4.3 and 4.4, and iv. that the capital improvements described above result in new Full-Time Equivalent Jobs in an amount and earning an annual salary equal to or greater than that which is required under Sections 4.3 and 4.4. 9.10.4. Program Grants to Investor Assignees. a. Subject to performance by the Investor Assignee(s) of Company's obligations under Section 9.10.3. of this Agreement, Investor Assignees who are parties to the Assignee Assumption Agreement will be entitled to receive annual Program Grants from the City for a period of up to ten (10) consecutive years, as more specifically set forth in this Section 9.10. b. It is understood and agreed that the provisions of Section 7 of this Agreement governing Program Grants payable to Assignees will have terminated upon termination of this Agreement as to Company and do not apply to the Program Grants available to Economic Development Program Agreement Between City of Fort Worth and Linear Labs,Inc. 51 of 60 Investor Assignees. This Section 9.10 exclusively governs Program Grants payable to Investor Assignees after the effective date of termination of this Agreement as to Company. 9.10.5. Amount of Program Grants to Investor Assignees. a. The amount of each annual Program Grant payable to an Investor Assignee pursuant to this Section 9.10 will equal 25% of the Assignee Subject Property Tax Revenues received by the City in the Twelve-Month Period ending in the Calendar Year in which the Program Grant is payable, subject to any adjustment in the Assignee Qualified Expenses Balance. b. If Investor Assignee(s) commits under the Assignee Assumption Agreement to invest an amount equal to the Assignee Investment Amount in a new project (consisting of any new real improvements or, alternatively, a like investment in a project that qualifies under Section 6 of the Policy) that is located in a Fort Worth innovation district, as formally recognized by the Fort Worth City Council, the grant value will be equal to 75% of the Assignee Subject Property Tax Revenues received by the City in the Twelve-Month Period ending in each Calendar Year in which the Program Grant is payable, provided that such investments occur by no later than five (5) years following the Completion Deadline and understanding that the required investment will be reduced to reflect any costs already invested by Company pursuant to Section 4.1. C. Notwithstanding the foregoing, the aggregate amount of all Program Grants payable to an Investor Assignee will be capped at an amount equal to the lesser of (i) the Assignee Investment Amount (less any portion returned or recovered by Assignee at the time of the Company default), or (ii) Ten Million Three Hundred Thirty-five Thousand Dollars and Zero Cents ($10,335,000.00), which is 15% of the Program Cap ("Investor Assignee Cap"). d. If the aggregate amount of Program Grants payable to an Assignee reaches the Investor Assignee Cap at any time prior to payment in full of all ten (10) annual Program Grants otherwise payable to an Investor Assignee, the Assignee Assumption Agreement between the City and the Investor Assignee will automatically terminate, and the City will not be obligated to pay the Investor Assignee any additional Program Grants. e. Furthermore, if payment of any single annual Program Grant would cause the aggregate amount of all Program Grants Economic Development Program Agreement Between City of Fort Worth and Linear Labs,Inc. 52 of 60 payable to an Investor Assignee to exceed. the Investor Assignee Cap applicable to such Investor Assignee, the amount of the Program Grant payable in the Calendar Year in question will be prorated in accordance with the process outlined Section 6.7.2., unless otherwise required pursuant to the terms entered into between Company and Investor Assignee as part of the Assignee Agreement, with the understanding that Company is required to disclose any such terms as may apply when entering into similar agreements with any subsequent Investor Assignees. 9.11. Knowing Employment of Undocumented Workers. 9.11.1. Company acknowledges that the City is required to comply with Chapter 2264 of the Texas Government Code, enacted by House Bill 1196 (80th Texas Legislature), which relates to restrictions on the use of certain public subsidies. Company hereby certifies that Company, and any branches, divisions, or departments of Company, does not and will not knowingly employ an undocumented worker, as that term is defined by Section 2264.00](4) of the Texas Government Code. In the event that Company, or any branch, division, or department of Company, is convicted of a violation under 8 U.S.C. Section 1324a(f) (relating to federal criminal penalties and injunctions for a pattern or practice of employing unauthorized aliens), subject to any appellate rights that may lawfully be available to and exercised by Company, Company shall repay, within one hundred twenty (120) calendar days following receipt of written demand from the City, the aggregate amount of Program Grants received by Company hereunder, if any,plus Simple Interest at a rate of four percent(4%)per annum. 9.11.2. For the purposes of this Section 9.11, "Simple Interest" is defined as a rate of interest applied only to an original value, in this case the aggregate amount of Program Grants paid to Company pursuant to this Agreement. This rate of interest can be applied each year but will only apply to the amount of Program Grants received hereunder and is not applied to interest calculated. For example, if the aggregate amount of Program Grants received by Company hereunder is $10,000 and it is required to be paid back with four percent (4%) interest five years later, the total amount would be $10,000 + [5 x ($10,000 x 0.04)], which is $12,000. This Section 9.11 does not apply to violations of any subsidiary or other Affiliate of Company, any franchisees of Company, or any person or entity with whom Company contracts. Notwithstanding anything to the contrary herein, this Section 9.11 shall survive the expiration or termination of this Agreement. 10. INDEPENDENT CONTRACTOR. Economic Development Program Agreement Between City of Fort Worth and Linear Labs,Inc. 53 of 60 It is expressly understood and agreed that Company shall operate as an independent contractor in each and every respect hereunder and not as an agent, representative or employee of the City. Company shall have the exclusive right to control all details and day-to-day operations relative to the Subject Property and any improvements thereon and shall be solely responsible for the acts and omissions of its officers, agents, servants, employees, contractors, subcontractors, licensees and invitees. Company acknowledges that the doctrine of respondeat superior will not apply as between the City and Company, its officers, agents, servants, employees, contractors, subcontractors, licensees, and invitees. Company further agrees that nothing in this Agreement will be construed as the creation of a partnership or joint enterprise between the City and Company. 11. INDEMNIFICATION AND RELEASE. COMPANY, AT NO COST TO THE CITY, AGREES TO DEFEND, INDEMNIFY AND HOLD THE CITY, ITS OFFICERS, AGENTS SER PANTS AND EMPLOYEES, HARMLESS AGAINST ANY AND ALL CLAIMS, LAWSUITS, ACTIONS, COSTS AND EXPENSES OF ANY KIND BROUGHT BY A THIRD PARTY, INCLUDING, BUT NOT LIMITED TO, THOSE FOR PROPERTY DAMAGE OR LOSS (INCLUDING ALLEGED DAMAGE OR LOSS TO COMPANY'S BUSINESS AND ANY RESULTING LOST PROFITS) AND/OR PERSONAL INJURY, INCLUDING DEATH, THAT MAY RELATE TO, ARISE OUT OF OR BE OCCASIONED BY(i) COMPANY'S BREACH OF ANY OF THE TERMS OR PROVISIONS OF THIS AGREEMENT OR (it)ANY NEGLIGENT ACT OR OMISSION OR INTENTIONAL MISCONDUCT OF COMPANY, ITS OFFICERS, AGENTS, ASSOCIATES, EMPLOYEES, CONTRACTORS (OTHER THAN THE CITY) OR SUBCONTRACTORS, RELATED TO THE SUBJECT PROPERTY, IMPROVEMENTS ON THE SUBJECT PROPERTY, INCLUDING THE PROTECT IMPROVEMENTS, AND ANY OPERATIONS AND ACTIVITIES THEREON, OR OTHERWISE TO THE PERFORMANCE OF THIS AGREEMENT. 12. NOTICES. All written notices called for or required by this Agreement shall be addressed to the following, or such other party or address as either party designates in writing, by certified mail,postage prepaid, or by hand delivery: City: Company: City of Fort Worth Linear Labs,Inc. Attn: City Manager Attn: Brad Hunstable 200 Texas St. 2600 NE Loop 820, Suite 100 Fort Worth, TX 76102 Ft. Worth, TX 76137 with copies to: with copies to: Economic Development Program Agreement Between City of Fort Worth and Linear Labs,Inc. 54 of 60 I the City Attorney and Legal Department and Economic Development Department Chief Financial Officer Director at the same address at the same address And provide electronic copies to: Brad Hunstable bhunstable@linearlabsinc.com Mary Korn mkorn@linearlabsine.com Legal contracts@linearlabsinc.com 13. ASSIGNMENT AND SUCCESSORS. 13.1. Company may at any time assign, transfer or otherwise convey the entirety of its rights or obligations under this Agreement to an Affiliate that is in good standing to do business in the State of Texas, as determined by the Texas Secretary of State, without the consent of the City Council so long as Company, the Affiliate and the City first execute an agreement under which the Affiliate agrees to assume and be bound by all covenants and obligations of Company under this Agreement. 13.2 Otherwise, subject Assignments of its Program Grants in accordance with Section 7, Company may not assign, transfer or otherwise convey any of its other rights or obligations under this Agreement to any other person or entity without the consent of the City Council, which consent shall not be unreasonably withheld, conditioned on (i) the prior approval of the assignee or successor and a finding by the City Council that the proposed assignee or successor is financially capable of meeting the terms and conditions of this Agreement and (ii) prior execution by the proposed assignee or successor of a written agreement with the City under which the proposed assignee or successor agrees to assume and be bound by all covenants and obligations of Company under this Agreement, including any previous Assignments pursuant to Section 7 of this Agreement. 13.3. Any lawful assignee or successor in interest of Company of all rights under this Agreement will be deemed"Company"for all purposes under this Agreement. 13.4 In addition, Company may assign its rights and obligations under this Agreement to a financial institution or other lender for purposes of granting a security interest in the Subject Property or improvements thereon without the consent of the City Council; provided, however, that the City, Company, and any Assignee must enter into a written consent to such assignment. 14. COMPLIANCE WITH LAWS, ORDINANCES,RULES AND REGULATIONS. This Agreement will be subject to all applicable federal, state and local laws, ordinances, rules and regulations, including, but not limited to, all provisions of the City's Charter and ordinances, as amended. Economic Development Program Agreement Between City of Fort Worth and Linear Labs,Inc. 55 of b0 15. GOVERNMENTAL POWERS. It is understood that by execution of this Agreement, the City does not waive or surrender any of its governmental powers or immunities. Nothing contained in this Agreement shall be construed to limit the powers of future City Councils to carry out their general powers and duties under applicable federal, state and local laws. The parties expressly recognize and acknowledge that the City Council will make any future decision(s) related to the rights and obligations contained in this Agreement based upon the City Council's normal procedures for making decisions and the then current City Council shall have the final responsibility for making such decision(s). 16. NO WAIVER. The failure of either party to insist upon the performance of any term or provision of this Agreement or to exercise any right granted hereunder shall not constitute a waiver of that party's right to insist upon appropriate performance or to assert any such right on any future occasion. 17. VENUE AND CHOICE OF LAW. If any action, whether real or asserted, at law or in equity, arises on the basis of any provision of this Agreement, venue for such action shall lie in state courts located in Tarrant County, Texas or the United States District Court for the Northern District of Texas —Fort Worth Division. This Agreement will be construed in accordance with the laws of the State of Texas. 18. SEVERABILITY; CONFLICTING LAW. 18.1. If any provision of this Agreement is held to be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired. 18.2. if any law is enacted after the Effective Date that prohibits either party from materially performing its duties and obligations under this Agreement, the parties agree to meet and confer in good faith for a period of no less than thirty business (30) and no more than ninety business (90) days to seek to effectuate an amendment to this Agreement that preserves, to the extent reasonably possible, the Original intentions of the parties under this Agreement, with the understanding that this Agreement cannot be amended without the approval of the City Council, as specified in Section 25. 19. NO THIRD PARTY RIGHTS. The provisions and. conditions of this Agreement are solely for the benefit of the City and Company; any lawful successor of Company and any person or entity to whom Economic Development Program Agreement Between City of Fort worth and Linear Labs,Inc. )f 60 Company has lawfully assigned the entirety of its rights and obligations under this Agreement in accordance with Section 13; and, to the limited extent set forth herein, any Assignees, including Investor Assignees, and are not intended to create any rights, contractual or otherwise, to any other person or entity, 20. ESTOPPEL CERTIFICATE Upon written request by Company to the City, as reasonably necessary to Company, the. City will provide Company with a certificate stating; as of the date of the certificate, (i) whether this Agreement is in full force and effect and, if Company is in breach of this Agreement, the nature of the breach; (ii) a statement as to whether this Agreement has been amended and, if so, the identity of each amendment; and (iii) any other factual matters reasonably requested that relate to this Agreement. 21. CONFIDENTIAL INFORMATION City is a government entity under the laws of the State of Texas and all documents held or maintained by City are subject to disclosure under the Texas Public Information Act. In the event there is a request for information marked Confidential or Proprietary, City will promptly notify Company. It will be the responsibility of Company to submit reasons objecting to disclosure. A determination on whether such reasons are sufficient will not be decided by City, but by the Office of the Attorney General of the State of Texas or by a court of competent jurisdiction. Notwithstanding anything contained herein to the contrary, nothing contained in this Section 21 prevents or prohibits the City from complying with its obligations under the Public Information Act. 22. FORCE MAdEURE. It is expressly understood and agreed by the parties to this Agreement that if the performance of any obligations hereunder is delayed by reason of pandemic, health or other emergency of any form as declared by federal, state, local or other governing agency or authority, war, civil commotion, acts of God, earthquakes, strike, inclement weather, shortages or unavailability of labor or materials, embargoes, lack of access to obtain work visas for qualified skilled employees due to changes in government regulations, unreasonable delays by the City (based on the then-current workload of the City department(s) responsible for undertaking the activity in question) in issuing any permits, consents, assignment authorization, certifications, or certificates of occupancy or conducting any inspections of or with respect to the Subject Property Locations and Project Improvements, or other circumstances which are reasonably beyond the control of the party obligated or permitted under the terms of this Agreement to do or perform the same (each an "Event of Force Majeure"), the party so obligated or permitted will be excused from doing or performing the same during such period of delay, so that the time period applicable to such obligation will be extended for a period of time equal to the period such party was delayed directly on account of the Event of Force Majeure. Notwithstanding anything to the contrary herein, it is specifically understood and agreed Economic Development Program Agreement Between City of Port Worth and Linear Labs,Inc. 57 of 60 that any failure of Company to obtain adequate financing necessary to meet any of its obligations under this Agreement shall not be deemed to be an Event of Force Majeurc and that this Section will not operate to extend any deadlines for performance by Company in such an event. 23. INTERPRETATION. In the event of any dispute over the meaning or application of any provision of this Agreement, this Agreement shall be interpreted fairly and reasonably, and neither more strongly for or against any party,regardless of the actual drafter of this Agreement. 24. CAPTIONS. Captions and headings used in this Agreement are for reference purposes only and shall not be deemed a part of this Agreement. 25. ENTIRETY OF AGREEMENT. This Agreement, including any exhibits attached hereto and any documents incorporated herein by reference, contains the entire understanding and agreement between the City and Company, and any lawful assign and successor of Company, as to the matters contained herein. Any prior or contemporaneous oral or written agreement is hereby declared null and void to the extent in conflict with any provision of this Agreement. Notwithstanding anything to the contrary herein, this Agreement will not be amended unless executed in writing by both parties and approved by the City Council of the City in an open meeting held in accordance with Chapter 551 of the Texas Government Code. 26. COUNTERPARTS. This Agreement may be executed in multiple counterparts, each of which shall be considered an original, but all of which shall constitute one instrument. 27. ELECTRONIC SIGNATURES. This Agreement may be executed by electronic signature, which will be considered as an original signature for all purposes and have the same force and effect as an original signature. For these purposes, "electronic signature" means electronically scanned and transmitted versions (e.g. via pdf file or facsimile transmission) of an original signature,or signatures electronically inserted via software such as Adobe Sign. [SIGNATURES ON THE FOLLOWING PAGE] Economic Development Program Agreement Between City of Fort worth and Linear Labs,Inc. 58 of 60 EXECUTED as of the last date indicated below: CITY OF FORT WORTH: CONTRACT COMPLIANCE < ~ � MANAGER: By signing I acknowledge that I am the By' person responsible for the monitoring and Jay administration of this contract,including Depuutyty City Manager ensuring all performance and reporting Date: requirements. APPROVAL RECOMMENDED: Mic ae e, 'g By: Strategic Development Coordinator Robe' Sturns Director,Economic Development APPROVED AS TO FORM AND LEGALITY: ATTEST: By. By. Tyler F.' allach ff4:emales T :.. 4("I;C jr .A,ssistanr eity Attorney ding City Secretjary � �: ' • '� CONTRACT AUTHORIZATION: ilk {M&C: 20-0421 (June 16, 2020); 21-0201 (March 23,2021) 01 `4,=;' Form 1295:2020-522194 LINEAR LABS,INC., a Delaware corporation By: Brad Huss le CEO Date: OFFICIAL RECORD CITY SECRETARY Economic Development Program Agreement ' Between Cityof Fort Worth and Linear Labs Inc. s EXECUTED as of the last date indicated below: CITY OF FORT WORTH: CONTRACT COMPLLANCE �~ C./� MANAGER: By signing I acknowledge that I am the By: person responsible for the monitoring and Jay administration of this contract, including Depuutyty City Manager ensuring all performance and reporting Date: h requirements. APPROVAL RECOMMENDED: By: _ f Mic ae Hep ig By: Strategic Development Coordinator Robert Sturns Director,Economic Development APPROVED AS TO FORM AND LEGALITY: ATTEST: By: _ By: Tyler F. 11iatlach es il,w e tf l koo, !( Assistak, ity Attorney vrct�ag City Secretary CONTRACT AUTHORIZATION: M&C: 20-0421 (June 16, 2020); 21-0201 (March 23, 2021) Form 1295: 2020-622194 LINEAR LABS,INC., a Delaware corporation By: Brad Hunst ble CEO Date: Economic Development Program.Agreement Between City of Fort Worth and Linear Labs,Inc. of 60 EXHIBIT A Project Milestones Operational Year: YEAR 1 WAR 3 YEAR 5 YEAR 8 AdWraurn REgyi-vg1eak Product R&D Full-time Equivalent Jobs 15 35 100 400 Advanced Manufacturing R&D Full-time Equivalent Jobs 2 4 40 200 Full-time Equivalent Jobs for All other Qualified Expenses & 11 60 500 Minimum Total R&D-related Full-time Equivalent Jobs 25 s0 200 1,100 Average INaoes Product R&D Average Wages $ 90,000 $ 90,000. $ 90,000 $ 90,000 Advanced Manufacturing R&D Average Wages $ 70,000 $ 70,000 $ 70,000 $ 70,000 Average Wages for All Other Qualified R&D Expenses $ 70,000 $ 70,000 $ 70,000 $ 70,000 Total nnual Qualified R&D Expenses $ 3,800,000 $ 9,000,000 $ 28,000,000 $ 135,000,000 Cap to Qualif led Expenses if Milestone Unmet 95% 80% 65% 50% (percent of maximum for year) Economic Development Program Agreement Between City of Fort Worth and Linear Labs,Inc. "of 60 1/6/22,9:54 AM M&C Review Official site of the City of Fort Worth,Texas CITY COUNCIL AGENDA FOT Wow Create New From This M&C DATE: 6/16/2020 REFERENCE NO.: M&C 20-0421 LOG NAME: 17EDPALINEAR CODE: C TYPE: NON-CONSENT PUBLIC HEARING: NO SUBJECT: Authorize Execution of an Economic Development Program Agreement with Linear Labs, Inc. or an Affiliate for the Relocation of Its Corporate Headquarters to the City of Fort Worth and for Associated Investments in Research and Development and Product Manufacturing (COUNCIL DISTRICT 7) RECOMMENDATION: It is recommended that the City Council Authorize the City Manager to execute an Economic Development Program Agreement with Linear Labs, Inc. or an affiliate for the relocation of Its corporate headquarters to the City of Fort Worth and for associated investments in research and development and product manufacturing. DISCUSSION: Linear Labs develops fully modular electric motors and generators that deliver greater performance versus existing technology. Currently located in Fort Worth's extraterritorial jurisdiction (ETJ), Linear Labs has used the greater Fort Worth area as its domestic headquarters and center for product technology development, while current large-scale manufacturing is focused on operations outside of the United States, including in Monterrey, Mexico. In addition to various technological and performance advantages presented by the company's products, the products' design and necessary components and materials permit highly advanced manufacturing practices to be possible and economical at scale. As such, the possibility of large-scale domestic production for global customers is feasible provided that the company make significant investments in capital equipment over what would be required for foreign manufacturing. Moreover, the more advanced manufacturing techniques as well as the products themselves require significant and sustained investment by the company in research and development (R&D). In an effort to establish large-scale domestic production, develop industry-leading manufacturing systems, and to continue its development of new technologies and applications for its products, Linear Labs proposes to relocate its corporate headquarters to be within the City of Fort Worth, to build its Fort Worth operations to serve as the company's primary manufacturing center, and to ensure that Fort Worth serves as the chief location of the company's R&D activities. The project is proposed to be located at 2060 Eagle Parkway (or such other property(ies) located in the corporate limits of Fort Worth as agreed upon by the parties) (the Subject Property). In order to facilitate the relocation and expansion of Linear Labs (Company) and in order to promote greater R&D activity within the City of Fort Worth, the City proposes to provide up to 15 annual Economic Development Program grants to the Company, as authorized by Chapter 380, Texas Local Government Code (each a Grant). The proposed project and Grants are eligible under criteria and guidelines contained in Section 6 the City's Economic Development Policy (Resolution No. 5039-01-2019, as amended), which specifically applies to R&D projects. The Grant funds will be built into the City's long-term financial forecast for the General Fund with an estimated grant award of$68,900,000.00. The grants will be based on a percentage of the Company's Qualified Costs in R&D during a 10-year performance period and will be tied to the satisfaction of other project and investment requirements, as follows: Company Investment: Company must comply with all of the following requirements with respect to the Subject Property: - By December 31, 2023, a temporary or final certificate of occupancy must be in place for all space occupied by Company at the project site; apps.cfwnet.org/council_packet/mc_review.asp?ID=27990&councildate=6/16/2020 1/4 1/6/22,9:54 AM M&C Review - Company must expend at least$250,000.00 by the end of its first operational year and $3,750,000.00 by the end of its third operational year in construction costs for upgrades and modifications to the building and the property at which project operations will occur; - Company must maintain its corporate headquarters at a location within the corporate limits of the City at all times during the term of the Agreement. Utilization of Certified Minority and Women Business Enterprise (M/WBE) Companies (Real Property_ Improvements): Company must expend or cause to be expended 15\% of all construction costs for tenant improvements, upgrades and modifications to the building and the property comprising the Subject Property with Certified M/WBE Companies. A Certified M/WBE Company is a minority or woman-owned business that (i) has received certification as either a minority business enterprise (MBE), a woman business enterprise (WBE), or a disadvantaged business enterprise (DBE) by the North Central Texas Regional Certification Agency (NCTRCA), D/FW Minority Supplier Development Council (MSDC) or Women's Business Council — Southwest (WBC) and (ii) has a Principal Office located within Tarrant, Dallas, Denton, Johnson, Parker or Wise Counties. Failure to meet this M/WBE commitment will not constitute a default, but the available percentage of ad valorem tax revenues used to calculate the amount of each Grant will be reduced by 10\%. Minimum Qualified R&D Expenditures: Company must expend at least$3,800,000.00 annually in qualified R&D costs in the first operational year; $9,000,000.00 annually in qualified R&D costs as of the third operational year; $28,000,000.00 annually in qualified R&D costs as of the fifth operational year; and $135,000,000.00 annually in qualified R&D costs as of the eighth operational year. Failure by Company to meet these minimum expenditures in qualified R&D costs will result in a cap to the Qualified R&D costs used in the calculation of grant payments equal to 95\% as of the first operational year, 80\% as of the third operational year, 65\% as of the fifth operational year, and 50\% as of the eighth operational year. Employment and Wage Commitments: Company must comply with all of the following requirements with respect to employment and wages: - Employ at least 25 Full-time Equivalent Jobs (FTEs) by December 31 of the first operational year, with failure to meet this commitment constituting a default under the Agreement; - Employ at least 60 FTEs by December 31 of the third operational year, 240 FTEs by December 31 of the fifth operational year, and 1,200 FTEs by December 31 of the eighth operational year, with failure to meet any of these commitments in a respective year resulting in a proportional reduction of up to 25\% of the Grant payable in the following year; - For Company activities relating to Product R&D, employ at least 2 FTEs by December 31 of the first operational year, employ at least 4 FTEs by December 31 of the third operational year, 40 FTEs by December 31 of the fifth operational year, and 200 FTEs by December 31 of the eighth operational year; - For Company activities relating to Advanced Manufacturing R&D, employ at least 15 FTEs by December 31 of the first operational year, employ at least 35 FTEs by December 31 of the third operational year, 100 FTEs by December 31 of the fifth operational year, and 400 FTEs by December 31 of the eighth operational year; - For other Company activities relating to qualified R&D, employ at least 8 FTEs by December 31 of the first operational year, employ at least 11 FTEs by December 31 of the third operational year, 60 FTEs by December 31 of the fifth operational year, and 500 FTEs by December 31 of the eighth operational year; - Maintain average annual salaries for all employees at the Subject Property who are engaged in Product R&D of at least $90,000.00 and average annual salaries for all employees who are engaged in Advanced Manufacturing and other Qualified R&D of at least $70,000.00; - Failure by Company to meet any of the employment and wage commitments relating to qualified R&D activities as specified above will result in a cap to the Qualified R&D costs used in the calculation of grant payments equal to 95\% as of the first operational year, 80\% as of the third operational year, 65\% as of the fifth operational year, and 50\% as of the eighth operational year; - Maintain average annual salaries for all employees at the Subject Property (except as indicated below for non-exempt employees) of at least $70,000.00, with failure to meet this commitment constituting a default under the Agreement; a pps.cfwnet.o rg/council_packet/mc_review.asp?I D=27990&cou nci Idate=6/16/2020 2/4 1/6/22,9:54 AM M&C Review - Pay all non-exempt employees that are directly engaged in Company manufacturing an average wage of no less than $15.00 per hour, with failure to meet this commitment constituting a default under the Agreement; - Offer healthcare benefits to all exempt and non-exempt employees that are employed in Project Operations, with failure to meet this commitment constituting a default under the Agreement; City Commitments: The City will make up to 15 annual Economic Development Program grants to the Company in a total amount not to exceed $68,900,000.00 (the Program Cap). Grant amounts will equal 25\% of those costs expended by Company (or such higher percentage that may be permitted under the City's Economic Develoment Policy based on project location) in each calendar year for a period of 10 years that are expenses classified as qualified expenses under Internal Revenue Code Section 41 (the Research and Experimentation Tax Credit) and any other expenses identified in the Agreement as direct expenses for utility patent generation, technology commercialization, or spinoff incubation costs. At no time may any Grant paid to Company exceed 75\% of incremental real and business personal property ad valorem tax revenues attributable to the Subject Property that are received in the preceding calendar year. Assignments: Company shall have the right to make assignments of the Grants, in whole or in part, to one or more third- party assignee owners of real property in the City. For purposes of calculating assigned Grants, the Subject Property will be the real property or properties in the City that are owned by the assignee, instead of the Subject Property on which Company is conducting the project operations. Assignment agreements will be executed by the City Manager, and the City shall not unreasonably withhold or delay execution of any assignment. Grant assignments will be subject to the following restrictions: - The City will only pay Grants for 15 consecutive years, beginning in the year in which the first Grant payment is made. For example, if an assignment is made after 2 annual Grants have already been paid under the Agreement, the assignee will be entitled to a maximum of 13 annual Grants; - No property that is already tied to an existing City incentive agreement may be included as the Subject Property; - No property that is zoned Residential by the City shall be permitted to be included as part of an Assignee's Subject Property except where such zoning may be changed to facilitate new development (e.g. Residential property that is subsequently rezoned for Commercial). Properties that are zoned Mixed-Use (including any part of a form-based code) or properties that are zoned Planned Development may be included as part of an Assignee's Subject Property; - In an event of an assignment, the amount of Qualified R&D costs used in the calculation of Grant payments will be reduced by 5\%, with the resulting amount of the grant reduction to be dedicated for use by the City in the administration of its economic development programs or for other purposes relating to the promotion of R&D activity within the City; - In the event an assignee advances funds to Company in an amount equal to at least 10\% of the value of the Program Cap within the first 18 months following execution of the Agreement and an event of default subsequently occurs under the Agreement (but not later than the 48th month following execution of the Agreement), the assignee will have the right to receive Grants equal to 25\% of its annual incremental real and business personal property ad valorem tax revenues for up to 10 years up to the lesser of the amount advanced or 15\% of the Program Cap, but only if the assignee performs and meets certain specified commitments of the Company relating to minimum capital investment, minimum employment, and minimum average wages; and - The aggregate cap on all annual Grants paid by the City, regardless of the number of assignments and the parties to whom the Grants are made, shall not exceed $68,900,000.00. This project is located in COUNCIL DISTRICT 7 FISCAL INFORMATION/CERTIFICATION: The Director of Finance certifies that funds will be available contingent on the approval of future Fiscal Year operating budget appropriations in the General Fund and the Economic Incentives Fund. Prior to any a pps.cfwnet.o rg/council_packet/mc_review.asp?I D=27990&cou nci Idate=6/16/2020 3/4 1/6/22,9:54 AM M&C Review expenditure being incurred, the Economic Development Department has the responsibility to validate the availability of funds. TO Fund Department Account Project Program Activity Budget Reference # Amount ID ID Year (Chartfield 2) FROM Fund Department Account Project Program Activity Budget Reference # Amount ID I I ID I I Year (Chartfield 2) Submitted for City Manager's Office by_ Jay Chapa (5804) Originating Department Head: Robert Sturns (2663) Additional Information Contact: Michael Hennig (6024) ATTACHMENTS 200619 Linear LocationMap.pdf (Public) Linear Labs 1295.pdf (CFW Internal) a pps.cfwnet.o rg/council_packet/mc_review.asp?I D=27990&cou nci Idate=6/16/2020 4/4 1/6/22,9:54 AM M&C Review Official site of the City of Fort Worth,Texas CITY COUNCIL AGENDA FORT W oRyn Create New From This M&C DATE: 3/23/2021 REFERENCE M&C 21-0201 LOG NAME: 17LINEARLABSAMEND NO.: CODE: C TYPE: NON- PUBLIC CONSENT HEARING: NO SUBJECT: (CD 4)Amend Mayor and Council Communication 20-0421, an Economic Development Program Agreement with Linear Labs, Inc. or an Affiliate, to Revise the Timing and Amount of Required Real Property and Business Personal Property Improvements RECOMMENDATION: It is recommended that the City Council amend Mayor and Council Communication 20-0421, an Economic Development Program Agreement with Linear Labs, Inc. or an affiliate, to revise the timing and amount of required real property and business personal property improvements, as set forth in the discussion. DISCUSSION: The purpose of this Mayor and Council Communication (M&C) is to revise the deadlines and required amounts that apply to construction costs for upgrades and modifications to the building and the property at which project operations will occur and to add new associated requirements as part of the Economic Development Program Agreement(Agreement)with Linear Labs, Inc. or an affiliate (Company). On June 16, 2020, the City Council approved M&C 20-0421 authorizing the execution of the Agreement, which included the requirement that the Company expend at least$250,000.00 by the end of its first operational year and $3,750,000.00 by the end of its third operational year in construction costs for upgrades and modifications to the building and the property at which project operations will occur. Although the primary purpose of the Agreement was to support the relocation of the firm and the growth of its investment and business activities in research and development, the anticipated cost of improvements to the building that had been expected to house those activities was also incorporated into the terms of the Agreement. Since the date of the approval of the M&C, the Company has chosen to locate at a different location within the City, a building located at 2600 NE Loop 820. The new location does not require the same level of improvements during the initial years of the term of the Agreement necessary to house the Company's activities in those years. However, the Company does plan for the installation of taxable capital equipment at the property which is proposed for inclusion as part of the base requirement for the Agreement. Therefore, staff recommends that the City Council approve the following changes to the Company requirements: Original Requirement Year 1 Year 3 Minimum Real Property Improvements (in aggregate) 250,000.00 4,000,000.00 Minimum Total Capital Investment (in aggregate) 250,000.00 4,000,000.00 Amended Requirement Year 1 Year 5 Minimum Real Property Improvements (in aggregate) 250,000.00 2,750,000.00 Minimum Capital Equipment Installations (Business Personal Property) (in aggregate) 0.00 1,250,000.00 Minimum Total Capital Investment (in aggregate)' F 250,000.00 4,000,000.00 'Year 5 Minimum Total Capital Investment may be reallocated between Real and Capital Equipment provided that the combined value is satisfied. The project is located in COUNCIL DISTRICT 4. FISCAL INFORMATION/CERTIFICATION: The Director of Finance certifies that approval of this agreement will have no material effect on the Fiscal Year 2021 Budget. While no current year impact is anticipated from this action, any effect on expenditures and revenues will be budgeted in future Fiscal Years and will be included in the long-term financial forecast. TO Fund Department Account Project Program Activity Budget Reference# Amount ID ID Year Chartfield 2 FROM nnl� epartment Account Project Program Activity Budget Reference# Amount ID ID I I Year Chartfield 2 apps.cfwnet.org/council_packet/mc_review.asp?ID=28751&counciIdate=3/23/2021 1/2 1/6/22,9:54 AM M&C Review Submitted for City Manager's Office by_ Jay Chapa(5804) Originating Department Head: Robert Sturns(2663) Additional Information Contact: Michael Hennig (6024) ATTACHMENTS 200608 Form 1295 Certificate 100640(signed).pdf (CFW Internal) 210202 Linear LocationMap.pdf (Public) apps.cfwnet.org/council_packet/mc_review.asp?ID=28751&counciIdate=3/23/2021 2/2