HomeMy WebLinkAboutContract 56926-CA1CSC No. 56926-CA1
CITY SECRETARY CONTRACT NO.56926,
ECONOMIC DEVELOPMENT PROGRAM GRANT
CONSENT TO ASSIGNMENT AGREEMENT
THIS ECONOMIC DEVELOPMENT PROGRAM GRANT CONSENT TO
ASSIGNMENT AGREEMENT ("Consent") is made by and among Linear Labs, Inc., a
Delaware corporation ("Company"), the City of Fort Worth Texas, a home -rule municipality
organized under the laws of the State of Texas ("City"), and AIL Investment LP, a Texas limited
partnership ( "Assignee"). Company, City, and Assignee are hereinafter sometimes referred to
individually as a "Party" and collectively as the "Parties."
WHEREAS, the City and Company entered into that certain Economic Development
Program Agreement (City Secretary Contract Number 56926) ("EDPA") dated effective as of
December 21, 2021. Capitalized terms not otherwise defined herein shall have the meaning set
forth in the EDPA;
WHEREAS, under the EDPA, the City has agreed to make Program Grants to the
Company (or its assignee) up to the Program Cap subject to the Company's continuing compliance
with the terms of the EDPA;
WHEREAS, as of the Effective Date of this Consent, Company has incurred the Qualified
Expenses necessary to ensure that the Qualified Expense Balance equals or exceeds the minimum
amount of funds necessary for the City to pay the Assignee as set forth hererin;
WHEREAS, Company desires to assign a portion of its earned Program Grants to
Assignee in an amount up to $2,000,000.00 net of the five percent (5%) Assignee Set Aside
contained in section 7.1.7 of the EDPA ("Assigned Earned Program Grant") to be paid in
accordance with the terms of the EDPA;
WHEREAS, Company and Assignee intend to enter into a separate agreement pursuant to
which Company has agreed to assign and Assignee has agreed to assume the Assigned Earned
Program Grant ("Earned Program Grant Assignment");
WHEREAS, pursuant to Section 7.2.1 of the EDPA, Company has delivered to City a
Notice of Intent to Assign the Assigned Program Grant and the Director has approved such Notice
of Intent to Assign, a copy of such Notice of Intent to Assign is attached hereto as Exhibit A; and
WHEREAS, pursuant to Section 7.2.2 of the EDPA, Company, Assignee, and City desire
to enter into this Consent to confirm satisfaction of the conditions precedent to the City's consent
to the Earned Program Grant Assignment.
NOW THEREFORE for good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree as follows:
OFFICIAL RECORD
CITY SECRETARY
FT. WORTH, TX
Consent to Assignment Page 1 of 11
1. Incorporation of Recital. The Parties agree that the recitals, which are incorporated
herein by reference, set forth above are true and correct and form the basis upon which they are
entering into this Consent.
2. Consent. The City hereby consents to the Earned Program Grant Assignment
subject to the terms and conditions of this Consent, effective on the date on which the City,
Company, and Assignee have all executed this Consent ("Effective Date").
3. List of Parcels. Attached hereto as Exhibit B is a list of parcels comprising the
Assignee Subject Property for the Assigned Earned Program Grant, the total taxable appraised
value of the Assignee Subject Property, the amount of ad valorem taxes payable to the City on the
Assignee Subject Property for the tax year that is identified in the Notice of Intent to Assign, and
the amount of the Assigned Earned Program Grant that has been applied to each Assignee Subject
Property. Assignee shall be permitted to apply the Assigned Earned Program Grant to each
Assignee Subject Property identified and in the amounts set forth in Exhibit B.
4. Assignee Percentaize. The Parties hereby confirm that the Assignee has been
assigned the Assigned Earned Program Grant, and that the Assignee shall be entitled to receive
payment of the entirety of the Assigned Earned Program Grant in accordance with the terms of the
EDPA.
5. Pavment of Program Grants. The City will pay the Assigned Earned Program Grant
to the Assignee in accordance with Section 7 of the EDPA and within thirty (30) days after the City
receives written proof from Assignee of ad valorem taxes paid by Assignee on the Assignee Subject
Property. Assignee shall be entitled to select which properties listed in Exhibit C against which
the Assigned Earned Program Grant may be applied. The Calendar Year in which the Assignee
Earned Program Grant will be paid by the City will be 2024, with any remaining amounts to be
paid out over each subsequent Calendar Year in accordance with the terms of the EDPA until the
entirety of the Assigned Earned Program Grant has been paid. Assignee hereby affirms its
understanding that (i) the value of the Assigned Earned Program Grants may be restricted in
relation to the incremental value of property taxes generated by the Assignee Subject Property, (ii)
that (as specified under Section 7.1.6.) the value of any annual Assigned Earned Program Grant
shall not exceed seventy-five percent (75%) of the aggregate value of 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, and (iii) that the Assignee Subject Property will be ineligible
to receive 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.
The Parties ratify and confirm that, unless and until another Consent to Assignment is executed by
the Parties, Assignee shall not be entitled to any future Program Grants that are not explicitly set
forth herein.
6. Submittal of Propertv Reports. Assignee acknowledges that it is required to submit
all property reports related to the Assignee Subject Property on an annual basis, with such report
stating the total ad valorem taxes on the Assignee Subject Project and on Assignee New Taxable
Tangible Personal Property paid to the City in the twelve-month period ending in the same
Consent to Assignment Page 2 of 11
Calendar Year, together with reasonable supporting documentation and any other relevant
information requested by the City. Assignee represents that it has representative authority over the
Assignee Subject Property and has submitted all property reports related to the Assignee Subject
Property to the City and no further reports are necessary to be submitted in connection with the
Assigned Earned Program Grant except as otherwise described above.
7. Incentives for Assignee Subiect Property. Assignee represents and warrants to the
City that no Assignee Subject Property is eligible for any incentives from the City that are based
on the ad valorem taxes generated by an Assignee Subject Property for any Calendar Year in which
the Assignee will receive payment of the Assignee Earned Program Grant and hereby waives and
relinquishes any right it may have to receipt of any such incentives for those specific Calendar
Years.
8. Compliance with EDPA. As of the Effective Date, Company hereby represents and
warrants to the City and Assignee and its successors and assigns that (i) it is in full compliance
with the terms of the EDPA and (ii) it incurred the Qualified Expenses necessary to ensure that the
Qualified Expense Balance equals or exceeds the minimum amount of funds necessary for the City
to pay the Assignee the Assigned Earned Program Grant. Company acknowledges that City and
Assignee and its successors and assigns shall be entitled to rely upon the foregoing representation
and warranty in connection with the issuance, assignment, and utilization of the Assigned Earned
Program Grant.
9. City Estoppel. Pursuant to Section 20 of the EDPA, as of the Effective Date, City
hereby certifies to Assignee and its successors and assigns as follows: (i) the EDPA remains in full
force and effect, (ii) Company is not in default or breach of the EDPA, (iii) City has issued the
Assigned Grant to Company and Company is entitled to assign the Assigned Earned Program
Grant under the terms of the EDPA and this Consent, (iv) this Consent complies with the terms of
the EDPA and is not contrary to the Mayor and Council Communications 20-0421 and 21-0201,
the City Council agenda items under which the City Council authorized the EDPA, (v) City
represents that no additional Mayor and Council Communications have been approved as of the
Effective Date, (vi) that no provision of the EDPA regarding performance by Assignor as a
condition precedent to the receipt of any Program Grants or impacting the amount of any Program
Grants shall in any way, impact, impair, reduce or void the Assigned Earned Program Grant hereby
assigned to Assignee, and (vii) that termination of the EDPA under Section 9 of the EDPA shall
not, in any way impact, impair, reduce or void the Assigned Earned Program Grant hereby assigned
to Assignee.. City acknowledges that Assignee, its successors and assigns, shall be entitled to rely
upon the foregoing certifications in connection with the assignment and utilization of the Assigned
Program Grant.
10. No Ratification or Amendment. By executing this Consent, the City does not ratify
or endorse any agreement or representation between Company and Assignee or grant Assignee any
rights greater than those granted to Company under the EDPA.
11. Claims. City ratifies and confirms that any claims by the City for breach under the
EDPA occurring by Company after an assignment of an earned Program Grant for which a Consent
to Assignment Agreement has been executed shall be against Company only and not the Assignee.
Consent to Assignment Page 3 of 11
12. Assignee Subject Property Taxable Appraised Value. The City ratifies and confirms
that the total taxable appraised value of the Assignee Subject Property shall be based on 2023
appraised values calculated by the respective appraisal district that has jurisdiction over the
Assignee Subject Property.
13. Application of Assigned Earned Pro gram Grant.. The City ratifies and confirms that
the Assigned Earned Program Grant may be used in any monetary amount and applied to any
Assignee Subject Property as the Assignee, in its sole discretion, shall designate.
14. Future Program Grant Assignments. City ratifies and confirms that Assignee is
authorized to take future assignments of additional Program Grants earned by the Assignor, as
provided for under one or more future assignment agreements for which the City's consent will
not be unreasonably withheld, which may be applied to any Assignee Subject Property identified
in this Consent, whether or not Earned Program Grants have been previously applied to the
Assignee Subject Property, or to other subject property owned by Assignee as specified under that
future assignment agreement.
15. Incorporation by Reference. Sections 17, 18, 19, and 21 of the EDPA are hereby
incorporated herein by reference as if restated in their entirety in this Consent.
16. Counterparts. This Consent may be executed in multiple counterparts, each of
which shall be considered an original, but all of which shall be constitute one instrument.
17. 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 or DocuSign.
18. Notices. Any notice given by any Party to another Party must be in writing and
shall be effective upon receipt when (i) sent by U.S. mail with property postage, certified mail
return receipt requested or by a nationally recognized overnight delivery service, and (ii) addressed
to the other Party at the address set out below or at such other address as the receiving Party
designates by proper notice to the sending Party.
City
Economic Development Department
100 Fort Worth Trail
Fort Worth TX 76102
Attention: Director
With a copy to:
City of Fort Worth
Consent to Assignment Page 4 of 11
100 Fort Worth Trail
Fort Worth TX 76102
Attention: City Attorney
Assignor
Linear Labs, Inc.
2600 NE Loop 820, Suite 100
Fort Worth, Texas 76137
Attention: Brad Hunstable
Assignee
AIL Investment LP
c/o Hillwood Development Company, LLC
9800 Hillwood Parkway, Suite 300
Fort Worth, Texas 76177
Attn: Charlie Campbell
With a copy to:
Hillwood Development Company, LLC
9800 Hillwood Parkway, Suite 300
Fort Worth, Texas 76177
Attn: Don Reid
[Signature Pages to Follow]
Consent to Assignment Page 5 of 11
EXECUTED as of the Effective Date.
COMPANY:
LINEAR LABS, INC,
a Delaware corporation
By:
Name: . 4� i4v7+IS''•46 L%°
Its:
ASSIGNEE:
AIL INVESTMENT, L.P.,
a Texas limited partnership
By: AIL GP, LLC,
a Texas limited liability company,
its general partner
By:
Name:
Title:
Page 6 of 9
EXECUTED as of the Effective Date.
COMPANY:
LINEAR LABS, INC,
a Delaware corporation
By:
Name:
Its:
ASSIGNEE:
AIL INVESTMENT, L.P.,
a Texas limited partnership
By: AIL GP, LLC,
a Texas limited liability company,
its general partner
By. _ l _`
Name:
Title: ,V p
Consent to Assignment Page 6 of 11
CITY OF FORT WORTH:
By: William.johnson (A g22,202406:56CDT)
William Johnson
Assistant City Manager
Date: Aug 22, 2024
APPROVAL RECOMMENDED
B y: Robert Sturns (Aug 16, 202416:08 CDT)
Robert Sturns
Director, Economic Development
Contract Compliance Manager:
By signing I acknowledge that I am the
person responsible for the monitoring and
administration of this contract, including
ensuring all performance and reporting
requirements.
By:
Michael H 16,20 •6:05CDT)
Michael Hennig
Strategic Development Coordinator
APPROVED AS TO FORM AND
LEGALITY:
ATTEST:
o� F� .. Ste
>� ` By:
Fg
Ovs °s;
pPQ*oQ oo*�a
qm,, b L4,�ss °a,,XAg4p Assistant City Attorney
By: Q
Jannette Goodall CONTRACT AUTHORIZATION:
City Secretary M&C: 20-0421 (June 16, 2020); 21-0201
(March 23, 2021)
Form 1295: 2020-622194
OFFICIAL RECORD
CITY SECRETARY
FT. WORTH, TX
Consent to Assignment Page 7 of 11
EXHIBIT A
NOTICE OF INTENT TO ASSIGN
DowSon Eawlat* 10: t)CA4RI&I is
June 26. 2024
,11
City of Fort Worth,
Attn: [David Cooke, City Manager
200 Texas Street
Fort Worth. Texas 76102
Re: Notice of intent To Assign Portion of Program Grants from Economic
Dce elopmtmt Program Agreement (the "Agreement") by and between
City of Fort Worth ("City-) and Linear Labs, Inc. ("Linear Labs") dated
December 21. 202 )
Dear David Cooke, City Manager.
On behalf of Linear Labs.1 .trite it) you to give notice pursuant to Article 7. Section 7.2
of the Agreement of its intent to assign a portion of its earned Program Grants in the amount of
I'wo Million and notl00 17ollars ($2.000.00D.04), which amount shall be reduced by the "5%
Assignee Set -Aside" required by lltc Agtwment to One Million, Nine Hundred Thousand and
no1100 Dollars ($1,900.000.00), to Alliance Westport No. 25 Ltd,, Ali. Investment LP, W°PRR
LP. Alliance Center North No. 4 Ltd., Alliance Center North No. 6 Ltd.. and Palomu Pillage I.P.
collectively.
The information required by Section 7.2 of the Agreement is provided in the enclosed
spread.-heet and affidavit of the reWctive ascignm entities. No business personal property will
be included as pain of ft, Assignee Subject Property. Pease advise if additional information is
required.
Since -IV.
grad Hunstable, Chief Executive Officer
Lincarr Labs, Ire.
Cc: City of fort Worth Ka Hand Deli►w.r,}
Attn: City Attorney
200 Texas Street
Fort Worth. Texas 76102
City of Fun Worth V!a llaad Ae/i►ten
Attn: Michael llemiig. Economic Mvelopmcnt Manager
Fcoriomic Development Crept.
100 Fort Worth 7 rail
Fort Worth, Texas 76102
HillwtW - Collk Notice: of Itetrnl to Assign by t.irtr tt lAhs' (i )JX)CX
Consent to Assignment Page 8 of 11
DowSgnEjh*NVO 0:6C44R13.1120440E
Assies.uccs:
All_ INVESTMENT. L.P.,
a Texas limited partnership
Lip: AIL GP, 11C,
a °l exas limited liability company:,
its gMrrtr =Lncr
By ("&
— �."arq le '�arpoc I 1
Name:
Title: aP finance and adrsin
WPRR. L.P..
a I cxas limited partnership
By: WPRR GP. LLC,
a Texas limited liability company
By:
Name: CFlarii!'4 pb*- 1
Title: tvr rl Hance and w2m n
ALLIANCE, Sl'ESTPORT NO, 25. LTD..
a Texas limited partnership
fly: Ilillw xxl Alliance Management Il. LLC.
a 1*exas limited liability company.
its generalzw1ke
By: `�
l UL (.nm fly t
L
`altl@: gar I I a Laripbe I I
11t1e' E11P finance and adwin
ALLIANCE CENTER NORTH NO 4. LTD..
a'rexas limited patinnership
by: l illwoW AllianceMartagenwnt 11, MC.
a Texas limited liability company.
its gencral ` rir�; �
13y:
9 SF alb 31
Name:
Title: EdP finance and adrin
l tslhti and - f'of'lt' h1xi� ui lnleni til Assign bi Lin��lr Lis (t ).i)tJE`X
Consent to Assignment Page 9 of 11
Do-'-,W Envelope tom: tSG44Ftat?-1 1W 4saE4SdD-68.'iAJt9C92AF88
ALLIANCE CFNTF:R NORTH NO. b. LTD -
a Texas limited ponnership
I3v: Ililh4(W Alliance Management Il, LLf:,
a Texas limited liability company.
its genera
By: iica�Utt (�"
Name: ` —"O' LaWae, ,
Title: EVP finance and adwin
PALOMA VILLAGF. LP
a `texas limited partnership
By: Patoma Village GP, I.I.C.
a Texas limited liability company.
its general partner
U." kr
B%,56
�� �snarrse��aampoei �
Title: EVP finance and ad®in
11iffmowd - Ct+M ;wotice of Intent to Assign by Linear Labs (t),DMX
Consent to Assignment Page 10 of 11
EXHIBIT B
LIST OF ASSIGNEE SUBJECT PROPERTY
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Consent to Assignment Page 11 of 11
CITY "TCRETM,�f
4 ECONOMIC DEVELOPMENT PROGRAM AGREEMENT
DECEIVED
Ii1N - 4 2022
CITY of FORT WORTH
C17YSECRETARy 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 provision of
personnel and services of the City, to businesses and entities that the City Council
Economic Development Program Agreement
Behveen City of Fort Worth and Linear Labs, Inc. 1 of 60
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 "380 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:
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 / 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 full 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
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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
Assignees 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
maximum 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).
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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 Emplovment Commitment has the meaning ascribed to it in Section
M
Additional Emplovment 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 (50%) or more of the ownership determined by either value or vote.
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Annual Qualified 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 9.10.
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
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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 Subiect 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 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 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 Emplovment 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._
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Business Equitv 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 SvendinE_ 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.
Comvanv 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; (iii) 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 7.2.
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
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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 Mai eure has the meaning ascribed to it in Section 22.
Final Project Completion Report has the meaning ascribed to it in Section 4.5.
Final Propertv 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 following 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 full-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.
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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 Protect 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.
Mobilitv 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
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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 Energv Svstem 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.
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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 Expenses 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 higher 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.
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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.
Subiect 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.
Subiect Property Locations has the meaning ascribed to it in Recital B.
Subiect 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.
Technologv Center of Excellence means a publicly promoted institution,
academic or industry partnership, shared facility, or formally established team or entity
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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, Salarv, 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 6 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 Propertv Improvements and Uses.
4.1.1. Initial Propertv 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 Propertv 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
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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.
4.1.4. Project Operations at Subject Property.
Beginning
remainder of the
Subject Property.
with the First Operational Year and throughout the
Term, Project Operations must be conducted on the
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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.
4.2.1. 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
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Behveen 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, Salarv, 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 Hourlv Wages for Full-time Equivalent
Jobs Held by Non -Exempt Emplovees.
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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 Emplovees.
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").
4.4.2. 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
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Behveen City of Fort Worth and Linear Labs, Inc. 19 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-time 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 Jobs
25
50
200
1,100
Average Wages
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 Quablied R&D Ex e�
$ 3,800,000
$ 9,000,000
$ 28,000,000
$ 135,000,000
Cap to Qualified Expenses if Milestone Unmet
(percent of maximum for year) 95% 80% 65% 50%
4.5. Reports and Filinus by Companv.
4.5.1. Notices of Completion and Proiect Operations
Commencement.
a. Completion Date.
Company promptly will notify the City in writing once the
Completion Date has occurred.
b. Initial Propertv 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
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Between City of Fort Worth and Linear Labs, Inc. 20 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").
ii. 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
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Behveen City of Fort Worth and Linear Labs, Inc. 21 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,
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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:
i. 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;
I 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
iii. 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.
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Between City of Fort Worth and Linear Labs, Inc. 23 of 60
4.6. Annual Propertv 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. Community Engagement.
4.7.1. By not later than eighteen months (18) 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 firm 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 Fort Worth and Linear Labs, Inc. 24 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 parry 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 Propertv 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
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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 Proiect 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 Proiect 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
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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 Oualified Expenses 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 Pavments.
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
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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. General 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, minks the BEF
Reduction Percentage, minus the Additional Employment Reduction
Percentage.
a. For example, in the event that Company paid $1 million 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. l.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. 28 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. In 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
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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 Percentag_ a if Aoolicable Additional
Employment Commitments Not Met (Uo 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").
i. 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 following 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
Behveen City of Fort Worth and Linear Labs, Inc. 30 of 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. EiRhth or Any Subsequent On_ erational 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% (Percentaize of Qualified Expenses)
= $25,000 (25% of the aggregate Qualified Expenses)
x (1-.2) (20% Reduction)
=$20,000
— $10,000 (Program Grant Payments to date)
$10,000 Program Grant Payable
6.4.3. Reductions Applied Onlv 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
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Behveen City of Fort Worth and Linear Labs, Inc. 31 of 60
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. 32 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 8 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 if Necessary.
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Behveen City of Fort Worth and Linear Labs, Inc. 33 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 Development 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.
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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%, 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 Company. 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 ("5% 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
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Behveen City of Fort Worth and Linear Labs, Inc. 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);
vi. 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 -based 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
Behveen City of Fort Worth and Linear Labs, Inc. 38of 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;
ii. 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;
iii. 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
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Between City of Fort Worth and Linear Labs, Inc. 39 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;
viii. 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. 40 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 Pavments to Assignees.
a. Timing of First Program Grant Pavment.
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
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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
Behveen 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 Propertv 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 Companv (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%.
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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 Companv (Up 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 (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%.
i. 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- (40/60))].
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
Behveen 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
Reduction 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 Company.
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. 45 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 party.
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.
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9.1. If Initial Property Improvement Commitment Is Not Met.
Subject to Section 9.10, if Company fails to comply with the Initial
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 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 Assignee(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.
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9.5 Failure to Maintain Project Operations at Subject Property.
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 further obligations to Company or any Assignee
hereunder.
9.6. Failure to Maintain Corporate Headquarters in the Citv.
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 If 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
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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.
9.9. 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 parry
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,
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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 Agreement.
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
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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:
i. new capital improvements equal to, or greater in
value than, the Initial Property Improvement
Commitment.;
ii. 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
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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
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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 Emplovment 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 tern: 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.
E1 _►-1 -1 1►1 l`_ I I
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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 SERVANTS 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 (ii) ANY NEGLIGENT ACT
OR OMISSION OR INTENTIONAL MISCONDUCT OF COMPANY, ITS
OFFICERS, AGENTS, ASSOCIATES, EMPLOYEES, CONTRACTORS (OTHER
THAN THE CIT19 OR SUBCONTRACTORS, RELATED TO THE SUBJECT
PROPERTY, IMPROVEMENTS ON THE SUBJECT PROPERTY, INCLUDING
THE PROJECT 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:
City of Fort Worth
Attn: City Manager
200 Texas St.
Fort Worth, TX 76102
with copies to:
Company:
Linear Labs, Inc.
Attn: Brad Hunstable
2600 NE Loop 820, Suite 100
Ft. Worth, TX 76137
with copies to:
Economic Development Program Agreement
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the City Attorney and
Economic Development Department
Director at the same address
Legal Department and
Chief Financial Officer
at the same address
And provide electronic copies to:
Brad Hunstable bhunstable@linearlabsinc.com
Mary Korn mkom@linearlabsinc.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 Giants 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.
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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.
15.1. 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.
15.2. 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
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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 MAJEURE.
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
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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 Majeure
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
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EXECUTED as of the last date indicated below:
CITY OF FORT WORTH:
By:�
Jay Chapa
Deputy City Manager
Date: 1A A / -a
APPROVAL RECOMMENDED:
By:
Ro ert turns
Director, Economic Development
ATTEST:
CONTRACT COMPLIANCE
MANAGER:
By signing I acknowledge that I am the
person responsible for the monitoring and
administration of this contract, including
ensuring all performance and reporting
requirements.
By:�/�/
�)iael Hdir niig
Strategic Development Coordinator
APPROVED AS TO FORM AND
LEGALITY:
Bye Tyler F. Wallach'
Ronald P.-Gonzales Assists Cyty Attorney
Acting City Secretary.. ` :1 Nt.�
CONTRACT AUTHORIZATION:
z r M&C: 20-0421 (June 16, 2020); 21-0201
,(March 23, 2021)
-�° Form 1295: 2020-622194
LINEAR LABS, INC.,
a Delaware corporation
By:
Brad Hunstable
CEO
Date: l 2/I c) (Z(
Economic Development Program Agreement
Between City of Fort Worth and Linear Labs, Inc. 59 of 60
EXHIBIT A
Project Milestones
Operational Year:
YEAR 1
YEAR 3
YEAR 5
YEAR 8
Minimum R&D Full-time Equivalent lobs
Product R&D Full-time Equivalent Jobs
15
35
100
400
Advanced Manufacturing R&D Full-time Equivalentlobs
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 Jobs
25
50
200
1,100
Average Wages
Product R&D Average Wages
Advanced Manufacturing R&D Average Wages
Average Wages for All Other Qualified R&D Expenses
Total Annual Qualified R&D Expenses
Cap to Qualified Expenses if Milestone Unmet
(percent of maximum for year)
$ 90,000
$ 90,000
$ 90,000
$ 90,000
$ 70,000
$ 70,000
$ 70,000
$ 70,000
$ 70,000
$ 70,000
$ 70,000
$ 70,000
$ 3,800,000
$ 9,000,000
$ 28,000,000
$ 135,000,000
95%
1 80%
1 65%
1 50%
Economic Development Program Agreement
Behveen City of Fort Worth and Linear Labs, Inc.
60 of 60
5/19/2021
M&C Review
CITY COUNCIL AGENDA
Official site of the City of Fort Worth, Texas
FoRTWORm
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:
Companv 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;
- 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;
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- 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 Minoritv 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 Waae 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;
- 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;
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- 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;
Citv 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.
Assianments:
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
expenditure being incurred, the Economic Development Department has the responsibility to validate the
availability of funds.
TO
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Submitted for City Manager's Office by_
Originating Department Head:
Additional Information Contact:
ATTACHMENTS
200619 Linear LocationMap.pdf
Jay Chapa (5804)
Robert Sturns (2663)
Michael Hennig (6024)
Reference # Amount
(Chartfield 21
keterence ;F Amount
(Chartfield 2)
Reference # Amount
(Chartfield 2)
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