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R-2013-021-2013-02-11RESOLUTION NO. R2013-21 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PEARLAND, TEXAS, APPROVING CONTRACT AMENDMENTS WITH KS MANAGEMENT. BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF PEARLAND, TEXAS: Section 1. That certain Chapter 380 Economic Development Amendment between the City and KS Management, a copy of which is attached hereto as Exhibit "A" and made a part hereof for all purposes, is hereby authorized and approved. Section 2. That the City Manager or his designee is hereby authorized to execute and the City Secretary to attest the Chapter 380 Economic Development Amendment between the City and KS Management. Section 3. That certain Performance Agreement Amendment between the Pearland Economic Development Corporation and KS Management, a copy of which is attached hereto as Exhibit "B" and made part hereof for all purposes is hereby authorized. PASSED, APPROVED and ADOPTED this the 11th day of February A.D., 2013. ATTEST: APPROVED AS TO FORM: DARRIN M. COKER CITY ATTORNEY TOM REID MAYOR Resolution No. R2013-21 Exhibit "A" SECOND AMENDMENT TO CHAPTER 380 ECONOMIC DEVELOPMENT AGREEMENT This Second Amendment (hereinafter "Amendment") is made between the CITY OF PEARLAND (hereinafter "City"), and KS MANAGEMENT SERVICES, L.L.C. (hereinafter "Company") to amend that contract (the "Contract") between the City and the Company, attached hereto as Exhibit "A." 1. Amended Terms. The City and the Developer hereby agree that the Contract is amended as follows: A. Section 4(a) Certificate of Occupancy. Company covenants and agrees to obtain or cause to be obtained a Final Certificate of Occupancy from the City for a minimum of 125,000 gross square feet corporate headquarters facility located on the Property by August 31, 2013, provided that this deadline shall be extended, day-to-day, for any unreasonable delays caused by PEDC or the City. In no event shall an incomplete development permit application or incomplete plat application submitted by Company, or an agent of Company, to the City constitute a delay by the PEDC or the City under this Agreement. B. Section 4(b) Operate Facility. Company covenants and agrees that by November 30, 2013, and during the Term of this Agreement, to maintain and operate a minimum 125,000 gross square feet corporate headquarters facility located on the Property. Subject limitations contained herein, this deadline shall be extended, day-to-day, for any unreasonable delays caused by PEDC or the City. C. Section 4(d) Job Creation and Retention. The first sentence of Section 4(e) `shall read as follows: Company covenants and agrees by November 30, 2013(provided that this deadline may be extended, day-to-day, for any unreasonable delays caused by PEDC or the City and subject to the limitations provided in this Agreement), and during the Term of this Agreement the Company or related entity of the Company, will employ a minimum of six hundred (600) Full -Time Equivalent Employment Positions working at the Property. 2. Contract to Remain in Force. Other than the provisions of the Contract expressly amended herein, the Contract shall remain in full force and its enforceability shall be unaffected by this Amendment. EXECUTED and EFFECTIVE as of the day of , 2013. COMPANY: KS MANAGEMENT SERVICES, L.L.C. a Texas limited liability company By: r. Spencer R. Berthelsen Tit Managing�ire� Da signed: CITY: CITY OF PEARLAND a Texas home -rule municipality By: &old 4-Z-4A— Tom Reid Mayor Date signed: 03- - / APPROVED AS TO FORM: Darrin M. Coker, City Attorney Resolution R2013-21 Exhibit "B" AMENDMENT TO PERFORMANCE AGREEMENT This Amendment (hereinafter "Amendment") is made between the PEARLAND ECONOMIC DEVELOPMENT CORPORATION (hereinafter "PEDC"), and KS MANAGEMENT SERVICES, LLC (hereinafter "Company") to amend that contract (the "Contract") between the PEDC and the Company, attached hereto as Exhibit "A." 1. Amended Terms. The City and the Developer hereby agree that the Contract is amended as follows: A. Section 4(a) Certificate of Occupancy. Company covenants and agrees to obtain or cause to be obtained a Final Certificate of Occupancy from the City for a minimum of 125,000 gross square feet corporate headquarters facility located on the Property by May 31, 2013, provided that this deadline shall be extended, day-to-day, for any unreasonable delays caused by PEDC or the City. In no event shall an incomplete development permit application or incomplete plat application submitted by Company, or an agent of Company, to the City constitute a delay by the PEDC or the City under this Agreement. B. Section 4(c) Operate Facility. Company covenants and agrees that by August 31, 2013, and during the Term of this Agreement, to maintain and operate a minimum 125,000 gross square feet corporate headquarters facility located on the Property. Subject limitations contained herein, this deadline shall be extended, day-to-day, for any unreasonable delays caused by PEDC or the City. C. Section 4(e) Job Creation and Retention. The first sentence of Section 4(e) shall read as follows: Company covenants and agrees by August 31, 2013(provided that this deadline may be extended, day-to-day, for any unreasonable delays caused by PEDC or the City and subject to the limitations provided in this Agreement), and during the Term of this Agreement the Company or related entity of the Company, will employ a minimum of six hundred (600) Full -Time Equivalent Employment Positions. Contract to Remain in Force. Other than the provisions of the Contract expressly amended herein, the Contract shall remain in full force and its enforceability shall be unaffected by this Amendment. EXECUTED and EFFECTIVE as of the I 1 ` ' day of /' j'(') / , 2012. COMPANY: KS MANAGEMENT SERVICES, L.L.C., a Texas limited liability company By: Titl6Dr. Spencer R. Berthelsen Managing Director Date Signed: e-% / / 7�, Z PEDC: PEARLAND ECONOMIC DEVELOPMENT CORPORATION, a Texas non-profit corporation By: Matt Buchanan Title: President Date Signed: c — .2 3 THE STATE OF TEXAS COUNTIES OF BRAZORIA FORT BEND, AND HARRIS PERFORMANCE AGREEMENT Company: PEDC: KS MANAGEMENT SERVICES, L.L.C. a Texas limited liability comEany 2727 W. Holcombe Blvd., 4` Floor Houston, Texas 77025-1669 Attn: Managing Director PEARLAND ECONOMIC DEVELOPMENT CORPORATION a Texas non-profit corporation 1200 Pearland Parkway, Suite 200 Pearland, Texas 77581 This PERFORMANCE AGREEMENT between KS MANAGEMENT SERVICES, L.L.C., a Texas limited liability company (hereinafter referred to as "Company"), and the PEARLAND ECONOMIC DEVELOPMENT CORPORATION, a Texas non-profit corporation, is made and executed on the following recitals, terms and conditions. WHEREAS, the Pearland Economic Development Corporation (hereinafter referred to as the "PEDC") is a Type B economic development corporation, created pursuant to Chapter 505 of the Texas Local Government Code, as amended; and WHEREAS, Section 501.101 of the Texas Local Government Code, in pertinent part, defines the term "project" to mean "land, buildings, equipment, facilities, expenditures, targeted infrastructure, and improvements that are: (1) for the creation or retention of primary jobs; and (2) found by the board of directors to be required or suitable for the development, retention, or expansion of: (A) manufacturing and industrial facilities; (B) research and development facilities; (C) military facilities, including closed or realigned military bases; ... (F) recycling facilities; . . . (I) distribution centers; (J) small warehouse facilities capable of serving as decentralized storage and distribution centers; (K) primary job training facilities for use by institutions of higher education; or (L) regional or national corporate headquarters facilities"; and WHEREAS, Section 501.103 of the Texas Local Government Code, in pertinent part, defines the term "project" to mean "expenditures that are found by the board of directors to be required or suitable for infrastructure necessary to promote or develop new or expanded business enterprises, limited to: (1.) streets and roads, rail spurs, water and sewer utilities, electric utilities, or gas utilities, drainage, site improvements, and related improvements; (2) telecommunications and Internet improvements ..."; and WHEREAS, Section 501.158 of the Texas Local Government Code prohibits the provision of a direct incentive unless PEDC enters into an Agreement with Company providing at a minimum a schedule of additional payroll or jobs to be created or retained by PEDC's investment; a schedule of capital investments to be made as consideration for any direct incentives provided by PEDC to Company; and a provision specifying the terms and conditions upon which repayment must be made should Company fail to meet the agreed to performance requirements specified in this Agreement; and WHEREAS, Company has applied to PEDC for direct incentives necessary to operate a healthcare corporate headquarters facility generally located at the northeast corner of Shadow Creek Parkway and Kirby Drive, located within the City of Pearland, Texas, including the direct incentives described in this Agreement, and those which may be described on any exhibit or schedule attached to this Agreement, a copy of said application is attached hereto as Exhibit E; and WHEREAS, Company has agreed to locate a minimum of 600 Full -Time Equivalent Employment Positions working at the Company's corporate headquarters located on the Property; and WHEREAS, Company has agreed to make or cause to be made a minimum capital investment of Eighteen Million and No/100 Dollars ($18,000,000.00) within the City of Pearland, Texas, and this amount includes the construction of a building for the Company's corporate headquarters facility located on the Property, which will be leased by the Company; the cost of the real estate; the cost of the land; the cost of architectural, engineering and other consulting fees for the project; and the cost of the business personal property to be located on the Property; and WHEREAS, PEDC approved the provision of certain direct incentives to the Company at its meeting held on May 19, 2011, which would provide the Company the direct incentives necessary for the Company to locate the corporate headquarters facility on the Property; and WHEREAS, the direct incentives from the PEDC to the Company, are referred to in this Agreement individually as the "Incentive" and collectively as the "Incentives;" and WHEREAS, Company understands and agrees that: (a) in granting, renewing, or extending this Incentive, PEDC is relying upon Company's representations, warranties, and agreements, as set forth and provided for in this Agreement; (b) the granting, renewing, or extending of this Incentive by PEDC at all times shall be subject to PEDC's sole judgment and discretion; and (c) this Incentive shall be and shall remain subject to the terms and conditions as set forth in this Agreement; and Page 2 of 31 Performance Agreement Pearland Economic Development Corporation — KS Management Services , L.L.C. WHEREAS, the Board of Directors of PEDC have determined the Incentive provided to Company is consistent and meets the definition of "project" as that tern is defined in Sections 501.101 and 501.103 of the Texas Local Government Code; and the definition of "cost" as that term is defined by Section 501.152 of the Texas Local Government Code; and WHEREAS, Company agrees and understands that Section 501.073(a) of the Texas Local Government Code requires the City Council of the City of Pearland, Texas, to approve all programs, and expenditures of the PEDC, and accordingly this Agreement is not effective, and PEDC isunder no obligation to provide the Incentive authorized by this Agreement until City Council has approved this project and expenditure at a City Council meeting called and held for that purpose. NOW, THEREFORE, for and in consideration of the agreements contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the PEDC and Company agree as follows: SECTION 1. FINDINGS INCORPORATED. The foregoing recitals are hereby incorporated into the body of this Agreement and shall be considered part of the mutual covenants, consideration and promises that bind the parties. SECTION 2. TERM. This Agreement shall be effective as of the Effective Date, and shall continue thereafter until all obligations of Company to PEDC and of PEDC to Company have been performed in full, or until the tenth (10th) anniversary date of Initial Compliance Verification Date, whichever is later, unless terminated sooner under the provisions hereof. SECTION 3. DEFINITIONS. The following words shall have the following meanings when used in this Agreement. (a) Act. The word "Act" means Chapters 501 to 505 of the Texas Local Government Code, as amended. (b) Agreement. The word "Agreement" means this Performance Agreement, together with all exhibits and schedules attached to this Performance Agreement from time to time, if any. (c) City. The word "City" means the City of Pearland, Texas, a Texas home -rule municipality, whose address for the purposes of this Agreement is 3519 Liberty Drive, Pearland, Texas 77581. Page 3 of 31 Performance Agreement Pearland Economic Development Corporation — KS Management Services , L.L.C. (d) Company. The word "Company" means KS Management Services, L.L.C., a Texas limited liability company, whose address for the purposes of this Agreement is 2727 W. Holcombe Boulevard, 4" Floor, Houston, Texas 77025-1669. Effective Date. The words "Effective Date" mean the date of the later to execute this Agreement by and between the Company and PEDC. Event of Default. The words "Event of Default" mean and include any of the Events of Default set forth below in the section entitled "Events of Default." Full -Time Equivalent Employment Positions. The words "Full -Time Equivalent Employment Position" or "Full -Time Equivalent Employment Positions" mean the equivalent of one (1) person, employed by the Company (or a company that is 100% in common control with the Company) working a minimum of Two Thousand (2,000) hours of work averaged over a twelve (12) month period, with such hours also to include any personal, holiday, vacation, sick leave and other typical forms of leave of similar -sized organizations (e.g., bereavement, jury duty, disability, etc.). At least 95% of the Full - Time Equivalent Employment Positions for which the Company seeks incentive payments under this Agreement must be offered health insurance benefits by Company (or a company that is 100% in common control with the Company), and have the majority of their hours worked at the Property. The average annual salary of all "Full - Time Equivalent Employment Positions" must be greater than $42,000.00, excluding employee benefits. The total Full -Time Equivalent Positions will be calculated on a twelve (12) month period by dividing the total hours worked by all employment positions divided by 2,000 hours. Total hours over 2,000 worked by any one (1) person in a twelve (12) month compliance period will not be counted toward the overall total hours worked by all employment positions. (h) Incentive. The word "Incentive" or "Incentives" means and includes any and all financial accommodations from PEDC to Company, whether now or hereafter existing, and however evidenced, including without limitation those financial accommodations described in this Agreement and described on any exhibit or schedule attached to this Agreement. (i) Initial Compliance Verification Date. The words "Initial Compliance Verification Date" has the same meaning as defined in Exhibit D of this Agreement. The Company and PEDC covenant and agree to attach to this Agreement, as Exhibit D of this Agreement, the Initial Compliance Verification Date. The Initial Compliance Verification Date shall be a specific date determined by the PEDC, and shall be attached to this Agreement subsequent to the commencement of the Term of this Agreement. (j) PEDC. The word "PEDC" means the Pearland Economic Development Corporation, a Type B economic development corporation, and a Texas non-profit corporation, its successors and assigns, whose corporate address for the purposes of this Agreement is Page 4of31 Performance Agreement Pearland Economic Development Corporation — KS Management Services , L.L.C. 1200 Pearland Parkway, Suite 200, Pearland, Texas 77581. Telephone number is (281) 997-3000. Facsimile number is (281) 997-3016. (k) Property. The word "Property" means the approximately 779,830 square feet or 17.9024 acre tract or tracts of land situated in the Obediah Pitts Survey, Abstract No. 717, City of Pearland, Brazoria County, Texas, more particularly described and or depicted in ExhibitA of this Agreement, which is attached hereto and incorporated herein for all purposes. (1) Qualified Expenditures. The words "Qualified Expenditures" mean those expenditures made to the Property, consistent with Exhibit B of this Agreement, and those expenses which otherwise meet the definition of "project" as that term is defined by Sections 501.101 and 501.103 of the Act, and the definition of "cost" as that term is defined by Section 501.152 of the Act. (m) Related Documents. The words "Related Documents" mean and include without limitation all other instruments and documents, whether now or hereafter existing, executed in connection with PEDC's providing the Incentive to Company. (n) Sales and Use Tax. The words "Sales and Use Tax" or "Sales and Use Taxes" mean the City's municipal sales and use tax, at the rate of one percent (1.0%), pursuant to section 321.103(a) of the Texas Tax Code, as amended. (o) State Comptroller. The words "State Comptroller" mean the Office of the Texas Comptroller of Public Accounts, or any successor agency. (p) Term. The word "Term" means the term of this Agreement as specified in Section 2 of this Agreement. (q) Type B Sales and Use Tax Revenue. The words "Type B Sales and Use Tax Revenue" mean the economic development sales and use tax revenue, at the rate of one-half of one percent (0.50%) percent, generated for use by PEDC, a Type B economic development corporation, operating pursuant to Chapter 505 of the Texas Local Government Code, as amended. SECTION 4. AFFIRMATIVE COVENANTS OF COMPANY. Company covenants and agrees with PEDC that, while this Agreement is in effect, Company shall comply with the following terms and conditions: (a) Certificate of Occupancy. Company covenants and agrees to obtain or cause to be obtained a Final Certificate of Occupancy from the City for a minimum of 125,000 gross square feet corporate headquarters facility located on the Property by March 3I, 2013, provided that this deadline shall be extended, day -for -day, for any unreasonable Page5 of31 Performance Agreement Pearland Economic Development Corporation — KS' Management Services , L.L.C. (b) delays caused by PEDC or the City. In no event shall an incomplete development permit application or incomplete plat application submitted by Company, or an agent of Company, to the City constitute a delay by the PEDC or the City under this Agreement. Qualified Expenditures Made to Property. Company covenants and agrees to submit to PEDC as part of Company's Initial Annual Compliance Verification Submittal invoices, receipts or other documentation reasonably acceptable to PEDC for Qualified Expenditures made to the Property of at least Four Hundred Thirteen Thousand and No/100 Dollars ($413,000.00) by June 30, 2013, in order to qualify for the Incentives set forth in Section 5(a). (c) Operate Facility. Company covenants and agrees by June 30, 2013, and during the Term of this Agreement, to maintain and operate a minimum of 125,000 Boss square feet corporate headquarters facility located on the Property. Subject to any limitations contained herein, this deadline shall be extended, day -for -day, for any unreasonable delays caused by PEDC or the City. (d) Annual Compliance Verification. Company covenants and agrees to submit to the PEDC annually within sixty (60) days of the Initial Compliance Verification Date, during the Tenn of this Agreement, an annual compliance verification signed by a duly authorized representative of Company that shall certify compliance with the terms and conditions of this agreement (the "Annual Compliance Verification"). The Company covenants and agrees beginning with the Initial Annual Compliance Verification Submittal, and annually thereafter during the Term of this Agreement, there will be a total of eleven (11) Annual Compliance Verifications due and submitted to the PEDC during the term of this agreement, covering job creation and retention, sales and use tax and real and personal property investment. All Annual Compliance Verifications shall be in the form substantially similar to the form attached hereto as Exhibit C of this Agreement. The Initial Compliance Verification Date and Initial Annual Compliance Verification Submittal requirements are defined in Exhibit D. (e) Job Creation and Retention. Company covenants and agrees by June 30, 2013 (provided that this deadline may be extended, day -for -day, for any unreasonable delays caused by PEDC or the City and subject to the limitations provided in this Agreement), and during the Term of this Agreement the Company or related entity of the Company, will employ a minimum of six hundred (600) Full -Time Equivalent Employment Positions. Company covenants and agrees to maintain the Full -Time Equivalent Employment Positions in order to qualify for the Incentives specified in Table 4-1 of this Agreement during the Term of this Agreement. The Company shall certify to the PEDC the number of Full -Time Equivalent Employment Positions at the Property, as part of the Annual Compliance Verification, provided that the Company may disclose and certify the wage, and hours worked for all Full -Time Equivalent Employment Positions only on the following basis: (1) PEDC shall only be permitted to review such information at the Page 6of31 Performance Agreement Pearland Economic Development Corporation — KS Management Services , L.L.C. Company's offices and PEDC shall not retain a copy of any such specific wage information provided); (2) PEDC shall limit such review to no more than four (4) specific representatives of PEDC each year of this Agreement, plus the members of the PEDC board, provided the Company may object to a specific individual with a conflict of interest; and (3) such representatives shall provide written acknowledgement that they are subject to the provisions of the Non -Disclosure Agreement referenced in Section 12(t) and that this information is "Confidential Information" under the terms of such Non - Disclosure Agreement. Company shall provide access to back-up data for the Full -Time Equivalent Employment Position numbers provided, which may include quarterly IRS 941 returns, or Texas Workforce Commission Employer Quarterly Reports, upon request of PEDC. (1) Minimum Number of Full -Time Equivalent Employment Positions. During the Tenn of this Agreement, Company covenants and agrees to provide to PEDC annually an Annual Compliance Verifications, indicating a minimum 600 Full -Time Equivalent Employment Positions working at the Property in order for Company to qualify for the Incentives as set forth in Table 4-1. The maximum financial Incentive provided by the PEDC to Company pursuant to this Section 4(e)(1) shall not exceed One Million Eight Hundred Thousand and No/100 Dollars (51,800,000.00), and shall be provided as specified in Table 4-1 of this Agreement. Table 4-1: Due Date: Minimum Number of Full -Time Equivalent Employment Positions: Financial Assistance Provided: Initial Compliance Verification Date 600 $0.00 I st Anniversary of Initial Compliance Verification Date 600 $200,000.00 2n`� Anniversary of Initial Compliance Verification Date 600 $200,000.00 3'' Anniversary of Initial Compliance Verification Date 600 S200,000.00 4th Anniversary of Initial Compliance Verification Date 600 $200,000.00 5t Anniversary of Initial Compliance Verification Date 600 5200,000.00 6`" Anniversary of Initial Compliance Verification Date 600 S200,000.00 7th Anniversary of Initial Compliance L Verification Date 600 $200.000.00 Page 7 of 31 Performance Agreement Pearland Economic Development Corporation — ILS Management Services , 8t'' Anniversary of Initial Compliance 600 $200,000.00 Verification Date Initial Compliance Verification Date 9th Anniversary of Initial Compliance 600 S200,000.00 Verification Date Annual payments of $333.34 for each Full - Time Equivalent Employment Position exceeding 600 (2) Additional Full -Time Equivalent Employment Positions. If during the Term of this Agreement, Company creates and maintains Full -Time Equivalent Employment Positions which exceeds the 600 Full -Time Equivalent Employment Positions, Company shall be entitled to a financial Incentive of Three Hundred Thirty -Three and 34/100 Dollars ($333.34) for each Full -Time Equivalent Employment Position exceeding the minimum number of 600 Full -Time Equivalent Employment Positions, as specified in Table 4-2 of this Agreement. The maximum financial Incentive provided by the PEDC to Company pursuant to this Section 4(e)(2) shall not exceed Four Hundred Fifty Thousand and No/100 Dollars ($450,000.00), and shall be provided as specified in Table 4-2 of this Agreement. Table 4-2: Due Date: Additional Full -Time Equivalent Employment Positions: Financial Assistance Provided: Initial Compliance Verification Date 601 to 750 $0.00 I't Anniversary through 9th Anniversary of Initial Compliance Verification Date 601 to 750 Annual payments of $333.34 for each Full - Time Equivalent Employment Position exceeding 600 (0 Reporting of Sales and Use Taxes. Company covenants and agrees to report to the PEDC in the Annual Compliance Verification Reports the amount of local sales and use tax revenues generated by taxable purchases billed or shipped to the Property that was remitted to the State Comptroller on behalf of the PEDC and the City. All Annual Compliance Verification reports shall be in the form substantially similar to the form attached hereto as Exhibit C of this Agreement. The initial Annual Compliance Verification Submittal from Company to PEDC shall comprise taxable purchases for which local sales or use tax was remitted to the State Comptroller on behalf of the PEDC and the City at the Property beginning on the 1St day of the month following the Effective Date of the Agreement to the date of the initial submittal. Subsequent Annual Compliance Verification Reports are due annually thereafter 60 days after the Initial Annual Compliance Verification Date for a total period not to exceed120 months. Annual Compliance Verification Report shall be based upon reports filed by Company, and its Performance Agreement Pearland Economic Development Corporation — KS Management Services , L.L.C. Page 8of31 (g) vendors with the State Comptroller's Office concerning the corporate headquarters facility located on the Property. The Annual Compliance Verification Reports shall be sent to the PEDC's address as provided in this Agreement. The Company covenants and agrees to take all reasonably necessary action to allow the City or PEDC to obtain from the State Comptroller's office an "Facility Report" or "WebFile" or other tax filings, records or documentation related to local sales and use taxes for the corporate headquarters facility located on the Property, and which identifies sales or use tax information generated from the Property. The Company shall also have its Vendors calculate how much sales or use tax was paid to the PEDC and the City from the accrual and remittance of local sales or use tax at the Property, as set forth in the Annual Compliance Verification. Consistent with Section 321.3022(0 of the Texas Tax Code, as amended, the "Facility Reports" and "WebFile" or other tax filings, records or documentation related to local sales and use taxes are confidential and not subject to public inspection. Accordingly, the City or PEDC shall not make the "Facility Reports" available for public inspection. Company shall be entitled to sixty percent (60%) of the Type B Sales and Use Tax Revenue generated by and attributed solely to taxable purchases, for which required documentation has been submitted, occurring at the Property and received by the PEDC for the applicable calendar year in accordance with Section 5(d) of this Agreement. The sixty percent (60%) entitled to the Company will be less any fees charged by the State Comptroller's office to the City or PEDC and less any local sales or use tax refund of the PEDC or the City's taxes as a result of an audit by the State Comptroller or for any other reason whatsoever. Real and Business Personal Property Located on the Property. Company covenants and agrees to invest, or cause to be invested in, the Property at least Twelve Million and No/100 Dollars ($12,000,000.00) in improvements and business personal property as of June 30, 2013, provided that this deadline shall be extended, subject to any limitations contained herein, day -for -day for any unreasonable delays caused by PEDC or the City. (h) Additional Assurances. Company agrees to make, execute and deliver to PEDC such other instruments,- documents and other agreements as PEDC or its attorneys may reasonably request to evidence the Incentives. (i) Performance. Company agrees to perform and comply with all terms, conditions, and provisions set forth in this Agreement and in all other instruments and agreements between Company and PEDC. SECTION 5. AFFIRMATIVE COVENANTS OF PEDC. PEDC covenants and agrees with Company that, while this Agreement is in effect, PEDC shall comply with the following terms and conditions: (a) Reimbursement for Qualified Expenditures. Company shall be entitled to a disbursement of Incentive proceeds in the amount of invoices or receipts provided by Pe,formance Agreement Pearland Economic Development Corporation — KS Management Services , L.L.C. Page 9 of 31 Company to PEDC as part of the Initial Annual Compliance Verification Submittal, and not to exceed Four Hundred Thirteen Thousand and No/100 Dollars ($413,000.00) for Qualified Expenditures made to the Property. The first payment by PEDC to Company in the amount of Forty -Five Thousand Eight Hundred Eighty -Nine and No/100 Dollars ($45,889.00) shall be made within sixty (60) days following the 1St Anniversary of the Initial Compliance Verification Date as is provided in Exhibit D of this Agreement, and for which the Initial Annual Compliance Verification Submittal indicates a minimum of 600 Full -Time Equivalent Employment Positions working at the Property. Eight (8) additional annual payments of Forty -Five Thousand Eight Hundred Eighty -Nine and No/100 Dollars ($45,889.00) shall be made by PEDC to Company within sixty (60) days following the submission of the completed Annual Compliance Verification submittal as provided in Section 4(d) and (e) of this Agreement, and which reflects a minimum of 600 Full -Time Equivalent Employment Positions working at the Property for the applicable year anniversaries of the Initial Compliance Verification Date. (b) Financial Incentives. PEDC covenants and agrees to provide to Company disbursements of Incentive proceeds consistent with Section 4(e)(1) and Table 4-1 of this Agreement provided the Annual Compliance Verification reflects a minimum of 600 Full -Time Equivalent Employment Positions working at the Property. The maximum additional financial Incentive to be provided by PEDC to Company under this Section 5(b) of this Agreement is One Million Eight Hundred Thousand and No/100 Dollars ($1,800,000.00). PEDC covenants and agrees to disburse Incentive proceeds within sixty (60) days following submission of a completed Annual Compliance Verification as provided in Section 4(d) and (e) of this Agreement which reflects a minimum of 600 Full -Time Equivalent Employment Positions working at the Property for the applicable year anniversaries of the Initial Compliance Verification Date. (c) Additional Financial Incentives. PEDC covenants and agrees to provide to Company disbursements of Incentive proceeds consistent with Section 4(e)(2) and Table 4-2 of this Agreement provided the Annual Compliance Verification reflects 601 to 750 Full -Time Equivalent Employment Positions working at the Property. The maximum additional financial Incentive to be provided by PEDC to Company under this Section 5(c) of this Agreement is Four Hundred Fifty Thousand and No/100 Dollars ($450,000.00). PEDC covenants and agrees to disburse Incentive proceeds within sixty (60) days following submission of a completed Annual Compliance Verification as provided in Section 4(d) and (e) of this Agreement which reflects 601 to 750 Full -Time Equivalent Employment Positions working at the Property for the applicable year anniversaries of the Initial Compliance Verification Date. (d) Type B Sales and Use Tax Revenne Reimbursement. The PEDC covenants and agrees for a period not to exceed 120 months, to pay Company sixty percent (60%) of the Type B Sales and Use Tax Revenue generated by and attributed solely to taxable purchase, for which required documentation has been submitted, occurring at the Property for which local sales and use tax is paid to the State for the benefit of the PEDC and City for the Page 10of31 Performance Agreement Pearland Economic Development Corporation — KS Management Services , (e) applicable period. The PEDC covenants and agrees to make annual payments during the Term of this Agreement to Company within sixty (60) days following the later of submission of all of the following: (1) a completed Annual Compliance Verification as provided in Section 4(d) and (e) of this Agreement which reflects a minimum 600 Full -Time Equivalent Employment Positions working at the Property; (2) the State Comptroller's office "Facility Report" or "WebFile" or other tax filings, records or documentation related to local sales and use taxes as specified in Section 4(f) of this Agreement; (3) "WebFile" or other tax filings, records or documentation related to local sales and use taxes as specified in Section 4(0 of this Agreement for which local sales or use tax was accrued and remitted to the State Comptroller for the benefit of the PEDC and the City during the applicable period to the Company, at the Property, as more fully described in the Annual Compliance Statement; and (4) receipt of the Type B Sales and Use Tax Revenue from the State Comptroller's office and local sales and use tax for the City for the applicable period, whichever comes later. The sixty percent (60%) entitled to the Company will be less any fees charged by the State Comptroller's office to the City or PEDC and less any local sales or use tax refund of the PEDC or the City's taxes as a result of an audit by the State Comptroller or for any other reason whatsoever. Performance. PEDC agrees to perform and comply with all teens, conditions, and provisions set forth in this Agreement and in all other instruments and agreements between Company and PEDC. TO THE EXTENT PERMITTED BY LAW, PEDC VOLUNTARILY WAIVES ITS RIGHT TO ASSERT SOVEREIGN IMMUNITY FROM SUIT OR LIABILITY IN RESPONSE TO AN ACTION BY THE COMPANY SEEKING THE REMEDIES PROVIDED FOR IN THIS AGREEMENT WITH SAID WAIVER BEING LIMITED SOLELY TO THE CORPORATION AND NOT TO ANY DIRECTOR OR EMPLOYEE OF THE CORPORATION. SECTION 6. CESSATION OF DISBURSEMENT OF FINANCIAL INCENTIVES. If PEDC has made any commitment to make any Incentive to Company, whether under this Agreement or under any other agreement, PEDC shall have no obligation to disburse Incentive proceeds specified in Section 5(a), 5(b), and 5(c) of this Agreement or Type B Sales and Use Tax Revenue reimbursement specified in Section 5(d) of this Agreement if: (i) Company becomes insolvent, tiles a petition in bankruptcy or similar proceedings, or is adjudged bankrupt; or (ii) an Event of Default by Company occurs, as more fully specified in Sections 7 and 8. SECTION 7. EVENTS OF DEFAULT. Each of the following shall constitute an Event of Default under this Agreement: (a) Certificate of Occupancy. Failure of Company to obtain or cause to be obtained a Certificate of Occupancy from the City for a minimum of 125,000 gross square feet corporate headquarters facility located on the Property consistent with Section 4(a) of this Page 11 of 31 Performance Agreement Pearlan.d Economic Development Corporation — KS Management Services , L.L.C. Agreement is an Event of Default. (b) Reimbursement for Qualified Expenditures Made to Property. Failure of Company to submit to PEDC invoices, receipts or other documentation reasonably acceptable to PEDC for Qualified Expenditures and materially consistent with Section 4(b) of this Agreement is an Event of Default. (c) Operate Facility. Failure of Company to operate a minimum of 125,000 gross square feet corporate headquarters facility on the Property consistent with Section 4(c) of this Agreement is an Event of Default. (d) Annual Compliance Verification. Failure of Company to submit the Annual Compliance Verifications materially consistent with Section 4(d) of this Agreement (failing to set forth the number of Full -Time Equivalent Employment Positions and the average annual salary is material) is an Event of Default. (e) (f) (g) Job Creation and Retention. Failure of Company to employ and maintain 600 Full - Time Equivalent Employment Positions working at the Property is an Event of Default, provided that the exclusive remedy of PEDC in the event the Company falls below 600 Full -Time Equivalent Employment Positions (while maintaining at least 150) is specifically set forth below in Section 8. Reporting of Sales and Use Taxes. Failure of Company to report to the PEDC on an annual basis the amount of Texas sales and use, and specifically local sales and use tax revenues generated by taxable purchases whose sale is consummated (as defined by Texas statute, regulation and State Comptroller policy) at the corporate headquarters facility located on the Property materially consistent with Section 4(f) of this Agreement is an Event of Default. Real and Business Personal Property Located on the Property. Failure of Company to invest, or cause to be invested and maintain at least Twelve Million and No/1.00 Dollars ($12,000,000.00), of improvements to real property and business personal property value consistent with Section 4(g) of this Agreement is an Event of Default. (h) Reimbursement for Qualified Expenditures. Failure of PEDC to disburse Incentive proceeds to Company for Qualified Expenditures made to the Property consistent with Section 5(a) of this Agreement is an Event of Default. (i) Financial Incentives. Failure of PEDC to disburse Incentive proceeds to Company for Financial Incentives consistent with Section 5(b) of this Agreement is an Event of Default. (j) Additional Financial Incentives. Failure of PEDC to disburse Incentive proceeds to Company for Additional Financial Incentives consistent with Section 5(c) of this Page 12 of 31 Performance Agreement Pearland Econonzic Development. Corporation — KS Management Services , L.L.C. Agreement is an Event of Default. (k) Type B Sales and Use Tax Revenue Reimbursement. Failure of PEDC to reimburse Company the Type B Sales and Use Tax Revenue Reimbursement generated from the Property consistent with Section 5(d) of this Agreement is an Event of Default. (1) (m) False Statements. Any written warranty, representation or statement made or furnished to the PEDC by Company under this Agreement or any document(s) related hereto furnished to the PEDC by Company is/are false or misleading in any material respect, either now or at the time made or furnished, and Company fails to cure same within thirty (30) days after written notice from the PEDC describing the violation, or if such violation cannot be cured within such thirty (30) day period in the exercise of all due diligence, then if Company fails to commence such cure within such thirty (30) day period or fails to continuously thereafter diligently prosecute the cure of such violation, or if Company obtains actual knowledge that any such warranty, representation or statement has become false or misleading after the time that it was made, and Company fails to provide written notice to the PEDC of the false or misleading nature of such warranty, representation or statement within ten (10) days after Company learns of its false or misleading nature. Insolvency. The dissolution or termination of Company's existence as a going business or concern, Company's insolvency, appointment of receiver for any part of Company's property, any assignment of all or substantially all of the assets of Company for the benefit of creditors of Company, or the commencement of any proceeding under any bankruptcy or insolvency laws by or against Company unless, in the case of involuntary proceedings, such proceedings are discharged within sixty (60) days after filing. (n) Other Defaults. Failure of Company or PEDC to comply with or to perform any other term, obligation, covenant or condition contained in this Agreement or in any Related Documents in any material respect, or failure of Company or PEDC to comply with or to perform any other term, obligation, covenant or condition contained in any other agreement between the PEDC and Company in any material respect, and Company or PEDC fails to cure such failure within thirty (30) days after written notice from the PEDC or Company, as the case may be, describing such failure, or if such failure cannot be cured within such thirty (30) day period in the exercise of all due diligence, then if Company or PEDC fails to commence such cure within such thirty (30) day period or fails to continuously thereafter diligently prosecute the cure of such failure. SECTION 8. EFFECT OF AN EVENT OF DEFAULT. In the event of default under Section 7 of this Agreement, the non -defaulting party shall give written notice to the other party of any default, and the defaulting party shall have thirty (30) days to cure said default. Should said default remain uncured as of the last day of the applicable cure period and the non -defaulting party is not otherwise in default, the non -defaulting party shall have the right to immediately terminate this Agreement as specified below, enforce Page 13of31 Performance Agreement Pearland Economic Development Corporation — KS Management Services, L.L.C. specific performance as appropriate under applicable law, or maintain a cause of action for damages caused by the event(s) of default, as well as all other remedies provided by applicable law. In the event the Company defaults pursuant to Sections 7 (a), 7(c) or 7(d) of this Agreement, and the Company fails to cure said default within the prescribed time period, this Agreement shall immediately terminate. In the event the Company defaults pursuant to Section 7(b) of this Agreement, and the Company fails to cure said default within the prescribed time period, then Company shall not be entitled to Incentives under Section 5(a). In the event the Company defaults pursuant to Section 7(e) of this Agreement, because the Company fails to employ a minimum of one hundred fifty (150) Full -Time Equivalent Employment Positions working at the Property, and the Company is unable or unwilling to cure said default within the prescribed time period, the Incentives provided by PEDC to the Company for the previous three (3) year period pursuant to Sections 5(a), 5(b), and 5(c) of this Agreement shall become immediately due and payable by the Company to PEDC, and this Agreement shall immediately terminate. Any repayment of Incentives pursuant to this paragraph shall not include any sales taxes reimbursed to the Company as provided in Section 5(d) of this Agreement. In the event the Company fails to employ a minimum of six hundred (600) Full -Time Equivalent Employment Positions working at the Property, the Company shall not receive any Incentive for the applicable one (1) year period but shall not preclude the Company from receiving future Incentives during the Term of this Agreement consistent with this Agreement. In the event the Company defaults under Section 7(f), then the Company shall not be entitled to any Sales Tax Rebates related to such Annual Compliance Verification, provided that the Company shall be entitled to file future Annual Compliance Verifications and PEDC shall not be relieved of any financial incentives related to such properly filed Annual Compliance Verifications. SECTION 9. TERMINATION OF AGREEMENT BY PEDC WITHOUT DEFAULT. PEDC may terminate this Agreement without an event of default by Company and effective immediately if (i) any state or federal statute, regulation, case law, or other law renders this Agreement ineffectual, impractical or illegal, including case law holding that rebating Sales and Use Taxes such as this Agreement is an unconstitutional debt; or (ii) the federal government implements the Streamlined Sales and Use Tax or similar legislation in such a manner as to change the consummation of a sales and use tax event to a tax situs outside of the City thereby eliminating the PEDC's rights in the sales tax proceeds attributable to sales from the Property; provided, however, that any such termination shall be limited to that portion of the Agreement that is rendered illegal or impractical as set forth above (e.g., the portion of the Agreement relating to rebates of Sales and Use Taxes shall be terminated if unconstitutional, but the other Page 14 of 31 Performance Agreement Pearland Economic Development Corporation—KSManagement Services , L.L.C. Incentives shall remain in place if unaffected). Termination of this Agreement by PEDC under this Section of the Agreement shall render this Agreement, or the relevant portion of this Agreement, null and void from that point forward with each party having no further rights against each other under this Agreement or at law; provided, however, that (i) Company shall be entitled to receive from PEDC any payments due Company through the date of termination, and (ii) the PEDC and Company may agree to negotiate in good faith a remedy that preserves the intent of the parties hereunder as much as reasonably possible. SECTION 10. INDEMNIFICATION. Company shall indemnify, save, and hold harmless PEDC, its directors, officers, agents, attorneys, and employees (collectively, the "Indemnitees") from and against: (i) any and all claims, demands, actions or causes of action that are asserted against any Indemnitee if the claim, demand, action or cause of action is due to the wrongful use of PEDC's financial incentives by Company or its agents and employees; (ii) intentionally deleted; (iii) intentionally deleted; and (iv) any and all liabilities, losses, costs, or expenses (including reasonable attorneys' fees and disbursements) that any Indemnitee suffers or incurs as a result of any of the foregoing; provided, however, that Company shall have no obligation under this Section to PEDC with respect to any of the foregoing arising out of the gross negligence or willful misconduct of PEDC or the breach by PEDC of this Agreement. If any claim, demand, action or cause of action is asserted against any Indemnitee, such Indemnitee shall promptly notify Company, but the failure to so promptly notify Company shall not affect Company's obligations under this Section unless such failure materially prejudices Company's right to participate in the contest of such claim, demand, action or cause of action, as hereinafter provided. If requested by Company in writing, as so long as no Default or Event of Default shall have occurred and be continuing, such Indemnitee shall in good faith contest the validity, applicability and amount of such claim, demand, action or cause of action and shall permit Company to participate in such contest. Any Indemnitee that proposes to settle or compromise any claim, demand, action, cause of action or proceeding for which Company may be liable for payment of indemnity hereunder shall give Company written notice of the terms of such proposed settlement or compromise reasonably in advance of settling or compromising such claim or proceeding and shall obtain Company's concurrence thereto. SECTION 11. COMPANY'S REPRESENTATIONS. By execution hereof, the signators warrant and represent that they have the requisite authority to execute this Agreement and the Related Documents and that the representations made herein, and in the Related Documents, are true and accurate in all respects. SECTION 12. MISCELLANEOUS PROVISIONS. Page 15 of 31 Performance Agreement Pearland Economic Development Corporation — KS Management Services , L.L.C. The following miscellaneous provisions are a part of this Agreement: (a) Amendments. This Agreement, together with any Related Documents, constitutes the entire understanding and agreement of the parties as to the matters set forth in this Agreement. No alteration of or amendment to this Agreement shall be effective unless given in writing and signed by the party or parties sought to be charged or bound by the alteration or amendment. (b) Applicable Law and Venue. This Agreement shall be governed by and construed in accordance with the laws of the State of Texas, and all obligations of the parties created hereunder are performable in Brazoria County, Texas. Venue for any action arising under this Agreement shall lie in the state district courts of Brazoria County, Texas. (c) Intentionally Deleted. (d) Audit. Company shall furnish PEDC a copy of Company's annual audited financial statements and Company's records, documents, agreements and other instruments for the following purposes: (i) to ensure Company's compliance with the affirmative covenants set forth in Section 4 of this Agreement; and (ii) to determine the existence of an Event of Default set forth in Section 7 of this Agreement. The Company shall maintain such records as are deemed reasonably necessary by the PEDC and auditors of PEDC, or such other persons or entities designated by PEDC, to ensure proper accounting for all costs, performances, sales tax information, and number of jobs created or retained related to this Agreement. The Company shall grant access to all paper and electronic records, books, documents, accounting procedures, practices or any other items relevant to the performance of this Agreement to PEDC, or such other persons or entities designated by PEDC for the purposes of inspecting, auditing, or copying such books and records, provided that PEDC has provided two business days prior notice, and PEDC or its representatives shall not unduly disrupt the Company's operations. All records, books, documents, accounting procedures, practices or any other items relevant to the performance of this Agreement shall be subject to examination or audit by PEDC, or such other persons or entities designated by PEDC in accordance with all applicable state and federal laws, regulations or directives. PEDC shall not make a copy of any such records and shall return within thirty (30) days any records upon written request. The Company will direct any subcontractor with whom it has established a contractual relationship to discharge the Company's obligations to likewise permit access to, inspection of, and reproduction of all books and records of the Company's subcontractor(s) which pertain to this Agreement. (e) Binding Obligation. This Agreement shall become a binding obligation on the signatories upon execution by all signatories hereto. Company warrants and represents that the individual or individuals executing this Agreement on behalf of Company has full authority to execute this Agreement and bind Company to the same. PEDC warrants and represents that the individual executing this Agreement on its behalf has full Page 16 of 31 Performance .tgreem ent Pentland Economic Development Corporation — KS Management Services , L.L.C. and represents that the individual executing this Agreement on its behalf has full authority to execute this Agreement and bind it to the same. (f) Caption Headings. Caption headings in this Agreement are for convenience purposes only and are not to be used to interpret or define the provisions of the Agreement. (g) Certain Prohibited Economic Incentives. Company and PEDC covenant and agree that this Agreement does not violate Section 501.161 of the Act, as amended. (h) Community Involvement. Although not an event of default or condition of any advance hereunder, the Company agrees to actively participate in community and charitable organizations and/or activities, the purpose of which are to improve the quality of life in the City of Pearland, Texas, and to actively encourage its employees to be involved in such organization and/or activities. (i) Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original and all of which shall constitute one and the same document. (j) Employee Hiring, Materials and Supplies Purchase. Although not an event of default or a condition to this Agreement, PEDC requests that the Company give due consideration to hiring additional employees from City of Pearland, Texas, residents and consider the purchase of materials, supplies and services necessary to affect the occupancy of the leased office space from City of Pearland merchants and businesses. (k) 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 war, civil commotion, acts of God, inclement weather, fire or other casualty, or court injunction, the party so obligated or permitted shall be excused from doing or performing the same during such period of delay, so that the time period applicable to such obligation or requirement shall be extended for a period of time equal to the period such party was delayed. (1) Notices. All notices required to be given under this Agreement shall be given in writing and shall be effective when actually delivered or when deposited in the United States mail, first class, postage prepaid, addressed to the party to whom the notice is to be given at the address shown on Page 1 of this Agreement. Any party may change its address for notices under this Agreement by giving formal written notice to the other parties, specifying that the purpose of the notice is to change the party's address. For notice purposes, Company agrees to keep PEDC informed at all times of Company's current address. (m) Revenue Sharing Agreement. The PEDC designates this Agreement as a revenue sharing agreement, thereby entitling the City or the PEDC to request Sales and Use Tax Page 17 of3l Performance Agreement Pearland Economic Development Corporation — KS Management Services , L.L.C. information from the State Comptroller, pursuant to section 321.3022 of the Texas Tax Code, as amended. (n) Severability. If a court of competent jurisdiction finds any provision of this Agreement to be invalid or unenforceable as to any person or circumstance, such finding shall not render that provision invalid or unenforceable as to any other persons or circumstances. If feasible, any such offending provision shall be deemed to be modified to be within the limits of enforceability or validity; however, if the offending provision cannot be so modified, it shall be stricken and all other provisions of this Agreement in all other respects shall remain valid and enforceable. (o) Successors and Assigns. This Agreement is with the Company, and may not be assigned without the written consent of the PEDC; provided, however, that this Agreement may be assigned to Kelsey -Seybold Medical Group, PLLC, the parent of the Company, without the consent of PEDC. This Agreement may be assigned to a successor of the Company pursuant to any sale, merger, change of control or similar transaction involving the Company, without the written consent of the PEDC, provided that the successor meets all applicable legal requirements to receive the Incentives provided herein. The Company shall provide the PEDC written notice of any assignment, sale, merger, change of control or similar transaction pursuant to this Agreement as soon as possible, and in no event not later than thirty (30) days following such event. (p) (q) Survival. All warranties, representations, and covenants made by Company in this Agreement or in any certificate or other instrument delivered by Company to PEDC under this Agreement shall be considered to have been relied upon by PEDC and will survive the making of the Incentive and delivery to PEDC of the Related Documents, regardless of any investigation made by PEDC or on PEDC's behalf. Time is of the Essence. Time is of the essence in the performance of this Agreement. (r) Undocumented Workers. Company certifies that the Company does not and will not knowingly employ an undocumented worker in accordance with Chapter 2264 of the Texas Government Code, as amended. If during the Term of this Agreement, Company is convicted of a violation under 8 U.S.C. § 1324a(f), Company shall repay the amount of the public subsidy provided under this Agreement plus interest, at the rate of eight percent (8%), not later than the 120th day after the date the PEDC notifies Company of the violation. To the extent permitted by law, the repayment obligation shall only apply to any incremental amounts paid by PEDC to Company that relate to such undocumented worker. For example, if PEDC provided incentives for 700 Full -Time Equivalent Employment Positions in one year, and one of those positions was an undocumented worker, then the Company shall be obligated to repay $333.34 plus interest. If however, PEDC provided incentives for 750 Full -Time Equivalent Employment Positions, and Company had 800 Full -Time Equivalent Employment Positions (one of which was an undocumented worker), then Company shall not be obligated to repay as Company had Page 18 of 31 Performance Agreement Peariand Economic Development Corporation — KS Management Services , L.L.C. (s) Condemnation. In the event that the Property shall be taken by PEDC, the City, or any political subdivision of the City, in a manner that adversely impacts Company's ability to meet its obligations under this Agreement, then this Agreement shall continue in full force and effect and PEDC's obligations shall continue, and the last Annual Compliance Verification shall be substituted for any future annual verifications for the remainder of the Term. (t) Confidentiality. To the extent permitted by law, all information provided by the Company to the PEDC shall be considered "Confidential Information" pursuant to the Non -Disclosure Agreement between the parties dated February 17th, 2011, and shall be subject to the terms and conditions of such Non -Disclosure Agreement. (u) Reasonable actions. Any approval, acceptance, or consent of one party required herein may not be unreasonably withheld, conditioned, or delayed. [The Remainder of this Page Intentionally Left Blank] Page 19 of 31 Performance Agreement Pearland Economic Development Corporation — KS Management Services , L.L.C. COMPANY ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS AGREEMENT, AND COMPANY AGREES TO ITS TERMS. THIS AGREEMENT IS DATED AS OF EFFECTIVE AS OF 1/47.)--,4 K e 6 Z at 1 ATT ucy YTv: er, Secretary COMPANY: KS' MANAGEMENT SERVICES, L.L. C., a Texas limited liability company, By: Dr. Spencer R. Berthelsen Tit e: Managing Director Date Signed: J GI Z o ( PEDC: PEARLAND ECONOMIC DEVELOPMENT CORPORATION, a Texas non-profit corporation By: Matt Buchanan Title: President Date Signed: Page 20 of 31 Performance Agreement Pearland Economic Development Corporation — KS Management Services , L.L.C. THE STATE OF TEXAS COUNTY OF BRAZORIA BEFORE ME, the undersigned Notary Public, on this day personally appeared Matt Buchanan, President of the Pearland Economic Development Corporation, a Texas non-profit corporation, known to me to be the person whose name is subscribed to the foregoing instrument and acknowledged to me that he executed the same for the purposes and consideration therein expressed. GIVEN UNDER MY HAND AND SEAL OF OFFICE THIS 3rd DAY OF , A.D., 2011 . NIfER K. Stv11TH Notary Pubti;. State o, My ComrntastonExpires July 15. 201$ THE STATE OF TEXAS COUNTY OF BRAZORIA NO ARY`PUBLIC STATE OF TEXAS Printed Name: )e)- K S, >',. Commission Expires: J ccly i5 20 r 4 BEFORE ME, the undersigned Notary Public, on this day personally appeared Dr. Spencer R. Berthelsen, Managing Director of the KS Management Services, L.L.C., a Texas limited liability company, known to me to be the person whose name is subscribed to the foregoing instrument and acknowledged to me that he executed the same for the purposes and consideration therein expressed. GIVEN UNDER MY HAND AND SEAL OF OFFICE THIS (4 DAY OF 'SUM , A.D., 2011. NOTARY PUI3 Printed Name: Commission Expires: Page 21 of 31 Performance Agreement Pearland Economic Development Corporation — KS Management Services , L.L.C. Exhibit A [Description or Depiction of the Property] Page 22 of 31 Performance Agreement Pearland Economic Development Corporation — KS Management Services , L.L.C. 11," EJ Windrose Land Services, Inc 7623 Wesictinae rf,�stoa. Te,. 7704$ F'h;rn6 :'71114.53.2291 Fqr ('71.7; 461-7151 Professional Development Consultants DESCRIPTION OF 17.9024 ACRES OR 779,830 SQ. FT. A TRACT OR PARCEL CONTAINING 17.9024 ACRES OR 779,830 SQUARE FEET OF LAND SITUATED IN THE OBED[AH PITTS SURVEY, ABSTRACT NO. 717 AND THE T.C.R.R. CO. SURVEY, SECTION 4, ABSTRACT NO. 675, BRAZORIA COUNTY, TEXAS, BEING OUT AND A PART OF LOT "A" OF THE THIRD PARTIAL REPLAT OF SHADOW CREEK RANCH, COMMERCIAL SITE NO. 18, AS RECORDED N FILE NO. 2009055545 OF THE OFFICIAL PUBLIC RECORDS OF BRAZORIA COUNTY (O.P.R.B.C.), AND ALL OF RESTRICTED RESERVE "F" OF SHADOW CREEK RANCH, COMMERCIAL SITE NO. 18A, AS RECORDED IN FILE NO, 2006023440 O.P.R.B.C. , WITH SAID 17.9024 ACRE TRACT BEING MORE PARTICULARLY DESCRIBED BY METES AND BOUNDS AS FOLLOWS, WITH ALL BEARINGS BASED ON THE TEXAS STATE PLANE COORDINATE SYSTEM, SOUTH CENTRAL ZONE (NAD 83): BEGINNING AT A CAPPED 5/8" IRON ROD STAMPED "LJA" FOUND IN THE EASTERLY RIGHT-OF-WAY (R.O.W.) LINE OF KIRBY DRIVE (WIDTH VARIES) MARKING THE COMMON CORNER OF LOT "AI" OF SAID THIRD PARTIAL REPLAT OF SHADOW CREEK RANCH, COMMERCIAL SITE NO. 18 AND SAID RESTRICTED RESERVE "F" AND THE BEGINNING OF A NON -TANGENT CURVE TO THE RIGHT; THENCE, ALONG SAID EASTERLY R.O.W. LINE, WITH SAID CURVE TO THE RIGHT, HAVING A RADIUS OF 1740.00 FEET, A CENTRAL ANGLE OF 00 DEGREES 20 MINUTES 59 SECONDS, AN ARC LENGTH OF 10.62 FEET, AND A CHORD BEARING AND DISTANCE OF NORTH 10 DEGREES 11 MINUTES 22 SECONDS WEST - 10.62 FEET TO A CAPPED 5/8" IRON ROD STAMPED "WINDROSE LAND SERVICES" SET FOR A POINT OF TANGENCY; THENCE CONTINUING ALONG SAID EASTERLY R.O.W. LINE, NORTH 10 DEGREES 00 MINUTES 53 SECONDS WEST, A DISTANCE OF 115.62 FEET TO A POINT ON SAID EASTERLY K.O.W. LINE OF SAID KIRBY DRIVE AND THE SOUTH LINE OF A 75 FOOT WIDE DRAINAGE EASEMENT RECORDED IN THE NAME OF HARRIS COUNTY DRAINAGE DISTRICT NUMBER 2, IN VOLUME 1176, PAGE 661 OF THE HARRIS COUNTY DEED RECORDS (H.C.D.R.) AND MARKING THE NORTHWEST CORNER OF THE HEREIN DESCRIBED TRACT; THENCE, WITH TUE COMMON LINE OF SAID 75 FOOT WIDE DRAINAGE EASEMENT AND SAID RESTRICTED RESERVE "F" THE FOLLOWING SEVEN (7) COURSES; 1, NORTH 87 DEGREES 59 MINUTES 36 SECONDS EAST, A DISTANCE OF 102.04 FEET TO A POINT FOR CORNER OF THE HEREIN DESCRIBED TRACT; 2. NORTH 75 DEGREES 57 MINUTES 23 SECONDS EAST, A DISTANCE OF 204.10 FEET TO A POINT FOR CORNER OF THE HEREIN DESCRIBED TRACT; 3. SOUTI-I 79 DEGREES 16 MINUTES 24 SECONDS EAST, A DISTANCE OF 161.05 FEET TO A POINT FOR CORNER OF THE HEREIN DESCRIBED TRACT; 4. NORTH 55 DEGREES 44 MINUTES 08 SECONDS EAST, A DISTANCE OF 229.30 FEET TO A POINT FOR CORNER OF THE HEREIN DESCRIBED TRACT; 5. NORTH 85 DEGREES 42 MINUTES 40 SECONDS EAST, A DISTANCE OF 316.69 FEET TO A POINT FOR CORNER OF THE HEREIN DESCRIBED TRACT; 6. NORTH 71 DEGREES 29 MNUTES 14 SECONDS EAST, A DISTANCE OF 340.34 FEET TO A POINT FOR CORNER OF THE HEREIN DESCRIBED TRACT; 7. NORTH 80 DEGREES 27 MINUTES 57 SECONDS EAST, A DISTANCE OF 11.29 FEET TO A POINT FOR THE NORTHEAST CORNER OF THE HEREIN DESCRIBED TRACT; THENCE, SOUTH 03 DEGREES 19 MINUTES 33 SECONDS EAST, WITH THE COMMON LINE OF SAID RESERVE "A", SAID RESTRICTED RESERVE "F' AND SAID LOT "A", A DISTANCE OF 288.28 FEET TO A CAPPED 5/8" IRON STAMPED "LJA" FOUND FOR AN INTERIOR CORNER OF THE HEREIN DESCRIBED TRACT; THENCE, NORTH 86 DEGREES 40 MINUTES 27 SECONDS EAST, CONTINUING ALONG THE COMMON LINE OF SAID LOT "A" AND SAID RESERVE "A", A DISTANCE OF 18.04 FEET TO A CAPPED 5/8" IRON ROD STAMPED "LJA" FOUND MARKING THE NORTHWESTERLY CORNER OF RESERVE "B" OF SAID SHADOW CREEK MARKET PLACE AND AN EASTERLY CORNER OF SAID LOT "A" AND THE HEREIN DESCRIBED ' TRACT; THENCE, SOUTH 03 DEGREES 02 MINUTES 58 SECONDS EAST, ALONG THE COMMON LINE OF SAID LOT "A" AND SAID RESERVE "B". A DISTANCE OF 178.46 FEET TO A CAPPED 5/8" IRON ROD STAMPED "IIA" FOUND MARKING THE COMMON WESTERLY CORNER OF SAID RESERVE 'B" AND LOT "A" OF SHADOW CREEK RANCH, COMMERCIAL SITE NO. 18B AS RECORDED IN FILE NO. 2007035195 OF THE OFFICIAL '.ae;la S ,, /n7.Fttfcti, GI S worW.1+ 11/3,05t BAP ri€*E.S. car tH PUBLIC RECORDS OF BRAZORIA COUNTY AND AN ANGLE POINT OF SAID LOT "A" AND THE HEREIN DESCRIBED TRACT; THENCE, SOUTH 03 DEGREES 22 MINUTES 07 SECONDS EAST, ALONG THE COMMON LINE OF SAID LOT "A" AND SAID LOT "A" OF SHADOW CREEK RANCH, COMMERCIAL SITE NO. 18B, A DISTANCE OF 129.59 FEET TO A CAPPED 5/8" IRON ROD STAMPED "WINDROSE LAND SERVICES" FOUND MARKING AN EASTERLY CORNER OF SAID LOT "A" AND THE NORTHWEST CORNER OF A PRIVATE ROADWAY AS DEPICTED ON THE SECOND PARTIAL REPLAT OF SHADOW CREEK RANCH, COMMERCIAL SITE NO. 18 AS RECORDED IN FILE NO. 2008035477 OF THE OFFICIAL PUBLIC RECORDS OF BRAZORIA COUNTY, TEXAS; THENCE, SOUTH 86 DEGREES 37 MINUTES 53 SECONDS WEST, ALONG THE COMMON LINE OF SAID LOT "A" AND SAID PRIVATE ROADWAY, A DISTANCE OF 47.50 FEET TO A CAPPED 5/8" IRON ROD STAMPED "WINDROSE LAND SERVICES" FOUND MARKING THE NORTHWEST CORNER OF SAID PRIVATE ROADWAY AND AN INTERIOR CORNER OF SAID LOT "A" OF THE THIRD PARTIAL REPLAT OF SHADOW CREEK RANCH, COMMERCIAL SITE NO. 18; THENCE, SOUTH 03 DEGREES 22 MINUTES 07 SECONDS EAST, CONTINUING ALONG THE COMMON LINE OF SAID LOT "A" AND SAID PRIVATE ROADWAY, A DISTANCE OF 200.00 FEET TO A CAPPED 5/8" IRON ROD STAMPED "WINDROSE LAND SERVICES" FOUND MARKING THE COMMON EASTERLY CORNER OF SAID LOT "A", AND LOT "H" OF SAID SECOND PARTIAL REPLAT OF SHADOW CREEK RANCH, COMMERCIAL SITE NO. 18; THENCE, SOUTH 86 DEGREES 37 MINUTES 53 SECONDS WEST, ALONG THE COMMON LINE OF SAID LOT "A" AND SAID LOT "H" PASSING AT A DISTANCE OF 355.94 FEET TI -IE COMMON NORTHERLY CORNER OF SAID LOT "H" AND RESTRICTED LOT "G" OF THE PARTIAL REPLAT OF SHADOW CREEK RANCH, COMMERCIAL SITE NO. 18 AS RECORDED IN FILE NO, 2007044084 OF THE OFFICIAL PUBLIC RECORDS OF BRAZORIA COUNTY, CONTINUING ALONG THE COMMON LINE OF SAID LOT "A" AND SAID RESTRICTED LOT "G", FOR A TOTAL D(STANCE OF 486.49 FEET TO A CAPPED 5/8" IRON ROD STAMPED "WINDROSE LAND SERVICES" FOUND MARKING THE NORTHWEST CORNER OF SAID RESTRICTED LOT "G" AND AN INTERIOR CORNER OF SAID LOT "A" AND THE HEREIN DESCRIBED TRAC; THENCE, SOUTH 03 DEGREES 22 MINUTES 07 SECONDS EAST, ALONG THE COMMON LINE OF SAID LOT "A" AND SAID RESTRICTED LOT "G", A DISTANCE OF 267.39 FEET TO A CAPPED 5/8" IRON ROD STAMPED "LSA" FOUND IN THE NORTHERLY RIGHT-OF-WAY LINE OF F.M. 2234 - SHADOW CREEK PARKWAY (160' WIDTH) MARKING THE COMMON SOUTHERLY CORNER OF SAID LOT "A" OF THE THIRD PARTIAL REPLAT OF SHADOW CREEK RANCH, COMMERCIAL SITE NO. 18 AND SAID RESTRICTED LOT "G AND THE BEGINNING OF A NON -TANGENT CURVE TO THE LEFT; THENCE, ALONG SAID NORTHERLY RIGHT-OF-WAY LINE OF F.M. 2234 - SHADOW CREEK PARKWAY, WITH SAID CURVE TO THE LEFT, HAVING A RADIUS OF 1939.86 FEET, A CENTRAL ANGLE OF 01 DEGREES 59 MINUTES 49 SECONDS, AN ARC LENGTH OF 69.36 FEET, AND A CHORD BEARING AND DISTANCE OF SOUTH 84 DEGREES 11 MINUTES 47 SECONDS WEST - 69.35 FEET TO A CAPPED 5/8" IRON ROD STAMPED "LIA" FOUND MARKING THE COMMON SOUTHERLY CORNER OF SAID LOT "A" AND RESTRICTED LOT "C" OF SAID SHADOW CREEK RANCH, COMMERCIAL SITE NO. 18A; THENCE, NORTH 03 DEGREES 22 MINUTES 07 SECONDS WEST, ALONG THE COMMON LINE OF SAID LOT "A" AND SAID RESTRICTED LOT "C", A DISTANCE OF 233,64 FEET TO AN "X" CUT IN CONCRETE FOUND MARKING THE NORTHEASTERLY CORNER OF SAID RESTRICTED LOT "C" AND AN INTERIOR CORNER OF SAID LOT "A" AND THE HEREIN DESCRIBED TRACT; THENCE, SOUTH 86 DEGREES 37 MINUTES 53 SECONDS WEST, CONTINUING ALONG THE COMMON LINE OF SAID LOT "A" AND SAID RESTRICTED LOT "C" A DISTANCE OF 162.86 FEET TO AN "X" CUT IN CONCRETE FOUND MARKING THE BEGINNING OF A CURVE TO THE LEFT; THENCE, CONTINUING ALONG THE COMMON LINE OF SAID LOT "A" AND SAID RESTRICTED LOT "C", WITH SAID CURVE TO THE LEFT, HAVING A RADIUS OF 25.00 FEET, A CENTRAL ANGLE OF 10 DEGREES 31 MINUTES 31 SECONDS, AN ARC LENGTH OF 4.59 FEET, AND A CHORD BEARING AND DISTANCE OF SOUTH 81 DEGREES 22 MINUTES 04 SECONDS WEST - 4.59 FEET TO AN "X" CUT EN CONCRETE FOUND MARKING A POINT OF TANGENCY; THENCE, SOUTH 76 DEGREES 06 MINUTES 15 SECONDS WEST. CONTINUING ALONG THE COMMON LINE OF SAID LOT "A" AND SAID RESTRICTED LOT "C", PASSING AT A DISTANCE OF 54.81 FEET THE COMMON NORTHERLY CORNER OF SAID RESTRICTED LOT "C" AND RESTRICTED LOT "B" OF SAID SHADOW CREEK RANCH, COMMERCIAL SITE NO. 1 8A, CONTINUING ALONG THE COMMON LINE OF SAID LOT "A" AND SAID RESTRICTED LOT "B", FOR A TOTAL DISTANCE OF 330.41 FEET TO A "V" CUT IN CONCRETE FOUND MARKING AN ANGLE POINT; THENCE, SOUTH 68 DEGREES 51 MINUTES 27 SECONDS WEST, CONTINUING ALONG THE COMMON LINE OF SAID LOT "A" AND SAID RESTRICTED LOT "B", A DISTANCE OF 59.84 FEET TO A MAO NAIL FOUND IN SAID EASTERLY RIGHT-OF-WAY LINE OF KIRBY DRIVE MARKING THE COMMON WESTERLY CORNER OF SAID LOT "A" AND SAID RESTRICTED LOT "8"; THENCE ALONG SAID EASTERLY RIGHT-OF-WAY LINE OF KIRBY DRIVE, WITH A CURVE TO THE LEFT, HAVING A RADIUS OF 1860.00 FEET, A CENTRAL ANGLE OF 00 DEGREES 55 MINUTES 27 SECONDS., AN ARC LENGTH OF 30.00 FEET, AND A CHORD BEARING AND DISTANCE OF NORTH 20 DEGREES 45 MINUTES 47 SECONDS WEST - 30.00 FEET TO A CUT "X" IN CONCRETE SET FOR CORNER OF THE HEREIN DESCRIBED TRACT; THENCE, THROUGH AND ACROSS SAID LOT "A" THE FOLLOWING FOUR (4) COURSES: sty Windrose Land ServIcc , Inc 3628 Westchase Houston, Tara* 77042 Phone (713) 4S8-2281 fax 47Y3) 4614151 Professional Development Consultants I rNORTH 68 DEGREES 51 MINUTES 27 SECONDS EAST, A DISTANCE OF 61.54 FEET TO A CAPPED 5/8" IRON ROD STAMPED "WINDROSE LAND SERVICE" SET FOR AN ANGLE POINT OF THE HEREIN DESCRIBED TRACT; 2. NORTH 76 DEGREES 06 MINUTES 15 SECONDS EAST, A DISTANCE OF 164.70 FEET TO A CAPPED 5/8" IRON ROD STAMPED "WINDROSE LAND SERVICES" SET MARKING THE BEGINNING OF A NON -TANGENT CURVE TO THE LEFT; 3. 174.07 FEET, ALONG THE ARC OF SAID CURVE TO THE LEFT, HAVING A RADIUS OF 2085.00 FEET, A CENTRAL ANGLE OF 04 DEGREES 47 MINUTES 00 SECONDS, WITH A CHORD BEARING OF NORTH 23 DEGREES 02 MINUTES 13 SECONDS WEST, A DISTANCE OF 174.02 FEET TO A CAPPED 5/8"IRON ROD STAMPED "WINDROSE LAND SERVICES" SET FOR THE BEGINNING OF A CURVE TO THE RIGHT; 4. 229.18 FEET, ALONG THE ARC OF SAID CURVE TO THE RIGHT, HAVING A RADIUS OF 1515.00 FEET, A CENTRAL ANGLE OF 08 DEGREES 40 MINUTES 03 SECONDS, WITH A CHORD BEARING OF NORTH 20 DEGREES 15 MINUTES 32 SECONDS WEST, A DISTANCE OF 228.96 FEET TO A CAPPED 5/8"IRON ROD STAMPED "WINDROSE LAND SERVICES" FOUND ON THE EASTERLY LINE OF SAJD LOT "Al" AND MARKING A POINT OF TANGENCY; THENCE, NORTH 15 DEGREES 55 MINUTES 10 SECONDS WEST, CONTIUING ALONG THE COMMON LINE OF SAID LOT"AI" AND SAID LOT "A", A DISTANCE OF 140.77 FEET TO A CAPPED 5/8" IRON ROD STAMPED "WINDROSE LAND SERVICES" FOUND ON THE SOUTHERLY LINE OF SAID RESTRICTED RESERVE "F" AND MARKING THE COMMON CORNER OF SAID LOTS "A" AND "Al"; THENCE, SOUTH 75 DEGREES 57 MINUTES 23 SECONDS WEST, WITH THE COMMON LINE OF SAID RESTRICTED RESERVE "F" AND SAID LOT "A1", A DISTANCE OF 122,00 FEET TO A CAPPED 5/8" IRON ROD STAMPED "UA" FOUND MARKING AN .ANGLE POINT OF THE HEREIN DESCRIBED TRACT; THENCE, SOUTH 87 DEGREES 59 MINUTES 36 SECONDS WEST, CONTINUING WITH THE COMMON LINE OF SAID RESTRICTED RESERVE "F" AND SAID LOT "Al", A DISTANCE OF 97.60 FEET TO THE PLACE OF BEGINNING AND CONTAINING 17.9024 ACRES OR 779,830 SQUARE FEET OF LAND, AS SHOWN ON JOB NO. 45381 WC-13AC, PREPARED BY WINDROSE LAND SERVICES INC. MIKE KURKOWSKI R.P.L.S. NO. 5101 STATE OF TEXAS 04/20/11 DATE: ,1Sarsraa a}1uC[rvg.Prrj=st,iAnri�r��ur.trr#GtS c+un. r,rusirarer�rr icer.torr ''1 yar NORTH 1 MM..? ..a:AW 6pe�e x KPK� X14 '`,qoaa N. 1 <u4 a.,Ar CLEAR CREEK • ------------ ------------------------------------- -- II.AOA. ACA. Male oe. L .fY t a ---------------------------------------------------- -•i ROOO AFSA? • oAA 0. ..... .tea Ay Tra• AypjtA vent PAAWO, 'w^' tiF"r "° xi seise ^t 41100 r•ara r?.xx s.. -.urea,•.°• """'"r."-.., AMMO MOTTA 01164111010 vow- miumu. r A • 4 .'S— A"MiJYYM`idtlY'Itlii n.l IIIILI I�1 ,,+ ,I ? two V.? tlatesiMIIVIt .74 O LAMA X6.1'—' lrC.A el PC14 PRN1..??'" ""' C•!•dm? FQ YlitL•a.e s.-. w ? 40*.°W lofair . WetkliNreiggY L""'F .1: e r i%," -.:z ss Avman wrt+rtAm. nawavacra- 11104.10.8 Onnadonrolo ALTA/ACM we Trnx SWIM a MOIL. a LOT 'A' TAM CaW., TMMEM MOM COMeAaA• OM .. n. T® a TM a MT. WL.T. A.ToA .CAA <0. N.r<T, Am 4 Acre MAMMA COMM MIAA Exhibit B [Qualified Expenditures] Reimbursement for Qualified Expenditures located on the Property, including the following costs: (1) the cost of acquiring all land, rights-of-way, property rights, easements, and interests; (2) the cost of architectural, engineering or legal services; (3) the cost of plans, specifications, environmental studies, soil studies, traffic studies, or surveys; (4) other expenses necessary or incident to determining the feasibility and practicability of acquiring, cleaning, constructing, reconstructing, the drainage facility; (5) the cost of constructing the facility, including landscaping, sitework, parking, and utilities; and (6) administrative expenses. Page 23 of 31 Performance Agreement Pearland Economic Development Corporation — KS Management Services, L.L.C. Exhibit C [Annual Compliance Verification Form] Page 24 of 31 Performance Agreement Pearland Economic Development Corporation — KS Management Services , L.L.C. PEARLAND PEARLAND ECONOMIC DEVELOPMENT CORPORATION ANNUAL COMPLIANCE VERIFICATION Verification should be submitted to the Pearland Economic Development Corporation Executive Director, 1200 Pearland Parkway, Suite 200, Pearland, Texas 77581, 281.997.3000, kv u,pearlartid slc,c xni.. Please attach exhibits and additional information. Company Information Name of Business: KS Management Services, LLC Address: City: Pearland State: TX Contact Person: Title: Phone: Fax: Email: Annual Compliance Verification Zip: 77584 Date: Please check the box that applies: ❑ Initial Compliance Verification (1 of 1) ❑ Subsequent Fi]ing ( of 10) If subsequent, date last compliance statement submitted: Report Covers Period: Begin Date: End Date: 1 Full -Time Equivalent Employment -Position Information All positions must meet the definition of "Full -Tune Equivalent Employment Positions" in the Performance Agreement between rhe Company and PEDC, dated __ 2011., and employed by the Company (or a company within 100% common control of the Company). Total Number of Full -Time Equivalent Employment Positions Reported for this period: 2. Total Payroll for all Full -Time Equivalent Employment Positions Reported this Claim Period: 3. Average annual gross compensation at this Company/Project Facility (line 2/line 1): Did the Company meet the job creation and retention targets for this reporting period? ❑ Yes ❑ No lino, please explain why: Does the Company (or a company within 100% common control of the Company) offer medical and dental benefits to at least 95% of the Full -Time Equivalent Employment Positions Reported? ❑ Yes ❑ No Investment Information (Only applicable for Initial Compliance Verification) 1. Total Investment (Qualified Expenditures) Reported : Did the Company meet the investment target for this reporting period? ['Yes ❑ No If no, please explain why: Sales Tax Information This compliance verification payment request represents the period 20 to number months # to # of the 120 month sales tax reimbursement period. Annual local sales and use tax refund calculation for KS Management Services, LLC.: 20 which covers the 1. Provide the total amount of purchases subject to the local sales and use tax in the City of Pearland for a corporate headquarters facility locked at the Property, for which required documentation has been provided: $ 2. Provide the total amount of sales and use tax paid to the City of Pearland (1.0%) and the Pearland Economic Development Corporation (.5%) as a result of activity (line 1 X 1.5%) at the Property: $ 3. Total amount of local sales and use tax refund requested for this period (line 2 X 60%) at the Property: $ Supporting information to be attached: Provide documentation related to Texas Comptroller "WebFile" filings related to sales and use tax for the preceding year (or such other method of filing and paying sales and use tax permitted by the Texas Comptroller) for KS Management Services LLC. associated with the corporate headquarters facility located at the Property, including: copies of the monthly "WebFile" filings, or other tax compliance required to be filed by the Texas Comptroller or any successor agency related to the accrual and remittal of Texas state and local sales and use tax or successor tax, proof of payment of local sales and use tax to the State of Texas on behalf of the Pearland Economic Development Corporation and the City 2 of Pearland and any other work papers used to support your calculation of local sales and use tax due related to your monthly Texas sales and use tax filings for a corporate headquarters facility located at the Property. Provide documentation from vendors with more than $10,000 in calendar year sales to KS Management Services, LLC. in Pearland for a corporate headquarters facility located at the Property over the prior calendar year, for which Local sales and use tax was paid and payments were then remitted to the Texas Comptroller on behalf of Pearland, including: schedule of vendors with more than $10,000 in calendar year sales associated with the corporate headquarters facility located at the Property in Pearland, the amount of their sales subject to local sales or use tax in Pearland, monthly Texas Comptroller "WebFile" filings , or other tax compliance required to be filed by the Texas Comptroller or any successor agency related to the accrual and remittal of Texas state and local sales and use tax, or successor tax related to these purchases and any other work papers that your vendors provide to support their calculation of local sales and use tax accrued and remitted on behalf of Pearland. Please have each vendor show how much of their local sales and use tax was submitted to the Texas Comptroller on behalf of Pearland as a result of sales at the property to KS Management Services, LLC. Failure to provide such documentation on behalf of a vendor will result in a presumption that the sales and use tax paid with respect to purchases from such vender was on behalf of another local jurisdiction, unless other documentation conclusively demonstrates that the local sales and use tax was paid on hehalf of Pearland. Provide evidence annually that vendors with Texas places of business or engaged in business in Texas have been directed on the proper local sales and use tax jurisdiction to remit local sales and use tax related to the corporate headquarters facility located at the Property in writing at least once during the prior calendar year. Failure to provide such documentation will result in a presumption that the sales and use tax paid with respect to such vender was on behalf of another local jurisdiction, unless other documentation conclusively demonstrates that the local sales and use tax was paid on behalf of Pearland. Provide a statement annually declaring that all sales and use tax returns, `WebFile" flings, or other tax compliance required to be filed by the Texas Comptroller or any successor agency related to the accrual and remittal of Texas state and local sales and use tax or successor tax, filed on KS Management Services LLC behalf are substantially correct and without material discrepancy and that KS Management Services LLC, its officers and directors, and managing directors are nor aware that any vendor is not properly accruing and remitting local sales and rise tax. Provide written notice to the City and PEDC of the commencement of any sales and use tax audit of KS Management Services, LLC for the length of this agreement plus 4 years or the end of the running of the statute of limitations on the sales and use tax returns filed with the Texas Comptroller or any successor agency. In addition, the City and PEDC will be entitled to receive all audit findings related to the accrual and remittance of local sales and use tax resulting from the audit. Other Information Ts the company in compliance with all terms and conditions of the agreement in all material respects for this reporting period and all previous periods: ❑ Yes ❑ No If no, please explain why: 3 Attachments Please attach the following documents: Al KS Management Services, LLC "WebFile" and supporting documentation. A2 Vendors "WebFile" and supporting documentation including a calculation of sales tax remitted to Comptroller as a result of sales tax at the property. A3 Vendor notification of proper jurisdiction. A4 Sales tax declaration (see below, under Certification). Certification I certify the Business has not, within the reporting period, been cited or convicted for violating any state or federal statutes, rules, and regulations, including environmental, worker safety and immigration regulations, except as otherwise noted in the attached Exhibit A. Under penalty of perjury, 1 declare that the information in this document and any attachments are true and correct to the best of my knowledge and belief. All sales and use tax returns, "WebFile" filings, or other tax compliance required to be filed by the Texas Comptroller or any successor agency related to the accrual and remittal of Texas state and local sales and use tax or successor tax, filed on KS Management Services LLC behalf are substantially correct and without material discrepancy and that KS 1vlanagernent Services LLC, its officers and directors, and managing directors are not aware that any vendor is not properly accruing and remitting local sales and use tax. For the Business: Signature Date Name and Title (typed or printed) 4 NOTE — THIS STATEMENT SHALL NOT BE ATTACHED TO THE ANNUAL COMPLIANCE VERIFICATION, BUT SHALL BE PROVIDED ONLY /N ACCORDANCE WITH SECTION 4(E) OF THE PERFORMANCE AGREEMENT. ANNUAL FULL-TIME EQUIVALENT EMPLOYMENT POSITION COMPLIANCE VERIFICATION ABC Company, Inc. Project Approved: 10/23/98 FTE Employment Position Certification Period: January 1, 2000 through December 31, 2000 ABC Company 114 Oak Drive Pearland, Texas 77584 Job No. Position Title Social Employee Wages Hours Date Hired to Security Name During Claim Worked Position/Date Number (last Period During Claim Left Position 6 digits) Period 001 Division Director 002 Office Manager 002A ###-##-#### Dennis $68,987 Director ###-##-#### Mary Worker $15,236 ###-##-#### Lindsey $12,008 Sellsmith 2,318 09/01/98 to Present 1,200 01/15/98 to 8/31//98 900 9/1/98 to Present 003 Sales ###-##-#### Delores $29,695 2,080 09/01/99 to Manager Incharge Present 004 Print Shop ###-##-#### Adam $32,450 2,056 09/01/99 to Manager Typeset Present Total FTE Employment Position: Total Payroll: $###,### TOTAL # OF FTE Employment Positions ON THIS PAGE 4 PAGE # 1 oft TOTAL # OF FTE Employment Positions ON THIS CLAIM 4 1 Exhibit D [Initial Compliance Verification Date] Consistent with the terms of this Agreement, the Initial Compliance Verification Date shall be a specific date on the 1st day of the month of the Initial Annual Compliance Verification Submittal following the later of: (1) Company's submission of a final certificate of occupancy consistent with Section 4(a) of this Agreement; (2) Company's submission of invoices, receipts or other documentation acceptable to PEDC consistent with Section 4(b) of this Agreement, provided that PEDC shall not unreasonably withhold, condition, or delay such acceptance; and (3) Company's submission of a completed Initial Annual Compliance Verification as provided in Section 4(d) and (e) of this Agreement which reflects a minimum 600 Full -Time Equivalent Employment Positions working at the Property. For example, if the above items are submitted as part of the Initial Annual Compliance Verification Submittal on July 15, the ten (10) subsequent Compliance Verification submittals will be due 60 days after July ls`. Initial Compliance Verification Date is: Page 30 of 31 Perfor nance Agreement Pearland Economic Development Corporation — KS Management Services , L.L.C. Exhibit E Application Page 31 of 31 Performance Agreement Pearland Economic Development Corporation — KS Management Services , L.L.C. Pearland Economic Development Corporation Assistance Application Form Applicant Information Company Name: KS Management Services, LLC Address: 8900 Lakesc(7, 610 Blvd. Houston, TX 77054 Company Official: Nicholas H. Ro, JD Title: Vice -President, Legal & Strategic Planning Telephone: 713-442-0726 FAX: 713-442-0771 Please submit third party reviewed financial statements or IRS tax filings for the prior two years. Project Description Applicant MUST attach a statement fully explaining the project and the attached job schedule. Describe future site improvements, business operations, and economic impacts of the proposed project. If the company will be required to obtain any State or Federal permits, please detail which permits and why they are required. The company must ask for assistance from the PEDC. Description of Facility (Select those that apply) PLLC & LLC Corporation (X) * Partnership ( ) Proprietorship ( ) New Plant ( ) Expansion ( ) Modernization ( ) Manufacturing ( ) Sales ( ) Office/ Professional ( ) Other Industry ( ) Distribution Center ( ) "Limited Liability Company NA1CS Code: 551114 Centralized Administrative Office Project Location (Attach site plan): _Site TBD in Pearland Total Capital Investment (Excluding Land Value): S 15,000,000 (building only) Estimated Expenses of Bringing Utilities to Site: $ TBD Building Size (Sq. Ft.): 125,000 Estimated Moving Expenses: $ 150,000 Estimated Annual Sales Tax Contribution: $ Approximately, $ 2.4 Million Estimated Value of Fixed Equipment: $ 4 Million Sales Tax Sent to State of Texas (Last year): $ Approximately, $ 2.4 Million Company Profile: Employment: Current Employment: 724 Employment in 5 years: More Gross Annual Payroll: $ Over $40,000,000 Annual Payroll in 5 years: $ More Average Hourly Wage: $ 26.71 Avg. Wage in 5 years: $ More Revised May, 2010 Project Description Kelsey -Seybold Clinic Dr. Mavis Kelsey founded his one-person practice in 1949, with a vision of creating a multi -specialty practice based on the Mayo Clink model. Since that time, Kelsey -Seybold Clinic has grown to more than 370 physicians providing primary care and specialty care at 20 clinic locations throughout the Houston area. Kelsey -Seybold Clinic cares for over 400,000 patients a year including members of managed care plans, employer groups, and the National Aeronautics and Space Administration (NASA). Kelsey -Seybold Clinic was also the first freestanding Cancer Center in the nation to be accredited by the American College of Surgeons Commission on Cancer. The mission of Kelsey -Seybold is to deliver comprehensive, quality medical services by sustaining a preeminent multi -specialty practice. We are committed to be a superior health care organization, which continuously improves the quality and value of service delivered to our patients and communities. Kelsey - Seybold pursues this vision being guided by these values: patient care, customer satisfaction, honesty, mutual respect, supportive environment, creativity and enthusiasm. In 1999, Kelsey -Seybold opened its flagship 267,000 gsf Main Campus facility at 2727 W. Holcombe (near the Medical Center). Over 100 physicians practice at this location, in nearly all specialties. In addition, Kelsey -Seybold operates nearly all outpatient ancillary services at its Main Campus, including MRI, CT, nuclear camera, X-ray, an ambulatory surgery center, endoscopy center, infusion center, clinical laboratory, breast diagnostic center, and pharmacy. Because the Houston area population has expanded rapidly in the suburbs, Kelsey -Seybold has recognized that it must also expand in these areas. Since 2005, Kelsey -Seybold opened nearly 400,000 square feet of new medical building space throughout the Houston area. Recent new medical office expansions include: • 50,000 square feet in the Woodlands • 125,000 square feet in Spring (including a cancer center, a surgery center, and an MRI and CT imaging center) • 75,000 square feet in Sugar Land • 22,000 square feet at the Woman's Center • 28,000 square feet in Cypress • 60,000 square feet at the Vintage (off Hwy 249) • 10,000 square feet in Shadow Creek Ranch (Pearland) • 16,000 square feet in Cinco Ranch (Katy) In addition, Kelsey -Seybold is currently building out a new 23,000 square foot location at the Shops at Houston Center (Downtown Houston) and an 8 -bed sleep center in River Oaks. In the next two years, Kelsey -Seybold plans include (1) an approximate 47,000 gsf expansion of the Main Campus (for a radiation therapy center and expanded ASC services), (2) a replacement medical office facility in Pasadena, Texas, (3) new or replacement facilities in other areas, and (4) substantial renovations to the Kingwood and West Clinics. Kelsey -Seybold has also recently completed the successful installation of a state -of -the art electronic medical record system (EMR). Combined with our Picture Archiving Communications System (PACS), the EMR system will allow all Kelsey physicians to access their patients' information instantaneously, regardless of clinic location. With the EMR installation, Kelsey -Seybold will undertake projects to convert former medical record rooms to revenue-producing use over the next several years. Please visit our website at www.kelsev-sevbold.com for additional information regarding our organization. Revised May, 2010 The Project Currently, Kelsey -Seybold has approximately 700 full-time equivalent administrative employees who work at three locations — (8900 Lakes at 610; 8275 El Rio; and 8282 El Rio). These departments include human resources, payroll, IT, managed care, central business office, call center, marketing and business development, compliance, risk management, quality improvement, purchasing, facilities, pharmacy administration, finance, accounts payable, and business analysis. In addition, some of Kelsey-Seybold's executive administration is located at its Main Campus at 2727 W. Holcombe. It is Kelsey-Seybold's intent to consolidate these operations into one centralized administrative office, to be located in the greater Houston, Texas metropolitan area. Kelsey-Seybold's goals for this Project are to provide a collaborative, attractive, and productive working environment for its personnel, including space for anticipated growth (nearly 1,000 employees at full capacity) while minimizing wasted space. The Project will consist of a three-story, tilt wall, approximate 126,000 sf administrative office building (there will be no medical use in the building). Each floor will have an approximate 41,500 sf plates, with a central core area on each floor, and two departmental "pods" on each side of the core area. The first floor will have an approximate 7,500 sf warehouse and storage area with receiving dock, and an approximate 3,000 sf eommunity break room/cafeteria area that can be used for large meetings as needed. An open kitchen and coffee bar (or "town center") will be located on each floor in the central core area. Centralized training and conference room suites will be located on the second and third floors, with several rooms (or floors) wi-fi enabled, which can be flexed into smaller training/conference rooms. Many of these conference rooms will have cabling and technology that allows videoconferencing with clinic sites and dedicated projector/flat panel set ups. Each department "pod' wilt follow an open planning concept, with minimal offices that are located away from the windows (to allow natural light for the staff). Most staff will have workstations, with lower panels to maximize natural light and permit staff to have views of the entire area. These department pods will also be designed with open collaboration areas (cafe tables; chairs and coffee table with whiteboards, ete.) to promote spontaneous discussions, which, in the event of growth, can be easily converted to accommodate more workstations. In addition, more small (4 or 6 person) conference or "break out" rooms will be located within the department pods. These pods may be equipped with speakers emitting ambient noise. The Project will take advantage of appropriate energy efficiencand sustainable designs, but will not seek LEED status. Kelsey -Seybold anticipates beginning the schematic design phase in January 2011, with construction to begin in the summer of 2011. Kelsey -Seybold desires to have the Project open by the summer of 2012, at which time approximately 700 FTEs would relocate to the new office building. Revised May, 2010 Project Jobs List the jobs that will be created and/or retained as the result of this project. For jobs to be created, include the starting and final hourly wage rate. For retained jobs, include the current hourly wage rate. Is the hourly wage rate based on a 40 hour work week, 52 weeks per year?,E1 n❑ No If no please explain: Full -Time CREATED Jobs (Add additional rows as needed) Job Title Number of CREATED Jobs Starting Wage Wage at End of Year Five Total 700 $26.71 more Total CREATED Jobs 700 $26.71 more Full -Time RETAINED Jobs (Add additional rows as needed) Job Title Number of RETAINED Jobs Starting Wage Wage at End of Year Five Total RETAINED Jobs Revised May, 2010 Project Jobs List the jobs that will be created and/or retained as the result of this project. For jobs to be created, include the starting and final hourly wage rate. For retained jobs, include the current hourly wage rate. Is the hourly wage rate based on a 40 hour work week, 52 weeks per year? ® Yes ❑ No If no please explain: Full -Time CREATED Jobs (Add additional rows as needed) Job Title Number of CREATED Jobs Starting Wage Wage at End of Year Five Chairman and CEO 1 x x Medical Directors 2 x x Vice Presidents 10 x x Directors 25 Managers 53 Supervisors/Administrators 21 Team/Project Lead 25 Executive Secretary 7 Coordina tors 27 Specialists/Analysts 86 Sales Representatives 45 IT Analysts/Support 105 Nurses 22 Pharmacists 1 Pharmacist Technicians 2 Clerical 143 Trainers 2 Service Representatives 45 Auditors 4 Accountants 3 Cash Accounting 3 Drivers 2 Facility Techs 5 Contact Center 93 Total CREATED Jobs 732 Revised May, 2010 Full -Time RETAINED Jobs (Add additional rows as needed) Job Title Number of RETAINED Jobs Starting Wage Wage at End of Year Five Total RETAINED Jobs Revised May,, 2010