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HomeMy WebLinkAbout26-0509 THE STATE OF TEXAS § COUNTY OF DENTON § ECONOMIC DEVELOPMENT AGREEMENT WITH KRATEOSKY LLC of the Effective Date as defined herein by KrateoSky LLC. a Wyoming limited liability company authorized to do business in the State of Texas with its principal place of business at 30 N Gould Street, Ste 53777, Sheridan, Wyoming, and the City of Denton home-rule municipal corporation located at 215 E. McKinney St., Denton, Texas, for the purposes WHEREAS, this Agreement is authorized pursuant to Article III, Section 52-a of the Texas economic development and to stimulate business and commercial activity in the City of Denton; and WHEREAS, Grantee intends to locate their business and increase the number of high-wage or Knowledge-based Jobs as defined herein in the City of Denton; and WHEREAS, on or about March 13, 2026, Grantee submitted an application to the City to ); and WHEREAS, the Grant Application was reviewed by the Economic Development Chapter 380 Policy onApril 15, 2026, and the EDP Board found the Grant Application meets the qualifications for financial incentives and recommended approval of the proposed incentives unanimously; and , authorized, by ordinance, an incentive in the form of a grant to the Grantee to expand the business and retain jobs in the City of Denton and found that the contemplated use of funds to be provided will promote economic development, increase employment, and stimulate business and commercial activity within the City of Denton for the benefit of the public and therefore meets the requirements under Chapter 380 of the Texas Local Government Code; and WHEREAS, the City Council determined that a grant of funds in accordance with the terms of this Agreement will accomplish the public purpose of stimulating economic development and that all transactions involving the use of public funds and resources in the establishment and administration of this Agreement contain controls likely to ensure that the public purpose is accomplished; and NOW, THEREFORE, the City and Grantee, for and in consideration of the premises contained herein do hereby contract, covenant, and agree as follows: I. DEFINITIONS F.1 of this Agreement. that are included when reporting to the Texas Workforce Commission or Internal Revenue Service for unemployment insurance or tax purposes. 2025 calendar year. Value" means the 2025 certified valuation by the Denton Central Appraisal District of 3411 Mingo Road, Denton, Texas. of means a Certificate issued by the City Building Official for the use of a building, structure or land, when it is determined by the Building Official that the building, structure or proposed land use complies with the provisions of all applicable Codes of the City of Denton pursuant to the Denton Development Code Subchapter 23-5. means the City of Denton, a home-rule municipal corporation located at 215 E. McKinney, Denton, Texas 76201. H of this Agreement. means a year indicated in Table III-1, with Year 1 meaning the calendar year 2027and the following years corresponding to the respective subsequent calendar year. means a Job which is paid an Annual Salary of at least Sixty-Five Thousand Dollars ($65,000) per year and includes a standard employee benefits package. means when because of flood, fire, explosions, civil disturbances, strikes, war, actsof God, or other causes beyond the control of either party, either party is not able to perform any or all of its obligations under this Agreement, then the respective party's obligations hereunder shall be suspended during such period but for no longer than such period of time when the party is unable to perform or periods of time specified in this Agreement. has the meaning provided in the preamble of this Agreement. Headquarters E of this Agreement. Grantee following the Base Year, including the improvements to the current facility on the Premises detailed in Exhibit B, attached hereto and incorporated by reference, and tangible personal property located on or at the Premisesexcluding inventory, vehicles, and supplies, which is not eligible property. 2 "Job" means a permanent, full-time employment position that has provided or will result in employment with scheduled hours of at least 2,080 hours per position per year. Part-time positions may be aggregated to create a full-time position for consideration in this Agreement. means the property located at 3411 Mingo Road in Denton, Texas, more particularly described in Exhibit C attached hereto. F of this Agreement. City pursuant to Chapter 321 of Texas Tax Code. Section III.H of this Agreement. Sales and Use Taxes directly to the Comptroller, instead of the seller collecting the Sales and Use Taxes, as authorized by Texas Administrative Code, Title 34, Chapter 3, Subchapter O, Rule Section 3.288, which is received by filing a qualifying Texas Application for Direct Payment Permit, Form AP-101 of the Comptroller. -119 of the Comptroller used for reporting and paying Sales and Use Taxes directly to the Comptroller under a Texas Direct Payment Permit, or other form used for this purpose that may be required by the Comptroller in the future. II. GRANT CONDITIONS Grantee shall satisfy the following conditions to receive the grant payments from the City provided in Articles III and IV, and to avoid termination of this Agreement pursuant to Article VIII: A. agrees to perform and comply with the terms, conditions, and provisions of this Agreement and in all other instruments and agreements, if any, between Grantee and the City with respect to the financial or other incentives provided herein. B. Grantee is duly authorized and existing under U.S. law and is in good standing under such laws and is registered to do business in the State of Texas. C. In the event of any conflict between the City of Denton Code of Ordinances or federal, state, or other local regulations and this Agreement, such ordinances and/or regulations shall control. 3 D. In accordance with Chapter 2264 of the Texas Government Code, Grantee covenants and certifies that Grantee shall not knowingly employ any person who is not lawfully admitted for permanent residence to the United States or who is not authorized under law to be execution of this Agreement, Grantee shall execute Exhibit D to certify that the Grantee does not and will not directly employ Undocumented Workers, as required by state law for economic development incentives, including tax abatements. The provisions in this Agreement regarding provisions of this Agreement. During the term of this Agreement, Grantee shall notify the City of any complaint brought against Grantee alleging that Grantee has knowingly employed Undocumented Workers. In accordance with section 2264.052 of the Texas Government Code, if Grantee is convicted of a violation of 8 U.S.C. section 1324a(f) for employing an Undocumented Worker, all grant payments shall be terminated, and Grantee shall repay the amount of all grants with interest of ten percent (10%) per annum from the date the grant payment(s) was made. Repayment shall be paid within 120 days after the date Grantee receives notice of such conviction from the City. E. Grantee agrees to obtain a Texas Direct Payment Permit prior to purchasing any Construction Materials grantee wants to include in the grant, as defined below, and to thereafter pay Sales and Use Taxes for purchases relating to the construction of the Improvements using - Subchapter O, Rule Section 3.291(a)(3) and (13), for construction of the Improvements. F. For the term of the Grant, Grantee must maintain its place of business within the corporate limits of the City of Denton. For the avoidance of doubt, nothing herein precludes Grantee from maintaining satellite offices in any location, provided the place of business remains within the corporate limits of the City of Denton. G. Grantee shall not fail to render for taxation any property located within the City of Denton, nor shall it allow the ad valorem taxes owed to the City on any property owned by the Grantee and located within the City of Denton to become delinquent beyond the last day they can be paid without assessment of penalty, as such date is generally extended to allow for any appeal. H. Grantee shall not allow any other municipal fees, levies, assessments, bills, or fines issued by the City to become delinquent. I. Grantee shall not discriminate in employment and contracting based on race, sex, sexual orientation, gender identity, age, disability, creed, color, genetics, or national origin, and shall not violate any applicable anti-discrimination laws in connection w J. Grantee agrees to use good faith efforts to purchase and select goods, services, and contractors from businesses located in the City of Denton whenever such goods, services, and contractors are comparable in availability, quality, and price. In the selection of contractors, suppliers, or other persons proposed for work on this Agreement, Grantee agrees to use its good 4 faith efforts to select and employ historically underutilized businesses for work on this Agreement, whenever such vendors are comparable in availability, quality and price; however, Grantee is not required to use such vendors. Grantee is not required to but may submit information related to any good faith efforts as it relates to the local procurement of goods and services or the use of historically underutilized businesses with its annual Certificate of Compliance in the form attached hereto as Exhibit A. III. TERMS OF GRANT A. The City agrees to provide the Grantee with a Job Grant in the amount shown in TABLE V-1 for each new Eligible Job added during Year 1 through Year 4 of the Coverage Periods as shown in TABLE III-1. The total amount of the Job Grant shall not exceed Two Hundred Fourteen Thousand and Five Hundred Dollars ($214,500) over the term of this Agreement. The calculation of the Job Grant payment amount and the schedule of payments shall be made in accordance with Articles IV and V. Grantee has the ability to begin the Year 1 Coverage Period and subsequent Coverage Periods and Certificate of Compliance deadlines up to two years later than the dates provided in TABLE III-1 if there is a delay in the project, pending approval from the City. Notwithstanding any other provision of this Agreement, the Job Grant shall only be available for Eligible Jobs added during Year 1 through Year 4 of the Coverage Period; no Job Grant payments shall be made for Eligible Jobs added in Years 5 through 8. B. City will provide a Residency Bonus to Grantee in the amount of $500 for each new Job added during Year 1 through Year 4 of the Coverage Periods that is held by an eligible resident in the applicable Coverage Period as shown in TABLE III-1 if the Grantee provides y of Denton corporate limits during the applicable Coverage Period as detailed in Section IV.A of this Agreement. A Job is not required to be an Eligible Job to qualify for the Residency Bonus. The total amount of the Residency Bonus shall not exceed Twelve Thousand Five Hundred Dollars ($12,500) over the term of this Agreement. C. To receive a Job Grant payment or Residency Bonus payment for a Coverage Period, the Grantee must submit the annual Certificate of Compliance which contains all information required by this Agreement, along with all documentation required in Section IV.A of this Agreement, on or before the corresponding Certification Due date provided in TABLE III-1 below: TABLE III-1 Coverage Period Certification Due Required Jobs Year 1 March 31, 2028 0 Year 2 March 31, 2029 0 Year 3 March 31, 2030 0 Year 4 March 31, 2031 123 Year 5 March 31, 2032 123 Year 6 March 31, 2033 123 Year 7 March 31, 2034 123 5 Year 8 March 31, 2035 123 D. A condition of the Job Grant and the Ad Valorem Rebate is that the employee rosters required by Section IV.A submitted with each Certificate of Compliance in the respective Coverage Period employment of an amount of Jobs equal to the number provided in TABLE III-1 above. City may, in its sole discretion, grant an extension of up to 180 days for the creation of these Jobs. Grantee shall repay to City any portions of the Job Grant previously paid by the City that are attributable to Eligible Jobs that become vacant during the Term of this Agreement and remain vacant for more than one (1) Coverage Period. E. The City will provide a Headquarters Grant to Grantee in an amount not to exceed Fifty Thousand Dollars ($50the Improvements resulting in receiving a Certificate of Occupancy from the City of Denton for the Improvements and, in the event Grantee decides to place its Headquarters in Denton, issuance of the Press Release, subject to the terms of this agreement. The Grantee may request payment of the Headquarters Grant, or a portion thereof, one year after receiving a Certificate of Occupancy by submitting a written request that includes a copy of the Certificate of Occupancy and the Press Release. A request for a portion of the Headquarters Grant may be made up to two years after receiving a Certificate of Occupancy. F. As consideration for increased capital investment within the City of Denton, and subject to the Grantee meeting all of the terms and conditions of this Agreement, the City Ad Valorem Rebate: 1. An annual grant equal to sixty-five percent (65%) of the increase in City ad valorem taxes above the City ad valorem taxes arising from the Base Year Value, to the extent such increase is attributable to the Improvements, as determined by the Denton Central Appraisal District (DCAD), paid annually for a period of eight (8) years, commencing the first year following receipt by Grantee of the new Certificate of Occupancy based on the Improvements completed after the Base Year, in a total amount not to exceed Four Hundred Ninety-Eight Thousand, Five Hundred Sixty-Four dollars ($498,564). G. A condition of the Ad Valorem Rebate and the Sales Tax Grant is that, by December 31, 2028 , subject to Force Majeure delays not to exceed One Hundred Eighty (180) days, Grantee shall have made the Improvements on the Premises which result in an increased combined assessed valuation of the improvements and tangible personal property (excluding inventory, vehicles, and supplies) on the Premises of at least $18,800,000 morethan the Base Year Value, as determined by DCAD. The City may, in its sole discretion, grantan extension of up to 180 days for the making of the Improvements. H. The City agrees to provide the Grantee a Sales Tax Grant equal to fifty percent (50%) of the Sales and Use Taxes, up to a maximum of Ninety-Four Thousand Five Hundred dollars ($94,500), paid by Grantee and actually received by the City on taxable purchases for items utilized in or incorporated into the construction, development, and furnishing of the Improvements, such items which include, but are not limited to, construction materials, furniture, fixtures, equipment, and operational supplies and equipment 6 set forth in the Texas Direct Payment Returns submitted by Grantee to the Comptroller and verified not be obligated to pay any portion of the Sales Tax Grant related to Construction Materials purchased for the Improvements after the later of (i) 180 days after the date upon which a Certificate of Occupancy is issued for the Improvements, or (ii) the Required Completion Date. Grantee acknowledges and understands that: (i) the Construction Materials are required by state taxable, so the contract(s) entered by Grantee, and desired by Grantee to be included in the calculation of the - in order for the Sales and Use Tax to be eligible for payment on Texas Direct Payment Returns and included in the Sales Tax Grant calculations. I. The total amount of the Job Grant, Residency Bonus, Headquarters Grant, Ad Valorem Rebate, and the Sales Tax Grant shall not exceed Eight Hundred Seventy Thousand, Sixty-Four dollars ($870,064) J. Payment of any portion of the Grant is subject to annual appropriation by the City Council in the annual budget, a general obligation of the City or indebtedness under the constitution or laws of the State of Texas. K. If the assessed value for the Premises for any Coverage Period after the Required Completion Date, as determined by the DCAD, is less than $18,800,000 above the Base Year Value, the City will not make any payment for any portion of the Ad Valorem Rebate for that year. IV. PAYMENTS OF GRANTS A. The City will pay the Job Grant requested pursuant to the requirements of this Agreement within 60 days of receiving the request, Certificate of Compliance, and the following documentation: requested by the City that includes titles of positions, employee resident zip code and city, total wages per employee (inclusive of overtime and bonus payments), annual benefits paid by the employer per employee, and total compensation (Salary + Benefits) amount per employee; and Documentation showing the date on which each Job was filled and if Grantee has received a Job Grant or Residency Bonus payment for that Job. B. Payments of the Ad Valorem Rebate shall be made annually for a period not to exceed eight (8) years during the term of this Agreement, with the first payment being due and payable on or before 90 days after the City is in receipt of all City ad valorem taxes due and payable for the Property and Improvements as of January 1st of the year following the calendar year in which a Certificate of Occupancy is issued by the City for the Property and the business personal property category breakdown is provided by DCAD. 7 C. To receive the Sales Tax Grant, Grantee shall submit a written Request for the Sales Tax Grant payment to City no later than sixty (60) days after the Required Completion Date. f filing and payment of amounts reflected thereon, which reflect an amount to be included in the calculation of the Sales Tax Grant payment and the total Sales Tax Grant payment requested and (ii) a completed Certificate of Compliance (Exhibit A). The City will pay the Sales Tax Grant requested pursuant to the requirements of this Agreement within 60 days of receiving the request. D. Payments shall be issued to KrateoSky LLC unless an approved assignment occurs under Article XVI herein, and in which case payment shall be directed to the entity assigned rights under this Agreement. E. Prior to any payment of the Ad Valorem Rebate, Grantee shall provide written proof of payment by Grantee of all City ad valorem taxes payable for the Premises and the Improvements for the preceding year in the form of (a) an invoice for taxes issued by DCAD, (b) an itemized receipt for a rent payment including payment of ad valorem taxes issued by the owner of the Premises, (c) another written form of proof acceptable to the City of Denton Director of Economic Development, or (d) any combination of the foregoing. Grantee shall attach this proof of payment of ad valorem taxes to each Certificate of Compliance. F. Prior to payment of the Headquarters Grant, Grantee shall issue a press release through relevant business news outlets announcing Denton, Texas as the national headquarters of KrateoSky and supporter of the project . If, within two (2) years of receiving the Headquarters Grant, Grantee issues a press release or other public statement indicating a facility not located in Denton as their national headquarters, then Grantee shall reimburse City the full amount of the Headquarters Grant. V. CALCULATION OF INSTALLMENT PAYMENTS A. The Job Grant for a Coverage Period, if any, shall be calculated by multiplying the ABLE V-1. TABLE V-1 Annual Salary Ranges Grant Amount Per Eligible Job $65,000 to $74,999.99 $500 $75,000 to $89,999.99 $1,000 $90,000 to $99,999.99 $2,500 $100,000 or greater $5,000 B. There is no cap on the Job Grant payments for any Coverage Period, so long as the cumulative Job Grant payments do not exceed Two Hundred Fourteen Thousand Five Hundred dollars ($214,500) over the term of this Agreement. 8 C. The Residency Bonus shall be calculated by multiplying the total number of new Jobs established in any Coverage Period which Grantee can successfully demonstrate are held by an eligible resident during the applicable Coverage Period by Five Hundred Dollars ($500). VI. OTHER GRANTEE OBLIGATIONS A. Grantee shall deliver to the City before March 31st of each year their written request for incentive payment, if any, the Certificate of Compliance, and any other documentation required by this Agreement or requested by the City, beginning on the year following issuance of the Certificate of Occupancy and each year thereafter during the term of this Agreement. Said written request and required documentation shall reflect all relevant information from the previous calendar year. Grantee shall warrant to the City in its Certificate of Compliance that it is in full compliance with its obligations under this Agreement for the preceding year, unless an approved assignment occurs under Article XVI herein, and in which case payment shall be directed to the entity assigned rights under this Agreement. B. demonstrating proof of Eligible Jobs, in accordance with the terms of this Agreement adequate to documentation by -1, may, in the sole discretion of the City, result in Grantee being ineligible to receive the Job Grant for the applicable Coverage Period. VII. AUDITS AND MONITORING Grantee shall deliver to the City before March 31st of each year a Certificate of Compliance utilizing the form attached as Exhibit A, beginning on the year following issuance of the Certificate of Occupancy and each year thereafter during the term of this Agreement. Said Certificate of Compliance shall reflect all relevant information from the previous calendar year. In the Certificate of Compliance, Grantee shall warrant to the City that it is in full compliance with its obligations under this Agreement for the preceding year. During the term of this Agreement, the City reserves the right to conduct audits of the employment records of the Grantee related to this Agreement if, in the sole opinion of the City, such action is determined to be necessary. Grantee agrees upon reasonable advance request to furnish the City with additional records and information reasonably requested to support that the terms and conditions of this Agreement have been satisfied. Failure to provide such assistance shall be grounds for default, and City may withhold a Grant rebate payment until such assistance is provided. During the term of this Agreement, the City will keep, or cause to be kept, copies of the Certificates of Compliance and all documentation or employment records provided by the Grantee, payments made to Grantee, and any other calculations, allocations, and payments required by this Agreement. 9 VIII. DEFAULT AND TERMINATION A. If a party fails to perform any of its obligations under this Agreement and such failure is not cured within thirty (30) days after written notice, the failure of the non-performing party to cure within such thirty (30) day period (or to commence and continue diligently to cure such default if the nature of the failure cannot reasonably be cured within 30 days in the exercise of all due diligence) shall constitute a default under this Agreement. A default by Grantee shall entitle the City to all remedies available at law or in equity, including but not limited to, termination of this Agreement, injunctive relief, specific performance, and suspending or withholding Job Grant, Residency Bonus, Headquarters Grant, Ad Valorem Rebate, and Sales Tax Grant payments. A default by the City shall entitle Grantee as its sole remedy to seek specific performance of the terms of this Agreement. B. The Property shall be operated and maintained for the purposes set forth herein except as otherwise authorized or modified by this Agreement. The City shall have the right to terminate the Agreement if the Grantee does not occupy and operate the premises continuously for the purposes set forth in the Agreement for the entire term of the Agreement. C. Section VIII.A above within the first five (5) years of the Effective Date, the Grantee shall, upon demand by City, repay to City the full amounts of any Job Grant, Residency Bonus, Sales Tax Grant, Headquarters Grant, or Ad Valorem Rebate paid to Grantee for the most recent past Coverage Period for which payment was made as shown in Table VIII-1. Repayment of grant payments shall become due sixty (60) eipt of such demand, and shall accrue interest if overdue at the rate of the lesser of either 10% per annum or the greatest rate which may be charged or collected under applicable law. In the years following the end of the initial five-year recapture period contained herein, Grantee shall refund to City the percentage of the amount of any Job Grant, Residency Bonus, Headquarters Grant, Sales Tax Grant, and Ad Valorem Rebate payment paid to Grantee for the most recent past Coverage Period for which payment was made, as shown in Table VIII-1 below. The rights of the City to require recapture and demand repayment of grant payments, and the obligation of Grantee to pay such, shall survive termination of the Agreement. TABLE VIII-1 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Refund to 100% 100% 100% 100% 100% 50% 25% 15% City IX. INDEMNITY IT IS UNDERSTOOD AND AGREED THAT GRANTEE IN PERFORMING ITS OBLIGATIONS HEREUNDER IS ACTING INDEPENDENTLY AND THE CITY ASSUMES NO RESPONSIBILITIES OR LIABILITIES IN CONNECTION THEREWITH 10 TO THIRD PARTIES AND GRANTEE AGREES TO DEFEND, INDEMNIFY, AND HOLD HARMLESS THE CITY FROM AND AGAINST ANY AND ALL DIRECT AND INDIRECT DAMAGES INCURRED BY THE CITY RESULTING FROM CLAIMS, SUITS, AND CAUSES OF ACTION OF ANY NATURE WHATSOEVER BROUGHT BY NEGLIGENCE IN THE PERFORMANCE OF ITS OBLIGATIONS HEREUNDER, EXCEPT WHERE SUCH DAMAGES ARE CAUSED SOLELY BY THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF THE CITY, ITS EMPLOYEES, OR ITS AGENTS. X. REPRESENTATIONS AND WARRANTIES BY THE CITY The City represents and warrants that: A. The City is a home rule Texas municipal corporation that has the power to enter into and has taken all actions to date required to authorize this Agreement and to carry out its obligations hereunder; and B. The City knows of no litigation, proceedings, initiative, referendum, investigation, or threat of any of the same contesting the powers of the City or its officials with respect to this Agreement that has not been disclosed in writing to Grantee; and C. The City knows of no law, order, rule, or regulation applicable to the City or to the delivery of this Agreement; and D. This Agreement constitutes a valid and binding obligation of the City, enforceable according to its terms, except to the extent limited by governmental immunity and bankruptcy, nd by equitable principles, whether considered at law or in equity; and E. The funds granted by the City are derived from sources lawfully available to the City and are not proceeds of bonds or other obligations of the City payable from ad valorem taxes. XI. REPRESENTATIONS AND WARRANTIES BY GRANTEE Grantee represents and warrants that: A. Grantee is a limited liability company duly registered and validly existing under the laws of the State of Wyoming and is, or prior to the Effective Date of this Agreement will be, qualified to do business in the State of Texas and has the legal capacity and the authority to enter into and perform its obligations under this Agreement; and 11 B. The execution and delivery of this Agreement and the performance and observance of its terms, conditions and obligations have been duly and validly authorized by all necessary action on its part to enter into this Agreement; and C. Grantee knows of no litigation proceeding, initiative, referendum, or investigation or threat of any the same contesting the powers of the City, Grantee or any of its principals or officials with respect to this Agreement that has not been disclosed in writing to the City; and D. Grantee has the necessary legal ability to perform its obligations under this Agreement and has the necessary financial ability, through borrowing or otherwise, to construct improvements on the portions of the property that Grantee may acquire or improve in accordance with this Agreement. This Agreement constitutes a valid and binding obligation of Grantee, enforceable according to its terms, except to the extent limited by bankruptcy, insolvency and other laws of general application affecting creditors' rights and by equitable principles, whether considered at law or in equity. XII. RIGHTS OF LENDERS AND INTERESTED PARTIES The City is aware that financing for Grantee may be provided, in whole or in part, from time to time, by one or more third parties, including, without limitation, lenders, major tenants, Agreement, all notices to which Grantee is entitled under Article XVII of this Agreement shall be provided to the Interested Parties at the same time they are provided to Grantee (provided the Interested Parties have previously been identified to the City and provided their notice addresses to the City). If any Interested Party is permitted under the terms of its agreement with Grantee to cure the event of default and/or to assume Grantee's position with respect to this Agreement, the City agrees to recognize such rights of the Interested Party and to otherwise permit the Interested Party to cure the event of default and to assume all of the rights and obligations of Grantee under this Agreement. The City shall, at any time upon reasonable request by Grantee, provide to any Interested Party an estoppel certificate or other document evidencing that this Agreement is in full force and effect and that no event of default by Grantee exists hereunder (or, if appropriate, specifying the nature and duration of any existing event of default). Upon request by any Interested Party, the City will enter into a separate assumption or similar agreement with such Interested Party, consistent with the provisions of Article XVI. XIII. COMPLIANCE This Agreement shall be conditioned upon and subject to compliance with applicable federal, state, and City laws, ordinances, rules, and regulations. 12 XIV. NO VESTED RIGHTS The Grantee shall be subject to all applicable ordinances of the City, whether now existing or in the future arising. This Agreement shall confer no vested rights, as defined and referenced in Chapter 245 of the Texas Local Government Code, as amended, on the Grantee or property where Grantee conducts business. Grantee agrees and acknowledges that this Agreement is not required by the City to complete the project described in the Grant Application. XV. ENTIRE AGREEMENT; CHANGES AND AMENDMENTS This Agreement constitutes the entire agreement of the Parties with regard to the subject matter hereof. Except as specifically provided otherwise in this Agreement, any alterations or deletions to the terms of this Agreement shall be by written amendment executed by both Parties to this Agreement. XVI. SUCCESSORS AND ASSIGNS This Agreement shall be binding on and inure to the benefit of the Parties, their respective successors, and assigns. Grantee may assign all or part of its rights and/or obligations in or to or under this Agreement upon written notice to the City of such assignment. The City may execute amendment to the Agreement shall not be unreasonably withheld or delayed. If an assignee agrees in writing to be bound by the terms and conditions of this Agreement and executes an amendment to this Agreement stating the same, the assignor shall be released as to the obligations assigned but not as to any obligations or liabilities of the assignor to the City that arose prior to the assignment. XVII. NOTICE Any notice and/or statement required or permitted to be delivered shall be deemed delivered five business days after being deposited in the United States mail, certified with return receipt requested, postage prepaid, addressed to the appropriate party at the following addresses, or at such other addresses provided by the Parties in writing. Any such notice and/or statement shall also be deemed delivered when delivered by a nationally recognized delivery company (e.g., FedEx or UPS) with evidence of delivery signed by anyone at the delivery address. If to Grantee: KRATEOSKY LLC Attn: Ellen McCarthy 30 N Gould St Ste. 53777 Sheridan, WY 82801 Email: Ellen@krateosky.com 13 If to the City: With a copy to: City of Denton City of Denton Attn: City Manager Attn: City Attorney 215 E. McKinney St 215 E. McKinney St Denton, Texas 76201 Denton, Texas 76201 Phone: (940) 349-8307 Phone: (940) 349-8333 Fax: (940) 349-8596 Fax: (940) 382-7923 XVIII. APPLICABLE LAW This Agreement shall be governed by and construed in accordance with the laws and court District Court of Denton County, Texas. This Agreement is performable in Denton County, Texas. XIX. BENEFIT OF AGREEMENT This Agreement is executed solely for the benefit of the Parties and their successors and assigns, and nothing in this Agreement is intended to create any rights in favor of or for the benefit of any third party. XX. LEGAL CONSTRUCTION/PARTIAL INVALIDITY OF AGREEMENT In case any one or more of the provisions contained in this Agreement shall for any reason be held to be invalid, illegal, or unenforceable in any respect, such invalidity, illegality, or unenforceability shall not affect any other provision thereof and it is the intention of the Parties to this Agreement that in lieu of each provision that is found to be illegal, invalid or unenforceable, upon written, mutual agreement of both parties and approval of the City Council, a provision be added to this Agreement which is legal, valid and enforceable and is as similar in terms as possible to the provision found to be illegal, invalid or unenforceable. XXI. FORM 1295 Submitted herewith is a completed Form 1295 generated by the Texas Ethics Section 2252.908 of the Texas Government Code and the rules promulgated by the TEC (the "Form 1295"). The City hereby confirms receipt of the Form 1295 from the Grantee and the City agrees to acknowledge such form with the TEC through its electronic filing application not later than the 30th day after the receipt of such form. The Parties understand and agree that, with the exception of information identifying the City and the contract identification number, neither the City nor its consultants are responsible for the information contained in the Form 1295; that the 14 information contained in the Form 1295 has been provided solely by the Grantee; and neither the City nor its consultants have verified such information. XXII. TERM This Agreement shall be effective as of the Effective Date. This Agreement will terminate on the earlier to occur of December 31, 2034, or the date of termination for default in accordance with Article VIII. After termination of this Agreement, the City shall not be liable to make any further payments to Grantee. \[Signature Page Follows\] 15 EXECUTED and effective as of the ______ day of _____________, 2026 action of the City Council, and by Grantee, acting through its duly authorized officials. CITY OF DENTON, TEXAS THIS AGREEMENT HAS BEEN BOTH REVIEWED AND APPROVED By: as to financial and operational obligations and business CASSEYOGDEN,INTERIM CITY terms. MANAGER Brittany Sotelo ____________________ _______________________ ATTEST: SIGNATURE PRINTED NAME Economic Development Director __________________________________ TITLE INGRID REX, CITY SECRETARY Economic Development __________________________________ DEPARTMENT APPROVED AS TO LEGAL FORM: By: MACK REINWAND, CITY ATTORNEY KRATEOSKY LLC By: Name: Scott W. Wine Title:Chief Executive Officer 16 EXHIBIT A CITY OF DENTON INCENTIVE ANNUAL CERTIFICATE OF COMPLIANCE KrateoSky LLC A. Payment 1. The Economic Development Agreement provides annual payments for up to eight years based on conditions being met. 2. The City property taxes paid for January 1, 20__ valuation are: 3411Mingo Rd Real Property: __________________________________ Business Personal Property: _______________________ 3. List dates and periods of filing of Texas Direct Payment Returns and the amount of City of Denton Sale and Use Taxes paid to the Comptroller with each return (attach additional page if needed): Reporting Period Date Return Filed Amount Paid B. Required Attachments 1. Grantee to submit annual proof of payment of ad valorem taxes on the Premises and Improvements, as provided in Section IV.E of the Agreement. 17 2. Grantee to submit employee roster and relevant documentation, as provided in Section IV.A of the Agreement. I hereby certify that, to the best of my knowledge and belief, the information provided herein is accurate and in compliance with the terms of the Economic Development Agreement with the City of Denton, Texas. I have provided a copy of all documentation needed to substantiate the job creation threshold requirement for which I am requesting a rebate payment. _____________________________________________________________________________ Printed Name and Title of Certifying Officer ______________________________________ ___________________ Signature of Certifying Officer Date Note: This form is due by March 31 of each year after the commencement date, and as long as this Agreement is in effect. This Certificate of Compliance should be mailed to: City of Denton Attn: Economic Development 401 N. Elm St. Denton, TX 76201 18 EXHIBIT B IMPROVEMENTS 19 EXHIBIT C LEGAL DESCRIPTION OF THE LAND BEING ALL OF LOT 1R, BLOCK A, PAAGE CROSSING, AN ADDITION TO THE CITY OF DENTON, DENTON COUNTY, TEXAS, ACCORDING TO THE PLAT RECORDED IN DOCUMENT NO. 2022-206, OFFICIAL PUBLIC RECORDS OF DENTON COUNTY, TEXAS. 20 EXHIBIT D CERTIFICATION REGARDING THE EMPLOYMENT OF UNDOCUMENTED WORKERS The undersigned certifies, to the best of his or her knowledge and belief, that: (1) The business receiving any public subsidies provides pursuant to this Agreement, or a branch, division, or department of the business, does not and will not knowingly employ Public Subsidies loan guarantees, benefits relating to an enterprise or empowerment zone, fee waivers or rebates, land price subsidies, infrastructure development and improvements designed to principally benefit a single business or defined group of businesses, matching funds, tax refunds, tax rebates, or tax Undocumented worker at the time of employment, is not: (A) lawfully admitted for permanent residence to the United States; or (B) authorized under law to be employed in that manner in the United States. (2) If, after receiving the Public Subsidies provide herein, the business entity or a branch, division, or department of the business, is convicted of a violation under 8 U.S.C. to be Section 1324a(f), the business shall repay the amount of the Public Subsidy with interest to be charged at the statutory rate for delinquent taxes as determined by Section 33.01 of the Property Tax Code of the State of Texas, but without the addition of a penalty, according to the terms th provided by this Agreement under V.T.C.A. Government Code § 2264.053, not later than the 120 day after the date the City notifies the business of the violation. This certification is a material representation of fact upon which reliance was placed when this Agreement was made or entered into. Submission of this certification is a prerequisite for making or entering into this transaction imposed by V.T.C.A. Government Code § 2264. KRATEOSKY LLC By:_________________________________ _________________________________ (Type name and title) 21