Document:

Developer Economic Development Grant Agreement

 Exhibit 10.18 
 DEVELOPER ECONOMIC DEVELOPMENT GRANT AGREEMENT 
 THIS DEVELOPER ECONOMIC DEVELOPMENT GRANT
AGREEMENT (this “Agreement”) is made as of this 2nd day of August, 2007 (the “Effective Date”) among and between the CITY OF WINDCREST, TEXAS, a Texas general law municipality (“City”), the WINDCREST ECONOMIC
DEVELOPMENT CORPORATION, a Section 4B corporation created pursuant to the authority of the Development Corporation Act of 1979, as amended (“Windcrest EDC”), and the WINDCREST ECONOMIC DEVELOPMENT COMPANY, LLC, a Texas limited
liability company (the “Developer”). The City, Windcrest EDC and Developer may be referred to herein from time to time as a “Party” or collectively as the “Parties”. 
 WITNESSETH: 
 WHEREAS, the
Parties have entered into that certain Walzem Road Redevelopment Project Master Economic Incentives Agreement of even date herewith (the “Master Agreement”) with the City of San Antonio, Texas, a Texas home rule municipality (“City of
San Antonio”), Bexar County, Texas, a political subdivision of the State of Texas (the “County”), and Rackspace US, Inc., a Texas corporation (“Rackspace”), in order to induce Rackspace to relocate its corporate headquarters
to a facility on Walzem Road and to redevelop the Walzem Road corridor; and 
 WHEREAS, the redevelopment of the Walzem Road corridor
is intended to promote new or expanded business development through certain projects meeting the criteria of the Development Corporation Act of 1979, as amended, Texas Revised Civil Statutes Annotated, Article 5190.6 (the “EDC Act”); and

 WHEREAS, pursuant to the Master Agreement, Windcrest EDC and/or the Developer will acquire title to certain land in the area around
U.S. Interstate Highway 35 and Walzem Road as part of the Walzem Road corridor, such land to include the Eisenhauer Development Tract; and 
 WHEREAS, pursuant to Section 4.2 of the Master Agreement and that certain Development Agreement for Eisenhauer Development Project dated of even date herewith (the “Development Agreement”), the Developer will use its
best efforts to develop the Eisenhauer Development Tract into a mixed use project incorporating a live, work and play concept; and 
 WHEREAS, the parties to the Master Agreement recognize that the development of certain portions of the Eisenhauer Development Tract may require additional incentives from the City of Windcrest and/or Windcrest EDC; and 
 WHEREAS, the City is authorized by the provisions of Article III, Section 52-a of the Texas Constitution and Section 380.001 of the
Texas Local Government Code (the “Code”) to provide grants of public money to promote local economic development and to stimulate business and commercial activity in the City; and 
 WHEREAS, pursuant to Section 4.4 of the Master Agreement, the Parties have agreed to enter into this Agreement; and 
  

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 WHEREAS, on the Effective Date, the commitments contained in this Agreement shall become legally
binding obligations of the Parties. 
 NOW THEREFORE, in consideration of the foregoing and the mutual agreements, covenants and
payments herein and other valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Parties agree as follows: 
 ARTICLE I 
 DEFINITIONS 
 1.1 Defined Terms. Wherever used in this Agreement, the following terms shall have the meanings ascribed to them: 
 “City Council” means the City Council of the City of Windcrest, Texas. 
 “Event of Bankruptcy
or Insolvency” shall mean the dissolution or termination of Developer’s existence as a going business, insolvency, appointment of receiver for any significant part of Developer’s property and such appointment is not terminated within
ninety (90) days after such appointment is initially made, any general assignment for the benefit of creditors, or the commencement of any proceeding under any bankruptcy or insolvency laws by or against Developer and such proceeding is not
dismissed within ninety (90) days after the filing thereof. 
 “Governmental Authority” means any Federal, State, or local
governmental entity having jurisdiction. 
 “Governmental Rule” means any applicable law, rule or regulation of a Governmental
Authority. 
 “Grant(s)” shall have the meaning ascribed to it in Section 5.2. 
 “Grant Funds” shall have the meaning ascribed to it in Section 5.1. 
 “Infrastructure” shall mean public infrastructure, public works or public improvements, including streets, sidewalks, curbs, gutters, parks,
open spaces, drainage, improvements, utilities and the soft costs associated therewith such as engineering, architectural, planning, permits, fees and the master land plan (including the development of any necessary smart codes or changes to City
ordinances) made on or for the benefit of the Annexed Area. 
 1.2 Other Defined Terms. Capitalized terms used herein and not
defined herein shall have the meaning ascribed to such terms in the Master Agreement. 
  

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 ARTICLE II 
 GENERAL PROVISIONS 
 2.1 Recitals. The recitals to this Agreement and the Master
Agreement are incorporated herein for all purposes. 
 2.2 Purpose. The specific purpose of this Agreement is to grant economic
benefits to the Developer as necessary to induce the Developer to undertake certain improvements in the Eisenhauer Development Tract. This action will be a significant contribution toward a broader purpose to stimulate and encourage business and
commercial activity in the City, to create more job opportunities, build the sales and property tax base and promote a partnership relationship with the private sector businesses that will bring additional employment projects into the City.

 2.3 Term. The term of this Agreement shall begin on the Effective Date and end on December 31, 2010 (the
“Expiration Date”), unless sooner terminated as provided herein. 
 ARTICLE III 
 REPRESENTATIONS AND WARRANTIES 
 3.1
Representations of Developer. The Developer hereby makes the following representations, warranties and covenants to City as of the Effective Date unless another date is expressly stated to apply: 
  

	 	(a)	Existence. The Developer is a limited liability company created and validly existing under the laws of the State of Texas. 

  

	 	(b)	Authorization. The execution, delivery and performance by the Developer of this Agreement has been duly authorized by all necessary action and will not violate the
organizational documents of the Developer or result in the breach of or constitute a default under any loan or credit agreement, or other material agreement to which the Developer is a party or by which the Developer or its material assets may be
bound or affected. The execution of this Agreement by the Developer does not require any consent or approval that has not been obtained, including without limitation the consent or approval of any Governmental Authority. 

  

	 	(c)	Enforceable Obligations. Assuming due authorization, execution and delivery by each signatory Party hereto and thereto, this Agreement, all documents executed by the
Developer pursuant hereto and all obligations of the Developer hereunder and thereunder are enforceable against the Developer in accordance with their terms, except as such enforcement may be limited by bankruptcy, insolvency, reorganization or
other similar laws affecting the enforcement of creditor’s rights generally and by general equity principles (regardless of whether such enforcement is considered in a proceeding in equity or at law). 

  

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	 	(d)	No Legal Bar. To the extent of our knowledge, the execution and delivery of this Agreement and the performance of its obligations hereunder by the Developer will not conflict
with any provision of any law, regulation or Governmental Rules to which the Developer is subject or conflict with, or result in a breach of, or constitute a default under any of the terms, conditions or provisions of any agreement or instrument to
which the Developer is a party or by which it is bound or any order or decree applicable to the Developer. 

  

	 	(e)	Litigation. There are no legal actions or proceedings pending or, to the knowledge of the Developer, threatened against the Developer which, if adversely determined, would
materially and adversely affect the ability of the Developer to fulfill its obligations under this Agreement or the financial condition, business or prospects of the Developer. 

  

	 	(f)	Documents. All documents made available by the Developer to City are true, correct and complete copies of the instruments which they purport to be and accurately depict the
subject matter addressed therein. 

  

	 	(g)	Knowledge. The Developer has no knowledge of any facts or circumstances which presently evidence, or with the passage of time would evidence, that any of the representations
made by the Developer under this Agreement are in any way inaccurate, incomplete or misleading. 

 3.2 Representations of
City. City hereby makes the following representations, warranties and covenants to the Developer as of the Effective Date unless another date is expressly stated to apply: 
  

	 	(a)	Existence. City is a general law municipality of the State of Texas, situated in the County. 

  

	 	(b)	Power and Authority. Pursuant to Chapter 380 of the Code, City has all requisite corporate power and authority to enter into this Agreement and perform all of its obligations
hereunder. The execution and performance by City of this Agreement has been duly authorized and does not require the consent or approval of any other person which has not been obtained, including, without limitation, any Governmental Authority.

  

	 	(c)	No Legal Bar. To the extent of our knowledge, the execution and performance by City of this Agreement does not and will not violate any provisions of any contract, agreement,
instrument or Governmental Rule to which City is a party or is subject. 

  

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	 	(d)	Litigation. There are no legal actions or proceedings pending known to City which, if adversely determined, would materially and adversely affect the ability of City to
fulfill its obligations under this Agreement. 

  

	 	(e)	Enforceable Obligations. Assuming (i) due authorization, execution and delivery by each Party hereto and thereto, (ii) the enforceability of the Agreement and the
actions of City authorized by the Code, this Agreement, each document executed by the City pursuant hereto and all obligations of the City hereunder and thereunder are enforceable against the City in accordance with their terms.

 ARTICLE IV 
 CONDITIONS TO GRANTS 
 4.1 Conditions. The obligation for City to pay any and all of the Grants hereunder
shall be conditioned upon compliance with and satisfaction of each of the conditions set forth below: 
  

	 	(a)	Performance. Payment of any Grant hereunder shall not occur until after the Developer has satisfied the conditions precedent of Section 4.4 of the Master Agreement to
release the Grant Funds and either (i) contracted for construction of a portion of the Infrastructure and has presented such contract to the City and presented a draw under such contract for payment together with invoices for the work
performed, (ii) provided the City with a letter of credit satisfactory to the City in the amount of the contract, or (iii) constructed or paid for the construction of a portion of the Infrastructure and has submitted a request to the City
for reimbursement of the associated costs together with invoices for the work performed and proof of payment. 

  

	 	(b)	Racker Road Retention. The City shall escrow such portion of the Grant Funds as necessary to insure the construction of the Developer’s portion of Racker Road if neither
TxDOT nor the MPO construct Racker Road according to Article 5 of the Master Agreement or the Developer has not provided a letter of credit acceptable to the City to secure the completion of Racker Road. 

  

	 	(c)	Prohibition on Default. The Developer shall not receive any Grants during an uncured breach or default by the Developer of this Agreement or the Development Agreement.

  

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 ARTICLE V 
 ECONOMIC DEVELOPMENT GRANTS 
 5.1 Grant Funds. The City shall set aside the
amount of five million dollars ($5,000,000) from the amount it receives from Rackspace as prepaid lease payments pursuant to Section 3.1 of the Master Agreement in a separate account in order to fund the Grants (the “Grant Funds”).
The Grant Funds shall be invested in eligible investments for the City as provided in Section 4.4 of the Master Agreement. All earnings from such investments will be added to the Grant Funds. 
 5.2 Grants. Subject to the conditions in Article IV and Section 5.5 and the Developer’s continued fulfillment of all the
terms of this Agreement and the Development Agreement, City agrees to provide the Developer with up to as many economic development grants (“Grants”) as necessary to pay for the Infrastructure until all Grant Funds have been expended.
Grants shall be paid as necessary to facilitate a contract for a portion of the Infrastructure or within thirty (30) days of submission of a reimbursement request from the Developer. 
 5.3 Limit of Obligation. The Grants made hereunder shall be paid solely from the $5,000,000 set aside by the City pursuant to
Section 5.1 above. Under no circumstances shall the City’s obligations hereunder be deemed to create any debt within the meaning of any constitutional or statutory provision. Further, the City shall not be obligated to pay any commercial
bank, lender or similar institution for any loan or credit agreement made by Developer. The Developer may pledge payments it is to receive hereunder to a commercial bank, lender or similar institution to help finance the project provided that they
may not seek recovery against the City until an amount is due hereunder and then only in that amount. The City and the Developer will work together to structure such pledge so that it is acceptable to the Developer’s lender. 
 5.4 Conveyance to the City. Upon completion of construction of any Infrastructure paid in whole or part from Grant Funds, such
Infrastructure must be conveyed to the City under terms and conditions acceptable to the City or shall be burdened with a public access easement acceptable to the City such that it is always available to the public. 
 5.5 Racker Road. The City will attempt to cause TxDOT or the MPO to fund Racker Road. In the event the City is not able to
accomplish this, a portion of the Grant Funds will be used to complete Racker Road from the southern boundary of the Leased Property adjoining the existing Mall Loop Road to Eisenhauer Road. Once designed, the Developer will obtain an estimate of
the cost of constructing this portion of Racker Road from its engineer and will deliver a copy to the City. The City will retain Grant Funds in an amount sufficient to complete Racker Road until the City has determined to use such funds itself to
complete Racker Road as provided in Section 4.4 of the Master Agreement, or such time as the Developer has either (i) entered into a contact for the construction of this portion of Racker Road and the grant is being made for the
construction of Racker Road or (ii) the Developer has provided a letter of credit acceptable to the City to insure the construction of Racker Road. 
  

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 ARTICLE VI 
 TERMINATION 
 6.1 Termination. This Agreement shall terminate upon the occurrence of
anyone or more of the following: 
  

	 	(a)	the Expiration Date; 

  

	 	(b)	the execution by all Parties of a written agreement terminating this Agreement; 

  

	 	(c)	at the option of a Party in the event the other Party breaches any of the terms or conditions of this Agreement and such breach is not cured within thirty (30) days after
written notice thereof; 

  

	 	(d)	at the option of a Party in the event the other Party breaches a representation in either Section 3.1 or 3.2 herein; 

  

	 	(e)	at the option of City, if the Developer suffers an Event of Bankruptcy or Insolvency; or 

  

	 	(f)	any subsequent Federal or State legislation or any decision by a court of competent jurisdiction declares or renders this Agreement invalid, illegal or unenforceable.

 6.2 Repayment of the Grant(s). In the event the Agreement is terminated pursuant to Sections 6.1 (c),
(d) or (e) if the Developer is the breaching party, then the Developer shall immediately refund to the City an amount equal to the sum of all Grants paid by the City to the Developer immediately proceeding the date of such termination,
less the value to the City of Windcrest of all Infrastructure previously conveyed to the City of Windcrest and paid for with Grant Funds, plus interest at the rate periodically announced by the Wall Street Journal as the prime or base commercial
lending rate, or if the Wall Street Journal shall ever cease to exist or cease to announce a prime or base lending rate, then at the annual rate of interest from time to time announced by Citibank, N.A. (or by any other New York money center bank
selected by the City) as its prime or base commercial lending rate, from the date of termination until paid, less the value of any Public Improvements previously funded by the Grant Funds and conveyed to the City. 
 ARTICLE VII 
 INDEMNIFICATION,
ATTORNEYS FEES, & OTHER REMEDIES 
 7.1 THE DEVELOPER COVENANTS AND AGREES TO FULLY INDEMNIFY AND HOLD HARMLESS THE CITY AND THE
ELECTED OFFICIALS, EMPLOYEES, OFFICERS, DIRECTORS, VOLUNTEERS AND REPRESENTATIVES OF THE CITY, INDIVIDUALLY OR COLLECTIVELY, FROM AND AGAINST ANY AND ALL COSTS, 

  

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CLAIMS, LIENS, DAMAGES, LOSSES, EXPENSES, FEES, FINES, PENALTIES, PROCEEDINGS, ACTIONS, DEMANDS, CAUSES OF ACTION, LIABILITY AND SUITS OF ANY KIND AND
NATURE, INCLUDING BUT NOT LIMITED TO, PERSONAL OR BODILY INJURY, DEATH AND PROPERTY DAMAGE, MADE UPON THE CITY, DIRECTLY OR INDIRECTLY ARISING OUT OF, RESULTING FROM OR RELATED TO THE DEVELOPER’S ACTIVITIES UNDER THIS CONTRACT, INCLUDING ANY
ACTS OR OMISSIONS OF THE DEVELOPER, ANY AGENT, OFFICER, DIRECTOR, REPRESENTATIVE, EMPLOYEE, CONSULTANT, CONTRACTOR OR SUBCONTRACTOR OF THE DEVELOPER, AND THEIR RESPECTIVE OFFICERS, AGENTS, EMPLOYEES, DIRECTORS AND REPRESENTATIVES WHILE IN THE
EXERCISE OR PERFORMANCE OF THE RIGHTS OR DUTIES UNDER THIS CONTRACT, ALL WITHOUT, HOWEVER, WAIVING ANY GOVERNMENTAL IMMUNITY AVAILABLE TO THE CITY UNDER TEXAS LAW AND WITHOUT WAIVING ANY DEFENSES OF THE PARTIES UNDER TEXAS LAW. THE PROVISIONS OF
THIS INDEMNIFICATION ARE SOLELY FOR THE BENEFIT OF THE CITY AND NOT INTENDED TO CREATE OR GRANT ANY RIGHTS, CONTRACTUAL OR OTHERWISE, TO ANY OTHER PERSON OR ENTITY. THE DEVELOPER SHALL PROMPTLY ADVISE THE CITY IN WRITING OF ANY CLAIM OR DEMAND
AGAINST THE CITY OR THE DEVELOPER KNOWN TO THE DEVELOPER RELATED TO OR ARISING OUT OF THE DEVELOPER’S ACTIVITIES UNDER THIS AGREEMENT AND SHALL SEE TO THE INVESTIGATION AND DEFENSE OF SUCH CLAIM OR DEMAND AT THE DEVELOPER’S COST. THE CITY
SHALL HAVE THE RIGHT, AT ITS OPTION AND AT ITS OWN EXPENSE, TO PARTICIPATE IN SUCH DEFENSE WITHOUT RELIEVING THE DEVELOPER OF ANY OF ITS OBLIGATIONS UNDER THIS PARAGRAPH. 
 7.2 THE DEVELOPER FURTHER AGREES TO DEFEND, AT ITS OWN EXPENSE AND ON BEHALF OF THE CITY AND IN THE NAME OF THE CITY, ANY CLAIM OR LITIGATION BROUGHT AGAINST THE CITY AND ITS ELECTED OFFICIALS, EMPLOYEES, OFFICERS,
DIRECTORS AND REPRESENTATIVES, IN CONNECTION WITH ANY SUCH INJURY, DEATH, OR DAMAGE FOR WHICH THIS INDEMNITY SHALL APPLY, AS SET FORTH ABOVE. THE DEVELOPER’S OBLIGATIONS UNDER THIS ARTICLE VII SHALL SURVIVE THE TERMINATION OF THIS AGREEMENT.

 7.3 Independent Contractor. It is expressly understood and agreed that the Developer is and shall be deemed to be an
independent contractor and operator responsible to the City for its respective acts or omissions and that the City shall in no way be responsible therefore. 
 7.4 Attorney Fees and Expenses. In the event that a Party should default under any of the provisions of this Agreement and the non-defaulting Party should employ attorneys or incur other expenses for the
collection of the payments due under this Agreement or the enforcement of performance or observance of any obligation or agreement herein contained, the defaulting Party agrees to pay to the non-defaulting Party reasonable fees of such attorneys and
such other expenses so incurred. 
  

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 7.5 Non Waiver of Remedies. No remedy herein conferred upon or reserved herein is intended
to be exclusive of any other available remedy or remedies, but each and every such remedy shall be cumulative and shall be in addition to every other remedy given under this Agreement or now or hereafter existing at law or in equity or by statute.

 7.6 Waiver of Consequential Damages. The Parties waive all present and future claims for consequential damages arising from
or related to this Agreement, and such waiver shall survive any termination of this Agreement. 
 7.7 Release of Existing
Claims. Each Party hereby releases any and all presently existing claims of every kind or character which it has or may have under or pursuant to this Agreement or the Master Agreement, including those against its appointed or elected
officials, members, agents, employees, officers, directors and representatives, individually and collectively. 
 ARTICLE VIII

 MISCELLANEOUS 
 8.1
Binding Agreement; Assignment. The terms and conditions of this Agreement are binding upon the successors and permitted assigns of the Parties hereto. This Agreement may not be assigned by the Developer without the prior written
consent of the City. 
 8.2 Limitation on Liability. It is understood and agreed among the parties that the Developer and the
City, in satisfying the conditions of this Agreement, have acted independently, and assume no responsibilities or liabilities to third parties in connection with these actions. 
 8.3 No Joint Venture. It is acknowledged and agreed by the Parties that the terms hereof are not intended to and shall not be deemed to
create a partnership or joint venture among the Parties. 
 8.4 Notice. Any notice required or permitted to be delivered
hereunder shall be deemed received (i) three (3) days after deposit into the United States Mail, postage prepaid, certified mail, return receipt requested, addressed to the Party at the address set forth below or (ii) on the day
actually received if sent by courier or otherwise hand delivered. 
  

			
	 Developer
	 	Windcrest Economic Development Company, LLC
		 	910 Harding Street
		 	Lafayette, LA 70503
		 	Attn: Jeremy A. Hebert
		
	 With a copy to:
	 	Gary Cain
		 	24165 IH 10 West, Suite 217125
		 	San Antonio, Texas 78257

  

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	 City
	 	City of Winderest, Texas
		 	8601 Midcrown Drive
		 	San Antonio, Texas 78239
		 	Attn: Ronnie Cain
		
	 With a copy to:
	 	Fulbright & Jaworski L.L.P.
		 	300 Convent Street, Suite 2200
		 	San Antonio, Texas 78205
		 	Attn: James P. Plummer

 8.5 Conflict. If there is any conflict between this Agreement and the Master
Agreement, the terms of this Agreement shall control. 
 8.6 Governing Law. This Agreement shall be governed by the laws of the
State of Texas; and venue for any action concerning this Agreement shall be exclusively in the State District Court of Bexar County, Texas. The Parties agree to submit to the jurisdiction of said courts. 
 8.7 Amendment. This Agreement may only be amended by a written agreement executed by the Parties. 
 8.8 Legal Construction. In the event 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 other provisions, 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, a provision shall 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. 
 8.9 Captions. All descriptive headings and captions herein are inserted for convenience only and shall not be considered in interpreting or
construing this Agreement. 
 8.10 Exhibits. The exhibits to this Agreement are incorporated herein by reference for all
purposes wherever reference is made to the same. 
 8.11 Survival of Covenants. Any of the representations, warranties,
covenants, and obligations of the Parties, as well as any rights and benefits of the Parties, pertaining to a period of time following the termination of this Agreement (specifically including Section 5.5 of this Agreement) shall survive
termination. 
 8.12 Counterparts. This Agreement may be executed in counterparts. Each of the counterparts shall be deemed an
original instrument, but all of the counterparts shall constitute one and the same instrument. 
 [Signatures and acknowledgments of
Parties on following pages] 
  

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 EXECUTED in duplicate originals as of the Effective Date. 
  

			
	CITY OF WINDCREST, TEXAS
		
	By:	 	/s/ Ronnie Cain
		 	Ronnie Cain,
		 	City Administrator

  

	
	Approved as to Form:
	
	/s/ James P. Plummer
	James P. Plummer, Special City Attorney

 ACKNOWLEDGMENT 
  

			
	STATE OF TEXAS	  	§
		  	§
	COUNTY OF BEXAR	  	§

 This instrument was acknowledged before me on the 2nd day of August, 2007, by Ronnie Cain, the
City Administrator of the City of Windcrest, Texas on behalf of Said City. 
  

	
	
	/s/ Aida Ann Albiar
	Notary Public, State of Texas

  

			
	My Commission Expires: ___________________	 	[SEAL]

  

 S-1 

 EXECUTED in duplicate originals as of the Effective Date. 
  

			
	WINDCREST ECONOMIC DEVELOPMENT COMPANY, LLC
		
	By:	 	/s/ Jeremy A. Hebert
		 	Jeremy A. Hebert,
		 	Duly Authorized Representative

 ACKNOWLEDGMENT 
  

			
	STATE OF LOUISIANA	  	§
		  	§
	PARISH OF LAFAYETTE	  	§

 This instrument was acknowledged before me on the 1st day of August, 2007, by Jeremy A. Hebert,
the Duly Authorized Representative of Windcrest Economic Development Company, LLC., a Texas limited liability company, on behalf of said limited liability company. 
  

	
	
	/s/ Adam A. Abdalla
	Notary Public, State of Louisiana
	Adam A. Abdalla
	Bar Roll Number 30370
	Notary Public, State of Louisiana

  

			
	My Commission Expires: At Death	 	

  

 S-2State of Texas Economic Development Agreement

 Exhibit 10.19 
 EXECUTION COPY 
 ECONOMIC
DEVELOPMENT AGREEMENT 
 BETWEEN 
 THE STATE OF TEXAS 
 AND 
 RACKSPACE US, INC.

 AUGUST 1, 2007 
 THIS AGREEMENT (“Agreement”) is by and between the State of Texas (the “State”), acting by and through the Office of Economic Development and Tourism, a division within
the Office of the Governor (“OOGEDT”), and Rackspace US, Inc., a Delaware corporation d/b/a Rackspace Managed Hosting (“Rackspace”). The State and Rackspace are hereinafter referred to either individually as the
“party,” or collectively as the “parties.” The Effective Date of this Agreement is August 1, 2007. 
 RECITALS 
 WHEREAS, Texas’ low taxes, budgetary discipline, reasonable regulations and educated
workforce continue to make the state a top location for businesses looking to expand or relocate; and 
 WHEREAS, the State of Texas
desires to become a world leader in information technology; and 
 WHEREAS, Rackspace is known for information
technology hosting and related services; and 
 WHEREAS, Rackspace has proposed establishing a new facility headquarters at the former
Windsor Park Mall located at the intersection of Walzem Road and IH-35 (the “Walzem Road facility”) in Windcrest, Bexar County, Texas; and 
 WHEREAS; the new facility and expansion will involve Rackspace investing over $100 million in land, buildings, and capital improvements in Texas, and is expected to result in the creation
of at least 4000 new full-time jobs for Texans, with an average annual payroll of more than $220 million; and 
 WHEREAS, Article III, Section 52-A of the Texas Constitution expressly authorizes the State to use public funds for the public purposes of development and diversification of the economy of the
State, the elimination of unemployment or underemployment in the State, or the development of commerce in the State; and 
 WHEREAS, SB 1771 of the 78th Texas Legislature established the Texas Enterprise Fund
(“TEF”) to be used with the express written approval of the Governor, Lieutenant Governor, and Speaker of the House of Representatives for economic development, infrastructure development, community development, job training programs, and
business incentives, and SB 1 of the 79th Texas Legislature appropriated more than $180 million to the TEF for the 2006 and 2007 fiscal years; and

 WHEREAS, the State values Rackspace as a distinguished and important corporate citizen, and wishes
to receive a commitment that Rackspace will locate its new facility in Texas, and Rackspace wishes to provide such a commitment; and 
 WHEREAS, the Governor, Lieutenant Governor, and Speaker have each approved a grant from the TEF to Rackspace, as evidenced in the letter attached as Exhibit A hereto; and 
 WHEREAS, to ensure that the benefits the State provides under this Agreement are utilized in a manner consistent with Article III,
Section 52-a of the Texas Constitution, and other laws, Rackspace has agreed to comply with certain conditions and deliver certain performance, including achieving measurable job creation and retention commitments, in exchange for receiving
these benefits; and 
 WHEREAS, the parties desire to have such proposals set forth in a valid, binding and enforceable agreement; and

 WHEREAS, the State believes it is in the best public interest to enter into this Agreement for the reasons set forth above;

 AGREEMENTS 
 NOW, THEREFORE, in consideration of the mutual promises herein, the parties agree as follows: 
 1. STATE OF TEXAS COMMITMENT 
 Grant of Funds from the Texas Enterprise Fund.
The State agrees to pay cash from the Texas Enterprise Fund to Rackspace in the amount of Twenty Two Million Dollars ($22,000,000) (the “Funds”) as follows: 
  

	 	i.	Five Million Dollars ($5,000,000) as soon as practicable following execution of this Agreement, provided that all necessary documents for disbursement of the funds have been
provided to the State as required; 

  

	 	ii.	Six Million Dollars ($6,000,000) following receipt from Rackspace of evidence of creating at least One Thousand Two Hundred Twenty-Five (1,225) new employment positions;

  

	 	iii.	Five Million Five Hundred Thousand Dollars ($5,500,000) following receipt from Rackspace of evidence of creating at least Two Thousand One Hundred (2,100) new employment
positions including those in section 1.ii., above; and 

  

	 	iv.	Five Million Five Hundred Thousand Dollars ($5,500,000) following receipt from Rackspace of evidence of creating at least Three Thousand (3,000) new employment positions
including those in section 1.ii and iii., above. 

  

 2 

 The format for submitting evidence of job creation will be in sufficient detail for the State to confirm the asserted job
creation. Rackspace must request each disbursement in writing. If Rackspace does not request the first disbursement in accordance with the terms of this Agreement within six months from the Effective Date of this Agreement, then this Agreement shall
terminate and become null and void. 
 2. RACKSPACE FUNDING CONDITIONS 
 Rackspace must meet all of the following “Funding Conditions”, or will be subject to liquidated damages and/or repayment in accordance with the Agreement. The
Funding Conditions are as follows: 
 a. Expansion in Windcrest, Bexar County, Texas. Rackspace commits to establishing the Walzem Road facility in
Windcrest, Bexar County, Texas. This development shall begin by December 31, 2007, and be complete by December 31, 2012. 
 b.
Job Target. Rackspace commits to meeting a job target of (i) creating a total of at least Four Thousand (4000) Employment Positions by December 31, 2012, in Texas and of (ii) maintaining these Employment Positions through
December 31, 2018. Rackspace also commits to the following job creation schedule: 
  

	 	(i)	475 new employment positions by December 31, 2008; 

  

	 	(ii)	1225 total new employment positions by December 31, 2009; 

  

	 	(iii)	2100 total new employment positions by December 31, 2010; 

  

	 	(iv)	3000 total new employment positions by December 31, 2011; and 

  

	 	(v)	4000 total new employment positions by December 31, 2012. 

 At least 3000 of the Employment Positions shall be created in Windcrest, Bexar County, Texas. The remaining 1000 Employment Positions may be located anywhere in Texas. Employment Positions will only be counted as new employment positions
for purposes of this Agreement if they are above the total number of employment positions with Rackspace in the State at the time this Agreement is executed. Collectively, these job targets shall be referred to as the “Job Target.”

 c. Employment Positions. For the purposes of this Agreement, “Employment Positions” shall be defined as jobs meeting all
of the following criteria: 
  

	 	(i)	New full-time employment positions in the State of Texas with Rackspace, and 

  

	 	(ii)	With an average annual gross compensation of at least $56,000 per year (excluding benefits), adjusted upward by 2% per year over the term of the Agreement to take account of
inflation beginning in 2009. 

 d. Annual Compliance Verification. Beginning in January 2009, and continuing every year
thereafter through January 2019, each year by January 31 Rackspace must deliver to OOGEDT a compliance verification signed by a duly authorized representative of Rackspace that shall certify the number of and generally describe the Employment
Positions existing as of December 31 of the year preceding and provide the median wage for all Employment Positions (the “Annual Compliance Verification”). There will be a total of eleven (11) Annual Compliance Verifications due,
covering jobs created and maintained in years 2008 through 2018. All Annual Compliance Verifications shall be in a form reasonably satisfactory to OOGEDT and shall 

  

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provide appropriate back-up data for the Employment Position numbers provided. In addition, Rackspace must submit each year a copy of the Annual Compliance
Verification to the Office of the Lieutenant Governor and the Office of the Speaker of the House of Representatives. 
 e.
Certification of Good Standing/Delinquent Taxes. By execution of this Agreement, Rackspace certifies that the company is in good standing under the laws of the State in which it was formed or organized, and has provided the State sufficient
evidence of such. In addition, Rackspace certifies that the company owes no delinquent taxes to any taxing unit of this State at the time of execution of this Agreement. 
 3. LIQUIDATED DAMAGES 
 a. Failure to Meet 2008 “Floor” Job
Target. If Rackspace’s first Annual Compliance Verification demonstrates that it has failed to create and maintain at least 237 Employment Positions as of December 31, 2008, the State may terminate the Agreement and require Rackspace
to repay the entirety of any funds disbursed plus interest at the rate of 4.7% per year, compounded. 
 b. Job Target. As
set forth in Section 2 above, annually during the term of this Agreement through 2019 Rackspace must deliver to OOGEDT an Annual Compliance Verification demonstrating that it has met the Job Target for the year just ended. The consequences to
Rackspace of satisfying, failing to satisfy or exceeding the Job Target are as follows: 
 i. Compliance With Job Target. If Rackspace
provides a satisfactory Annual Compliance Verification that demonstrates that it has met the Job Target for that year, then Rackspace will be deemed to have met its obligations for such preceding year and no damages are due. 
 ii. Failure to Meet Job Target. If Rackspace provides an Annual Compliance Verification that demonstrates that it has not met the Job Target for
that year, then OOGEDT may require Rackspace to pay liquidated damages in the amount of $1,221 per job for every Employment Position by which it is short that year. In no event shall the amount of damages exceed the amount of the Funds granted
pursuant to this Agreement, plus interest at the rate of 4.7% per year. 
 iii. Exceeding Job Target. If an Annual Compliance
Verification filed by Rackspace demonstrates that it has exceeded the job target for that year, then Rackspace will be deemed to have exceeded its obligations, and will receive a “Surplus Job Credit” for each extra Employment Position that
it has maintained above the job target for that year. Rackspace may utilize any earned Surplus Job Credits in following years as follows: 
 A. Rackspace may expend a Surplus Job Credit in lieu of paying liquidated damages in the amount of $1,221 per job (for example, if Rackspace owes liquidated damages in the amount of $122,100 for 100 Employment
Positions lacking in a particular year, Rackspace may discharge this amount by expending 100 Surplus Job Credits it has earned in prior years); or 
 B. Rackspace may apply Surplus Job Credits toward meeting the remaining Job Target for future years, such that if Rackspace accumulates enough Surplus Job Credits it will be deemed to have fulfilled all of its 

  

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obligations under the Agreement, and will be released from the Agreement early (for example, if Rackspace has accumulated at least 4000 Surplus Job Credits
by December 31, 2017, then it may apply these Surplus Job Credits forward to fulfill its Job Target for 2018, and may thereby fulfill its obligations and be released from the Agreement one year early). 
 4. RACKSPACE ADDITIONAL COMMITMENTS 
 a. OOGEDT Audit Rights. 
 (i) Duty to Maintain Records. Rackspace shall
maintain adequate records to support its charges, procedures and performances to OOGEDT for all work related to this Agreement. Rackspace also shall maintain such records as are deemed necessary by the OOGEDT and auditors of the State of Texas or
United States, or such other persons or entities designated by the OOGEDT, to ensure proper accounting for all costs and performances related to this Agreement. 
 (ii) Records Retention. Rackspace shall maintain and retain for a period of four (4) years after the submission of the final
expenditure report, or until full and final resolution of all audit or litigation matters which arise after the expiration of the four (4) year period after the submission of the final expenditure report, whichever time period is longer, such
records as are necessary to fully disclose the extent of services provided under this Agreement, including but not limited to any daily activity reports and time distribution and attendance records, and other records which may show the basis for the
calculation of full time positions. 
 (iii) Audit Trails. Appropriate audit trails shall be maintained by Rackspace to
provide accountability for updates and changes to automated personnel and financial systems. Audit trails maintained by Rackspace will, at a minimum, identify the changes made, the individual making the change and the date the change was made. An
adequate history of transactions shall be maintained by Rackspace to permit an audit of the system by tracing the activities of individuals through the system. Rackspace’s automated systems must provide the means whereby authorized personnel
have the ability to audit and establish individual accountability for any action that can potentially cause access to, generation of, or modification of information related to the performances of this Agreement. Rackspace agrees that
Rackspace’s failure to maintain adequate audit trails and corresponding documentation shall create a presumption that the obligations hereunder were not performed. 
 (iv) Access. Rackspace 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 OOGEDT and auditors of the State of Texas, or such other persons or entities designated by OOGEDT for the purposes of inspecting, auditing, or copying such books and records. 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 the OOGEDT and auditors of the State of Texas, or such other persons or entities
designated by the OOGEDT in accordance with all applicable state and federal laws, regulations or directives. Rackspace will direct any subcontractor with whom it has established a contractual relationship to discharge Rackspace’s obligations
to likewise permit access to, inspection of, and reproduction of all books and records of Rackspace’s subcontractor(s) which pertain to this agreement. 
  

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 (v) Location. Any such audit shall be conducted at Rackspace's principal place of
business during Rackspace's normal business hours and at OOGEDT 's expense, provided all costs incurred by OOGEDT in conducting any such audit shall be reimbursed by Rackspace in the event such audit reveals an aggregate discrepancy in any Rackspace
reporting of compliance as required by the Agreement. 
 (vi) Reimbursement. If any audit or examination reveals that
Rackspace’s reports for the audited period are not accurate for such period, Rackspace shall promptly reimburse the OOGEDT for the liquidated damages amount(s) in accordance with section 3.b.ii. 
 (vii) Corrective Action Plan. If any audit reveals any discrepancies or inadequacies in the fulfillment of Rackspace’s
obligations hereunder which are necessary in order to maintain compliance with this Agreement, applicable laws, regulations, Rackspace’s responsibilities or performance standards, Rackspace agrees within thirty (30) calendar days after
Rackspace’s receipt of the audit findings, to propose and submit to OOGEDT a corrective action plan to correct such discrepancies or inadequacies subject to the approval of the OOGEDT. Rackspace further agrees to complete the corrective action
approved by OOGEDT within thirty (30) calendar days after OOGEDT approves Rackspace’s corrective action plan, at the sole cost of Rackspace. 
 (viii) Reports. Rackspace shall provide to OOGEDT periodic status reports in accordance with OOGEDT's audit procedures regarding Rackspace's resolution of any audit-related compliance activity for which
Rackspace is responsible. 
 b. Economic Impact Reports; Periodic Progress Briefings. In a manner consistent with the need to protect
privacy and the intellectual property of Rackspace and third parties, Rackspace will provide periodic briefings as reasonably requested by OOGEDT on the general activities, economic impact and progress of the new facility development and expansion
and business operations in Texas. 
 c. Use and Retention of Texas Suppliers. Rackspace will use reasonable efforts to use qualified
Texas-based suppliers to provide products and services under this Agreement, provided however, Rackspace may in its sole discretion select suppliers and contractors based on program needs, scientific criteria, and industry standards. 
 d. Financial Information. Rackspace will furnish to OOGEDT on an annual basis by January 31, of each year throughout the term of the
Agreement as requested by OOGEDT, information regarding the general business status, market and general summary financial updates regarding Rackspace. 
 e. Indemnity and Hold Harmless. Rackspace agrees to indemnify and hold the State, the maker of this grant, and its agents, officers, and employees harmless for any and all losses, claims, suits, actions, and
liability, including any litigation costs, that arise from any act or omission of Rackspace or any of its officers and employees, agents, contractors, assignees, and affiliates relating to the project for which this grant is made regardless of
whether the act or omission is related to job creation or other stated purpose of the grant. 
  

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 5. DEFAULTS AND REMEDIES 
 Each of the following acts or omissions of Rackspace or occurrences shall constitute an act of default under this agreement: 
 a. Failure to establish the Walzem Road Facility. If Rackspace fails to begin the development of the Walzem Road facility by December 31, 2007
all funds advanced will be subject to an immediate refund to the State of Texas. Rackspace shall refund to the State of Texas an amount equal to all funds advanced under this Agreement plus interest at the rate of 4.7% per year, compounded,
reduced by any funds refunded to the State for failure to meet job creation targets. 
 b. Failure to pay liquidated damages for job
creation. After notice, Rackspace shall have thirty (30) days to pay outstanding liquidated damages for job creation. If Rackspace does not pay after this period, all amounts that could potentially be claimed for failure to meet job targets
hereunder shall become due and payable immediately on demand of the State of Texas. 
 c. Failure to provide verification. If after
the end of a calendar year Rackspace fails to provide an Annual Compliance Verification by the deadline for that year, OOGEDT may make a good faith estimate, based on information available to OOGEDT, of the Employment Positions at Rackspace as of
December 31 of that year and, if the estimated Employment Positions fall short of the Job Target, require corresponding liquidated damages in accordance with Section 3.b.ii. above. Rackspace will not be eligible to earn Surplus Job Credits
for any such year for which it fails to provide an Annual Compliance Verification by the deadline for that year. 
 6. GENERAL
PROVISIONS 
 a. Authority. Each party represents that it has obtained all necessary authority to enter into this
Agreement. 
 b. Relationship of Parties and Disclaimer of Liability. The parties will perform their
respective obligations under this Agreement as independent contractors and not as agents, employees, partners, joint venturers, or representatives of the other party. Neither party can make representations or commitments that bind the other party.
Rackspace is not a “governmental body” by virtue of this Agreement or the use of TEF or other funding. 
 c.
Limitation of Liability. In no event will either party be liable to the other party for any indirect, special, punitive, exemplary, incidental or consequential damages. This limitation will apply regardless of whether or not the other party has
been advised of the possibility of such damages. 
 d. Term. The term of this Agreement commences on the Effective Date of the
Agreement and continues until January 31, 2019 unless terminated earlier pursuant to the terms of this Agreement. 
 e. Termination
for Cause. Either party may terminate this Agreement for Cause upon thirty (30) days prior written notice to the other party. “Cause” is any failure to perform a material obligation under this Agreement within the specified time;
including a material breach of a Funding Condition. This Agreement may not be terminated if the alleged Cause is cured within the specified thirty-day period. The sole remedy for any termination for Cause (and for the “cause” giving rise
to the termination) shall be that each party is relieved of its obligation to 

  

 7 

 
perform hereunder, however, following termination by the State, Rackspace will continue to be obligated to the State for liquidated damages and/or repayment
of funds in accordance with applicable provisions of this Agreement. 
 f. Dispute Resolution and Applicable Law. 
 (i) Informal Meetings. The parties’ representatives will meet as needed to implement the terms of this Agreement and will make a good
faith attempt to informally resolve any disputes. 
 (ii) Non-binding Mediation. Except to prevent irreparable harm for which
there is no adequate remedy at law, neither party shall file suit to enforce this Agreement without first submitting the dispute to confidential, non-binding mediation before a mediator mutually agreed upon by the parties. 
 (iii) Applicable Law and Venue. This Agreement is made and entered into in the state of Texas, and this Agreement and all disputes arising out of
or relating thereto shall be governed by the laws of the state of Texas, without regard to any otherwise applicable conflict of law rules or requirements. 
 Rackspace agrees that any action, suit, litigation or other proceeding (collectively "litigation") arising out of or in any way relating to this Agreement, or the matters referred to therein, shall be commenced
exclusively in the Travis County District Court or the United States District Court for the Western District of Texas, Austin Division, and hereby irrevocably and unconditionally consent to the exclusive jurisdiction of those courts for the purpose
of prosecuting and/or defending such litigation. Rackspace hereby waives and agrees not to assert by way of motion, as a defense, or otherwise, in any suit, action or proceeding, any claim that (a) Rackspace is not personally subject to the
jurisdiction of the above-named courts, (b) the suit, action or proceeding is brought in an inconvenient forum or (c) the venue of the suit, action or proceeding is improper. 
 g. Publicity. The parties agree to cooperate fully to coordinate with each other in connection with all press releases and publications regarding
this Agreement. 
 h. No Waiver of Sovereign Immunity. Nothing in this agreement may be construed to be a waiver of the sovereign
immunity of the State to suit. 
 7. MISCELLANEOUS PROVISIONS 
 a. Counterparts. This Agreement may be executed simultaneously in two or more counterparts, each of which shall be deemed an original, and it shall
not be necessary in establishing proof of this Agreement to produce or account for more than one such counterpart. 
 b. Merger. This
document constitutes the final entire agreement between the parties and supersedes any and all prior oral or written communication, representation or agreement relating to the subject matter of this Agreement. 
 c. Severability. Any term in this Agreement prohibited by, or unlawful or unenforceable under, any applicable law or jurisdiction is void without
invalidating the remaining terms of this said Agreement. However, where the provisions of any such applicable law may be waived, they are hereby waived by either party, as the case may be, to the fullest extent permitted by the law, and the affected
terms are enforceable in accordance with the parties' original intent. 
  

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 d. Survival of Promises. Notwithstanding any expiration, termination or cancellation of this
Agreement, the rights and obligations pertaining to payment or repayment of funds and/or liquidated damages, confidentiality, disclaimers and limitation of liability, indemnification, and any other provision implying survivability will remain in
effect after this Agreement ends. 
 e. Binding Effect. This Agreement and all terms, provisions and obligations set forth herein
shall be binding upon and shall inure to the benefit of the parties and their successors and assigns and shall be binding upon and shall inure to the benefit of the parties and their respective successors and assigns and all other state agencies and
any other agencies, departments, divisions, governmental entities, public corporations and other entities which shall be successors to each of the parties or which shall succeed to or become obligated to perform or become bound by any of the
covenants, agreements or obligations hereunder of each of the parties hereto. 
 f. Successors and Assigns/Notice. Rackspace, or any
legal successor thereto or prior assignee thereof, may assign its rights and obligations under this Agreement, including by merger or operation of law, to any legal successor or any person or entity that acquires all or substantially all of its
business and operations. In addition, with the prior written consent of the State, which consent shall not be unreasonably withheld or delayed, Rackspace, or any legal successor company thereto or prior assignee thereof, may assign its rights and
obligations under this Agreement to any parent or wholly owned subsidiary that it currently has in place or later establishes, if it is constituted as a separate legally recognized business entity. Any such assignment will be made without additional
consideration being payable to the State. This Agreement shall survive any sale, change of control or similar transaction involving Rackspace, any successor thereto or prior assignee thereof and no such transaction shall require the consent of the
State. Rackspace shall provide the State written notice of any assignment, sale, change of control or similar transaction pursuant to this section as soon as possible and in no event not later than thirty (30) calendar days following such
event. 
 g. Force Majeure. Neither party shall be required to perform any obligation under this Agreement or be liable or responsible
for any loss or damage resulting from its failure to perform so long as performance is delayed by force majeure or acts of God, including but not limited to strikes, lockouts or labor shortages, embargo, riot, war, revolution, terrorism, rebellion,
insurrection, flood, natural disaster, or interruption of utilities from external causes. 
 h. Notice. All notices, requests, demands
and other communications will be in writing and will be deemed given and received (i) on the date of delivery when delivered by hand, (ii) on the following business day when sent by confirmed simultaneous telecopy, (iii) on the
following business day when sent by receipted overnight courier, or (iv) three (3) business days after deposit in the United States Mail when mailed by registered or certified mail, return receipt requested, first class postage prepaid, as
follows: 
  

 9 

 If to the State to: 
 General Counsel 
 Office of the Governor 
 P.O. Box 12428 
 Austin, Texas 78711 
 Phone: 512-463-1788 
 Fax: 512-463-1932

 If to Rackspace to: 
 Alan Schoenbaum

 General Counsel 
 9725
Datapoint Drive, Suite 100 
 San Antonio, Texas 78229 
 Phone: 210-447-4721 
 Fax: 210-447-4031 
 {Signature Page Follows} 
  

 10 

 The parties have caused this Economic Development Agreement to be executed by their duly authorized representatives as of
the date first specified above. 
  

					
	THE STATE OF TEXAS	  		  	RACKSPACE US, INC.
			
	 /S/ RICK PERRY
	  		  	 /S/ A. LANHAM NAPIER

	GOVERNOR RICK PERRY	  		  	
			
		  		  	 President & CEO

		  		  	[TITLE]
			
	 8-14-07
	  		  	8-01-07
	Date	  		  	Date

  

 11 

 EXHIBIT A 
 LETTER FROM GOVERNOR, LIEUTENANT GOVERNOR AND SPEAKER APPROVING
GRANT TO RACKSPACE FROM THE TEXAS ENTERPRISE FUND 
  

 12

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