CONTRACT EZ ENTERPRISE ZONE TAX CREDIT AGREEMENT BETWEEN THE WISCONSIN ECONOMIC DEVELOPMENT CORPORATION AND CORPORATION This Agreement is entered into pursuant to Wisconsin Statutes 238.399 between the Wisconsin Economic Development Corporation (WEDC) and Kohl?s Corporation (Kohl?s). Background WHEREAS, over the last decade, Kohl's has added nearly 3000 corporate jobs, at an average annual job growth rate of approximately 6% and added and expanded various corporate facilities in southeastern Wisconsin; WHEREAS, Kohl's has submitted an Application and project plan to WEDC, wherein Kohl's has indicated that it has plans to retain its current 4500 full time positions, add an additional 3000 new employees, and invest approximately $250,000,000 in new and existing corporate facilities located in southeastern Wisconsin during the term of this Agreement; WHEREAS, WEDC has determined that Kohl?s is an eiigible recipient of Enterprise Zone Tax Credits; and WHEREAS, in reliance on the materials and information provided by Kohl?s, WEDC has determined as part of its mission to stimulate economic development and galvanize support for business prosperity in the state of Wisconsin. to certify that Kohl's is eligible for up to $47,500,000 in Tax Benefits, and an additional $15,000,000 in job creation tax credits if Kohl}; We hire New Full-Time Employees after Kohl's has been certified for $47,500,000 in 'Tax Benefits. In no event will Kohl's be eligible for more than $62,500,000 in Tax Bene?ts. NOW, THEREFORE. for valuabie consideration, the receipt of which is acknowledged, and in consideration for the promises and covenants in this Agreement, WEDC and Kohl's agree as toilows: 1. Definitions. For purposes of this Agreement, the following terms shall have the following meanings: ?Agreement? means this Agreement and the attached Exhibits, together with any future amendments executed in compliance with this Agreement. ?Application? means the materials submitted in writing by Kohl?s to WEDC reiating to the aiiocation of Enterprise Zone Tax Credits. ?Base Year? means the taxable year beginning during the calendar year prior to the calendar year in which the Enterprise Zone in which Kohi's is located takes effect. For purposes of this Agreement, fiscal years shall begin on February 1 and end on January 31 of each year, and the Base Year is the fiscal year ending January 31. 2011. ?Certification Date" means February 1, 2011, the effective date of the Enterprise Zone certification pursuant to this Agreement. ?Effective Date? means the date this Agreement has been fully executed by both parties. it) ?Eligible Capital investment? means: The purchase price of depreciable, tangible personal property; and (ii) The amount expended for the acquisition, development, construction, rehabilitation, remodeling, expansion or repair of real preperty or improvements thereto in the Enterprise Zone. (9) An ?enterprise zone" means a zone designated under 238.399. The "Enterprise Zone" referred to in this Agreement shall mean and refer to all of Kohl?s business facilities located within southeastern Wisconsin otherthan retail stores. "Enterprise Zone Tax Credits" and "Tax Benefits" mean the tax credits Kohl?s is certified as eligible to receive under ?Existingiuib i ime Employees? means the number; of Egill- ime Employees employed in the Enterprise Zone in the Smelt-2L ?Full-Time Employees" mean persons filling Full-Time Positions in the Enterprise Zone. ?Full-Time Position? means any permanent, non-seasonal 005W required, as a condition of employment, to work at least 1.950 hours per year. including paid leave "?dan tiElays, and for which the individual receives annual Day that is equal to at least $30,000 and benefits that are not required by federal or state ?Kohl's? means Kohl's Corporation, together with its affiliates, subsidiaries and successors and assigns. "New Full-Time Employee" means a Full-Time Employee hired after the Certification Date. The ?Project? means the economic investment activities for which WEDC is certifying Kohl?s as eligible for receiving Tax Benefits, as described on Exhibit A attached hereto. (0) "Tax Benefit Cap" shall mean the sum of $47,500,000, which is subject to increase by $15,000,000 in job creation tax credits in the event Kohl's continues to create additional New Full-Time Positions after Kohl's reaches the initial $47,500,000 in Tax Benefits. means the Wisconsin Economic Development Corporation, together with its successors and assigns. "Zone Payroll" means the amount of state payroll that is attributable to wages paid to full- time employees for services that are performed in an Enterprise Zone. ?Zone Payroll? does not include the amount of wages paid to any Full-Time Employee that exceeds $100,000. 2. Duration. The allocation of Enterprise Zone Tax Credits under 238.399 shall be effective for up to 144 consecutive months, commencing at 12:00 am. on the Certification Date and expiring at 11:59 pm. on January 31, 2023, unless Kohl?s receives Tax Benefits equal to the Tax Benefit Cap prior to that date, or the designation terminates or is revoked prior to that date in accordance with the terms of this Agreement. 3. Certification of Recipient for Tax Benefits. Subject to the terms and conditions set forth in this Agreement, and in 71.28(3w) and 238.309. WEDC shall certify Kohl?s as eligible for Tax Benefits up to the Tax Benefit Cap for the fiscal years ending January 31, 2012, through January 31, 2023. Upon receipt of Kohl's Annual Project Report, WEDC will certify Kohl's for its annual allocation of Enterprise Zone Tax Credits. 4. Calculation of Tax Credits. Job creation tax credits will be disbursed up to the annual amounts detailed in Exhibit provided, however. that. if any fiscal year, the amount of job creation tax credits exceeds the amount of such credits authorized in that category for that year, the excess earned may be carried over to the next fiscal year and added to the amount of job creation tax credits authorized for that subsequent fiscal year. ln addition, job creation tax credits Kohl?s does not earn in any fiscal year may be earned in subsequent years. The actual amount of tax credits for which Kohl?s may be eligible is dependent on Kohl?s' actual employment and wage levels. Kohl?s is eligible for an additional $75,000,000 in job creation tax credits in the event Kohl's continues to create additional New Ful ~Time Positions after being certified for receipt of $47,500,000 in Tax Benefits. Throughout the term of the Enterprise Zone, Kohl's is eligible for a maximum $2,750 average job creation tax credit per job per year. Notwithstanding other terms, including Without limitation that the ?total? job creation credits on Exhibit equals $39,380,000, Kohl?s shall, subject to the terms of this Agreement, be eligible to receive job Creation credits equal to the Tax Benefit Cap, less the amount of any capital investment credits earned by Kohl's. Kohl's plans to retain all the Existing Full?Time Positions and create jobs for a substantial number of New Full-Time Employees in the Enterprise Zone for which Kohl?s is eligible to receive tax credits. Pursuant to job creation tax credits for each year, if earned, will be calculated using the following formula: Job Creation Tax Credit Net Total Annual Creation Wage .06 or 05% (the latter percentage applies to jobs created starting the year after Kohl?s has been certified for a total of $4 7, 500,000 in Tax Benefits) "Net Total Annual Creation Wage" means the sum of the F-T Net Wages and the FTE Net Wages during any annual period, minus (ii) the Base Wage. Net Wages? means the aggregate of the total annual wages, excluding any severance or separation payments. earned by each Full-Time Employee who has, on an individual basis, worked at least 1,050 hours during suc rovi however, that to thEextent any such employee earns in excess of $100,000 during such annuat period, no wages in excess of $100,000, with respect to each such individual Edi-Wee, shall be included in the totat minus (ii) $30000. The restrictions on wages here are the only wage requirements that will ment. means the aggregate of the total annual hours worked by all those Full-Time Employees who have not, on an individual basis, worked at least t,950 hours during such annual period. divided by 1.950. Gross Wages? means the aggregate of the total annual wages, excluding any severance or separation payments, earned by each Full-Time Employee who has not, on an individual basis, worked at least 1,950 hours during such annual period; provided, however, that to the extent any such employee earns in excess of $100,000 during such annual pay period. no wages in excess of $100,000 with respect to each such individual employee, shall be included in the total. Average Wage" means the FTE Gross Wages, divided by the FTE, minus $30,000. Net Wages? means the FTE Average Wage multiplied by the FTE. ?Base Wage? means the sum of the ET Net Wages and the FTE Net Wages for the Base Year. Kohl's plans to invest in the Enterprise Zone approximately $250,000,000 in Eligible Capital investments. Pursuant to capital investment tax credits, if earned, will be calculated at a rate of 8 72% of the cost of Kohl?s Eligible Capital Investment. The actual amount of tax credits for which Kohl's may be eligible is dependent on Kohl's documented Eligible Capital investment. Capitat investment tax credits will be disbursed up to the annual amounts detailed in Exhibit provided, however, that, if any fiscal year, the amount of capital investment tax credits exceeds the amount of such credits authorized in that category for that year, the excess earned may be carried over to the next fiscal year and added to the amount of capital investment tax credits authorized for that subsequent fiscal year. in addition, capital investment tax credits Kohl's does not earn in any calendar year may be earned in subsequent years. Notwithstanding other terms. Kohl?s is eligible for a maximum of $25,000,000 in capital investment tax credits. 5. Term. The Tax Benefits can be earned over a period of 144 consecutive months. commencing at 12:01 am. on the Certification Date and expiring at 11:59 pm, on January 31, 2023. 6. Refund Eligibility. Enterprise Zone tax credits are refundable. it the amount of tax credits in any tax year exceeds the taxes otherwise due on Kohl?s income under 71.02, for such year, then the amount of the claim that is not used to offset taxes in such year shall be certified by the Department of Revenue to the Department of Administration and paid to Kohl's by check, share draft or other draft. Partnerships, LLCs treated as partnerships and tax-option corporations cannot claim the credit. but the credit attributable to the entity?s business operations passes through to the partners, members or shareholders. 7. Reporting. Kohl?s shall prepare, keep and maintain such records as may be reasonably required by WEDC to show: the number of New Full-Time Positions Created by Kohl?s in the Enterprise Zone pursuant to this Agreement; the total wages paid to Full?Time Employees working in the Enterprise Zone; I the total hours for which Full?Time Employees working in the Enterprise Zone were compensated; and (iv) the amount of Eligible Capitai Investment. Kohl?s shalt provide WEDC with an Annual Project Report (the form of which is attached as Exhibit and all required supporting documentation for the Annual Project Report including payroll reports and documentation of capital investment as outlined in more detail in Exhibit B. The documentation identified in and shall cover each year of the Enterprise Zone, from the fiscal year ending January 31. 2012, through the fiscal year ending January 31, 2023. Kohl's shall provide the documentation identified in by January 31 of the calendar year following the fiscal year covered by the report. For example, the documentation covering the fiscal year ending January 31, 2012 the 2012 Annual Project Report, Payroll Report, and investment Details must be provided to WEDC by January 31, 2013. And the documentation covering the fiscal year ending January 31, 2013 the 2013 Annual Project Report, Payroll Report, and Investment Details - must be provided to WEDC by January 31, 2014. Kohl's must submit all required annual reports and other documentation in a timely manner. it Kohl?s fails to submit all reporting material within 365 days of the end of a taxable year, Kohl?s may not receive Enterprise Zone Tax Credits earned during that taxable year. 8. Event of Default. The occurrence of any one or more of the following events shall constitute an Event of Default for the purposes of this Agreement: Kohl?s relocates the Project outside of Wisconsin within five years of the Certification Date. Kohl's supplies false or misleading information to WEDC in connection with this Agreement. Kohl's relocates its headquarters outside of Wisconsin. Kohl's leaves the Enterprise Zone to conduct substantially the same business outside of the Enterprise Zone. Kohl's ceases operations in the Enterprise Zone and does not renew operation of the business or a similar business in the Enterprise Zone within 12 months. Kohl?s fails to comply with or perform: in any material respect, any of its obligations under this Agreement. 9. Remedies in Event of Default. Upon the occurrence of an Event of Default under this Agreement by Kohl's. WEDC may send a written notice of default to Kohl's, setting forth with reasonable specificity the nature of the default. if Kohl's fails to cure the default within 30 calendar days from delivery of such notice, WEDC may, without further written notice to Kohl?s, declare an ?Event of Default?. in the Event of Default WEDC may terminate the Agreement. if an intentional Event of Default under paragraphs or occurs, WEDC will recover from Kohl?s repayment of ail Tax Benefits received under this Agreement. if an Event of Default under paragraphs Std), or occurs, WEDC may recover from Kohl?s the fotiowing: fifeargtg?awlt Amount of Recovery Payment FYE 1/31/2013 100% of the tax credits disbursed to date FYE 1/31/2014 05% of the tax credits disbursed to date FYE 1/31/2015 90% of the tax credits disbursed to date FYE 1/31/2016 85% of the tax credits disbursed to date FYE 1/31/2017 80% of the tax credits disbursed to date FYE 1/31/2018 75% of the tax credits disbursed to date FYE 1/3i/2019 70% of the tax credits disbursed to date FYE 1/31/2020 65% of the tax credits disbursed to date FYE 1/31/2021 60% of the tax credits disbursed to date FYE 1/31/2022 55% of the tax credits disbursed to date FYE ?2/31/2023 50% of the tax credits disbursed to date WEDC will recover from Kohl?s all court costs and reasonable attorney's fees incurred by WEDC in recovering the amounts owed by Kohl's. (8) These amounts will be paid to WEDC within 30 calendar days of demand by WEDC. if Kohl's fails to pay these amounts to WEDC, Kohl?s will be liable for the full unpaid batance plus interest at the annual rate of "i2% from the date of the notice of Event of Default. The thirty (30) day cure period set forth above may be extended by WEDC in the event the matter is not of a nature that can be cured in thirty (30) days, provided that Kohl's begins to cure such matter in the initial thirty (30) day cure period and thereafter diligently pursues a cure thereof to the reasonable satisfaction of WEDC. In no event shall the cure period extend beyond ninety (90) days. 10. Kohl?s Warranties and Representations. To induce WEDC to enter into this Agreement to allocate Enterprise Zone Tax Credits= Kohl's warrants to the best of its know/edge that as of the date of this Agreement: Kohl's is duty incorporated and vaiidiy existing under the laws of the state of its incorporation and is authorized to engage in business in the State of Wisconsin; Kohl?s is ouatified to engage in business in every jurisdiction where the nature of its business makes such qualification necessary, except where the failure to be so authorized would not have a material and adverse effect on Kohi?s ability to perform its obligations under this Agreement. Kohl's is in compliance with laws, regulations ordinances and orders of public authorities applicable to it, the violation of which would have a material and adverse effect on Kohl's ability to perform its obtigations under this Agreement. Kohl?s has available or has the capacity to secure funds necessary to cover, as and when incurred, the Eligible Capital Investment as identified in this Agreement. The undersigned officer of Kohl's is fully authorized to execute and deliver this Agreement on behalf of Kohl's. 11.Wisconsin Open Records Law and Confidential Documents. Kohl?s understands this Agreement and other materials submitted to WEDC may constitute public records subject to disclosure under Wisconsin's Public Records Law, 19.3I et seq. Where feasible and appropriate, Kohl's will mark documents ?confidential.? Notwithstanding whether a document is marked confidential, WEDC will, to the extent permitted by law, keep sensitive information related to this Agreement in confidence. WEDC wilt notify Kohl?s if it receives a public records request for materials related to this Agreement. 12. Public announcements. Kohl?s agrees to work with WEDC in making a public announcement. and to contact WEDC prior to any public announcement about this Agreement or its subject matter. in no event shall WEDC make a public announcement about this agreement without Kohl?s prior written consent, not to be unreasonably withhetd. 13. Commitment. This commitment represents the extent of participation in the Project. 14. Inspection. a. WEDC, will, upon 48 hours advance written notice electronic or otherwise to Kohl?s, have the right to enter Koht's premises, during normal business hours, to inspect the Project or documentation relating to the Project, provided, however, that such access does not unreasonably disrupt the normal operations of Kohl?s. b. Upon reasonable advance written notice, Kohl?s shall make available to WEDC, at Kohi?s corporate headquarters, any and alt records which reasonably reiate to this Agreement, for inspection, examination, auditing and copying. 15. Consolidation or Merger. During the term of this Agreement, Kohl's shall provide written notice to WEDC of any consolidation or merger with or into any other unrelated corporation or business entity where Kohl?s is not the surviving entity. 16. Choice of Law. THIS AGREEMENT AND ALL MATTERS RELATING TO IT OR ARISING FROM IT (WHETHER SOUNDING IN CONTRACT LAW OR OTHERWISE) SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED PURSUANT THE LAWS OF THE STATE OF WISCONSIN. 17. Venue, Jurisdiction. Any judiciai action retating to the construction, interpretation, or enforcement of this Agreement, or the recovery of any principat, accrued interest, court costs, attorney?s tees and other amounts owed hereunder, shall be brought and venued in the US. District Court for the Western District of Wisconsin or the Dane County Circuit Court in Madison, Wisconsin. CONSENTS TO PERSONAL JURISDICTION AND VENUE IN THOSE WISCONSIN COURTS, AND WAIVES ANY DEFENSES THAT OTHERWISE MEGHT HAVE RELATING THERETO. 18. Waiver of Right to Jury Trial. EACH PARTY WAIVES ITS RIGHT TO A JURY TRIAL IN CONNECTION WITH ANY JUDICIAL ACTION OR PROCEEDING THAT MAY ARISE \l 19AND BETWEEN WEDC AND CONCERNING THE CONSTRUCTION, INTERPRETATION OR ENFORCEMENT OF THIS AGREEMENT, OR THE RECOVERY OF ANY PRINCIPAL, ACCRUED INTEREST, COURT COSTS, FEES AND OTHER AMOUNTS THAT MAY BE OWED BY HEREUNDER. Limitation of Liability. EACH PARTY WAIVES ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER FROM THE OTHER ANY SPECIAL, EXEMPLARY, PUNITIVE, CONSEQUENTIAL, OR DAMAGES OF ANY NATURE OTHER THAN ACTUAL DAMAGES INCURRED OR SUFFERED BY SUCH PARTY. The invalidity of any provision of this Agreement shalt not affect the validity of the remaining provisions, which shall remain in full force and effect to govern the parties? relationship. WEDC Not A Joint Venturer or Partner. WEDC shall not, under any circumstances, be considered or represented to be a partner or joint venturer of Kohl?s or any beneficiary thereof. Documents. All documents required to be delivered contemporaneousiy with the execution and delivery of this Agreement is expressly made a part of this Agreement as though completely herein, and all references to this Agreement herein shall be deemed to refer to and include all such documents. Agreement Controlling. in the event of any conflict or inconsistency between the Agreement and any prior understanding or agreement, the terms of this Agreement shall control. Captions. The captions in this Agreement are for convenience of reference only and shall not define or limit any of the terms and conditions set forth herein. Entire Agreement. This Agreement contains the entire understanding of the parties concerning and Kohl?s obligations under the terms and conditions of this Agreement and the subject matter of this Agreement. This Agreement may not be amended, modified or altered except in writing signed by Kohl?s and WEDC. [signatures on following page(s)] IN WITNESS WHEREOF. WEDC and Kohl?s have executed and delivered this Agreement effective the date on which it is fully executed by both parties. WISCONSIN ECONOMIC DEVELOPMENT CORPORATION 7? ?was Pau Jadin, Date Secretary and CEO CORPORATION fif?i?j?i)?: f, lea;- M. MW ?7 Ai jgRichardn?c?ep?pr Date Senior Executive Vice-President Notices to Kohl?s hereunder shall be effective Notices to WEDC hereunder shall be effective upon mailing by first class mail, postage upon mailing by first class mail, postage prepaid, and addressed to the following person prepaid, and addressed as follows: and address or such other person and address as Kohl?s may designate in writing: Kohl's Corporation Wisconsin Economic Development Corporation N56 W17000 Ridgewood Drive Economic Community DeveIOpment Menomonee Falls. WI 53051 201 West Washington Avenue Attn: Chairman PO. Box 1687 Madison. WI 53701 with copy to: Attn: Enterprise Zone Contract Kohl?s Corporation EZ l~18293 N56 W17000 Ridgewood Drive Menomonee Falls. WI 53051 Attn: Generat Counsel EXHIBIT A PROJECT DESCRIPTION This Agreement has been executed to strengthen Wisconsin's economy through a collaborative project between WEDC and. Kohl's under the State?s Enterprise Zone Tax Credit Program. WEDC is providing Kohl?s with up to in tax benefits to support its plans for retaining approximately 4500 jobs, its projections of creating 3000 new jobs, and investing approximately $250,000.000 in new and existing corporate facilities located in southeastern Wisconsin during the term of the Agreement. Kohl?s will be eligible for an additional 315000000 in job creation tax credits if it creates additional full-time jobs after earning the full $47,500,000 in tax benefits. 10 EXHIBIT ENTERPRISE ZONE ANNUAL PROJECT REPORT PART I. GENERAL BUSINESS INFORMATION I Business Name and Address (Street, City, State Zip) Telephone Number: Fax Number: Project Location Address (Street, City. State. Zip) FEIN I Tax Year End Contact Person, Title Address-(Street. City, srs??fzm) Telephone Number: Fax Number: Email Address: Tax Preparer, Title Address (Street, City, State, Zip) NumbEF? Fax Number: Email Address: PART II. SUMMARY OF ACTIVITIES Provide a summary of business activities for the past ?scal year. Please describe any growth that has taken place, including new jobs; new equipment, plant expansion and other capital expenditures, as well as any factors that may have had an adverse effect on your business operations in the past year. Brie?y address the company's ptans for the next year] including projected growth and anticipated hiring. Attach additional pages if needed. Estimated WI income tax liability (if known at this time; otherwise provide prior year's tax liability): bFor tax?option (S) corporations: partnerships and please provide current year net income (if known at this time; otherwise provide prior year?s net income): 11 I PART PAYROLL TAX CREDITS Attach a copy of your company's Enterprise Zone site payroll records for the previous iiscai year. This information is not subject to Wisconsin?s Open Records Law. Only Full?Time Positions wilt be counted for tax credit purposes. Each Full?Time Position must be identified individually by name and/or payroit code. Payroll information must include each Fuli~Emptoyee?s: a Name and/or payroll code (Do not include Sociai Security numbers) a Total hours for which each employee was compensated during the previous fiscal year Total pay during the previous fiscal year - Employment start date . Termination date (where appiicabie) IV. INVESTMENT TAX CREDITS Attach an itemized tisi of Eligibie Capitai investment expenses paid by the certified business at the project locationis) during the past fiscal year. The list must include a description ofthe Eligible Capitai investment, amount ofthe investment and date of the investment. Eligible Capital investment expenses include: 1) the purchase price of depreciable, tangible personal property; and 2) the amount expended to acquire, construct, rehabilitate. remodel, or repair real property. Total Eiigibie Capitai investment in the tweive~month period: PART V. BUSINESS AFFIDAVIT I hereby attest and certify that '8 (company name) Annual Project Report is true and correct to the best of my knowledge. further attest that the project and capital investments, as described in Exhibit A of the Enterprise Zone Tax Credit Agreement, were still in place at the Project Location at the end of the past fiscat year. Name/Tine of Authorized Company Representative Signature Date Annual Project Report Preparer?s Contact Information Name Phone Number Email Address Please return this completed form and required supporting documentation to: ECONOMIC DEVELOPMENT ECONOMIC 8: DEVELOPMENT 201 WEST WASHINGTON AVENUE PO. BOX 188? MADISON. WI 53701 Note that upon completion of a review of your Annual Report, WEDC will issue you 3 Verification Form. This form must be attached to your Wisconsin income Tax Return. A certified business can file for Wisconsin Enterprise Zone Tax Credits using the Wisconsin Schedule EC tax form. EXHIBIT ANNUAL TAX CREDIT DISBURSEMENT LIMITS Reporting Anticipated Job Creation Cumulative Period Number of Credits Investment Credits Credits Jobs Credits Created FYE 1/31/12 270 $383,000 3383000 $583,003? 556 31,244,000 1/31/14 81,005,000 $7,945,000 30,8_4__2,_0__00w FYE 1/31/15 1181 a $2,837,000 $14,450,000 $17,287,000 $27,229,000 FYE 1522 $3,784,000 $2,550,000 $6,334,000 $33,883,000? FYE 1/31/17 1883 $4,843,000 $38,408,000 FYE 1/31/18 2266 $6,026,000 1 $6,026,000 $44,432,000 FYE 1/31/19 I .5313441000 35177621999. FYE 1/31/20 3103 $7,343,000 $7,343,000 $59,118,000 $3,381,000 $3,381,000 $82,500,000 FYE 1/31/22 1/31/23 TOTAL ?eggqgoo $23,120,000 $52,500,000 *The limits set forth in this Exhibit are subject to the terms of the Agreement, including without limitation, Sect ion 4 thereof. 13