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1999-025-PARIS PANDA POWER, REINVESTMENT ZONE 1998-I RESOLUTION NO. 99-025 WHEREAS, the Lamar County Commissioners Court did heretofore, on the 15th day of May, 1998, by Order, establish Reinvestment Zone 1998-1; and, WHEREAS, the City Council of the City of Paris did heretofore, on the 8th day of June, 1998, in Resolution No 98-077, elect to become eligible to participate in tax abatements; and, WHEREAS, the City Council of the City of Paris did heretofore, on the 8th day of June, 1998, in Resolution No. 98-078, adopt Guidelines and Criteria governing Reinvestment Zone 1998-1; and, WHEREAS, the City Council of the City of Paris did heretofore, on the 8th day of June, 1998, in Resolution No, 98-079, authorize the execution, delivery, and performance of an agreement with Panda Paris Power, L.L.C., pursuant to the Property Redevelopment and Tax Abatement Act, V.T.C.A" Tax Code Sec, 312.001, et seq. ("Act"), and the Guidelines and Criteria for Designation of Reinvestment Zones and Tax Abatement Agreements ("Guidelines"), to exempt a portion of the value of the property owned by Panda Paris Power, L.L.C. located in Reinvestment Zone 1998-1 from ad valorem taxation upon and subject to the terms, conditions, and provisions set forth in the Tax Abatement Agreement, dated effective as of January 1, 1999; and, WHEREAS, in order to assist Panda Paris Power, L.L.C" now known as Panda Paris I, L.L.C., in effectuating its contractual relationship with the affiliated legal entity which now specifically owns the project and the project assets and which was not in existence previously, same being Panda Paris Power, L.P., it is deemed appropriate that the City of Paris authorize the execution of a new Tax Abatement Agreement with Panda Paris Power L.P. that is identical in form to the previous abatement agreement and which will replace said previous agreement; and, WHEREAS, the form of the new Tax Abatement Agreement, attached hereto as Exhibit A, should, in all things, be approved, and the Mayor, Charles H. Neeley, should be authorized to execute the same; NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF PARIS: 1. That all prior actions of the City Council of the City of Paris, same being the election to become eligible to participate in tax abatements, the establishment of Guidelines and Criteria governing Reinvestment Zone 1998-1, and the execution of the previous Tax Abatement Agreement with Panda Paris Power, L.L.C., be, and the same are hereby, affirmed and approved. 2. That the form of the new Tax Abatement Agreement with Panda Paris Power, L.P., attached hereto as Exhibit A, be, and the same is hereby, found to be identical, with regard to the terms and conditions thereof, in form to the previous Tax Abatement Agreement with Panda Paris Power, L.L.C., approved on the 8th day of June, 1998. 3. That the terms and conditions of the new Tax Abatement Agreement, having been reviewed by the City Council of the City of Paris and found to be acceptable and in the best interests of the City of Paris and its citizens, be, and the same are hereby, in all things, approved. 4. That the Mayor is hereby authorized to execute the new Agreement and all other documents in connection therewith on behalf of the City of Paris substantially according to the terms and conditions set forth in the new Agreement. 5. That the terms of the new Tax Abatement Agreement and the property the subject thereof meet the Guidelines and Criteria heretofore adopted by the City of Paris that govern Reinvestment Zone 1998-1. 6, That, by heretofore granting the tax abatement, there will be no substantial adverse effect on the provision of City services or on its tax base. 7. That the planned use of the property the subject of the tax abatement will not constitute a hazard to public safety, health, or morals. 8. That the approval and execution of the new Agreement on behalf of the City is not conditional upon approval and execution of any other tax abatement agreement by any other taxing entity. 9. That this resolution shall become effective from and after its passage. PASSED AND ADOPTED this 18th day of February, 1999. Charles H. Neeley, Mayor ATTEST: Mattie Cunningham, City Clerk APPROVED: 9~ Scott P. Foster, City Attorney THE STATE OF TEXAS ) ) COUNTY OF LAMAR ) TAX ABATEMENT AGREEMENT This agreement is entered into by and between the CITY OF PARIS, PARIS, TEXAS, a municipal corporation, situated in Lamar County, Texas, acting by and through its Mayor, Charles H. Neeley, duly authorized, hereinafter called CITY, and PANDA PARIS POWER, L.P., acting by and thrpugh its authorized officer whose signature appears below, hereinafter referred to as OWNER. WIT N E SSE T H: WHEREAS, the Commissioners Court of Lamar County did heretofore, on the 26th day of May, 1998, pass an order establishing Reinvestment Zone No. 1998-1 in the County of Lamar, hereinafter called COUNTY, for commercial and industrial tax abatement, hereinafter referred to as ORDER, as authorized by the Property Redevelopment and Tax Abatement Act, as amended, being V.T.C.A. Tax Code, Chapter 312; and, WHEREAS, the Commissioners Court of Lamar County did heretofore, on the 26th day of May, 1998, by Resolution, pass and adopt a policy on tax abatement incentives; and, WHEREAS, the policy on tax abatement incentives constitutes appropriate guidelines and criteria governing tax abatement agreements to be entered into by the COUNTY as required by the Property Redevelopment and Tax Abatement Act, as amended; and, WHEREAS, the Commissioners Court of Lamar County did heretofore, on the 26th day of May, 1998, by Resolution elect to be eligible to participate in tax abatement agreements in order to maintain and enhance the commercial and industrial economic and employment base of Lamar County for the long term interest and benefit of the COUNTY and its citizens; and, WHEREAS, the contemplated use of the property, as hereinafter defined, the contemplated improvements to the property in the amount as set forth in this AGREEMENT, and the other terms hereof are consistent with encouraging development of said Reinvestment Zone No, 1998-1 in accordance with the purposes for which it was created and are in compliance with the COUNTY's policy on tax abatement incentives and the ordinance creating such reinvestment zone adopted by the COUNTY and all applicable laws; NOW, THEREFORE, The Parties hereto do mutually contract and agree as follows: TAX ABATEMENT AGREEMENT - Page 1 i-.XH1BIT A I. Term 1.1. The term of this AGREEMENT shall begin on the 8th day of June, 1998, with, as hereinafter provided, tax abatement granted herein beginning with the tax year beginning January 1, 1999, and expiring on December 31, 2005. . II. Area to be Improved 2.1. The property to be the subject of this AGREEMENT shall be that property described by metes and bounds and as shown by plat, attached hereto as Exhibits A and B, respectively, which are made a part hereof and shall be hereinafter referred to as PROPERTY. III. Improvements 3.1. The OWNER shall make improvements to the PROPERTY as follows: construction of a 1,000 megawatt natural gas-fired power generation facility. This facility will include a new building or buildings with an anticipated taxable value of approximately $1,500,000.00; the acquisition and installation of machinery and equipment with an anticipated taxable value of approximately $110,000,000.00; and the acquisition and installation of furniture and fIxtures with an anticipated taxable value of approximately $500,000.00; for a total capital investment of approximately $112,000,000.00; all of which improvements will be particularly described in CITY's Certificate of Completion prepared after the completion and installation of the improvements and machinery herein described which shall be furnished to and filed with the Chief Appraiser of Lamar County and the Tax Assessor and Collector of the City of Paris. Said Certificate shall be duly executed by the Mayor of the City of Paris and attached hereto as Exhibit C. The improvements described in this paragraph shall be hereinafter referred to as IMPROVEMENTS. The IMPROVEMENTS will be at a cost of approximately $112,000,000.00, and shall be substantially completed on or about June 30, 2001, or such later date as may be mutually agreed upon by CITY and OWNER; provided, that OWNER shall have such additional time to complete the IMPROVEMENTS as may be required in the event of "force majeure" if OWNER is diligently and faithfully pursuing completion of the IMPROVEMENTS. For this purpose, "force majeure" shall mean any contingency or cause beyond the reasonable control of OWNER including, without limitation, acts of God, or the public enemy, any natural disaster, war, riot, civil commotion, insurrection, governmental or de facto governmental action, fires, explosions, accidents, floods, and labor disputes or strikes, unless caused by acts or omissions of OWNER. The date of completion of the IMPROVEMENTS shall be defined as the date a Certificate of Occupancy is issued by the City of Paris, said Certificate shall be attached hereto as Exhibit D upon issuance of the same. TAX ABATEMENT AGREEMENT - Page 2 IV. Consideration Improvements 4.1. The OWNER agrees and covenants that it will diligently and faithfully, in a good and workmanlike manner, pursue the completion of the IMPROVEMENTS as a good and valuable consideration of this AGREEMENT. OWNER further covenants and agrees that all construction of the IMPROVEMENTS will be in accordance with all applicable state and local laws, codes and regulations or will procure a valid waiver thereof. In further consideration, OWNER shall thereafter, from the dllte a Certificate of Occupancy is issued until the expiration of this AGREEMENT, continuously operate and maintain the PROPERTY as a natural gas-fIred electric generating facility. V. Consideration Jobs 5.1. Not later than December 31, 2001, or such later date as may be mutually agreed upon by CITY and OWNER, OWNER will create at least thirty (30) new, permanent jobs at the Paris Plant for work to be performed substantially either (a) at the site of the IMPROVEMENTS, or (b) in support of operations performed by others at the site of the IMPROVEMENTS. Such jobs to be filled with priority being given to promote among equally qualified job applicants the hiring of employees first from within the City of Paris Enterprise Zone, second from within the corporate limits of the City of Paris, and third from within the County of Lamar, State of Texas, subject to the laws and regulations of the United States of America and the State of Texas and subject to any labor contracts currently in effect and any successive contracts or past practices. 5.2. OWNER agrees that, during the term of the AGREEMENT, it will not reduce below thirty (30) the number of such new, permanent jobs so created. VI. Default 6.1. In the event that (a) the IMPROVEMENTS for which an abatement has been granted are not completed in accordance with this AGREEMENT or (b) OWNER allows its ad valorem taxes owed the CITY to become delinquent and fails to timely and properly follow the legal procedures for protest or contest of any such ad valorem taxes; or (c) OWNER materially breaches any of the terms and conditions of this AGREEMENT, then this AGREEMENT shall be in default. In the event the OWNER defaults in its performance of either (a), or (b) or (c) above, then the CITY shall give the OWNER written notice of such default and if the OWNER has not cured such default by the payment of money within thirty (30) days of said written notice, or, if such default cannot be so cured within such thirty (30) day period by the payment of money, then such thirty (30) day period shall be extended an additional sixty (60) days immediately TAX ABATEMENT AGREEMENT - Page 3 subsequent to such thirty (30) day period if corrective action is instituted by the OWNER prior to or within such sixty (60) day period. If the default has not been corrected within the time frame specified above, this AGREEMENT may be modified by written agreement between CITY and OWNER or terminated by the CITY. Notice shall be in accordance with paragraph 13.3. As liquidated damages in the event of default, all taxes which otherwise would have been paid to the CITY without the benefit of abatement, together with interest to be charged at tlle statutory rate for delinquent taxes as determined by Section 33.01 of the Property Tax Code of the State of Texas, with all penalties permitted by the Property Redevelopment and Tax Abatement Act and the Property Tax Code of the State of Texas, will become a debt to the CITY and shall be due, owing, and paid to the ,CITY within sixty (60) days of the expiration of the above-mentioned applicable cure period as the sole remedy of the CITY subject to any and all lawful offsets, settlements, deductions, or credits to which OWNER may be entitled. In other words, pursuant to such liquidated damages, the parties agree that the CITY shall have the right to recapture property tax revenue lost as a result of this AGREEMENT if the OWNER fails to make the IMPROVEMENTS or repairs as provided hereby. The parties acknowledge that actual damages in the event of default and termination would be speculative and difficult to determine, VII. Tax Abatement 7.1. It is understood and agreed between the parties that the PROPERTY, also known as Reinvestment Zone Number 1998-1, shall be appraised at market value prior to the construction and installation of the IMPROVEMENTS for the purposes of property tax assessment effective January 1, 1999, and continued at market value without said IMPROVEMENTS until the expiration of this AGREEMENT. The CITY, acting under and pursuant to the said Texas Property Redevelopment and Tax Abatement Act, hereby covenants and agrees to abate: (a) all CITY real property taxes that would otherwise be payable with respect to the IMPROVEMENTS, and (b) all CITY personal property taxes that would otherwise be payable with respect to all personal property, save and except inventory and supplies, that is brought onto the PROPERTY described in Exhibits A and B as a part of the improvement project herein described, for a period of seven (7) years, beginning January 1, 1999, and ending December 31,2005, as herein provided. TAX ABATEMENT AGREEMENT - Page 4 VIII. No Conflict of Interest 8.1. The CITY represents and warrants that the PROPERTY does not include any property that is owned by a member of the City Council approving, or having responsibility for the approval of this AGREEMENT. ' IX. Conditions 9,1. The terms and conditions of the AGREEMENT are binding upon the successors and assigns of all parties hereto. 9.2. It is understood and agreed between the parties that the OWNER, in performing its obligations hereunder, is acting independently, and the CITY assumes no responsibility or liability in connection therewith to third parties and OWNER agrees to indemnify and hold harmless the CITY against any and all claims, injuries, demands, liabilities, causes of action, suits, judgments, damages, and expenses arising from the development, design, construction, and operation of the IMPROVEMENTS, except to the extent that such occurrence is caused by the breach of this AGREEMENT by the CITY or by the acts or omissions of the CITY, its officers, employees, representatives, or agents; it is further understood and agreed among the parties that the CITY, in performing its obligations hereunder, is acting independently, and the OWNER assumes no responsibility or liability in connection therewith to third parties and the CITY agrees to indemnify and hold harmless the OWNER therefrom. x. Compliance Provisions 10.1. The OWNER further agrees that the CITY, its agents and employees, shall have reasonable right of access to the PROPERTY to inspect the IMPROVEMENTS in order to insure that the construction of the IMPROVEMENTS are in accordance with this AGREEMENT and all applicable state and local laws and regulations or valid waiver thereof. After completion of the IMPROVEMENTS, the CITY shall have the continuing right to inspect the PROPERTY to insure that it is thereafter maintained and operated in accordance with this AGREEMENT during the term of the AGREEMENT, and OWNER shall provide evidence as to the creation of the thirty (30) new, permanent jobs described in this AGREEMENT. Representatives of the CITY inspecting the PROPERTY and IMPROVEMENTS shall sign an agreement promising to maintain the confidentiality of any information they obtain in connection therewith except for the purposes of assessing and collecting ad valorem taxes. Said representatives shall also be required to observe any facility rule and regulation applicable to the PROPERTY. T AX ABATEMENT AGREEMENT - Page 5 XI. Initial and Annual Reporting 11.1 The OWNER further agrees that it will, immediately upon completion of the IMPROVEMENTS, provide CITY with a sworn report which contains the followipg information: (a) Copy of the appraisal showing the market value without the IMPROVEMENTS as required in paragraph 7.1; (b) Detailed pescription of IMPROVEMENTS; (c) Description of any miscellaneous items of office and plant equipment; (d) Identification of plans and specifications of constructed IMPROVEMENTS and the location of the same for inspection by CITY's certification team; (e) Actual cost of added machinery and equipment; (f) Actual cost of capital IMPROVEMENTS; and, (g) Date of substantial completion of the IMPROVEMENTS as defined in paragraph 3.1 hereof. 11.2 The OWNER further agrees that it will provide CITY with an annual, sworn report which contains the following information: (a) the name of original hiree in the newly created job, date of hire, and place of residence of the hiree, and (b) statement as to whether or not the thirty (30) new, permanent jobs are still in existence and filled, and (c) the name of current employee in the newly created job, date of hire, and place ofresidence of the hiree. Additionally, OWNER shall certify, in writing, that it is in compliance with each applicable term of this AGREEMENT. XII. Authority to Contract 12.1. This AGREEMENT was authorized by resolution of the City Council at its regularly scheduled meeting on the 8th day of June, 1998, and was re-authorized by resolution of the City Council at its special meeting on the 18th day of February, 1999, authorizing the Mayor to execute said AGREEMENT on behalf of the CITY. 12.2. This AGREEMENT was entered into by Panda Paris Power, L.P., pursuant to authority granted to the authorized official whose signature appears below. TAX ABATEMENT AGREEMENT - Page 6 12.3. This AGREEMENT shall constitute a valid and binding agreement between the CITY and OWNER when executed in accordance herewith, regardless of whether any other taxing unit executes a similar agreement for tax abatement. XIII. Legal 13.1. No officer, official, or agent of the CITY has the power to amend, modify, or alter this AGREEMENT or waive any of its conditions or to bind the CITY by making any promise or representation not conta,ined herein, without prior written direction of the City Council. 13.2 This AGREEMENT, except by operation of law, shall not be assigned or transferred by OWNER, without the prior written consent of CITY, which consent shall be at the sole discretion of the CITY; provided that OWNER may assign its rights and obligations under this AGREEMENT to any affiliate of OWNER without any such prior written consent. In the event of an assignment to an affiliate, OWNER agrees to provide CITY with written notification within thirty (30) days of the same. 13.3, Any written notice required or permitted under the terms of this AGREEMENT shall be given and be deemed to have been duly served if either (1) delivered in person, or (2) deposited certified mail, return receipt requested, postage prepaid in the United States mail, addressed to the designated representative of the respective parties which are designated as follows: OWNER General Counsel Panda Paris Power, L.P. 4100 Spring Valley Road, Suite 1001 Dallas, TX 75244 CITY City Manager City of Paris p, O. Box 9037 Paris, Texas 75461-9037 With a copy to: Project Man;lger Panda Paris Power, L.P. 4100 Spring Valley Road, Suite 1001 Dallas, TX 75244 With a copy to: City Clerk City of Paris P. O. Box 9037 Paris, Texas 75461-9037 13.4. If any term or provision of this AGREEMENT shall be declared unconstitutional or void by any court of competent jurisdiction, the constitutionality and validity of the remainder of said AGREEMENT shall not be affected thereby, and to this end the terms and provisions of said AGREEMENT are declared to be severable, 13,5. This AGREEMENT sets forth the entire understanding between the parties, and any other understandings or agreements shall be canceled and superseded by this AGREEMENT upon TAX ABATEMENT AGREEMENT - Page 7 the date of execution hereof. None of the terms of this AGREEMENT shall be waived, discharged, altered or modified in any respect, except by an agreement in writing signed by both parties and specifically referring to this AGREEMENT. The captions in this AGREEMENT are included for convenience only and shall not be taken into consideration in any construction or interpretation of this AGREEMENT or any of its provisions. This AGREEMENT. is performable in Lamar County, Texas, and shall be governed by, construed and enforced in accordance with the laws of the State of Texas. The provisions of this AGREEMENT shall apply to, bind and inure to the benefit of the CITY, OWNER, and their respective successors, and permitted assigns, if any. 13.6 OWNER agrees that venue for any litigation under this AGREEMENT shall reside in Lamar County, Texas. Witness our hands this 18th day of February, 1999, CITY OF PARIS, PARIS, TEXAS By: ATTEST: Mattie Cunningham, City Clerk APPROVED AS TO FORM: 9~~ Scott P. Foster, City Attorney PANDA PARIS POWER, L.P. By: Name Title TAX ABATEMENT AGREEMENT - Page 8 ATTEST: Name Title TAX ABATEMENT AGREEMENT - Page 9