Exhibit 10.15
AD VALOREM TAX CONTRACT
THIS Ad Valorem Tax Contract ("Contract"), dated as of August 24, 1998, is
made and entered into effective as of the last date of its execution by the
respective parties hereto, determined by reference to the dates set forth
opposite their respective names on the signature pages attached hereto, by and
among the following (collectively "Parties"): PANOLA COUNTY, MISSISSIPPI
("County"), acting by and through its Board of Supervisors; the CITY OF
BATESVILLE, MISSISSIPPI ("City"), acting by and through its Mayor and Board of
Aldermen; the MISSISSIPPI DEPARTMENT OF ECONOMIC AND COMMUNITY DEVELOPMENT
("MDECD"), acting for and on behalf of the State of Mississippi ("State"); the
PANOLA COUNTY TAX ASSESSOR/COLLECTOR ("Tax Assessor"); and LSP ENERGY LIMITED
PARTNERSHIP, a Delaware limited partnership ("Company").
W I T N E S S E T H:
WHEREAS, Company plans to develop a natural gas-fired combustion turbine
combined cycle electric power generation facility ("Facility") located in the
City, County, and State, which will also necessitate the construction of certain
on-site and off-site public infrastructure, as generally described in Section 10
(collectively "Facility Components"), to be located in the City, County, and
State, to be constructed by the County, and, upon completion of construction, to
be transferred by the County to, and thereafter owned by, the Industrial
Development Authority of the Second Judicial District of Panola County,
Mississippi ("XXX") but operated and maintained by the Company (collectively
"Project"); and
WHEREAS, the Facility is currently projected to involve an expenditure by
the Company in excess of Two Hundred Fifty Million Dollars ($250,000,000.00);
and
WHEREAS, Company has requested certain tax incentives from the County and
City, representing that these incentives are necessary to make the Facility
economically viable in the State; and
WHEREAS, the City, County, and MDECD recognize that the Company can locate
the Project in other locations outside the City, County, and State; desire to
encourage the Company to locate the Project in the City, County, and State for
the benefit of the citizens of the City, County and State; and enter into this
Contract in consideration of the Company locating, and as inducements to the
Company to locate, the Facility in the City, County, and State and in
consideration of the economic benefits to be realized by the City, County and
State, including, but not limited to, the economic impact, the increased tax
revenues, and other benefits to be received by the City, County, State, and the
general public; and
WHEREAS, the City, County, and MDECD recognize that the Company would not
locate the Project in the City, County, and State without the inducements
provided herein for the entire period for which such inducements are available
(pursuant to existing law, as presently interpreted and construed); and
WHEREAS, since the Facility is costing in excess of One Hundred Million
Dollars ($100,000,000.00), the Company and Facility are eligible either (i) for
a new enterprise exemption under xx.xx. 00-00-000 et seq. for the Facility
(including any assessable interest of the Company in the Facility Components and
any inventories of raw materials and work-in-process [collectively "Process
Inventories"] but excluding any inventories of manufactured products and/or
finished goods [collectively "Products Inventories"] related to the Facility
[collectively "Inventories"]) and, to the extent financed out of the proceeds of
an issuance of industrial development revenue bonds ("IDBs") issued by the
County and/or the State, an exemption for projects financed with IDBs under ss.
57-3-33 by the County and/or ss. 00-00-000 by the State for the Facility itself
(excluding any Inventories) (collectively "Facility Exemptions") from the ad
valorem real and personal property taxes otherwise leviable and assessable on
the Facility and Process Inventories by the City and/or the County ("Taxes"),
excluding Taxes for South Panola Consolidated School District ("District")
purposes ("School Taxes"), or (ii) for a negotiated fee-in-lieu of Taxes of not
less than one-third (1/3rd) of the Taxes on the Company, the Facility, any
Inventories, and any assessable interests of the Company in the Facility
Components, including School Taxes, under ss. 00-00-000 ("Fee-in-Lieu"); and
WHEREAS, in order to attract Company's Facility to the City, County, and
State, the MDECD, County, and City have negotiated this Contract as part of the
inducements and incentives for the location of the Project in the City, County,
and State; and
WHEREAS, the County and City, pursuant to ss. 00-00-000, et seq., have
agreed to grant to the Facility, Company, and Process Inventories contingent,
protective Facility Exemptions for a period of ten (10) years ("Term"),
excepting only School Taxes, and, pursuant to xx.xx. 27-31-7 and 27-31-51, et
seq., have also agreed to grant to the Company a protective finished goods
inventory exemption (excluding School Taxes) under ss. 27-31-7 and a protective
free port inventory exemption (including School Taxes) under ss. 27-31-51 et
seq. on the Products Inventories (collectively "Products Exemptions")
(collectively "Protective Exemptions");
-2-
WHEREAS, the MDECD, with the participation and approval of the City and
County, have agreed to grant a Fee-in-Lieu to the Company, the Facility, and the
Inventories for the Term in the amount of one-third (1/3rd) of the then current
total Taxes in effect from time to time during the Term, subject to a certain
minimum hereinafter indicated ("Fee-in-Lieu Amount"); and
WHEREAS, the City and County agree that, to the extent permissible and
necessary under Mississippi law, the Company, as a manufacturer, is also
eligible for and entitled to Protective Exemptions in the event of the
invalidity and unavailability, for any reason, of the Fee-in-Lieu; and
WHEREAS, the MDECD, County, City, and Company have reached agreement with
respect to the Taxes, the Fee-in-Lieu, the Fee-in-Lieu Amount, the Protective
Exemptions, and the Term; the Company's lenders for the Facility have required
the execution of this Contract as a condition precedent to the closing of the
Company's financing for the Facility; and it is now appropriate for the Parties
to enter into this Contract in order to implement the agreements already reached
in their negotiations with respect to the subject matter hereof.
NOW, THEREFORE, IN CONSIDERATION OF the foregoing, the mutual covenants,
promises and agreements contained in this Contract, the Company's location of
the Facility in the City, County, and State, the various economic benefits to be
realized by the City, County, and State as a result of the Project, and other
good and valuable consideration, each to the other given, the receipt and
sufficiency of all of which are both hereby expressly acknowledged, the Parties
hereto, intending legally to be bound, do hereby mutually agree as follows:
Section 1. Undertakings Re: Taxes. The City, the County, the MDECD, the
Tax Assessor, and the Company agree, individually and collectively, as
indicated, as follows:
(1) MDECD, City, County, and the Tax Assessor agree that the
Facility is a "new enterprise" enumerated in ss. 00-00-000,
constituting, more particularly, a manufacturing business, and that
the Company, Facility, any assessable interests of the Company in
the Facility Components, and Inventories are eligible both for a
Fee-in-Lieu and for the Facility Exemptions and Products Exemptions;
provided, however, that the City, County, MDECD, the Tax Assessor,
and the Company acknowledge that qualification for the Facility
Exemptions and Products Exemptions is subject to the approval
thereof by the State Tax Commission ("Tax Commission").
(2) MDECD hereby consents to and approves the City's and
County's agreement to grant to the Company, Facility, and
Inventories a Fee-in-Lieu as set forth in Section 3 in lieu of the
Facility Exemptions and Products
-3-
Exemptions, and City and County, pursuant to a resolution duly
approved and adopted by the City and County in the
-4-
form and manner required by law, hereby contract for and grant a
Fee-in-Lieu, and the Tax Assessor hereby agrees to recognize and
implement the Fee-in-Lieu so granted, to the Company on the
Facility, Inventories, and any assessable interest of the Company in
the Facility Components, in the Fee-in-Lieu Amount for the Term, as
more particularly described in Section 3 hereof.
(3) City, County, and Tax Assessor agree that the Company,
Facility, any assessable interests of the Company in the Facility
Components, and Inventories are eligible for the Facility Exemptions
and for the Products Exemptions, and the City and County, pursuant
to a resolution duly approved and adopted by the City and County in
the form and manner required by law, hereby contract for and agree
to grant the Protective Exemptions, and the Tax Assessor hereby
agrees to recognize and implement the Protective Exemptions so
granted, to the Company for the Term as more particularly described
in Section 4 hereof.
(4) The City and County expressly disapprove and do not
consent to the Facility Exemptions otherwise provided by xx.xx.
57-3-33 and 00-00-000 except as Protective Exemptions pursuant to
Section 1(3), with the Taxes on the Company and Facility for City,
County and District purposes to be determined in accordance with
this Section 1 and Section 3.
(5) The Tax Assessor agrees to the determinations referenced
in Section 6.
(6) The Company warrants that the aggregate cost of the
Facility will exceed One Hundred Million Dollars ($100,000,000) as
required by ss. 00-00-000 for a Fee-in-Lieu to be authorized
("Minimum Capital Investment") prior to the Substantial Completion
Date as defined in Section 3(4)(A) and agrees that, upon
satisfaction of the Minimum Capital Investment, it will provide a
certificate to that effect, duly executed by an officer thereof, to
the County, City, MDECD, and Tax Assessor.
Section 2. Waiver. In consideration of the granting of the Fee-in-Lieu,
the Company agrees not to take advantage of the Facility Exemptions and Products
Exemptions available from the City and/or the County for the Facility, the
Inventories, and any assessable interest of the Company in the Facility
Components through xx.xx. 00-00-000, 57-3-33, and/or 00-00-000 et seq.
(excluding the Fee-in-Lieu under ss. 00-00-000 thereof) except as Protective
Exemptions pursuant to Section 4, and the Company hereby waives such Facility
Exemptions and Products Exemptions from the City and the County except as
Protective Exemptions pursuant to Section 4.
-5-
Instead, the Company will pay a Fee-in-Lieu to the City and the County in
accordance with Section 3.
Section 3. Fee-in-Lieu.
(1) Amount. The Fee-in-Lieu Amount shall be equal to one-third
(1/3rd) of the Taxes on the Company, Facility, Inventories, and any
assessable interest of the Company in the Facility Components,
including County Taxes, City Taxes, and School Taxes; provided,
however, that the Fee-in-Lieu Amount payable annually by the Company
to the City, County, and District shall not be less, in the
aggregate, than One Million Nine Hundred Thousand Dollars
($1,900,000.00) for each year of the Term during which a Fee-in-Lieu
Amount is due and payable by the Company.
(2) Apportionment. The City, County, and MDECD agree that the
Fee-in-Lieu Amount paid by the Company shall be apportioned between
the City, County, and the District as follows:
(i) The amount of the Fee-in-Lieu Amount which shall be
apportioned to the District shall be equal to the
greater of:
(A) Seventy percent (70%) of the Fee-in-Lieu Amount; or
(B) The District's pro rata share of the Fee-in-Lieu
Amount calculated as follows:
(a) From the total Fee-in-Lieu Amount shall be
subtracted the City's minimum Fee-in-Lieu Amount
determined in accordance with Section 3(2)(ii)(B)
in order to arrive at the District's and County's
joint Fee-in-Lieu Amount; and
(b) The District's pro rata share of the Fee-in-Lieu
Amount shall be the proportion of the District's
and County's joint Fee-in-Lieu Amount determined
under Section 3(2)(i)(B)(a) that the millage
imposed for the District by the County bears to
the total millage imposed for both the District's
and all other County purposes;
(ii) The amount of the Fee-in-Lieu Amount which shall be
apportioned to the City shall be equal to the greater
of:
-6-
(A) One-sixth (1/6th) of the balance of the
Fee-in-Lieu Amount remaining after allocation of
the District's position; or
(B) The amount of the Fee-in-Lieu Amount equal to
one-third (1/3rd) of the Taxes otherwise leviable
on the Company, Facility, Inventories, and any
assessable interest of the Company in the Facility
Components by the City; and
(iii) The amount of the Fee-in-Lieu Amount which shall be
apportioned to the County shall be equal to the balance
of the Fee-in-Lieu Amount remaining after allocation of
the District's and City's portions.
(3) Coverage. The Fee-in-Lieu shall be in lieu of all Taxes,
including School Taxes, which would otherwise be imposed by the
County and the City on the Company, Facility, and Inventories
(including, without limitation, equipment, real property, personal
property, and all mortgages, deeds of trust, easements,
rights-of-way, leasehold interests, other assessable property
interests, and purchase agreements thereon), as well as on any
Facility Components owned by the Company and/or any assessable
interests of the Company in any such Facility Components owned by
the County or XXX, with said Fee-in-Lieu to remain in effect for the
entire Term, in the manner allowed by law, commencing in accordance
with Section 3(4).
(4) Term. The Term of the Fee-in-Lieu shall commence on the
first January 1st on or after which both of the following events
have occurred:
(A) The date when the Project is substantially complete,
as evidenced by a certificate of substantial completion
issued by the independent engineer retained by the
lenders providing the Company's permanent, long-term
financing for the Facility ("Substantial Completion
Date"); and
(B) The Company has then satisfied the Minimum Capital
Investment;
provided, however, that, if the Substantial Completion Date occurs
on or after January 1st but before March 1st of the calendar year,
then the Project shall be deemed to have been completed, and the
Term shall commence, on January 1st immediately preceding such
Substantial Completion Date if the Company has also satisfied the
Minimum Capital Investment with respect to the Facility
-7-
on or before the Substantial Completion Date (collectively the
"First Assessment Date"). (As hereinafter used, the term "First
Assessment Year" shall mean the period beginning with the First
Assessment Date and ending on December 31st of the same calendar
year.) Provided further, however, if for any reason separate
portions of the Facility are completed in different calendar years,
then, to the extent permitted by law, each such separate portion
shall have its own Substantial Completion Date, First Assessment
Date, First Assessment Year, and Term, with the Minimum Capital
Investment requirement being applied to the aggregate cost of the
Facility incurred to date instead of to each separate portion as
each separate portion is completed.
(5) Payment. The Company shall pay the Fee-in-Lieu Amount for
the Term of ten (10) consecutive years with respect to the Facility
by the first day of February immediately following the year for
which such Fee-in-Lieu is assessed. Such Term shall commence on the
First Assessment Date. (For example, if the Substantial Completion
Date/Minimum Capital Investment requirements under Section 3(4) are
met on November 15, 1999, or on February 15, 2000, then the First
Assessment Date would be January 1, 2000, and the First Assessment
Year would be the calendar year 2000, with the Term also commencing
on January 1, 2000. Before February 1, 2001, the Company would pay
the Fee-in-Lieu Amount for the First Assessment Year with respect to
the Company's property subject to Taxes on January 1, 2000 (the
First Assessment Date).
(6) Millage Changes. Subject to the minimum Fee-in-Lieu Amount
required by Section 3(1), if the aggregate City, County, and
District millage rate is increased or decreased and such increase or
decrease is applicable generally to all taxpayers, then the
Fee-in-Lieu Amount will be increased or decreased based upon
one-third (1/3rd) of such higher or lower aggregate millage.
(7) Law Requirements. The Parties agree that the Fee-in-Lieu
shall always meet the minimum requirements of State law as provided
in ss. 00-00-000.
(8) Approvals. The MDECD hereby gives its approval to the
terms and provisions of the Fee-in-Lieu. The Tax Assessor hereby
acknowledges the terms of the Fee-in-Lieu described herein and
agrees to abide by such terms as they involve or require the Tax
Assessor's acquiescence or approval.
-8-
Section 4. Protective Exemptions.
(1) Upon the request of the Company or, if required by law,
upon receipt from the Company of a timely and complete application,
the County and City do hereby approve, consent to, and declare their
intention and agreement, to the extent permissible and available
under applicable law and subject to receipt of any required
approvals by or licenses from the Tax Commission, to grant
Protective Exemptions from Taxes (excluding, however, any State and
School Taxes where required by State law to be so excluded) for the
Term in the form of Facility Exemptions on the Facility itself, any
Process Inventories, and on any Facility Components owned by the
Company and/or any assessable interests of the Company in the
Facility Components owned by the County or XXX, and in the form of
Products Exemptions on any Products Inventories of the Company
related to the Facility.
(2) The Protective Exemptions shall not be applicable,
effective, or operational during any period of the Term during which
the Fee-in-Lieu granted hereunder is applicable, effective, and
operational. The Company expressly acknowledges that the intention
of this Contract is that the Taxes on the Facility, the Inventories,
and any Facility Components owned by the Company and/or any
assessable interests of the Company in the Facility Components owned
by the County or XXX are to be determined and paid in the form of
the Fee-in-Lieu and that the Protective Exemptions shall become
applicable, effective, and operational only if the Fee-in-Lieu, for
any reason, becomes inapplicable, ineffective, and inoperable with
respect to any particular class or item of, or interest in, the
assessable real and/or personal property of the Company
(collectively "Property") otherwise intended to be subject to the
Fee-in-Lieu under this Contract.
(3) If, for any reason, all or any portion of the Fee-in-Lieu
shall be held illegal or invalid by any court of competent
jurisdiction with respect to any Property otherwise intended to be
subject to the Fee-in-Lieu under this Contract, then the Protective
Exemptions, or the necessary applicable portions thereof, shall then
automatically become applicable, effective, and operational with
respect to such Property for any period of the Term for which all or
any portion of the Fee-in-Lieu shall be held to have been or to be
illegal or invalid with respect to such Property.
(4) If any or all of the Protective Exemptions become
effective and operational, then the Taxes annually paid by the
Company shall be aggregated with any valid
-9-
and legal remaining portion of the Fee-in-Lieu Amount paid by the
Company in order to determine whether the Taxes so paid by the
Company, or a combination of the Taxes and any valid and legal
portion of the Fee-in-Lieu Amount so paid by the Company, satisfy
the minimum amount required to be paid annually by the Company
pursuant to Section 3(1) and, if not, then, notwithstanding the
Protective Exemptions, the Company shall pay any additional amount
necessary in order to make a total, aggregate annual payment equal
to the minimum amount required by Section 3(1).
(5) Solely for purposes of Sections 3(1) and (2), any Taxes
paid by the Company as a result of the operation of the Protective
Exemptions shall be deemed to be, and treated as, part of the
Fee-in-Lieu Amount, and, except to the extent otherwise required by
law, the total, aggregate annual payment of Taxes and the balance of
the Fee-in-Lieu Amount shall be apportioned as provided by Section
3(2).
(6) The Term of the Protective Exemptions shall commence on
the Substantial Completion Date in accordance with Section 3(4)(A)
but without regard to the necessity of otherwise satisfying the
minimum capital investment requirement of Section 3(4)(B). The
intention of the City, County, Tax Assessor, and Company is that the
Terms of the Protective Exemptions and the Fee-in-Lieu shall
correspond and run concurrently, but, in the event for any reason
the Terms of a Protective Exemption and the Fee-in-Lieu applicable
to any Property do not begin at the same time, then the City,
County, Tax Assessor, and Company agree that the aggregate of the
periods of time during which the Fee-in-Lieu and a Protective
Exemption are applicable, effective and operational with respect to
a particular Property shall not exceed the Term, but the City,
County, and Tax Assessor agree that the Company shall be entitled to
the Fee-in-Lieu and/or a Protective Exemption with respect to each
such particular Property for an aggregate period of time equal to
the Term.
(7) Any Taxes payable during the Term while a Protective
Exemption is applicable, effective, and operational shall be payable
in accordance with Section 3(5). In addition, the provisions of
Section 3(6) shall be applicable to the Taxes during the Term while
a Protective Exemption is applicable, effective, and operational.
The Protective Exemptions shall always meet the minimum requirements
of State law provided in xx.xx. 27-31-7, 27-31-51 et seq., 00-00-000
et seq., 57-3-33, and 00-00-000, as applicable.
Section 5. Conditions. The Fee-in-Lieu granted and Protective Exemptions
agreed to be granted by this Contract, as
-10-
well as the other terms and provisions hereof, are contingent upon the
subsequent actual construction and placement into service of the Facility. The
Company agrees that, except during maintenance periods scheduled in accordance
with good utility practices, nondispatch periods scheduled in accordance with
the terms of power sales agreements entered into between the Company and the
purchasers of its electricity, and periods when the Facility is not operational
due to events beyond the reasonable control of the Company, including, but not
limited to, those outage periods caused by the Force Majeure events hereinafter
described, it will cause the Facility to be capable of generating electric power
for the entire period of time which is coextensive with the Term. In the event
that the Company fails to meet such requirement, then the Term of the
Fee-in-Lieu and Protective Exemptions shall, upon receipt by the Company of
prior written notice to that effect from the MDECD, County and City, terminate
effective as of the next succeeding January 1st. For purposes of this Section 5,
"Force Majeure" is defined as something beyond the Company's reasonable control,
including, but not limited to, acts of God, governmental acts (including delay
or denial of necessary permits or approvals and whether or not within the power
of the government or governmental agency), acts of the public enemy, terrorism,
sabotage and civil disturbance, floods, landslides, earthquakes, fires,
washouts, droughts, unusually severe weather (including, without limitation,
lightning, hurricanes, tornadoes, and other storms), epidemics, quarantine,
restrictions, strikes, labor slowdowns, labor troubles, freight embargoes, and
breakdowns or damages to equipment and necessary facilities (including emergency
outages of equipment or facilities used for making repairs to avoid breakdown,
damage, or imminent danger and specifically excepting economic conditions or
events or business decisions or judgment, but specifically excluding a failure
to make any payment (collectively "Force Majeure"). The Company shall exercise
reasonable business efforts to remove the event of Force Majeure; provided,
however, that nothing in this Section shall require the Company to settle or
resolve any labor dispute if it deems the settlement to be contrary to its best
interests.
Section 6. Assessment.
(1) Valuation. With respect to the calculation of the assessed
valuation of the Property, the Tax Assessor agrees that such
assessment shall be made in accordance with the values and methods
resulting from the application of ss. 27-35-50 and such other
applicable rules, regulations, and guidelines consistent therewith
adopted from time to time by the Tax Commission for such purposes;
provided, however, that the Tax Assessor further:
(1) Acknowledges that, pursuant to the current edition
of the "Mississippi Appraisal Manual" published by the
Property Assessment Division of the Tax Commission
("Manual"),
-11-
property generally does not have a value in excess of
its replacement cost and that the cost approach to
valuation usually establishes the upper limit of
property values (Manual pp. VII-2 and VII-3), with the
result that the Tax Assessor also agrees that, absent
unusual or exceptional circumstances, the initial
assessment of the Property, as of the First Assessment
Date, should not exceed the actual cost thereof; and
(2) Agrees that the Property constitutes, under the
Manual, "industrial property" and that, under the
Manual, original acquisition cost new, including all
costs associated with installing equipment in place, is
the base for assessment of "industrial property," with
the result that the Tax Assessor also agrees that the
initial assessment of the Property, as of the First
Assessment Date, should not exceed the cost thereof; and
(3) Agrees that, thereafter, based upon the Property's
industrial classification pursuant to the Manual, this
base cost will be multiplied by the appropriate
industrial index complex multiplier (the inflation
factor) for that particular industry furnished by the
Tax Commission annually, based upon the age of the
Facility, in order to arrive at the then current
reproduction cost, which will then be multiplied by the
appropriate percentage of depreciation factor for that
particular industry from the industrial depreciation
schedules also provided annually by the Tax Commission
(Manual p. XI-7), with any economic and/or functional
obsolescence to be considered by the Tax Assessor at the
request of the Company following appropriate Tax
Commission guidelines but with office furniture,
fixtures, and equipment being assessed separately using
the appropriate Tax Commission tables and indices.
(Manual p. XI-10, XI-26, and XI-60).
(2) Classification. With respect to the classification of the
Property for purposes of the calculation of the assessed valuation
thereof, the Tax Assessor agrees with the application of the
following general methodology to determine the portion of the
Property which constitutes real property and personal property:
-12-
(1) Land and improvements thereto constitute real
property;
(2) Any Property which can be removed without
substantial harm or devaluation of the real property
shall be classified as personal property; and
(3) Based upon the past assessment practices in the
State and of the Tax Commission, in those areas of
questionable classification of property as either real
property or personal property, a preference for
classification as personal property will be utilized.
(3) Assessment Ratio. The Tax Assessor acknowledges and agrees
that:
(1) neither the Facility nor the Project nor any portion
thereof constitutes a public utility or a public service
corporation for any ad valorem tax purposes;
(2) neither the Facility nor the Project nor any portion
thereof constitutes "Class IV Property" as described in
Section 112 of the State Constitution and ss. 27-35-4;
(3) neither the Facility nor the Project nor any portion
thereof is subject to assessment by the Tax Commission
under ss. 00-00-000 et seq.; and
(4) the Facility, Inventories, and any Facility
Components owned by the Company and/or any assessable
interests of the Company in the Facility Components are
subject to a fifteen percent (15%) of true value
assessment ratio.
(4) Inventories. The Tax Assessor acknowledges and agrees
that:
(A) neither the Company's contractual rights under its
natural gas supply contracts with its natural gas
suppliers nor its contractual rights under its water
supply agreement with the United States Army Corps of
Engineers ("Corps") constitute Process Inventory
assessable for purposes of Taxes;
(B) the Company's contractual rights under its
electricity sales agreements with its
-13-
customers do not constitute Products Inventory
assessable for purposes of Taxes;
(3) the inventory of water obtained by the Company from
the Corps has no assessable value;
(4) due to the nature of the electric power generation
business of the Company and the operations of the
Facility, the Company will have no work-in-process
inventory; and
(5) pursuant to ss. 27-35-1(1), the values of the
Inventories annually reportable by the Company to the
Tax Assessor may, at the option of the Company from
year-to-year, be either the value thereof on January 1st
of that year or the average monthly inventory
(consistently calculated as of the last day of each
month) during the twelve (12) months preceding January
1st of each year, with the amount thereof being
determined as follows:
(1) Company's Process Inventory of natural gas shall,
on the appropriate measurement day, be the lesser
of either the total amount or volume of natural
gas used by the Facility on that particular day or
the maximum volume capacity of the natural gas
pipeline constituting a Facility Component between
the pipeline interconnections and the Facility at
any single moment; and
(2) Company's Products Inventory of electricity shall,
on the appropriate measurement day, be the lesser
of either the total amount or volume of
electricity produced by the Facility on that
particular day or the maximum capacity of the
electrical interconnection system between the
Entergy/TVA interconnections and the Facility at
any single moment.
Section 7. Facility Components. The City, the County, and the Tax Assessor
acknowledge that the Facility Components owned by the County or XXX consist of
publicly-owned improvements which will be exempt from Taxes under ss.
27-31-1(b). Consequently, the Tax Assessor agrees that the Company will not be
required to pay Taxes or a Fee-in-Lieu to the City, County, or District with
respect to
-14-
the County's or IDA's interest in the Facility Components, whether
such Components or portions thereof are located inside or outside the County.
The City, County, and the Tax Assessor acknowledge that it is their and the
Company's intention that the Fee-in-Lieu cover not only the Taxes on the
Facility itself but also the Taxes, if any, on any Inventories and on the
Company's assessable interest, if any, in the Facility Components owned by the
County or XXX, as well as the Taxes on any of the Facility Components owned by
the Company.
Section 8. Future.
(1) To the extent lawfully available to the Company and if the
Company is then in substantial compliance with its material
obligations contained in this Contract, City, County, and MDECD,
agree to provide, and Tax Assessor agrees to recognize and
implement, maximum statutory tax exemptions and fee-in-lieu-of-taxes
treatment to the Company for any future additions, expansions,
improvements, or equipment replacements to the Facility and/or
Facility Components upon proper application of Company for such
exemptions or fee-in-lieu-of-taxes treatment pursuant to applicable
law. Such exemptions and fee-in-lieu treatment shall include, but
not necessarily be limited to, ad valorem exemptions and fee-in-lieu
treatment for real and personal property, raw materials,
work-in-process, furniture and fixtures, machinery and equipment
(including computer hardware and software), and finished products.
(2) To the extent lawfully available to the Company and if the
Company is then in substantial compliance with its material
obligations contained in this Contract, the Company shall be
permitted to take full advantage of, and the MDECD, City, and County
agree that, upon receipt of a timely and complete application from
the Company, if required by applicable statutes, each of them will
approve and provide, and Tax Assessor agrees to recognize and
implement, any additional tax exemptions and other ad valorem tax
incentives hereafter provided by Mississippi law which may be
provided by, or which are subject to the approval of, the MDECD,
City, or County.
(3) If any of the exemptions or credits described herein
expire pursuant to statute, the Company shall be "grandfathered"
into such exemptions or credits to the extent permissible under
applicable law.
(4) Provided, however, that the Company expressly acknowledges
its understanding that the present Board of Aldermen, Board of
Supervisors, Tax Assessor, or
-15-
Executive Director of MDECD may not be able to obligate a future
Board of Aldermen, Board of Supervisors, Tax Assessor, or Executive
Director of MDECD; however, said officials who are a party to this
Contract agree to use their best efforts to assure the compliance by
the MDECD, City, County, and Tax Assessor, as applicable, with the
provisions of this Section 8.
Section 9. Miscellaneous.
(1) Amendments. Any amendments to this Contract shall be in
writing and signed by all Parties who are affected by such amendment
or their respective successors and assigns.
(2) Applicable Law. This Contract shall be governed by the
laws of the State of Mississippi notwithstanding the fact that one
or more of the Parties to this Contract may be or become a resident
or a citizen of, or be or become domiciled in, a different state.
(3) Forum Selection. To the extent permitted by law, venue for
any legal action involving the City, County, Tax Assessor, and/or
the Company arising from this Contract shall be in Panola County,
Mississippi.
(4) Counterparts. This Contract may be executed in two or more
counterparts, each and all of which shall be deemed an original and
all of which together shall constitute but one and the same
instrument.
(5) Headings. The use of captions and headings in this
Contract are solely for convenience and shall have no legal effect
in construing the provisions of this Contract.
(6) Gender; Number. Whenever the context of this Contract
requires, the gender of all words herein shall include the
masculine, feminine and neuter, and the number of all words herein
shall include the singular and plural.
(7) Entire Agreement. This Contract constitutes the essential
terms of the agreement between the Parties for the purposes stated
herein, and no other offers, agreements, understandings, warranties,
or representations exist between the Parties with respect to the
subject matter hereof.
(8) Statutory References. Unless otherwise specifically
indicated herein to the contrary, all references herein to statutory
sections refer to the Mississippi Code Annotated of 1972, as
amended.
-16-
(9) Severability. If any clause, provision or section of this
Contract be held illegal or invalid by any court, the invalidity of
such clause, provision or section shall not affect any of the
remaining clauses, provisions or sections hereof, and this Contract
shall be construed and enforced as if such illegal or invalid
clause, provision or section had not been contained herein.
(10) Assignability. So long as the Company is in substantial
compliance with its obligations under this Contract, this Contract
is assignable by the Company to any person acquiring the Facility
upon receipt by the Company of prior written approval for such
assignment from the County, which approval shall not be unreasonably
withheld; provided, however, that, in any and all circumstances,
this Contract may be collaterally assigned, and/or assigned outright
upon a default in its obligations to its lenders, by the Company to
or on behalf of the lenders for the Facility. Any such assignment
shall be binding upon, and inure to the benefit of, both the Parties
hereto and the respective successors and the assigns of the Company.
(11) Authority. The Parties hereto recognize, acknowledge, and
agree that the agreements contained herein have been the subject of
arm's length negotiations between the Parties, and each of the
Parties recognizes, acknowledges, represents, and warrants that, to
the best of their knowledge and to the extent permissible under
applicable law (as to which no representation or warranty is made or
implied by the MDECD, County, City, and the Tax Assessor), the
obligations set forth herein are the valid and legally and mutually
binding reciprocal obligations of such Party, enforceable in a court
of competent jurisdiction against such respective Party in
accordance with the terms hereof. Each of the Parties and each of
the officers or officials thereof represents and warrants that the
terms and provisions of this Contract applicable to, and his or her
execution of this Contract in the name of and on behalf of, such
Party has been authorized and approved, as required by law, by any
and all necessary actions of the applicable Board of Aldermen, Board
of Supervisors, Board of Directors, or other appropriate governing
body of the Party and that such officer or official has been duly
authorized by such Party to execute this Contract on behalf of and
in the name of such Party.
(12) No Personal Liability. The Parties acknowledge and agree
that in no event shall any individual, partner, member, shareholder,
owner, officer,
-17-
director, employee, affiliate, beneficiary, or elected or appointed
public official of any Party be personally liable to another Party
for any payments, obligations or performance due under this
Contract, or any breach or failure of performance of a Party
hereunder and that the sole recourse for payment or performance of
the obligations hereunder shall be against the Parties themselves
and each of their respective assets and not against any other
Person, except for such liability as may be expressly assumed by an
assignee pursuant to an assignment of, or pursuant to, this Contract
in accordance with the terms hereof. ("Person" shall mean, solely
for this Section 9(13), an individual, partnership, corporation,
business trust, joint stock company, trust, unincorporated
association, limited liability company, joint venture, state or
local government or any political subdivision or department, agency
or instrumentality thereof, or any other entity of whatever nature.)
Section 10. Facility Components. For purposes of this Contract, the term
"Facility Components" is defined, and the Facility Components are generally
described, as follows:
(1) Industrial Water Supply System: An industrial water supply
system to the Facility from Xxxx Xxxx, including, but not limited
to, the following:
(1) An intake structure and pumping station located at
Xxxx Xxxx.
(2) A water line for approximately 13.5 miles from Xxxx
Xxxx to the Facility.
(3) A service road at Xxxx Xxxx.
(4) Water filtering, treatment, storage and pumping
facilities at the Facility Site for raw water and
demineralized water.
(2) Process Wastewater Disposal System: A process wastewater
disposal system designed to pump the Company's discharged wastewater
into a pipeline of approximately 5800 feet in length from the
Facility to the Little Tallahatchie River.
(3) Fire Protection System: Construction and equipping of an
installed fire protection system on the Facility Site, including an
emergency, diesel-powered water pump with fuel storage.
(4) Natural Gas Pipeline: A lateral natural gas pipeline to be
constructed between existing interstate natural gas pipelines and
the Facility, including, but not limited to, connections, regulation
equipment, and the pipeline.
-18-
(5) Other Facility Components for the Project which may
lawfully be financed under the Impact Act.
EXECUTION
IN WITNESS WHEREOF, the undersigned individuals, acting in their indicated
official capacity, have executed this Contract on behalf of and in the name of
the Parties on the dates set forth opposite their respective names, having first
been duly authorized so to do.
Company: LSP Energy Limited Partnership
By: LSP Energy, Inc.,
General Partner
Date: August 20, 1998 By: /s/ Xxxxx X. Xxxxxxxxxxx
-------------------------
Xxxxx X. Xxxxxxxxxxx
Its: Senior Vice President
-19-
County: PANOLA COUNTY, MISSISSIPPI
Date: August 24, 1998 By: /s/ Xxxxxx Xxxxx
--------------------------------
Xxxxxx Xxxxx
President, Board of
Supervisors
Date: August 24, 1998 /s/ Xxxxxx X. Xxxxxx
--------------------------------
Xxxxxx X. Xxxxxx, Clerk
(Seal) Board of Supervisors
Tax Assessor: PANOLA COUNTY TAX
ASSESSOR/COLLECTOR
Date: August 21, 1998 By: /s/ Xxxxx Xxxxxx
-------------------------
Xxxxx Xxxxxx
Tax Assessor/Collector
City: CITY OF BATESVILLE, MISSISSIPPI
Date: August 21, 1998 By: /s/ Xxxxx Xxxxx
-------------------------------
Xxxxx Xxxxx
Mayor
Date: August 21, 1998 /s/ Xxxx X. Xxxxxx
-------------------------------
Xxxx X. Xxxxxx, City Clerk
(Seal)
-20-
MDECD: MISSISSIPPI DEPARTMENT OF ECONOMIC
AND COMMUNITY DEVELOPMENT, acting
for and on behalf of the State of
Mississippi
Date: August 21, 1998 By: /s/ Xxxxx X. Xxxxxx
---------------------------
Xxxxx X. Xxxxxx
Its: Executive Director
-21-
