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<br />AMENDMENT NO.2 TO ECONOMIC DEVELOPMENT <br />AGREEMENT BETWEEN THE CITY OF SAN MARCOS, SAN <br />MARCOS FACTORY STORES, LTD., AND PRIME OUTLETS AT <br />SAN MARCOS II, L.P. FOR EXPANSION AND RENOVATION OF <br />RETAIL COMMERCIAL FACILITY <br /> <br />This is Amendment No.2 to the Economic Development Agreement (the "Agreement") <br />entered into on September 27, 2004 (the "Effective Date") between the City of San Marcos, <br />Texas (the "City"), a Texas municipal corporation, San Marcos Factory Stores, Ltd. ("SMFS"), a <br />Texas limited partnership, and Prime Outlets at San Marcos II, L.P. ("POSM"), a Delaware <br />limited partnership. San Marcos Factory Stores, Ltd. and Prime Outlets at San Marcos II, L.P. are <br />sometimes referred to collectively in this Agreement as "Prime". <br /> <br />RECIT ALS <br /> <br />1. The City, SMFS and POSM entered into the Agreement pursuant to a program of the <br />City under Chapter 380 of the Texas Local Government Code, for the purpose of facilitating a <br />project (the "Project") to renovate and expand Prime Outlets at San Marcos, the existing retail <br />facility owned by SMFS and POSM in the City. <br /> <br />2. Prime Outlets at San Marcos, together with Tanger Factory Outlets, has for several <br />years been among the most popular tourist destinations in the State of Texas, and generates <br />significant sales and use tax revenues for the City. <br /> <br />3. SMFS and POSM recently submitted a proposal to the City for increasing the scale of <br />the Project and making an area of the Project available to the City for use as a Tourist <br />Information Center, and a request to increase the City's sales tax incentive payments related to <br />the Project based on the increase in the Project's scale and the provision of an area to the City for <br />use as a Tourist Information Center. <br /> <br />4. The City Council wishes to approve an amendment to the Agreement under which <br />SMFS and POSM will increase the scale of the Project and make an area of the Project available <br />to the City for use as a Tourist Information Center, and the City will increase its sales tax <br />incentive payments to SMFS and POSM based on the increase in the Project's scale and the <br />provision of an area to the City for use as a Tourist Information Center, and certain other <br />clarifying amendments will be made to the Agreement. <br /> <br />AMENDMENT <br /> <br />The City, SMFS and POSM agree to amend the Agreement as follows: <br /> <br />1) The attached Exhibit A, depicting a revised Facility Expansion Area for the Project, will <br />replace the version of Exhibit A that was originally attached to the Agreement. <br /> <br />2) The definition of "Sales Tax Deficiency" in Article 1 of the Agreement is amended as <br />