ML19329D724

Technical Assistance Request.Requests Review of Encl Preliminary Draft Participation Agreement for Util Proposed Joint cost-power Venture.Formal Signing Scheduled for 750715

ML19329D724
Person / Time
Site:	Crystal River
Issue date:	05/19/1975
From:	Moore V Office of Nuclear Reactor Regulation
To:	Skovholt D Office of Nuclear Reactor Regulation
References
NUDOCS 8003170512
Download: ML19329D724 (37)

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, u, L. Engle Docket ~Mo. 50-302' ~

V. Moore M. Karman, ELD D. Skovholt, Assistant Director for Quality Ascurance and Opcrations, D2L TECINICAL ASOISTANCE OEQ:!2ST Your assistance'is requested for'the following:

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Crystal River,1 nit 3 PLAIC NAME:

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.L. B. Eng1c, LWR 2-3 F.EVI'S GA*'CID

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71ortala.?cver Cepany la proper.in, a joint coct-rou'r vmture. tith a pre :1~.ately 16 utilitics or r.unicipalitic

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Unit 3 fc:111ty. -Conenrning this venture, t'- an11 cant desirac to n

kno' 1* any and/or what tinancial Sfor atien er rcacirmcu s v'.ll bo requircd by N2C concerning their CP end OL licensa. The c;plicant ina acheduled July 15, 1975 for for ml nignin~,of Participat W Astecnen; i.it'a the utilitica iraolvel.

Please revicu th2 cpplicant's Particip tien A ;recnent &clo: cd and provide us with the specifL: infor..ation and/or rscacsts (if any) d.ich 5".C v111 rug. ire of the Licenste(s) regardin;; the 3a natters.

TARGET DATE:

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CRYSTA5 RIVER uni'T No. 3-

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PARI'ICIPATIOi IGtEPIC.T THIS IE:DEiT, dated as of

,1975, is betwen FID?lDA PCM CORPOPATIGi (the "Cmy"), a cor;cration organized'and existing urder the laws of the State of Florida, ard PAPTICIPRES (a cmplete description of the PARTICI-P;27IS appears in Exhibit A attached hereto and :rade a part hereof).

WITNESSETH:

(Suggest Section on Definitions be included here)

A.

CC.?lltf and PKCICIPJ6TS desire and 'interd to establish their cwnarship rights in the 825 IG nni_my rated nuclear generating unit known as the Crystal River Unit No. 3 ("CR-3") 1ccated near Crystal River in Citrus Ccunty, Florida, as nere partic tlarly described in the Applicar.icn, and ceWants thereto, by CCMPI0rf before the Nuclear P.egulatcry Camission in Decket No. 50-302.

D NOT,'I'4EREFORE, in consideration of the prccises and the nutual agreements herein set forth, COT 10rf and PAFTICIP16TS hereby agree as follows:

SECTION 1.

Sale of 10% Urdivided Interest in CR-3 (a)

By separate doc =.ents of ? ten date with this Agrccant, C01-PJdif has conveyed to PARTICIPA:ES an urdivided 10% c'.c.ershic interest as. Te.na.nts-in Ccrren in CR-3.

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(b)

For reference purposes, and as a Memorand=t of Understanding relating to the documents of conveyance prior to their actual execution, the fol-lading is the agreeraant of O2GRU and PAIu'ICIPAhTS pertaining to the ab7/e-des-cribed sale:

(c)

CR-3 shall consist of:

(i) The land rights described in Exhibits B1 and B2 (such land rig' hts, together with all such a?aitional land or rights t'arein as may here-r inafter ba acquircd fcr the purpose specified in clause (iv) belcra, being herein-after called the "Ind");

(ii)

CR-3, including the nuclear pwer reactors, the tur-b'imenerators, the b'ildings 1cusing the same, aM tha associated au:dlin-ies ard equipent, all as nere partico1=-ly describtd in the Application deccrib;d in i

Paragraph A of the forc9 ng recitals; (iii) 11ateri'als, supplies,. fuel, tools, and equipment, including spare parts for use in construction of CR-3; and (iv)

Such Maitional land rights therein as may be acquired, and such additicral facilities a-d other targible prcpej as nay be acquired, cen-structcd, installed or replaced in connection with CR-3, provided (1) that the cost cf such n?Aitional land cr rights tinrein or of such additional facilities or other tangible p.M shall be properly recordable in accordance with the Uniform Sys-them of Acccunts (as harein defined),-

ad. (2) that such additional land rights therein or such additional facilities or other te.ngible preperty shall have been acquired, constructed, installed or replaced for the ca:non use of CQGA?2 and PARTICIPANTS uMer and subject to the provisions of this Agreerent.

(d)

Sale of Assets. CCGRE will sell and cc:r/ey to PAM;.iSRES, and PAPSICIPR.TS will purchase frcra CCtGRN, an undivided cwnership interest as a M

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te ant in comr.on in CR-3.

PARTICIPANTS... interest;ui_1_1_ be. determined by their Generation Entitlement Share.

Such conveyance will be by 1.icense Agreement and Bill of Sale substantially in the form of Exhibit __ attached hereto and made a part hereof.

From time to time after the Closing, COMPANY and PARTICIPANTS shall execute such other instruments of conveyance and transfer as may be necessary or appropriate to vest in PARTICIPA!!TS such 10% undivided ownership interest in and to CR-3 as is intended in this Agreement.

(e)

Purchase Price and Payment.

(i) The purchase price for PhRTICIPA!iTS 10% undivided interest in CR-3 acquired, constructed or completed prior to the June 30,*1975 shall be an amount equal to 11% of the aggregate of all Cost of Constructica of CR-3 '(as herein defined) incurred by. the COMPANY up to June 30, 1975.

It is recognized tnat the COMPANY will have made payments of the accumulated Cost of Construction prior to the June 30, 1975.

In vicu of such fact, the Allowance for Funds Used During Construction (AFC) charged to the Unit on the COMPANY'S books of record, shall be included as accumulated Cost of Construction.

As of June 30, 1975, 11% of the aggregate of all Cost of Construction of CR-3 incurred by the COMPANY prior to such date, including AFC, is estimated to

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, which will be shared by the PARTICIPANTS in proportion to t' heir respective Generation Entitlement shares.

The purchase price for PARTICIPANT'S 10% undivided interest in CR-3 ccquired, constructed or comp 1.eted_ prior to the June 30, 1975 shall be payable to PREL ML !r R '

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PREla a lARY e~e the C0'4PANY at the Closing in imedia:ely available funds.... _.

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(ii) The COMPAllY will make available to PARTICIPAtiTS all records regarding Co' t of Construction of CR-3 sufficient to allow PARTICIPA!iTS s

to determine that such costs and expenditures imputed to CR-3 by the COMPANY pursuant to this Section 1 (e) are in compliance with the Uniform of System of Accounts.

(iii) For purposes of this Agrement, Constructica Costs shall include the costs ircurrel by the CCIGRN in CR-3, including: The costs incurred or centriluted by tb CC:GRTI fcr nuclear training, feasibility studies, site evaluatica studies, preparaticn of i:witation for bids, bid evaluations and cent.act negotiatiens for equip.ent, systens, n: clear Fuel c:d services and for activities urdertahn to secure penits, licenses, aut'rrizations and ap f:na any regulatory authority for CR-3.

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(iv) subsecuent to June 30,1975, all construction costs

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ircarred by th.e. Cc=any to cu.glete constructica of CH-3, c::cluding AFC, will be

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shrcd bv the CC!SITI a-d PATICIPX7PS in =crcr ica to their respective C-anera-e tien Entitl ment Qures. These acr--" tad e:garditres are prcperly r:cc hbl in accordance with the Electric Plant Instructicns and in appropriate accounts as set forth in the Federal Pcuer Ccnniission Uniform Systen of Accounts prescriled for Public Utilities ard Licensees (Class A and Class B) (the "Crifem Systen of

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Acccunts").

(v)

Capital ir rovem.nt costs subsec".:ent to final cc sletien Of CR-3, excl"U,g AFC,_will_be shared by the CCreRE and PARTICI?g__inyropor--

tien to tMir resWive Ceneratica Entitle. ant Shares.

(vi), Pay:ent for the extenditures centccplated in Sectica _

l(e)(iv) and Section 1 (e) (v) will b2 payable in advarce at tM tegi:ing of the renth in which the constructi_o_n__wcRk is to_take place.

The first such payment

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PRELIM.NAR on an invoice; hwever, a forecast of tbli,a5hr@irmAts shall be made for

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cach quarterly period ccurencing on the first day of January, April, July _and y

October. These forecasts will be.for each renth'for.t.h.e first t..o guarterly.

pariods imrediately follcraing the issuance of the forecast, Revisions ard fore-casts will he made every three rcnths.

Payments are due at time of invoicing in accordan e with provisiens outlined in Section 5(d) (vii).

(vii) ~ The COGKN shall have sole authority in decisions regarding Units of Property retired frcra service whether considered original f

construction or capital improver.ents. Costs of rarraval and salvage credits, if any, frtn retired units of property will be shared by the PMCICIPX7PS in propor-tion to their respective Gen 2 ration Entitlcc.ent Shares.

SECTI0tt 2.

Closing. The closing of the sale and transfer provided for in Section 1 hareof (the "Cicsing") will take placa at 10:00 A.M. en July 15, 1975, at the offices of CCP.PA!iY.

SECTIO:1 3.

Certain Representations and Warranties by PARPICIPETPS.

PARTICI-PRES hereby represent, warrant and covenant to the CCGRU as follows:

(a)

PARTICIPX7P'S Organization. Each PARrICIPANT is an entity duly organized, validly existing and in good standing under Florida Statutes and other applimble laws of the State of Florida and' has corporate pcwer to carry on husiness as it is noa being conducted and as it is contsplated to he ccnducted after the Closing. The PARTICIPMCS delivered to the CCGR4Y a true and cccplete copy of their respective charter and by-laws aa amanded to date. Each warrants that they are fi.ancially able to ascra the responsibilities conte. plated by this Agrement and have thus delivered audited fi.ancial statenents to the CCGRN.

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(b) Merebers.

Set fo..-th in Exhibit;-is a-true ard ccep,lete list of all PARPICIPX,'IS.

(c) Authority Relative to this Acre = cent. The exc-cation, de-livery and perfor.ance of this Agreement by the PARTICDR7FS have been duly and effectively authorized by all requisite corporate and other requisite action.

SECTIO;i 4.

Certain Pacresentations a.-d Warranties by the CCe R N.

Tha Cm-PRE hereby represents ad warrants to PARPICDR72S cs follc,s:

(a)

The COGRTf'S Cr anization. The C2ORTI is a corporation duly organized, validly existing and in gced standing under th2 laws of the State of Florida and has corporate power to carry cn its business as it is nc*J haing conducbed.

(b)

Authoribf Relative to this Acrescent. The cMecution, delivery ard parfc=r.ce of this Agr:ccit by the CCORN have been duly and affec"'.ively authorized by all rcquisite corpcrate action.

SECTIO;j 5.

Cert-ain 7crocants bet. een the CCORE and PARTICIPRTTS. The CCM-PRE and PARTICERTTS Mreb covenant and agree as follows:

f (a)

Resconsibility for Construction. The COGRE shall have sole responsibility, to be discharged in a prudent nanner in accordance with good utilit,.f practices, for the planning, licensing, design, construction and tes*4.of CR-3.

The CO?rTI will use its reasonable best efforts fully to ccrply with all require-ments of all applicable statutes and the rules and regulations of the Nuclear Pqa-latory Ccr.nissicn and such other regulatory agencies as shall have campetent juris-diction ove.c the planning, design, licensing, construction, operation, r.aintenance ary' disposal of CR-3.

The C2@ATI shall not be liable or respcnsible for any. delay 2n CR-3 carerring Camercial Operatien caused by forca ma'eare-TIhst %f*

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573o775 PRED Ah' RY rajeure" as used herein shall mean, without liritation, the folic.iing:

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of God; strikes; Icckouts or other industrial disturbances; acts of public ene-mies; orders, or absence of necessary orders and per:rits of any kind of the govern-ment of the United States or of the State of Florida er any of their-departr.ents, agencies or officials, or any civil or military authority pertaining to CR-3 in-surrections; riots; extraordinary delay in transportaticn; unforeseen soil con-ditiens; eculprant, material, supplies, labor, or rachinery shortages; cpidemics; landslides; lightnim; carth;2akes; fire; hurricanes; tornadc>es; stcr:ns; ficods; wasFrats; drcught; arrest; wr; civil disturbances; explosions; breahge or acci-dent to rachinery, tranr.iccica lines, pipes or canals; partial or entire failure of utilitics; breach of contract by any supplier, centrcctor, subcentractor, la-berar or materialran; sabotage; injunctien; blight; ferine; bicekage; : quarantine;.

cr av other sirliar came er e-7ent not reasen2bly within the centrol of the C24- '

PRT.

Tne CG9.WI agrees, hDwever, to rccedy with all reasonable dispatch the cause or causes preventing the Ca2NT! frcm carrying cut its agreccents; provided, that the settlecent of strikes, lockouts and other industrial disturbances shall lya entirely'within the discretion of tha CO2RTI and the CO2RTI shall not he regaireh to rake setticment of strikes, lockouts and other industrial disturbances by ac-

' ceding to the drands of the opposing party or parties when such course is in the judgment of the CO2RN unfavorable to the CG2RTI O' O

(b)

Agency.

PAR:'ICIPRCS hereby i e'.e2.y appoint the CO2Erl their agent in connection with C4-3 to act on their behalf in the planning, design, licensing, ccnstructicn, acq2isitica, cenpletion, raintenance, cperation a.d dis-posal of CR-3 and authorize the CGT.WI in the name and on behalf of PAFCICIPM.TS to take all reasenable actions which, in the discretion and judg.ent of the CCM-PMW, are deced necessary or adnsable to effect the planning, design, licensing,

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construction, acqaisition, ccnpletion, raintenance, operation and disrosal of CR-3, including with:ut limitation, the following:

(i) The making of such agree.ents and nrdifications of existing agreetants and the taking of such other action as tM CCeKiY deers necessary or appropriate, in its sole discretion, or as ray be regaired under the regulations or directives of the IMclear Regulatory Ctnmission or such other regulatory agencies having jurieMie-tion, with respect to the construction, acgai-sition and ccr:pletion of CR-3 for crmarcial mice, the pmarmt, replacement, modification or rene.,al of all or any part thereof, ard if necessary, the retire-mnt, dis;csal or salvaging of all or any part thereof, whether befcre or af*ar carpletion; (ii)

D. cept as provided in Section 5(1), and Sectica 5(m),

the execution and filing with tb Naclear hegulat y Cccaission or such other regu-htory agency having jurisdiction of applications, amn&ents, reports and ot.cr documnts and filings.in or in connection with licensirg and otMr regulatcry matters with respect to CR-3.

(iii)

The receipt on PARTICIPE;T'S behalf of any nctice or other ccm:anication fran the Nuclear Regulatory Ccrmission or other regulatory agency having jurisdiction, as to any licensing or other regulatory matter

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to CR-3.

In dischuging its cbligaticas hereurder, the CCGX;Y shall have the right, on its cwn behalf and en behalf of PAR?ICIPE7?S, to contract with itself for the purchase of any egai;r. ant or facilities or the perfor ance of services in connection with CR-3.

The CCGAvl shall have no liability *w PARTICIPR7PS for any loss, da:nage or expense suffered by PARTICIPR??S cr for any 5/10/75 o

damage to PIETICIPXir'S interest in CR-3 or any portion of CR-3 arising out of or resulting fran any action taken or failed to be taken by tha CUGMTI br any crployee of the CCfGANY pursuant to this Section 5(b) unless such loss, darage

- or e:: pense results frcm the willful misconduct of the CCreRTI cr the failure of the CCtG14TI to perfo=n any cbligation imposed pursuant to Section 5(b) alcve, in-cluding without limitation,. the failure of the CnGKrl to plan, license, construct, ccquire, carplete, maintain, operate and dis;cce of CR-3 in a prudent manner in accordance with good utility practice.

In the event the CCIGICTI perforrance of its dutics pursuant to this Section 5(b) incurs any liability to any third party, any amount paid by the CCI?KW on accetmt of such liability shall M considered a Cost of Constructicn and apportiencd Mtween tha pa-hics pursuant to Section 1(e) hareof'.

(c)

Inforratien. The CCI2Rrc shall r&2 all reasonable effort to inforn the PARTICIP1NTS as to planning for and pregress of constructicn, ac-quisition and ccmpletion of CR-3.

(d)

Operating Conditions.

(i)

Authority for Coeration and Management. The CCITNTI sh111'have sole authority to manage, control, maintain, and operate CR-3, and shall' take all steps which it deems necessary or appropriate for that purpose. The PAR-TICIPNTIS irrevocably authorize the CCIGNTI to act as their ag'ent in all activities associated with the operation ard ranagcr.ent of CR-3.

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5/10/75 As the 'sola manager and predominant owner of CR-3, tho CC:!PAtiY will mana*ge, control, i

maintain, and operate CR-3 in all respects as if the COMPAtlY were the sole owner of CR-3.

In discharging its obligations hereunder, the CC: IPA!iY shall have the right, on its own behalf and on behalf of the PARTICIPAt;TS, to contract with itself or any outside contractor for the purchase of any equipment or facilities, or the performance of services in connection with CR-3.

(ii)

Scheduling and Dispatching The COMPMiY shall have sole authority for the hourly scheduling and dispatching of CR-3 generation, in accordance with COMPA iY's scheduling and dispatching practice.

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gy (iii) Energy EntitlementE Y

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I The COMPA!1Y and the PARTICIPAfiTS shall be entitled to 90% and 10%, respectively, of the net energy cutput of CR-3 as ceasured on the lcw side of the main generator step-up transfor=er and adjusted for appropriate step-up and station service transfon er losses.

Point of Delivery for PARTICIPAliTS shall be the high side of the step-up transformer.

The determination of actual entitle-mants will be made conthly after the fact.

Differences between actual b;H's received and n!H's entitlement will be carried as Inadvertent with every attempt being made to correct monthly.

PARTICIPAtiT'S Generation Entitlement Share shall ccsence with comercial operation of CR-3.

Where it is the PARTICIPAllT's responsibility to control hourly net intercharige between the CCNPAtiY, or another intermediate transmission system entity, such PARTICIPANT (S) shall cake every effort to stay within + 5% of its hourly entitlement.

Should conditions dictate that hourly entitlements be graater or lesser than what would be normally expected, system dispatchers of PARTICIPAf!TS D

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J b o J1 d J1)ill Nhko The COMPANY shall maintain and perform annual meter tests of the :GlH meters used to determine the net generation of CR-3.

Ali PARTICIPANTS shall have witness rights to such tests. Any PARTICIPANT may request more frequent testing than outlined hereinn however it will be financial responsibility caf n

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that PARTICIPk.6 w war c 6 6 costs associatec wi th such tests.

(iv)

Operations Manaaement TheCOMPA!1Y,assolemanagerofCR-3,shalltakeaft steps which it deems necessary or appropriate for that purpose in a manner con-sistent with prudent practices in the electric utility industry.

The COMPAI4Y shall:

Execute, administer, perform and enforce contracts acting as principal on its own behalf and as agent for all of the other PARTICIPAllTS, for operating work, including, without limitation, any and all warranties on equipment, facilitics, materials and services furnished pursuant to any such contracts.

Administer, perform an cnforce any liuclear Fuel Agreements and negotiate, execute, administer, perform and enforce all other fluclear Fuel Agreements.

Administer, perform and enforce all other contractual obligations and arrangements, including all warranties applicable thereto entered prior to the date hereof.

Furnish cr recruit the necessary. personnel and provide for such tre.ining as may be required to qualify them to perform the operating work and to meet all licensing requirements established by law.

Cceply with (1) any cnd all laws applicable to the performance'of cperating work and capital improvements for CR-3, including without limi tation all applicable laws, rules and regulations for protecti'on of the environment and all applicable provisions of cny workmen's compensation laws, and (2) the terms and condi tions of any contract, permit or license relating to CR-3.

Purchase and procure, through and from any source it may select, in the name of the PARTICIPA!1TS with undivided interests as tenants in comon in accordance with their Generation Enti tlement Shares, the equip-ment, apparatus, machinery, tools, services, materials and supplies and emergency spare parts necessary for the performance of operating work and the additien of capital improvements.

Expend funds in accordance with the terms and conditiens of this participation agreement.

Keep and maintain such records of monies received n

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and expended, obligations incurred, credits accrued, the conduct of operating work and making capital improvements, and of contracts entered into in the performance of' operating work as may be necessary or useful in carrying out project agreements or requi~ red-to permit an audit of the operating work and capital improvements, relating to CR-3, and make such records available for inspection.

!!ct permit any liens to rema'in in effect unsatisfied against CR-3 (other than the lie'ns permitted under

' this Agreement, liens for taxes and assessments not yet delinquent, liens for labor and material not yet perfected or undetemined charges or liens incidental to the perfor-mance of the operating work).

Arrange for the placement and maintenance of operating '

insurance.

Assist any insurer in the investigation, adjustment and settlement of any loss or claim covered by operating insurance.

Present and prosecute claims a~ gainst :

insurers and indemnitors providing operating insurance or indemnities'in respect of any loss of or damage to any property.of CR-3 or liability of any PARTICIPA iT to third parties covered by any inddnity agreement, and to the extent that such loss, '

damage or liability is not covered by operating insurance or by any indemnity agree-ment, present and prosecute claims therefor against any parties who may be liable therefor.

Investigate, adjust, defend and settle claims against any or all PARTICIPA!iTS arising out of or attributable to operating work or capital improvements, or the past or future performance or non-performance of the obligations and duties of ariy PARTICIPA!!T, under or pursuant to this participation agreement, including but not limited.to any claim resulting from death or injury to persons or damage to property, when said cliams are not covered by valid and collectible operating insurance carried 3PdUMLi.AR

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by any PARTICIPNIT, and whenever and to the extent reasonable,present and prosecute clais cgainst any third party, including insurers, for any costs, losses and demages in-curred in connection wi th said claims.

Notice to the Administrative Conraittee shall be given by the COMPMiY before any said claim or ccchination of said claims against cny or all PA?.TICIPNITS arising out of the same transaction or incident is settled for more than $250,000 unless the entire amount of the settlement in excess of

$250,000 is recoverabic from an insurer providing operating insurance.

Keep the PARTICIPNITS advised of major changes in conditions or other material develop:nents ef fecting the performance of operating work, any kncwn default of the project' agree-ments and submit to the PARTICIPNITS cny reccmmendations for amendm'ents ~ of this

. Agreement.

In the event of an opera *.ing curtailer.an t or energency take such action es the COMPNtY in its sole discretion may deem prudent or necessary to terminate the operating curtailment or emergency, to preserve and maintain the safety, in-tegri ty and operabi li ty of CR-3, to protect the hecith and safety of the public or to minimize any adverse environmental effects and such other action as required by Exhibit _ attached hereto.

(v)

The other PARTICIPAtlTS shall lend and be properly reim-bursed for all necessary and available assistance as may be requested by the COMPN 1Y in the performance of operating work.

(vi)

CR OPERATING EXPE';SES Operating Expenses of CR-3 vill include all the ' COMPANY costs incurred at CR-3, including amortication of Nuclear Fuel Investment as provided under j

Account 518 of the Unifcrm System of Accounts and appropriate allocations of the COMPAfiY costs for Production Supervision, Insurance and Liability Payments

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and Employee Benefits (includir.g Payroll taxe.s.)

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5/10/75 s.

(vii)

SHARIi!G OF COSTS It is t'he absolute intent of the COMPAtlY and all PARTICIPA!!TS to share all items of cost, obligation and liability incurred in connection with CP-3 (other than financing) in proportion to their Generation Entitlement Shares.

In addition to the costs listed above, under " Operating Expenses", the costs to be shared will be increased

% to cover unallocated costs for Di5 patching and Load Control, Overheads, such as Administrative and General Expenses, special billing and' acccunting, organization, expertise, risks and management.

Payment of these charges and those for Common and External Facilities provided in Section is due in advance.

Mcwaver, to facilitate billing and payment, the monthly charges for the cash portion (total charges less amortizatir of fuel expense), v[ill be invoiced by the 15th with payment due by the 25th of

~

the next succeeding month, and a financing charge of 1/8 of 1.15 times current annual Prime Rate (as defined) times the amount due will be cdded and al::o be due with the above cash payment.

These costs shall be paid by the PARTICIPA!iTS when an invoice is presented and payment.is to be made payable to Treasurer: Florida Power Corporation, P. O. Box 14042, St. Petersburg, Florida 33733.

Payments are also subject to the, requirements of Section 9.

At the request of either the COMPAtiY or PARTICIPAliTS an adjustment or readjustment of the percentage for unallocated costs may be determined as agreed upon among the COMPAtlY and the PARTICIPAi1TS.

If agreement is not reached, the percentage shall be.' hanged by the same amcunt as (insert c

some acceptable national in::ex).

PREUMiNARY

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(f)

Coooeration.

The COMPANY and PARTICIPANTS will cooperate wi th each other in all activities relating to CR-3, including, without limitation, the filing of applications for authorizations, permits or licenses and the execution of such other documents as may be reasonably necessary to carry out the provisions of this Agree-Without the COMPANY 85 written consent, PARTICIPANTS shall not incur any ment.

obligation which would or could obligate the COMPANY to any third party.

(g)

Alienation and Assienment.

During the existence of this contract, neither. tile CCMPANY nor PARTICIPANTS shall have the right to sell, lease, convey, transfer, assign or alienate in any manner v.hatsoever its ownership interest, or any portion or portions thereof, in CR-3, or any rights under this Agreement without first offering, subject to all requisite regulatory approval, such sale, lease or other conveyance to the other parties to this Agreement upon the same terms and conditions as the proposed sale, lease or conveyance to a third party, which offer shall be made in the form of a proposed contract. and shall be open for acceptance by the parties to this Agreement for a period of thirty days, and in the event such offer is accepted,

.c the affected parties shall proceed to a closing pursuant to the terms of the aforesaid contract in an expediticus manner; provided, D D R I1.v iium - DV IV%

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5/10/75 however, the CCIPAliY and PARJICIPSITS shall each have the right to convey a security interest in its proportionate interest in_CR-3 to secure bonds or other obl'igatick issued or to be issued.

In the event such offer is not accepted by the other parties to this Agreement within the aforesaid thirty-day period and the offering party does not consur= ate a sale, lease or other conveyance of such interest within a period of one year after the date of its offer to the parties to this Agreecent, no such

. sale, lease or other conveyance may be consummated without re-offering the sale, lease or conveyance to such other parties to this Agreement.

In no event shall the offering party sell, lease or convey such interest to any third party on more favorable terms than those set forth in the aforesaid contract.

The COiPAt;Y and PARTICIPAf1TS shall notify the other in writing as soon as possible after it learns that any lien or security interest (which lien or security interest in the case of the CG;iPANY only is in rispect of an obligation or liability in excess of $50,000) has been or will be imposed upon its ownership interest in CR-3 or has reason to believe that such a lien or security interesi will be imposed.

In the event of any sale, ccnvefance.

transfer, cssignmer.t, er alienation (other than solely as security for an indebtedness) by the CC:iPAtlY or PARTICIPAiTS of its ownership interest, or any portion or portions thereof, in CR-3, the CCriPAtlY or PARTICIPA?iTS, as the case may be, shall cause such transferee to become a party to this Agreement and assume the obligations of the transferor hereunder.

fictwithstanding the foregoing provisions of this Section 5(g),

the COMPAfiY shall have the right to sell, convey, transfer or assign its ownership interest, or any portion or portions thereof, in CR-3 to any Entity PPmF_A N 'RY 9

b/lullb i

or to any gover rental or political subdivision in connection with the financing of pollution centrol facilities without the ccnsent of PIMICIPR.TS aM without ccrplying with the foregoing. provisions of this Section 5 (g).

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(h)

Taxes.

(i) The PARTICIPRES shall use their test efforts to have any taxing or other authority levying any taxes or assessr.ents, or payments in lieu thereof, or raking any valuations for the purpose of levying any taxes or assess:ents or pag.ents in lieu thereof, on CR-3, or any interest or rights therein, assess and levy such taxes or assessants or papants in l'ieu thereof (except Payroll and Sales and Use Taxes) di-rectly agai.st the cr.ership cr beneficial interest of tha CCOMTl en each PARTICIPler2, (ii) Idi taxes or assesc~ents or pa3=ents in lieu thereof levied against the CC'G7NI cr each PIUCICII;M'S ownership or baneficial interest in CR-3, ex-cepting those taxes or assess ent.s or pagents in lieu thereof levicd against cn indi-vidual PIMICIFR.'T in behalf of any or all of the other PARTICIPIMS, shall he the scle respcasibility of the PARTICIPNTf upcn whcse ow.ership or bana#M M interest said t2x22 or assassnents or pairents in lieu thereof are levied.

(iii)

If any property Mcs er pap.cnis in licu thereof or any other taxes or assess. ants are levied or assessed in a ranner othe-than specified in Sectica (h) (i) here^f, CCCGMTl and PARTICIP;NIS shall establish equitable prac-tices and procedures fcr the apportiomant arcng the CCIG7xl and PARrICIPRTrS of such taxes and assessrants or papents in lieu thereof.

Sales and Use taxes will be ch1rged as part of the cost of the raterial or service taxed.

(iv)

Responsibility for papent of nineteen hundred seventy-five ad valorem taxes shall be determined between the COMFA;;Y and PARTICIPA!iTS at the Closing based upon their respective interest i.. CR-3.

PARTICIPAitTS shall be responsible for all sales and transfer taxes and reccrding fees incurred in connectica with the conveyance to PARTICIpA iTS of an undivided interest it CR-3 pursuant to this Agreement.

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(i)

Insurance. The CCreRTI shall raintain in force for the bene-fit of the CDPRE and PARTICIPRTIS as their interest shall appear, as a cost of construction or a cost of operation as appropriate, such insurance as desed neces-sary by the CCIGA. f, but not less than wibI s[tisfy tM require ents of.the Atcrcic

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V Energy Act of 1954, as arended, and confonn with the prudent utility practices. The ccre R E shall keep the PARrICIPR;TS info =4d as to the status of insurance in fore.e and if it does so, the CCIGRTI shall not be liable for any failure to insure or in '

adequacy.of coverage.

(j) tMclear Fuel. The warding of the 1Mclear Fuel sections will be estnh1inhed in accordance with the follcwing general principles:

(i)

Investmants in IMclear Fuel will be mde considerably in advance of its use. Scre elements affectin;; Fuel E:gense ray not ba Imctsn until sev-eral years after tha related IMclear Fuel is used and the Federal Pcuar Ccranission Systan of Accounts i=:oses certain requiremants respecting IMclear Fuel Accounti.~g.

(ii)

Thia CCCGRTI shil hve fi al authority and responsibility to manage all CR-3 teclear Fuel according to its discretion and judgrent.

(iii)

The CDPRTI shall also have tne right to ente-into any arrangenent, en its cran behalf and on ba'm1f of PAFTICIPR7IS, for the. purchase er financing of Ibclear Fuel for CR-3, including wit' rut li::titatica the leasing thercof which the Cd=any, at its sole discretim, shall deen desirable and PARTICIPRiTS agree to cceptc with th2 CCIGRU to Ma all action requircd to cons =cate such arrange-nents.

(iv)

PARTICIPRHS have the right to trortgage pledge or en-c nter their invest =cnt in !bclear Fucl.

(v)

Investment in and later arcrticatica of Nuclan" Fuel in-cludes all costs, except AFC, as recorded in Accounts 120 or Amortization Account 518.

(vi)

Papents shall be mde in advance in order for the CCtGAN't to reet pap:ea.t schedules under Nuclear Fuel Agreerents for i:westments in fuel.

All costs will he shared en the basis of Generation Entitisc.ent shares with tha result that tha recaining investment in fuel inventcries will he in propertica to Generatica En-titlenent shares.

,7 5/10/75

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(k)

Pollution Control Facilities. The CG4PRR shall have the right to enter into any arra.ger.ent, solely cn its c.m behalf cr en beMlf of both itself and PARTICIPR.'rS, for the purpose of financing.cartain facilities and egaip. ant 1ccated at CR-3 for the centrol of environmental pollution through the issuance of bonds or similar securities through any political subdivision, the interest on which may be exempt from Federal income taxes.

PARTICIPANTS agree to cooperate with the COMPANY and to take all action required to consummate any such financing of pollution control facilities and equipment.

(1) Approvals. The CC4PM W and PA%'ICIPANTS shaiT use their best efforts to cbtain as quickly as possible all requisite gcVernT. ental, regulatory and verdor approvals of the oca n :matica of the transactions cnntsplatcd hereby.

[

(m)

Licensca. PARTIC~PR;TS, at its cf.m expense, with infort.tional M

assist:nca providad by the COGIj:Y, will seek to and beccme, priory o the Closing, a t

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license of th2 Nuclear Regulatory Cu.i.dssion.or _such ot;.her_ regulatory age.cies having jurisdict,ien_cv.er_the_ lice.nsing of CR-_3.

SECTION 6.

Conditions Precedent to the Cc4PRri'S Cbligations Hereunder. All cbligations of the 02GRri under this Agrec.aent are subject to the fulfillment,

' prior to or at the Closing, of each of the follcuing corditions (or the waiver in writing of such conditions by the CQGRE):

(a)

The CQGANY shall not have discovered any material crior, mis-stats.ent or cmission in the representations and warranties rcade by PARTICIPR7FS in this Agreenent'.

(b)

PARTICIPR;TS representations and 'tarranties contained in this Agreccent shall be deeired to have been made again at and as of the time of the Closing and shall then be true in all material respects; PARTICIPR;TS e5-11 have 3DCi ! A Aih t iOy

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_m 5/10/75 performed aM cmplied with all agrements, covenants aM cenditions repired by this Agrem.ent to be perforced or explied with by it prior to or at the Closing; the CCtGANY shall have been furnished with a certificate signed by the Principal Officer of cach PARTICIP22, dated the date of the Closing, certifyirg in such de--

Mil as tha CCtGNE r.ay regaest to t% fulfillment of the foregoing conditions.

(c)

Eviderre that the purchase reney regaired of each PARTICIPRR has been wired in Federal funds to the acccunt of the CCtGA'E at Forgan Guaranty Trust Capany, 23 Wall Street, Nea York, Nea York, Account Dmbar 021-44338, on or before July 15, 1975.

'SECN0;t 7.

Ce ditiens Precedent of PA rICIPx s'S Cblications Hereud er.

All obligaticns of PATICIPRES under this Agree.cnt are subject to the fulfillment, prior to or at tha Clocing, of each of the following conditions (or the waiver in writi.m of such cenlitions by-PARTICIPM7rs):

(a)

PATICIPRES shall nct have discoveed any raterial* error, misstatsant or cnicsion in the representations and warranties made by the COGRN in this Igresent.

(b)

Tha CIIGRE'S representations and warranties contained in this Agrement shall be deced to have been rade again at ad as of the tira of the Closing ad shall then be true in all raterial respect; the COGRE shall have per-fored and'cmplied with all agrements, covenants and conditions regaired by this Agrecnent to be per#crred er explied with by it prior to or at the Clcsing a.d PARICIPAh'IS shall have been furnished with a cetificate of the President or a Vice President of the COGANY, dated the date of the C10 sing, certifying in such deuil as PArICIPRES may regaest to the fulfillment of the foregoing conditions.

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l-5/10/75' SECTION 8.

Conditions Precedent to the Respective. Obligations of' the COPANY and PAMICIPXES. The respective obligations of the CC@RTI and PARTICiPRES hereunder are, unless waived in writing by the CQ G Erl and PA EICIPICES prior to or at the Closing, subject to the further corditions that:

(a)

All requisite govermental, regulatory and vendor approvals of the e:acution, delivery and perfourance of this Agrecrent and the const:rration of the transactions conte platcd hereby the CQGRTI and PARTICIPRES and the re-lease by Fbrgan Guaranty Trust Carpany as Trustee urder the CO9MTI'S First bbrt-gage Bond Indenture datel January 1,1944, of the interest in CR-3 to be conveyed to PARTICIPRES hereunder frcm the lien of such Irdenture, shall have been received incluliJg other approvals on the part of any PAPTICIPA'ES which approvals ray not be waived.

SECTION 9.

NONPARTITIO!BtErlT.

Each PARTICIPANT and CC+iPANY hereby waives any rights which it may have to partition any component of CR-3 or Common Facilitie,s or External Facilities, whether by partitionment in kind or by sale and division of the proceeds, and further agrees that it will not resort to any action in law or in equity to partition such component or Common Facilities or External Facilities, and it waives the benef_its of all laws that may now or hereafter authorize such partition for a term (i) which shall be conterminous with this Agreement, or(ii) which shall be for such lesser period as may be required under applicable' law.

SECTION 10.

f0i: DEDICATION OF FACILITIES.

The PARTICIPANTS and C0liPANY do not intend to dedicate and nothing in this Participation Agreement shall be construed as constituting a dedication by CODIFAtlY or any PARTICIPAtiT of its propertiee or facilities, or any part thereof, to any other PARTICIPANT, to the CCFiPANY, the public, or the cust::mers of any PARTICIPANT or CCMPANY.

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manpowe r

_ budget, annual operation and maintenance budget, planned outages, written statisti cal and administrative reports, written budgets, and information and other similar records and the form thereof to be kept and furnished by the COMPANY (excluding accounting records used internally by the COMPANY for the purpose of accumulating financial and statistical data, such as books of original entry, ledgers, work papers and source documents).

(vi)

Coordinate audi t requests by PARTICIPANTS and the selection of an auditor to review the books or records of the COMPhiY, relevant to CR-3, as may be needed by PARTICIPANTS.

It is recognized that as the COMPANY is constantly audited by representatives of various, governmental and regulatory agencies as well es independe,t auditors who certify to the correctness of the CCMPANY'S cccounting records, requests for special audi ts for the benefit of PARTICIPANTS shall be paid for by those rcquesting such audi ts.

(c)

Within thirty (30) days af ter the execution of this Partici-pation Agreement the CCMPANY and each PARTICIPANT shall designate its representa-tive on the Administrative Committee hereby established, with notice thereof given to the COMPANY and the PARTICIPANTS.

(d)

Any action or determination of the Administrative Committee mus t be unanimous, including the vote of the Chai rman, subject to provisions herein with respect to procedures of default and arbitration.

(e)

The Administrative Committee shall keep written records of all mee tings.

(f)

If the Adminis trative Committee fails to reach agree ent while

~ performing the respective functions and duties assigned to it in this Agreement, then such disagreement shall be referred to higher authority within the organiza-

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?REUi AlNARY SECTION 11.

ADMlulSTRATICS.

As a means of securing cffect-ive cooperation and interchange of information and of providing consultation on a prompt and orderly basis cmong the PARTICIPAllTS and the COMPANY in connection with various administra-tive and technical matters which may arise from time to time in connection with the terms and conditions of this Agreement, an Advisory Administrative.

Cccmittee is established which shall have the functions and responsibilities and be constituted as described herein.

(a)

Membership.

The Administrative Comittee shall have as its Chairman an appointee representing-the COMPANY, who shall be respensible for calling meetings and establishing agendas.

Each participant may, at its option, have an-individually appointed m:.ber or may delegate a cember to represent two or more participants.

1

~ he Administrative Committee shall have the fol!cw-(b)

Fun c ti ons.

T Ing functions, av.ong others:

(i)

Provide liaison among all PARTICIPANTS and the COMPAlly at the management level.

(ii)

Appoint Ad Hoc Comi trees as necessary to perform detailed work and conduct studies regarding matters requiring investigation.

(iii)

Perform such other functions and duties as may be assigned to it in this Agreement.

(iv)

Review and discuss disputes arising under this Agreement.

(v)

Provide liaison among all PARTIC'PAMTS and the COMPAftY wi th respect to the financial and accounting aspects of progress, performance and completion of' construction and operation of CR-3.

These shall include such items as:

capital improvements, annual capital expenditures budget, annual

5/10/75 tion of the COMPMY cnd c:ch PARTICIPNIT for resolution.

I f, ef ter thirty '(30) days the disagreement is no't :esolved by such higher authorities, then the matter may proceed to arbitration as provided in Section 14 hereof.

(g)

I f a dispute should arise which is not resolved by the Ad-ministrative Committee or the higher authorities wi thin the COMPAfiY and PARTICIPAtiTS' organizations, then, pending the resolution of the dispute by arbitration, COMPMY shall proceed wi th Construction Work, Operating Work or Capital improvements in a manner consistent wi th this Agreement and prudent pract ice in the electric utili ty industry, and the PARTICIPMTS shall advance the funds required to perform such Construction Work, Operating Vork or Capital

'improvecents in accordance wi th the applicable provisions of this Agreement.

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Amounts advanced by the PARTICIPMTS pursucnt to this Icction ll(g) during the pendency of such dispute shall not be subject to refund except upon a final determination that the expandi-made in a manner incensistent with this Agreement and prudent practice tures were in the electric utility industry.

(h)

The COMPMY and each PARTICIPANT shall notify the others promptly of any change in the designation of its representatives on the committees.

In the absence of the representative, any alternate appearing at a committec meeting shall be deemed to have authori ty to act on behalf of the organization he represents unless the committee chairman is furnished wi th wri tten ' notice to the contrary.

(i)

Any expenses incurred by any member of the Administrative Ccmni ttee, or g hoc cor:nittees, and all expanses incurred by any e ployee or agent of the COMPANY or any PARTICIPANT assisting such cecnittee cacher, in connecticn with his duties on such cocmittee shall be paid and borne by the organization which he represents and shall not be included in Construction Costs or in costs WrLDPnRnRESEt Mwka i

5/10/73

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12.

COMMON FACillTIES.

The COMPANY,,as the sole _ger of a'l Comon Facili ties solely responsible for their operatien and maintenance, including the making of any replacements, substi tutions, addi tions, improvements or betterments thereof, agrees to the following terms and conditions:

(a)

COMPANY shall operate and maintain the Cecmon Facilities in e manner consistent with generally accepted practices in the electric utility industry.

Any dispute between COMPANY and any PARTICIPANT in respect of the operation end maintenance of the Con. mon Facilities shall be subject to resolution in the manner previded by Section 11.

(b)

The PARTICIPANTS shall pay to COMP #iY a share of the operation and maintenance expenses of the Common Facilities r.ct otherwise allocated to CR-3, which share shall be equal to the percentage (hereinaf ter the "CR-3 Percentage") computed by dividing the turbine !! mcplate Capabili ty of CR-3 by the sum of (i) such Turbine Nameplate Capabi'i ty of CR-3, and (ii) the Turbine Nanept ate Capabi1i ty for CR-1 and CR-2.

The CR-3 percentage as calculated, utill:ing the above procedure, is 50.'34%.

(c)

The PARTICIPMITS shall pay to COMPANY a monthly use charge for the Coe on facilities in an amount equal to one-twc!f th of the product of the CR-3 Percentage, the original cost of the Connon Facilities, and the applicabic fixed charge rate as shown in Exhibit

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(d)

COMPANY, as the sole owner of cli External Facilities solely respe isible for their operation and maintenance, including the making of any replacements, subs ti tutions, addi tions, improvements or be t terments thereof, agree to the following terms and conditions:

(i)

COMPANY shall operate and maintain the External Facili ties in a manner consistent with generally accapted practices in the electric utility industry.

Any dispute between COMPANY and anp PARTICIPNIT in respect of the opera-tion and maintenance of the External Facilities shall be, subject to resolution in the manner provided by Section 11 hereof.

(ii)

Each PARTICIPANT shall pay to COMPANY a share of the operation and maintenance expenses of the External Facilities not otheraise

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allocated to CR-3, which share shall be equal to I ts percentage of owner: hip in CR-3.

(iii)

The PARTICIPANTS shall pay to COMPANY a acn thly uso charge for the External Facili ties in an c= cunt equal to one-tweif th of the product of the original cost of the External Facilities, and the applicable fixed char'ge ' rate as shown in Exhibit __,.

(e)

At the request of the COMPANY or any. PARTICIPANT, the Administra-tive Cannittee shall determine whether or not an adjustment or readjustment of any percentage used in conputing the conthly use charge is warranted, provided, hovever, such determination shall not be requested at intervals shorter than eso years with-out the written consent of COMPANY and all of the PARTICIPANTS.

(f)

COMPANY shall bill the PARTICIPANTS mcnthly for the monthly use charges payable under Sectier.s 12(c) and 12(d)(iii) hereof, in accordance with the provisions in Section 5(d)(viib c@a t i_,j $ ' N

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5/10/i:2 pREUMINARY

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-13.

DEFAULTS ANDi:0N-PAYMEflT in this Section 13, the term PARTICIPklTS or PARTICIPAliT shall include the COMPAirf.

(a)

Each PARTICIPANT hereby agrees that it shall pay all monies and carry out all other duties and obligations cgreed to be paid and/or performed by it pursuant to all of the terms and conditions set forth and contained in this Agreement, and a default by any PARTICIPNiT in the covenants and obligations to be kept and performed pursuant to the terms and condi tions set forth and con-tained herein shall be an act of default.

s (b)

In the ever.t of a default by any PARTICIPANT in any of the terns and conditions of this Agreement *, then, within ten (10) days af ter wri tten

--s_..--

notice has been given by any non-defaulting PARTICIPANT to all other PARTIC! PANTS of the existence and nature of the default, the ncn-defaulting PARTICIPRITS shall

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remedy such def ault ei ther by advancing the necessary funds and/or ccmr.encing to

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render the nece_ssary performance, with each non-def aul ting PARTICIPRiT contributing to such ready in the ratio of i ts Generation Enti tlement Share to t.h. e total of the, f _.Entitlerent Shares of all non-dafaulting PARTICIPNiTS.

Genera tion (c) in the event of a default by any PARTICIPNIT in any of the terms cnd conditions of this Agreement and the giving of notice by any non-defaulting PARTICIPMITS as provided in Section 13(b) hereof, the defaul ting PARTICIPRiT shall take all steps necessary to cure such default as prcmptly and completely as 1

possible and shall pay promptly upon demand to each ncn-defaulting PARTICIPANT the total amcunt of money and/or the reasonable eyivalent in ecne/ of non-mcr.etary performance, i f any, paid and/cr made by such ncn-defaul' ting PA?.TICIPNIT in order to cure any default by the defaulting PARTICIPR4T, together with interest on such money and/or the costs of r. o-monetary performance at an annual rate equal to 1.30 t mes Pr_ime Rate (Prime Rate to be defined in Definition Section) at the time of default,

5/10/75 3D ClINLt slVk' MN /- Q,V

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from the date of the expenditure of such money and/or the date of completion of such non-monetary performance by each such non-defaul ting PARTICIPNIT to the date of such reimbursement by the defaulting PARTICIPNIT, or such greater amount as may be other<il se provided in this Agreemen t.

(d)

In the event that any PARTICIPNIT shall dispute the existence or nature of a default asserted against it in a notice given pursuant to Section 13(b),

then such PARTICIPANT shall pay the disputed payment or perform the disputed obliga-tion, but may do so under protest.

The protest shall be in writing, shall acccmpany the disputed payment or precede the performance of the disputed obligation, and shall specify the reasons upon which the protest is based.

Copies of such protest,

shalI be mailed by such PARTIClPRIT to al1 other PART1C1PMITS.

Paymen ts not made under protest shall be deemed to be correct, except to th'e extent that periodic or annual audi ts may reveal over, or under payments by PARTICIPNITS, necessitating adj us t.en ts.

In the event it is determined by arbitration, pursuant to the pro-visions of this Participation Agreement or othervtise, that a protesting PARTICIPN4T is entitled to a refund of all or any portion of a disputed payment or payments or is

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entitled to the reasonable equivalent in money of non-conetary performance of a disputed obligation theretofore made, then, upon such determination, the non-protesting PARTICIPANTS shall pay st. A amount to the protesting PARTICIPANT, together with in-terest thereon at the annual rate of the Prime Rate at time of protested payment, from the date of payment or frca the date of completion.of performance of a disputed obligati to the date of reimbursement.

Reimbursement of the amount so paid shall be made by the non-protesting PARTICIPANTS in the ratio of their respective Generation Entitlement Shar to the total of the Generation Entitlement Shares o.f all non-protesting PARTICIPANTS.

(e)

Unless otherwise determined by a board of arbitrators, in the ovent a def aul t by a'ny PARTICIPANT in the payment or performance of any obligation

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5/10/75

?REUM!NAR under this Agreemen t. shall continue for a period of six (6) months or more wi thout having been cured by the defaulting PARTICIPNIT or without such PARTICIPNIT ha com.enced or continued action in good faith to cure such default, or in the event the question of whether an act of default exists beccces the subject of an arbitration.

pursuant to Section 14 hereof, and such act continues for a period of six (6) months folloaing a final determination by a board of arbitrators or otherwise that

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en act of default exists and the defaulting PARTICIPA! 7 has failed to cure such def ault or to ccamence such action during said six (6) month period, then, a't an/

time thereaf ter and while said default is continuing, all of the non-defaulting PARTICIPNITS, by written notice to all PARTICIPNITS, may suspend the right of the defauling PART!C!PA!;T to be represented on and participate in the acticns of all ccomittees and to receive all or any part of its proporticnate share of the Available Generating Capability and }!et Energy in which event:

(i)

During the period that such suspension is in effect, the non-defaulting PARTICIPNiTS shall bear all of the operation and maintenanm costs, in -

surance costs and other expenses, including Fuci Expenses and !!uclear Fuel Expenditure otherwise payable by the defaulting PARTICIPANT under this Agreement and shall be enti tied to schedule and receive for their respective accounts the Generation Entitlement Share of the defaulting PARTICIPNIT of the Available Generatin3 Capability and Met Energy Generation in the ratio of their respective Generation Entitle =ent Shares to the total of the Generation Entitlement Shares of all non-defaulting PARTICIPN4TS.

(ii)

A defaulting PARTICIPAtlT shall be liable to the non-defaul ti PARTICIPAtiTS in the proportion that the Generation Entitlement Shares of each non-def aul:ing PARTICIPANT bears to the total of the Generatien Entitle. ment Shares of all non-defaulting PARTICIPANTS for all costs incurred by such non-defaulting PARTICIPNIT@

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t pursuant to Section 13(e)(i) hereof. _ The _ proceeds paid by any defaul ting PARTICIPANT to reniedy any such default shall be distributed to the non-defoulting PAP.TICIPANTS in the ratio of their respective Generation Enti tlement Shares to the total of the Generation Enti tlement Shares of all non-defaulting PARTICIPNiTS.

(iii)

The suspension of any def aulting PARTICIPN4T shall be terminated and its full rights hereunder restored when all of -its defaults have been cured and all costs incurred by non-defaulting PARTICIPANTS pursuant to Section 13(e)(i) have been paid by the defaulting PARTICIPMIT or other arrangements suitable to all non-defaulting PARTICIPMITS have been made.

(iv)

During the period that such suspension is in effect, no fuel expense credit adjustments shall be made to which the defaulting PARTICIPNIT would have been entitled in the absence of such suspension.

Tne non-defaulting PARTICIPNITS may apply all or any portion of any such credit adjustments as offsets to.

costs and expenses incurred by them and arising frca or in connecticn with such default (f)

In addition to the remedies provided for in Section 13(c) hereof the non-def aul ting PARTICIPM;TS may, in submitting a dispute to arbi tration in accordance with the provisien of Section 14 hereof, request that the board of arbitrators determine what additional remedies may be reasonably necessar,y or re-quired under the circumstances which give rise to.the dispute. The board of arbitrato' may determine what remedies are necessary or required in the premises, including but not limited to the condi tions under which CR-3 may be operated economically and ef fi-ciently during periods when the defaulting PARTICIPANT'S right to receive its pro-portionate share of the Available Generating Capabili ty is suspended.

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5/10/75 PREUMINAR 14.

ARBITRATIO!!.

In this Section 14, the term 'PARTICIPAllT or PARTICIPA?lTS shall. include the COMPA!IY.

(a)

If an arbitrable dispute between any of the PARTICIPAlifS ::hculd aria under this' Agreement, any PARTICIPA!iT(S) may call for submission of the dispute to arbi tration which shall be binding upon all of the other PARTICIPANTS.

(b)

The PARTICIPA!!T(S) calling for arbitration shall give wri tten

. notice to all other PARTICIPRITS, setting forth in such notice in adequate detai1 the nature of-the dispute, the amount or amounts, if any, involved in such dispute, and the remedy sought by such arbitration proceedings, and, within twenty (20) days f rom receipt of such notice, any other PAP,TICIPNIT(S) involved may, by wri tten response to the first PARTICIPRIT(S) and all other PARTICIPA!!TS, submit its or their own statement of the matter at issue and set forth in adequate detail additional related matters or issues to be arbitrated.

Thereaf ter, the PART[CIPANT(S) fi rst submitting its or their notice of the matter at issue shall have ten (10) days in which to submit a written rebuttal statenent, copies of which shall be given to all

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other PARTI CIPNITS.

(c)

Within forty (40) days following delivery of the written notice pursuant to Section 14(b) hereof, the PARTICIPNITS, acting through their representatives on the Administrative Coxiittee, shall meet for the purpose of selecting; arbitrators.

Both sides of the dispute shall each designate an equal number of arbitrators.

The arbitrators so selected shall meet wi thin twenty (20) days folicwing their selection and shall select additional arbi trators, the number of wh*ch shall be one (1) less than the total number of crbi trators selected by the PARTICIPA'lTS.

If the arbitrators selected by the

'PARTICIPRJTS, as herein provided, shall fail to select such additional ARBITRATCR(S) within said twenty (20) day period, then the arbi trators shall reques t from the

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r\\lx A,erican Arbi tration Association (or a similar.or.gani-zation-i f-the A :erican Arbi tra-tion Association should not at the time exist) a list of arbitrators who are qualified and eligible to serve as hereinafter provided.

The arbitrators selected by the PARTICIPANTS shall take turns striking names from the list of arbi trators furnished by the American Arbitratic, Association, and the last name(s) remaining on said l'Ist shall be the 'addi tional arbi trator(s).

All arbitrators shall be persons skilled and experienced in the f.ield which gives rise to the dispute, and no person shall be eligible for appointment as an arbitrator who is an officer or employee of any of the parties to the dispute or is otherwise interested in the matter to be arbitrated.

(d)

Except as otherwise provided in this Section 14, the arbi tra-tion shall be governed by the rules and practice of the A.merican Arbi tration Associa-tion (or the rules and practice of a similar organization if the American Arbi tration Association should not at that time exist) from time to time in force, except that

.i f such rules and practice, as modi fied herein, shall conflict with state or Federal

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law, as the case may be, then in force which are specifically applicable to such crbitration proceedings, such law shall govern.

(e) included in the issues which may be submitted to arbitration pursuant to this Section 14 is the issue of whether the right to arbitrate a par-ticular dispute is permitted under this Agreement, except for the list of non-arbitrable issues contained herein.

(f) The arbitrators shall hear evidence submitted by the respective Participants and may call for additional information, which additional information shall, be furnished by the PAP,TICIPANT(S) having such information.

The decision of a majority of the arbitrators shall be binding upon all the PAPTICIPANTS.

(g) The award of the arbitrators shall contain findings relative to the materiality of the default, the period of time within which the defaulting party must rer.edy the default or commence remedial action, and the remedies whic.*' may be

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'T 5/10/75 PRELIMh lAR

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exercised by the non-defaulting PARTICIPANTS in the event the default is not remedied wi thin such period of time.

(h). This agreement to arbitrate shall be specifically enforceable, end the award and findings of the arbitrators shall be final and binding upon the PARTICIPANTS to the extent permitted by applicable law.

Any award may be filed with

.the Clerk of any court having jurisdiction over the PARTICIPANTS, or any of them, against whom the saard is rendered, and, upon such filing, such award, to the extent permitted by the laws.of the jurisdiction in which said award is filed, shall be specifical1y enforceable or shall form the basis of a declaratory judgment or other T

similar relief.

(i)

The fees and expenses of the arbitrators shall be shared by the PARTICIPANTS equally, unless the decision of the arbi trators shali specify some other apportionment of such fees and. expenses.

All other expenses and costs of the arbitration shall be borne by the PARTICIPANT incurring the sece.

(j)

In the event that any PARTICIPANT shall attempt to carry out the provisions herein set forth in regard to arbitraticn, and such PARTICIPANT shall not.

able to obtain a valid and enforceable arbitration decree, such PARTICIPANT shall be entitled to seek legal remedies in the courts having jurisdiction in the premises, and the provisions of this Agreement referring to decision of a board of ar'bitral tion, to the extent allowable by law, shall be then deemed applicable to' final decisions of such courts.

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15.

(a)

Governina 1.aw.

The validity, interpretation, and performance of this Agreement and each of its provisions shal-1 -be-governed-by the laws of the State of Florida.

(b)

Notice.

Any notice, request, consent or other ccm unication

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permitted or required by this Agreement (including, without linitation, any offer or ceceptanc'c pursuant to Section 5(f) hereof) shall be in writing and shall be deemed given when deposited in the United States Mail, first class postage prepaid, and if given to the COMPANY shall be addressed to:

Florids Pcwer Corporation, P. O.

Box 14042, 3201 34th Street South, St. Petersburg, Flo'rida 33733, Attention:

General Counsel, and if given to any or all PARTICIPANTS shall be addressed as indicated in Exhibi t_, unless a dif ferent officer or address shall have been desiganted by the respective party by notice, in writing.

(c)

Section Headinos Not to Affect !!eaninc.

The descriptive headings

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of the various Sections of this Agreement 'me been inserted for convenience of reference only and shall in no way modify or restrict any of the terms cnd pro-visions thereof.

O (d)

No Partnershio.

Notwithstanding any provision of this Agreement the CCMPN1Y and PARTICIPANTS do not intend to create hereby any joint venture, partnership, association taxable as a corporation or other entity for the conde-t of any business for prof t t, and contemplate ' seeking a ruling of the Internal Revenue Service that this Agreement has no such effect.

The CCMPANY and PARTICIPNiT agree to timely take all voluntary action as may be necessary to be excluded from treatment as a partnership under the Internal Revenue Code of 1954, as amended, and, if it should appear that one or more changes to this Agree-1 ment would be required in order to obtain the ruling referred to above, the COMP '

and PARTICIPANT agree to negotiate prceptly in scod faith with respect to such changes.

(e)

Tire of Essence.

Time is of the essence of this Agreement.

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(f)

Amendments.

This Agreement may be amended by and only by a I

written instrument duly executed by each of the parties hereto.

(g)

Successors and Assigns.

This Agreement shall inure to the benefit of and be binding upon the COMPAt Y and PARTICIPANTS and their respective successors and assigns.

Nothing in this Agreement, express or implied, -is intended to confer upon any other person any rights or remedies hereunder.

(h)

Binding Obligations.

All of the respective covenants and obligations of each of the PARTICIPANTS and COMPANY set forth and contained in this Agreement shall bind and shall be and become the respectiva covenants and obligations of:

(1)

Each PARTICIPAtiT and COMPANY (2) All mortgagees, trustees and secured parties under all present and future mortgages, indentures and deeds of trust, and se:urity agreements which are or may beccme a lica upon any of the interests of CCMPA"Y or PARTICIPANTS in CR-3; provided, however, that such covenants and obligations shall become binding upon such parties only at the time of taking possession:

(3) All receivers, assignees for the benefit of creditors, bankruptcy trustees and referees of CCMPANY cr PARTICIPANTS; and (4) All other persons, firms, partnerships or corporations claimi through or under any of the foregoing; and shall be covenants and obligations running with COMPANY or PARTICIPANTS respective rights, titles and interests in CR-3 and in, to and under this Agreement, and shall be for the benefit of the respective rights, titles and interests of the COMPANY or PARTICI!

and their respective successors and assigns, in and to CR-3.

It is the specific intenti:

of this provision that all such covenants and obligatiens shall be binding upon any part; which acquires any of the rights, titles and interests of any PARTICIPANT or COMPANY in CR-3 or in, to and under this Agreement and that all of the above-described persons and

5/10/75 groups shall be obligated to use COMPANY or PARTICIPAtlTS rights, titles and interest in CP.-3 and/or in, t'o or under this Agreement for the purpose of' discharging.

its covenants and obligations under this Agreement ___

(i) Counterpary.

This Agreement may be executed simultaneously in two or more co0nterparts, each of which shall be deemed an original but all of which together shall. constitute cne and the same instrument.

(j )

"As is" Sale.

CR-3 is to be sold "as is" and "where is".

The COMPMlY makes no representation or warranty whatsoever in this Agreement, c:cpre s s, implied or statutory, including, without limitation, any representation or warranty as to the value, quanti ty, condi tion, salcability, obsolescence, merchantabilit fi tness or sui tability for use or ucrking order of any of CR-3, nor does the COMPNiY represent or warrant that the use or operation of CR-3 will not violate pat'ent trademark or service mark rights of any third parties.

PARTICIPMITS are willing to purchase CR-3 "as is" and "where is" and in accordance wi th the terms and condi tions of this Agreement.

flotwi thstanding the foregoing, PARTICIPkiTS shall have the benefit, in proportion to their interest in CR-3, to all manufacturers' and-vendors' warranties and all patent, trademark and service-mark rights running to the CCMPRiY in connection with CR-3.

'(k)

Gcod Utili ty Practices.

The CCM?NiY and PART!rlPRITS shall discharge any and all obligations under this Agreement in a prudent manner and in cecordance with good utility practices.

(1)

Equal anoortunity.

During the term of this Participation i

Agreement, the COMPN 1Y agrees to cceply with all provisions of the Equal Opportunity clause in Section 202, Paragraphs 1 thru 7 of Executive Order 11246 of September 24, 1965, as amended by Executive Order 11375 of October 13, 1967, relative to equal employment opportuni ty, and the implementing Rules and Regulations of the Of fice of Federal Contract Compliance, where applicable.

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SECTI0tt 16 - Term and Termination (a) This Participation Agreement shall become effective on July 15, 1975, and terminate (1) at the Expiration of 75 years from the date of Execution, or (2) at such time as.CR-3 is retired from service, whichever event occurs first. -

(b)

It shall be the responsibility of the Administrative Com ittee to work ~out the specific details for retirement of CR-3, which details shall include the ultimate dispensation of CR-3, and how ownership interests will be dealt with for the purpose of retirement and/or salvage.

(c)

C0:4PA!!Y shall notify the Administrative Committee at such time as CO:4PA!iY determines CR-3 will be retired.

The Administrative Committee shall then perform. its responsibilities under Section 16 (b).

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