ML19309C878

Application for Amend of CPPR-118 & CPPR-119 Adding South Mi Electric Power Association as co-owner.Drafts of Joint Const,Acquisition & Ownership Agreement,Operating Agreement & Substitute Power Agreement Encl

ML19309C878
Person / Time
Site:	Grand Gulf
Issue date:	04/03/1980
From:	MISSISSIPPI POWER & LIGHT CO.
To:
Shared Package
ML19309C873	List: ML19309C872 ML19309C878 ML19309C881
References
NUDOCS 8004090345
Download: ML19309C878 (240)

Text

{{#Wiki_filter:._ O O BEFORE THE UNITED STATES NUCLEAR REGULATORY COMMISSION DOCKET NOS. 50-416 AND 50-417 IN THE MATTER OF l MISSISSIPPI POWER & LIGHT COMPANY, ' MIDDLE SOUTH ENERGY, INC. AND SOUTH MISSISSIPPI ELECTRIC POWER ASSOCIATION r APPLICATIONS FOR AMENDMENT OF CONSTRUCTION PERMIT NOS. CPPR-ll8 AND CPPR-119 TO ADD CO-0WNER Mississippi Power & Light Company (MP&L) and Middle South Energy, Inc. (MSE) are presently the holders of Nuclear Regulatory Commission (NRC or Commission) Construc-tion Permit Nos. CPPR-ll8 and CPPR-119. By this application, MP&L, MSE, and' South Mississippi Electric Power Association (SMEPA) respectfully request that the NRC amend the Construc-l tion Permits to include SMEPA as a co-owner of the Grand 1 Gulf Nuclear Station, Units Nos. 1 and 2 (Grand Gulf) and as an applicant for the issuance of operating licenses and other necessary licenses, to own, use, and operate Grand l Gulf. MSE will act as the agent for SMEPA with regard to O 8004090 g6

1 Grand Gulf, and MP&L, on behalf of MSE and SMEPA, will retain sole responsibility for the overall technical direction in the licensing, design, construction, operation, management, maintenance and decommissioning of the facility. MSE and SMEPA will own 90% and 10% of Grand Gulf, respectively. In support of the request for amendment to Applica-J l tion for Licenses and to Construction Permits Nos. CPPR-ll8 and CPPR-119, the following information is supplied:

1. SMEPA will acquire a ten percent (10%) un-divided ownership interest in Grand Gulf. The acquisition will be governed by the terms of a Joint Construction, p Acquisition and ownership Agreement to be entered into between MSE and SMEPA (ownership Agreement) [ Exhibit A,

hereto]. MSE and SMEPA will also enter into an Operating Agreement, which provides, among other things, for the sole '

operation of Grand Gulf by MP&L, on behalf of MSE and SMEPA, [ Exhibit B, hereto] and a related Substitute Power Agreement [ Exhibit C, hereto]. The Closing is expected to_ occur on or about June 1, 1980, and is contingent, among other things, upon receipt of all necessary regulatory approvals, including  ; approval by the NRC of this transaction and receipt by SMEPA of a satisfactory financing commitment from lenders. A V i l

(- , ( ) SMEPA has delegated to MSE the authority to act in its behalf with regard to this amendment to the Application for Licenses and request for Amendment of Construction Permits No. CPPR-ll8 anc cPR-119 and in prosecuting such further facility and materials license applications and amendments as may b . quired by law or regulation.

2. The general information required by 10 CsF.R.

S 50.33 and 50.37 for SMEPA is as follows:1/ (a) Name of Applicants [Section 50.33(a)] The Applicants are MSE, MP&L and SMEPA. MSE and SMEPA will own an undivided 90% and 10% ownership interest  : in Grand Gulf, respectively. MP&L, on behalf of MSE and

  -s  SMEPA, is responsible for all matters relating to the design, A#  construction, operation and maintenance of Grand Gulf.

(b) Address of Proposed Co-owner [Section 50.33(b)] The address of SMEPA is: South Mississippi Electric Power Association , Post Office Box 1589 ' Hattiesburg, Mississippi 39401 l 1/ The general information for MSE and MP&L is contained ! in Amendment No. 24 to the Application for Licenses, to the extent not modified by this request. Upon completion of the transaction and approval by the NRC, the Application for Licenses will be conformed. n U I w w w

( (c) Description of Business of Proposed Co-owner [Section 50.33(c)] South Mississippi Electric Power Association (SMEPA) is an operating public utility engaged exclusively in the generation and transmission of electric energy for its seven (7) member Rural Electric Cooperatives in the State of Mississippi. SMEPA presently serves from its transmission system the total requirements of two (2) of its members and partial requirements for two other members. This service area encompasses approximately 9300 square miles, having a population of approximately 342,000 people. SMEPA operates in 19 counties in Mississippi and as of December 31, 1979, provided electric service to approxi-x mately 76,260 ultimate consumers through its members. In addition, two (2) of SMEPA's members purchase their total electric requirements and one (1) of its members purchases its partial electric requirements from Mississippi Power & Light Company. As of December 31, 1979, these three coopera-tives served approximately 41,205 consumet . Also, SMEPA purchases from Mississippi Power Company the total require-ments of one (1) and the partial requirements of one (1) of its members who as of December 31, 1979, served approximately 53,372 consumers. Soon after the Closing, four (4) additional rural electric distribution cooperatives will join SMEPA as members. A The four (4) new member cooperatives will be: \ U l l

(O

     /              Coahoma Electric Power Association Post Office Box 188 Lyon, Mississippi    38645 Delta Electric Power Association Post Office Box 935 Greenwood, Mississippi 38930 Twin County Electric Power Association Post Office Box 158 Hollandale, Mississippi    38748

Yazoo Valley Electric Power Association '

4 Post Office Box 8 Yazoo City, Mississippi 39194 These cooperatives are all located in northwestern Missis-sippi, and as of December 31, 1979, served approximately 42,495 elecLrical consumers. These four (4) cooperatives do not have any generating capacity and presently purchase s substantially all of their total electrical requirements from MP&L. However, shortly after the cooperatives become , members of SMEPA, SMEPA plans to assume generation responsibility for approximately 12 percent of their electrical load, and plans to periodically over the next three (3) years assume additional amounts of their electrical load, until such time as all of the new cooperatives' load is supplied by SMEPA. Furthermore, in addition to assuming generation responsibilities for the four (4) new members, SMEPA also, plans shortly after the closing, to assume the total generation requirements of three of its present members - Magnolia F Electric Power Association, Southern Pine Electric Power Association, and Southwest Mississippi Electric Power Associa-l' _

tion (these three members had a total load demand in 1979 of approximately 126 MW). All three of these cooperatives are located in southwestern Mississippi. Magnolia Electric Power Association and Southwest Mississippi Electric Power Associa-tion are presently being served their total electrical requirements by MP&L. Southern Pine Electric Power Associa-tion is partially served by SMEPA. SMEPA's electric revenues from its members in 1979 i was $83,113,000 (this figure does not include Coast EPA which was not a member of SMEPA in 1978). In the one year  ; period ending December 31, 1979, SMEPA experienced a growth , in electric revenues of approximately 18%. The total mwh s sales decreased from 2,243,868 mwh to 2,227,098 mwh during the same period, a decrease of 0.8%. (These figures do not include Coast EPA.) For the five previous years, SMEPA's load growth, measured by the increase over the preceding , year in the total mwh sold by SMEPA to its members, has been as follows: 1974 - 5%; 1975 - 10%; 1976 - 8%; 1977 - 9%; and 1979 - 6.6%. The total installed generation capability of SMEPA's electric utility plant as of December 31, 1979, was 573,000 kw consisting of five (5) steam electric units and two (2) combustion turbine units. Virtually all SMEPA's I capital investment has been financed through loans from the Rural Electrification Administration (REA), the National i A ' U

v Rural Utilities Cooperative Finance Corporation, and REA guaranteed loans from the Federal Financing Bank. The peak demand on SMEPA's system in 1979 was 266,000 kw. This reflects a decrease of 2.2% from the 1978 peak demand. On December 31, 1979, SMEPA's transmission system consisted of approximately 1247 miles of line of which 881 miles was 69 hT, 52 miles was 115 KV and 314 miles was 161 KV. On that date, SMEPA operated ten (10) substations with a total transformer capacity of 1,722,200 Kva. SMEPA is a member of the Southeastern Electric Reliability Council (SERC), whose primary purpose is to , insure the reliability and adequacy of the electric bulk power supply in the Southeast region of the United States. SERC is a member of the National Electric Reliability Council (NERC). (d) Orgal ization and Management of Applicant and Proposed Co-Owner (Section 50.33(d)] SMEPA is a corporation, incorporated under ' the laws of the State of Mississippi as a non-profit electric power association. SMEPA's office is located in Hattiesburg, Mississippi at the address previously stated. SMEPA's directors and principal officers are all citizens of the United States. Their names and addresses are as follows:

O U

l

                                                                                                                                                                       ;
                                                                                                                                                                       ;

I () Directors 1 Name'and Address R. D. Morrow, Sr.  ! 102 Glenartney Street i Brandon, MS 39042.  ; W. W. Bond  : Route 1

• i Perkinston, MS 39573 ,

C. C. Clark  : Ruth, MS 39662 -

,

i L. G. Pierce  : Route 1  ! Moselle, MS 39459 l i H. M. Little P. O. Box 67 t Carpenter, MS 39050 i

i

~

D. R. Ware Neely, MS 39461  : J. A. Rester ' Route 1, Box 301 Picayune, MS 39466 W. T. Shows

916 West Avenue 1

Columbia, MS 39429 . J. T. Dudley, Sr. , i P. 0.' Box 767 r i Lucedale, MS 39452  ; i Robert L. Graham  : Route 1  : Shubuta, MS 39360 , ! Blaine H. Eaton 1 ! Front Street Taylorsville, MS 39168  ;

4 E. C. Parker

                                                  ~

P. O. Box 747 . McComb, MS 39648 i , 1 i [

    , , . _ - , _ _ - - - _ - _ , , _ . , _ .        - - _ _ -    . _ .       .,, , ,     ... ,--.,_--.._,_.,,,_, ,,              .--...e___        -
                                                                                                                                                           , --rr.

() ' Robert St. John P. O. Box 421 Port Gibson, MS 39150 r Henry L. Thomas P. O. Box 311 Bay St. Louis, MS 39520 .

              -                Principal Officers Name and Address                                      .

R. D. Morrow, Sr., President 102 Glenartney Street Brandon, MS 39042 C. C. Clark, Vice President Ruth, MS 39662 D. R. Ware, Secretary / Treasurer Neely, MS 39461 George B. Taylor, General Manager g-~g Beverly Lane g j Hattiesburg, MS 39401 i SMEPA is not owned, controlled or dominated by any alien or any foreign government. (e) Class and Period of License Applied For And Use to Which Facility.Will Be Put [Section 50.33(e)] The class of License applied for is Class 103 pursuant to Section 103 of the Atomic Energy Act of 1954, as , amended, authorizing MP&L to possess, use and operate and MSE and SMEPA to possess the utilization facilities which will be used for the generation of electric energy to be transmitted over the respective electric systems of the Applicants. l ([ 9 I () MP&L, MSE and SMEPA, further apply for such addi-tional source, special nuclear and by-product material [ licenses and any other licenses as may be necessary or appropriate to the construction, acquisition, possession, use and operation of Grand Gulf. (f) Financial Qualifications [Section 50.33(f)] The financial qualifications of SMEPA are shown by data contained in SMEPA's Annual Report of 1978, attached hereto as Exhibit D. These may be summarized as follows: Assets as of Net Patronage Capital 12/31/78 or Margins for 1978

                  $277,563,374              $1,290,404                 ,

() It is SMEPA's intent to finance its undivided interest in f

 ,    Grand Gulf Nuclear Station, Units 1 and 2, under a loan P

guarantee agreement from the Rural Electrification Administra-tion with financing from the Federal Financing Bank. Copies of the loan commitment notice from the - Federal Financing Bank and of the loan guarantee agreement I from the Rural Electrification Administration will be sub-mitted as part of this Application as soon as they become  : available. In further support of the financial qualifica-tions of SMEPA, additional information is provided in Exhibit E attached hereto. l l

As of December 21, 1979, the total estimated cost of Grand Gulf, excluding nuclear fuel, is $3,049,000,000, and as of March 4, 1980, the estimated nuclear fuel inventory cost for the first core of Unit No. 1 is $88,463,127 and for the first core of Unit No. 2 is $133,092,406. The above estimates represent current dollar values. The annual report and other information submitted herewith show that SMEPA has reasonable assurance of obtaining funds necessary to cover its share of estimated construction costs and related fuel cycle costs of Grand Gulf. (h) Completion Dates [Section 50.33(h)] By Order of the Commission dated October 30, g- 1979, the earliest and latest completion dates of Grand Gulf

-

were extended as follows: Earliest Latest CPPR-ll8 September 1, 1980 March 1, 1982 CPPR-119 April 1, 1983 October 1, 1984 (i) Regulatory Agencies and Publications [Section 50.33(i)] , SMEPA and its members are each subject to l regulation by the Mississippi Public Service Commission with respect to the location of and the need for' new generation l and transmission facilities, and its members are subject to , regulation with respect to the scope of their service areas. SMEPA's rates, however, are regulated by its-directors and l D l l t are not subject to regulation by the Mississippi Public Service Commission, with the exception of those retail rates which SMEPA's members may charge to consumers inside municipa-lities which are also served by another electric utility. Notice of this Application will be sent to the trade publications and newspapers described in Amendment 24 to the Application for Licenses. Additional News Publica-tions which are considered appropriate to give reasonable notice of the Application to those municipalities, private utilities, public bodies, cooperatives and entities which might have an interest in Grand Gulf are as follows:

1. Clarksdale Press Register Clarksdale, Mississippi 38614

2. The News-Commercial Collins, 'ississippi 39428

3. The Greenwood Commonwealth Greenwood, Mississippi 38390

4. The Leland Progress Leland, Mississippi 38756

5. The Yazoo City Herald

                     'Yazoo City, Mississippi   39194 (j) Restricted Data     [Section 50.33(j) and P

Section 50.37J This application does not involve any Secret and Confidential National Security Information and/or Restricted Data and it is not expected that any will become involved. If it does, it will be appropriately segregated and safeguarded O l l  :

as required by law. The Applicants agree that they will not permit any individual to have access to Secret and Confidential National Security Information and/or Restricted Data until the office of Personnel Management shall have made an in-vestigation and report to the Nuclear Regulatory Commission on the character, associations, and loyalty of such individual, and the NRC shall have determined that permitting such ' person to have access to restricted data will not endanger the common defense and security.

3. In accordance with Section 103 of the Atomic Energy Act of 1954, as amended, and Appendix L to Part 50 and 10 C.F.R. Sections 2.101(a)(5) and 50.33a of the Commis-sion's regulations, the Appendix L information entitled J " Antitrust Information for South Mississippi Electric Power Association" is filed herewith on behalf of SMEPA in a separate document.

4. The requested amendment will have no effect on safety related matters heretofore. reviewed, and, accordingly, does not involve a singificant hazards consideration. Since the requested Amendment of the Construction Permits involves no significant hazards consideration, it is requested that the NRC dispense with the advance notice publication require-ments as permitted under the Atomic Energy Act of 1954. The

issuance of the requested amendment will not be inimical to the common defense and security or to the health and safety bv l

(_,) of the public and will not result in any significant en-vironmental impact.

5. It is requested that all communications pertaining to this hmendment to Application be sent to:

Mr. Norris L. Stampley Vice President of Production and Engineering Mississippi Power & Light Company P.O. Box 1640 Jackson, Mississippi 39205 In addition, it is requested that. copies of each communication be sent to the following persons: Mr. George B. Taylor General Manager South Mississippi Electric Power Association Post Office Box 1589 Hattiesburg, Mississippi 39401 ( ) Mr. Robert B. McGehee Attorney Wise Carter Child & Caraway P.O. Box 651 Jackson, Mississippi 39205 Mr. Troy B. Conner, Jr. Attorney Conner, Moore & Corber 1747, Pennsylvania Avenue, N.W.

                       ' Washington, D.C. 20006 THEREFORE, the Applicants request that the Commis-sion determine that the amendment complies with the standards and requirements of the Atomic Energy Act of 1954, as amended, and the Commission's rules and regulations and that "the amendment involves no significant hazards considerations,"

and request that the Commission issue appropriate amendments l ( u (. - ( ,/ to Application for Licenses and to Construction Permits, Nos. CPPR-ll8 and CPPR-119, to include SMEPA as co-owner of Grand Gulf. MIDDLE SO I El NC. BY. D. C. LUTKEN VICE PRESIDENT MISSISSIPPI POWER & LIGHT COMPANY BY: / h//t'/, I

                                       / N./ L. STAMPLEY //

r~m VICE PRESIDENTV

  --l SOUTH MISSISSIPPI ELECTRIC POWER ASSOC        ION BY:             Y       -      .

GEORGE E TAYLOR [/ GENERAL MANAGER STATE OF MISSISSIPPI l COUNTY OF HINDS l D. C. Lutken, being duly sworn, states that he is a Vice President of Middle South Energy, Inc., and that he is authorized on the part of said Company to sign and file with the Nuclear Regulatory Commission this Amendment to Application for Licenses and request for Amendment to Con-struction Permits, and exhibits attached thereto; that he signed the foregoing Amendment to Application for Licenses 7 and request for Amendment of Construction Permits, as Vice 1

 \_/

( ') President of Middle South Energy, Inc.; and that the state- 'w ' ments made and matters set forth ein a e and correct to the bett of his knowledge, in tio *1ief. I

                                                /                d_.

D. (T.'LUTKEN SUBSCRIBED AND SWORN TO before me, a Notary Public, a or ty and State above named, this g f Y day 1M//e(a)sff NOTARY PUBLIC'

                                                              /

My Commission Expires: yj cy+s, rENgg. IL Iq 7_ STATE OF MISSISSIPPI

;       ,

U' COUNTY OF HINDS N. L. Stampley, being duly sworn, states that he is a Vice President of Mississippi Power & Light Company, and that he is authorized on the part of said Company to sign and file with the Nuclear Regulatory Commission this Amendment to Application for Licenses, and request for Amendment to Construction Permits, and exhibits attached thereto; that he signed the foregoing Amendment to Applica-tion for Licenses and request for Amendment to Construction Permits as Vice President of Mississippi Power & Light Company; and that the statements made and matters set forth thereia are true and correct to the best of his knowledge, information, and belief.

                                                       'I (I            l Lka auli N .' L'.

STAMPLEY/ G i )

    ~j SUBSCRIBED AND SWORN TO before me, a Not         ublic, a      or    he Co        and State above n med, this    gday J

NOTARY PUBLIC ~

                                                         /

M My Commission Expires: L? Cw u n vom ja,n, y STATE OF MISSISSIPPI COUNTY OF , George B. Taylor, being duly sworn, states that he is the General Manager of South Mississippi Electric Power Association, and that he is authorized on the part of said Company to sign and file with the Nuclear Regulatory Commis-sion this Amendment to Application for Licenses, and request for Amendment to Construction Permits, and exhibits attached y thereto; that he signed the foregoing Amendment to Applica-tion for Licenses and request for Amendment to Construction Permits as General Manager of South Mississippi Electric Power Association; and that the statements made and matters set forth therein are true and correct to the best of his knowledge, information, and belief. GEORGE B.OfAYLOR (/ SUBSCRIBED AND SWORN TO before me, a Notary Public, in and for the County and State above named, this / day of 6Mt , 1980. w I xD l j NOTARYvFUBLIC My Commission Expires: l

    ** kmt**M bpues Aug n, un

t EXl 3lT A -  ! i i f i i I I 1 l i  !

I l

i i

                                                                                                                                                                                                             ;

GRAND GULF NUCLEAR STATION - L i ! Joint Construction, Acquisition and Ownership Agreement j i

between (

) i

Middle South Energy, Inc. l

! and  : l South Mississippi Electric Power Association I I l . 1 - Dated as of ,11980  ! ' l t i i 4 i L I i l I i j I h l l l t

TABLE OF CONTENTS PAGE ARTICLE I - DEFINITIONS 2 1.01 AEC 2 1.02 AFUDC . 2 1.03 Application 3 1.04 Capacity 3 1.05 CFC 3 1.06 Closing 3 1.07 Commercial Operation 3 1.08 Construction Permit 4 1.09 Cost of Construction 4 1.10 Energ 4 1.11 Final Adjustment Date 4 1.12 Force Ma]eure 5 1.13 Good Utility Practice 5 1.14 Grand Gulf 6 1.15 Immediately Available Funds 7 1.16 Indemnification Agreement 7 1.17 MSE 7 1.18 MSE Affiliate 7 I)

          1.19     MSE Bank Loan Agreement               8 l.20     MSE Mortgage                          8 1.21     MP&L                                  8 1.22     NRC                                   8 1.23     Nuclear Fuel                          8 1.24     Operating Agreement                   8 1.25     Operating License                     9 1.26     Payment and Adjustment Date           9 1.27     REA                                   9 1.28     SEC                                   9 1.29     Service Agreement                     9 1.30     SMEPA                                 9 1.31     SMEPA Mortgage                       10 1.32     Substitute Power Agreement           10 1.33     SFI                                  10 ARTICLE II - ACQUISITION OF UNDIVIDED INTEREST IN GRAND GULF BY SMEPA    10 2.01     Execution, Delivery, and Recording of Agreement; Closing                10 2.02     Payment and Adjustment Dates         11 2.03     Final Adjustment Date                16 2.04     Assignment of Contract Rights, l     ,               Permits, Authorizations, Licenses i

y ,) or other Intangible Rights 18 l 2.05 Indemnification 21 l l 2.06 Accounting for Cost of Construction 22 2.07 Excess Uranium Provision 22

PAGE ARTICLE III - CONSTRUCTION PERIOD 23 3.01 Completion of Construction 23 3.02 Execution of Contracts 24 3.03 Progress Payment of Cost of Construction 26 3.04 MSE-SMEPA Grand Gulf Construction Accounts 27 3.05 No Delay in Payments by SMEPA 28 3.06 Contest of Payment of Cost of Construction; Waiver 28 3.07 Availability of Records; Annual Audit 29 3.08 Agent for Construction; Limitation , of Liability 29 3.09 Information 33 3.10 Cooperation 34 3.11 Insurance 34 ' 3.12 Nuclear Fuel 36 3.13 Pollution Control Facilities 37 ARTICLE IV - DELAY IN COMMERCIAL OPERATION - 38 4.01 Delay in Commercial Operation Caused by Force Majeure O' 4.02 Delay in Commercial Operation 38 of Grand Gulf Unit No.1 Not Caused by Force Maieure 38 4.03 Delay in Commercial Operation of Grand Gulf Unit NO. 2 Not Caused by Force Majeure 39 4.04 SMEPA's Remedies for Delay 39 4.05 Optional Capital Contribution 42 4.06 MSE's Optional Remedy for SMEPA's Failure to Provide Funds 42 4.07 Coordination of Financing 48 4.08 Federal Energy Regulatory Commission 48 ARTICLE V - REPRESENTATIONS AND WARRANTIES 49 5.01 Representations and Warranties of SMEPA 49 5.02 Representations and Warranties by MSE 53 ARTICLE VI - GENERAL COVENANTS OF THE PARTIES 56 6.01 No Adverse Distinction 56 6.02 Alienation and Assignment 56 6.03 Right to Mortgage ((~')N 6.04 MSE's Right to Sell in Certain Cases 58 59 6.05 Right of Partition 60 6.06 Imposition of Liens 60 L .

m x PAGE 6.07 Taxes 61 6.08 Commitment for Financing 62 6.09 Regulatory Approvals 62 6.10 Licensee 63 6.11 Ri hts of Mortgagees 63 6.12 Ri ht of Eminent Domain 64 6.13 Sa e of Land Under Certain Circumstances 65 ARTICLE VII - CONDITIONS PRECEDENT 65 7.01 Conditions to Effectiveness of Agreement 65 7.02 Conditions Precedent to MSE's obligations at the Closing 69 7.03 Condition Precedent to SMEPA's Obligations at Closing 70 ARTICLE VIII - DEFAULT; REMEDIES 73 8.01 Obligation of Parties; Default 73 8.02 Special Remedies 74

/

8.03

\s /\        8.04 Interest on Overdue Payments Usury 76 76 ARTICLE IX - GENERAL CONDITIONS                  77 9.01     MSE's Right to Make Payments on Behalf of SMEPA                77 9.02     Survival                           77 9.03     Further Assurances                 78 9.04     Governing Law                      78 9.05     Notice                             78 9.06     Headings Not to Affect Meaning     79 9.07     No Partnership                     79 9.08     Time of Essence                    79 9.09     Amendments                         79 9.10     Successors and Assigns             80 9.11     Counterparts                       80 9.12     License Conditions                 80 9.13     "AS IS" TRANSACTION; ASSUMPTION OF RISK             80 9.14     Good Utility Practice              81 9.15     Force Majeure                      81 9.16     REA Approval                       82 9.17     Entire Agreement                   82 lO

(x PAGE 9.18 Construction Agent 82 9.19 Portions of this Agreement Subject to Closing 82 9.20 Covenants Running with the Land 83 9.21 Environment 83 9.22 Kick-backs 83 9.23 Equal Opportunity Clause 83 9.24 Nonsegregated Facilities 87 ARTICLE X - ADMINISTRATION 88 10.01 Administrative Committee 88 10.02 Membership 89 10.03 Meetings 89 10.04 Functions 89 10.05 Records 90 10.06 Expenses 90 ARTICLE XI - TERM AND TERMINnTION 91 11.01 Termination 91 () 11.02 Retirement Costs 91 ARTICLE XII - ADDITIONAL GENERATING UNIT OR UNITS 92 LIST OF EXHIBITS INITIAL EXHIBIT REFERENCE A - Description of Land in which SMEPA Obtains an Undivided Ownership Interest 6 B - Description of Land in which SMEPA obtains Easement Rights 6 C - Form of Operating Agreement 9 D - Form of Substitute Power Agreement 10 E - Form of Easement Agreement (for Delivery at Closing) 11 l l F - Form of Special Warranty Deed, Conveyance and Adjustment i (--) Agreement (for Delivery on each  : Payment and Adjustment Date) 13

k i I i L 4 PAGE  !. G - List of Contracts, Permits, Authorizations, 6 i Licenses and Other Intangible Rights ' Assigned to SMEPA at the Closing 18 I L H - Excess Uranium Letter 22 l I - List of Reports and Contracts 34 t l J - Form of Partnership Tax Returns 61 - i l l 1 i f i [ t f i

 ;

L r j l

I i

n l

 ;

                                                                                                                                                                                                                        }

l

I

                                                                                                                                                                                                                        ;

I i [; P I [ 5 t L

O GRAND GULF NUCLEAR STATION Joint Construction, Acquisition and Ownership Agreement between Middle South Energy, Inc. and South Mississippi Electric Power Association Dated as of _

                                          , 1980 THIS AGREEMENT, dated as of                     ,

1980, is between MIDDLE SOUTH ENERGY, INC., an Arkansas corporation (MSE), and SOUTH MISSISSIPPI ELECTRIC POWER ASSOCIATION, a Mississippi corporation (SMEPA). MSE is presently constructing, through its agent, Mississippi Power & Light Company (MP&L), the Grand Gulf Nuclear Station located in Claiborne County, Mississippi, pursuant to Construction Permits issued to it and MP&L by the United States Atomic Energy Commission (predecessor of the Nuclear Regulatory Commission). Upon the completion of the Grand Gulf Nuclear Station, MSE expects to operate the station, through its agent MP&L, so as to generate electricity for sale, primarily to companies of the Middle South System. As one of the conditions of the Construction Permits MSE was required to make available to certain " entities," as defined O

O in the Construction Permits, the opportunity to become owners of undivided interests in the Grand Gulf Nuclear Station. This Agreement is entered into for the purpose of providing a means by which SMEPA can obtain a 10% undivided ownership interest in the Grand Gulf Nuclear Station, and for the further purpose of providing for the continued construction and ownership of the Grand Gulf Nuclear Station. NOW, THEREFORE, IN CONSIDERATION of the premises, and the mutual covenants herein set forth, MSE and SMEPA agree as fallows: 1 ARTICLE I - DEFINITIONS O Section 1.01. AEC shall mean the United States Atomic Energy Commission. Section 1.02. AFUDC (" Allowance for Funds used During Construction") shall mean an allowance to compensate either MSE or SMEPA, as the case may be, for all costs in-curred on funds advanced to pay the Cost of construction calculated in accordance with applicable rules and regula-tions, provided that such allowance as accrued and recorded in the financial records of MSE shall be increased by an amount equal to any reduction in AFUDC for tax benefits, through Final Adjustment Date. Section 1.03. Application shall mean the applica-tion of MP&L and MSE before the NRC for the ownership, construction, and operation of Grand Gulf which is Docket No. 50-416 as to Grand Gulf Unit No. 1 and Docket No. 50-417 as to Grand Gulf Unit No. 2, as heretofore or hereafter supplemented or amended. Section 1.04. Capacity shall mean the capability of producing (or consuming) energy and is measured in mega-watts. Section 1.05. CFC shall mean the National Rural Utilities Cooperative Finance Corporation, a District of Columbia private not-for-profit cooperative association. Section 1.06. Closing shall mean June, 1, 1980, or such other date as may be set by MSE and SMEPA, which date in any event shall be subsequent to the execution and delivery of this Agreement, the operating Agreement, the Substitute Power Agreement and the Indemnification Agreement, at which time SMEPA shall advance to MSE the Cost of Construc-tion for the month following the Closing, and the parties shall meet the other conditions provided in this Agreement for the Closing. Section 1.07. Commercial Operation shall mean the l period of time commencing at 12:01 a.m. of the day following the successful completion of "the 100-hour steam output per-G

   )  formance test"'provided for in agreements between MSE and General Electric Company relating to the nuclear steam supply system of Grand Gulf Unit No.1 or Grand Gulf Unit No. 2, as the case may be.

Section 1.08. Construction Permit shall mean the permits issued September 4, 1974, by the AEC authorizing MP&L and MSE to build Grand Gulf; as to Grand Gulf Unit No. 1 the construction permit is number CPPR-ll8; as to Grand Gulf Unit No. 2 the construction permit is No. CPPR-119. Section 1.09. Cost of Construction shall mean all costs incurred in connection with the planning, design, licensing, acquisition, construction, completion, training for operation, startup, renewal, addition, replacement, decommissioning, entombment or disposal of Grand Gulf or any portion of Grand Gulf, calculated in accordance with any applicable rules and regulations. Section 1.10. Energy shall mean the quantity of electricity produced (or consumed) over a period of time and is measured in megawatt hours. Section 1.11. Final Adjustment Date shall mean the date as of which the respective undivided ownership interests of MSE and SMEPA are determined to reflect, pursuant to the terms of this Agreement, that MSE's undivided nwnership interest in Grand Gulf is 90% and SMEPA's undivided ownership interest in Grand Gulf is 10%. Unless otherwise agreed, the V l

O l V Final Adjustment Date shall be determined as soon as prac-ticable subsequent to the month during which SMEPA's aggregate payments of Cost of Construction and its accrued AFUDC thereon equal 10% of the aggregate Cost of Construction plus MSE's and SMEPA's aggregate AFUDC. Section 1.12. Force Majeure shall mean any act, " delay or failure to act on the part of any state or federal governmental authority, whether legislative, executive, judicial or administrative, including delay or failure to l act by any governmental authority in the issuance of permits or licenses required in connection with Grand Gulf and the prohibiting of acts necessary to performance hereunder or the permitting of any such acts only subject to unreasonable conditions; acts of God; damage, accidents or disruptions including but not limited to fire, flood, explosion, tornado, hurricane, earthquake, windstorm or equipment breakdown; failure or delay beyond either party's reasonable control in securing materials, equipment, services or facilities; labor difficulties such as strikes, slow-downs or shortages; delays in transportation; civil unrest, disturbances, demon-strations; or any other cause beyond either party's control. Section 1.13. Good Utility Practice shall mean any of the practices, methods and acts engaged in or approved by a significant proportion of the electric utility industry Q at the time of the reference, or any of the practices, O 1 l

O methods and acts which, in the exercise of reasonable judg-ment in light of the facts known at the time the decision was made, could have been expected to accomplish the desired result at the lowest reasonable cost consistent with reli-ability, safety and expedition. Good Utility Practice shall apply not only to functional parts of Grand Gulf, but also to appropriate structures, landscaping, painting, signs, lighting and other facilities and public relations programs reasonably designed to promote public enjoyment, under-standing and acceptance of Grand Gulf. Good Utility Practice is not intended to be limited to the optimum practice, method or act to the exclusion of all others, but rather to be a spectrum of acceptable practices, methods or acts. Section 1.14. Grand Gulf shall mean all property which is a part of the Grand Gulf Nuclear Station in Claiborne County, Mississippi including (1) the land described in Exhibit A and easements and other rights in the land, described in Exhibit B; (2) Unit No. 1 and Unit No. 2, including the nuclear power reactors, the turbine generators, the buildings housing the same, and the associated auxiliaries and equipment, all as more particularly described in the Application (each Unit being designated herein as Grand Gulf Unit No.1 or Grand Gulf Unit No. 2, respectively); (3) inventories of materials, supplies, fuel, Nuclear Fuel, tools, equipment and other property for use in connection with Grand Gulf; and (4) such additional land or rights therein as may be acquired, and any additional facilities and other property (including but not limited to initial Nuclear Fuel) as may be acquired, constructed, installed or replaced in connection with Grand Gulf, provided that such additional land or rights therein or such additional facilities or other property shall have been acquired, constructed, installed or replaced for the common use of MSE and SMEPA under and subject to the provisions of this Agreement. Section 1.15. Immediately Available Funds shall mean funds good and available to the payee on the day when paid. Section 1.16. Indemnification. Agreement shall mean the agreement between MSE and SMEPA entered into concur-rently herewith providing indemnification of MSE by SMEPA of additional taxes measured by income payable by MSE as a result of the treatment of SMEPA's acquisition of a 10% interest in Grand Gulf as the equivalent of a sale or other disposition subject to income tax. Section 1.17. MSE shall mean Middle South Energy, i Inc., an Arkansas corporation. Section 1.18. MSE Affiliate shall mean Middle South Utilities, Inc. and any " subsidiary company" thereof, as such term is defined in Section 2(a)(8) of the Public I Utility Holding Company Act of 1935, as amended, 15 U.S.C.A. Sec. 79(b)(a)(8)(1). Section 1.19. MSE Bank Loan Agreement shall mean the Amended and Restated Bank Loan Agreement dated as of June 30, 1977 among MSE, the Banks listed in Schedule 1 thereto, and Manufacturers Hanover Trust Company, as Agent for such Banks, as heretofore or hereafter amended, restated or extended. Section 1.20. MSE Mortgage shall mean the Mortgage and Deed of Trust dated as of June 15, 1977, between MSE and United States Trust Company of New York and Malcolm J. Hood, Trustee, as heretofore or hereafter supplemented. Section 1.21. MP&L shall mean Mississippi Power & Light Company, a Mississippi corporation. Section 1.22. NRC shall mean_ Nuclear Regulatory n V Commission. Section 1.23. Nuclear Fuel shall mean any source, special nuclear or by-product material as defined in the Atomic Energy Act of 1954, as amended and as may be amended from time to time, including any ores, mined or unmined, or concentrates from which any such material can be obtained, and any fuel assemblies, any of which are acquired by MSE for Grand Gulf. Section 1.24. Operating Agreement shall mean the agreement between MSE and SMEPA entered into concurrently herewith providing for the operation of Grand Gulf Unit No. 1 and Grand Gulf Unit No. 2, or either of them, upon their O v

being placed in Commercial Operation, the form of which is attached hereto as Exhibit C, as hereafter supplemented or amended. Section 1.25. Operating License shall mean the operating license or licenses for which applications are being made before the NRC. Section 1.26. Payment and Adjustment Date shall mean each date (except the Closing Date) on which SMEPA advances to MSE the Cost of Construction for the next succeeding month and on which the undivided ownership interests of MSE and SMEPA in Grand Gulf are adjusted pursuant to the terms of this Agreement to reflect their respective payments of Cost of Construction and AFUDC accounts. Unless otherwise agreed, the Payment and Adjustment Date shall be the first business day of each month. Section 1.27. REA shall mean Rural Electrification Administration. Section 1.28. SEC shall mean Securities and Ex-change Commission. Section 1.29. Service Agreement shall mean the Service Agreement dated June 21, 1974, between MP&L and MSE, as hereafter supplemented or amended. Section 1.30. SMEPA shall mean South Mississippi Electric Power Association, a Mississippi corporation. O f O Section 1.31. SMEPA Mortgage shall mean the Supplemental Mortgage and Security Agreement dated as of November 1, 1977 by and between SMEPA, CFC and the United States of America acting through the Administrator of the REA, as heretofore or hereafter supplemented. Section 1.32. Substitute Power Agreement shall mean the agreement among MP&L, MSE, and SMEPA entered into concurrently herewith providing for the supplying of Capacity and Energy by MP&L to SMEPA under certain circumstances, the form of which is attached hereto as Exhibit D, as hereafter supplemented or amended. Section 1.33. SFI shall mean System Fuels, Inc., (v . . a Loulslana corporat on. ARTICLE II - ACQUISITION OF UNDIVIDED INTEREST IN GRAND GULF BY SMEPA Section 2.01. Execution, Delivery and Recording of Agreement; Closing. It is contemplated that, subject to the obtaining by each of all necessary regulatory and creditor consents and approvals and to satisfaction of any terms and conditions provided in this Agreement, MSE and SMEPA will execute and deliver this Agreement, the Operating Agreement and the Indemnification Agreement and that MSE, MP&L and l SMEPA will execute and deliver the Substitute Power Agreement

O lV

contemporaneously and that this Agreement and Operating Agreement will be thereafter promptly recorded in the property records of Claiborne County, Mississippi, and in each other official office where the parties deem it te be necessary. Subsequent thereto, SMEPA will promptly submit this Agreement and all other necessary documentation to the REA for final approval by REA and shall use its best efforts to obtain such approval at the earliest practicable time. Subject to the terms and conditions hereof, at the closing provided for herein, SMEPA will advance sufficient monies to pay 100% of the Costs of Construction which MSE estimates will be incurred during the month following the Closing. SMEPA's payments will be made in Immediately Available Funds to the "MSE-SMEPA Grand Gulf Construction Account" 'at any bank designated by MSE to SMEPA. As agent for the parties, MSE shall draw down such funds as needed to pay the Cost of Construction. MSE will deliver to SMEPA at the Closing an Easement Agreement in the form of Exhibit E hereto, pursuant to which SMEPA will have the right (subject to this Agreement) to locate, , maintain and remove its undivided ownership interest in that portion of Grand Gulf located on the land described in Exhibit B. Section 2.02. Payment and Adjustment Dates. (a) On or before the first day of each month, commencing with the month following the Closing, MSE will O b notify SMEPA of the Cost of Construction anticipated to be incurred during the succeeding calendar month plus any adjustments for Cost of Construction incurred in prior months but not previously charged or credited to SMEPA. MSE may, without liability to SMEPA, at any time before the date payment into the MSE-SMEPA Grand Gulf Construction Account is due, cancel the call for such funds. The date designated by MSE to SMEPA for SMEPA's monthly payment of the Cost of Construction is the Payment and Adjustment Date. On each Payment and Adjustment Date, SMEPA will pay the amount designated by MSE in the notice in Immediately Available Funds to the MSE-SMEPA Grand Gulf Construction Account at any Bank designated by MSE to SMEPA, and the undivided ownership interests of MSE and SMEPA in Grand Gulf will be adjusted in accordance with the following formula: B C A = Bf x 100%, and A1 = 100% - A, where A = Undivided ownership interest entitle-ment of SMEPA,  %. A1= Undivided ownershi interest entitle-ment of MSE, . B = Contribution of SMEPA to cost of Construction to beginning of the month preceding the Payment and Adjustment Date, $ . B1= Contribution of SMEPA to Cost of Construction during the month preceding the Payment and Ad]ustment Date, S . t O C = AFUDC of SMEPA with respect to B, $ . D = Total contribution of MSE and SMEPA to Cost of Construction to the beginning of the month preceding the Payment and Adjustment Date, S . E = AFUDC of MSE and SMEPA with respect to D, That portion of "D" in the above formula consisting of MSE's contribution to the Cost of Construction shall be derived from or based upon MSE's financial statements at December 31, 1979 audited by its independent certified public accountants Deloitte Haskins & Sells plus MSE's additional expenditures for Cost of Construction during each month subsequent thereto prior to the Closing. MSE will advise SMEPA of making any change in its accounting methods or practices which could increase the Cost of Construction accruals made for periods subsequent to December 31, 1979 over the amounts which would have been accrued had MSE followed the accounting methods and practices used to derive the amounts shown on its December 31, 1979 financial statements. (b) On each Payment and Adjustment Date or at such other time as MSE and SMEPA deem it desirable, MSE and SMEPA will transfer, convey and warrant specially, by the Special Warranty Deed, Conveyance and Adjustment Agreement substantially in the form of Exhibit F hereto, undivided ownership interests in Grand Gulf, including the real property O , described in Exhibit A hereto, free and clear of all liens and mortgages, other than those expressly permitted by the terms of such Special Warranty Deed, Conveyance and Adjust-ment Agreements, so tihat, as of each Payment and Adjustment Date or at such other time as any Special Warranty Deed, conveyance and Adjustment Agreement is delivered, MSE and SMEPA will each own, as tenants in common, the undivided ownership interest in Grand Gulf derived by application of the above formula. Such special Warranty Deed, Conveyance and Adjustment Agreement will also confirm the adjustment to their respective undivided ownership interests in Grand Gulf and each such Agreement shall be promptly and duly recorded wherever counsel to MSE and SMEPA may deem it appropriate and necesscry. Subsequent to each such change, all provisions of this Agreement, the Indemnification Agreement and the Operating Agreement referring to the undivided ownership interests of the parties in Grand Gulf shall be deemed amended to reflect the new undivided ownership interests of - the parties in Grand Gulf. (c) The advances by SMEPA of 100% of the Cost of Construction will continue until such date as the accumulated sum of all such advances, together with SMEPA's AFUDC accrued thereon, equals 10% cf the aggregate advances of MSE and SMEPA of the Cost of Construction plus the respective- amounts of MSE's and SMEPA's AFUDC accrued thereon. MSE and SMEPA O will provide each other with current information on their respective AFUDC accruals so that all necessary computations can be made on a timely and appropriate basis. (d) On or prior to Closing, MSE will have obtained a release from the lien of the MSE Mortgage of at least 5% of its ownership interest in Grand Gulf on such date. On or prior to the date on which SMEPA shall have acquired hereunder a 4% undivided ownership interest in Grand Gulf, MSE will obtain a release from the lien of the MSE Mortgage of an additional 5% of its undivided ownership interest in Grand Gulf. All of SMEPA's obligations hereunder are contingent upon MSE obtaining such releases at the times specified O above. b ~ (e) To the extent that MSE or any corporation with which it files a consolidated Federal income tax return actually obtains any tax benefits attributable to the deduction for tax purposes of any portion of MSE's AFUDC included within the "E" portion of the formula set forth in this Section 2.02 as applied at any Payment and Adjustment Date or upon the Final Adjustment Date, the amount of such tax benefit shall be deducted from "E" for purposes of computing SMEPA's undivided ownership interest in Grand Gulf. To the extent tax benefits are not obtained prior to the Fitial Adjustment Date but are thereafter obtained prior to completion

of construction, SMEPA's obligation to make contributions to l

l

O V the cost of construction shall be reduced by 10% of such obtained benefit. To the extent such tax benefits are not obtained prior to the completion of construction of Grand Gulf but are obtained thereafter, MSE shall pay SMEPA an amount equal to 10% of such obtained benefit. For the purpose of this Section " tax benefits" refer to reductions in Federal income tax payments or increases in Federal income tax refunds attributable to deduction of any portion of AFUDC prior to Final Adjustment Date. For the purpose of this Section "obtained" refers to actual adjustment in tax as determined when a taxable year has administratively been settled by MSE and the IRS or court proceedings for such tax year have been finally resolved. Section 2.03. Final Adjustment Date. As of the Final Adjustment Date (a) MSE and SMEPA will each make a final transfer, exchange and conveyance in accordance with the procedures specified in Section 2.02 so that, as of the Final Adjustment Date, MSE and SMEPA will own 90% and 10%, respectively, of Grand Gulf as constructed to such date, (b) SMEPA will pay to MSE the sum of $1,500,000, which MSE and SMEPA agree compensates MSE for all costs incurred, past, present and future, relating to Grand Gulf that have not been capitalized, such as planning, negotiation, education and similar unallocated administrative and general expenses, and such payment shall not be used thereafter in calculating SMEPA's undivided ownership interest in Grand Gulf, and (c) MSE will credit toward SMEPA's obligations to contribute to future Cost of Construction any payments by SMEPA to the MSE-SMEPA Grand Gulf Construction Account not allocable to SMEPA's 10% undivided ownership interest in Grand Gulf. From time to time after the Final Adjustment Date, MSE and SMEPA shall execute such other instruments of conveyance and transfer as may be necessary or appropriate to vest in MSE and SMEPA their respective undivided ownership interests in Grand Gulf. The parties intend that from and after the Final Adjustment Date, MSE and SMEPA, by virtue of this Agreement or any special conveyance or transfer of title provided for herein, will each take title to Grand Gulf as tenants in common in proportion to their respective undivided ownership interests therein, and that unless otherwise expressly provided in this Agreement, neither party will have any title in or to the undivided ownership interest in Grand Gulf owned by the other party. To facilitate the financing of Nuclear Fuel by MSE for itself and SMEPA in accordance with Section 3.12, it is agreed that SMEPA shall pay for and acquire title to an undivided ownership interest in Nuclear Fuel only upon the execution and delivery by MSE l to SMEPA of an appropriate instrument of conveyance and transfer of title identifying the specific Nuclear Fuel to be conveyed and transferred to SMEPA. O Section 2.04. Assignment of Contract Rights, V Permits, Authorizations, Licenses g other Intangible Rights. (a) It is understood that MSE has, prior to the date hereof, executed or obtained in its own name, certain contracts, permits, authorizations, licenses or other in-tangible rights relating to Grand Gulf, including without limitation the contracts, permits, authorizations, licenses or other intangible rights listed on Exhibit G hereto. MSE represents, to the best of its knowledge, that the contracts listed on Exhibit G are all such agreements entered into or obtained by or on behalf of MSE to the date of this Agreement wherein the aggregate contract price is estimated to exceed O V

 $1,000,000.

(b) Exhibit G also lists (i) certain contracts entered into, or which may be entered into, by MSE with certain companies affiliated with it in the Middle South Utilities System, which relate to the financing of, or sale of capacity and Energy from, Grand Gulf, and (ii) certain contracts relating to Nuclear Fuel expected to be integrally related to any financing of Nuclear Fuel by MSE for itself and SMEPA in accordance with Section 3.12. It is agreed SMEPA shall have rights and obligations under the contracts referred to in Section 2.04(b)(i) and Section 2.04(b)(ii) and any similar contracts now existing or hereafter entered into by MSE only upon the execution and delivery by MSE to u SMEPA of an appropriate instrument of assignment identifying the specific contract to be assigned to SMEPA. (c) By execution of this Agreement MSE shall, as of the Closing, be deemed to have granted, conveyed, and assigned to SMEPA, to the extent permitted by law, contract, or otherwise, an undivided ownership interest in such contracts, permits, authorizations, licenses, or other intangible rights and any other contracts, permits, authorizations, licenses, or other intangible rights entered into or obtained prior to the Closing, with respect to Grand Gulf, whether or not listed on Exhibit G hereto, other than those expressly excepted in Exhibit G or by the provisions of this Section 2.04(b), equal to the undivided ownership interest of SMEPA in Grand Gulf determined from time to time under Section 2.02 and Section 2.03, and SMEPA shall be deemed as of each Payment and Adjustment Date and the Final Adjustment Date to have been granted such an undivided ownership interest of the benefits, and to have accepted and assumed a proportionate share of the obligations, of all such contracts, permits, authorizations, licenses, or other intangible rights. (d) Without regard to whether any contract, permit, authorization, license, or other intangible right relating to Grand Gulf (other than those expressly excepted in Exhibit G or by the provisions of this Section 2.04(b)) is deemed assigned pursuant to this section, after the O

Closing, (i) except as otherwise provided in Section 2.03, title to property which comprises, or is intended to comprise, a part of Grand Gulf shall be acquired directly by, and by virtue of this Agreement, shall vest directly in, MSE and SMEPA as tenants in common in accordance with their undivided ownership interests in Grand Gulf, and (ii) SMEPA agrees to be bound by the terms of all contracts, permits, authorizations or licenses relating to Grand Gulf (including any provisions that limit or protect against liability, nuclear and non-nuclear, or exclude any warranties) to the same extent as if SMEPA were an original signatory to such contract, permit, authoriza-tion or license or otherwise a party thereto, provided that SMEPA's liability under any such contracts shall be in proportion to its undivided ownership interest in Grand Gulf determined from time to time under the provisions of this Agreement. SMEPA shall indemnify and hold MSE harmless against any liability resulting from SMEPA's breach of the foregoing covenant. (e) Further, after the execution of this Agreement, SMEPA, in order to induce parties who have contracted with MSE to agree to the transfer to SMEPA of an undivided owner-ship interest in Grand Gulf or in any part thereof or to an assignment to SMEPA of an interest in any contract, permit, authorization, license or other intangible right, shall, , upon request of MSE, enter into an agreement with any such 1 O

4 O C/ party consenting, with respect to and in proportion to its undivided ownership interest in Grand Gulf, to be bound by the provisions of any such contract, permit, authorization, license or other intangible right in the same manner and to the same extent as MSE and making such other representations as may be reasonably required by such party. After the Closing, MSE and SMEPA shall be severally (but not jointly) responsible for their respective share of all amounts payable under or with respect to all contracts, permits, authoriza-tions, licenses, or other intangible rights. Section 2.05. Indemnification. SMEPA agrees to indemnify and reimburse MSE for all of MSE's costs, expenses, fees, and taxes of all types (any taxes measured by income being computed at statuto g rates without reduction for credits and grossed up in accordance with the statutory rates at which they are imposed), together with interest and penalties, incurred in or resulting from the transactions contemplated by Sections 2.01 through 2.04 and 4.06 of this Agreement, regardless of whether incurred, imposed or paid before, on or after the Final Adjustment Date. Insofar as the indemnification or reimbursement of taxes measured by inccme is specifically set forth in the Indemnification Agreement, no indemnification shall be required under this ! Section 2.05 except as required under the terms of the Indemnification Agreement. O

 \.s            Section 2.06. Accounting for Cost o_f Construction.

Subsequent to the date hereof, and at such reasonable times as may be requested, MSE shall furnish SMEPA such informa-tion as SMEPA shall reasonably require in order to verify all SMEPA's payments of Cost of Construction and MSE's AFUDC. Both SMEPA and MSE shall have until the 180th day after the Final Adjustment Date to question or contest the correctness of the payments made prior thereto, after which time the correctness of such payments shall be conclusively presumed. In the event of an error in the calculation of any such payments or the undivided ownership interests of MSE and SMEPA in Grand Gulf, SMEPA or MSE shall, following notice of such erroneous calculation from the other party, within 30 days of agreeing as to the amount of the error, reimburse the other party for the amount charged or failed to be charged in error or otherwise rectify the error. , Section 2.07. Excess Uranium Provision. As an exception to the requirements of Sections 2.01 through 2.03 that MSE and SMEPA will have undivided ownership interests in Grand Gulf proportionate to their contributions to Cost of Construction plus their respective accrued AFUDC, it is agreed that MSE will own 100% of any Excess Uranium, as such term is defined in the letter agreement dated June 15, 1978 by and between System Fuels, Inc. and Arkansas Power & Light

company, a copy of which is attached hereto as Exhibit H, O

L

which it may acquire from time to time, and SMEPA will have no undivided ownership interest or any other right therein under the terms of this Agreement. MSE will assume all of the cost and expense of acquiring, storing, processing and disposing of Excess Uranium, and no such costs will be chargeable as a Cost of Construction to SMEPA. ARTICLE III - CONSTRUCTION PERIOD Section 3.01. Completion of Construction. MSE shall have the sole authority and responsibility for the planning, design, licensing, acquisition, construction, com-pletion, training for operation, startup, renewal, addition, replacement, decommissioning, entombment and disposal of Grand Gulf or any portion of Grand Gulf. MSE will use its reasonable best efforts fully to comply with all require-ments of all applicable statutes and the rules and regula-tions of the NRC and such other regulatory agencies as shall have competent jurisdiction over the planning, design, licensing, acquisition, construction, completion, training for operation, startup, renewal, addition, replacement, decommissioning, entombment and disposal of Grand Gulf or of any portion of Grand Gulf. MSE will use its reasonable best efforts in accordance with Good Utility Practice to proceed with the construction and completion of Grand Gulf Units No. LJ

  'l  1 and No. 2. MSE is presently scheduling Grand Gulf Unit No. 1 for Commercial Operation by April 1, 1982, and Grand Gulf Unit No. 2 for Commercial Operation by April 1,1985.

The construction schedule for each Grand Gulf Unit may be , revised from time to time by MSE to reflect actual progress in the planning, designing, licensing, acquiring, construc-tion, completion, training for operation, and startup for each Unit, and MSE shall not be liable or responsible to SMEPA for any delay in commencement of Commercial Operation of either Grand Gulf Unit No.1 or Grand Gulf Unit No. 2 beyond such dates, except as provided in Article IV. Costs incurred in connection with, or as a result of, the re-() scheduling of the construction of Grand Gulf, or any part thereof, in accordance with the provisions of this Agreement shall be shared by MSE and SMEPA in accordance with their respective undivided ownership interests in Grand Gulf. MSE shall promptly notify SMEPA of all material changes in the construction schedule for each Unit of Grand Gulf. Section 3.02. Execution of Contracts. After the Closing any contract covering design, engineering, procure-ment, construction and installation services and major com-ponents of Grand Gulf, including any contract for the acquisi-tion of materials, inventories, supplies, spare parts, equipment, fuel, Nuclear Fuel, or services therefor, shall be executed solely by MSE, or by MSE for itself and on (-- l

q behalf of SMEPA. Also, the firm or firms responsible for the engineering and construction of Grand Gulf, including but not limited to Bechtel Corporation, may be authorized by MSE to sign contracts as agent for MSE and SMEPA relating to the design, engineering, procurement, construction and installation of Grand Gulf. MSE will use its best efforts, ' consistent with the objection of economic and timely completion of Grand Gulf, to obtain in each such contract entered into after the Closing, wherein the aggregate contract price is estimated to exceed $1,000,000, the inclusion of a provision ' providing for several but not joint liability of MSE and SMEPA under such contracts in proportion to their respective undivided ownership interests in Grand Gulf. Each such contract may provide for separate invoicing to SMEPA in accordance with its undivided ownership interest in Grand Gulf. Whether or not any such contract is entered into in the name of both parties, after the closing each party shall, except as otherwise expressly provided in this Agree-ment, (a) be severally and not jointly responsible for its share of all amounts which are payable under or with respect to such contracts, (b) indemnify and reimburse the other party for payments made by such other party with respect to or on account of any part of the share of such amounts owed by the indemnifying or reimbursing party, and (c) take title to the property included in Grand Gulf and covered by such O O l l l

O V contracts in proportion to its undivided ownership interest in Grand Gulf. In order to induce third parties to contract with MSE with regard to the performance of MSE's obligations to SMEPA under this Agreement, SMEPA hereby agrees to indemnify any such contracting party to the extent of any liability arising under such contract in proportion to SMEPA's undivided ownership interest in Grand Gulf, notwithstanding the fact that such contract may be made only in the name of MSE. To the extent feasible and desirable, no contract contemplated by this Section shall provide for retention by a supplier of I title to major components purchased for Grand Gulf after the delivery of such components at the Grand Gulf site. ( Section 3.03. Progress Payment of Cost of Construction. At all times after the Final Adjustment Date and whether prior to or after Commercial Operation of either Unit, SMEPA shall pay to MSE an amount equal to 10% of the cost of Con-struction of Grand Gulf Unit No.1 and Grand Gulf Unit No. 2, as the case may be, payable as follows: MSE will, on or before the first day of each month, commencing with the month immediately preceding the Final Adjustment Date, l notify SMEPA of the Cost of Construction anticipated to be l I incurred by MSE during the succeeding calendar month plus any adjustments for Cost of Construction incurred in prior l months but not previously charged or credited to SMEPA.

 /    SMEPA shall pay an amount equal to 10% of such anticipated l (._ /T O

V Cost of Construction as so adjusted on the first day of such succeeding month (or on such other day or days in such month as shall be designated in the notice) to the MSE-SMEPA Grand Gulf Construction Account, and MSE shall, on such date, pay 90% of such Cost of Construction into said account. The first of such payments shall be made at the Final Adjustment Date. All such payments shall be in Immediately Available Funds. As agent for the parties MSE shall draw down such funds as needed to pay the Cost of Ccnstruction. MSE may, without liability to SMEPA, at any time before the date ' payment into the MSE-SMEPA Grand Gulf Construction Account is due, cancel the call for such funds. MSE will provide , i SMEPA with such information as is reasonably required by SMEPA in order for SMEPA to account for the payment of the Cost of Construction on its books and for retirement of Grand Gulf. MSE will give SMEPA as much notice as is rea-sonably practicable of any major anticipated costs. ' Section 3.04. MSE-SMEPA Grand Gulf Construction Account. Funds in the MSE-SMEPA Grand Gulf Construction Account may be invested, and shall be invested to the extent practicable, at MSE's direction and for the benefit of both parties, in United States bonds, bills, Treasury notes or certificates, certificates of deposit of Mississippi banks and other investments permitted by law, and profits and losses from said investments shall be shared by the parties i

n Q in accordance with their undivided ownership interests in Grand Gulf; provided that should SMEPA object to the type of investments made by MSE, then from and after 90 days after such objection, SMEPA's share of such funds shall be invested in such type of investments as shall be designated by SMEPA; profits and losses therefrom shall be allocated solely to SMEPA; and SMEPA shall have no share in the profits and losses from investments made in respect of MSE's payments. Section 3.05. No Delay in Payments by SMEPA. No disagreement or dispute of any kind between MSE and SMEPA concerning any matter, including without limitation, the amount of any payment due from SMEPA or the correctness of p any charge made to SMEPA, or any other reason, excuse or circumstance, including Force Majeure, shall permit SMEPA to delay or withhold any payment due and owing under this Agreement, provided, however, SMEPA shall have the right to make any payment required of it under protest and reserve its rights under Section 3.06. Section 3.06. Contest of Payment of Cost of Construction; Waiver. No payment made pursuant to Section 3.03 shall constitute a waiver of any right of SMEPA to question or contest, pursuant to~the following sentence, the correctness of that portion of the Cost of Construction charged to SMEPA by MSE. SMEPA shall have until the 180th day after the end of each calendar year to question or l O V i

contest the correctness of any charge or adjustment made in the preceding calendar year, after which time the correctness of such charge or adjustment shall be conclusively presumed; provided that MSE shall credit SMEPA with its allocable share of recoveries, whenever received, from third parties and shall charge or credit SMEPA with its allocable share of underpayments or overpayments of Cost of Construction, as the case may be, discovered by MSE at any time. Force Majeure will not excuse failure by MSE to credit SMEPA with its allocable share of recoveries or overpayments of Cost of Construction arising at any time. Section 3.07. Availability of Records; Annual p O Audit. MSE will permit SMEPA, at SMEPA's expense, to examine all records regarding construction of Grand Gulf. At the end of each calendar year SMEFA may, at its option, conduct, or cause to be conducted, an audit of the books and records of MSE relating to Grand Gulf, and such audit shall be completed within ninety (90) days of the end of the calendar year. Section 3.08. Agent for Construction; Limitation of Liability. SMEPA hereby irrevocably appoints MSE its agent in connection with Grand Gulf to act on its behalf in the planning, design, licensing, acquisition, construction, completion, training for operation, startup, renewal, addi-tion, replacement, decommissioning, entombment and disposal O l

O of Grand Gulf or any portion of Grand Gulf and authorizes MSE in the name and on behalf of SMEPA to take all reason-able actions which, in the discretion and judgment of MSE, it deems necessary or advisable to effect the planning, design, licensing, acquisition, construction, completion, training for operation, startup, renewal, addition, re-placement, decommissioning, entombment and disposal of Grand Gulf or any portion of Grand Gulf. MSE accepts such appoint-ment. Without limiting the generality of the foregoing, acting for itself and SMEPA, MSE may: (i) in conformity with the provisions of Section 3.02, make such agreements and modifica-tions of existing or future agreements and take such other action, including settlement of claims and disputes, as MSE deems necessary or appropriate, in its sole discretion, or as may be required under the regulations or directives of the NRC or such other regulatory agencies having jurisdiction, with respect to the planning, design, licensing, acquisition, construction, completion and training for operation of Grand Gulf, the procurement, replacement, modification or renewal of all or any part thereof, and if necessary, the retirement, decommissioning, entombment, disposal or salvaging , of all or any part thereof, whether before or after Commercial Operation; and i 1 () (ii) execute and file with the NRC, or other regulatory agency having jurisdiction, applications, amendments, reports and other documents and filings in or in connection with licensing and other regulatory matters with respect to Grand Gulf; and (iii) receive on SMEPA's behalf any notice or other communication from the NRC or other regulatory agency having jurisdiction, as to any licensing or other regulatory matter with respect to Grand Gulf; and (iv) appoint agents for the purpose of dis-charging any of the obligations imposed upon it in (~S this Agreement or revoke such agencies, subject to V dll neCessary regulatory approvals, (it being understood that MP&L presently acts as MSE's general agent under the Service Agreement in connection with Grand Gulf to the extent and in the manner permitted therein), provided that no such appointment shall relieve MSE of any obliga-tion to SMEPA hereunder. In discharging its obligations hereunder, MSE shall have the right, either on its own behalf or on its own behalf and on behalf of SMEPA, to contract with itself or any MSE Affiliate for the purchase, at cost, of any equipment, facilities, Nuclear Fuel or for the performance of services, at cost, in O V

connection with Grand Gulf. To the extent permitted by law, SMEPA shall not be entitled to recover from MSE, its agents, employees or insurers (except to the extent it shall be entitled to share in insurance recoveries under Section 3.11) for any damage resulting from negligence, error or delay in the planning, design, licensing, acquisition, construction, completion, training for operation, startup, renewal, addition, replacement, decommissioning, entombment and disposal of Grand Gulf or any portion of Grand Gulf, or for any damage thereto, any curtailment of power, or any damages of any kind, including consequential damages, occurring during the course of planning, licensing, design, construction, acquisition, completion, startup, decommissioning, entombment or disposal of Grand Gulf or otherwise arising out of the performance of this Agreement, unless such damages (other than consequential damages, 5hich shall not be recoverable in any event) shall have rcsulted from gross negligence of MSE, its agents or employees; but all such damages (other than consequential damages, which shall not be recoverable in any event), other than those resulting from gross negligence of MSE, shall be shared by MSE and SMEPA as a Cost of Construc-tion in proportion to their respective undivided ownership interest in Grand Gulf. In no event shall MSE be liable to SMEPA for any such loss in an amount greater than SMEPA's uninsured loss. SMEPA shall be entitled to share in any such damages which may be recovered by MSE from any third party, including insurers, in accordance with its undivided ownership interest in Grand Gulf. As used in this Section, the term " consequential damages" shall include but not be limited to damage or loss of other property or equipment, loss of profits or revenue, loss of use of power system, cost of capital, cost of purchased or replacement power, or claims of customers for service interruption. The duty of MSE to perform its obligations under this Agreement in a prudent manner and in accordance with Good Utility Practice shall be construed or modified to the extent necessary to give full effect to the provisions of this Section, but this Section shall not excuse a breach of this Agreement constituting gross negligence. Each party hereto shall individually bear, and shall indemnify the other party against, all costs, losses, liabilities and expenses resulting from its own gross negligence, but in the event MSE, in the performance of its duties under this Agreement, otherwise incurs any - liability to any third party, any amount paid by MSE on account of such liability shall be considered a cost of ) Construction and apportioned between the parties in accordance with their respective undivided ownership interests in Grand Gulf. Section 3.09. Information. MSE shall make all I reasonable efforts to inform SMEPA as to the planning for b a and progress of construction, acquisition, completion, and startup of Grand Gulf and shall furnish SMEPA such reports and contracts as are related thereto at such times as are indicated on Exhibit I hereto. No failure by MSE to provide information pursuant to the provisions of this section, shall release SMEPA from any obligation hereunder. Section 3.10. Cooperation. MSE and SMEPA will cooperate with er.ch other in all activities relating to Grand Gulf, including without limitation, the execution and filing of applications for authorizations, permits and licenses and the execution of such other documents ~as may be reasonably necessary to carry out the provisions of this Agreement. Except at the written request of MSE, SMEPA shall not incur any obligation or do any other act in con-nection with Grand Gulf which would or could obligate MSE to any third party. The obligation of cooperation contained in this Section does not imply that MSE does not have full power of authority to execute applications and documents on behalf of SMEPA as contemplated by Section 3.08. Section 3.11. Insurance. With respect to Grand Gulf, MSE shall carry in the name of MSE and SMEPA, and in proportion to their respective undivided ownership interests therein, builder's risk or installation floater insurance, < and such other insurance, in an amount, with such deductible or self-insurance features and including such risks as is O

C'h O consistent with MSE's customary practices, provided such insurance is available. MSE shall also reasonably satisfy itself that all contractors, subcontractors, engineers and all equipment suppliers or manufacturers have adequate insurance and limits thereof, with carriers approved by MSE (to the extent permissible), for workmen's compensation, public liability, contractors' liability and such other hazards as MSE shall deem appropriate with respect to Grand Gulf, or MSE, at its option, may provide for such insurance in the nature of an overall owner-directed program, with the parties, including owners, contractors and subcontractors, involved in Grand Gulf being insured thereunder as their interest may appear. MSE will keep in force the nuclear liability insurance and the indemnity agreement with respect to Grand Gulf as required by Section 170 of the Atomic Energy Act of 1954, as amended [42 U.S.C.A. Sec. 2210], and such other insurance as may be necessary to comply with any applicable regulations of the NRC or any other regulatory agency having jurisdiction, with MSE and SMEPA being named therein in proportion to their respective undivided owner-ship interests in Grand Gulf. The aggregate cost of all insurance procured pursuant to this section, including without limitation any retrospective assessment, shall be considered a Cost of Construction and as such shall be l q apportioned between MSE and SMEPA pursuant hereto. SMEPA G t may at its sole expense purchase and take out any additional insurance for its sole use and benefit as SMEPA may deem necessary, provided the interests of MSE are not thereby adversely affected. SMEPA shall advise MSE of the terms of any such additional insurance prior to entering into any contract therefor. All of the insurance policies obtained by either party shall contain waivers of subrogation against the other party, if obtainable from the insurer. If not prohibited under the terms of the insurance contracts, MSE and SMEPA hereby waive their rights of recovery against each  ! other to the extent that any loss experienced by MSE or SMEPA is covered by insurance carried by or on behalf of either party. Section 3.12. Nuclear Fuel. MSE shall have the authority and shall use its best efforts to acquire and manage all Nuclear Fuel for Grand Gulf according to its sole discretion and judgment, including, without limitation, reloading, spent storage, reprocessing and waste disposal matters relating to Nuclear Fuel. MSE shall also have the ; right to enter into any arrangement, on its behalf and on behalf of SMEPA, for obtaining and financing, by purchase, lease or otherwise, Nuclear Fuel for Grand Gulf which MSE, in its sole discretion, shall deem desirable, and SMEPA agrees to cooperate with MSE and, subject to all required approval of the REA, to take all action required to consem-O

i mate any such arrangements. MSE may acquire Nuclear Fuel n from SFI or others, for itself and others. Each party shall have the right to mortgage, pledge or encumber its investment in Nuclear Fuel for Grand Gulf, without the consent of the i other party, subject to the exclusive right of MSE to acquire - and manage all Nuclear Fuel for Grand Gulf according to its i sole discretion and judgment as provided in this Section 3.12. This Section applies only insofar as the cost of Nuclear Fuel is deemed a Cost of Construction in accordance with standard accounting practices applicable tc MSE and only to the extent the Operating Agreement is not otherwise applicable. Section 3.13. Poll _ution Control Facilities. MSE O and SMEPA shall each have the right to enter into any separate arrangements for the purpose of financing their respective undivided ownership interests in facilities and equipment located at Grand Gulf for the control of environmental pollution through the issuance by claiborne County, Mississippi, or its successors or assigns, or any other political subdivision, of its notes or bonds, or both, the interest of which shall be exempt from federal income taxes. Each party agrees to cooperate with the other and to take all action required to consummate any such financing of pollution control facilities and equipment for Grand Gulf. !O ARTICLE IV - DELAY IN COMMERCIAL OPERATION Section 4.01. Delay in Commercial Operation Caused BJ Force Majeure. If Commercial Operation of either Grand Gulf Unit No. 1 or Grand Gulf Unit No. 2 is delayed by reason of Force Majeure, neither MSE nor SMEPA shall incur any obligation to the other party. Section 4.02. Delay in Commercial Operation of Grand Gulf Unit No. l_ Not Caused BJ Force Majeure. If Commercial operation of Grand Gulf Unit No.1 is delayed until after April 1, 1982 for any reason which is not Force Majeure, then there shall be made available to SMEPA through Section 2.01 of the Substitute Power Agreement, Capacity and Energy in the manner and amount, and at the cost, determined pursuant to the Substitute Power Agreement. If such Capacity and Energy is not available to SMEPA under Section 2.01 of the Substitute Power Agreement, MSE shall, if it has available to it from sources other than Grand Gulf, Capacity and Energy equivalent to the amount of Capacity and Energy which would have been available to SMEPA under Section 2.01 of the Substitute Power Agreement which is excess to its needs, supply such excess capacity and Energy to SMEPA at MSE's average cost thereof, but otherwise under the same terms and provisions as are set forth in Section 2.01 of the Substitute Power Agreement, as if MSE, rather than MP&L, were obligated to supply Capacity and Energy thereunder. Section 4.03. Delay In Commercial Operation of Grand Gulf Unit No. 2,Not Caused By Force Majeure. If Commercial Operation of Grand Gulf Unit No. 2 is delayed until after April 1,1985 for any reason which is not Force Majeure, then there shall be made available to SMEPA through Section 2.02 of the Substitute Power Agreement, Capacity and Energy in the manner and amount, and at the cost, determined purauant to the Substitute Power Agreement. If such Capacity and Energy is not available to SMEPA under Section 2.02 of the substitute Power Agreement, MSE shall, if it has available to it from sources other than Grand Gulf, Capacity and Energy equivalent to the amount of Capacity and Energy which would have been available to SMEPA under Section 2.02 of the Substitute Power Agreement which is excess to its needs, supply such excess Capacity and Energy to SMEPA at MSE's average cost thereof, but otherwise under the same terms and provisions as are set forth in Section 2.02 of the Substitute Power Agreement, as if MSE, rather than MP&L, were obligated to supply Capacity and Energy thereunder. Section 4.04. SMEPA's Remedies for Delay. If Grand Gulf Unit No. 1 is not in Commercial Operation by January 1, 1983, or if Grand Gulf Unit No. 2 is not in Commercial Operation by January 1, 1987, or if MSE notifies SMEPA at any time that either Unit of Grand Gulf will not be 1 C in Commercial Operation by such respective dates, then MSE will, at SMEPA's option, which option must be exercised in writing within 30 days after January 1, 1983, with respect to Grand Gulf Unit No. 1, within 30 days after January 1, 1987 with respect to Grand Gulf Unit No. 2 or within 30 days of receipt of the above mentioned notice, as the case may be, subject to securing approval of REA and any regulatory authority having jurisdiction thereof, and to the extent permitted by the MSE Mortgage and MSE Bank Loan Agreement, borrow such amounts from SMEPA as may be necessary to com-plete the construction of Grand Gulf Unit No. 1 or Grand Gulf Unit No. 2, as the case may be, and MSE shall proceed expeditiously toward.such completion. Any such borrowing

  /*

Q shall be evidenced by first mortgage bonds issued pursuant to a supplemental indenture to the MSE Mortgage, or such other securities as MSE may be able to issue, and MSE will in good faith negotiate with its bond holders under the MSE Mortgage toward accomplishing such financing agreement as herein agreed to. MSE agrees that the rate of interest on any such borrowings will equal the effective interest rate paid _y SMEPA on SMEPA's borrowings effected to obtain the funds to be advanced to MSE hereunder; provided, however, SMEPA agrees that it will not, without the advance written consent of MSE, affect borrowings which would result in MSE paying an interest cost (calculated in accordance with ,. accepted financial practice) in excess of the-rate provided L t

in Section 8.03. In effecting such borrowings, SMEPA shall use its best efforts to obtain the lowest cost of money practicable under the circumstances. The supplemental in-denture or other loan agreement pursuant to which any such borrowings are made shall provide that within 180 days following the expiration of five (5) years from the earlier of (1) the Commercial Operation of both Grand Gulf Unit No. 1 and Grand Gulf Unit No. 2, or (2) the Commercial operation of either unit of Grand Gulf and the abandonment of con-struction of the other unit, or (3) the abandonment of construction of Grand Gulf, SMEPA may require MSE to redeem at par from SMEPA all such borrowings. If MSE is then unable to effect such redemption, SMEPA may, subject to obtaining all necessary regulatory approvals, surrender its first mortgage bonds or other securities to MSE and acquire an increased ownership interest in Grand Gulf. The amount of the increase in SMEPA's ownership interest shall be the quotient obtained by dividing the total cost of Construction of Grand Gulf incurred to the date of the calculation into the aggregate principal amount of MSE's bonds which SMEPA is surrendering to MSE. The increase of ownership interest thus acquired by SMEPA shall be subject to the MSE Mortgage unless released therefrom, and MSE commits itself in good faith to cooperate with SMEPA in obtaining suct release. If Grand Gulf Unit No. 1 is not in Commercial Operation by l  !

1 January 1,1983 or Grand Gulf Unit No. 2 is not in Commercial Operation by January 1, 1987 because of any delay (a) in commencing Commercial Operation of either Unit of Grand Gulf occasioned by Force Majeure, (b) concurred in by SMEPA, or ' (c) during which SMEPA is in default of any of its material obligations to MSE under this Agreement or the Operating Agreement, the date on which SMEPA may require MSE to borrow from it shall be advanced by the amount of such delay. Section 4.05. Optional Capital Contribution. If adequate financing on reasonable terms is not available to MSE and such unavailability may result in delay of Commercial Operation of either Unit of Grand Gulf (whether due to Force Majeure or otherwise) MSE may, at its option, request SMEPA to lend its funds to MSE to permit the continuation of construction, and SMEPA agrees to lend MSE such funds as it may have available and as it deems desirable to lend. Section 4.06. MSE's Optional Remedy For SMEPA's Failure to Provide Funds. In the event SMEPA is unable to pay its share of the Cost of Construction owing at any time, MSE may, but shall not be obligated, in lieu of treating such failure as a default by SMEPA for which the remedies provided in Article VIII of this Agreement are available, pursue the following arrangements at any time subsequent to SMEPA's default. O (a) First, MSE may elect to lend SMEPA and SMEPA may elect to borrow from MSE an amount equal to SMEPA's share of the Cost of Construction so that construction of Grand Gulf may continue according to the desired schedule and SMEPA's undivided ownership interest therein shall (1) increase in accordance with Section 2.02 if such loans are made prior ;o the Final Adjustment Date, or (2) remain constant in accordance with Section 2.03 and Section 3.03 if such lor.ns are made subsequent to the Final Adjustment Date. Each advance by MSE to SMEPA, on the terms hereafter provided, shall excuse, pro tanto, each separate default by SMEPA in advancing such funds to MSE but shall in no way operate to excuse or release SMEPA from any future failure to r.dvance its share of the Cost of Construction or any other default under this Agreement. Any such borrowing shall be evidenced by first mortgage notes issued pursuant to a supplemental mortgage to the SMEPA Mortgage, and SMEPA will in good faith negotiate with its noteholders under the SMEPA Mortgage toward accomplishing such financing agreement as herein agreed to. SMEPA agrees that the rate of interest on any such borrowings will equal the effective capital cost in-curred by MSE to obtain the funds to be lent to SMEPA here-under; provided, however, MSE agrees that it 5:ill not, without the advance written consent of SMEPA, incur capital costs which would result in SMEPA paying an interest cost I

   )

l

A U (calculated in accordance with accepted financial practice) in excess of the rate provided in Section 8.03. In obtaining such capital, MSE shall use its best efforts to obtain the lowest cost of money practicable under the circumstances. The first nortgage notes issued by SMEPA to MSE hereunder will be secured by a direct first mortgage lien on SMEPA's undivided ownership interest in Grand Gulf and shall have such other terms and provisions as the parties may mutually agree to at the time. The foregoing arrangements shall be subject to SMEPA obtaining all necessary regulatory approvals and the approval of the REA and the CFC. (b; Second, whether or not the arrangements set forth in paragrapi, (a) are permissible or practicable at the time, MSE may, subject to obtaining all necessary ' regulatory approvals, elect to provide funds in respect of each separate default by SMEPA in advancing its share of the Cost of Construction, which funds will be applied to the cost of Construction so that construction of Grand Gulf may continue according to the desired schedule. Each amount so provided by MSE will excuse, pro tanto, each separate default by SMEPA in advancing such funds to MSE, but shall in no way operate to excuse or release SMEPA from any future failure to advance its share of the cost of Construction or any other default under this Agreement. Each amount so provided by MSE will also increase MSE's undivided ownership interest O in Grand Gulf (expressed as a percentage) to the quotient obtained by dividing the total cost of Construction of Grand Gulf incurred to the date of the calculation, net of MSE's and SMEPA's accrued depreciation thereon, if any, plus MSE's and SMEPA's AFUDC thereon, into the sum of the Cost of Construction theretofore incurred by MSE, net of MSE's accrued depreciation thereon plus MSE's AFUDC thereon, and the amcunt advanced by MSE on behalf of SMEPA. SMEPA's undivided ownership interest in Grand Gulf (expressed as a percentage) will decrease by the amount of each increase in MSE's undivided ownership interest in Grand Gulf (expressed as a percentage) as determined in accordance with this O vereerePa (8). se euca aecreese 1e sasea's ==aiviaea e eer-ship interest in Grand Gulf (expressed as a percentage) will diminish or adversely affect the lien of the SMEPA Mortgage. Subsequent to each such change in the amount of the respective undivided ownership interests in Grand Gulf owned by MSE and SMEPA, all provisions of this Agreement and the Operating Agreement referring to the undivided ownership interests of the parties in Grand Gulf [ including but not limited to provisions concerning sharing of Cost of Construction and Cost of Operation (as such term is defined in the Operating Agreement), sharing of liability, capacity and Energy en-titlements and sharing of contracts] shall be deemed amended fS to reflect the new undivided ownership interests of the U

                  .           -4s-

T U,C parties in Grand Gulf. MSE and SMEPA agree to take all further action which is necessary or desirable to effect a satisfactory readjustment of their respective undivided ownership interests in Grand Gulf subsequent to each re-calculation in accordance with the provisions of this para-graph (b). Subject to obtaining any necessary consent or approval of the REA or the CFC, SMEPA agrees to obtain the release from the lien of the SMEPA Mortgage of any part of its undivided ownership interest in Grand Gulf acquired by MSE as a result of the occurrence of any recalculation contemplated by this paragraph (b), including but not limited to any real property comprising a part of Grand Gulf. By written notice to MSE, SMEPA may, subject to obtaining all necessary regulatory approvals, exercise the option to purchase from MSE such additional ownership interest in Grand Gulf, which resulted from MSE providing funds, pursuant to this Subsection 4.06(b), for SMEPA's share of Cost of Construction, at a price equal to the original cost to MSE 1 of such additional ownership interest, including AFUDC on MSE's additional ownership in Grand Gulf, plus all reasonable fees, costs, and expenses of MSE associated with MSE's i providing funds for SMEPA's share of Cost of Construction l and acquiring an increased ownership interest in Grand Gulf; less related accumulated depreciation to the date of such transfer of ownership determined in accordance with rates of 1 v depreciation approved for MSE by the Mississippi Public Service Commission. Such notice must be given to MSE within six (6) months from the datelof each separate increase in MSE's undivided ownership interest in Grand Gulf, which

 ,        occurs pursuant to this Subsection 4.06(b). The purchase price for each such additional undivided ownership interest in Grand Gulf shall be payable to MSE in Immediately Available Funds and must be paid to MSE within one (1) year from the date of each separate increase in MSE's undivided ownership interest in Grand Gulf, which occurs pursuant to this sub-section 4.06(b). Upon receipt of such payment, MSE shall execute such instruments as may be necessary to perfect,        '

O( ,j subject to the rights of the trustee of the MSE Mortgage, the undivided ownership interest to which SMEPA is restored hereunder. MSE will use its best efforts to obtain a release from the lien of the MSE Mortgage of the undivided ownership interest in Grand Gulf to which SMEPA is restored hereunder. a If the notice is not given within the six (6) month period referred to above or if such payment is not made to MSE within the one (1) year period referred to above, MSE shall retain the portion of its undivided ownership interest which resulted from the additional investment in the Cost of Construction of Grand Gulf made by MSE under this subsection t and SMEPA shall have no other or further right to reacquire said interest. O .g Section 4.07. Coordination of Financing. If under the provisions of Section 4.04 or 4.05 financing arrangements are not accomplished so that Grand Gulf Units 1 or 2 are not or will not be in Commercial Operation prior to January 1, 1983 and January 1, 1987, respectively, MSE will use its reasonable best efforts to permit the continuation of construction by coordinating the joint efforts of MSE, SMEPA, MSE's first mortgage bond holders and other interested parties to arrange additional financing by SMEPA, subject to all Governmental and regulatory approvals, and to assist SMEPA in obtaining an increased ownership interest in Grand Gulf free and clear of the lien of the MSE Mortgage. ( Section 4.08. Federal Energy Regulatory Commission. The rates and charges for the purchase and sale of Capacity and Energy to be provided by MSE to SMEPA pursuant to Sections 4.02 and 4.03 of this Agreement are subject to amendment and change, and each party reseriss the right to seek unilaterally amendments, changes and increases in the rates and charges set forth herein in accordance with law from any regulatory agency having jurisdiction thereof. If and to the extent that this Agreement or any part hereof shall be required to be filed, or shall be filed with any regulatory agency, including, without limitation the Federal Energy Regulatory Commission, as a rate or rate schedule, nothing in this Agreement shall be construed as affecting in any way the bp C) U right of MSE to make application unilaterally to such agency for a change in rates, charges, classifications, or service, or any rule, regulation, or contract relating thereto under applicable laws and regulations. To the extent that MSE  ; makes any such filing, SMEPA reserves the right to intervene in any proceeding involving such a filing by MSE and shall have the right to object to any proposed change. ARTICLE V - REPRESENTATIONS AND WARRANTIES t-0 Section 5.01. Representations and Warranties of SMEPA. On and as of the Closing, SMEPA represents, warrants and covenants to MSE as follows: (i) SMEPA is a corporation duly organized, validly existing and in good standing under the laws of the State of Mississippi and has corporate power and authority to carry on its business as it 1 is now being conducted and as it is contemplated to be conducted after the Closing. SMEPA has delivered to MSE a true and complete copy of its . Certificate of Incorporation and Bylaws as amended , to the date closing. (ii) The execution, delivery and per-formance of this Agreement (including without limitation, Section 3.02), the Operating Agree-

ment, the Substitute Power Agreement, the Indemnifi-cation Agreement and each Special Warranty Deed, Conveyance and Adjustment Agreement and compliance with their respective terms (1) will not violate any provision of any law or regulation or of any order, writ, judgment or decree of any court or governmental instrumentality applicable to SMEPA (except that various consents, permits, licenses and approvals of governmental regulatory authorities must be obtained in connection with the performance of certain provisions of this Agreement and the Operating Agreement to be performed after the date on which this representation is made), (2) will not violate any provision of the certificate of Incorporation or Bylaws of SMEPA, and (3) will not violate any provision of, or constitute a default under, or result in the creation or imposition of any lien, charge or encumbrence on or security interest in any of the assets of SMEPA pursuant to the provisions of, any mortgage, indenture, contract, agreement or other undertaking to which SMEPA is a party or which purports to be binding upon SMEPA or upon any of its assets, except that SMEPA's undivided ownership interest in Grand Gulf will be p subject to the terms and provisions of this Agree-V (D U ment, each Special Warranty Deed, Conveyance and Adjustment Agreement and the Operating Agreement, and to the terms and provisions and lien of the SMEPA Mortgage. (iii) Except as disclosed in a letter to be delivered to MSE at least seven (7) days before the Closing, there is no action, suit, proceeding or investigation (whether or not purportedly on behalf of SMEPA) pending or threatened against or affecting SMEPA, or its assets, which questions the validity of, or the result of which will have a materially adverse effect on the transactions contemplated by, this Agreement, the operating Agreement, the Substitute Power Agreement, the Indemnification Agreement and each Special War-ranty Deed, Conveyance and Adjustment Agreement or any action taken or to be taken pursuant to any such Agreement; and there is no action, suit, proceeding or investigation (whether or not pur-portedly on behalf of SMEPA) pending or threatened against or affecting SMEPA, or its assets, which individually or in the aggregate with other such actions, suits, proceedings or investigations, would have a materially adverse effect on the

 ,h financial condition, business or operations of (O SMEPA.

O (iv) The execution, delivery and performance of this Agreement, the Operating Agreement, the , Substitute Power Agreement, the Indemnification Agreement, and each Special Warranty Deed, Convey-ance and Adjustment Agreement, and compliance with their respective terms, by SMEPA have been duly and effectively authorized by all requisite corporate, membership, governmental and regulatory action. (v) This Agreement, the Operating Agree-ment, the Substitute Power Agreement, and the Indemnification Agreement have been and each Special Warranty Deed, Conveyance and Adjustment > Agreement, when executed and delivered by SMEPA, will be, duly and validly executed and delivered by SMEPA and each constitutes (or will constitute, as the case may be,) a valid and binding obligation 4 of SMEPA enforceable against it in accordance with their respective terms, subject to any limitation of bankruptcy and insolvency laws. j (vi) SMEPA will maintain its corporate exis-tence during the term of this Agreement, the l Operating Agreement, the Substitute Power Agreement, I the Indemnification Agreement and each Special 1 I Warranty Deed, Conveyance and Adjustment Agreement p) L or any extensions of any thereof.

                      -s2-

Section 5.02. Representations and Warranties by MSE. On and as of the Closing, MSE represents and warrants to SMEPA as follows: (i) MSE is a corporation duly organized, validly existing and in good standing under the laws of the State of Arkansas and has corporate power and authority to carry on its business as it is now being conducted and as it is contemplated to be conducted after the Closing. MSE has delivered to SMEPA a true and complete copy of its Articles of Incorporation and Bylaws as amended to the date of closing. () (ii) The execution, delivery and performance of this Agreement, the Operating Agreement, the Substitute Power Agreement, the Indemnification Agreement and each Special Warranty Deed, Conveyance and Adjustment Agreement and compliance with their respective terms (1) will not violate any provision of any law or regulation or of any order, writ, judgment or decree of any court or governmental instrumentality applicable to MSE (except that various consents, permits, licenses and approvals of governmental regulatory authorities must be l l obtained in connection with the performance of t ! (% certain provisions of this Agreement, the Operating U l Agreement, the Substitute Power Agreement, the Indemnification Agreement and each special Warranty Deed, Conveyance and Adjustment Agreement to be  ; performed after the date on which this represen-  ; tation is made); (2) will not violate any provi- , sion of the Articles of Incorporation or Bylaws of l MSE; and (3) will not violate any provision of, or ' constitute a default under, or result in the creation or imposition of any lien, charge or encumbrance on or security interest in any of the assets of MSE pursuant to the provisions of, any mortgage, indenture, contract, agreement or other undertaking to which MSE is a party or which O vervorts te de diedi 2 even aSz er enee eer ef its assets, except that MSE's undivided ownership interest in Grand Gulf will be subject to the terms and provisions of this Agreement, the Operating ' Agreement and each Special Warranty Deed, Conveyance and Adjustment Agreement. l (iii) There is no action, suit, proceeding or investigation (whether or not purportedly on i behalf of MSE) pending or threatened against or affecting MSE, or its assets, which questions the validity of, or the result of which will have a materially adverse effect on the transactions n contemplated by, this Agreement, the Operating V O Agreement, the Substitute Power Agreement, the Indemnification Agreement or each Special Warranty Deed, Conveyance and Adjustment Agreement or any action taken or to be taken pursuant to either; and, except as disclosed in a letter to be delivered to SMEPA at least seven (7) days before the Closing, and delivery of this Agreement, there is no action, suit, proceeding or investigation (whether or not purportedly on behalf of MSE) pending or threatened against or affecting MSE, or its assets, which, individually or in the aggregate with other such actions, suits, proceedings or investigations, (~) V would have a materially adverse effect on the financial condition, business or operations of MSE. (iv) The execution, delivery and performance of this Agreement, the Operating Agreement, the Substitute Power Agreement, the Indemnification Agreement and each Special Warranty Deed, Convey-ance and Adjustment Agreement, and compliance with

their respective terms, by MSE have been duly and effectively authorized by all requisite corporate, governmental and regulatory action. (v) This Agreement, the Operating Agreement, l the Substitute Power Agreement and the Indemnifica-

                       -ss-

O () tion Agreement have been and each Special Warranty Deed, Conveyance and Adjustment Agreement, when executed and delivered by MSE, will be, duly and validly executed and delivered by MSE and each constitutes (or will constitute, as the case may be,) a valid and binding obligation of MSE enforce-able against it in accordance with their respective terms, subject to any limitation of bankruptcy and insolvency laws. ARTICLE VI - GENERAL COVENANTS OF THE PARTIES Section 6.01. No Adverse Distinction. Notwith-standing any other provision of this Agreement, neither MSE nor MP&L, as its agent under this Agreement, shall make any distinction adverse to Grand Gulf between Grand Gulf and any other generating unit because of MSE's co-ownership of Grand Gulf with SMEPA, and neither MSE nor MP&L, as its agent under this Agreement, shall be under any obligation to make any distinction favorable to Grand Gulf between Grand Gulf and any other generating unit because of MSE's co-ownership of Grand Gulf with SMEPA. Section 6.02. Alienation and Assignment. During. the useful life of Grand Gulf, except with the prior written consent of the other, and except as hereinafter provided in o V Sections 6.03 and 6.04, neither MSE nor SMEPA shall have the right to sell, lease, convey, transfer, assign, encumber or alienate in any manner whatsoever its ownership interest, or any portion or portions thereof, in Grand Gulf or any rights under this Agreement without first offering, subject to all requisite regulatory approvals, including, without limita-tion, approval of the SEC and the NRC, such sale, lease or other conveyance to the other party upon the same terms and conditions as may be proposed for a sale, lease or conveyance to a third party. Any such offer shall be made in the form of a proposed contract which shall be open for acceptance by the other party for a period of 90 days. In the event such an offer is accepted, both parties shall proceed to a closing pursuant to the terms of such contract in an expeditious manner, subject to obtaining all necessary regulatory approvals. In the event such offer is not accepted by the other party within the aforesaid 90 day period and the offering party does not consummate a sale, lease or other conveyance of such interest within a period of one year after the date of its offer to the other party, no such sale, lease or other conveyance may be consummated without re-offering the sale, lease or conveyance to such other party. In no event shall the offering party sell, lease or convey such interest to any third party on any terms at variance from those set p' forth in the aforesaid proposed contract. In the event of (./ O any sale, conveyance, transfer, assignment or alienation (other than solely as security for an indebtedness) by MSE or SMEPA of its ownership interest, or any portion or portions thereof, in Grand Gulf, MSE or SMEPA, as the case may be, shall, subject to obtaining all necessary regulatory approvals, cause such transferee to become a party to this Agreement and assume pro rata the obligations and the rights of the transferor hereunder. Notwithstanding the foregoing, MSE shall be under no obligation in such event to assign, pro-portionately or otherwise, any part of its authority and responsibility under Section 3.01 to plan, design, license, acquire, construct, complete, train for operation, startup, renew, add to, replace, decommission, entomb and dispose of Grand Gulf or any authority and responsibility related thereto under this Agreement. The "first refusal" rights of SMEPA provided in this section shall not be enforceable against MSE so long as and to the extent either the MSE Mortgage or the MSE Bank Loan Agreement prohibit the creation of such a right in SMEPA. Section 6.03. Right to Mortgage. Notwithstanding the provisions of Section 6.02 MSE and SMEPA each shall have the right to create a mortgage lien or security interest in l its proportionate ownership interest in Grand Gulf, or any part thereof, to secure bonds or other obligations issued or p to be issued as part of a financing program, without the V O approval of the other party. In addition, notwithstanding the provisions of Section 6.02, both MSE and SMEPA shall each have the right to sell, subject to obtaining all neces-sary regulatory approvals, in connection with a sale and leaseback transaction, their undivided ownership interest in any construction equipment to be used during the construc-tion phase of Grand Gulf, office space and transportation, data processing or communications equipment comprising a part of Grand Gulf. Section 6.04. MSE's Right to sell in Certain Cases. Subject to obtaining all necessary regulatory ap-provals, MSE shall have the right to sell, lease, convey, transfer, assign, encumber or alienate all or any part of its interest in Grand Gulf or all or any of its rights under this Agreement (a) to any MSE Affiliate, (b) to any " entity" as defined in the Construction Permit, pursuant to the terms thereof, (c) for the purpose of complying with an order or orders of a governmental body having jurisdiction in the premises, or (d) to any governmental or political subdivision in connection with the financing of pollution control facilities, in all cases without obtaining the consent of SMEPA and without complying with the "first refusal" provisions of Section 6.02, and any sale, conveyance or transfer by MSE of an ownership interest in Grand Gulf, wherein the purchaser p assumes the obligations of MSE under this Agreement, the Q ( l

O Operating Agreement, the Substitute Power Agreement, the Indemnification Agreement and each Special Warranty Deed, Conveyance and Adjustment Agreement in proportion to the ownership interest sold, conveyed or transferred, shall operate as a release, pro tanto, of MSE from any further obligation under this Agreement, the Operating Agreement, the Substitute Power Agreement, the Indemnification Agree-ment and each Special Warranty Deed, Conveyance and Adjust-ment Agreement. Section 6.05. Right of Partition. MSE and SMEPA hereby expressly waive and renounce for the useful life of Grand Gulf, for themselves, their successors, transferees, assigns and mortgagees, all rights as tenants in common in Grand Gulf to require partition or division of Grand Gulf, except as herein expressly stated. Section 6.06. Imposition of Liens. Both MSE and SMEPA shall notify each other in writing as soon as possible after either of them learns that any lien or security interest (which lien or security interest in the case of MSE only is in respect of an obligation or liability in excess of $100,000) other than the liens of the MSE Mortgage and the SMEPA Mortgage, or any security interest created thereby, or any liens er security interests which would be permitted or excepted encumbrances under either such instrument, has been or will be imposed upon its respective ownership interest in v o

 ,b  Grand Gulf or has reason to believe that such a lien or security interest will be imposed.

Section 6.07. Taxes. MSE and SMEPA shall separately (except as required by law to file other than separately) report, file returns with respect to, be responsible for and pay all real property, franchise, business, or other taxes or fees, arising out of the acquisition by MSE and SMEPA of undivided ownership interests in Grand Gulf and their co-ownership of Grand Gulf; provided that for federal income tax purposes and for purposes of other taxes measured by income pursuant to which co-ownership is treated as the equivalent of a partnership, no election will be made to be excluded from the partnership provisions of the applicable statutes, a separate agreement shall be entered into con-cerning such taxes and partnership returns shall be filed by MSE in a form similar to Exhibit J hereto, and provided, that to the extent that taxes or fees may be levied or assessed against MSE and SMEPA in such a manner so as to make impossible the carrying out of the foregoing provisions of this Section 6.07, or upon the agreement of the parties, or at the election of MSE, MSE shall pay such taxes or fees and SMEPA shall immediately reimburse MSE for such payments as if +.d y were a Cost of Construction. MSE shall have no obl:;.oltion to contest or to seek refund of such taxes or fees provided however that MSE may, by.its personnel or V) l O V counsel of its selection, pursue administrative or court proceedings determined by MSE. SMEPA shall on request pay MSE a share of the costs of such proceedings determined in proportion to SMEPA's obligation to reimburse MSE for taxes and fees and shall share in the savings resulting from such proceedings in the same proportion. Insofar as the indemnif-ication or reimbursement of taxes measured by income is specifically set forth in the Indemnification Agreement, no indemnification shall be required under this Section 6.07 except as required under the terms of the Indemnification Agreement. In the event that ad_ valorem taxes are assessed with respect to mc,re than MSE's undivided ownership interest in Grand Culf, SMEPA shall pay such additional ad valorem taxes. (For example, if ad valorem taxes arc essessed with respect to ninety-five percent (95%) of Grand Gulf and MSE's undivided ownership interest at that time is ninety percent (90%), SMEPA shall pay 5/95ths of the a_d_ valorem taxes.) Section 6.08. Commitment for Financing. SMEPA shall obtain on or before the closing, a commitment notice sar.isfactory to MSE of a Federal Financing Bank loan with an REA guarantee or other financing source satisfactory to MSE, providing for not less than $325 million for financing SMEPA's undivided ownership interest in Grand Gulf. Section 6.09. Regulatory Approvals. MSE and SMEPA shall use their best efforts to obtain as <Inickly as v possible all requisite government, regulatory and vendor approvals of the consummation of the transactions contem-plated hereby. Section 6.10. Licensee. SMEPA, at its own expense, i will become, prior to the closing, a licensee of the NRC and any other regulatory agency having jurisdiction over Grand Gulf, where such approvals are necessary. SMEPA hereby appoints MSE as its agent to handle the application by SMEPA to become a licensee as provided herein. Section 6.11. Rights of Mortgagees. Notwith-standing anything in this Agreement to the contrary, (a) any and all rights of SMEPA under this Agreement against MSE and against any of the property of MSE shall be subject to the rights of the United States Trust Company of New York and Malcolm J. Hood, Trustees under the MSE Mortgage, their successors and assigns, and the rights of any trustee or mortgagee of MSE pursuant to any other mortgage or deed of ] trust granted by MSE on Grand Gulf pursuant to Section 6.03, i EXCEPT THE UNDIVIDED OWNERSHIP INTERESTS IN GRAND GULF TRANSFERRED OR CONVEYED TO SMEPA AT AN'i PAYMENT AND ADJUSTMENT DATE AND AT THE FINAL ADJUSTMENT DATE AND ANY OTHER INTEREST SUBSEQUENTLY TRANSFERRED TO SMEPA AND RELEASED BY THE TRUSTEES OF THE MSE MORTGAGE; provided, however, that in the event  ; MSE enters into a new or substituted mortgage or deed of trust, MSE shall take such steps as are necessary to assure v

(s-that the trustees and bondholders under such new or sub-stituted mortgage or deed of trust have no greater power to affect the rights of SMEPA under this Agreement than the trustees and bondholders under the MSE Mortgage have at present, and (b) any and all rights of MSE under this Agree-ment against SMEPA and against any of the property of SMEPA I shall be subject to the rights of the REA and the CFC under the SMEPA Mortgage, their successors and assigns, and the rights of any trustee or mortgagee of SMEPA pursuant to any other mortgage or deed of trust granted by SMEPA on Grand Gulf pursuant to Section 6.03, provided, however, that in the event SMEPA enters into a new or substituted mortgage or ( () deed of trust, SMEPA shall take such steps as are necessary " to assure that the trustees and bondholders under such new > or substituted mortgage or deed of trust have no greater power to affect the rights of MSE under this Agreement than r the trustees and bondholders under the SMEPA Mortgage have at present. Section 6.12. Right of Eminent Domain. During the term of this Agreement and the operating Agreement, and any extension of either, SMEPA and MSE, to the extent not prohibited by law, hereby waive any power of eminent domain that either may have as to any of the property or assets of the other situated at Grand Gulf. m I l i

f\ V Section 6.13. Sale of Land under Certain Circumstances. If MSE in its sole discretion and for any reason, decides to sell an ownership interest in any of its real property described in Exhibit B, and such sale does not unreasonably burden or interfere with Grand Gulf, SMEPA agrees to use its best efforts to obtain the necessary releases for the purpose of such sale under any mortgage indenture to which it is a party and subject to obtaining the prior approval of REA and at no additional cost to MSE other than the consideration hereof, to release to MSE, for the purpose of such sale, any easements, servitudes, licenses, or other rights it may have in such real property. O ARTICLE VII - CONDITIONS PRECEDENT Section 7.01. Conditions to Effectiveness of Agreement. Contemporaneously with the Closing, and as a condition to the effectiveness of this Agreement, the Operating Agreement, the Substitute Power Agreement and the Indemnifica-tion Agreement: (i) SMEPA is causing to be delivered to MSE an opinion from John K. Keyes, Esq., of Collins, Mississippi, counsel for SMEPA (or other satis-factory counsel), addressed to MSE and dated the closing date, to the effect provided in subsections

(i) (other than the last sentence thereof) through (v) of Section 5.01; except that, as to matters referred to in Section 5.01(ii)(3), the opinion need relate only to those mortgages, indentures, contracts, agreements or undertakings known to such counsel; as to actions, suits, investigations or proceedings threatened against or affecting SMEPA referred to in Section 5.01(iii), the opinion need only be to the best knowledge of such counsel, having made due inquiry with respect thereto; and as to the Agreements constituting valid and binding obligations of SMEPA enforceable against it according to their terms, referred to in Section 5.01(v), the opinion may be made subject to applicable equitable principles, which may affect certain remedies provided therein, which equitable principles, however, in the opinion of such counsel, do not make the remedies provided therein inadequate for the realization of the benefits provided therein; in providing all such opinions, John K. Keyes, Esq., may rely, to the extent he deems proper, on opinions of counsel rendered to him as to certain matters of Federal law or laws of the Commonwealth of Kentucky; O

(ii) SMEPA is causing to be delivered to MSE certified copies of proceedings of SMEPA and related bodies, if any, relevant orders of govern-mental authorities and such other documentation as counsel for MSE shall reasonably require; (iii) MSE is causing to be delivered to SMEPA certified copies of resolutions of its Board of Directors relating to the authorizations of MSE to execute and deliver this Agreement and any agreement attached as an exhibit hereto, to which MSE is a party; and (iv) MSE shall have received an opinion from () Messrs. Wise Carter Child & Caraway, of Jackson, Mississippi, (or other satisfactory counsel), for delivery to the Trustees under the MSE Mortgage, to the effect set forth in Section 4.07(b) of the i First Supplemental Indenture, dated as of June 15,  :,

,    1977, to the MSE Mortgage and in any comparable section of any subsequent Supplemental Indenture.

(v) there shall have been issued orders, consents or permits satisfactory in form and substance to MSE and SMEPA authorizing (if and only to the extent each such body may have juris-diction) the execution, delivery and performance O i

Q, V of this Agreement, r.he Operating Agreement, the Indemnification Agreement, each Special Warranty Deed, Conveyance and Adjustment Agreement, and the Substitute Power Agreement, by the Federal Energy Regulatory Commission, the Mississippi Public Ser-Vice Commission, NRC and SEC; and (vi) MSE is causing to be delivered to SMEPA an opinion from Messrs. Wise Carter Child & Caraway, of Jackson, Mississippi, counsel for MSE (or other satisfactory counsel), addressed to SMEPA and dated the closing date, to the effect provided in subsections (i) (other than the last sentence thereof) through (v) of Section 5.02; except that, as to matters referred to in Section 5.02(ii)(3), the opinion need relate only to those mortgages, indentures, contracts, agreements or undertakings known to such counsel; as to actions, suits, - investigations or proceedings threatened against or affecting MSE referred to in Section 5.02(iii), the opinion need only be to the best knowledge of such counsel, having made due inquiry with respect thereto; and as to the Agreements constituting valid and binding obligations of MSE enforceable , against it according to their terms, referred to O ( b} in Section 5.02(v), the opinion may be made sub-ject to applicable equitable principles, which may affect certain remedies provided therein, which equitable principles, however, in the opinion of such counsel, do not make the remedies provided therein inadequate for the realization of the benefits provided therein; in providing all such opinions, Messrs. Wise Carter Child & Caraway may rely, to the extent they deem proper, on opinions of counsel rendered either to such counsel or to MSE as to certain matters of Federal law or laws of the states of Arkansas and Louisiana. Section 7.02. Conditions Precedent to MSE's Obligations at the Closing. All obligations of MSE under this Agreement, the operating Agreement, the Indemnification Agreement and the Substitute Power Agreement are subject to the fulfillment, prior to or at the closing, of each of the following conditions (or the waiver in writing of any such condition by MSE): (i) MSE shall not have discovered any material error, misstatement or omission in the representa-tions and warranties made by SMEPA in this Agree-ment. (ii) SMEPA's representations and warranties p contained in this Agreement shall be true in all V l

material respects at the time of the Closing; SMEPA shall have performed and complied with all agreements, covenants and conditions required by this Agreement to be performed or complied with by it prior to or at the closing; and MSE shall have been furnished with a certificate of the General Manager of SMEPA, dated the date of the Closing, certifying in such detail as MSE may reasonably request to the fulfillment to the foregoing conditions. (iii) The condition specified in Section 6.08 shall have been fulfilled and satisfactory evidence thereof provided to MSE. (iv) The Closing shall occur on or before June 1, 1980, at the offices of Mississippi Power

             & Light Company, Jackson, Mississippi, or at such other place as may be agreed upon by the parties; if the closing has not occurred by October 1, 1980, unless such date is extended with the consent of MSE, then this Agreement, the Operating Agreement, the Indemnification Agreement and the Substitute Power Agreement shall be deemed void and of no effect.

Section 7.03. Conditions Precedent to SMEPA's obligations at closing. All obligations of SMEPA under this b l  ! i

O Agreement, the Substitute Power Agreement, the Indemnifica-tion Agreement and the Operating Agreement are subject to the fulfillment, prior to or at the closing, of each of the following conditions (or the waiver in writing of any such condition by SMEPA): , (i) SMEPA shall not have discovered any material error, misstatement or omission in the representations and warranties made by MSE in this Agreement. (ii) MSE's representations and warranties contained in this Agreement shall be true in all material respects at the time of the Closing; MSE shall have performed and complied with all agree-ments, covenants and conditions required by this Agreement to be performed or complied with by it prior to or at the Closing; and SMEPA shall have ' been furnished with a certificate of the President or a Vice President of MSE, dated the date of the Closing, certifying in such detail as SMEPA may reasonably request to the fulfillment of the foregoing conditions. (iii) SMEPA shall have obtained a commitment, satisfactory to REA, for title insurance relating to SMEPA's undivided ownership interest in Grand - A Gulf which it proposes to acquire. U _= - _ ._

f s (iv) SMEPA and REA shall have received a certificate of the President or a Vice President of MSE certifying that in the performance of this Agreement (1) at least 10% of the total cost of the unmanufactured articles, materials and supplies used or to be used in the construction of or otherwise made a part of Grand Gulf shall have been mined or produced in the United States, and (2) at least 10% of the total cost of the manu-factured articles, materials and supplies used or to be used in the construction of or otherwise made a part of Grand Gulf shall have been manu-() factured in the United States substantially all from articles, materials or supplies mined, produced or manufactured, as the case may be, in the United States. If any article, material or supplies are partially mined, produced or manufactured in the United States (said part being hereinafter called the "Americal Made Portion") and partially mined, produced or uanufactured somewhere other than in the United States, then only the cost of the American Made Portion shall be used in determining whether the requirements of the preceding sentence have been satisfied. Upon completing the construction of Grand Gulf, MSE shall certify to SMCPA and REA

  >O.

O C/ that Grand Gulf was constructed in accordance with the requirements of the first sentence of this paragraph.

                                                                   ;

ARTICLE VIII - DEFAULT; REMEDIES Section 8.01. Obligation of Parties; Default. MSE and SMEPA hereby agree that they shall pay all monies and carry out all other duties and obligations agreed to be paid or performed by them pursuant to all of the terms and conditions of this Agreement. In addition to any other rights or remedies, legal or equitable, available to a party which is not in default, in the event SMEPA at any time fails to pay any amounts owing under this Agreement or the operating Agreement for more than twelve months or to per-form any other obligation imposed by this Agreement or the Operating Agreement, the non-performance of which has or is expected to materially hinder, obstruct or delay the construc-tion or maintenance of Grand Gulf, for more than twelve months from the date of a written demand for payment or performance, as the case may be, addressed to SMEPA, MSE may, in addition to any other rights or remedies MSE may have against SMEPA, by written notice to SMEPA, declare SMEPA to be in default of this Agreement and the Operating-Agreement and terminate all rights of SMEPA under this fm b Agreement and the Operating Agreement on the date specified in such notice, which date shall be not less than thirty days after the giving of such notice. If the failure of SMEPA to pay occurs before Commercial Operation of either Unit No.1 or Unit No. 2 of Grand Gulf, MSE shall be relieved of the obligation under Section 3.01 with respect to construc-tion, completion and placing in Commercial Operation of either such Unit for such period as may be reasonably related to the period in which such failure has not been remedied by SMEPA. Section 8.02. Special Remedies. Upon the ef-fectiveness of such termination, (a) SMEPA shall cease to have any rights in m the capacity and Energy of Grand Gulf or any other rights under the Operating Agreement or this Agreement except as set forth in this Article VIII; (b) MSE shall succeed to all of SMEPA's rights under this Agreement and the Operating  ; Agreement and all other contracts, agreements and other instruments relating to Grand Gulf, in-cluding, without limitation, the Substitute Power Agreement; (c) SMEPA shall be obligated to pay to MSE all amounts then owed by SMEPA under the terms of this Agreement and the Operating Agreement to-gether with interest thereon, computed as provided f-s in Section 8.03 and (i) the amount of any legal or b/ o b other expenses incurred, and (ii) the actual damages suffered, by MSE in connection with such default or the termination of SMEPA's rights under this Agreement and the Operating Agreement; (d) subject to obtaining all necessary regulatory approvals and necessary approvals of REA and CFC, SMEPA shall convey, transfer and assign to MSE, free and clear of all liens and encumbrances other than those which existed at the time of conveyance to SMEPA, all of its right, title and interest in Grand Gulf, and all contracts, agreements or other instruments relating thereto. SMEPA shall use its best efforts to obtain the necessary regulatory approvals from any regulatory agency having juris-diction over it and to obtain the necessary releases under any mortgage indenture, bond resolution or other security instrument to which it is a party, including without limitation the SMEPA Mortgage. Upon the completion of such conveyance, transfer and assignment, MSE shall pay to SMEPA an amount equal to the lesser of (i) SMEPA's net investment in Grand Gulf plus its AFUDC on the effective date of such termination or (ii) the then fair market value of :iMEPA's ownership interest in Grand Gulf, g less (iii) all amounts owed to MSE pursuant to the U

                   -7s-

i V terms o'f Subsection (c) above. If the amount required to be deducted under clause (iii) of the preceding sentence is greater than the lesser of the amounts described in clauses (i) and (ii) of the preceding sentence, SMEPA shall remain liable for the deficiency. Section 8.03. Interest on_ Overdue Payments. In addition to any other rights or remedies, legal or equitable, available to the parties, in the event either party fails to make any payment to the other party when due pursuant to this Agreement or otherwise, whether or not due to Force Majeure, there shall be added to such overdue amount in-terest from the date such payment was due at an annual rate equal to either the then current average yield on outstanding obligations of the United States of America having a term of ninety (90) days or less, plus five percent (5%), or the owed party's incremental cost of short-term unsecured borrowed funds plus five percent (5%), whichever is the greater. Except in the event that Section 8.02 is applicable, each party shall also indemnify and hold the other harmless from and against any and all losses, costs, damages and expenses arising out of or resulting from the other party's failure to make such payments when due. Section 8.04 Usury. Notwithstanding any other provision herein to the contrary, it is the intention of MSE

   .)
   /  and SMEPA that any amount paid as interest, whether it be characterized as interest, finance charge or otherwise, shall not be usurious; to that end, should any calculation of interest provided for hereunder result in an amount of interest or finance charge which would be usurious, or which is subsequently held to be usurious, the amount of interest to be charged hereunder shall be reduced so that the amount actually charged will not be usurious, or if interest has already been paid, the amount by which such interest or finance charge is held to be usurious shall be refunded.

ARTICLE IX - GENERAL CONDITIONS O V Section 9.01. MSE's Right to Make Payments on Behalf of SMEPA. In addition to all of the rights of MSE pursuant to Article VIII, MSE shall have the right, but not the obligation, to make any payment of interest or principal due and owing by SMEPA to the Federal Financing Bank, the REA, CFC or any other creditor of SMEPA in respect of a financing of SMEPA's obligations hereunder, which SMEPA fails to make when due and to be promptly reimbursed in full . therefor by SMEPA, together with interest at the rate provided L in Section 8.03 hereof. Section 9.02. Survival. The agreements, covenants, l 7s representations and warranties contained in this Agreement shall survive the closing. 1 l

O- Section 9.03. Further Assurances. From time to time after the closing MSE and SMEPA will execute such instruments of conveyance and other documents, upon the request of the other, as may be necessary or appropriate to carry out the intent of this Agreement. Section 9.04. Governing Law. The validity, interpretation and performance of this Agreement and each of its provisions shall be governed by the laws of the State of Mississippi. Section 9.05. Notice. Any notice, request, consent or other communication permitted or required by this Agreement (including, without limitation, any offer or () acceptance pursuant to section 6.02 hereof) shall be in writing and shall be deemed given when deposited in the United States mail, certified Mail prepaid, and if given to MSE shall be addressed to: Middle South Energy, Inc. , c/o Mississippi Power & Light Company Post Office Box 1640 Jackson, Mississippi 39205 Attention: President with a copy addressed to: Middle South Energy, Inc. Post Office Box 61000 New Orleans, Louisiana 70161 Attention: President

and if given to SMEPA shall be addressed to: South Mississippi Electric Power Association Post Office Box 1589 Hattiesburg, Mississippi 39401 Attention: General Manager unless a different officer or address shall have been desig-nated by the respective party by notice in writing. Section 9.06. Headings Not to Affect Meaning. The descriptive headings of the various Sections and Articles of this Agreement have been inserted for convenience of reference only and shall in no way modify or restrict any of the terms and provisions hereof. Section 9.07. No Partnership. Notwithstanding any provision of this Agreement, MSE and SMEPA do not intend to create hereby any joint venture, partnership, association taxable as a corporation, or other entity for the conduct of any business for profit. All obligations of the parties arising under this Agreement are several and not joint. MSE and SMEPA agree that they do not intend to create a partner-ship under the Mississippi Uniform Partnership Act or any other statute of the State of Mississippi. Section 9.08. Time of Essence. Time is of the essence with respect to this Agreement. Section 9.09. Amendments. This Agreement may be amended by and only by a written instrument duly executed by each of the parties hereto. Section 9.10. Successors and Assigns. This Agreement shall inure to the benefit of and be binding upon MSE and SMEPA and their respective successors and assigns, and, insofar as is permitted by law, on any receiver or trustee in bankruptcy, reorganization or receivership by either party. Nothing in this Agreement, expressed or implied, is intended to confer upon any other person any rights or remedies hereunder, except as specifically provided herein in Section 3.02. Section 9.11. Counterparts. This Agreement may be executed simultaneously in two or more counterparts,.each of which shall be deemed an original, but all of which () together shall constitute one and the same instrument. Section 9.12. License Conditions. The Construc-tion Permit contains antitrust conditions which may be a , part of subsequent licenses issued by the NRC for Grand This Agreement is entered into by the parties in Gulf. implementation of and is to be construed within the para-meters of such conditions, and nothing contained herein shall be in violation thereof. Section 9.13. "AS IS" TRANSACTION; ASSUMPTION OF RISK. TRANSACTION CONCERNS GRAND GULF "AS IS" AND "WHERE IS." MSE MAKES NO REPRESENTATION OR WARRANTY WHATSOEVER IN THIS AGREEMENT, EXPRESSED, IMPLIED OR STATUTORY, AS TO THE q VALUE, QUANTITY, CONDITION, SALABILITY, OBSOLESCENCE, MERCHANT-V

ABILITY, FITNESS OR SUITABILITY FOR USE OR WORKING ORDER OF ANY OF GRAND GULF, NOR DOES MSE REPRESENT OR WARRANT THAT THE USE OR OPERATION OF GRAND GULF WILL NOT VIOLATE PATENT, TRADEMARK OR SERVICEMARK RIGHTS OF ANY THIRD PARTIES. SMEPA IS WILLING TO BECOME OWNER OF AN UNDIVIDED INTEREST IN GRAND GULF "AS IS" AND "WHERE IS" AND IN ACCORDANCE WITH THE TERMS AND CONDITIONS OF THIS AGREEMENT. SMEPA HAS INSPECTED GRAND GULF TO THE EXTENT IT DEEMS NECESSARY UNDER THE CIRCUMSTANCES TO ENABLE IT TO ENTER INTO THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT AND IT EXPRESSLY ASSUMES ALL RISKS REFERRED TO IN THIS SECTION. Notwithstanding the foregoing, SMEPA shall have the benefit, in proportion to its interest in (T Grand Gulf, in all manu facturers' and vendors' warranties \s' and all patents, trademark and servicemark rights running to MSE in connection with Grand Gulf. Section 9.14. Good Utility Practice. MSE and SMEPA shall discharge any and all obligations under this Agreement in a prudent manner and in accordance with Good-Utility Practice. Section 9:15 Force Majeure. MSE shall not be in default in performance of any obligation or duty hereunder (other than any obligation to credit SMEPA with its allocable share of recoveries or overpayments of Cost of Construction owing at any time) if such failure of performance is due to Force Majeure. SMEPA shall not be in default in performance nv of any obligation or duty hereunder (other than any obligation to pay monies to or at the direction of MSE as provided in this Agreement) if such failure of performance is due to Force Majeure. Section 9.16. REA Approval. This Agreement shall not be in force and effect until approved by the Administrator of the REA. Section 9.17. Entire Agreement. This Agreement shall constitute the entire understanding between SFIFA and MSE, superseding any and all previous understandings between the parties pertaining to the subject matter contained herein. Section 9.18. Construction Agent. MP&L is acting as agent for MSE under the Service Agreement in connection with the planning, design, licensing, acquisition, construc-tion, completion, training for operation, startup, renewal, addition, replacement, decommissioning, entombment and disposal of Grand Gulf, and MP&L may act in such regard for both MSE and SMEPA after the Closing; MSE covenants that any substituted construction agent appointed by MSE in place of MP&L will be at least as competent'and knowledgeable in these regards as MP&L. Section 9.19. Portions of this Agreement Subject t_o Closing. SMEPA shall have no rights or obligations under the provisions contained in Sections 3.10 through 3.12, b a Article IV, Sections 6.01 through 6.07, and Article X until the closing has been consummated pursuant to the terms of this Agreement. Section 9.20. Covenants Running With The Land. All covenants contained herein shall be deemed covenants running with the land. Section 9.21. Environment. MSE shall construct Grand Gulf consistent with any Environmental Impact Statement issued by the NRC with respect to Grand Gulf, pursuant to the National Environmental Policy Act, and subject to such changes as have been approved by the NRC, provided REA is given notice prior to such changes. Section 9.22. Kick-backs. In the acquisition, l construction and completion of Grand Gulf pursuant to this Agreement, MSE shall comply with all applicable statutes, rules and regulations pertaining to the so-called " Kick-Back" Statute (48 Stat 948, 18 U.S.C. Sect. 874 and 40 U.S.C. Sect. 276C). MSE acknowledges that it is familiar with the Rural Electrification Act of 1936, as amended, the so-called

      " Kick-Back" Statute (48 Stat. 948), and regulations issued pursuant thereto, and 18 U.S.C. 287, 1001, as amended.

Section 9.23. Equal Opportunity Clause. The following equal opportunity clause is included in this Agreement pursuant to Executive Order No. 11246 and Depart-l ment of Labor OFCCP Regulations, is effective only to the l l 0\ v l I l

(D V' extenc required by such Executive Order and Department of Labor OFCCP Regulations, and is not intended to create any independent obligations between MSE and SMEPA. MSE will comply only with those provisions of Executive Order 11246 and the rules, regulations and relevant orders of the Secretary of Labor referred to in Section 9.23 (iv) as are applicable to it. Nothing in this Section shall be construed to prevent MSE from resisting, challenging, contesting or appealing any law, statute, regulation or decision of any federal, state or local government or agency which MSE claims to be invalid, unlawful, arbitrary, capricious or inapplicable. MSE agrees as follows: (i) MSE will not discriminate against any employee or applicant for employment because of race, color, religion, sex, or national origin. MSE will take affirmative action to ensure that applicants are employed, and that employees are treated during employment without regard to their race, color, religion, sex, or national origin. Such action shall include, but not be limited to, the following: Employment, upgrading, demotion or transfer; recruitment or recruitment advertising; layoff or termination; rates of pay or other forms of compensation; and selection for training, including apprenticeship. MSE agrees to post in m conspicuous places, available to employees and applicants for employment, notices setting forth , the provisions of this Nondiscrimination Clause. (ii) MSE will, in all solicitations or adver-tisements for employees placed by or on behalf of MSE, state that all qualified applicants will receive consideration for employment without regard to race, color, religion, sex or national origin. ' (iii) MSE will send to each labor union or , representative of workers with which it has a collective bargaining agreement or other contract or understanding, a notice to be provided advising the said labor union or workers' representatives of MSE's commitments under this Section, and shall post copies of the notice in conspicuous places available to employees and applicants for employment. (iv) MSE will comply with all provisions of i Executive Order 11246 of September 24, 1965, and of the rules, regulations and relevant orders of the Secretary of Labor. (v) MSE will furnish all information and reports required by Executive Order 11246 of ' September 24, 1965, and by rules, regulations and relevant orders of the Secretary of Labor, or

m

    )
 /    pursuant thereto, and will permit access to its books, records and accounts by the administering agency and the Secretary of Labor for purposes of investigation to ascertain compliance with such rules, regulations and orders.

(vi) In the event of MSE's noncompliance with the nondiscrimination clauses of this Agreement or with any of the said rules, regulations or orders, this Agreement may be cancelled, terminated or suspended in whole or in part and MSE may be declared ineligible for further Government contracts or federally assisted construction contracts in accordance with procedures authorized in Executive Order 11246 of September 24, 1965, and such other sanctions may be imposed and remedies invoked as provided in said Executive Order or by rule, regulation or order of the Secretary of Labor, or as otherwise provided by law. (vii) MSE will include the words, "During the performance of this contract, the contractor agrees as follows:" followed by the provisions of paragraphs (i) through (vii) in every subcontract or purchase order (with the word "MSE" changed to the word " Contractor") unless exempted by the s rules, regulations or orders of the Secretary of Labor issued pursuant to Section 204 of Executive Order 11246 of September 24, 1965, so that such provisions will be binding upon such action with respect to any subcontract or purchase order as the administering agency may direct as a means of enforcing such provisions, including sanctions for noncompliance; provided, however, that in the event MSE becomes involved in, or is threatened with, litigation with a subcontractor or vendor as a result of such direction by the administering agency, MSE may request the United States to enter into such litigation to protect the interests of the United States. Section 9.24. Nonsegregated Facilities. MSE certifies that it does not maintain or provide for its employees any segregated facilities at any of its establish-ments, and that it does not permit its employees to perform their services at any location, under its control, where segregated facilities are maintained. MSE certifies further that it will not maintain or provide for its employees any segregated facilities at any of its establishments, and that it will not permit its employees to perform their services at any location, under its control, where segregated facilities. are maintained. MSE agrees that a breach of this certification l g is a violation of the Equal Opportunity Clause in this l V l l l 1 l

O V Agreement. As used in this certification, the term " segregated facilities" means any waiting rooms, work areas, restrooms and washrooms, restaurants and other eating areas, timeclocks, locker rooms and other storage or dressing areas, parking , lots, drinking fountains, recreation or entertainment areas, , transportation, and housing facilities provided for employees which are segregated by explicit directive or are in fact segregated on the basis of race, color, religion, or national origin, because of habit, local custom, or otherwise. MSE agrees that (except where it has obtained identical certifica-tions from proposed subcontractors for specific time periods) it will obtain identical certifications from proposed sub-contractors prior to the award of subcontracts exceeding  ;

   $10,000 which are not exempt from the provisions of the             j Equal Opportunity Clause, and that it will retain such              '

certification in its files. l ARTICLE X - ADMINISTRATION Section 10.01. Administrative Committee. It is recognized that from time to time various administrative and technical matters may arise in connection with the terms and conditions of this Agreement which will require the coopera-tion of the parties and the exchange of information. As a means of providing for such exchanges, an Administrative 1 O O Committee is hereby established; however, it is understood that such Committee shall not dioinish in any manner the responsibility and authority of MSE as set forth in this Agreement. Section 10.02. Membership. Each party shall be represented on the Administrative Committee by one (1) member. Within sixty (60) days after execution of this Agreement, each party shall designate its representative with written notice thereof to the other party. Thereafter, each party shall notify the other promptly of any change in the designation of its representative on the Committee. The Chairman of the Administrative Committee shall be the MSE representative, who shall be responsible for calling meetings and establishing r.genda. Section 10.03. Meetings. The Administrative Com-mittee shall maet annually on a date and at a location to be announced by he Chairman one month in advance. Such other meetings as are reasonably required may be called by either member with as much advance notice as is practical. At-tendance at meetings shall not be limited to members. Section 10.04. Functions. The Administrative Committee shall have the following functions, among others: (a) Provide liaison among the parties at the management level and exchange information with respect to significant matters of licensing, design and construction of Grand Gulf. O \' ' (b) Appoint sub-committees, the members of which need not be members of the Administrative Committee, as necessary to perform detailed work and conduct studies regarding matters requiring investigation. (c) Review and discuss disputes arising under this Agreement. (d) Provide liaison among the parties with respect to the financial and accounting aspects of progress, performance and completion of construc-tion of Grand Gulf. (e) Perform such other functions and duties () as may be assigned to it. Section 10.05. Records. The Administrative Com-mittee shall keep written records of all meetings. Section 10.06. Expenses. Each party sh&ll be responsible for the personal expenses of its representative or other attendees. All other expenses incurred in con-nection with the performance by the Administrative Committee of its duties shall be allocated and paid as determined by the Committee. (% N ,) i

     'T
  ~

ARTICLE XI - TERM AND TERMINATION Section 11.01. Termination. This Agreement shall terminate (1) at the expiration of the initial term of the operating licenses for Grand Gulf Unit Nos. 1 and 2 or any renewal or extension of either such license or (2) at such time as both Grand Gulf Unit Nos. 1 and 2 are retired from service, decommissioned and all requirements of Federal, state or local law relating to the safe deactivation of such' Units have been met, whichever is later. Section 11.02. Retirement Costs. All capital costs associated with retirement of Grand Gulf Unit Nos.1  ; () and 2, including, without limitation, decommissioning, security, maintenance, monitoring, razing of structures and disposing or storing of debris and spent Nuclear Fuel, and the cost of fulfilling all governmental requirements for safe deactivation of Grand Gulf Unit Nos. 1 and 2 shall, to the extent they are not covered under the terms of the Operating Agreement, be deemed a Cost of Construction and be borne by the parties in proportion to their respective [ undivided ownership interests. Payments for these costs shall be made in accordance with the provisions of Article III. l O ' l I l

6 d ARTICLE XII- ADDITIONAL GENERATING UNIT OR UNITS MSE or others in conjunction with MSE shall have the right to construct, install, modify and operate on the land, described in Exhibit A and in Exhibit B, one or more additional electric generating units, whether or not nuclear-fueled, and necessary appirtenances thereto, or other faci-lities relating to the elactric utility business, provided such additional electric generating unit or units or other facilities shall not be no constructed, installed, modified or operated as unreasonaoly to burden or interfere with Grand Gulf. In the event MSE exercises its right to construct. O C install, modify and operate such additional electric generating unit or units or other facilities, then the following shall apply: (a) The land described in Exhibit A and in Exhibit B, the improvements thereon (such as service roads, rail spurs and buildings), and other facilities installed as part of Grand Gulf may, subject to obtaining all necessary regulatory

   ,  approvals, be used in connection with the construction, modification and operation of the additional electric generating unit or units or other facilities (such property and facilities so used being hereinafter called " Common Facilities"), and the Common Facilities may be adapted to permit such use,
 ,    provided that (i) such use and adaptation do not unreasonably d burden or interfere with Grand Gulf, (ii) the cost of any such adaptation is borne by the ownr or owners of the additional electric generating unit or units or other faci-lities, and, (iii) in exchange for st.ch use, each of the parties hereto shall be compensated fo: an appropriate portion of its share of the original cost of the Common Facilities by the owner or owners of the additional electric generating unit or units or other facilities.

(b) To provide for the construction, modification and operation of the additional electric generating unit or units or other facilities on the land described in Exhibit A and in Exhibit B, the owner or owners of the additional electric generating unit or units or other facilities, at its or their expense, may, subject to obtaining all necessary regulatory approvals, relocate previously installed Grand Gulf facilities, provided that such relocation does not unreasonably burden or interfere with Grand Gulf. SMEPA shall grant to MSE all easements, licenses, pern.its and other rights and interests required by MSE to enalle it to construct, install, operate and maintain such additional electric generating unit or units or other facilities. (c) If SMEPA becomes a co-owner with MSE of any additional electric generating unit or units or other facil-ities located on the land described in Exhibit A or in p Exhibit B, MSE agrees, subject to obtaining all necessary O i

O- regulatory approvals, to convey to SMEPA at no additional cost to SMEPA other than the consideration hereof, an un-divided ownership interest, equal to SMEPA's undivided ownership interest expressed as a percentage in such addi-tional generating unit or units or other facilities, as the case may be, as tenant in common with MSE and any other participant in such unit or units or facilities, in such real property as MSE deems necessary for the construction, installation, maintenance, or operation of such unit or units or facilities. (d) The parties hereto shall execute and deliver such amendments to this Agreement and the Operating Agree-ment as may be appropriate to provide for the additional electric generating unit or units or other facilities at Grand Gulf. (e) SMEPA shall not have by virtue of this Agree-ment any right to participate in any additional electric generating unit or units or other facilities installed on the land included in Grand Gulf. SMEPA shall use its best efforts to obtain any necessary regulatory approvals from any regulatory agency having jurisdiction over SMEPA, and to obtain any such necessary releases under any mortgage in-denture to which SMEPA is a party, for the purpose of any such relocation, modification or joint use. This provision shall not abrogate, abridge, or impair any rights SMEPA (G3 should now or in the future have to acquire an interest in any future nuclear unit or units under the laws of the United States of America, or pursuant to an order or regula-tion promulgated by any agency or department of the United States of America having jurisdiction over the licensing, operation or sale of future nuclear units. IN WITNESS WHEREOF, the undersigned parties hereto have duly executed this agreement in Jackson, Mississippi, on the date first above written. MIDDLE SOUTH ENERGY, INC. SEAL BY: _ ITS

   /

ATTEST: SOUTH MISSISSIPPI ELECTRIC POWER ASSOCIATION SEAL BY: 4 ITS ATTEST: 1 G n U STATE OF MISSISSIPPI COUNTY OF HINDS Personally appeared before me, a Notary Public in and for the jurisdiction aforesaid, the within named who acknowledged that he is the of Middle South Energy, Inc., a cor? ora-tion, and the within named , who acknowledged that he is the Secretary of said corporation and that in their respective capacities herein set forth they signed and delivered the foregoing instrument on the corporation's behalf on the day and year therein mentioned, being duly authorized so to do. GIVEN UNDER MY HAND AND OFFICIAL SEAL this the day of , 1980. NOTARY PUBLIC y My Commission Expires: STATE OF MISSISSIPPI COUNTY OF Personally appeared before me, a Notary Public in and for the jurisdiction aforesaid, the within named

                 , who acknowledged that he is the President of South Mississippi Electric Power Association, a corporation, and the within named                            , who acknowl-edged that he is the Secretary of said corporation and that in their respective capacities herein set forth they signed and delivered the foregoing instrument on the corporation's behalf on the day and year therein mentioned, being duly authorized so to do.

( l 1 GIVEN UNDER MY HAND AND OFFICIAL SEAL this the day of , 1980. NOTARY PUBLIC My Commission Expires: l l i p 1 l

                                                                              ~ - ~ "

 ...J.--dms   aJ. m  aes.-      m M s 44ap--6.4        hwA's-#Ma6.*-                  W  4m*     M,45-hh 4 8 8 a                         N-     a66MS Em                  8-um*O             --        - m-m6*J.-A- *he M+*5 45-6A-Bae---Eh-6MANJ**- m*g.ser._ - .. .. me.e ay- .,,,m e

0 exa att ^

DESCRIPTION OF LAND IN WHICH

! SMEPA OBTAINS A 10% l UNDIVIDED OWNERSHIP INTEREST i 4 1 I l 1 l 1 l i i I i 4 ~k i A i i I l. l I i S , I i 1

i. . _ _ . . _ _ _ _ . . . . _ _ _ _ _ _ . . . . _ _ _ _ _ _ _ _ _ _ _ . _ _ _ . _ _ _ _ _ _ _ - . _ . . - - _ _ .

l

                                                                                                                                                          . ._ . _ . __ _ _ .. _ . . .l t                                                                                                                                                                                                   ,

I i

i i EXHIBIT B i i

r DESCRIPTION OF LAND IN WHICH SMEPA  !

OBTAINS CERTAIN EASEMENT RIGHTS

1 2 t I ! i i k ,! t t } I i i i f i , ? t I t i 1 , i i i a  ? l h l

                                                                                                                                                                                                   )

! i i t 4 t 1 i  ! \ 1 l I i i ! l I i ! I I i _ . . _ . , - . . _ _ - . . . . _ . _ . _ . - . - . . . _ , _ . _ _ , _ . . _ . _ , _ _ . _ _ _ _ _ - ._.._,...-.-.__,..__.,,m....,. . . _ _ _ _ , , , , - _ - ~ . . .

EXHIBIT "E" l (To Be Delivered at " Closing") Easement Agreement Dated as of , 1980 Between Middle South Energy, Inc. and South Mississippi Electric Power Association Pursuant to the provisions of Section 2.01 of the Joint Construction, Acquisition and Ownership Agreement (Construction Agreement) between Middle South Energy, Inc. (MSE) and South Mississippi Electric Power Association (SMEPA), dated es of , 1980, and recorded on

              , 1980, in Book      , at page     , in the office of the Chancery Clerk of Claiborne County, Mississippi, which is incorporated herein by reference and made a part hereof, MSE, in consideration of SMEPA's agreements made in the Construction Agreement and other good and valuable consideration, receipt of which is hereby acknowledged, hereby assigns, conveys and warrants specially to SMEPA a non-exclusive easement (" Easement") for entombment of Grand Gulf and for locating, occupying, situating, connecting, owning, selling, leasing, operating, maintaining, replacing, O

renewing, repairing, storing, removing and building all equipment and property comprising Grand Gulf including , roads, railroads, telephones, electric transmission lines and systems, electric substations, water wells, pipelines, sewer and water lines, systems for nuclear and other waste disposal as permitted by law and all appurtenances thereto, and for all related purposes, subject, however, to all applicable provisions of the Construction Agreement, its undivided ownership interest, as now owned or hereafter acquired, in and to Grand Gulf (as such term is defined in the Construction Agreement), in, on, over, under, across and through the following described property which is owned by MSE: (Insert Exhibit B Description) This Easement is for the benefit of and appur-tenant to Grand Gulf including the real property described as follows: (Insert Exhibit A Description) O

i I I O MAR rapresents that the Easement is free from the lien of the MSE Mortgage, as such term is defined in the Construction Agreement. During the term of the Construction Agreement, SMEPA agrees that it will not, without the prior written consent of MSE, assign, grant or convey any part of its interest in this Easement to any other person except to any mortgagee under the SMEPA Mortgage, as such term is defined in the Construction Agreement. This Easement shall terminate upon the date when SMEPA shall have no interest, contingent or otherwise, in Grand Gulf. () This Easement Agreement is hereby made expressly subject to all applicable terms, conditions, exceptions, reservations, and covenants set forth in the Construction Agreement. IN WITNESS WHEREOF, MSE has duly executed this , Easement in Jackson, Mississippi on the date first above written. MIDDLE SOUTH ENERGY, INC. SEAL BY: VICE PRESIDENT ATTEST SECRETARY O STATE OF MISSISSIPPI COUNTY OF HINDS Personally appeared before me, a Notary Public in and for the jurisdiction aforesaid, the within named

                            , who acknowledged that he is a Vice President of Middle South Energy, Inc., a corporation, and the within named                           , who acknowledged that he is the Secretary of said corporation and that in their respective capacities herein set forth they signed and delivered the foregoing instrument on the corporation's behalf on the day and year therein mentioned, being duly authorized so to do.

GIVEN UNDER MY HAND AND OFFICIAL SEAL, this the day of , 1980. NOTARY PUBLIC My Commission Expires: O I l _

EXHIBIT "F" SPECIAL WARRANTY DEED, C0lWEYANCE AND ADJUSTMENT AGREEMENT NO. This Special Warranty Deed, Conveyance and Adjust-ment Agreement No. , dated as of , 19 , between MIDDLE SOUTH ENERGY, INC., an Arkansas corporation (MSE), and SOUTH MISSISSIPPI ELECTRIC POWER ASSOCIATION, a Mississippi corporation (SMEPA), W I T N E S S E T H: (All terms hereinafter used shall have the meanings ascribed to them in the Grand Gulf Nuclear Station - Joint Construction, Acquisition and Ownership Agreement between MSE and SMEPA, dated as of , 1980, and recorded on , , 1980, in Book , at page , in the office of the Chancery Clerk of Claiborne County, Mississippi (Construction Agreement) which is incorporated herein by reference and made a part hereof). WHEREAS, under the Construction Agreement, MSE is constructing Grand Gulf for itself and SMEPA, and WHEREAS, under the Construction Agreement SMEPA has agreed to furnish the total cost of Construction until l such time as its total advances plus its AFUDC equals 10% of

O the total Cost of Construction plus the total AFUDC of MSE and SMEPA, and WHEREAS, Section 2.02 of the Construction Agreement contemplates that MSE and SMEPA will, on each Payment and ' Adjustment Date or at such other times as shall be mutually agreeable, (a) each transfer and convey by a Special Warranty Deed, Conveyance and Adjustment Agreement, undivided ownership interests in Grand Gulf, including the real property described herein, free and clear of all liens and mortgages, other than those expressly permitted by the terms of the Construction Agreement, so that, as of each Payment and Adjustment Date or at such other times as any Special Warranty Deed, Conveyance and Adjustment Agreement is entered into, MSE 7.nd SMEPA will each own, as tenants in common, the undividef. ownership interest in Grand Gulf derived by applicatuon of the formula set forth in Section 2.02 of the Construction Agreement, and (b) by execution and delivery of a special Warranty Deed, Conveyance and Adjustment Agreement confirm the adjustment to their respective undivided ownership interests in Grand Gulf as of each such Payment and Adjustment Date, and WHEREAS, the parties wish to execute and deliver this Special Warranty Deed, Conveyance and Adjustment Agree-ment No. for the purpose of carrying out the agreements hereinabove referred to,

NOW, THEREFORE, the parties hereto hereby agree that:

l. Pursuant to application of the following formulas it has been determined that SMEPA is entitled to own a  % undivided ownership interest in Grand Gulf (ex '

cluding Nuclear Fuel) and that MSE is entitled to own a

        % undivided ownership interest in Grand Gulf (excluding Nuclear Fuel):

A=B Bf C, x 100%, and A1 = 100% -A, where A = Undivided ownership interest entitlement of SMEPA,  %. 1 A = Undivided ownership interest entitlement of MSE,  %. B = Contribution of SMEPA to Cost of Construction to beginning of the month preceding the date hereof, S . l B = Contribution of SMEPA to Cost of Construction during the month preceding the date hereof,

C = AFUDC of SMEPA with respect to B, S .

D = Total contributions of MSE and SMEPA to Cost of Construction to the beginning of the month preceding the date hereof, S . E = AFUDC of MSE and SMEPA with respect to D, S .

2. Pursuant to application of the foregoing formula on this Payment and Adjustment Date and in accord-ance with Section 2.02 of the Construction Agreement, SMEPA presently owns an equitable interest in or is entitled to

l own, as the case may be, an undivided ownership interest in Grand Gulf (excluding Nuclear Fuel and the Easement previously conveyed to SMEPA by MSE in an Easement Agreement, dated as of 1980, and recorded on , 1980, in Book

        , at page      , in the office of the Chancery Clerk of Claiborne County, Mississippi) equal to          % and MSE presently owns an equitable interest in or is entitled to own, as the case may be, an undivided ownership interest in Grand Gulf (excluding Nuclear Fuel and the Easement referred to above) equal to      %.

3. In order to perfect in MSE an undivided ownership interest in Grand Gulf (excluding Nuclear Fuel and the Easement referred to above) equal to  % and to perfect V in SMEPA an undivided ownership interest in Grand Gulf (excluding Nuclear Fuel and the Easement referred to above) equal to  %, it is necessary for MSE and SMEPA to transfer and convey and with regard to the real property described below to convey and warrant specially, to themselves and each other as tenants in common, and in consideration of MSE's and SMEPA's agreements contained in the Construction Agreement and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, MSE and SMEPA do hereby transfer, convey and warrant specially to MSE as a tenant in common a  % undivided ownership interest in Grand Gulf (excluding Nuclear Fuel and the O

V _.; _

   )  Easement referred to above), including the real property described herein, and to SMEPA as a tenant in common a      %

undivided ownership interest in Grand Gulf (excluding Nuclear Fuel and the Easement referred to above), including the real property described herein. The real property referred to herein is more particularly described as follows: (Description of Land)

4. MSE represents that SMEPA's undivided ownership <

interest obtained through any transfer and conveyance by MSE is free from the lien of the MSE Mortgage and any other liens and encumbrances relating to MSE, other than those permitted by Sections 2(ii) and 2 (iii) of the SMEPA Mortgage. SMEPA represents that MSE's undivided ownership interest obtained through any transfer and conveyance by SMEPA is free from the lien of the SMEPA Mortgage and any other liens and encumbrances relating to SMEPA, other than Excepted Encumbrances as such term is defined in the MSE Mortgage.

5. MSE and SMEPA hereby expressly waive and renounce for the useful life of Grand Gulf, for themselves, their successors, transferees, assigns and mortgagees, all rights as tenants in common in Grand Gulf to require partition D

or division of Grand Gulf, except as expressly stated in the i Construction Agreement.

6. This Special Warranty Deed, Conveyance and Adjustment Agreement is hereby made expressly subject to all applicable terms, conditions, exceptions, reservations, and covenants set forth in the Construction Agreement.

IN WITNESS WHEREOF, the undersigned parties hereto have duly executed this agreement in Jackson, Mississippi, on the date first above written. SEAL ATTEST: MIDDLE SOUTH ENERGY, INC. BY: O SECRETARY VICE PRESIDENT SEAL ATTEST: SOUTH MISSISSIPPI ELECTRIC POWER ASSOCIATION BY: SECRETARY PRESIDENT STATE OF MISSISSIPPI COUNTY OF HINDS Personally appeared before me, a Notary Public in and for the jurisdiction aforesaid, the within named

                                , who acknowledged that he is Vice President of Middle South Energy, Inc., a corporation, and the within named                                  , who acknowledged O

that he is the Secretary of said corporation and that in their respective capacities herein set forth they signed and delivered the foregoing instrument on the corporation's behalf on the day and year therein mentioned, being duly authorized so to do. < GIVEN UNDER MY HAND AND OFFICIAL SEAL, this the day of , 19 _. NOTARY PUBLIC My Commission Expires: STATE OF MISSISSIPPI COUNTY OF Personally appeared before me, a Notary Public in and for the jurisdiction aforesaid, the within named

                           , who acknowledged that he is the President of South Mississippi Electric Power Association, a corporation, and the within named                             ,

who acknowledged that he is the Secretary of said corporation and that in their respective capacities herein set forth they signed and delivered the foregoing instrument on the corporation's behalf on the day and year therein mentioned, being duly authorized so to do. i 4 i

I i 0 I! 4 GIVEN UNDER MY HAND AND OFFICIAL SEAL, this the  !, day of

                                                               , 19 _ -

1, f i,

                                                                                                                ;

i NOTARY PUBLIC  ! j My Commission Expires: r e i j '!

ii ,. 1  ; } i } h h I { 4 1 5 I . v s I i' r

                                                                                                                ;

l l  !

)                                                                                                               i i                                                                                                                ,

4 J i 4 l j 1-l c 4 I l e i l I i P t

              ..-_-.____._______-..________-__-____-_-__.______._..--.,_-..___.J.

I EXHIBIT G LIST OF CONTRACTS, PERMITS, AUTHORIZATIONS, LICEMES AND OTHER INTANGIBLE RIGHTS ASSIGNED TO SMEPA AT THE CLOSING I. List of Contracts, Purchase Orders and Subcontracts Wherein the Aggregate Contract Price is Estimated to Exceed One Million Dollars ($1,000,000). A. Direct Contracts of Middle South Energy, Inc.: Contract Vendor Title Effective Date

1. General Electric NSSS 6/25/74

2. Allis-Chalmers Turbine Generator 12/10/74

3. General Electric Spare Parts 6/30/78

4. General Electric Startup Services --

5. General Electric BWR Simulator Training 6/30/78

6. General Electric Inservice Inspection 12/22/77

7. Bechtel Engineering, Procurement and Construction 11/15/71 w_/

B. Purchase Orders and Subcontracts of Bechtel Power Corporation, acting as agent for Middle South Energy, Inc.: P.O. Spec /P.O.// Vendor Title Effective Date-

1. A-004.2 M.P. Gibson Co. Furnish & Erect Concrete Masonry 3/21/77

2. A-039.0 0.B. Cannon Special Coatings 8/27/76

3. A-074.0 INRYCO, Inc. Secondary Containment Metal Enclosure 10/15/78

4. C-016.0 McHann Bros. Furnish & Construct Railroad 3/11/74

5. C-022.0 W.J. Runyon & Sons Site Access Road & Paving 6/28/74

6. C-101.0 National Mobile Con. Concrete 4/11/74

7. C-101.1 United Cement Cement 10/11/73

8. C-lll.0 Bethlehem Steel Reinforcing Steel 10/22/73

9. C-121.0 Bristol Steel Structural Steel Category I Structures 2/26/74

10. C-122.0 Stupp Bros. Structural Steel Non Cat. I Structures 1/16/74

11. C-143.0 Chicago Bridge & Iron Misc. Field Erection Tanks 5/16/75

12. C-131.0 Alfab, Inc. Mis. Steel for Category Structures 3/27/74

13. C-131.1 Stupp Bros. Misc. Steel for Non-Cat. I Structures 4/15/74

14. C-136.0 Stupp Bros. Metal Decking 5/23/74

15. C-151.0 Chicago Bridge & Iron Containment Liner Plate & Accessories 2/26/74

16. C-153.0 W. J. Woolley Personnel Locks, Equipment 10/04/74

 /~'
 ;
      't . C-154.0       Southern Boiler            RPV Shield Wall                          5/23/74
      ,J. C-171.0       Economy Forms              Liner Plate & Appurtenances for Upper Cont. & Spent Fuel Pad             9/27/74

g

 &O 9. C-191.0 Pittsburg Testing Labs Material Testing Services                  4/01/74

20. E-001.0 Westinghouse Main Step-Up Power Transformers 7/22/74

21. E-005.0 H.K. Porter Isolated Phase Buse & Accessories 4/30/76

22. E-017.0 ITE 480V Load Center Unit Substations 4/30/74 i 23. E-029.0 Kerite 9 KV Power Cable 5/24/74

24. E-030.1 Okonite 1000 V Power Cable 7/05/74

25. E-030.2 Okonite 600 V Multi-Conductor Control Cable 8/14/76

26. E-031.1 Samuel Moore Co. Inst.rument & Computer Cable 8/13/74

27. E-035.0 Westinghouse Containment Electrical Cannister Penetrations 3/31/75

28. E-076.0 McGraw-Edison B0P Transformers 5/15/74

29. J-106.0 System Engineering Labs B0P Computer System 5/15/74

30. J-609.0 Fisher Controls Heater Drain Valve 8/09/74

31. J-806.0 Signatron Elec.Sys.Co. Security & Fire Protection Systems 8/29/75

32. M-004.0 Southwestern Engr. Co. Main Consenser & Auxiliaries 12/10/73

33. M-012.0 General Eectric Reactor feed Pump Turbines 5/08/74

34. M-015.2 Ragnar-Benson Cooling Tower Unit 1 4/05/79

35. M-015.3 Ragnar-Benson Cooling Tower Unit 2 8/ /79

36. M-018.0 Delaval Engine & Comp. Standby Diesel Generators 8/06/74

37. M-062.0 Whiting Spent Fuel Cask Crane 7/08/74

38. M-072.0 Southwestern Engr. Co. Turb. Bldg. & Component Cooling H9 0 Heat Exchangers 5/13/74

39. M-101.1 Richmond Engr. Co. M3in Steam Safety Relief Valve Discharge Line Quenchers 6/18/76

(,,1. M-102.0 Buffalo Tank Misc. Tank & Pressure Vessels 3/21/75 C /1. M-112.0 Graver Condensate Demineralizers 3/22/74

42. M-160.0 Anco Insulations, Inc. Plant Insulation Equip. & Pipe 4/05/78

43. M-163.0 Diamond Power Reflective Insulation 8/31/76

44. M-181.0 Exxon High Density Fuel Storage Racks 12/14/78

45. M-185.0 Ranney Co. Plant Service Water Radial Wells 12/02/75

46. M-186.0 Power Systems, Inc. Turbine Generator Erection 9/20/76

47. M-201.0 Texas Pipe Bending Shop Fab Piping-Nuc. Serv. 2\" & Lgr. 5/10/74

48. M-202.0 Texas Pipe Bending Shop Fab. Piping-Conven. Serv. 2\" & Lgr 5/10/74

49. M-205.0 McJunkin Piping 2" & Sm. Nuc. Serv. 3/04/75

50. M-205.2 Guyon Alloys, Inc. Carbon & SS Piping 2" & Sm.Nuc. Serv. 5/12/78

51. M-211.0 Texas Pipe Bending Drainage Pipe 11/29/73

52. M-241.0 William Powell Non Nuclear Service Valves 2.5" 12/21/73

53. M-242.0 William Powell Nuclear Service Valves 2.5" 12/21/73

54. M-250.0 Rockwell Non Nuclear Service Valves 2" 6/06/75

55. M-251.0 Yarway Nuclear Service Valves 2" 2/11/75

56. M-257.0 Henry Pratt Butterfly Valves C.S. 24" & Lgr Nuc.Ser 5/24/74

57. M-258.0 Henry Pratt Butterfly Valves C.S. 20" & Sm.Nuc.Ser. 6/03/74

58. M-300.0 Bergen-Paterson Hanger Components 5/29/74

59. M-312.0 Armco Flued Heads 5/29/74

60. M-316.0 Reactor Controls Control Rod Drive Hydraulic System 10/28/74

61. M-611.0 AAF Air Handling Units 3/18/74

62. M-618.1 General Mechanical Ductwork Non "Q" 11/08/78

63. M-618.2 Delta Metals Fabricate Non "Q" Ductwork Unit 2 8/ /79

  , A4
  ,      M-624.1 General Mechanical       "Q" Ductwork                            11/08/78

( ) v

l l l I l O

5. FSC-18 Reliance Truck Co. Heavy Hauling, Reactor Pressure Ves. 4/ /76

66. FSC-19 Capital Security Serv. Security Services

67. FSC-30 Bagwell Coating 7/ /74 Cementitious Line Proofing of Struc. Steel 10/ /76

68. FSC-34 Peabody Testing Nou Destructive Testing 69.

1/ /76 M-192.0 General Electric Install Reactor Internals 5/23/77 II. Contracts Relating to the Financing of, or Sale of Capacity and Energy from, Grand Gulf with Certain Companies of the Middle Sout Utilities System and to the Financing of Nuclear Fuel, whici. are specifically Exempted from the Assignment of Contracts to SMEPA by Section 2.02 of the Sale, Construction and Ownership Agreement. A. Middle South System Agreements

1. Capital Funds Agreement, dated as of June 21, 1974, between Middle South Utilities, Inc. (MSU) and Middle South Energy, Inc. (MSE).

2. Availability Agreement, dated as of June 21, 1974, as amended by the First Amendment thereto, dated as of June 30, 1977, among MSE and p Arkansas Power & Light Company, Arkansas-Missouri Power Company,

(^ji Louisiana Power & Light Company, Mississippi Power & Light Company and New Orleans Public Service Inc. (collectively, System Companies).

3. First Supplementary Capital Funds Agreement and Assignment, dated as of June 30, 1977, by and between MSU, MSE and Manufacturers Hanover Trust Company, as agent for certain Banks (Agent).

4. First Assignment of Availability Agreement, Consent and Agreement, dated as of June 30, 1977, by and between MSE, the System Companies and the Agent.

5. Second Supplementary Capital Funds Agreement and Assignment, dated as of June 30, 1977, by and between MSU, MSE and United States Trust Company of New York and Malcolm J. Hood, as Trustees (Trustees).

6. Second Assignment of Availability Agreement, Consent and Agreement, dated as of June 30, 1977, by and between MSE, the System Companies and the Trustees.

7. System Agreement, dated April 16, 1973, and effective July 2, 1973, among the System Companies and Middle South Ser-vices, Inc. (Services).

O V

,a i         ;           8. Sales Agreement, dated as of June 21, 1974, between Mississippi Power & Light Company and MSE.

9. Service Agreement, dated as of July 16, 1974, between Services and MSE.

10. Nuclear Fuel and Fuel Services Purchase Agreement, dated as of June 15, 1978, among System Fuels, Inc., AP&L, LP&L and MSE.

B. Fuel Agreements

1. Contract for Fuel Fabrication Service for the Initial Core of Fuel Bundles and Related Services, dated June 25, 1974, between MSE and General Electric Company.

2. Fuel Fabrication and Related Services Contract, effective March 30, 1976, between MSE and Exxon Nuclear Company, Inc.

III. List of Permits, Authorizations, Licenses, and Other Intangible Rights: EXPIRATION RENEWAL

;

f""lCY r- PERMIT / LICENSE DATE ISSUED DATE APPLICATION DATE i;AEC/NRC 1. Final Environmental 8/73 N/A N/A Statement Docket Nos. 50-416 and 50-417

2. Limited Work Authorization 5/3/74 N/A

3. Construction Permit Unit 1: CPPR-118 9/4/74 9/1/81 N/A Unit 2: CPPR-119 9/4/74 11/1/84 N/A

4. Operating License Application Applied For N/A N/A (Units 1 and 2) Concurrent 4/28/78 submittal of Final Environ- Docketed on mental Report and Final Safety 6/30/78 Analysis Report. (Docket Nos.

50-416 and 50-417)

5. Special Nuclear Materials To Be Applied N/A N/A (SNM) License (To receive for 11/79 and warehouse nuclear fuel)

  ,m

O Miss. 1. Special Nuclear Materials V State (SNM) License (To receive Board radioactive sources for of Health in plant instrumentation) MS-SNM-01 6/15/79 7/1/80 5/80 MS-SNM-18 5/31/79 5/1/83 3/83 C. Miss. Certificate of Public Convenience Public and Necessity Service Commission

1. Units 1 and 2 2/5/74 N/A N/A D. Miss. 1. Section 401 Water Quality 2/5/74 N/A N/A' Air & Water Certification Pollution Control 2. NPDES - Temporary / Construction 10/15/74 4/25/82 10/81 Commission Sewage Plant Permit No. Renewed MS0027031 4/27/77

3. Permit to Burn Waste 1/8/75 N/A N/A Material

4. Temporary Permit to Operate 1/30/75 Replaced by NPDES Permit N3 Permanent / Construction MS0029173 Sewage Plant

5. NPDES - Permanent / Con- 8/8/75 5/31/80 11/79 struction Sewage Treatment Plant No. MS0029173

6. NPDES - Permit for Con- Issued N/A N/A struction Runoff Draft 10/22/75 Permit No. MS0029521

7. NPDES - Plant Discharge Applied for N/A N/A 10/26/77 E. U.S. Corps 1. Permit to dredge existing 11/12/76 11/12/79 N/A of Engineers barge slip No. DIK0D-FE 1522-15 (Miss.R.)-67

2. Permit to construct plant 10/15/76 10/15/79 N/A discharge structures No. LMK0D-FE 1522-14 (Miss.R.)-55 O

_ -- .. _. . _ . . .. - . ~ _ - . - . . l 4 1

O 3. General permit to fill 9/28/77 N/A N/A an existing barge slip with sand to facilitate barge unloadings.

LMK0D-FE 1522-14 (Miss.R.)-7

4. General permit to construct l' 8/1/79 N/A N/A temporary hydrostatic -

)' testing discharge line LMK0D-FE 1522-14-GPD (Vicksburg District)-22 F. Federal 1. Approval to construct Issued N/A N/A Aviation two cooling towers and 11/9/73 i Administration associated construction Revised

 ;                            cranes                         11/4/77 G. Miss.          1. Administrative scientific      11/22/78              11/7/79            10/79 Game and              collection permit for preop-                                                        '

Fish erational environmental Commission radiological monitoring program

 ;

i 4 a i t i I

 !                                                                                                                i

EMBIT.1L n V 3YSTEM FtJELS,INC./ BOX 61532/ NEW CALEANS, LA."701G1/(504) 585-1975 '

                           .JCHN L. AnPNCCAGAST DAaSaCENT ANQ CHEF EXGCUTfvG CPFICEA                                                          '

June 15, 1978 lir. Arch P. Pettit

        ' President Arkansas Power & Light Company                                 

P. O. Box 551 . Little Rock, Arkansas 72203 s

Dear }!r,

Pettit: i System Fuels, Inc. (SFI) is engaged in planning and impicmenting programs for the procurement of fuel supplies for the liiddic South System and as a part of such programs is undertaking to arrange for an adequate inventory of nuclear fuel for the }!iddle South System. Arkansas Power.&. Light Company (AP&L) presently owns 992,060 pounds of U 3 0s or U 03 g equivalent, including 105,000 pounds of U03 3 and 887,060 pounds of U 03 3 equivalent as UF6 (339,060 kilograms of U as UF6 ) ("F.xcess Uranium"), which uranium is in excess of that required by AP&L .

                                               '~...'

in the near future for the operation of its Arkansas Nuclear One Generating Station. The Excess Uranium was act.uired by AP&L under the terms of contracts dated September 20, 1971 and July 14, 1970 between AP&L and Eldorado Nuc1 car t Limited and APil and Kerr }!cGee Corpot stion, respectively. This is to confirm the understandtng betwcon us that AP&L is willing to v' ) sel.1 the Excess Uranium to SFI, and SF1 is willing to purchase the Excess Uranium from Al't.L. upon and subject to the following terms and conditions:

Mr. Arch P. Pettit June 15, 1978

 /~

1. SFI will purchase the Excess Uranium from AP&L for an amount in -

cash equal to the actual cost incurred by AP&L for the Excess Uranium, plus applicable allowance for funds used during construction to date of the purchase by SFI, it being understood that as of December 31, 1977 this amounted to $12,747,257.42 (including $678,616.96 of allowance for funds used during construction);

2. SFI will place the Excess Uranium in its inventory of U 038 eU038 equivalent and arrange for the necessary storage, conversion and enrichment thereof;

3. SFI will make the enriched Excess Uranium available for sale to AP&L

 /]

V or any other subsidiary of Middle South Utilities, Inc. for fabrication into . and use as nuclear fuel at a price equal to the cost thereof to SFI,_ including applicable conversien, enrichment, transportation and storage costs, fixed , charges, and interest and general administrative expenses, all of which shall be determined in accordance with the provisions o'f Rtile 91 promulgated by the Securitics and Exchange Commission under the Public Utility lloiding Company Act of 1935; and

4. If all or part of the enriched Excess Uranium is sold to a party other thar. APSL, the purchasing party shall, as a condition to such sale, i.sree to make available to AP&L energy in the amount equivalent to the amount of energy generated through the use of enriched Excess Uranium so purchased -

by such party from SFI at a fuel cost based upon the cost of the enriched Excess Uranium so purchased by such party from SFI. V l If this letter correctly sets forth the ' understanding between us and is l accept.able to you, please sign and return the enclosed copy thereof. Upon

                            .......w..               ..           .s....                                                                                                    ,

o... . . , , . ., , o l 4 .. i I i , i the roccipt of all requisite regulatory approvals, the documents necessary to - i 't . consummate the proposed transaction will be prepared, signed and delivered. Very truly yours, j 1

                                                                                                                                                                                     ,.-    ).//fA. t 9 M'
                                                                                                                                                                              '/ v s/

President' I r i

                                                                                                                                                                                                                                                           ?

4

The foregoing correctly ,

l sets forth the understanding . between us and is acceptable . 1 to us 1

;                                                                                                                                                                                                                                                          l i                                                                                                                                                                                                                                                          ?

ARYRISAS POWER & LIGliT COMPANY I l By . / ?! President fk{ (. ' l' a I i 1 r I t v. 1 6 t 1 e 9 i~

EXHIBIT I LIST OF REPORTS AND CONTRACTS REPORT TO FROM DESCRIPTION FREQUENCY

1. Weekly Construction MP&L Bechtel Detail Report Weekly Progress Report on the Progress of the Construc-tion

2. Project Monthly MP&L Bechtel Reflects the Monthly Progress Report status of En-gineering, .

Procurement & Construction

3. Cash Flow

a. Schedule of MP&L Middle Reflects how much 3 times a Expenditures South MSE has paid month Energy to Bechtel, Allis Chalmers & others O

\- / b. Analysis of MP&L Middle Report of distri- Monthly Client Cost South bution of money Energy paid out by Bechtel

4. Ferecasts MP&L Bechtel Projects the cost Yearly of Construction from the date of the report to completion of project

5. Advance Fund Middle Bechtel Request for Monthly Request South Anticipated Energy Expenditures

6. Cost Trend MP&L Bechtel Breakdown of Monthly Report money over/

under projection in Bechtel contract. Includes sua-mary of man-hours

                                                   & schedule

7. Statement of MP&L Bechtel Breakdown of Monthly Recoverable Cost construction

() cost per month

8. Turbine Progress M?&L Allis Provides manu- Monthly Report Chalmers facturing status of equipment

                                                                                                                                                                                        ;

i . i !  ; i l CONTRACTS FREQUENCY 1.

Contracts in which SMEPA Quarterly i ! has an undivided ownership j i interest, wherein the i aggregate contract price  ! i is estimated to exceed i j $1,000,000.  ; 4  ;

                                                                                                                                                                                        ;

. e t i i 1 . i  ! i' i 4 5 l i i

                                                                                                                                                                                         ;

1 I  ! I t i l i t i l i . > l l J b h 1 i i I l l 3 1 , i t l

-

                                                                                                                                                                                         }

} l I  ! i  ! 4 i i [ 4 l' l k

                                                                                                                                                                                         )

I

r .,,,, suVd ..........._.....,..........,,. EvH A BT ' U.S. Partnorship Return of income r-.---nn. C"f9

                                                                                                                                                                                                                            ~
           .m . ., ~.-, , . , ,;. _..
                                  .,,,,                . x.,
                                                                            , w ~ e e                     .        . n n. ... e    ..e . _. .                      _n_                         LW d ar...i...~...,,..,
            . a - . . u .. .. - -                      use         mne tos                   xy z Tenants in common        .

a " o . r ..., 'A',';.

                                                                                                                                                                                      '~'""x"""""

( pa . u .. . .,..~.. ~.. s2.he, ano st,tet

                                                                                           . -                                                                                  <ci               > ~ '> .*

v- ,,,, -

                                                                                                                                                                                               .x e .s. ,,..e...-o. ai..      . ., a-
                                     ..                , nnt rem cm, - io.n. sim. ane a coo.                                                                                                                                      .
                                                      ,,. _                                                                                                                                       .,.,,,,,r - .... -

sn. . a.,,2, to,. $2 ... t IMPORTANT Jell ;n all asphcaste tones an3 schedules. If more space is needed, see Instruct:onG b. 88 Enter

                                                                                                                                                                                          '*" 8 a'any   "t8'"' items sp alloCJfed ta the partners Cn Sc!'edufe n. line 16, instead of on the nytnbered lines on this page Cr in Schedules 0 througfi la Cross recepts or sales 5 -                                                                                                                                   O Y  G 8' Ib Less returns and allowances $ -                               Ba!ance >

2 _ I.C ___ Cost of goods sold and/or operations (line 34. Schedcle A) . 2 3 . . . . . . . . . . . Gross profit (sul; tract line 2 from line Ic) . 3 4 . . . . . . . . . . . . . . . . Crdinary income or (toss) from cther partnerships and fiduciaries (attach statement) 1

         .           5 Nnnqualifying dividends .                                                                                                       . . .
                                                                       . . . . . . . . . . . . . . . '. . . . . . .                                                         5 k          6 Interest .
      ,5 o                                       . . . . . . . . . . . . . . . . . .                                                                                        6 7 income or (foss) from rents (Schedure H) . . . . . . . . . . . .. ... .._ ... . .                                                                    7 8 Royalties (attach schedu'e) .                                                                                        ~ ~~

9 . . . . . . . . . . . . . . 8 Net farm proret or (toss) (attach Schedule F (Form 1040)) .

                                                                                                                   . . . .. . . . . . '. .                                 9.,_

10 Net gain or (foss) (Form 4797, fine 11) . . .. . . . . '. . . . . . . . . . 10 11 Other income (attach schedufe) . 11 12 TOTAL fncome 0sdd lines 3 through . . 11) . . . . . . . . . . . . . . . . .

                                                                                                                                     .            .        .            12 13a $4fJfles and wJC?s (Other than to partnefs) $.-

14 13b L:ss Jobs Cie$t $.. .._ Bai;nca ' p- 13C!

       ~                  Cuarsnteed payments to partners (see line 14 instruction) .                                                                                  14 I 15 Rent.                                                                                         . . . . . . . . . . .

16 Interest . . .. .. .. .. .. .. .. .. .. .. .. ............... 15 16 17 Taxes ....... n .. . . . . . . . . . . . . . . . . . . . . . . . . . . 18 Dad debts (see line 18 instruction) . . . . . .... . . . . . . . 17 18 /n} 19 Repairs . (,) 20 Deprec;ation (see Instructions for Schedula J) .

                                                                              ....................                                                                   _19 2

3 21 Amortiration (attach schedule)

                                                                                                  . .... . . . . . . .                              . . .            1 22                                                            ....................                                                                    21 Ceoletian (other than oil and gas-attach schedufe-see line 22 instruction) .                                       . . . . .
                                                                                                                                                                     .,tt.,.

23a Retirement pf ans, etc. (see line 23J instruction) (EntCr number of plansb..._ 3

                                                                                                                                                    ). ..

23b Emp!cyee benefit prcErams (see line 23b instruction)

                                                                                                             . . . . . . . . . . . . E.5, 24 Cther deductions (attach schedule) . . . . . . . . . . . .                                                                                         24                      X 25 TOTAt. deductions (add lines 13c thrcugh 24) .                                                                                          5                    X 25 Ortnvy income (fossi (subtract fine 25 from line 12) .. . . . . . . . . . . . . t ,,,, .
                                                                                                                                                        ...          25l                     X cheduin 7

A.--COST OF GCOCS SOL.D AND/OR OPERATIONS (See line 2 instruction) in.entcry at beginnmg of year (if d;fferent from last yest's closing inventory, attach excfanation) '27 . 3a ? m hases 1 2Eb Less cost of 4tems withd. ann for personal use $ .

     ? Ccst of labor                                                                                                                 _          Balance >          ,,28.C 3 MJterial and supplies                 . . . . . . . . . . .. . . . . . . . . . . . . . . .                                                                   .,
                                                                                                                                                                  .:.9                   NO9'

• i Other costs (attach schedu!e) .

                                                            ........................                                                                                3,,0,,,

31 MWm M r 1 Total of lines 27 through 31. . . . . . . . . . . . . . . . . . . . . . 1 inventory at end of year . . . . . . . . . . . . . . . . . . . . . . . . . . 3,3._

                                                                                   . . . . . . . . . . . . . . . . . .                                             3.3 Cost of reoct sof.? Isuhf ract Lne 23 frr m line 321. Enter here an,f en line 2. abcve .

34 ia Check valuation method (s) used for total closmg inventery: ib Check if Ferm 970 or other statement is attached for adoption of. .t.lFO insentory method .[ Co ic Are you esg,ged in r,*saufactung! [ Yes

                                                                                                                                                                      ........C id #as there U y substantui chage in determan;r'g cuar't: ties, cost, et valua ian if "Yes. artich escisnation.                                                                                                                                 .         .

Ye$ 0 No

       ,     ................,uo...e.ii.......,..n,....,.......,t......

we a. . e .~ rg. t w ...u..

                                                          . p .....r m *.
                                   . O!13 3 tZ in (,0%"'00,t.. a.OV                  i.* * . u . .a . 6 .a r.s 'a.s..a .t .a e ,e e r .< w 3. . u s . ' a-.cu .c ..,, .. ,,,,, ... .. e. s. ,.yw .e.s,,, .. i,.. ..u . e ;
                                                                             'a..                                                                                        ,
                    ._X f, ~p, . ~ . . . .C. . .m Y.;.         . . cra21on as Ace.t'
 \s#                                               . . . .                                                                         l c..n ,,..., g Pskt               s ;w.,. y                                                                                         ,,,en, .,was seemm.                             cwen # sem Freparer's                                                                                                                          .

• Ra3,',r..,aa'e sn , ,oicfeo yq

     . Irtform a t; ors            .
                                                  .gm,c i, W p .rs,                                                                                                                                                    '"
                                    , * 'r a q ,  .+t g -rt No* >                       .

f.pss.$*.

                                                                                                                                               ) Dee            >

jch;duia 0-CAPITAL GAlf4S MID LOSSES (See instructions for scneuule u)

     .m y Short term capital gains and losses-assets held one year or less
    ._ oa:.ee-                ,...ano.          .                     u..       4                  . 0 . .S4                        4 ., ..i.. u c                                                         a. c.4 ., ri n              v.,           s  c... ., c.49 tu. .. no                 .. .e r c. 3              m.im ..c..:.

en. ,, 3 ( . . a n. ,, a i = ..- .# m 'Ca'"**"6"" en. ,.., c4 ins . nnsonin

                                                                                      ~                                       ~     ~
                                                                                           -                                                                                                                                                                                     3 2 PJrtnership's share of not short-term gain or (foss). Including specially allocated items. from cther partnerships and from fiduciaries . . . . . . . . . . . . . . . . . .

3 Net cert term rain or flessi frem knes t and 2. Enter here and on Schedule K frorm 1065). fine 5. . pf')irM Long term capital gains and losses-assets held more than one year S 5 Partnership's share of net long-term gain or (toss),' including specially allocated items, from .'

                                                                                                                                                                                                                             ~                                             ~

other partnerships and from, fiduciaries . . . . . . . . . ... . . . . . . 6 Capital gain distrit:utions . . . . . . . . . . . . . ... . . . . . . 7 Net long terrn non er (loss) fenm lines 4. 5. and 6. Cater here and on Schedule K frorm 1065). fine 6. . . Schedule H-INCOME FROM RENTS (See line 7 instruction) If more space is needed. use Form 4831.

d. Rec..rs e. Cih.e ses.ases

s. Lad .ad I.s.t..a .f pr.ewfF t. Anneust of rent c. (es.

0.o.rulati.e

                                                                                                                                                                                      .ee se                            (attua           ..                (.et sons. n                                 un.e.m                              so.un wen
     --                  . . . - ~                        .                                    .                                                                     ..~                                  -...

_ t Totals . . . . . . . . . . . . . . . . Net income (tess) (subtract total cf columns c. d. and e from column b). Enter here and en page 1. line 7. . wchedule 1-6AD DESTS (See line 18 instruction)

6. Y,.4 4. . so.4 . m.a.

      ,,,,,                                   .a d n..au ..                                                                                                                                                     ,,                                                 u4
                     .... . 1.     .e n... i: 4 .e ,. .,                            ,,33,,,,..,,,,                                   ,,,,,,,,,,,,                                                                 4,,,. ,,, e yi.o         c. nom,   . e.etu.e ,ne.. .
                                    . t.i..
                                                                                                                                             ,. ,,,,                         .. *-anon                             ,,,,,o,.,..
    .973.                           _-                                  .    . . . - . . .                                      . .
    ~974.
                .         _.                       _.                                                                                                                                                                                         ~
    '975.

976. . _ . , 977. , , . . - . _ , , , . , _. _

                                                                                                                                                                                                                                   .                          ~

1973 Schedule J-DE. RECIATION (See Instructions for Schedule J) if mere seace is needed use Form 4562.

                                                                                                                                       .a                  e.                                                                                       g. D.stw.ti.e for

s. D.suss u.e .i pr.o.rry L 0.i. ,gi,,,0..e.o .ie.a 4, . ,*'. 8 8.e.8 us... 1 .e.

tan cne.... t i,a,,,,...,,.

                                                                                                                                                                  ,, ,ii                          e m*.O e..e .e. ,                     f. L.!fe r ie er               to. n t i Ictal add.t.cnal brst year decreciation (NOT to exceed 52.0C0). (Do not inctuce in items Delow.

enter hera Jnd on Senedule K. hne 2) - l ]#,',g[j'{{.

                                                                                                                                                                                                                                                  ~~L-                  -- .

1 Other cepreciation: B uildin gs . . . . . . . , , , _ _ , , , , _ _ .--- Furnature and fixt.:res . . . .. -. . _ . . . . Transcor*at:en eauinment . . .. . . . . . .. _ _ . .- . - . - . - - . MacNndry and other equisment . . . . - ----

                                                                                                                                                                                                                                                 ~.-.g cther (soeciff).                                                                                              ( Fo rm 4 8..: 2 A t.t a..c..h..o.d..}
                                                                                                                                                                   ~                                           .                      _                                      .
          . . . . . .                 . . . . . . . . . . . . . .              . . . .        . . . . .                                                              . . . . - .         . . . . - . .                   -    -.                  ..~-               - -.
                 - . ~ . . . . . . .                 - . . .                                               .   .             . . . -               ..                                                                . - -                    .- - -                         .
    . . . . . . . . ~                - . . . . . . . . . . .               . . . . . . . . . . .                  . . . . . . . . . . . . . . . .     . . . .                      :     - - - - - .                                                              -

g..-..... _. . . . . . . .. . . . . . .. .- - (s w .~... . .. . .-. -. . .. . . - . - - . .--.-- v-.-... . . . . . . - . . . . . .._. . . - -. - 3 Totals . . . . . . . . . . . . . l. . . . . . l' . . . . . . . . . ! .. .Y

     & Amouet of deprec:ation claimed .'n SeMoules A ano N . . . . . . . . . . . .                                                                                        . * * * * *

• 3 casance (suht.we i.n 4 from Une n Enter twre and on esce 1. Une 20. E

                                                                                                                                                              .            . . . . .                               . . -                    .            ^

                                                                                                                                                                                                  . u.            ,

Scnedule K-PAIMtit;R$' SHAHES OF it4COME CHEDifS. Ot. DUCTIONS ETC. Er.ter the total Ostobutive amount for eJCh JppisCJDie item listed bel 4W. Note: Inter toch partWs astatutive sfase 61 partnership itemt on Schedule K.I.

                                                                                                    ;I*        ye                                 ',',* ,            *

/ x i.in.p e c.m. p ****nami n Yet n No j  ; Partnership's distributwe share items Total

            .1 a Guaranteed pJyments to partners:
               .,,5 (1) Decuctible by the partnership (page 1. line 14)               . . . . . . . . . . . . . . . . .

(2) Capetalized by the partnership (see General Instruction d) . . . . . . s b Ordinary incomo (foss) (paco ], line 2G) . . . . . . . . . h P.) . . . . . . . . . X 2 Additional first-year depreciation (Schedule J. line 1) . 3 Gross farming or fishing income . 4 Cividends qualifying for exclusion (at*ach list) . . . . . . . . . . . . . . . . . 5 Net short term capital gavn or (foss) (Schedule 0, line 3): After 10/31/78 >.  : Total for year > . _ . . - - 6 Net tonC term capital gain or (fos:;) (Schedure D. line 7): After 10/31/78 V .: Total for year > .. 7 Net sect:on 1:31 gain or (ross) fmm invoruntary conversions due to casuaity and theft (Form 4797,line ;): . After 10/31/78 >._ . . . . . .: . . . . . . . . . . . . . . Total for year > . . . . S Net gain or (loss) from sale or exchange of property used in trade or business and certain involuntary con. " ' versica under section 1231 (Form 4797, line 6): After 10/31/78 >.. -

Total for year > .

9 Net earnings or (! ass) from self employment (Schedule N line 10) . . . . . . . . . . . . . 10 a Charitable contributions (attach ' list): S0W- 30 % 20% - .. __

           -. b Otheritemized deduct: ens (attach list) . . . . . . . . . . . .                                '. . . . . . . . . .

11 Espense account allowance . 12 New jobs credit or combined new jobs and targeted jcbs credits . 13 TJues paid by regulated investment companies on undistributed Capital gains (attach schedule) . . . . - 14 a Payments for partners to a Keegh Pfan. (Enter type of plan >- .). . . . . . _ . .. b Payments for partners to an Individuaf' Retirement Arrangement . . . . . . . . . . . . 15 a Other income, deducticns, etc. (attach schedulc) . . . . . . . . . . . . b Oil and Ess depletion. Enter amount (not for partner's use) >. S&4

                                                                                                                                                                                          '"3.......5     9:

wea [, 16 Specially at:ocated items (attach schedule):

    '/           a Shcrt term capital gain cr (fcss) .

b Long term Capital Cain or (! css) . c Orcinary gain cr (! css) . d C"' c r . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . 17 Tan preference items (sce instructions for Schedules K and K-1. line 17); 4 Accelerated depreciat4cn on real property: (1) Lcwonceme rental housing (section 167(k)) . . . . . . . . . . . . . . . . . . (2) O!':er real prcoer*y . . . . . . _ . . . . . . . . b Acceterated depreciation on personal property sublect to a lease . Amort;tatann: c . .. . . . . . . . . . . . . .

                                                . . . . . . . .., q                     ..e..._...                  _,f.

g Reserves for icsses on bad dect: of financ;alinstitutions . .. . h cep'et,en (other than c I and cas) . I . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1) Excess intanoble driiting costs from oil, gas or geothermal wells under section 57(a)(11) . . (2) . . Nat incoma frorn cil. r'3s cr reothermal wells . . . . . . . . . . . 8 Interest en investment Indebtedness; a investment interest expense: (1) Indebtedness incurred before Decemcer 17.1969. . . . . . . . . . . . . . . . . . (2) inaebtedness incurred bercre September 11.1975, but af ter Cecember 16.1969. . . . . . (3) Inde':tedness inCyrred alter September 10.1975. b Met investment income or (foss) c Excess escenses from net lease property" .

                                                                             . . . . . . . . . . . . . . . . .                                    * *           ~

d Excess cf net foneterm canital cain over net short. term encital foss from Investment crocerty . . 1 f ns e'.truent m proneety t*M! maalit:cs Mr investnient c'%t: l( O Bas:s of new

          ;) Investment a 3 cr more but ess than 5 years .          . . . . . . . . . . . . . .                                                                           __=

L/ pr0perty b 5 or mere but :ess than 7 years . g ,

                                                                                               . . . . . . . . . . . . . . .                                              Y.                              .
                                                                                                                             , , , ,                  ,                   y Quali5ed prcq.ess                    d 7 at mere years j l97.t. ;975,197G. acd 1977                                                          .._ -

eteend. tares . . . . . e 7 or more years i 1973 . . Cast of used t 3 or more but less than 5 years . In% estt"ent -

                                                                                              . . . . . . . . . . . . . .                                                       .=

pmpery g 5 cr more tut fess than 7 years . . . . . . . . . . . . . . . 5 7 er ma ve.es .

r.,. tons cettei Poe. 4

   , [ , Schedule L-BALANCE SilEETS (Sce General Information)                                                                                                                  . . . . .                    .

_ .. ._.......... ...m.......

                      .' ' . *'jf.             ~. Af. SETS                                          W^='"'                      (8 fad                  (C) ^**"'              l          (D"d d I           il CJsh > " .               . . . . . . . . . . . .                                                            X                                         -                     X               .

2 Trade notes and accounts receivable . . . . . X X

        . . . . e less allowance for bad debts .                       . . . . .

X g

         ..,_3         Inventories            . . . . . . . . . . . .                                                            X                                                               X               'a 4 Cov't cbligations: a U.S. and instrumentahtics                                                                                                , . _ .
               . . b State. subdivisions thereof. etc. . . . . .

5 Other current assets (attach schedule) . . . . v __ X

              . 6 Mortgage and real estate Icans . . . .                      . .                                                           ~

• 7 Other investments (attach schedule) . . . . ,

8 Duildings and other fixed depreciabic assets . X y y a Le:S accumulated depreciation . . . . . X . - - - 9 Deptetable assets . . . . . . . . . . a Less accumulated depletion . . . . . . . - 10 Land (net of any amor.ization) a

                                                                   . . . . . .                                                   V                                                               'z 11 Intangible assets (amortizable only) . . . .                   .                                                                                       .

e Less accumu!ated amortization. . . . . .

             "12 Other assets (attach schedu:e) . . . . . .                                                                      V                                                               X
            ~ 13                ' Total assets . . . . . . . . . .                                                                                                                               X
                             '~

V.__ _ LIABILtTIES AND CAPITAL 14 Acccunts payatte . . . . . . . . . . X _ X 15 Startgages, nates. and bondi pafstle in less than 13 ear . 16 Cther current liabihtics (attach schedule) . . . X

• 17 All nonrecourse l cans (attach schedule) . . .

13 biertgages. actes. and tends & ayab!e :n 1 year er rnore . . C1 Other liabilities (attach schedule) . . . . . b0 Partners' capital accounts . . . . . . . . - X 21 Total habihties and cae.tal . . . X X Schedule M-RECONCILIATION OF PARTNERS' CAPITAL ACCOUNTS (See Instruction for Schedule M) (Shove reconciliJtion of each partner's Capital account on Sch*;dule K-1. block L) .

s. cant seamtuted "d),'['M [."/.*[5, #,; c""U Id*,,**.#*! f. W>t* ***1:

e. cav.e.t

                                  .w.i,eet,at
                                       ,..                .. . , o                                  ,,,,,...,..
                                                                                                                  ,.     f."I.**E.' c'**N           e. .m e-.

sad ,s. c4estal eccovet

                                                                              ,,,, ,                                    ....i......c.,                                                 a -a e t-X                      X                    X                        X                        -                                                            v  '

Sctiedule N-COMPUTATION OF NET EARNINGS FROM SELF. EMPLOYMENT (See Instruction for Schedule N) 1 ordinary income (loss) (page 1. line 25) . . . . . . . . . . . . . . . . . . . . . . _ 2 Add: Cuaranteed payments to partners included on Schedu!c K, lines la(1) and 13(2) . . . 3 . Net rental loss from real estate ("see instmetien for Schedule N) . . . . . . 4 Net loss from Form 4797 (page 1. Form IC55. lino 10) . . . . . . . . . 5 Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . _ 6 Less: Nonquahfying dividends (page 1. lino 5) . . . . . . . . . . . . . 7 NO" Interest (see instruction for Schedu:e N) . . . . . . . . . . . . . . _. gppgg.,g 3 Net rentalincomo from real estate (see instruction fcr Schedule N) . . . . . . 9 Net gain from Form 4797 (page 1. Form ICG5. line 10) . . . . , . . . . . 10 .*iet e.)rnings cr (toss) from self empra.fment. Enter on Schedule K. line 9. . . . . . . . . . . .I Note: Any ad@tsonal first ye.ar depicciatrous taken by the ind.edual partners will teduce therr nst earnnngs from sc!! cmploym~nt. Gee Schecule J Instruct >ons.) Yes No H !s the partnerstu7 a liensteJ partnership (see Gene.at Instruction c)? . . . . . . . . . . . . . .. , X l is this partnership a partner in anotner partnership? . . . . . . . . . . . . . . . . . . . . . X J Has any material iccarding toe offermc cf a partnctsmp interest or other secunty ever been recistered er filed with a receral or State agency ,,r authority? . . . . . . . . . . . . . . . . . . . . . . .. . X 3 ) If "Yes." atta:5.e st1tement giving the name and address cf the agency (s). g, '

 \ +4 Cid the pJrtnersn.p, Ot any t:me during the (Jaab!e year, have any interest in of sig9sture or other authonty over a bank. ,, 5.P-
   ~-
                                                                                                                                                                                             ,.i..       %,.... I, y secunt.es, or other fittJncial account in J fore:gn eeuntry (except in a u.S. m.iitary banking facihty operated by a u.S. 2.n3 s,.;;;

! financial inst.tutJon)? See General information . . . . . . . . . . . . . . . . . . . . . . . ' L Was the cartnership the Cranter of. or transfer 0r to, a foraig7 trust during any taxabic year, which fore go trust was in , '1.'"'.- cxistence curing the current ta Jble year whether or not the partnersht0 cr 3ny DJrtner nas any benefiCtal intefest in ,,,l'jf h,. 3.5 tr** en st' tr " vat" veu r ov tw renuirett to tiie Forms 3??O. 3520 a. or 926. See Ceneral Intermation . . . . . l .( Oe a eoc.-oo. a.m.cw.m som-eunsuon mmsn

n. . , v .  ;. . .

    ,.yC,                                  ,, ,
             .          ,...           .m . s . .

e

                                                                                                                                                                                                                                                                 ;          e.,

[.

  ,    ,t . . . . . .                                .
                                                                   .. - . Ramrit he Artm.lanee olh ths Rewiso A(t of l'J/8 and the faef gy Tas Att of 1113                                                                                                 .* * * -               ' ,.

L cSCHEDULE K-1 . ' ' '

                                                                                                                                                                                                                                                                             " Co
          .4,m loss)                                   .          Partner's Shara.o f income, Credits, De6ct. ions, etc.-1970                                                                                                                                                (g;g jb Ararm                     * .

N

                             .                       *.                                                               for C.urnet.it y*1r l'm1 or f. scal year                                                            -
 /~            i      ia e .# sne te,.w,,                                                                                                                                                   '                                                                *
,              m... a,                   sm.,e                               Le t isieserm                           ...

gen,,,,,,, ,3, ,,,, p,,,,,,, _3,,

                                                                                                                                             . l'M. avd.eig                                               . . 2/ .. . ! 9

• 1065) .

                                                                                                                                                             . t ruc t.nas na tuc t of Coov C)                                                                                                         2 .*

• _- Partr.er's identifymn numtaer >

                                                                                                       ^                                                     Partnership's identifying ntimbier >.                                                                       X

- f , Partner's name. addrass. and ZIP code Partnersnip's name. address, and Z1P code ,,, . . - ' . ' . , , .

                                 ....                                                               s..         .               . .

v...w... .

                                                                                                                                                                                                                                                     .                  3...,              .

x...'X CORPORATION .. . XYZ Tenant 5 in Common . ~ . = " ~ . ~

        . A Date(s) partaer aCpres any part:ership mterest 1. ring the                                                                  Y'S                  G IRS Center where partnership return fded >
                                                                                                                                                 .N.0                                                                                                                                    --
   . .- .yes, >                                                                                                                         '

W H What type cf entity is this partner? > - B Is partner a noa. resident ahen? *-

                                                                                       . . . . ...                                      , , , . _X          1 Partner's sh. ire et f.aoiht2es (see instructions):

g, ,,,,,,,,, g ,,,, g ,,,, t9eri . X i m ir untm C DW isc.a evtner sa<iner a bm .. !d ucon:r.sceout o,opererGeneraf einer inan Mstr:.ct:on < nosey c.3)? X . nong,egu,3, , $,,,,,,, t..) s3D.otwe partnercart,eesma e e ~Tcs.' . coa oiere i.no 21 ' . . X ___y seem ine p4,e er re:ci.e

                                                    ;nersn.;,      : t a~ves.~

c striacoricomoieteotner i.re thin 2Manonet . . Other . . $ . . ._. . - $-- ^ ' t (..d W a s a ny : art of tee partner,s interer.t ever xawsred X J Enter total amount of liabdit es cthat than nonrec:grse for which the leorve anoiber partner' . . . . . partner is protected agUnst loss through guarantets. St3D !C$s agreements. I ~ E (.) C.d partnersP.:p interest terminate during the year' E 0' S' * 'd' '"3 ^ 8 '*

• 85 08 ""'Ch the partnersa.o has knoni g (a) Dd partnersNp ir* rest decrease daring the year! .

w s,. a c.. X locurred before 1/1/77 . . .- . 7.' " . 5 NM

f. F L-ter Pvner s preetage of: . ec,n. .:. m tu, .e i,: lacurred after 12/31/76 . . . . . f . . . $. ., . N../..- A._

g.~d '. Prefit shr.,v g . . ~. .

                                                                                                       --%                 .. .$ .. % K Partner's shart cf any are.1976 loss (es) from 'T.N

• U ;..J. '

- .... w. . Loss sharin g . . . . ..- a seClico 4fd act.mty for whiCD there emteo 2 ..a.:

                                                                                                       - ',fo
                                                                                                                                                                                                                                                                                       .*+#                  4.~.*--
                                                                                                                      . .. .N. . .. .. '/o
' ~~* ' Cacership of capitaf

• corresDon$ng amount of nonracourse habdify

O' ' " ' '. 1

                                                                                                                                 .. .X. . .. %                    at t'1e end of the year in ahich loss (es)                                                                                                     -
     .. . T.rne devoted 19 bus.nass                                                                               .                               $             occurred                                                              '
                                                                                                                                                                                                                                                                 .* s                    'N/A

t. Reconedsat. ort of nartrier s cathtJI aCCcurit:

                                                              .. c. .o o ,.... u
                   . . e. .a . i
                      . . o . . ..u,...

e . ,. ..... .....e..., e.o,+..,i o....,,..,i..,i.

                                                                                                                            ..e         d; = ,atar,t:a ..i, = ,ag=,y                 .                ,
                                                                                                                                                                                                                                   ,. .. m.. . . e
                                                                                                                                                                                                                                         ..sm,w.                                    e.a c...m         .ae,o
                                                                                                                                                ,,,,,,,,,,,                      ,,,,,,,,,,,,3,,,,,                                                                                         . ei ,..

x x x x - - x

                          . . .                                              .. o. m.. i..e ui .. e ....e                                                                                                               o....                               ' * * ' " p ,t'L P * '"" ='
            . I a Guaranteed payments to partner: (1) Deductible by the partnership .                                                                                                     .            . . . . . . . . . . . . . . . . . . . .               Sch. E. Part HI (2) Capitehzed by the art ner ship .                                                     .             . . . . . . . . .

Sch. E. Part lll b OrdinJry income er (! css) . QO,S S '

                                                                                                                                                         .               . . .                   ... . .. . .h . . . . .       .                             Sch. E. Part iti
              ~? Ad6honal f.rst. year desreciation                                                         . .                                                                            .
                                                                                                                                                                                                      ........................                               Sch. E. Part Ili 3 Cross farming er f.stunC enceme .                                                 .
                                                                                                                                                         ....                                           . . . . . . . . . . . . . . . . . . . . .            Scfi. E. Part til 4 Dividends qual,feng for esclusion                                                          . ..                                           .               .                                                                                   Sen. G. Part If, line 3 5 Short term capit.'! sain er (loss): a Tctal for the year .                                                                                                       .>                 . . . . .                . . . . . . . . . . . .         Scn. D. line 2. cet. f b After 10/31/73 .                                           .               .           .                              .                        . .                              :, G ,&2                   , ,         , , ,            Sch. D. hne 2. col. g 6 Lc"C term ca;:itat gain er (loss): a Total.for tne year .                                                                                               .            >         . .... . . . . . . . .                                        Sch. D. tine 9, cct, f b Atter 10/31/73                                       .                    . . . . . . .,                                                             ,                    . e ,1,,,. , ,                              . . a, ,          Sch. D. line 9. col. g 7 tavotuntary consersions caen or (loss)---<asualty .and thef t: a Total .                                                                                         .>
                                                                                                                                                                                                           . . . . . . . . . . . . . . . .                   Form 4797. hne I b After 10/31/78                                                                                                                                                    ,        , _ . , .
                                                                                                                                                                                                                         ,,',                   .s2.         See Form 4797 instr.
          ' 8 Ctner Cain er (foss)-front property under sect:on 1231: a Tctal . ..                                                                                              .>                              ..
                                                                                                                                                                                                                                     . . . . . . . ,         Form 4797. hne 4 e .e; :,

b Alter 10/31/75 . .

                                                                                                                                                                                                       ,,,                ..,,,,,..,,3,,           , . ,     Se*! Form 4 797 instr.

9 fdet c rninCs or (foss) from self employment . . . . . . . . . . . . . . . . . . . . . Sch. SE. Part ! cr Part 11

          '10 a Chardwe canennt.ons: 50 %                                                            .      3C*o                                    00 %            -.                                                      - ~ ~ ~ ~ - -                    Sch. A.                c 1 cr 22 b Otner iteritized ccouctiovis fattach hst) .                                                                                                        .
                                                                                                                                                                                                . . . . . . . . . . . . . . . - - - - -                   .,S.,e,,e     Sch..       A y       .e~~,.

11 E. cense accour:t alfawance . . . .

                                                                                                                                                                                                      - . - - - - - - ~ ~ - -                                   "                                 
                                                                                                                                                                                                                                                                                                          ~ .; ,;...

12 New totn credit er comtaned new :ctis and tarcated jobs cred.ts . ......... ... .. ...... ... For n SG. or ft:rm '2mry 13 Tases paid by reculJted investmerit company . . .. , .. . , . . . . . . . . Line til ad i aorcs "fram ICCP 14 a Payments for partner to a Keogn Pian (Tyr'e > .. ) , . . . . . . . . . . . Line 25 b Payments for partner to an .nd%:ual Retirernent Arr.inCement . Line 21 A . . . . . . . . . , , ,

  .f            ; a Cther income, dedu:!.ans. etc. (attach scheduie) .                                                                .             .         . . .                                .                                                           . .( s.m:s Cateroron         vm., an-i.cese

c. i.. ., ). . , ,

  \             '
                , b Cd and m h3 e? e Later ar ci.nt i.act fer ;artnei s wse) >                                                                                . . . . . .                                                   .    ,, ,,wm                  ,        ,.,a,,.                       . ,e< :     ,,p,,..

16 saccadv anacited .tems: a Snert term capit u c un or (1oss . . . . . . . . . . . . . . . . . . . . . Sch. D. hne 2 (See attacaca sc ' eau;e] b Lang te m capital ga.n or (toss) . . . . .. . . . . _ . . . Sen. D. hne 3 c Ordinary gain or (toss) ....... . . . . . . . . . . . . . . . . . . . . . Fcrm 4797. hne 10

                                                                          .s & i.,                                                                                                                                                                          s..,       r rn,. u s

• Note:

Separate Schedules on Form K-1 were filed to show each tenant's

 . . . -.. r . ; , , ., . , .         . .
     . 317.o              Accelerat.ed           depreciati         n en real property: (1) Low income rental hasing .                       .... .. ......

Form 4625. lins 1(b)(1) ,

   ,'.j g j..m ;. g yj.
               ~                    .            ,.   .,                                                                                                                                   , . .
                                                                               ..            (2) Other re:I proptrty .         ,
                                                                                                                                                                                         ~ ~

Form 4625 lina 1(b)(2) , (,7 3 b Accafe'ated dcoreciation on personal property subicct to a fesse. ' ' ' ~ ~ - ~~~ ~ Form 4625, line 1(c) j,

      ~7                  nmortustioni e ...._ _ . . . . d                                 .,o.       . . . . . . . f                     . . . . . . . . . . . . . . . . . . . .
                                                                                                                                                                                                 ~

Form 4C25. Ine 1(d) tr.ru (r.) f ^'4 g Reserves for losses on bad debts cf financial institutions . . . . . . ...... - C. Form 4625 line 1(h) e. ( { h Depletion (other than oil and cas) . . . . . . . . . . . . . A.I.l. (1) Excess intangible dnlling costs from oil, gas or geothermal wells

                                                                                                                                             ...._.__._,..'..                                               Form 4625, line 1(j)                          T.. .
                                                                                                                                   . .    . . . . . . . .                              . .             . See Form 4625 instr.                          ,,      .

_ ,, _ (2) Net income from oil, gas or geothermal wetts . . . . . . . . lig,

      . ~ IS Interest on Investment Indeb!cdness: a Investment interest expensc-3 r       * * '

e ....~.

                      .. (1) Indettedness incurred before 12/17/69. . . . . . . . . .
                                                                                                                                         . ~ . . . . . . . .                       -

Form 4952. line 1 . - .w. .c

       .'            .C-
                  ,         (?) Indebtedness incurred before D/11/75. but after 12/16/69.                                    . . .        . ._.                         _._ ._                              Form 4352. line 15                                  ,
             .c .l(3) Indebtedness incurred af ter 9/10/75.                                   . . . . . . . . . .                      .._                                            ._._               Form 4952. !ine 5
             ,        ' b Net investment income or (foss) . . . . . . . . . . . . . .                                                        ..-                       .

Form 4932. fine 2 or tine lC(2) c Excess expenses from " net icase property'*. . . . . . . . . . .... _ ...- .. Form 4552. lines 112nd 13

• d Excess of net long term capital gain over net short term capital loss frem -

investn ent ornt'erty . . Forrn 4952. line 20

            - 19 Property Quahtied for Investment Credit:                                                                                 -p                 '
                                                                                                                                                                  -wt            ' ## '                       WNrjdr6NMRi Basis cf new investmer.t a 3 or more but less than 5 years . . . . . . . .                             ..........K...                                                    Form 34(3. inc 1(a)                           . ..
                    '                               ~      b 5 or more but less than 7 years . . . . . . . .                                    ....X...........                                           Arm 2463. Iir:e 10)

E'C E * @ c 7 or more veirs . . . . . . . ,,,. . X

         **                                                                                                                                                                                                Form 3423. fine 1(c)

Qua!ifed prog, d 7 or mere years 1974.1975.1976 and 1977

                 - ress excend.tures                                                                                                                          _.                          ..               Tctm 2453. line 1(d)
                                                           , 7 er .r,rsre vears            1973
                                                                                                                                          , , , , , , , , , , , , _                        , , , , . . Form 3tC2, line 1(e)                         .

Cost of used f 3 or more but icss than 5 years . . . . . . . . . . . . . . . . . Form 3163, line 1(t) investment g 5 or mere but less than 7 years . . . . . . . . P'0?' @ h 7 or mere years .

                                                                                                                                                                     . . . . . . . . . . .                 Form 34E3. firie 14)                               .

Form 3463. !ina !fM 20 Frocerty tJsed in Neecni::utin.; a Prior year investment Crenit (enter in corretconoing column or form 4255)-

n. (1) .- (2) (3) (4) (5)

             * *

• Cesenst.ee of ' (G) (3) (9) (10) - - (11) preeme titi. Armi. Orig.rst nahheJ Date item retied Amesi. Qeaur:ed Cast ma:e1 can:e .a.estment ceased to e, ac.

inw stase neia r e Date eleces is er eserve car. (conome 3 a laat!y casse per-lavestmest een e, es.4 sm ce investmen (cr.3ama 3 e bas.s his centne coisme tp creJ.t stoo.t ,ty used centage casema 14 X X X X X X X X X X

        ~

21 a Dasis *o par *.ner of centributed prcperty (other than mency) at time (s) of contribution to partnership . . , , , , , _ b Value of centributed property in hne Ola as ref!ceted in thr: partner's capital account . . . . . . . .

             . 22 a Gasis to partnership cf distributed property (other than mency) at t;mc(s) of distribution to the partr c'r .                                                                                   .                              __

b Vane of distributed propcrty in line 22a as reflected in tha partner's capital account . . . . . . . . 23 Partnership informat.cn rea,arding internat.onal1:eycottin;. For partnc:'s reputting requirements see Form 5712. . h5 U2 a Did partnership habe Cperations in a boycotting country) . . . . . . . . . . . . . . . . . . . ,,,,, y Q ,,, t3 Did partnership participate in or Cooperate with an internaticnal boyectt? . . . . . . . . . . . ... ,(i [t , c DM rurtnersNn tae Form 5713?

                                                                                                                    . . .           .                         . . . .                                    .          . . .                     do
               .s.                                 ,

s. .:

I, s)\ . g .m 9

• O $

S 4 Note: Supporting Schedules were attached to show detailed (' computations of the investment credit, depreciation, the tax basis of partnership assets, and items on ' the partnership balance sheet. r kO U , l l l t

    'g  4
                  ~

i l

l =

i l

l l c G l 1 i  ! l I , i l-l l GRAND GULF NUCLEAR STATION Operating Agreement } between l Middle South Energy, Inc. I

and 4

South Mississippi Electric Power Association 1 Dated as of ,1980 i i i t i l . I ! l i I i ! -l ' L _- . _ _ _ - . - _ _ _ - _ _ _ . . _ . _ _ _ _ _ _ _ _ _ . _ . _ _ _ . . _ _ _ - _ _ _ _ _ . _

1 s TABLE OF CONTENTS PAGE ARTICLE I - DEFINITIONS 3 1.01 General 3 1.02 Construction Agreement 3 1.03 Cost of Operation or Costs of Operation 3 1.04 Economic Reasons 4 1.05 Force Majeure 4 1.06 Operating Agreement 5 1.07 System Agreement 5 ARTICLE II - GENERAL OBLIGATIONS AND RIGHTS OF TIIE PARTIES 5 2.01 No Adverse Distinction 5 2.02 Authority for Operation and Manage-ment 6 2.03 Execution of Contracts 7 2.04 Cooperation 8 h v 2.05 Operation, Agency, Conflict of Interest 9 2.06 Limitation of Liability 10 2.07 Nuclear Fuel 12 ARTICLE III - GENERAL FINANCIAL OBLIGA-TIONS OF MSE AND SMEPA 13 3.01 Sharing of Cost of Operation 13 3.02 Payment and Settlement of Cost of Operation 14 3.03 Excess Uranium Provision 18 - ARTICLE IV - AVAILABILITY OF CAPACITY AND ENERGY 19 4.01 Sharing of Capacity and Energy 19 4.02 Scheduling and Dispatching 19 4.03 Sharing of Cost of Nuclear Fuel 20 4.04 Transactions with Other Systems 21 4.05 Federal Energy Regulatory Commission 21 I l l . . ._ .

ARTICLE V - ACCESS TO GRAND GULF 22 5.01 Observadon 22 5.02 Indemnity 23 5.03 Plant Tours 23 5.04 Information 23 ARTICLE VI - ASSIGNMENT, TERMINATION AND RETIREMENT 24 6.01 Assignment 24 6.02 Termination 25 4 6.03 Retirement Costs 25 ARTICLE VII - PENALTIES 26 7.01 Obligation of the Parties; Default 26 , 7.02 Interest on Overdue Payments 27 7.03 Usury 28 7.04 MSE's Right to Make Payments on Behalf of SMEPA 28 ARTICLE VIII - INSURANCE 29 8.01 Insurance 29 ARTICLE IX - GENERAL 30 9.01 Governing Law 30 9.02 No Delay in Payments by SMEPA 30 9.03 Regulatory Agencies 31 9.04 Notice 31 9.05 Headings Not to Affect Meaning 32 9.06 Amendments 32 9.07 Successors and Assigns 32 9.08 Counterparts 33 9.09 Time of Essence 33 9.10 Good Utility Practice 33 ' 9.H Further Assurances 33 9.12 License Conditions 33 l 9.13 Conflict with Construction Agreement 34 9.14 Covenants Running with the Land 34 9.15 Force Majeure 34 9.16 REA Approval 34 9.17 Entire Agreement 34 9.18 Operating Agent 33 9.19 Environment 35 Oi

v

i I t LIST OF EXIIIBITS INITIAL ' EXHIBIT REFERENCE , A - Excess Uranium Letter Agreement 18 B - List of Reports and Contracts 23 i l I r i l r i I

                                                                       ;

i l { L I l-l l l l y --w -

GRAND GULF NUCLEAR STATION Operating Agreement between Middle South Energy, Inc. and South Mississippi Electric Power Association Dated as of , 1980_ THIS AGREEMENT, dated as of , 1980, is between MIDDLE SOUTH ENERGY, INC., an Arkansas corporation ("MSE"), and SOUTH MISSISSIPPI ELECTRIC POWER ASSOCIATION, a Mississippi corporation ("SMEPA"). MSE and SMEPA have concurrently herewith entered into an agreement entitled " Joint Construction, Acquisition and Ownership Agreement" dated as of , 1980 (the " Construction Agreement") pursuant to which this Operating Agreement is executed. SMEPA is empowered to engage in the business of generating, transmitting and distributing electric power and energy to its member electric power associations in the State of Mississippi. SMEPA presently supplies a part of the power requirements of its members, but upon the completion of Grand Gulf pursuant to the Construction Agreement and the performance by the

f a parties of their respective obligations under this Operating Agreement, SMEPA represents that it will or is expected to be the sole and exclusive power supplier for each such member presently supplied by Mississippi Power & Light Company ("MP&L"), so that MP&L gradually will be relieved of any further obligation to supply electric power and energy to any member of SMEPA. Pursuant to the Construction Agreement, SMEPA will acquire a ten percent (10%) undivided ownership interest in Grand Gulf (which percentage may change pursuant to the terms of the Construction Agreement). By this Operating Agreement, MSE and SMEPA intend to provide for the sole (~') management, operation and maintenance of Grand Gulf v subsequent to its Commercial Operation by MSE and for the use of capacity and Energy from Grand Gulf and the sharing of the costs thereof in accordance with the respective undivided ownership interests of MSE and SMEPA. NOW, THEREFORE, in consideration of the premises and the mutual covenants herein set forth, MSE and SMEPA agree as follows: O _/ ARTICLE I - DEFINITIONS Section 1.01. General. Any term used herein which has a defined meaning in the Construction Agreement shall have the same meaning in this operating Agreement, unless the context in which such term appears herein other-wise clearly indicates a contrary meaning is intended. Section 1.02. Construction Agreement shall mean the " Joint Construction, Acquisition and ownership Agreement," dated as of , 1980, between MSE and SMEPA. Section 1.03. Cost of Operation or Costs of ( )) Operation shall mean all management, control, maintenance, repair and operation costs and related taxes incurred undar or with respect to this operating Agreement and attributable or allocable to Grand Gulf, including production expenses, production supervision, cost of Nuclear Fuel, insurance and liability payments, employee pensions and benefits, payroll and other taxes and appropriate allocations of expenses classified as administrative and general expenses, and any other cost incurred in connection with Grand Gulf after the date of Commercial Operation which is not a Cost of Construction, all of which shall be calculated in accordance with any applicable rules and regulations. [} v Section 1.04. Economic Reasons shall mean that under the pooling agreement pursuant to which MSE's share of Capacity and Energy from Grand Gulf is being sold (at present such agreement is expected to be the System Agreement), Grand Gulf is not being operated because lower cost sources of energy are available to the companies which are parties to such agreement. Section 1.05. Force Majeure shall mean any act, delay or failure to act on the part of any state or federal governmental authority, whether legislative, executive, judicial or administrative, including delay or failure to act by any governmental authority in the issuance of permits O or licenses required in connection with Grand Gulf and the V prohibiting of acts necessary to performance hereunder or the permitting of any such acts only subject to unreasonable conditions; acts of God; damage, accidents or disruptions including but not limited to fire, flood, explosion, tornado, hurricane, earthquake, windstorm or equipment breakdown; failure or delay beyond either party's reasonable control in securing materials, equipment, services or facilities; labor difficulties such as strikes, slow-downs

or shortages; delays in transportation; civil unrest, disturbances, demonstrations; or any other cause beyond either party's control.

O l l

[V Section 1.06. Operating Agreement shall mean this agreement between Middle South Energy, Inc. and South Mississippi Electric Power Association. Section 1.07. System Agreement shall mean the Agreement dated April 16, 1973, and effective July 2, 1973, together with all service schedules thereto, among Arkansas Power & Light Company, Arkansas-Missouri Power Company, Louisiana Power & Light Company, MP&L, New Orleans Public Service Inc. and Middle South Services, Inc., as the same may from time to time be amended or supplemented in accordance with the applicable provisions thereof. O U ARTICLE II - GENERAL OBLIGATIONS AND RIGHTS OF THE PARTIES Section 2.01. _No_ Adverse Distinction. Notwith-standing any other provision of this operating Agreement, neither MSE nor MP&L, as its agent under this Agreement, shall make any distinction adverse to Grand Gulf between Grand Gulf and any other generating unit because of MSE's co-ownership of Grand Gulf with SMEPA, and neither MSE nor MP&L, as its agent under this Agreement, shall be under any obligation to make any distinction favorable to Grand Gulf between Grand Gulf and any other generating unit because of MSE's co-ownership of Grand Gulf with SMEPA. k Section 2.02. Authority for Operation and Management. MSE shall have the sole authority and responsibility to manage, control, maintain, repair and operate Grand Gulf, and it shall take all steps which it deems necessary or appropriate in accordance with Good Utility Practice for such purpose. MSE shall maintain all accounting and other records and shall prepare or cause to be prepared all partnership tax returns under laws pursuant to which co-ownership is treated as the equivalent of a partnership for tax purposes and all other tax returns which must be filed on behalf of MSE and SMEPA jointly; provided however, except as required by law, MSE and SMEPA shall separately report and pay taxes, if any. To the extent that

participation of SMEPA in any of such activities is necessary or appropriate, SMEPA hereby irrevocably appoints MSE as its agent to act on its behalf in all such activities q in connection with Grand Gulf, provided, however, MSE shall i

have no authority under this operating Agreement to sell or i otherwise dispose of SMEPA's proportionate share of Capacity and Energy from Grand Gulf for SMEPA's account, except as provided in Section 7.01. MSE accepts such appointment. MSE, further, shall have the authority to appoint agents for the purpose of discharging any of the obligations imposed upon MSE hereunder or revoke such agencies, subject to all necessary regulatory approvals, (it being understood that

Q (_j MP&L is presently empowered to act as MSE's general agent under the Service Agreement in connection with Grand Gulf to the extent and in the manner permitted therein), provided that no such appointment shall relieve MSE of any obligation to SMEPA hereunder. Section 2.03. Execution of Contracts. After the closing any contract covering management, control, maintenance, repair and operation of Grand Gulf, including (to the extent not provided for in the Construction Agreement) any contract for the acquisition of materials, inventories, supplies, spare parts, equipment, fuel, Nuclear Fuel, or services therefor, shall be executed solely by MSE, or by MSE for itself and on behalf of SMEPA. MSE will use [) its best efforts, consistent with the objective of economic and timely completion of Grand Gulf, to obtain in each such contract entered into after the Closing, wherein the aggregate contract price is estimated to exceed $1,000,000, the inclusion of a provision providing for several but not joint liability of MSE and SMEPA under such contracts in proportion to their respective undivided ownership interests in Grand Gulf. Each such contract may provide for separate invoicing to SMEPA in accordance with its undivided ownership interest in Grand Gulf. Whether or not any such contract is entered into in the name of both parties, after the closing each party shall, except as otherwise expressly [_)

 \_/

l l

O V provided in this operating Agreement, (a) be severally and not jointly responsible for its share of all amounts which are payable under or with respect to such contracts, (b) indemnify and reimburse the other party for payments made by such other party with respect to or on account of any part of the share of such amounts owed by the indemnifying or reimbursing party, and (c) take title to the property included in Grand Gulf and covered by such contracts in proportion to its undivided ownership interest in Grand Gulf. In order to induce third parties to contract with MSE with regard to the performance of MSE's obligations to SMEPA under this Agreement, SMEPA hereby agrees to indemnify any such contracting party to the extent of any liability arising under such contract in proportion to SMEPA's undivided ownership interest in Grand Gulf, notwithstanding the fact that such contract may be made only in the name of MSE. Section 2.04. Cooperation. MSE and SMEPA will cooperate with each other in all activities relating to Grand Gulf, including, without limitation, the execution and filing of applications for authorizations, permits and licenses and the execution of such other documents as may be reasonably necessary to carry out the provisions of this Operating Agreement. Except at the written request of MSE, SMEPA shall not incur any obligation or do any other act in Cs V _ _ ~ _ () connection with Grand Gulf which would or could obligate MSE to any third party. The obligation of cooperation contained in this section shall not imply that MSE does not have full power of authority to execute applications and documents on behalf of SMEPA as contemplated in Section 2.02. Section 2.05. Operation, Agency, Conflict of Interest. As the sole manager and predominant owner of Grand Gulf, MSE will manage, control, maintain and operate Grand Gulf in all respects as if MSE were the sole owner of Grand Gulf. If MSE ceases to operate Grand Gulf without the I concurrence of SMEPA for Economic Reasons there will be made available to SMEPA through Article III of the Substitute () Power Agreement, Capacity and Energy in the manner and amount, and at the cost, determined pursuant to the Substitute Power Agreement. MSE will reimburse MP&L for any net operating loss incurred by MP&L as a result of furnishing Capacity and Energy to SMEPA at the cost determined pursuant to Article III of the Substitute Power Agreement. If such Capacity and Energy is not available to SMEPA under Article III of the Substitute Power Agreement, MSE shall, if it has available to it from sources other than Grand Gulf Capacity and Energy equivalent to the amount of Capacity and Energy which would have been available to SMEPA under Article III of the Substitute Power Agreement which is

    ~s     excess to its needs, supply such excess Capacity and Energy V
                                        .g_

to SMEPA under the same terms and provisions as are set forth in Article III of the Substitute Power Agreement. Any reduction in the output of Grand Gulf which is caused by Force Majeure must be shared proportionately by the parties. In discharging its obligations hereunder, MSE shall have the right, either on its own behalf, or on its own behalf and on behalf of SMEPA, to provide by itself, or to contract with any MSE Affiliate for the purchase, at cost, of, any equipment, facilities or Nuclear Fuel or for the performance of services, at cost, in connection with Grand Gulf. Section 2.06. Limitation o_f Liability. To the extent permitted by law, SMEPA shall not be entitled to recover from MSE, its agents, employees or insurers (except to the extent it shall be entitled to share in insurance recoveries obtained by MSE hereunder) for any damage resulting from negligence, error or delay in the management, control, maintenance, repair or operation of Grand Gulf, or for any damage thereto, any curtailment of power, or any damages of any kind, including consequential damages, occurring during the course of management, control, maintenance, repair or operation of Grand Gulf or otherwise arising out of the performance of this operating Agreement, unless such damages (other than consequential damages, which shall not be recoverable in any event) shall have resulted from grocs negligence of MSE, its agents or employees; but all such damages (other than

pJ consequential damages, which shall not be recoverable in any event), other than those resulting from gross negligence of MSE, shall be shared by MSE and SMEPA as a Cost of Operation in proportion to their respective undivided ownership interests in Grand Gulf. In no event shall MSE be liable to SMEPA for any such loss in an amount greater than SMEPA's uninsured loss. SMEPA shall be entitled to share in any such damages which may be recovered by MSE from any third party, including insurers, in accordance with its undivided ownership interest in Grand Gulf. As used in this Section, the term " consequential damages" shall include but not be limited to damage or loss of other property or equipment,

 ;   loss of profits or revenue, loss of use of power system, cost of capital, cost of purchased or replacement power, or claims of customers for service interruption. The duty of MSE to perform its obligations under this Operating Agreement in a prudent manner and in accordance with Good Utility Practice shall be construed or modified to the extent necessary to give full effect to the provisions of this Section, but this Section shall not excuse a breach of this Operating Agreement constituting gross negligence.

Each party hereto shall individually bear, and shall indemnify the other party against, all costs, losses, liabilities and expenses resulting from its own gross negligence, but in the event MSE or SMEPA, in the v pJ performance by MSE of its duties under this Operating Agreement, otherwise incur any liability to any third party, any amount paid by MSE or SMEPA on account of such liability shall be considered a Cost of Operation and apportioned between the parties in accordance with their respective undivided ownership interests in Grand Gulf. Section 2.07. Nuclear Fuel. MSE shall have the authority and shall use its best efforts to acquire and manage all Nuclear Fuel for Grand Gulf according to its sole discretion and judgment, including, without limitation, reloading, spent storage, reprocessing and waste disposal matters relating to Nuclear Fuel. MSE shall also have the right to enter into any arrangement, on its behalf and on behalf of SMEPA, for obtaining and financing, by purchase, lease or otherwise, Nuclear Fuel for Grand Gulf which MSE, in its sole discretion, shall deem desirable, and SMEPA agrees to cooperate with MSE and, subject to any required approval of the REA, to take all action required to consummate any such arrangements. MSE may acquire Nuclear Fuel from SFI or others, for itself and others. This Section applies only insofar as the cost of Nuclear Fuel is deemed a Cost of Operation in accordance with standard accounting practices applicable to MSE and only to the extent the Construction Agreement is not otherwise g applicable. V ARTICLE III - GENERAL FINANCIAL OBLIGATIONS OF MSE AND SMEPA Section 3.01. Sharing of Cost of Operation. Except as otherwise provided in this Article III, MSE and SMEPA shall be responsible for sharing the Cost of Operation of Grand Gulf in the following manner: (a) with respect to those Costs of Operation which are fixed and do not vary with the amount of Energy produced by Grand Gulf (other than any such costs of Nuclear Fuel), MSE's share of such Costs of Operation shall be 90% and SMEPA's share of such Costs of V Operation shall be 10%; (b) with respect to those costs of Operation which vary with the amount of Energy produced ; (other than any such costs of Nuclear Fuel), ' the parties shall share the Costs of - i Operation in proportion to the Energy that , each obtains from Grand Gulf for its own benefit; and , (c) with respect to the cost of Nuclear Fuel the provisions of Section 4.03 shall apply, except insofar as the provisions of Section 3.03 may apply.  !

O h MSE and SMEPA shall share all cost of Operation incurred in connection with Grand Gulf, and not otherwise expressly provided for in this Operating Agreement, in the proportions set forth in Subsection 3.01(a), and in the event of any doubt whether a particular cost, obligation or liability is provided for in this Operating Agreement such cost, obligation or liability shall be so shared. SMEPA's obliga-tion to pay its share of the Cost of Operation shall be absolute, and SMEPA shall make all such payments when due, without any right of set off against MSE or any other person. Section 3.02. Payment and Settlement of Cost of Operation. MSE shall be responsible for making, and shall have sole authority on behalf of SMEPA to make, payment to third parties of all Cost of Operation, direct and indirect, in connection with Grand Gulf. The parties shall make their payments of Cost of Operation in accordance with the fol-lowing procedures: (a) At least fifteen (15) days prior to the Closing. and thereafter at least fifteen (15) days prior to the end of each calendar quarter, MSE will furnish SMEPA the best estimate reasonably available as to the anticipated Cost of Operation by calendar quarter for the next succeeding four calendar quarters. (b) MSE will, on or before the first day of each month, commencing the month immediately preceding the Closing, notify SMEPA of the Cost of Operation of Grand Gulf anticipated to be due and payable during the succeeding calendar month, plus

       -any adjustments to Cost of Operation made in prior months but not previously charged or credited to SMEPA, with separate computations as to Grand Gulf Unit No. 1 and Grand Gulf Unit No. 2. SMEPA shall pay an amount equal to ten percent (10%) of such anticipated Cost of Operation as so adjusted on the first day of such succeeding month (or on such other day or days in such month as shall be designated in such notice) to an account at any bank designated by MSE and called the "MSE-SMEPA Grand Gulf Operating Account," and MSE shall, on such date, pay 90% of such Cost of Operation into said account. All such payments shall be in Immediately Available Funds. As agent for the parties MSE shall draw down such funds as needed to pay the Cost of Operation. Funds in said account may be invested, and shall be invested to the extent practicable, at MSE's direction and for the benefit of both parties, in United States bonds, bills, Treasury notes or certificates, O

v l certificates of deposit of Mississippi banks and other investments permitted by law, and profits and losses from said investments shall be shared by the parties in accordance with their undivided ownership interests in Grand Gulf, provided that should SMEPA object to the type of investments made by MSE, then from and after 90 days after such objection, SMEPA's 10% of such funds shall be invested in such type of investments as shall be designated by SMEPA; profits and losses therefrom shall be allocated solely to SMEPA; and SMEPA shall have no share in the profits and losses from investments made in respect of MSE's payments. Each such notification made by MSE of anticipated Cost of Operation and adjustments to Cost of Operation shall be accompanied and adjusted by an accounting of Cost of Operation incurred and credits, if any, received for the preceding months. MSE shall provide SMEPA with such information as is reasonably required for SMEPA to account for the payment of Cost of Operation on its books. No payment made pursuant to this Section 3.02(b) shall constitute a waiver of any right of SMEPA to question or contest, pursuant to the following sentence, the correctness of that () portion of the Cost of Operation charged to SMEPA by MSE. SMEPA shall have until the 180th day after the end of each calendar year to question or contest the correctness of any charge or adjustment made in the preceding calendar year, after which time the correctness of such charge or adjustment shall be conclusively presumed, provided that MSE shall credit SMEPA with an allocable share of recoveries, whenever received, from third parties and shall charge or credit SMEPA with its allocable share of underpayments or overpayments of Cost of Operation, as the case

   )   may be, discovered by MSE at any time.      Force Majeure shall not excuse failure by MSE to credit SMEPA with its allocable share of recoveries or overpayments of Cost of Operation owing at any time.

(c) MSE will permit SMEPA, at SMEPA's expense, to examine all records regarding operation of Grand Gulf. At the end of each calendar year, SMEPA may, at its option, conduct, or cause to be conducted, an audit of the books and records of MSE relating to Grand Gulf, and such audit shall be completed within ninety (90) days of the end of the calendar year. Further, p O i

r '% V MSE shall make available to SMEPA a copy of any routine annu.tl audit report prepared at MSE's request conc!rning the books and records of MSE relating to 3 rand Gulf and the cost of preparing such audit report shall be a cost of operation. If SMEPA desires information from MSE's auditors in addition to that normally contained in the annual audit report, SMEPA may, at its expense, obtain such information. Section 3.03. Excess Uranium Provision. As an exception to the requirement of Section 3.01(c) that the cost of Nuclear Fuel be shared in accordance with the ( provisions of Section 4.03, it is agree.f that MSE will bear 100% of the Cost of Operation relating to any Excess Uranium, as such term is defined in the letter agreement dated June 15, 1978 by and between System Fuels, Inc. and Arkansas Power & Light Company, a copy of which is attached hereto as Exhibit A, which it may acquire from time to time, and no such costs will be chargeable as a Cost of Operation to SMEPA. Any such Excess Uranium shall not be considered part of the Nuclear Fuel comprising a part of Grand Gulf, and the cost of Operation for Energy delivered to SMEPA under this operating Agreement shall at all times reflect only the cost, or the assumed cost, of Nuclear Fuel constituting a part of Grand Gulf. (h

 '(            ARTICLE IV - AVAILABILITY OF CAPACITY AND E?ERGY Section 4.01. Sharing of Capacity and Energy.

Subject to the provisions of Section 4.03 hereof, MSE and SMEPA shall each be entitled to 90% and 10%, respectively, of the Capacity of, and Energy generated by Grand Gulf in kind available at any given time. If the output of Grand Gulf is negative, MSE shall obtain any necessary Capacity and Energy for the operation of Grand Gulf and the cost thereof shall be a Cost of Operation. Section 4.02. Scheduling and Dispatching. MSE shall have sole authority for the hourly scheduling and

 /~'T     dispatching of Grand Gulf generation, in accordance with G'

MSE's standard scheduling and dispatching procedures. So long as Grand Gulf is operating both parties may schedule up to whatever amount of Capacity and Energy can then be effectively generated from their respective undivided owner-ship interests in Grand Gulf. Each party may schedule Capacity and Energy from the other party's entitlement which is excess to such other party's needs and requirements, but only after taking the full amount of Capacity and Energy to which the scheduling party's undivided ownership interest in Grand Gulf entitles it. Each party shall use its best efforts to schedule such maximum amount of Capacity and

    ,     Energy to which each is entitled at any given time.      If l

() either party schedules less than such amount of capacity and Energy, it shall use its best efforts to schedule at least that percentage of the share of the Capacity and Energy to which it is entitled which, if such percentage were applied to all of the Capacity and Energy of Grand Gulf then available, would result in generation of the minimum amount of Energy required by regulation or practical considerations to keep Grand Gulf in operation. The foregoing two sentences shall not be deemed in any way to limit the sole authority of MSE to schedule and dispatch Grand Gulf generation in accordance with its standard scheduling and dispatching procedures or to manage, control, maintain and (~} operate Grand Gulf in all respects as if MSE were the sole v owner of Grand Gulf, as provided in Section 2.05. Section 4.03. Sharing of Cost of Nuclear Fuel. It is understood that MSE and SMEPA may own, lease or otherwise have the right to the use of and be responsible for the cost of Nuclear Fuel either in proportion, or other i than in proportion, to their respective undivided ownership interests in Grand Gulf at any given time. For any period, each party shall bear all costs of Nuclear Fuel by the ratio which the quantity of Energy taken by the party to be charged bears to the total Energy generated by Grand Gulf for the same period. The total cost of Nuclear Fuel to a party for any given time shall include the total variable Ci G operating expense related to that party's total share of Energy for such period plus (a) that party's own separable share of fixed investment, leasing and other carrying costs of Nuclear Fuel related to such Energy, and (b) an allocable share of the other party's own separable share of fixed investment, leasing and other carrying costs of Nuclear Fuel related to the Energy taken by the first party, and such other party shall be reimbursed by the first party for such < expense. MSE and SMEFA shall exchange from time to time as necessary such information with respect to their interests in Nuclear Fuel as will enable the computations referred to above to be made. MSE will render the appropriate resulting fl G charge or credit to SMEPA in accordance with Article III. Section 4.04. Transactions with Other Systems.

MSE and SMEPA shall each be entitled to dispose of its proportionate share of the Capacity and Energy of Grand Gulf through scheduled transactions with other systems or by any other method deemed by either party to be practical and feasible.

Section 4.05. Federal Energy Regulatory o C_onmission. If and to the extent that this Operating Agreement or any part hereof shall be required to be filed, or shall be filed with any regulatory agency, including, without limitation the Federal Energy Regulatory Commission,

  ,     as a rate or rate schedule, nothing in this Operating

( Agreement shall be construed as affecting in any way the right of MSE to make application unilaterally to such agency from time to time for a change in rates, charges, classifications, or service, to reflect changes in its actual costs or for a change in any rule, regulation, or contract relating to changes in its actual costs under applicable laws and regulations. To the extent that MSE makes any such filing, SMEPA reserves the right to intervene in any proceeding involving such a filing by MSE and shall have the right to object to any proposed change. ARTICLE V - ACCESS TO GRAND GULF O Section 5.01. Observation. Authorized representatives of SMEPA and its mortgagees will be permitted at reasonable times and in accordance with limitations of licenses and other regulatory authority to visit Grand Gulf to observe operation and maintenance, including refueling activities, being performed by MSE, and to examine and copy all records and papers maintained by MSE with respect to the ownership, operation and maintenance of Grand Gulf. None of the rights provided in this section 5.01 shall be exercised in such a way as, in the judgment of MSE, would unreasonably interfere with the safe and efficient operation of Grand Gulf.

   -vs

( ,,/ Section 5.02. Indemnity. Regardless of fault, SMEPA shall indemnify and hold MSE harmless against any claim for personal injury or death made by an employee, officer, agent or other representative of SMEPA, or its mortgagees, their heirs, representatives, successors, and assigns, which may be based upon or arise out of the presence of such employee, officer, agent or other representative at the site of Grand Gulf other than those arising out of the gross negligence of MSE or its agents or employees. Section 5.03. Plant Tours. Upon prior approval of MSE, SMEPA may conduct plant tours and visits at Grand

        )   Gulf, subject to the rules and regulations of regulatory authorities.

Section 5.04. Information. MSE shall make all reasonable effort to inform SMEPA as to the management, control, maintenance, repair and operation of Grand Gulf and shall furnish SMEPA such reports and contracts as are related thereto at such times as are indicated on Exhibit B hereto. No failure by MSE to provide information pursuant to the provisions of this Section shall release SMEPA from any obligation hereunder.

   -)

l L

m s ARTICLE VI - ASSIGNMENT, TERMINATION AND RETIREMENT Section 6.01. Assignment. If, pursuant to the Construction Agreement, either MSE or SMEPA makes a sale, transfer or assignment of any portion or portions of its undivided ownership interest in Grand Gulf (other than solely for any reason contemplated by Sections 6.03 and 6.04(d) of the Construction Agreement) such party shall, subject to obtaining all necessary regulatory approvals, also assign, and shall cause the transferee to assume the rights and obligations of such party hereunder in proportion to the interest so transferred, and any sale, conveyance, or transfer by MSE of an ownership interest in Grand Gulf, as [} contemplated by Section 6.04 of the Construction Agreement, wherein the purchaser assumes the obligations of MSE under this Operating Agreement or under the Construction Agreement in proportion to the ownership interest sold, conveyed or transferred, shall operate as a release pro tanto, of MSE from any further obligation under this Operating Agreement or under the Construction Agreement. Notwithstanding the foregoing, MSE shall be under no obligation in such event to i P assign, proportionately or otherwise, any part of its authority and responsibility under Section 2.01 to manage, control, maintain, repair and operate Grand Gulf or any _s authority and responsibility related thereto under this O O b Operating Agreement. No other assignment of this Operating Agreement shall be permitted, except with the consent of both MSE and SMEPA. SMEPA hereby expressly consents to the pledge by MSE of this operating Agreement under the MSE Mortgage in accordance with the provisions of Section 4.07(b) of the First Supplemental Indenture, dated as of June 15, 1977, to the MSE Mortgage and of any comparable Section of any subsequent Supplemental Indenture. Section 6.02. Termination. Unless such date is extended with the consent cf MSE, if the Closing under the Construction Agreement has not occurred by October 1, 1980, then this operating Agreement shall be deemed void and of no effect. This Operating Agreement shall terminate upon the later to occur of (1) the expiration of the initial term of the operating licenses for Grand Gulf Unit Nos. 1 and 2 or any renewal or extension of either such license or (2) both Grand Gulf Unit Nos.1 and 2 being retired from service, de-commissioned and all requirements of Federal, state or local law relating to the safe deactivation of such Units having been met. Section 6.03. Retirement Costs. All costs as-sociated with retirement of Grand Gulf Unit Nos.1 and 2, including, without limitation, decommissioning, security, maintenance, monitoring, razing of structures and disposing g or storing of debris and spent Nuclear Fuel, and the cost of L) fulfilling all governmental requirements for safe deactivation of Grand Gulf Unit Nos.1 and 2 shall, to the extent they are not covered under the terms of the Construction Agreement, be deemed a Cost of Operation and be borne by the parties in proportion ~o c their respective undivided ownership interests. Payments for these costs shall be made in accordance with the provisions of Article III. ARTICLE VII - PENALTIES Sectic,a 7.01. Obligation of the Parties: Default. MSE and SMEPA hereby agree that they shall pay all monies and carry out all other duties and obligations agreed to be paid or performed by them pursuant to all of the terms and conditions of this Operating Agreement. In addition to any other rights or remedies, legal or equitable, available to a party which is not in default, in the event SMEPA at any time fails to make any payment when due or perform any other duty under this operating Agreement or the Construction Agreement, the non-performance of which has or is expected materially to hinder, obstruct or delay the management, control, maintenance, repair or operation of Grand Gulf, MSE shall have the right, at its option, to give written notice of such failure to SMEPA, and in the event such failure

l continues for a period of thirty (30) days after the giving of such notice, to withhold from SMEPA and use for its own account SMEPA's proportionate share of Capacity of and Energy from, Grand Gulf until such payment has been made, but with appropriate credit being given to SMEPA in respect of its undivided ownership interest in Grand Gulf for use of such Capacity and Energy. If the credits for such Capacity and Energy exceed the amounts due MSE, MSE will pay SMEPA monthly for the difference thereof. If the amounts due MSE i exceed such credits, MSE shall have a right to receive interest on the difference thereof during the period such amounts were due, at the rate determined pursuant to Section 7.02. A party which is in default shall indemnify and hold the party which is not in default harmless from and against any and all losses, costs, damages and expenses arising out of or resulting from the defaulting party's failure to make such overdue payments when due. Section 7.02. Interest on Overdue Payments. In addition to any other rights or remedies, legal or equitable, available to the parties, in the event either party fails to make any payment to the other party when due pursuant to this Operating Agreement or otherwise, whether or not due to Force Majeure, there shall be added to-such overdue amount interest from the date such payment was due at an annual rate equal to either the then current average pQ yield on outstanding obligations of the United States of America having a term of ninety (90) days or less, plus five percent (5%), or the owed party's incremental cost of  ! short-term, unsecured, borrowed funds, plus five percent (5%), whichever is the greater. Section 7.03. Usury. Notwithstanding any other provision herein to the contrary, it is the intention of MSE and SMEPA that any amount paid as interest, whether it be characterized as interest, finance charge or otherwise, l shall not be usurious; to that end, should any calculation of interest provided for hereunder result in an amount of interest or finance charge which would be usurious, or which 3 is subsequently held to be usurious, the amount of interest (Q or finance charge to be charged hereunder shall be reduced so that the amount actually charged will not be usurious, or if interest has already been paid, the amount by which such , interest or finance charge is held to be usurious shall be refunded. Section 7.04. MSE's Right to Make Payments on Behalf of SMEPA. In addition to all of the rights of MSE pursuant to Sections 7.01 and 7.02, MSE shall have the right, but not the obligation, to make any payment of interest or principal due and owing by SMEPA to the Federal Financing Bank, the REA, CFC or any other creditor of SMEPA in respect of a financing of SME?A's obligations hereunder, bl-v which SMEPA fails to make when due and to be promptly reim-bursed in full therefor by SMEPA, together with interest at the rate provided in Section 7.02 hereof. ARTICLE VIII - INSURANCE Section 8.01. Insurance. With respect to Grand Gulf, MSE shall carry in the name of MSE and SMEPA, and in proportion to their respective undivided ownership interests therein, insurance covering workmen's compensation, general public liability, nuclear property and nuclear liability insurance, and other such insurance in an amount, with such deductible or self-insurance features and including such risks as is consistent with MSE's customary practices, provided such insurance is available. MSE will keep in force the nuclear liability insurance and the indemnity agreement with respect to Grand Gulf as required by Section 170 of the Atomic Energy Act of 1954, as amended [42 U.S.C.A. Section 2210], and such other insurance as may be necessary to comply with any applicable regulations of the NRC or any other regulatory agency having jurisdiction, with MSE and SMEPA being named therein in proportion to their respective undivided ownership interests in Grand Gulf. The aggregate cost of all insurance procured pursuant to this Secticn, including without limitation any retrospective (~s 'w] () assessment, shall be considered a Cost of Operation and as such shall be apportioned between MSE and SMEPA pursuant hereto. SMEPA may at its sole expense purchase and take out t any additional insurance for its sole use and benefit as SMEPA may deem necessary, provided the interests of MSE are not thereby adversely affected. SMEPA shall advise MSE of the terms of any such additional insurance prior to entering into any contract therefor. All of the insurance policies obtained by either party shall contain waivers of subrogation against the other party, if obtainable from the insurer. If not prohibited under the terms of the insurance contracts, MSE and SMEPA hereby waive their rights of re-covery against each other to the extent that any loss [} experienced by MSE or SMEPA is covered by insurance carried by or on behalf of either party. ARTICLE IX - GENERAL Section 9.01. Governing Law. The validity, in-terpretation and performance of this operating Agreement and each of its provisions shall be governed by the laws of the State of Mississippi. Section 9.02. No Delay in Payments by SMEPA. No disagreement or dispute of any kind between MSE and SMEPA

   ,       concerning any matter, including, without limitation, the 1       .

l \

amount of any payment due from SMEPA or the correctness of any charge made to SMEPA, or any other reason, excuse or circumstance, including Force Majeure, shall permit SMEPA to delay or withhold any payment due and owing under this Operating Agreement; provided, however, SMEPA shall have the right to make any payment required of it under protest and reserve its rights under Section 3.02. Section 9.03. Regulatory Agencies. This operating Agreement is subject to the approval and lawful regulations of any regulatory authority having jurisdiction over this Operating Agreement or any party hereto. Section 9.04. Notice. Any notice, request, consent or other communication permitted or required by this operating Agreement shall be in writing and shall be deemed given when deposited in the United States mail, certified Mail prepaid, and if given to MSE shall be addressed to: Middle South Energy, Inc. c/a Mississippi Power & Light Company Post Office Box 1640 Jackson, Mississippi 39205 Attention: President with a copy addressed to (} Middle South Energy, Inc. Post Office Box 61000 New Orleans, Louisiana 70161 Attention: President and if given to SMEPA shall be addressed to: South Mississippi Electric Power Association Post Office Box 1589 Hattiesburg, Mississippi 39401 Attention: General Manager unless a different officer or address shall have been designated by the respective party by notice in writing. Section 9.05. Headings Not to Affect Meaning. () The descriptive headings of the various Sections and Articles of this Operating Agreement have been inserted for convenience of reference only and shall in no way modify or restrict any of the terms or provisions hereof. " Section 9.06. Amendments. This Operating Agreement may be amended by and only by a written instrument duly executed by each of the parties hereto. Section 9.07. Successors and Assigns. This Operating Agreement shall inure to the benefit of and be binding upon MSE and SMEPA and their respective successors and assigns, and, insofar as permitted by law, on any re-ceiver or trustee in bankruptcy, reorganization or receiver-ship of either party. Nothing in this Operating Agreement, O G () express or implied, is intended to confer upon any other person any rights or remedies hereunder, except as specifically provided herein in Sections 2.03 and 2.05. Section 9.08. Counterparts. This Operating Agreement may be executed simultaneously in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Section 9.09. Time of Essence. Time is of the essence with respect to this Operating Agreement. Section 9.10. Good Utility Practice. MSE and SMEPA shall discharge any and all obligations under this () Operating Agreement in a prudent manner and in accordance with Good Utility Practice. Section 9.11. Further Assurances. From time to time after the Closing MSE and SMEPA will execute such instruments of conveyance and other documents, upon the request of the other, as may be necessary or appropriate, to carry out the intent of this Operating Agreement. 1 Section 9.12. License Conditions. The Construction Permit contains antitrust conditions which may be a part of subsequent licenses issued by the NRC for Grand Gulf. This Operating Agreement is entered into by the parties in implementation of and is to be construed within the parameters of such conditions, and nothing contained herein shall be in violation thereof.

l  :

Section 9.13. Conflict with Construction Agreement. This Operating Agreement is entered into in conjunction with the Construction Agreement between the parties hereto. In case of any conflict between the Construction Agreement and this Operating Agreement, the terms of the Construction Agreement shall prevail. Section 9.14. Covenants Running with the Land. The covenants of the parties hereto shall be deemed to be covenants running with the land. Section 9.15. Force Majeure. MSE shall not be in default in performance of any obligation or duty hereunder if such failure of performance is due to Force Majeure (other than any obligation to credit SMEPA with its allocable share of recoveries or overpayments of Cost of Construction owing at any time). SMEPA shall not be in default in performance of any duty or obligation hereunder (other than any obligation to pay monies to or at the direction of MSE as provided in this Operating Agreement) if such failure of performance is due to Force Majeure. Section 9.16. REA Approval. This Operating Agreement shall not be in force and effect until approved-by the Administrator of the REA. Section 9.17. Entire Agreement. This Operating Agreement shall constitute the entire understanding between SMEPA and MSE, superseding any and all previous a understandings between the parties pertaining to the subject matter contained herein. Section 9.18. Operating Agent. MSE has appointed MP&L to act as its agent (as provided by Section 2.02 of this Agreement) in connection with the management, control, maintenance, repair, and operation of Grand Gulf; MSE covenants that any substituted operating agent appointed by MSE in place of MP&L will be at least as competent and knowledgeable in these regards as MP&L. Section 9.19. Environment. MSE shall operate Grand Gulf consistent with any Environmental Impact Statement issued by the NRC with respect to Grand Gulf, pursuant to the National Environmental Policy Act, and subject to such changes as have been approved by the NRC, provided REA is given notice prior to such changes. IN WITNESS WHEREOF, the undersigned parties hereto have duly executed this Agreement in Jackson, Mississippi on the date first above written. MIDDLE SOUTH ENERGY, INC. , BY: SEAL ITS: ATTEST: SECRETARY O

   .s  .

F () SOUTH MISSISSIPPI ELECTRIC POWER ASSOCIATION BY: SEAL ITS: ATTEST: SECRETARY STATE OF MISSISSIPPI COUNTY OF HINDS Personally appeared before me, a Notary Public in and for the jurisdiction aforesaid, the within named O(_,/ , who acknowledged that he is the of Middle South Energy, Inc. , a corporation, and the within named , who acknowledged that he is the Secretary of said corporation and that in their respective capacities herein set forth , they signed and delivered the foregoing instrument on the corporation's behalf on the day and year thereir mentioned, being duly authorized so to do. r O

I GIVEN UNDER MY HAND AND OFFICIAL SEAL, this the day of , 1980. NOTARY PUBLIC My Commission Expires: STATE OF MISSISSIPPI ' COUNTY OF Personally appeared before me, a Notary Public in and for the jurisdiction aforesaid, the within named

                                , who acknowledged that he is the
    )

President of South Mississippi Electric Power Association, a , corporation, and the within named , who acknowledged that he is the Secretary of said corporation and that in their respective capacities herein set forth they signed and delivered the foregoing instrument on the corporation's behalf on the day and year therein ' mentioned, being duly authorized so to do. O

l. l 1 I i

j ,i .. - i

I I 1 i. GIVEN UNDER MY HAND AND OFFICIAL SEAL, this the ' i

day of , 1980.

i 1 t I ! NOTARY PUBLIC 1 My Commission Expires: l l ! l 1 ! i l 1 l k a l I i I  !

',f                                                                                                                                                                                      f I

l l ! l i . l . I I i  :

- i e r I

i , l t , 1 l l l l i I l i I f i.

           @                                                                                                                                                                                l I

t

                                                                                                                                                                                    )

1 1 l l u__ . . _ _ _ _ . - _ _ _ _ _ _ _ _ _____________________.....J.._.___.,_..______ ..

                                                                                                                         .   .,._,_._. _ ,_ , _ .,_ _ ,, .. _.., _ _ ,, ,. ,,_. ..,.- ,,I

   ; z. ; ;                          -
     .. ..                                                                    EX-IIBIT A       .

i O Ns u SVSTEM FUSLS. INC. / 8OX S1532 / NEW OFILSANS. LA.70181/[504] 5SS-1575 a=~nt.panNecacasr omES4 CENT ANO csan axacurus opmesa June 15, 1978 Mr. Arch P. Pettit

         ' President Arkansas Power & Light Company                               

i P. O. Box 551 . Little Rock, Arkansas 72203  :

Dear Mr. Pettit:

() System Fuels, Inc. (SFI) is engaged in planning and impicmenting programs for the procurement of fuci supplies for the Middle South System and as a part of such programs is undertaking to arrange for an adequate inventory of nuclear  : fuel for the Middle South System. Arkansas Power.&. Light Company (AP&L) presently I! owns 992,060 pounds of U3 0s or U 03 8 equivalent, including 105,000 pounds of f U03 8 and 887,060 pounds of U 03 8 equivalent as UF6 (339,060 kilograms of U as UF6 ) (" Excess Uranium"), which uranium is in excess of that required by AP&L , in the near future for the operation of its Arkansas Nuclear 0ne Generating Station. The Execss Uranium was acquired by AP&L under the terms of contracts , dated September 20, 1971 and, July 14, 1970 between AP&L and Eldorado Nuclear , Limited and AP&L and Kerr McCce Corporation, respectively. This is to confirm the understanding betvcen us that APSL is willing to i

       ) sell the Excess Uran,ium to SFI, and SFI is willing to purchase the ' Excess Uranium from AP&L, upon and subject to the following terns and conditions:

 .g.   , ;-

a-June 15, 1978

       ; .Mr. Arch P. Pettit 9

J

1. SFI will purchase the Excess Uranium from AP&L for an amount in cash equal to the actual cost incurred by AP&L for the Excess Uranium, plus applicable allowance for funds used during construction to date of the purchase by SFI, it being understood that as of December 31, 1977 this amounted to $12,747,257.42 (including $678,616.96 of allowance for funds used during construction);

2. SFI will place the Excess Uranium in its inventory of U 038 IU038 equivalent and arrange for the necessary storage, conversion and enrichment thereof;

3. SFI will make the enriched Excess Uranium available for sale to AP&L or any other subsidiary of Middle South Utilities, Inc. for fabrication into .

and use as nuclect fuel at a price equal to the cost thereof to SFI, including applicable conversion, enrichment, transportation and storage costs, fixed charges, and interest and general administrative expenses, all of which shall be determined in accordance with the -provisions o'f Ru'le 91 promulgated by the Securitics and Exchange Commission under the Public Utility lloiding Company Act of 1935; and

4. If all or part of the enriched Excess Uranium is sold to a party other than AP6L, the purchasing party shall, as a condition to such sale, agree to make available to AP&L energy in the amount equivalent to the amount of energy generated throu;h the use of enriched Excess Uranium so purchased -

by st ch party f rom SFI at a fuel cost based upon the cost of the enriched Excess Uranium so purchased by such party from SFl. O If this letter correctly se'es forth the understanding between us and is acceptabic~to you, please_ sign and return the cuelosed copy thereof. Upon

Mr. Arch P. Pettit June 15, 1978

 *a       * .

O the receipt of all requisite regulatory approvals, the documents necessary to consummate the proposed transaction will be prepared, signed and delivered. Very truly yours,

                                                         ,-    , .//     t9w

(,/ v Presiden:( . The foregoing correctly sets forth the understanding between us and is acceptable . to us ARKANSAS POWER & LIGilT COMPANY

                               /h[E -

By ,

                    /e President 9

0 .

      , .)

EXHIBIT B  ! i ' LIST OF REPORTS , l l Note: The Reports to be furnished to SMEPA l ' relating to the management, control, maintenance, repair and operation of Grand Gulf will be added to this Exhibit B, as they become available. l l l P l l t I

i - 4 r i EXHIBIT E ~  : l 1 i

i i

1  : 1 1 t j GRAND GULF NUCLEAR STATION l'

Substitute. Power Agreement  !

I c , ! between l [ Mississippi Power & Light Company,  ! c l 1 Middle South Energy, Inc. 4 - ! and South Mississippi Electric Power Association  ; ! @ Dated as of , 1980 i I i t b i t i 3-1 I I e

                                                                                                                                                                                                                  ;

) s j i i i 1  ! i. v , t i I l t i

  -   ,,-..,_..-...4,...,...,.._L._,,-__,..,---.....-..._.._,_..,.__.                                          ._..--       _ . . . . . . . - _ _ -_.._.             . , . . - . . , . _ _ _ . - . . - ~ .

TABLE OF CONTENTS PAGE ARTICLE I - DEFINITIONS 2 1.01 Capacity . . . . . . . . . . . . . . . . . . . 2 1.02 Closing . . . . . . . . . . . . . . . . . . . 2

1.03 Commercial Operation . . . . . . . . . . . . . 3 1.04 Construction Agreement . . . . . . . . . . . . 3 1.05 Construction Permit . . . . . . . . . . . . . 3 1.06 Economic Reasons . . . . . . . . . . . . . . . 3 1.07 Energy . . . . . . . . . . . . . . . . . . . . 4 1.08 FERC . . . . . . . . . . . . . . . . . . . . 4 1.09 Force Majeure . . . . . . . . . . . . . . . . 4 1.10 Good Utility Practice . . . . . . . . . . . . 5 1.11 Grand Gulf . . . . . . . . . . . . . . . . . 5 1.12 Interconnection Agreement . . . . . . . . . . 5 1.13 MP&L . . . . . . . . . . . . . . . . . . . . . 5 1.14 MSE . . . . . . . . . . . . . . . . . . . . . 5 1.15 NRC . . . . . . . . . . . . . . . . . . . . . 5 1.16 Operating Agreement . . . . . . . . . . . . . 6 1.17 REA . . . . . . . . . . . . . . . . . . . . . 6 1.18

() 1.19 SMEPA . . . . . . . . . . . . . . . . . . . . System Agreement . . . . . . . . . . . . . . . 6 6 ARTICLE II - DELAY IN COMMERCIAL OPERATION UNDER CONSTRUCTION AGREEMENT 6 2.01 Delay in Commercial Operation of Grand Gulf Unit No.1 Not Caused by Force Majeure . . . . . . . . . . . . . . . . . . . 6 2.02 Delay in Commercial Operation of Grand Gulf Unit No. 2 Not Caused by Force Majeure . . . . . . . . . . . . . . . . . . . 8 ARTICLE III - CESSATION OF OUTPUT FROM GRAND GULF FOR ECONOMIC REASONS UNDER OPERATING AGREEMENT 10

       .iRTICLE IV - GENERAL CONDITIONS OF SERVICE; BILLING AND PAYMENT                                                  13 4.01    Notice of Change in Power Supply .                        . . . . . . 13 4.02    Transmission and Delivery Points .                        . . . . . . 13 4.03    Limitation of Liability                . . . . . . . . . . .           13 4.04    Continuity of Service              . . . . . . . . . . . .             14 4.05    Billing and Payment             . . . . . . . . . . . . .              15 C

ARTICLE V - DEFAULT; INTEREST ON OVERDUE PAYMENTS 15 5.01 Default . . . . . . . . . . . . . . . . . . . 15 5.02 Interest on Overdue Payments . . . . . . . . 16 5.03 Usury . . . . . . . . . . . . . . . . . . . . 17 ARTICLE VI - GENERAL PROVISIONS 17 6.01 No Delay in Payments by SMEPA . . . . . . . . 17 6.02 Further Assurances . . . . . . . . . . . . . 17 6.03 Governing Law . . . . . . . . . . . . . . . . 18 6.04 Notice . . . . . . . . . . . . . . . . . . . 18 6.05 Headings Not to Affect Meaning . . . . . . . 19 6.06 Amendments . . . . . . . . . . . . . . . . . 19

6.07 Successors and Assigns; Assignment . . . . . 19 6.08 Counterparts . . . . . . . . . . . . . . . . 20 6.09 License Conditions . . . . . . . . . . . . . 20 6.10 Good Utility Practice . . . . . . . . . . . . 20 6.11 Force Majeure . . . . . . . . . . . . . . . . 20 6.12 Entire Agreement . . . . . . . . . . . . . . 20 6.13 Agreement Subject to Closing . . . . . . . . 21 6.14 FERC . . . . . . . . . . . . . . . . . . . . 21 6.15 Other Agreement . . . . . . . . . . . . . . 21

 /g        6.16    REA Approval .              . . . . . . . . . . . . . . .                                       22 V

i i l l l O

O GRAND GULF NUCLEAR STATION Substitute Power Agreement between Mississippi Power & Light Company, Middle South Energy, Inc. and South Mississippi Electric Power Association Dated as of , 1980 THIS AGREEMENT, dated as of , 1980, is between MISSISSIPPI POWER & LIGHT COMPANY (MP&L), a Mississippi corporation, MIDDLE SOUTH ENERGY, INC. (MSE), an Arkansas corporation, and SOUTH MISSISSIPPI ELECTRIC POWER ASSOCIATION (SMEPA), a Mississippi corporation. As agent for MSE, MP&L is presently constructing Grand Gulf Nuclear Station (Grand Gulf), located in Claiborne County, Mississippi, pursuant to Construction Permits issued to MSE and MP&L by the United States Atomic Energy Commission (predecessor of the Nuclear Regulatory Commission). MP&L expects to operate Grand Gulf upon its completion, as agent for MSE, to provide energy for sale, primarily to companies of the Middle South System. Pursuant to the Construction Permits, MSE is concurrently herewith entering into a Joint Construction, Acquisition and Ownership Agreement (Construction O v i l I

I xs -) Agreement) and an Operating Agreement (Operating Agreement) with SMEPA, providing for the acquisition by SMEPA of a ten percent (10%) undivided ownership interest in Grand Gulf and the ownership, construction and operation of Grand Gulf upon the terms and conditions provided therein. The Construction , Agreement and Operating Agreement each provide that in certain cases there shall be made available to SMEPA through this Substitute Power Agreement, Capacity and Energy. This Substitute Power Agreement is entered into for the purposes of providing for the furnishing of such Capacity and Energy by MP&L to SMEPA and the payment of certain costs associated therewith by MSE to MP&L. () NOW, THEREFORE, in consideration of the premises and of the mutual covenants herein set forth, MP&L and SMEPA agree as follows:

• ARTICLE I - DEFINITIONS Section 1.01. Capacity shall mean the capability of producing (or consuming) energy and is measured in mega-watts.

Section 1.02. Closing shall mean June 1, 1980,. or such other date as may be set by MSE and SMEPA as the l Closing under the Construction Agreement. 3 (G t Section 1.03. Commercial Operation shall mean the period of time commencing at 12:01 A.M. of the day following the successful completion of "the 100-hour steam output performance test" provided for in agreements between MSE and General Electric Company relating to the nuclear steam supply system of Grand Gulf Unit No.1 or Grand Gulf Unit No. 2, as the case may be. Section 1.04. Construction Agreement shall mean the Joint Construction, Acquisition and Ownership Agreement between MSE and SMEPA dated as of , 1980 relating to Grand Gulf Nuclear Station. Section 1.05. Construction Permit shall mean the

  /D
  %J permits issued September 4, 1974 by the United States Atomic Energy Commission (predecessor to the Nuclear Regulatory Commission) authorizing MP&L and MSE to build Grand Gulf; as to Grand Gulf Unit No. 1 the construction permit is No.

CPPR-ll8; as to Grand Gulf Unit No. 2 the construction permit is No. CPPR-119. Section 1.06. Economic Reasons shall mean that under the pooling agreement pursuant to which MSE's share of Capacity and Energy from Grand Gulf is being sold (at present such agreement is expected to be the System Agreement), Grand Gulf is not being operated because lower cost sources j of Energy are available to the companies which are parties

to such agreement. O

 \- /                Section 1.07. Energy shall mean the quantity of electricity produced (or consumed) over a period of time and is measured in megawatt hours.

Section 1.08. FERC shall mean Federal Energy Regulatory Commission, or any substituted or successor agency thereto. Section 1.09. Force Majeure shall have (when the context indicates the term is applicable to a duty of MSE) the same meaning as is set forth in the Construction Agree-ment; and (when the context indicates the term is applicable to a duty of MP&L or SMEPA) the term shall mean any act, delay or failure to act on the part of any state or federal () governmental authority, whether legislative, executive, judicial or administrative, or the prohibiting of acts ' necessary to performance under this Substitute Power Agree-ment or the permitting of any such acts only subject to unreasonable conditions; acts of God; damage, accidents or disruptions including but not limited to fire, flood, explosion, tornado, hurricane, earthquake, windstorm or equipment breakdown; failure or delay beyond MP&L's or SMEPA's reason-able control in securing materials, equipment, services or facilities; labor difficulties such as strikes, slow-downs or shortages; delays in transportation; civil unrest, dis-turbances, demonstrations; or any other cause beyond MP&L's 7s cr SMEPA's control. V _4_ L

1 Section 1.10. Good Utility Practice shall mean any of the practices, methods and acts engaged in or approved by a significant proportion of the electric utility industry at the time of the reference, or any of the practices, methods and acts which, in the exercise of reasonable judg-ment in light of the facts known at the time the decision was made, could have been expected to accomplish the desired result at the lowest reasonable cost consistent with reli-ability, safety and expedition. Good Utility Practice is not intended to be limited to the optimum practice, method or act to the exclusion of all others, but rather to be a spectrum of acceptable practices, methods or acts. G ( j Section 1.11. Grand Gulf shall mean the Grand Gulf Nuclear Station in Claiborne County, Mississippi. Section 1.12. Interconnection Agreement shall mean the Interconnection Agreement between MP&L and SMEPA dated as of July 18, 1979 relating to interconnections between their respective power systems. Section 1.13. MP&L shall mean Mississippi Power & Light Company, a Mississippi corporation. Section 1.14. MSE shall mean Middle South Energy, Inc., an Arkansas corporation. Section 1.15. NRC shall mean Nuclear Regulatory Commission. O a i

Q(> Section 1.16. Operating Agreement shall mean the Operating Agreement between MSE and SMEPA dated as of

                           , 1980 relating to the Grand Gulf Nuclear Station.

Section 1.17. REA shall mean Rural Electrification Administration. Section 1.18. SMEPA shall mean South Mississippi Electric Power Association, a Mississippi corporation. Section 1.19. System Agreement shall mean the Agreement dated April 16, 1973, and effective July 2, 1973, together with all service schedules thereto, among Arkansas Power & Light Company, Arkansas-Missouri Power Company, Louisiana Power & Light Company, MP&L, New Orleans Public g i Services, Inc. and Middle South Services, Inc., as the same s_/ may from time to time be amended or supplemented in accord-ance with the applicable provisions thereof. ARTICLE II - DELAY IN COMMERCIAL OPERATION UNDER CONSTRUCTION AGREEMENT Section 2.01. Delay in Commercial Operation of Grand Gulf Unit No. 1 Not Caused by Force Majeure. If, as provided by Section 4.02 of the Construction Agreement, Commercial Operation of Grand Gulf Unit No.1 is delayed until after April 1, 1982, then MP&L shall, subject to the receipt of appropriate regulatory approval, offer to sell to , O_

SMEPA, and SMEPA may accept such offer and take and purchase from MP&L, Capacity and Energy at such times and up to such amounts as would be equivalent to the capacity and Energy to which SMEPA would have been entitled under the terms of the Construction Agreement and the Operating Agreement had Grand Gulf Unit No. 1 been placed in Commercial Operation on April 1, 1982, giving due consideration to the predicted capacity factor for Grand Gulf at any given time during its operating life and assuming that MSE intends to operate Grand Gulf as a base-load facility. MP&L shall notify SMEPA of an antici-pated delay in Commercial Operation of Grand Gulf at least ninety (90) days before April 1, 1982, and SMEPA shall O v notify MP&L of its election to exercise its right to pur-chase Capacity and Energy pursuant to this Substitute Power Agreement on or before March 31, 1982. MP&L shall begin supplying and selling such Capacity and Energy to SMEPA on April 1, 1982 or auch later date as is derived from adding thereto the number of days of delay in placing Grand Gulf Unit No. 1 in Commercial Operation (i) occasioned by Force Majeure, (ii) occasioned by SMEPA's default in any material obligation under either the Construction Agreement, the Operating Agreement or this Substitute Power Agreement or (iii) concurred in by SMEPA, and shall terminate such ser-vice upon the earlier of: (a) the date on which Grand Gulf Unit No.1 is first placed in Commercial Operation; (b) the l i

O date on which SMEPA ceases to have any ownership interest in Grand Gulf Unit No. 1; (c) the date on which the parties agree that SMEPA has available to it sufficient Capacity and Energy from other sources or can itself supply such service and MP&L advises SMEPA that it has need for the capacity and Energy supplied to SMEPA for its own customers; or (d) five  : years from the date service is first provided to SMEPA under this Section 2.01. If such service is terminated for the contingency in (d) above, MP&L agrees to negotiate in good faith with SMEPA with a view to renewing or extending the service contemplated by this section past the initial term provided herein on a mutually agreeable basis. Subject to FERC acceptance, (i) the rate for such service shall be based upon MP&L's actual average cost, and (ii) MP&L shall have the right to change such rates unilaterally from time to time to reflect changes in its actual average cost con-sistent with the provisions of Section 6.14. Section 2.02. Delay in Commercial Operation of Grand Gulf Unit No. 2 Not Caused by Force Majeure. If, as provided by Section 4.03 of the Construction Agreement, Commercial Operation of Grand Gulf Unit No. 2 is delayed until after April 1, 1985, then MP&L shall, subject to the receipt of appropriate regulatory approval, offer to sell to SMEPA, and SMEPA may accept such offer and take and purchase from MP&L, Capacity and Energy at such times and up to such O V amounts as would be equivalent to the capacity and Energy to which SMEPA would have been entitled under the terms of the Construction Agreement and the Operating Agreement had Grand Gulf Unit No. 2 been placed in Commercial Operation on April 1, 1985, giving due consideration to the predicted capacity factor for Grand Gulf at any given time during its operating life and assuming that MSE intends to operate Grand Gulf as a base-load facility. MP&L shall notify SMEPA of an antici-pated delay in Commercial Operation of Grand Gulf at least ninety (90) days before April 1,1985, and SMEPA shall notify MP&L of its election to exercise its right to ' purchase Capacity and Energy pursuant to this Substitute Power Agreement on or before March 31, 1985. MP&L shall V begin supplying and selling such Capacity and Energy to SMEPA on April 1, 1985, or such later date as is derived from adding thereto the number of days of delay in placing Grand Gulf Unit No. 2 in Commercial Operation (i) occasioned by Force Majeure, (ii) occasioned by SMEPA's default in any material obligation under either the Construction Agreement, the Operating Agreement or this Substitute Power Agreement or (iii) concurred in by SMEPA, and shall terminate such service upon the earlier of: (a) the date on which Grand Gulf Unit No. 2 is first placed in Commercial Operation; (b) the date on which SMEPA ceases to have any ownership interest b v _g_

I fD G in Grand Gulf Unit No. 2; (c) the date on which the parties agree that SMEPA has available to it sufficient Capacity and Energy from other sources or can itself supply such service and MP&L advises SMEPA that it has need for the Capacity and Energy supplied to SMEPA for its own customers; or (d) five years from the date service is first provided under this Section 2.02. If such service is terminated for the con-tingency in (d) above, MP&L agrees to negotiate in good faith with SMEPA with a view to renewing or extending the service contemplated by this Section past the initial term provided herein on a mutually agreeable basis. Subject to FERC acceptance, (i) the rate for such service shall be based upon MP&L's actual average cost, and (ii) MP&L shall

      /

have the right to change such rates unilaterally from time to time to reflect changes in its actual average cost consistent with the provisions of Section 6.14. ARTICLE III - CESSATION OF OUTPUT FROM GRAND GULF FOR ECONOMIC REASONS UNDER OPERATING AGREEMENT If, as provided by Section 2.05 of the Operating Agreement, MSE ceases to operate Grand Gulf for Economic Reasons, without the concurrence of SMEPA, then MP&L shall, subject to appropriate regulatory approval, offer to supply and sell to SMEPA, and SMEPA may accept such offer and take O t

and purchase from MP&L, Capacity and Energy equivalent to the amount of capacity and Energy to which SMEPA would have been entitled under the terms of the Construction Agreement and the Operating Agreement (giving due consideration to the historic and predicted capacity factor for Grand Gulf at any given time during its operating life and assuming that MSE intends to operate Grand Gulf as a base-load facility) had the output of Grand Gulf not been so terminated by MSE. MP&L shall, in its capacity as agent for MSE in the operation of Grand Gulf, notify SMEPA from time to time whenever the output of Grand Gulf has been or will be terminated for Economic Reasons, without the concurrence of SMEPA, and SMEPA shall notify MP&L, on or before ninety (90) days from the date of any such notice, of its election to exercise its right to purchase Capacity and Energy from MP&L during the period of any such termination of output from Grand Gulf. If SMEPA does not notify MP&L of its intention to purchase capacity and Energy within the ninety (90) day period or if, after electing to purchase Capacity and Energy from MP&L during any period when output from Grand Gulf has been terminated for Economic Reasons, SMEPA notifies MP&L that it no longer needs Capacity and Energy during that period or ceases to take Capacity and Energy from MP&L for six (6) consecutive months during any period of shutdown, MP&L's obligation to supply Capacity and Energy to SMEPA during O V. O that period will terminate. MP&L's obligation to supply and sell Capacity and Energy to SMEPA pursuant to this Article III ends thirty (30) years from the date that the first unit of Grand Gulf begins Commercial Operation. The net cost to SMEPA of such Capacity and Energy shall be equal to the estimated cost that SMEPA would have paid if Grand Gulf had continued in operation without cessation of output for Economic Reasons, giving due consideration to the historic and predicted capacity factor for Grand Gulf at any given time during its operating life and assuming that MSE intends to operate Grand Gulf as a base-load facility. Subject to FERC acceptance, MP&L shall have the right to set the cost O V for such capacity and Energy initially based on its determina-tion of such estimated costs and to change such cost unilaterally from time to time to reflect changes in the determination of such estimated costs consistent with the provisions of Section 6.14. MP&L agrees to negotiate in good faith with SMEPA during the term of this Substitute Power Agreement with a view to renewing or extending the service contemplated by this Section past the initial term provided herein on a mutually agreeable basis. MSE agrees to reimburse MP&L for any net operating loss incurred by MP&L as a result of furnishing Capacity and Energy to SMEPA at the cost determined pursuant to this Article III. O O O ARTICLE IV - GENERAL CONDITIONS OF SERVICE: BILLING AND PAYMENT Section 4.01. Notice of Change in Power Supply. MP&L and SMEPA agree to notify each other, upon request, in writing of any and all increases in their power supply sources and decreases in their load obligations which could affect MP&L's obligation to furnish Capacity and Energy to SMEPA under Article II; such notice shall contain sufficient detail so that the parties can evaluate the effect of the changes on such obligations of MP&L. Section 4.02. Transmission and Delivery Points. MP&L will transmit and deliver the Capacity and Energy to be provided to SMEPA under this Substitute Power Agreement pursuant to the terms and conditions of the Interconnection Agreement. Section 4.03. Limitation of Liability. To the. extent permitted by law, SMEPA shall not be entitled to recover from MP&L, MSE, or their agents, employees or in-surers for any damage resulting from negligence, error, or delay, or any damages of any kind, including consequential damage, resulting from failure to supply Capacity and Energy under this Substitute Power Agreement, or interruption, reversal or abnormal voltage of, Capacity and Energy furnished ! under this substitute Power Agreement, unless such damage

n (other than consequential damage, which shall not be re-coverable in any event) shall have resulted from gross negligence of MP&L, MSE, or their agents or employees. In no event shall MP&L or MSE be liable to SMEPA for any loss in an amount greater than SMEPA's uninsured loss. As used in this Section, the term " consequential damages" shall include but not be limited to damage or loss of property or equipment, loss of profits or revenue, loss of use of power system, cost of capital, cost of purchased or replacement power, or claims of customers for service interruption. The duty of MP&L and of MSE to perform their obligations under this Substitute Power Agreement in a prudent manner and in [ accordance with Good Utility Practice shall be construed or modified to the extent necessary to give full effect to the provisions of this Section, but this Section shall not excuse a breach of this substitute Power Agreement constituting gross negligence. Except as otherwise provided in this Substitute Power Agreement, each party hereto shall individually bear, and shall indemnify each other party against, all costs, losses, liabilities and expenses resulting from its own gross negligence. Section 4.04. Continuity of Service. Whenever the integrity of the MP&L's system or the supply of Capacity and Energy under this Substitute Power Agreement is threatened by conditions on MP&L's system or on the systems with which

   ~

MP&L is directly or indirectly interconnected, or whenever t .- _ _ _ _ - - _ _

( necessary or desirable to aid in the restoration of service, MP&L may in accordance with Good Utility Practice and with the application of standards no more interruptive than applied in service to its wholesale customers in like cir-cumstances, curtail or interrupt electric service or reduce voltage to SMEPA, and such curtailment, interruption or reduction shall not constitute gross negligence by MP&L. Section 4.05. Billing and Payment. MP&L will bill SMEPA on a monthly basis in arrears for all service rendered under this Substitute Power Agreement. MP&L will send a bill to SMEPA as soon as practicable after the end of each calendar month, and SMEPA will pay each bill to the P (~} account and in the manner designated in the bill within V fifteen (15) days of the receipt of the bill. MP&L and SMEPA shall adjust all billings in a timely manner as 4 necessary. ARTICLE V - DEFAULT; INTEREST ON OVERDUE PAYMENTS 1 F Section 5.01. Default. MP&L and SMEPA hereby agree that they shall pay all monies and carry out all other duties and obligations agreed to be paid or performed by them pursuant to all of the terms and conditions of this Substitute Power Agreement. In addition to any other rights (s_-)

or remedies, legal or equitable, available to a party which is not in default, in the event SMEPA at any time fails to pay any amounts owing under this Substitute Power Agreement for more than thirty (30) days, MP&L may, at any time on or after said thirty (30) day period, upon five (5) days written notice, suspend service to SMEPA under this Substitute Power Agreement pending payment of all amounts due and owing MP&L hereunder. Upon such suspension, SMEPA shall be liable to MP&L for, in addition to any unpaid charges for service, such other damages as are provided by, or available under, law. Section 5.02. Interest on Overdue Payments. In addition to any other rights or remedies, legal or equit-able, available to MP&L, in the event SMEPA fails to make any payment to MP&L when due pursuant to this Substitute Power Agreement there shall be added to such overdue amount interest from the date such payment was due at an annual rate equal to either the then current average yield on outstanding obligations of the United States of America having a term of ninety (90) days or less, plus five percent (5%), or MP&L's incremental cost of short-term, unsecured borrowed funds, plus five percent (5%), whichever is the greater. SMEPA shall also indemnify and hold MP&L harmless from and against any and all losses, costs, damages and expenses arising out of or resulting from SMEPA's failure to ( make such payments when due. Section 5.03. Usury. Notwithstanding any other provision herein to the contrary, it is the intention of MP&L and SMEPA that any amount paid as interest, whether it be characterized as interest, finance charge or otherwise, - shall not be usurious; to that end, should any calculation of interest provided for hereunder result in an amount of interest or finance charge which would be usurious, or which is subsequently held to be usurious, the amount of interest to be charged hereunder shall be reduced so that the amount actually charged will not be ust.rious, or if interest has already been paid, the amount by which such interest or finance charge is held to be usurious shall be refunded. 0O i ARTICLE VI - GENERAL PROVISIONS Section 6.01. No Delay in Payments by SMEPA. No , disagreement or dispute of any kind between MP&L and SMEPA concerning any matter, including without limitation, the  ! amount of any payment due from SMEPA or the correctness of any charge made to SMEPA, or any other reason, excuse or circumstance, including Force Majeure, shall permit SMEPA to delay or withhold any payment due and owing under this Substitute Power Agreement. Section 6.02. Further Assurances. From time to time after the Closing, MP&L, MSE, and SMEPA will execute  ! (~

  ~

such documents, upon the request of the other, as may be necessary or appropriate to carry out the intent of this Substitute Power Agreement. Section 6.03. Governing Law. The validity, interpretation and performance of this Substitute Power Agreement and each of its provisions shall be governed by the laws of the State of Mississippi. Section 6.04. Notice. Any notice, request, consent or other communication permitted or required by this Substitute Power Agreement shall be in writing and shall be deemed given when deposited in the United States mail, Certified Mail prepaid, and if given to MP&L shall be ad-C) dressed to: Mississippi Power & Light Company Post Office Box 1640 Jackson, Mississippi 39205 Attention: President and if given to MSE shall be addressed to: Middle South Energy, Inc. Post Office Box 61000 New Orleans, Louisiana 70160 Attention: President and if given to SMEPA shall be addressed to:

    /\

U () South Mississippi Electric Power Association Post Office Box 1589 Hattiesburg, Mississippi 39401 Attention: General Manager unless a different officer or address shall have been designated by any party to the others by notice in writing. Section 6.05. Headings Not to Affect Meaning. The descriptive headings of the various Sections and Articles of this Substitute Power Agreement have been inserted for convenience of reference only and shall in no way modify or restrict any of the terms and provisions hereof. Section 6.06. Amendments. This Substitute Power

 /   Agreement may be amended by and only by a written instrument V) duly executed by all of the parties hereto.

Section 6.07. Successors and Assigns; Assignment. This Substitute Power Agreement shall inure to the benefit of and be binding upon MP&L, MSE, and SMEPA and their respective successors and assigns, and insofar as is permitted by law, on any receiver or trustee in bankruptcy, reorganization or receivership of either party. Nothing in this substitute Power Agreement, expressed or implied, is intended to confer upon any other person any rights or remedies hereunder. No party may assign its interest in this Substitute Power Agreement without the express written consent of the other parties. 1 O \ 1 G l i

Section 6.08. Counterparts. This substitute

   )

Power Agreement may be executed simultaneously in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Section 6.09. License Conditions. The Construc-tion Permit contains antitrust conditions which may be a part of subsequent licenses issued by the NRC for Grand Gulf. This Substitute Power Agreement is entered into by the parties in implementation of and is to be construed within the parameters of such conditions, and nothing con-tained herein shall be in violation thereof. Section 6.10. Good Utility Practice. MP&L, MSE, O \m / and SMEPA shall discharge any and all obligations under this Substitute Power Agreement in a prudent manner and in ac-cordance with Good Utility Practice. Section 6.11. Force Majeure. No party shall be in default in performance of any obligation or duty hereunder (other than any obligation of any party to pay monies to any other party arising under this Substitute Power Agreement) if such failure of performance is due to Force Majeure. Section 6.12. Entire Agreement. This Substitute Power Agreement shall constitute the entire understanding among MP&L, MSE, and SMEPA, superseding any and all previous understandings between the parties pertaining to the subject

/;

matter contained herein. V

Section 6.13. Agreement Subject to Closing. SMEPA shall have no rights or obligations under this sub-stitute Power Agreement until the Closing has been consum-mated pursuant to the terms of the Construction Agreement. Section 6.14. FERC. If and to the extent that this Substitute Power Agreement or any part hereof shall be , required to be filed, or shall be filed with any regulatory agency, including, without limitation, the FERC, as a rate or rate schedule, nothing in this Substitute Power Agreement shall be construed as affecting in any way the right of MP&L to make application unilaterally to such agency for a change in rates, charges, classifications, or service, or any rule, regulation, or contract relating thereto under Section 205 of the Federal Power Act or any other applicable laws and Regulations. To the extent that MP&L makes any such filing, SMEPA reserves the right to intervene in any proceeding involving such a filing by MP&L and shall have the right to object to any proposed change. Section 6.15. Other Agreement. The Interconnec-tion Agreement provides for the transmission and the supplying of Capacity and Energy, under certain circumstances not applicable to the service provided under this Substitute Power Agreement, by MP&L to SMEPA and for the interconnec-tion of their respective systems. Nothing in this Substitute Power Agreement shall be deemed to conflict with any provision ' (3 V of the Interconnection Agreement. l () Section 6.16. REA Approval. This substitute , Power Agreement shall not be in force and effect until approved by the Administrator of the REA. , IN WITNESS WHEREOF, the undersigned parties hereto have duly executed this Substitute Power Agreement in Jackson, Mississippi, on the date first above written. MISSISSIPPI POWER & LIGHT COMPANY i BY: SEAL ITS: l l ATTEST: SECRETARY MIDDLE SOUTH ENERGY, INC.  ! BY: SEAL ITS: ATTEST:  ! 1 SECRETARY SOUTH MISSISSIPPI ELECTRIC POWER - ASSOCIATION BY: SEAL ITS: ATTEST: (} SECRETARY . t _}}