Exhibit 00
XXXXXXX XXX XXXXXXXX
XXXXX XXXXX PROJECT
PARTICIPATION AGREEMENT
BETWEEN
CITY OF SAN ANTONIO
CENTRAL POWER AND LIGHT COMPANY
HOUSTON LIGHTING & POWER COMPANY
CITY OF AUSTIN
EFFECTIVE AS OF _______________
TABLE OF CONTENTS
Page
1. PARTIES......................................................... 1
2. RECITALS........................................................ 1
3. AGREEMENT....................................................... 2
4. DEFINITIONS..................................................... 2
5. OWNERSHIP OF SOUTH TEXAS PROJECT................................ 10
6. ADDITION OF GENERATING UNITS.................................... 11
7. GENERATING CAPACITY AND ENERGY ENTITLEMENT...................... 15
8. DELIVERY AND TRANSMISSION....................................... 16
9. ADMINISTRATION.................................................. 18
10. OPERATION AND DECOMMISSIONING................................... 21
11. REPLACEMENT OF OPCO............................................. 22
12. PROJECT COSTS....................................................... 22
13. ADVANCEMENT OF FUNDS............................................ 23
14. TAXES........................................................... 23
15. WAIVER OF RIGHT TO PARTITION.................................... 24
16. MORTGAGE AND TRANSFER OF INTEREST............................... 25
17. RIGHT OF FIRST REFUSAL.......................................... 28
18. DESTRUCTION OR ABANDONMENT...................................... 33
19. PROJECT INSURANCE............................................... 36
20. LIABILITY OF PARTICIPANTS TO EACH OTHER......................... 37
21. PAYMENT DEFAULT................................................. 41
22. SOURCE OF PAYMENTS BY SAN ANTONIO............................... 43
23. SOURCE OF PAYMENTS BY AUSTIN.................................... 44
24. CONTINUING RESPONSIBILITY OF OPCO............................... 46
-i-
25. RELATIONSHIP OF PARTICIPANTS................................... 46
26. FORCE MAJEURE.................................................. 48
27. GOVERNING LAW.................................................. 49
28. BINDING OBLIGATIONS............................................ 49
29. AMENDMENT OF THIS RESTATED AGREEMENT........................... 51
30. TERM........................................................... 51
31. INTERESTS ACQUIRED IN THE NAME OF AN INDIVIDUAL
PARTICIPANT.................................................... 51
32. NOTICES........................................................ 51
33. MISCELLANEOUS PROVISIONS....................................... 52
Exhibit A: Common Station Facilities........................... 55
Exhibit B: South Texas Plant Site.............................. 56
Exhibit B-1: Railroad Strip.................................... 57
-ii-
AMENDED AND RESTATED SOUTH TEXAS PROJECT PARTICIPATION AGREEMENT
1. PARTIES: The parties to this amended and restated agreement (this " Restated
Agreement") are: CITY OF SAN ANTONIO, acting through the City Public Service
Board of San Antonio, hereinafter referred to as "San Antonio"; CENTRAL POWER
AND LIGHT COMPANY, a Texas corporation, hereinafter referred to as "Central";
HOUSTON LIGHTING & POWER COMPANY, a Texas corporation, hereinafter referred to
as "Houston"; and the CITY OF AUSTIN, hereinafter referred to as "Austin". 2.
RECITALS: The parties have heretofore jointly licensed and constructed two
nuclear-fueled electric generation facilities known as the South Texas Project
which are currently operated for the production of electric power and energy
taken by each Participant in proportion to its ownership interest in such
facilities. Such jointly owned facilities were licensed and constructed and
currently are operated under the terms of the Participation Agreement, dated as
of July 1, 1973, as amended by three amendments thereto (which Participation
Agreement, as so amended, is hereinafter referred to as the "Prior Agreement").
The parties now desire to amend and restate the Prior Agreement in order (i) to
provide for the continued operation and maintenance of the said generating
facilities by STP Nuclear Operating Company ("OPCO") acting pursuant to the
South Texas Project Operating Agreement, dated effective as of the Effective
Date, (the "Operating Agreement") (ii) to relieve Houston and Central of their
respective
rights and obligations as Project Managers under provisions of the
Prior Agreement, (iii) to amend and restate the terms of the Prior
Agreement in other respects and (iv) to terminate the Prior
Agreement as of the Effective Date.
3. AGREEMENT: In consideration of the mutual covenants herein,
the parties agree as follows:
4. DEFINITIONS: The following terms, when used herein, shall
have the meanings specified:
4.1 ADDITIONAL GENERATING UNIT: The third or any
subsequent nuclear electric generating unit to be located on the
South Texas Plant Site.
4.2 CAPACITY: Electrical rating expressed in megawatts
(mw) or megavolt-amperes (mva) and based on manufacturer's
nameplate electrical ratings where available.
4.3 CAPITAL ADDITIONS: Any Units of Property, land or interests in
land which are added to the South Texas Project and which are not in
substitution for any existing Units of Property, land or interests in land
constituting a part of the South Texas Project, and which in accordance with
accounting practice should be capitalized.
4.4 CAPITAL BETTERMENTS: Any improvements to the South
Texas Project, including any enlargement or improvement of any
Units of Property constituting a part of the South Texas Project or
the substitution therefor, where such substitution constitutes an
enlargement or improvement as compared with that for which it is
-2-
substituted, and which in accordance with accounting practice
should be capitalized.
4.5 CAPITAL IMPROVEMENTS: All of any Capital Additions,
Capital Betterments, or Capital Replacements.
4.6 CAPITAL REPLACEMENTS: The substitution of any Units of Property
for other Units of Property constituting a part of the South Texas Project,
where such substitution does not constitute an enlargement or improvement of
that for which it is substituted, and which in accordance with accounting
practice should be capitalized.
4.7 COMMON STATION FACILITIES: Those components of the
South Texas Project identified in Exhibit A as being for the common
use of all units now or hereafter comprising the South Texas
Project.
4.8 CONSTRUCTION POWER LINE: A 138 KV line located within
the Transmission Corridor.
4.9 CONSTRUCTION WORK: Design, construction, repair, replacement and
reconstruction of Capital Improvements to the South Texas Project, and the
decommissioning, dismantling, removal and final disposition of all components of
the South Texas Project, including, but not by way of limitation, all related
engineering, design, contract preparation, purchasing, supervision, expediting,
inspection, accounting, testing, management and protection.
4.10 CONSTRUCTION WORK LIABILITY: Liability of OPCO or one
or more Participants for damage suffered by anyone other than a
Participant which arises out of Construction Work and is not
-3-
discharged by Project Insurance, and is not the result of Willful
Action.
4.11 COSTS OF OPERATION: Includes all Costs of Operation as
defined in the Operating Agreement.
4.12 EFFECTIVE DATE: [DATE] .
4.13 ENERGY: Kilowatt-hours (kwh).
4.14 GENERATION ENTITLEMENT SHARE: The percentage
entitlement of each Participant in a particular Generating Unit of the South
Texas Project. Each Participant's percentage entitlement shall be equal to such
Participant's percentage ownership in the particular Unit at the applicable time
as contemplated by this Restated Agreement.
4.15 GENERATING UNIT or UNIT: An electric generating unit, including
the components thereof (nuclear steam supply system, turbine and generator
including step-up transformers and other associated equipment), located on the
South Texas Plant Site. A Generating Unit does not include Common Station
Facilities but does include that portion of the South Texas Plant Site allocated
thereto in Exhibit B hereto, and in the case of an Additional Generating Unit,
that portion selected by the Participant proposing the Additional Generating
Unit and approved by the Owners Committee.
4.16 NET EFFECTIVE GENERATING CAPABILITY: The maximum
continuous ability of each Generating Unit to produce power
-4-
measured at the high voltage terminals of the generator step-up
transformers.
4.17 NRC OR NUCLEAR REGULATORY COMMISSION: The United States Nuclear
Regulatory Commission or its predecessor, the Atomic Energy Commission, or any
successor having responsibility for the administration of the licensing and
regulation of the operation of nuclear utilization facilities under the Atomic
Energy Act of 1954 and any amendments thereto.
4.18 NUCLEAR FUEL: Any source, special nuclear or by- product material
as defined in the Atomic Energy Act of 1954 and any amendments thereto,
including any ores, mined or unmined, uranium concentrates, natural or enriched
uranium hexafluoride, or any other material in process containing uranium, and
any fuel assemblies or parts thereof, which are required for the generation of
electricity at South Texas Project.
4.19 OPCO: STP Nuclear Operating Company, a Texas non-profit
corporation formed by the Participants for the purposes described in Section
10.1 of this Restated Agreement.
4.20 OPERATING AGREEMENT: The Operating Agreement dated
effective as of the Effective Date, by and among the Participants
and OPCO, as the same may be amended from time to time.
4.21 OWNERS COMMITTEE: The committee established pursuant
to Section 9.1 hereof composed of representatives of each
Participant.
-5-
4.22 PARTICIPANT: A party hereto or other entity acquiring an interest
in the South Texas Project in accordance with this Restated Agreement.
4.23 PLANT OWNERSHIP INTEREST: The percentage interest of the
Participants in the South Texas Project. Each Participant's percentage interest
shall be equal to such Participant's ownership in the Common Station Facilities
at the applicable time as contemplated by this Restated Agreement.
4.24 POWER: Kilowatts (kw) or megawatts (mw).
4.25 PRECONSTRUCTION WORK: Environmental impact studies,
safety analyses, site evaluation, licensing of the South Texas Project and
acquisition of the South Texas Plant Site, but excluding all Construction Work
and all Station Work.
4.26 PRECONSTRUCTION WORK LIABILITY: Liability of OPCO or
one or more Participants for damage suffered by anyone other than
a Participant which arises out of Preconstruction Work, and is not
discharged by Project Insurance, and is not the result of Willful
Action.
4.27 PROJECT COSTS: The costs of possessing, using, maintaining,
repairing, improving, operating, decontaminating and decommissioning the South
Texas Project which include (a) all Costs of Operation as defined in the
Operating Agreement; (b) all payments made to and expenses incurred by a
Participant pursuant to an agreement executed by each of the Participants which
designates such payments and expenses as Project Costs; and (c) costs of
-6-
jointly acquiring and disposing of Nuclear Fuel whether by OPCO or as otherwise
directed by the Owners Committee but excluding the Spent Fuel Disposal Fee.
4.28 PROJECT INSURANCE: Policies of insurance to be
procured and maintained in accordance with Section 19 of this
Restated Agreement.
4.29 RAILROAD STRIP: A strip of land approximately 80 feet
wide, extending northerly from the South Texas Plant Site and being
generally depicted in Exhibit B-1 hereto.
4.30 SOUTH TEXAS PLANT SITE: A parcel of land in Matagorda
County, Texas, consisting of approximately 11,000 acres and being
generally depicted on Exhibit B hereto.
4.31 SOUTH TEXAS PROJECT: The South Texas Plant Site and the two
existing nuclear steam electric generating units situated thereon, each having a
Capacity of approximately 1250 mw and all interests in property, facilities and
structures used therewith or related thereto on or adjacent to the South Texas
Plant Site. The South Texas Project is generally described in Exhibit A hereto.
Said definition shall also include any Additional Generating Unit located on the
South Texas Plant Site pursuant to this Restated Agreement and all interests in
property, facilities and structures used therewith or related thereto on or
adjacent to the South Texas Plant Site.
-7-
4.32 SPENT FUEL DISPOSAL FEE: The fee imposed by the Department of
Energy on nuclear reactor owner licensees in connection with the disposition of
spent fuel. The fee is assessed on the basis of Energy produced by a nuclear
reactor in accordance with rules established by the Department of Energy or its
successor. The term "Spent Fuel Disposal Fee" shall also be deemed to include
any other fee levied now or hereafter by any governmental entity for any purpose
related to the South Texas Project against nuclear reactor owner licensees
unless such fee is assessed on a basis that, when compared to the aggregate fee
for all Participants, equates to each Participant's Generation Entitlement
Share, if any, in the applicable nuclear reactor.
4.33 STATION WORK: Operation, maintenance, use or repair of the South
Texas Project including, though not by limitation, all related engineering,
contract preparation, purchasing, supervision, expediting, inspection,
accounting, testing, management and protection.
4.34 STATION WORK LIABILITY: Liability of OPCO or one or
more Participants for damage suffered by anyone other than a
Participant which arises out of Station Work and is not discharged
by Project Insurance, and is not the result of Willful Action.
4.35 TRANSMISSION CORRIDOR: A strip of land 400 feet wide
and approximately 6 miles long, plus a continuing strip of land 340
feet wide and approximately 13 miles long, extending northwesterly
-8-
from the South Texas Plant Site and being generally depicted in Exhibit B-1
hereto.
4.36 UNITS OF PROPERTY: Units of property as described in the Federal
Energy Regulatory Commission's list of "Units of Property for Use in Accounting
for Additions and Retirements of Electric Plant", 18 CFR Part 116 as in effect
from time to time.
4.37 WILLFUL ACTION:
4.37.1 Action taken or not taken by a Participant at the
direction of its governing body or board (that is, its managing Board
or governing body in the case of San Antonio and Austin, or its Board
of Directors in the case of Central or Houston), which action is
knowingly or intentionally taken or not taken with intent to cause
injury or damage to another.
4.37.2 Action taken or not taken by an employee of a
Participant, which action is intentionally taken or not taken with
intent to cause injury or damage to another and which action or
non-action is subsequently ratified by the Participant employing such
employee at the direction of its said governing body or board.
4.37.3 Willful Action does not include intentional acts or
omissions of a Participant for which a Participant is legally
responsible solely because of the master-servant relationship between
such Participant and its employees.
-9-
5. OWNERSHIP OF SOUTH TEXAS PROJECT:
5.1 The Participants have acquired and, subject to adjustments as
provided herein, own the South Texas Plant Site, Railroad Strip and Common
Station Facilities as tenants in common, as follows:
San Antonio owns an undivided 28.0 percent interest therein;
Central owns an undivided 25.2 percent interest therein;
Houston owns an undivided 30.8 percent interest therein; and
Austin owns an undivided 16.0 percent interest therein.
5.2 The Participants have acquired and own the first two Generating
Units located on the South Texas Plant Site as tenants in common, as follows:
San Antonio owns an undivided 28.0 percent interest therein;
Central owns an undivided 25.2 percent interest therein;
Houston owns an undivided 30.8 percent interest therein; and
Austin owns an undivided 16.0 percent interest therein.
5.3 The Participants have acquired and own:
5.3.1 The 400 foot wide section of the Transmission Corridor as
tenants in common, as follows:
San Antonio owns an undivided 36.5 percent interest therein;
Central owns an undivided 21.5 percent interest therein;
-10-
Houston owns an undivided 23.2 percent interest therein; and,
Austin owns an undivided 18.8 percent interest therein.
5.3.2 The 340 foot wide section of the Transmission Corridor as
tenants in common, as follows:
San Antonio owns an undivided 38.0 percent interest therein;
Central owns an undivided 20.9 percent interest therein;
Houston owns an undivided 21.8 percent interest therein;
Austin owns an undivided 19.3 percent interest therein.
6. ADDITION OF GENERATING UNITS:
6.1 Any Participant may propose the construction of an
Additional Generating Unit by written notice to all other
Participants setting forth:
6.1.1 A general description of the proposed Additional
Generating Unit and of proposed Capital Additions and Capital
Betterments to the existing Common Station Facilities, all in the same
form and detail as South Texas Generating Station Units Nos. 1 and 2
are shown in Exhibit A to this Restated Agreement, identifying all
Common Station Facilities proposed for use in connection with the
proposed Additional Generating Unit or with respect to which Capital
Additions or Capital Betterments are proposed.
6.1.2 A plat of the South Texas Plant site depicting the
location of the proposed Additional Generating Unit.
6.1.3 An estimate of the respective costs (all prospective
Preconstruction Work and all Construction Work required) of the
proposed Additional Generating Unit, Capital Additions and Capital
Betterments, all in reasonable detail.
6.1.4 A description of the entities which would plan,
design, license, construct and operate the proposed
-11-
Additional Generating Unit and the arrangements pursuant to
which this work would be performed.
6.2 Within forty-five (45) days after service of the
written notice given pursuant to Section 6.1 hereof, the proposing Participant
shall furnish to each other Participant a statement, in reasonable detail, of
all actual costs (without depreciation) of the South Texas Plant Site, the
Railroad Strip, and all Preconstruction Work and Construction Work attributable
to the Common Station Facilities.
6.3 Each Participant may elect to participate in the proposed
Additional Generating Unit, Capital Additions and Capital Betterments to the
extent of its Plant Ownership Interest by written election served upon each of
the other Participants within three (3) months after service of the written
notice given pursuant to Section 6.1 hereof. Failure of a Participant to
exercise said election as provided in this Section 6.3 within the time period
specified shall be conclusively deemed to be an election not to participate.
6.4 Subject to any limitations or conditions imposed by any court or
other governmental authority having jurisdiction over the licensing of the South
Texas Project or the proposed Additional Generating Unit, should all of the
Participants served with a written notice as provided in Section 6.1 hereof
elect to participate in the proposed Additional Generating Unit, the proposed
Additional Generating Unit, Capital Additions and Capital
-12-
Betterments shall be planned, licensed, constructed, operated and maintained in
accordance with the provisions of this Restated Agreement, shall be owned
(subject to adjustments as provided herein) by the Participants in proportion to
their Plant Ownership Interests, and shall become a part of the South Texas
Project.
6.5 Subject to any limitations or conditions imposed by any court or
other governmental authority having jurisdiction over the licensing of the South
Texas Project or the proposed Additional Generating Unit, should any one or
more, but less than all, of the Participants served with a written notice as
provided in Section 6.1 hereof elect to participate in the proposed Additional
Generating Unit and should the Participants desiring to participate in the
Additional Generating Unit own in excess of fifty (50) percent of the total
Plant Ownership Interest in the South Texas Project, the Participants desiring
to participate in the proposed Additional Generating Unit, Capital Additions and
Capital Betterments shall have the right to own and shall endeavor to obtain the
necessary permits and licenses and shall construct, operate and maintain the
Additional Generating Unit, Capital Additions and Capital Betterments proposed
pursuant to Section 6.1 hereof on the following basis:
6.5.1 The Additional Generating Unit shall be acquired,
constructed and owned by and at the sole cost, risk and expense of the
Participants proposing the Additional Generating Unit or electing to
participate therein in the proportion that the Plant Ownership Interest
of each of said Participants bears to the Plant Ownership Interest of
all of said Participants or as otherwise agreed between said
-13-
Participants and shall be operated, maintained and decommissioned by
OPCO pursuant to this Restated Agreement and the Operating Agreement.
6.5.2 Within two (2) months after the proposing
Participant has determined the actual costs of the Capital Additions
and Capital Betterments to the previously existing Common Station
Facilities undertaken in conjunction with the Additional Generating
Unit, the proposing Participant shall furnish to each other Participant
a statement, supplemental to the statement furnished pursuant to
Section 6.2 hereof, setting forth the costs shown in the statement
furnished pursuant to Section 6.2 hereof and the actual costs of said
Capital Additions and Capital Betterments. Within one (1) month after
receiving the statement called for in this Section 6.5.2, the
Participants participating in the Additional Generating Unit shall make
a cash payment to all Participants equal to the amount, if any, by
which: (i) the product of the total costs shown in the statement called
for in this Section 6.5.2 times a fraction, the numerator of which is
the nameplate rating of the Additional Generating Unit and the
denominator of which is the sum of the nameplate ratings of all
completed Generating Units in the South Texas Project plus the
Additional Generating Unit; exceeds (ii) the actual costs of said
Capital Additions and Capital Betterments. Thereafter the South Texas
Plant Site (exclusive of the portions thereof allocated to all
Generating Units theretofore agreed upon or permitted under this
Restated Agreement or allocated to the Additional Generating Unit), the
Railroad Strip and the Common Station Facilities shall be owned by the
Participants, as tenants in common, in the proportion that the sum of
the interests of each Participant in all Generating Units (including
the Additional Generating Unit) bears to the sum of the interests of
all Participants in all Generating Units (including the Additional
Generating Unit) and appropriate transfers of interests shall be made.
Said payment shall be borne by each Participant participating in the
Additional Generating Unit in the proportion that the interest of each
Participant so participating bears to the interest of all Participants
so participating and shall be paid to each Participant in the
proportion of its Plant Ownership Interest immediately prior to such
payment.
6.5.3 The Participants proposing the Additional Generating
Unit and the Capital Additions and Capital Betterments to existing
Common Station Facilities and electing to participate therein shall
bear the costs of Preconstruction Work and Construction Work of the
Additional Generating Unit and of said Capital Additions and Capital
Betterments and
-14-
Project Costs of the Additional Generating Unit in proportion to their
Generation Entitlement Share in the Additional Generating Unit. The
Project Costs of the Common Station Facilities to which said Capital
Additions and Capital Betterments relate shall be borne as provided in
Section 12.1 hereof.
6.6 Not withstanding any other provision of this Section 6, any
Participant who proposes construction of an Additional Generating Unit must,
prior to the commencement of construction, (i) provide San Antonio and Austin
with a ruling from the Internal Revenue Service to the effect that construction
and operation of said Unit pursuant to this Restated Agreement and the Operating
Agreement will not jeopardize the tax exempt status of any Debt Obligations as
that term is defined in Sections 22 and 23 hereof and (ii) provide each other
Participant with a ruling from the Internal Revenue Service to the effect that
the construction and operation of said Unit pursuant to this Restated Agreement
and the Operating Agreement will not create an association among the
Participants which will be taxable as a corporation.
6.7 The arrangements for securing Nuclear Fuel for
Additional Generating Units and the arrangements for the disposal
of spent Nuclear Fuel materials from such Additional Generating
Units shall be determined by the owners of such Additional Unit or
Units.
7. GENERATING CAPACITY AND ENERGY ENTITLEMENT:
7.1 The Capacity entitlement of each Participant in each
Generating Unit of the South Texas Project shall be the product of
-15-
its Generation Entitlement Share in that Unit and the Net Effective
Generating Capability of such Unit.
7.2 Each Participant shall take for its account a percentage share of
the total Energy available at the high voltage terminal of the generator step-up
terminals from each Generating Unit from time to time, corresponding to such
Participant's Generation Entitlement Share in such Generating Unit.
7.3 Operation of any Generating Unit shall be subject to scheduled
outages or curtailments, operating emergencies and unscheduled outages or
curtailments of such Generating Unit.
8. DELIVERY AND TRANSMISSION:
8.1 Power and Energy shall be metered and delivered to the
transmission system as shown in Exhibit B to this Restated Agreement at the
South Texas Project switchyard generally described in Exhibit A to this Restated
Agreement, and shall be accounted for in accordance with Section 7.2.
8.2 Each Participant shall design, construct, own, operate and
maintain the transmission facilities necessary to connect its system to the
South Texas Project switchyard, with the objective of permitting each
Participant to transmit under normal operating conditions its Generation
Entitlement Share from units of the South Texas Project to its system in a
manner which will not unreasonably affect the operation of the electric systems
of the other Participants or the interconnected systems of others.
-16-
8.3 Each Participant shall be entitled to the exclusive use of so much
of the South Texas Plant Site as may be necessary to construct and connect its
transmission facilities to the South Texas Project switchyard as generally shown
in Exhibit B hereto, provided the actual location and construction schedule of
any additional transmission facilities shall be subject to approval of the
Owners Committee and the requirements of the Operating Agreement.
8.4 Each Participant agrees to provide for the South Texas Project
off-site power to satisfy Nuclear Regulatory Commission requirements, such power
to be supplied through the Construction Power Line, through the Participant's
respective transmission lines connecting into the South Texas Project switchyard
and through the Participant's interconnections with other systems through the
Electric Reliability Council of Texas, Inc., or its successors. The Participants
agree not to modify their respective facilities, procedures and practices in a
manner that may result in failure to comply with Nuclear Regulatory Commission
regulations or commitments or the terms of the Operating Licenses, and each
Participant agrees to inform OPCO promptly of proposed changes that reasonably
would be expected to adversely affect such compliance. Appropriate adjustments
shall be made in the allocation of Energy available to the respective
Participants through the interconnected power grid of the Electric Reliability
Council of Texas, Inc. (or any successor power grid through which the generating
facilities of
-17-
the Participants are interconnected) or through the South Texas
Project switchyard, so as to cause each Participant to bear and
provide a net percentage share of off-site power corresponding to
its Plant Ownership Interest.
9. ADMINISTRATION:
9.1 As a means of implementing this Restated Agreement and the
Operating Agreement and fostering the interchange of information, the
Participants hereby establish the Owners Committee.
9.2 The Owners Committee shall be composed of one primary
representative of each Participant, who shall be an officer or general manager
of the Participant, and an alternate, both of whom shall be designated by the
Participant represented by written notice to all other Participants.
9.3 The Owners Committee shall:
9.3.1 Provide liaison among the Participants and
with OPCO at the management level;
9.3.2 Perform such other functions and duties as may
be assigned to it in this Restated Agreement;
9.3.3 Determine the Net Effective Generating
Capability of each Unit;
9.3.4 Review and act upon OPCO's recommendations
concerning or initiate, adopt, modify or take action with respect to:
9.3.4.1 Annual budget for Costs of Operation;
9.3.4.2 Annual revisions to the South Texas Project Five
Year Business Plan;
-18-
9.3.4.3 Annual revisions to the South Texas Project Five
Year Operating/Outage and Fuel Procurement Plans;
9.3.4.4 Process and procedure for the sale, encumbrance
or other disposition of equipment or personal property comprising the
South Texas Project;
9.3.4.5 Process and procedure for OPCO contracting on
behalf of the Participants for the purchase, lease or other acquisition
of materials, inventories, supplies, spare parts, equipment, Nuclear
Fuel, and other goods and services;
9.3.4.6 Process and procedure for OPCO handling the
defense, prosecution and/or settlement of disputes with third parties
relating in any way to the South Texas Project;
9.3.4.7 The Project Insurance to be procured and
maintained pursuant to Section 19 of this Restated Agreement, including
the process and procedure for OPCO obtaining and complying with
insurance coverages in effect and obtaining payment of claims;
9.3.4.8 Costs of Operation materially different from or
in excess of annual budget or Five Year Plans, and any sale,
encumbrance or other disposition of property other than in accordance
with approved processes and procedures;
9.3.4.9 Any other matter requiring Participants'
Direction or Participants' Approval pursuant to the Operating
Agreement;
9.3.4.10 The annual independent audit of the books and
records of OPCO and any interim or special audits directed by the
Owners Committee;
9.3.5 Decide upon the abandonment of each Unit of the
South Texas Project and provide written direction to OPCO of any
decision by the Participants to operate at reduced capacity and/or
place a Unit in safe shutdown condition and/or retire and decommission
a Unit;
9.3.6 Approve and join, where necessary, any application
or amended application to the Nuclear Regulatory Commission or other
regulatory authority as appropriate to provide for the reliable, safe
and efficient operation of the
-00-
Xxxxx Xxxxx Project by OPCO pursuant to the Operating
Agreement;
9.3.7 Make arrangements for securing Nuclear Fuel for
Units 1 and 2 and arrangements for disposal of spent Nuclear Fuel
materials and approve practices and procedures for accounting for
Nuclear Fuel;
9.3.8 Arrange for such additional support, services and
assistance as may be required by OPCO in carrying out its
responsibilities under the Operating Agreement; and
9.3.9 Plan for and approve payment of Project Costs to
the extent not provided for in the annual budget for Costs of
Operation.
9.4 All matters coming under the authority of the Owners Committee
shall be decided by agreement of the representatives of two or more Participants
having in excess of sixty percent (60%) interest in the Generating Unit or Units
affected by the decision, except as otherwise specifically provided in this
Restated Agreement. If, for any reason, the Owners Committee does not agree on
an annual budget for Costs of Operation, OPCO shall continue to operate under
the provisions of the most recently approved Five Year Business Plan and Five
Year Operating/Outage and Fuel Procurement Plan until such time as at least two
or more Participants having in excess of sixty percent (60%) interest in the
Generating Unit or Units affected by the decision otherwise agree. For the
purposes of this Section 9.4 decisions affecting the Common Station Facilities
shall be deemed to affect all Generating Units then served by the Common Station
Facilities or portion thereof affected by the decision. All decisions reached by
the Owners Committee on matters concerning the South Texas Project
-20-
and properly before the Owners Committee for decision pursuant to the terms of
this Restated Agreement shall be binding upon all Participants.
9.5 The Owners Committee shall designate one of its members as Chairman
and another as Vice Chairman, and shall appoint a Secretary and an Assistant
Secretary, neither of whom need be a member of the Owners Committee, and the
Committee shall keep such minutes of its meetings as the Committee shall
determine, provided a written record shall be made by the Committee of all of
its actions and decisions.
9.6 The Owners Committee shall have no authority to modify any of the
terms, covenants or conditions of this Restated Agreement or of the Operating
Agreement.
9.7 Each Participant shall give prompt written notice to the other
Participants of any change in the designation of its primary and alternate
representatives on the Owners Committee. Any primary representative, or any
alternate in the absence of the primary representative, appearing at a committee
meeting shall be deemed to have authority to act on behalf of the Participant
represented unless the Participant represented has designated another primary
representative or alternate representative as the case may be, as provided in
Section 9.2 hereof. 10. OPERATION AND DECOMMISSIONING:
10.1 The Participants shall cause the South Texas Project to
be operated in a safe and efficient manner in order to provide to
-21-
each Participant its proportionate share of Power and Energy produced from the
South Texas Project. The Participants further shall cause the decontamination
and decommissioning of the Generating Units and other facilities at the South
Texas Project upon final termination and abandonment of each Generating Unit. To
that end, the Participants have contemporaneously herewith engaged OPCO to do
all things necessary or desirable under the terms of the Operating Agreement for
the operation, maintenance, repair, replacement, reconstruction, decontamination
and decommissioning of the South Texas Project. 11. REPLACEMENT OF OPCO:
11.1 In the event OPCO's right to serve as operator on behalf of the
Participants is terminated prior to final decommissioning of the Generating
Units, the Participants shall by unanimous agreement select a successor to OPCO
for the operation, maintenance, repair, replacement, reconstruction,
construction, decontamination and decommissioning of the South Texas Project.
Such successor may be a third party, one or more of the Participants or an
affiliate thereof. 12. PROJECT COSTS:
12.1 The Project Costs of each Generating Unit shall be
shared and paid for by the Participants in proportion to their
Generation Entitlement Shares for the applicable Generating Unit.
The Project Costs of the Common Station Facilities shall be shared
-22-
and paid for by the Participants in proportion to their Plant
Ownership Interest.
13. ADVANCEMENT OF FUNDS:
13.1 Each Participant shall pay its share of Costs of Operation under
the Operating Agreement at the times established under and in accordance with
the procedures specified in the Operating Agreement. Each Participant shall pay
its share of Project Costs arising under any agreement other than the Operating
Agreement at the times established under and in accordance with the procedures
specified in said agreement. 14. TAXES:
14.1 Each Participant shall render for ad valorem taxation, if
applicable, its undivided interest in the jointly owned property comprising the
South Texas Project and shall otherwise use its best efforts to have any taxing
authority imposing any taxes or assessments on the South Texas Project, or any
interest or rights therein, assess and levy such taxes or assessments directly
against the ownership or beneficial interest of each Participant.
14.2 All taxes or assessments including but not limited to the Spent
Fuel Disposal Fee levied against or with respect to each Participant's interest
in, or pro rata share of, the purchase, use, ownership or beneficial interest in
the South Texas Project and Energy generated therefrom, shall be the sole
responsibility of, and, if applicable, shall be paid by, the Participant upon
whose
-23-
purchase, use, ownership or beneficial interest said taxes or
assessments are levied.
14.3 If any property taxes or other taxes or assessments are legally
and properly levied or assessed other than against each Participant as
contemplated in Sections 14.1 and 14.2 hereof (that is, are levied or assessed
in such a way as to be disproportionately collected from one or more
Participants), such taxes or assessments shall be apportioned between the
Participants in accordance with their respective ownership interest or Power or
Energy entitlement or take, whichever is appropriate to the incidence of the
tax.
14.4 Each of the Participants claiming exemption from any taxes or
assessments shall be responsible for and shall pay all expenses in connection
with the sustaining or determination of such claims and each of the other
Participants, the Owners Committee and OPCO (as directed by the Owners
Committee) shall lend all reasonable cooperation in connection with the filing
of tax renditions and reports and in connection with the making of protest and
payment under protest as may be requested by each Participant claiming an
exemption. 15. WAIVER OF RIGHT TO PARTITION:
15.1 Each Participant hereto agrees to waive any rights which it may
have to partition any component of the South Texas Project, whether by partition
in kind or by sale and division of the proceeds, and further agrees that it will
not resort to any
-24-
action in law or in equity to partition such component, and it waives the
benefits of all laws that may now or hereafter authorize such partition for the
maximum term permitted under applicable law.
16. MORTGAGE AND TRANSFER OF INTEREST:
16.1 Each Participant shall have the right at any time and from time to
time to mortgage, pledge, create or provide for a security interest in or convey
in trust all or a part of that Participant's share in the South Texas Project,
together with an equal interest in this Restated Agreement and the Operating
Agreement, to a trustee or trustees under deeds of trust, mortgages or
indentures, or to secured parties under a security agreement, as security for
its present or future bonds or other obligations or securities, and to any
successors or assigns thereof, without need for the prior written consent of any
other Participant, and without such mortgagee, trustee or secured party assuming
or becoming in any respect obligated to perform any of the obligations of the
Participant arising prior to such time as such mortgagee, trustee, or secured
party obtains possession of or assumes the right to exercise such Participant's
rights in respect of such ownership share, or after such possession or
assumption ceases.
16.2 Any mortgagee, trustee or secured party under present or future
deeds of trust, mortgages, indentures or security agreements of any of the
Participants and any successor or assign thereof, and any receiver, referee or
trustee in bankruptcy or reorganization of any of the Participants, and any
successor by
-25-
action of law or otherwise, and any purchaser, transferee or assignee of any
thereof may, without need for the prior written consent of the other
Participants, succeed to and acquire all of the rights, titles and interests of
such Participant in the South Texas Project and in this Restated Agreement, the
Operating Agreement and its rights as an owner of the South Texas Project under
any other agreement to which all the Participants are parties, and may take over
possession of or foreclose upon said property, rights, titles and interests of
such Participant.
16.3 Each Participant shall have the right to transfer or assign its
ownership share in the South Texas Project, together with its rights under this
Restated Agreement, the Operating Agreement and its rights as an owner of the
South Texas Project under any other agreement to which all the Participants are
parties, to any of the following without the need for prior written consent of
any other Participant:
16.3.1 To any entity acquiring all or substantially all of
the electric utility properties and business, or of the electric
generating facilities, of such Participant; or
16.3.2 To any entity merged or consolidated with such
Participant; or
16.3.3 To any entity which is wholly-owned by such
Participant.
16.4 Except as otherwise provided in Sections 16.1 and 16.2
hereof, any successor to the rights, titles and interests of a Participant in
the South Texas Project shall assume and agree in writing to fully perform and
discharge all of the obligations
-26-
hereunder of such Participant, and such successor shall notify each of the other
Participants in writing of such transfer, assignment or merger, and shall
furnish to each Participant evidence of such transfer, assignment or merger.
16.5 Unless and until the Participants unanimously agree otherwise, all
Nuclear Fuel purchased for use in or removed from any Generating Unit or
recovered after reprocessing for reuse in any Generating Unit or for sale to
others shall be jointly owned by the Participants in accordance with their
respective Generation Entitlement Shares in the Generating Unit for which the
Nuclear Fuel was purchased, provided that any Participant may at any time sell
and assign all or any part of its interest in such Nuclear Fuel to any person or
entity ("Fuel Lessor") for leaseback to such Participant subject to the
conditions that: (i) the Fuel Lessor shall waive all right to partition of such
Nuclear Fuel prior to completion of the reprocessing thereof; (ii) the Fuel
Lessor shall not obtain any rights not possessed by such Participant with
respect to the operation or scheduling of any Generating Unit or the removal of
Nuclear Fuel therefrom; (iii) the Fuel Lessor shall not become a Participant in
the Project unless or until it succeeds to all of such Participant's right,
title and interest in the South Texas Project in accordance with the terms and
provisions hereof; and (iv) such Participant shall indemnify all other
Participants against any costs or expenses incurred by them because of such
-27-
Participant's sale and leaseback of its interest in the Nuclear Fuel.
16.6 No Participant assigning or transferring an interest under this
Section 16 or Section 17 shall be relieved of any of its obligations under this
Restated Agreement or the Operating Agreement but shall remain liable and
obligated for the performance of all of the terms and conditions of this
Restated Agreement and the Operating Agreement, unless otherwise agreed by all
of the remaining Participants. 17. RIGHT OF FIRST REFUSAL:
17.1 Except as provided in Section 16 hereof, should any Participant,
prior to the expiration of the period described in Section 17.12 hereof, desire
to transfer its ownership, or any part thereof, in the South Texas Project to
any person, entity or another Participant, ready, able and willing to acquire
same, the Participant desiring to make such transfer shall obtain a written
offer from the prospective transferee, setting forth the consideration and other
terms of the offer, and each of the other Participants shall have the right of
first refusal to acquire such interest on the basis of the following
consideration:
17.1.1 If the offer is in cash, whether payable in one
payment or in installments, the amount of the bona fide written offer
from the prospective transferee, payable as specified in the offer; or
17.1.2 If the offer is not in cash but is in securities
having a readily ascertainable market value, the fair market value of
the securities offered by the prospective transferee; or
-28-
17.1.3 If the offer is neither in cash nor in securities having a
readily ascertainable market value, the fair market value of the consideration
to be received for the ownership interest to be transferred. 17.2 At least seven
(7) months prior to the date on which the intended transfer is to be
consummated, the Participant desiring to transfer shall serve written notice of
its intention to do so upon all of the Participants. Such notice shall contain
the proposed date of transfer and the terms and conditions of the transfer.
17.3 Each Participant shall have the option to acquire all or any part
of the interest to be transferred and shall exercise said option by serving
written notice of its intention upon the Participant desiring to transfer and on
the remaining Participants within three (3) months after service of the written
notice of intention to transfer given pursuant to Section 17.2 hereof. Failure
of a Participant to exercise said option as provided herein within the time
period specified shall be conclusively deemed to be an election not to exercise
said option.
17.4 If two or more of the Participants desire to acquire all, or parts
aggregating more than all, of such interest, unless otherwise agreed, such
interest shall be transferred in the ratio that the Plant Ownership Interest of
each Participant desiring to acquire bears to the total Plant Ownership
Interests of all Participants desiring to acquire.
-29-
17.5 If one or more of the Participants exercise their options to
acquire a part of the interest to be transferred but fail to exercise their
options so as to acquire in the aggregate the entire ownership interest to be
transferred, then the Participant desiring to transfer shall serve written
notice of this fact upon the Participants exercising their options within
fourteen (14) days after its receipt of all of the written notices permitted by
Section 17.3 hereof, or after the expiration of the three (3) month period
referred to in Section 17.3 hereof, whichever is earlier.
17.6 The Participants who exercise their option to acquire less than
the entire ownership interest to be transferred shall have the option to
acquire, for the consideration provided in Section 17.1 hereof, the remaining
ownership interest to be transferred, which such option shall be exercised by
serving written notice of such election upon the Participant desiring to
transfer within three (3) months after the receipt of the notice given pursuant
to Section 17.5 hereof.
17.7 When the options to acquire all or any part of said ownership
interest have been exercised, the Participants shall thereby incur the following
obligations:
17.7.1 The Participant desiring to transfer the ownership
interest and the Participant or Participants having exercised the
option to acquire all or any portion of such ownership interest shall
be obligated to proceed in good faith and with due diligence to obtain
all required authorizations and approvals of such acquisition.
-30-
17.7.2 The Participant desiring to transfer such ownership
interest shall be obligated to obtain the release of any lien
encumbering the ownership interest which is the subject of the transfer
at the earliest practicable date.
17.7.3 The Participant or Participants having
exercised the option to acquire such ownership interest shall
be obligated to perform all of the terms and conditions
required of them to complete the acquisition of said ownership
interest.
17.8 The acquisition of the ownership interest by the
Participant or Participants having elected to acquire the same shall be fully
consummated within seven (7) months following the date upon which all notices
required to be given under this Section 17 have been duly served, unless said
Participant or Participants are then diligently pursuing applications for
required authorizations or approvals to effect such transfer or are then
diligently pursuing or defending appeals from orders entered or authorizations
issued in connection with such applications, in which event the transfer shall
be consummated within three (3) months following the date upon which the final
order is entered or authorizations issued in connection with such applications.
17.9 If the Participants receiving notice of the proposed transfer
fail to exercise their options to acquire all or some part of the ownership
interest to be transferred, the Participant desiring to transfer such interest
shall be free to transfer such interest, if any, as may be left after the
exercise of such options to the party that made the offer referred to in Section
17.1 hereof upon the terms and conditions set forth in said bona fide written
-31-
offer. If such transfer is not consummated by the proposed date of transfer
referred to in Section 17.2 hereof, the Participant desiring to transfer said
ownership interest must give another complete new right of first refusal to the
remaining Participants pursuant to the provisions of this Section 17 before such
Participant shall be free to transfer said ownership interest to another party.
17.10 The Participant or Participants who acquire an ownership interest
pursuant to this Section 17 shall receive title to and shall own the interest as
tenants in common, subject to the same rights, duties and obligations as are
applied by this Restated Agreement to the interest being transferred in the
hands of the transferring Participant.
17.11 Any party who may succeed to an ownership interest pursuant to
this Section 17 shall specifically agree in writing with the remaining
Participants at the time of such transfer that it will not transfer or assign
all or any portion of such ownership interest without complying with the terms
and conditions of this Section 17.
17.12 It is intended that the provisions of this Section 17 shall, to
the full extent permitted by law, continue in effect and be enforceable by the
Participants, their successors and assigns, so long as two or more of them
continue to own an interest in the South Texas Project and/or in the South Texas
Plant Site, under this Restated Agreement. However, should it be finally
determined
-32-
by a court of competent jurisdiction that Article I, Section 26 of the
Constitution of the State of Texas or any other constitutional provision,
statute or rule of common law of like import, is applicable to the rights
created by this Section 17, then the agreements contained in this Section 17
shall terminate and be of no further force and effect whenever 21 years less one
day shall have elapsed after the death of the last surviving descendant (living
at the date of the earliest execution of this Restated Agreement on behalf of
any of the Participants) of any person signing this Restated Agreement in behalf
of a Participant in any capacity.
17.13 It is required that any transfer of a part of an interest
pursuant to this Section 17 be a transfer of the same percentage share of the
selling Participant's interest in each of the Generating Units and the Common
Station Facilities.
18. DESTRUCTION OR ABANDONMENT:
18.1 If a Generating Unit should be damaged or destroyed to the extent
that the estimated cost of repairs, replacement or reconstruction of the
physical damage to the affected Unit is not more than one hundred percent (100%)
of the aggregate amount of the proceeds from Project Insurance carried and
covering the cost of the repairs, replacement or reconstruction of such
Generating Unit, the Participants, unless otherwise unanimously agreed, shall
repair, replace or reconstruct such Generating Unit to substantially the same
general character or use as the original.
-33-
The Participants shall share the costs of such repairs, replacement or
reconstruction in proportion to their Generation Entitlement Shares in the
Generating Unit so destroyed.
18.2 If a Generating Unit should be damaged or destroyed to the extent
that the estimated cost of repairs, replacement or reconstruction of the
physical damage to the affected Unit is more than one hundred percent (100%) of
the aggregate amount of the proceeds from Project Insurance carried and covering
the cost of the repairs, replacement or reconstruction of such Generating Unit,
the Participants shall, upon agreement, repair, replace or reconstruct such
Generating Unit to substantially the same general character or use as the
original; provided, however, that should all of the Participants not agree to
repair, replace or reconstruct such Generating Unit, but one or more of the
Participants nevertheless desire so to do, then any Participant who does not
agree to repair, replace or reconstruct shall sell its interest in such
Generating Unit together with the corresponding interest in the Common Station
Facilities to the Participants desiring to repair, replace or reconstruct such
Generating Unit for a price equal to the selling Participant's proportionate
interest in the salvage value of such Generating Unit plus such Participant's
proportionate cost, less depreciation at the maximum straight line rates then
applicable to like properties under the Federal income tax law, in the interest
in the Common Station Facilities so sold. The Participants, if more than one,
desiring to repair, replace or
-34-
reconstruct such Generating Unit, unless otherwise agreed between them shall
share the payments to, and the interest acquired from, any Participant not
desiring to repair, replace or reconstruct such Generating Unit and the costs of
repair, replacement or reconstruction of such Generating Unit in the proportion
that the Generation Entitlement Share in such Unit bears to the total Generation
Entitlement Shares in such Unit of all Participants agreeing to repair, replace
or reconstruct such Generating Unit, and appropriate transfers of interests will
be made.
18.3 If any of the Common Station Facilities should be destroyed, the
Participants shall, unless otherwise agreed, repair or reconstruct same to
substantially the same character or use as the original. The Participants shall
share the costs of such repair or reconstruction in proportion to their Plant
Ownership Interests.
18.4 Should the Nuclear Regulatory Commission by final order not
subject to judicial or administrative appeal require, or should Participants
having in excess of a sixty percent (60%) Generation Entitlement Share in the
affected Generating Unit agree upon, the abandonment of any or all of the
Generating Units or of the South Texas Project, the Owners Committee shall
direct OPCO to seek authorization of the Nuclear Regulatory Commission to
surrender the operating licenses for the affected Generating Unit or Generating
Units or of the South Texas Project, as the case may be, and upon obtaining same
shall dismantle and sell or make such other final
-35-
disposition as may be required by law of the affected properties.
18.5 Costs of abandonment of the Common Station Facilities
shall be shared and paid for by the Participants in proportion to
their Plant Ownership Interests while the costs of abandonment of
a Generating Unit shall be shared and paid for by the Participants
in proportion to their respective Generation Entitlement Shares in
said Generating Unit.
19. PROJECT INSURANCE:
19.1 The Owners Committee shall direct OPCO to recommend, and the
Owners Committee shall determine, the insurance coverages, including the
insurable values, limits, deductibles, retentions and other special terms, to be
obtained during the periods covered by and with respect to Preconstruction Work,
Construction Work and Station Work or any phases thereof.
19.2 All policies of Project Insurance shall:
19.2.1 Provide insurable values, limits, deductibles,
retentions and other special terms as determined by the Owners
Committee;
19.2.2 List as loss payees or additional insureds (as
their interests may appear) such mortgagees, trustees or secured
parties as a Participant, by written notice to OPCO, may designate;
19.2.3 Contain endorsements providing for positive notice
of cancellation to all parties listed as named or additional insureds;
19.2.4 Contain endorsements providing that the
insurance is primary insurance for all purposes; and
19.2.5 Contain cross-liability endorsements for
comprehensive bodily injury liability and property damage liability
coverages.
-36-
19.3 The Owners Committee shall direct OPCO to observe the following
procedures in connection with the procurement of Project Insurance and changes
in Project Insurance:
19.3.1 OPCO shall give prompt written notice to the
Owners Committee of the procurement of all insurance binders.
19.3.2 OPCO shall furnish each Participant with either a
certified copy of each of the policies of the insurance procured or a
certified copy of each of the policy forms therefor, together with a
line sheet therefor (and any subsequent amendments) naming the
insurers and underwriters and the extent of their participation.
19.3.3 No policy of Project Insurance obtained pursuant
to decision of the Owners Committee shall be materially changed
without the prior written consent of the Owners Committee.
19.3.4 Any changes in policies of Project Insurance shall
be promptly reported to the Owners Committee by OPCO. 19.4 Each
Participant, at its expense, shall have the right to secure such
additional or different insurance coverage as may be required under
any mortgage or contract provision, and, to the extent practicable,
such additional or different insurance coverage may be effected
through endorsements on policies of Project Insurance. Costs incurred
by Participants pursuant to this Section 19.4 are not Project Costs.
20. LIABILITY OF PARTICIPANTS TO EACH OTHER:
-37-
20.1 No Participant shall have any Liability to any other Participant
for any action taken or omitted to be taken by such Participant which arises out
of or relates to the ownership of the South Texas Project or any portion
thereof, any Preconstruction Work, Construction Work or Station Work or any
actions taken or omitted to be taken by such Participant in connection with this
Restated Agreement or the Operating Agreement, except for any Liability of such
Participant resulting from (i) its Willful Action, or (ii) a payment "default"
under Section 21 hereof. Each Participant agrees that it shall not make, or
permit to be made on its behalf, any Claim against any other Participant in
respect of any breach or wrongful conduct of such Participant (whether based on
any federal, state or local law or regulation, securities or commercial law or
regulation or under common law or in equity or on contract, tort, strict
liability or otherwise) arising out of or relating to the ownership of the South
Texas Project or any portion thereof or any Preconstruction Work, Construction
Work or Station Work, or any actions taken or omitted to be taken by such
Participant in connection with this Restated Agreement or the Operating
Agreement other than a Claim (an "Excepted Claim") arising from (i) Willful
Action of such other Participant or (ii) a payment "default" under Section 21
hereof, and hereby waives and releases and agrees not to xxx upon any such Claim
(other than any Excepted Claim).
-38-
20.2 Each Participant shall indemnify each other Participant against,
and hold them harmless from and in respect of all Claims in favor of the
indemnifying Participant's electric customers (or any Person claiming through
the indemnifying Participant's electric customers) on account of bodily
injuries, death, damage to property or economic loss occurring, incident to or
arising out of or in connection with the furnishing of, or failure to furnish,
electric service to such customers by such indemnifying Participant, it being
the intention of this Section 20.2 to impose on each Participant the sole
responsibility for the defense and discharge of all such Claims; provided that
nothing in Section 20.2 shall impair any Excepted Claim of any Participant.
20.3 EACH PARTICIPANT SEVERALLY ACKNOWLEDGES TO EACH OTHER PARTICIPANT
THAT THE PROVISIONS OF SECTIONS 20.1 AND 20.2 HEREOF WHICH RELEASE THE OTHER
PARTICIPANTS FROM LIABILITY OR PROVIDE FOR THE INDEMNIFICATION BY THE
INDEMNIFYING PARTICIPANT OF THE OTHER PARTICIPANTS ARE INTENDED BY THE
INDEMNIFYING PARTICIPANT, TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW FROM
TIME TO TIME, TO RELEASE AND SAVE AND HOLD THE INDEMNIFIED PARTICIPANTS HARMLESS
FROM THE CONSEQUENCES OF THE INDEMNIFIED PARTICIPANT'S OWN NEGLIGENCE (WHETHER
ORDINARY OR GROSS, SOLE, JOINT OR CONCURRENT OR ACTIVE OR PASSIVE) AND STRICT
LIABILITY AND (EXCEPT AS PROVIDED IN SECTION 20.1 WITH RESPECT TO EXCEPTED
CLAIMS) RECKLESS OR WILLFUL MISCONDUCT WHICH ARISES OUT OF OR RELATED TO THE
OWNERSHIP OF THE SOUTH TEXAS PROJECT OR ANY PORTION THEREOF OR ANY
PRECONSTRUCTION
-39-
WORK, CONSTRUCTION WORK OR STATION WORK OR ANY ACTIONS TAKEN OR OMITTED TO BE
TAKEN BY THE INDEMNIFIED PARTICIPANT IN CONNECTION WITH THIS RESTATED AGREEMENT
OR THE OPERATING AGREEMENT. EACH PARTICIPANT ALSO SEVERALLY ACKNOWLEDGES TO EACH
OTHER PARTICIPANT THAT IT IS THE INTENTION OF THE INDEMNIFYING PARTICIPANT IN
SECTION 20.2 TO BE SOLELY RESPONSIBLE FOR THE DEFENSE AND DISCHARGE OF ALL
CLAIMS OF ANY KIND OR NATURE REFERRED TO IN SECTION 20.2 EVEN WHEN CAUSED BY THE
SOLE FAULT OF ANOTHER PARTICIPANT.
20.4 As used in this Section 20, the following terms shall have the
meanings hereinafter specified, to wit:
20.4.1 Claim--shall mean any demand, claim, loss, cost
(including, without limitation, fees and disbursements of accountants,
attorneys, consultants and experts, whether or not any action, suit or
other proceeding is brought), damage (including, without limitation,
consequential, exemplary or punitive or treble damage), expense,
action, suit, fine, penalty, proceeding, judgment or liability of any
kind or nature whatsoever.
20.4.2 Liability--shall mean, as to any Person, the
liability of such Person for payment, property or services, whether or
not the right is reduced to judgment, liquidated, unliquidated, fixed
contingent, matured, unmatured, disputed, undisputed, legal, equitable,
secured or unsecured.
20.4.3 Person--shall mean any individual, corporation,
limited liability company, partnership, joint venture, association,
joint stock company, trust, unincorporated organization, government (or
any agency or subdivision thereof, including, without limitation,
cities and towns of every class and the agencies and instrumentalities
thereof), electric cooperative corporation, joint powers agency,
municipal power agency or other entity. Each Participant is a Person.
20.5 The parties agree that the provisions of this Section
20 shall apply solely to Liability based on acts or omissions
-40-
occurring on or after the Effective Date. Liability, if any, based
on acts or omissions occurring before the Effective Date shall be
governed by the provisions of the Prior Agreement.
20.6 Each of the Participants acknowledges, agrees to and accepts the
provisions of the Articles of Incorporation of OPCO in the form on file with the
Secretary of State of Texas including, without limitation, the provisions of
Articles IV and X thereof.
21. PAYMENT DEFAULT
21.1 For the purpose of this Section 21, the word "default" shall mean
the failure of any Participant to make any payment at the time and in the manner
required by this Restated Agreement or the Operating Agreement.
21.2 Because of the immediate and irreparable damage that could be
caused to the South Texas Project, the other Participants and OPCO as a result
of a default hereunder by any Participant, each Participant agrees that, should
such Participant be in default hereunder, each other Participant, singly or in
any combination of such other Participants, may enforce the payment provisions
hereof against the Participant in default hereunder by mandatory injunction.
This remedy is not exclusive of any other right, remedy or recourse that the
Participants not in default hereunder may have in equity, at law, by virtue of
statute or otherwise.
21.3 Without limiting Section 21.2, in the event a
Participant is in default:
-41-
21.3.1 The non-defaulting Participants, if any, agreeing
to make payments and take actions necessary to cover the default (the
"covering Participants") shall make such payments and take such
actions, with the cost thereof allocated among and paid by each of the
covering Participants having cost responsibility for the component of
the South Texas Project to which the default relates in such ratio as
they may then agree. The non-defaulting Participants are not obligated
to make payments under this Subsection 21.3.1.
21.3.2 An election by the non-defaulting Participants not
to cover the default shall not operate as a waiver of any damages
incurred by the non-defaulting Participants from the resulting
shut-down status of the South Texas Project. If none of the
non-defaulting Participants elect to cover the default, OPCO shall, as
provided in the Operating Agreement, take whatever action and make
whatever expenditures, whether budgeted or not, which it determines to
be reasonably necessary to protect public health and safety as required
by the Operating Licenses and applicable laws and regulations and to
comply with applicable licenses or permits and to place and maintain
the South Texas Project in a safe shut-down condition. All Participants
remain obligated to pay for these expenditures in proportion to their
Generation Entitlement Shares for each affected Generating Unit. If one
or more Participants default on this safe shut-down obligation, the
other Participants are obligated to increase their contributions to
OPCO to cover the safe shut-down obligation in the proportion that
their respective Generation Entitlement Shares in the affected Unit
bear to the aggregate Generation Entitlement Shares in such Unit of all
non-defaulting Participants.
21.3.3 The defaulting Participant shall remedy defaults
including a default under Section 21.3.2 as soon as possible and shall
pay upon demand to each covering Participant any amount paid by such
covering Participant for the account of the defaulting Participant plus
interest on such amounts calculated at the rate applicable to judgments
rendered in the State of Texas. If the defaulting Participant shall
fail to make such payment upon demand therefor by a covering
Participant, then such covering Participant may, with or without the
other covering Participants, exercise any or all remedies afforded by
law, including without limitation, the institution of an action at law
or in equity to collect such amounts or to obtain such other legal or
equitable relief as may be available, or both.
-42-
22. SOURCE OF PAYMENTS BY SAN ANTONIO
22.1 It is expressly stipulated and agreed that none of the other
Owners nor any of their successors or assigns shall ever have the right to
demand or require payment of any amount becoming due from San Antonio under or
in connection with or pursuant to any term or provision of this Restated
Agreement out of any funds raised or to be raised by taxation, or from any
source whatsoever other than the sources specified in Section 22.2 below, and no
such amount shall ever constitute a claim, debt, liability or general obligation
of the City of San Antonio required to be paid from any other revenues or assets
thereof.
22.2 San Antonio covenants and agrees that any and all amounts becoming
due from San Antonio under or in connection with or pursuant to any term or
provision of this Restated Agreement shall be payable from the Revenue of the
San Antonio Electric and Gas Systems and from the proceeds of the sale of Debt
Obligations issued for that purpose.
22.3 As used in this Section 22, the following terms shall have the
meanings hereinafter specified:
22.3.1 Debt Obligations shall mean all bonds, notes and
other evidence of indebtedness for borrowed money which (i) have been
or are issued, incurred or assumed by the City of San Antonio pursuant
to express charter or statutory authority heretofore or hereafter
adopted or enacted and (ii) are payable from or secured by a lien or
pledge on net Revenues of the San Antonio Electric and Gas Systems.
22.3.2 Revenue shall mean all income and revenues from the
operation of the San Antonio Electric and Gas Systems.
-43-
22.3.3 San Antonio Electric and Gas Systems shall mean the
entire electric light and power plants and systems and gas distribution
system and all property of every kind appurtenant to and used or
acquired in connection with said electric light and power plant and
systems and gas distribution system owned by the power plant and
systems and gas distribution system owned by the City of San Antonio,
together with all property of every kind now or hereafter owned or
acquired by the City of San Antonio as a part of or for use in the
operation of the City's electric light and power plants and systems and
gas distribution system.
23. SOURCE OF PAYMENTS BY AUSTIN
23.1 It is expressly stipulated and agreed that none of the other
Owners nor any of their successors or assigns shall ever have the right to
demand or require payment of any amount becoming due from Austin under or in
connection with or pursuant to any term or provision of this Restated Agreement
out of any funds raised or to be raised by taxation, or from any source
whatsoever other than the sources specified in Section 23.2 below, and no such
amount shall ever constitute a claim, debt, liability or general obligation of
Austin required to be paid from any other revenues or assets of Austin.
23.2 Austin covenants and agrees that any and all amounts becoming due
from Austin under or in connection with or pursuant to any term or provision of
this Restated Agreement shall be payable from the Revenues of the Austin
Utilities Systems (as defined in Section 23.3 below) and from the proceeds of
the sale of Debt Obligations issued by Austin for that purpose.
23.3 As used in this Section 23, the following terms shall have the
meanings hereinafter specified:
-44-
23.3.1 Austin Utilities Systems shall mean collectively
the Electric Light and Power System and the Waterworks and Sewer
System.
23.3.2 Debt Obligations shall mean all bonds, notes and
other evidence of indebtedness for borrowed money which (i) have been
or are issued, incurred or assumed by the City of Austin pursuant to
express charter or statutory authority heretofore or hereafter adopted
or enacted and (ii) are payable from or secured by a lien or pledge on
net Revenues of the Austin Utilities Systems or of the Electric Light
and Power System or the Waterworks and Sewer System.
23.3.3 Electric Light and Power System shall mean the
entire electric light and power plants and systems and all property of
every kind appurtenant to and used or acquired in connection with said
electric light and power plants and systems owned by Austin, together
with all property of every kind now or hereafter owned or acquired by
Austin as a part of or for use in the operation of Austin's electric
light and power plants and systems; provided that, notwithstanding the
foregoing, and to the extent now or hereafter authorized or permitted
by law, the term "Electric Light and Power System" shall not include
facilities of any kind (including any electric power generating and
transmission facilities) which are declared not to be a part of the
Electric Light and Power System, are not a then existing material and
functioning part of the Electric Light and Power System at the time of
such declaration and which are acquired or constructed by Austin, alone
or in participation with others, with the proceeds from the issuance of
"Special Facilities Bonds," which are hereby defined as being special
revenue obligations of Austin which are not entitled to be paid from or
secured by any liens on or pledges of any Revenues of the Austin
Utilities Systems.
23.3.4 Revenues shall mean, with respect to the Electric
Light and Power System or the Waterworks and Sewer System, all income
and revenues from the operation of the respective system, excluding
refundable meter deposits, restricted gifts and grants, and income,
receipts, revenues, proceeds or payments from facilities acquired or
constructed with "Special Facilities Bonds."
23.3.5 Waterworks and Sewer System shall mean the entire
waterworks and sewer system operated and maintained by Austin for the
supply, treatment and transmission of treated potable water and the
collection, treatment and disposal of water-carried wastes and all
property of every kind appurtenant to and used or acquired in
connection with said
-45-
waterworks and sewer system owned by Austin, together with all property
of every kind now or hereafter owned or acquired by Austin as a part of
or for use in the operation of Austin's waterworks and sewer system;
provided, however, that notwithstanding the foregoing, and to the
extent now or hereafter authorized or permitted by law, the term
"Waterworks and Sewer System" shall not include facilities of any kind
which are declared not to be a part of the Waterworks and Sewer System,
are not a then existing material and functioning part of the Waterworks
and Sewer System at the time of such declaration and which are acquired
or constructed by or on behalf of Austin with the proceeds from the
issuance of "Special Facilities Bonds," which are hereby defined as
being special revenue obligations of Austin which are not entitled to
be paid from or secured by any liens on or pledges of any Revenues of
the Austin Utilities Systems.
24. CONTINUING RESPONSIBILITY OF OPCO:
24.1 If the Participants replace OPCO pursuant to Section
11, OPCO shall be required to continue to perform its duties under
the Operating Agreement as provided therein until its replacement
has been licensed to act as operator of the South Texas Project by
the Nuclear Regulatory Commission.
25. RELATIONSHIP OF PARTICIPANTS:
25.1 The covenants, obligations and liabilities of the Participants
shall be several and not joint or collective. Each Participant shall be
individually responsible for its own covenants, obligations and liabilities as
herein provided.
25.2 It is not the intention of the Participants to create, nor shall
this Restated Agreement be construed as creating, a partnership, association,
joint venture or trust, as imposing a trust or partnership covenant, obligation
or liability on or with regard to any one or more of the Participants or as
rendering the
-46-
Participants liable as partners or trustees. No Participant or group of
Participants shall be under the control of or shall be deemed to control any
other Participant or the Participants as a group. No Participant as such shall
be the agent of or have a right or power to bind any other Participant. If, for
federal income tax purposes, this Restated Agreement and the operations
hereunder are regarded as a partnership, each of the Participants hereto elects
to be excluded from the application of all of the provisions of Subchapter "K,"
Chapter 1, Subtitle "A," of the Internal Revenue Code of 1986, as amended
("Code"), as permitted and authorized by Section 761 of the Code and the
regulations promulgated thereunder. OPCO is authorized and directed to execute
on behalf of each Participant such evidence of this election as may be required
by the Secretary of the Treasury of the United States or the Federal Internal
Revenue Service, including specifically, but not by way of limitation, all of
the returns, statements, and the data required by Treasury Regulations ss.
1.761. Should there be any requirement that each Participant give further
evidence of this election, each Participant shall execute such documents and
furnish such other evidence as may be required by the Federal Internal Revenue
Service or as may be necessary to evidence this election. No such Participant
shall give any notices or take any other action inconsistent with the election
made hereby. If any present or future income tax laws of the State of Texas or
any future income tax laws of the United States contain provisions similar to
those
-47-
in Subchapter "K," Chapter 1, Subtitle "A," of the Code, under which an election
similar to that provided by Section 761 of the Code is permitted, each
Participant shall make such election as may be permitted or required by such
laws. In making the foregoing election, each Participant states that the income
derived by such Participant from operations hereunder can be adequately
determined without the computation of partnership taxable income.
26. FORCE MAJEURE:
26.1 In the event of any Participant being rendered unable, wholly or
in part, by force majeure to perform any of its obligations under this Restated
Agreement (other than obligations to pay money), upon such Participant giving
notice and full particulars of such force majeure in writing or by telephone to
the other Participants as soon as reasonably possible after the occurrence of
the cause relied upon, the obligations of the Participant giving such notice, so
far as they are affected by such force majeure, shall be suspended during the
continuance of any inability of performance so caused, but for no longer period.
Telephone notices given under the provisions of this Section 26.1 shall be
confirmed in writing as soon as reasonably possible and shall specifically state
full particulars of the force majeure, the time and date when the force majeure
occurred and when the force majeure ceased. This Restated Agreement shall not be
terminated by reason of any such cause but shall remain in full force and
effect. The term "force majeure" shall mean any cause beyond the control of
-48-
the Participant affected which by the exercise of due diligence such Participant
could not reasonably have been expected to avoid and which by exercise of due
diligence it shall be unable to overcome. Nothing contained herein shall be
construed so as to require a Participant to settle any strike, lockout, work
stoppage or other industrial disturbance or dispute in which it may be involved.
Any Participant rendered unable to fulfill any of its obligations under this
Restated Agreement by reason of force majeure shall exercise due diligence to
remove such inability with all reasonable dispatch.
27. GOVERNING LAW:
27.1 This agreement shall be governed by the laws of the State of
Texas, except as to matters exclusively controlled by the Constitution and
statutes of the United States of America.
28. BINDING OBLIGATIONS:
28.1 All of the respective covenants, undertakings and obligations of
each of the Participants set forth in this Restated Agreement shall bind and
shall be and become the respective covenants and obligations of that Participant
and, to the extent permitted by law and the existing contracts of the applicable
Participant, shall apply to and bind:
All mortgagees, trustees and secured parties under all
present and future mortgages, indentures and deeds of trust, security
agreements and other financing arrangements which are or may become a
lien upon any of the properties of such Participant;
-49-
All receivers, assignees for the benefit of creditors,
bankruptcy trustees and referees of, or having control or jurisdiction
over, such Participant;
All other persons, firms, partnerships, corporations or
entities claiming by, through or under any of the foregoing;
and
Any successors or assigns of any of those mentioned
above in this Section 28.1;
and shall be covenants and obligations running with each Participant's
respective rights, titles and interests in the South Texas Project and with all
of the rights and interests of each Participant under this Restated Agreement,
and shall be for the benefit of the respective rights, titles and interests of
the Participants and their respective successors and assigns, in and to the
South Texas Project. It is the specific intention of this provision that all
such covenants and obligations shall be binding upon any party which acquires
any of the rights, titles and interests of any Participant in the South Texas
Project or in, to and under this Restated Agreement and that all of the
above-described persons and groups shall be obligated to use such Participant's
rights, titles and interests in the South Texas Project and/or in, to or under
this Restated Agreement for the purpose of discharging the covenants and
obligations under this Restated Agreement; except that in the case of a partial
assignment the assignee shall only be required to share in the cost of
fulfilling said covenants and obligations of the assigning Participant to an
extent proportionate to the interest so assigned.
-50-
29. AMENDMENT OF THIS RESTATED AGREEMENT:
29.1 The Participants agree that this Restated Agreement cannot be
amended except by an instrument in writing signed by the duly authorized
representative of each Participant.
30. TERM:
30.1 This Restated Agreement shall be and become effective as of the
Effective Date and shall remain in force and effect, subject to prior
termination by unanimous agreement by all Participants, until the abandonment
of, authorization by the Nuclear Regulatory Commission of the surrender of all
operating licenses for, and final disposition of all components of, the South
Texas Project.
31. INTERESTS ACQUIRED IN THE NAME OF AN INDIVIDUAL PARTICIPANT:
31.1 Any Participant which acquires in its name an interest in any real
or personal property or a contractual right which is part of the South Texas
Project shall acquire and hold same subject to this Restated Agreement, and
shall transfer and assign an undivided interest therein to the other
Participants so that the ownership and rights of the Participants in such
property or contract shall be as provided in this Restated Agreement.
32. NOTICES:
32.1 Any notice, demand or request provided for in this Restated
Agreement shall be deemed properly served, given or made if delivered in person
or sent by registered or certified-mail,
-51-
postage prepaid, to the Participants at the addresses specified
below:
City of Austin
P. O. Xxx 0000
Xxxxxx, Xxxxx 00000
Attention: Director, Electric Utility Department
City of San Antonio-City Public Service Board
P. O. Xxx 0000
Xxx Xxxxxxx, Xxxxx 00000-0000
Attention: Office of the General Manager,
City Public Service Board
Central Power and Light Company
P. X. Xxx 0000
Xxxxxx Xxxxxxx, Xxxxx 00000
Attention: Office of the President
Houston Lighting & Power Company
P. O. Xxx 0000
Xxxxxxx, Xxxxx 00000
Attention: Office of the President.
32.2 Any Participant may, at any time, by written notice to all other
Participants, designate different or additional persons or different addresses
for the giving of notices hereunder.
32.3 Each Participant shall provide to each other Participant a copy of
any notice, demand or request given or received by it in connection with this
Restated Agreement.
33. MISCELLANEOUS PROVISIONS:
33.1 Each Participant agrees, upon request by the other
Participants, to make, execute and deliver any and all documents
-52-
and writings of every kind reasonably requested or required to implement this
Restated Agreement.
33.2 The captions and headings appearing in this Restated Agreement are
inserted merely to facilitate reference and shall have no bearing upon the
interpretation thereof.
33.3 Each term, covenant and condition of this Restated Agreement is
deemed to be an independent term, covenant and condition, and the obligation of
any Participant to perform all of the terms, covenants and conditions to be kept
and performed by it is not dependent on the performance by the other
Participants of any or all of the terms, covenants and conditions to be kept and
performed by them.
33.4 In the event that any of the terms, covenants or conditions of
this Restated Agreement, or the application of any such term, covenant or
condition, shall be held invalid as to any person or circumstance by any court
having jurisdiction in the premises, the remainder of such agreement, and the
application of its terms, covenants or conditions to such persons or
circumstances shall not be affected thereby.
33.5 If any provision of this Restated Agreement is found to be in
conflict with any provision of the Operating Agreement, the Participants agree
that as between and among the Participants the terms of this Restated Agreement
are controlling.
33.6 The Participants do not intend to create rights in or
to grant remedies to any third party as a beneficiary of this
-53-
Restated Agreement or of any duty, covenant, obligation or undertaking
established therein.
33.7 Any waiver at any time by any Participant of its rights with
respect to a default or any other matter arising in connection with this
Restated Agreement or the Operating Agreement shall not be deemed a waiver with
respect to any subsequent default or matter.
33.8 As of the Effective Date, the Prior Agreement is
terminated and shall be of no further force and effect.
IN WITNESS WHEREOF, the parties hereto have caused this Restated
Agreement to be executed effective as the Effective Date.
-54-
EXHIBIT A
Common Station Facilities
-00-
XXXXXXX X
Xxxxx Xxxxx Plant Site
-56-
EXHIBIT B-1
Railroad Strip
-57-
