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L :,A <br />10 <br />Participation Agreement <br />This Participation Agreement ( "Agreement ") is made as of the 31St day of January, 2013 (the <br />"Effective Date ") by and between the City of San Marcos ( "San Marcos ") and the Lower <br />Colorado River Authority ( "LCRA "), collectively referred to as the "Parties" or individually as a <br />«Party„ <br />RECITALS <br />(a) San Marcos and LCRA are parties to the Amended and Restated Wholesale Power <br />Agreement (the "WPA "), dated June 24, 2011; <br />(b) Under Article 5 of the WPA, San Marcos has the option to participate in certain new <br />generating facilities constructed by LCRA; <br />(c) LCRA is currently constructing a new generation facility, the Thomas C. Ferguson <br />Replacement Plant; and <br />(d) The Parties desire to execute this Agreement to fulfill San Marcos' right to participate <br />under the WPA with respect to the Thomas C. Ferguson Replacement Plant, to define San <br />Marcos' ownership in the Facility, and to establish mechanisms for San Marcos to pay <br />for, and to receive the value of, its ownership interest in the Facility; <br />In consideration of the mutual promises contained herein and for other good and valuable <br />consideration the sufficiency and receipt of which is hereby acknowledged, the Parties agree as <br />follows: <br />ARTICLE 1. DEFINITIONS <br />(a) As used in this Agreement, the following capitalized terms shall have the meaning set <br />forth below: <br />"Affiliate" means a nonprofit corporation or other entity created as an instrumentality of <br />a Party over which the Party exercises substantial control. <br />"Capacity" means the net electrical generating capability of the Facility at any given <br />time. The nominal capacity of the Facility is described in Exhibit B. <br />"Commercial Operation Date" means the date all performance tests required under the <br />EPC Contract have been successfully performed and met and all other work has been <br />performed in accordance with the requirements of the EPC Contract. <br />"Energy" means electric energy in kWh generated by the Facility. <br />"EPC Contract" means the contract between LCRA and Fluor Enterprises, Inc. for <br />engineering, procurement and construction of the Facility. <br />Participation Agreement between <br />Lower Colorado River Authority Page 3 of 26 <br />and City of San Marcos g <br />