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. . I , ~ ;; I ~ I I ~. ~ f l ARTICLE 2 CONSTRUCTION OF MODIFICATIONS TO THE PLANT TO PROVIDE 120 MGD FIRM CAPACITY 2.1 In General 2.1.1 It is agreed that each Participant has an equio/ ownership interest in the Plant's Pumping and Production Capacity in proportion to its capital investment from time to time in such Pumping and Production Capacity. The Participant Exhibits show the initial and projected ownership interests up to the time of completion of the Modification Project. The Participants agree to the construction of certain rehabilitation and modifications to the Plant in order to ensure the Plant can provide the 120 MGD firm capacity of potable water for the Participants ("Modification . . Project"). The Participants also recognize that the Managing Participant did not recover certain costs for (1) the Plant and Raw Water Transmission Facilities and (2) Distribution and Pumping Facilities. 2.1.2 In order to pay for the cost of the Modification Project and obtain the 120 MGD firm production capacity, (1) each of the Participants agrees to pay its pro rata share of Modification Project Cost and (2) each Participant (except the Managing Participant) agrees to pay the Plant and Raw Water Recoupment Cost. Those Participants desiring an increase in Pumping and Distribution . Allocation Factors shall pay the Pumping and Distribution Recoupment Cost. The Participant Exhibits show the allocation of such costs for each Participant. It is anticipated that all of the City i .. j. f l . of Galveston's beneficial interest in the Plant, which is held in the name of the Gulf Coast Water Authority, will be sold to other Participants prior to the date of operation of the Modification Project and the City of Galveston will accrue no benefit from the Modification Project. Thus, each of the A:\EWB 1097S.RVl L.C. File: No. 80-99146-01 February 9. 2000 9 -",.. ..~'