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Home My WebLink About2005-06-15 Agenda Packet - Board (16) i u s INTERMOUNTAIN POWER PROJECT UNIT THREE DEVELOPMENT AGREEMENT DATED AS OF MAY 1,2005 AMONG DEVELOPMENT PARTICIPANTS SET FORTH IN EXHIBIT A HERETO AND INTERMOUNTAIN POWER AGENCY, AS DEVELOPMENT MANAGER 0182113 v9 TABLE OF CONTENTS SECTION HEADING PAGE ARTICLE I DEFINITIONS AND CONSTRUCTION ................................................................2 Section l.l. Definitions..............................................................................................2 Section 1.2. Construction......................................................................... .................8 ARTICLE II DEVELOPMENT OF UNIT 3 ...................................................................... ......8 Section 2.1. Development of Unit 3...........................................................................8 Section 2.2. Development Work..............................................................................10 ARTICLE III ORGANIZATION OF THE DEVELOPMENT COMMITTEE...................................12 Section 3.1. Organization.........................................................................................12 Section 3.2. Representatives; Chair.........................................................................12 Section3.3. Meetings...............................................................................................12 Section3.4. Voting..................................................................................................13 Section 3.5. Written Records to be Kept..................................................................14 Section 3.6. Establishment of Subcommittees.........................................................15 Section 3.7. Confidential Information Regarding Litigation...................................15 ARTICLE IV POWERS,DUTIES AND RESPONSIBILITIES OF THE DEVELOPMENT COMMITTEE........................................................................15 Section 4.L Powers, Duties and Responsibilities of the Development Committee............................................................................................15 Section 4.2. No Authority of Development Committee to Amend Agreement............................................................................................17 Section 4.3. No Joint Venture or Partnership ...................................................... .... ARTICLE DEVELOPMENT MANAGER AND DEVELOPMENT COORDINATION AGREEMENT......................................................................17 Section 5.1. Development Manager.........................................................................17 Section 5.2. Development Coordination Agreement...............................................19 Section 5.3. Development Contracts and Contractors.............................................20 ARTICLE VI DEVELOPMENT WORK LIMIT;INITIAL BUDGET;INITIAL SCHEDULE;DEVELOPMENT COSTS;AND AUDITS..................I.....................22 Section 6.1. Limit on Development Costs...............................................................22 Section6.2. Initial Budget................................................................................I.......23 Section 6.3. Initial Schedule ....................................................................................23 Section 6.4. Development Costs; Audits.................................................................23 Section 6.5. Certain Costs Not Part of Development Costs.....................................24 Section 6.6. Final Accounting, Reconciliation and Audit of DevelopmentCosts..............................................................................25 - i - #182113 v9 ARTICLE VII BILLING AND PAYMENT OF DEVELOPMENT COSTS......................................26 Section 7.1. Billing and Invoicing of Costs.............................................................26 Section 7.2. Payment of Costs .................................................................................26 Section 7.3. Payment of Invoices.............................................................................26 Section 7.4. Interest on Late Payments....................................................................27 Section 7.5. Disputed Invoices.................................................................................27 ARTICLE VIII OBLIGATIONS OF THE DEVELOPMENT PARTICIPANTS..................................27 Section 8.1. Development Participants' Obligations Several, Limited andUnconditional................................................................................27 Section 8.2. Enforcement of this Agreement; Payment of Expenses.......................28 ARTICLE IX WITHDRAWAL OF DEVELOPMENT PARTICIPANTS;REDUCTION OF DEVELOPMENT COSTS SHARE................................................................28 Section 9.1. Withdrawal of Development Participant .............................................28 Section 9.2. Termination of Rights of Withdrawing Development Participant............................................................................................28 Section 9.3. Voluntary Assumption of Development Costs Shares.........................28 Section 9.4. Transfer of Development Costs Share by Withdrawing Development Participant......................................................................29 Section 9.5. Incomplete Allocation of Development Costs Shares.........................30 Section 9.6. Reimbursement of Costs to Withdrawing Development Participant............................................................................................30 Section 9.7. Reduction of Development Costs Share..............................................30 ARTICLE X ELECTION TO PARTICIPATE IN UNIT 3;DISPOSAL OF NON- ELECTED AMOUNTS;REIMBURSEMENT OF DEVELOPMENT COSTS AND CERTAIN STUDY COSTS............................................................31 Section 10.1. Notification of Results of Development Work; SubscriptionNotice..............................................................................31 Section 10.2. Exercise of Right to Participate in Unit 3............................................31 Section 10.3. Procedure For Disposal of Non-Elected Amounts...............................32 Section 10.4. Disposal of Remaining Non-Elected Amount .....................................32 Section 10.5. Reimbursement of Development Costs ...............................................33 Section 10.6. Reimbursement of Category 2 Study Expenses...................................34 Section 10.7. Compliance With Utah Interlocal Act.................................................35 ARTICLE XI NEGOTIATION AND EXECUTION OF PROJECT AGREEMENTS.........................35 Section I I.1. Negotiation and Execution of Project Agreements..............................35 ARTICLEXII LIABILITY....................................................................................................36 Section 12.1. Limitation on Liability.........................................................................36 Section 12.2. Allocation of Costs to Discharge Liability...........................................36 Section 12.3. Indemnification for Willful Action......................................................36 - ii - 4182113 0 Section12.4. Willful Action......................................................................................36 Section 12.5. No Relief of Insured Obligations ........................................................37 Section 12.6. Liability of Development Manager......................................................37 ARTICLEXIII DEFAULT.....................................................................................................38 Section 13.1. Notice of Default..................................................................................38 Section 13.2. Obligation to Cure Default; Payment of Defaulted Amount ................................................................................................38 Section 13.3. Dispute of Default................................................................................38 Section 13.4. Termination of Rights of Defaulting Development Participant............................................................................................38 Section 13.5. Waiver Not to Affect Subsequent Defaults..........................................40 ARTICLEXIV ASSIGNMENT...............................................................................................40 Section 14.1. Binding Obligations.............................................................................40 Section14.2. Assignment..........................................................................................40 ARTICLE XV TRANSITION PERIOD....................................................................................42 Section 15.1. Occurrence of Transition Period..........................................................42 Section 15.2. Transition Development Participants...................................................42 Section 15.3. Reimbursement of Incremental Development Costs ...........................43 Section 15.4. Payment Obligations of Development Participants.............................43 Section 15.5. Initial Budget and Initial Schedule.......................................................43 Section 15.6. Voting on Development Committee Matters.......................................44 ARTICLE XVI GENERAL AND MISCELLANEOUS PROVISIONS.............................................44 Section 16.1. Effective Date and Termination...........................................................44 Section16.2. Amendments........................................................................................46 Section 16.3 Representations and Warranties...........................................................46 Section 16.4. Entire Agreement.................................................................................47 Section 16.5. Relationship of Development Participants...........................................47 Section 16.6. Rights in Third Parties Created............................................................47 Section 16.7. Arbitration; Attorneys Fees and Other Costs.......................................48 Section16.8. Notices.................................................................................................48 Section 16.9. Headings Not Binding..........................................................................48 Section16.10. Severability..........................................................................................48 Section16.11. Governing Law ....................................................................................48 Section 16.12. Independent Decision of Development Participant..............................49 Section 16.13. IPP Obligations of IPA........................................................................49 Section 16.14. Opinion of Counsel and Other Documentation ...................................49 Section 16.15. Execution in Counterparts....................................................................49 EXHIBIT A— DEVELOPMENT PARTICIPANTS AND DEVELOPMENT COSTS SHARES #182113 0 it EXHIBIT B-INITIAL SCHEDULE EXHIBIT C-CONFIDENTIALITY AGREEMENT SCHEDULE OF STEERING COMMITTEE WORK COSTS-SCHEDULE I SCHEDULE OF STEERING COMMITTEE WORK COSTS-SCHEDULE 2 - iv- #192113 0 INTERMOUNTAIN POWER PROJECT UNIT THREE DEVELOPMENT AGREEMENT This Development Agreement, dated as of May 1, 2005 (this "Agreement'), among the Development Participants set forth in Exhibit A hereto, as it may be modified from time to time in accordance with this Agreement (collectively, the "Development Participants'), and Intermountain Power Agency (`IPA'), in its capacity as Development Manager hereunder (the "Development Manager'), is made with reference to the following: RECITALS Pursuant to the provisions of the Study Agreement, the Study Participants have formed the Steering Committee which has caused initial studies and analyses to be conducted with respect to the feasibility of constructing Unit 3 at the IPP site. The Steering Committee produced, and completed in January, 2003, its IPP Unit 3 Summary Package and Subscription Material, which summarizes the results of these studies and analyses and calls for interested parties to indicate their interest in participating in the development of Unit 3. Development Participants have indicated their interest in participating in the development of Unit 3 and now desire to enter into this Agreement in order to: • describe the scope and provide for the performance of the Development Work by the Development Manager, • establish the Development Committee to supervise and direct the Development Work and the undertakings of the Development Manager and the Development Participants under this Agreement, • provide for the funding of Development Costs through the payment by the Development Participants of their Development Costs Shares (or Augmented Development Costs Shares, if applicable), describe the process under which the Development Participants may elect to become Unit 3 Participants, and • provide for the negotiation and preparation of Project Agreements for Unit 3 that are acceptable to the Unit 3 Participants. Therefore, in consideration of the terms of this Agreement and the mutual covenants and agreements contained in this Agreement, the Development Participants and the Development Manager agree as follows: #182113 0 ARTICLE I DEFINITIONS AND CONSTRUCTION Section 1.1. Definitions. The following terms when used in this Agreement have the following meanings: "Air Permit" means the Approval Order issued for Unit 3 by the Division of Air Quality of the Utah Department of Environmental Quality. "Air Permit Incurred Costs" means those costs incurred by the Study Participants in connection with or related to the Air Permit, and which costs are identified as Air Permit Incurred Costs on Schedule 1, which costs include, without limitation, costs incurred by the Study Participants to apply for, obtain or defend any lawsuit or other procedure challenging the Air Permit. Air Permit Incurred Costs constitute Category 1 Study Expenses. "Air Permit Prosecution Agreement" means an agreement among the Development Committee Participants to prosecute the Air Permit as referenced in Section 3.7. "Augmented Development Costs Share" means, as to a particular Development Participant and as of any particular time, such Development Participant's Development Costs Share as then set forth in Exhibit A plus such Development Participant's Incremental Development Costs Share at such time. "Category 1 Study Expenses" means those expenses incurred in connection with the initial investigation and analysis of the development of Unit 3 pursuant to the Study Agreement which (i) constitute items of "Development Work Costs" under (and as defined in) the Study Agreement, (ii) have been classified by the Steering Committee as "category 1 expenses" in accordance with its Statement of Policy and (iii) are listed on Schedule 1. Category 1 Study Expenses constitute Development Costs under this Agreement and shall be reimbursed to the Study Participants by the Development Participants as and to the extent provided in Section 2.1. "Category 2 Study Expenses" means those expenses incurred in connection with the initial investigation and analysis of the development of Unit 3 pursuant to the Study Agreement which (i) constitute items of "Development Work Costs" under (and as defined in) the Study Agreement, (ii) have been classified by the Steering Committee as "category 2 expenses" in accordance with its Statement of Policy and (iii) are listed on Schedule 2. Category 2 Study Expenses do not constitute Development Costs under this Agreement and shall be reimbursed to the Study Participants only by Unit 3 Participants as and to the extent provided in Section 10.6. "Common Facilities" means those facilities, rights and interests acquired or constructed as a part of Units 1 and 2 that will be utilized, together with certain additions thereto and modifications thereof,in the construction and operation of Unit 3. "Common Facilities Agreement" means the agreement or agreements providing for the acquisition of interests in the Common Facilities (or other rights to the use of the Common 2 k 182113 v9 I 1 Facilities) by the Unit 3 Participants, and the utilizationand operation of these interests and rights in connection with Unit 3. "Construction Management and Operating Agreement" means the Construction Management and Operating Agreement dated as of September 12, 1980, as amended, between IPA and the Unit 1 and 2 Operating Agent relating to the construction and operation of Units 1 and 2 and the other facilities and assets comprising IPP. "Department" means The City of Los Angeles by and through the Department of Water and Power. "Development Committee"means the committee established under Section 3.1. "Development Committee Participants" means each Development Participant, each Development Manager serving from time to time and IPA in its capacity as owner of Units 1 and 2. "Development Contract" means a contract between the Development Participants or the Development Manager, as the case may be, and a Development Contractor. Development Contractor" means any person retained by the Development Participants or the Development Manager, as the case may be, to perform any part of the Development Work pursuant to a Development Contract. "Development Coordination Agreement" means the Development Coordination Agreement of even date herewith among IPA and the Development Participants providing for the development of Unit 3 in coordination with the existing ownership and operation of Units 1 and 2. "Development Costs Share" means each Development Participant's percentage share of Development Costs as set forth on Exhibit A, as such shares may be adjusted pursuant to Sections 9.3, 9.4, 9.5, 9.7, 13.4, 14.2 and 15.2. "Development Costs" means (1) Category 1 Study Expenses, plus (2) all costs and expenses necessary or desirable to complete Development Work as described in Section 6.4. "Development Costs Limit" is defined in Section 6.1(a). "Development Manager" means IPA in its capacity as Development Manager as provided in Section 5.1 and any entity appointed by the Development Committee to replace the Development Manager. "Development Participants"means, as of any particular time, the parties then set forth in Exhibit A and their respective successors and assigns in accordance with Article XIV of this Agreement. 3 #182113 V9 "Development Work" means all work and activities undertaken for the benefit of the Development Participants that is necessary or desirable in connection with the development of Unit 3. "Effective Date"is defined in Section 16.1. "Full Subscription Period" means the period commencing on the Effective Date and ending on the date of termination of this Agreement pursuant to Section 16.1(b)or(e). "Governmental Entity" means any federal, state, interstate or local governmental entity, authority, agency, board, commission, council, county, municipality, department, district, division or political subdivision. "Incremental Development Costs Share" means, as to a particular Development Participant and as of any particular time, such Development Participant's Relative Development Costs Share at such time multiplied by the sum of the Unsubscribed Development Costs Shares (stated as a percentage) at such time. A Development Participant's Incremental Development Costs Share shall be adjusted to reflect changes pursuant to this Agreement in such Development Participant's Relative Development Costs Share and the Unsubscribed Development Costs Shares. "Initial Budget" is defined in Section 6.2. "Interlocal Act" means the Utah Interlocal Cooperation Act, Title 11, Chapter 13, Utah Code Annotated 1953, as amended. "IPA" means Intermountain Power Agency as the owner of IPP and a party to the IPP Agreements, except that when express reference in this Agreement is made to IPA acting in its capacity as Development Manager, "IPA"means Intermountain Power Agency acting only in its capacity as an independent contractor and not as the owner of IPP or a party to the IPP Agreements. `IPP"means the Intermountain Power Project. "IPP Agreements" means the Units 1 and 2 Power Sales Contracts and the other Project Agreements as defined in the Construction Management and Operating Agreement, together with the resolution or other action of the Unit I and 2 Coordinating Committee authorizing IPA to enter into and perform its obligations under the Development Coordination Agreement and providing other terms and conditions relating to IPA's association or involvement with or performance of Unit 3 matters or activities. "Joint Operating Agreement" means the agreement or agreements providing for the operation of Unit 3 in coordination with Units 1 and 2. 4 #18211309 I �I z "Joint Ownership Agreement"means the agreement that provides for multiple ownership interests in Unit 3 and the respective rights and obligations of the co-owners with respect to Unit 3. "Joint Powers Agency" means (i) an interlocal entity created pursuant to the Interlocal Act, or (ii) any other separate public body, agency or entity created by agreement of two or more public bodies, agencies or entities that become members thereof which agreement is entered into for purposes which include developing, purchasing, constructing or operating any project that consists of electric generation or transmission facilities or capacity entitlements or any interest therein on behalf of such member public bodies, agencies or entities that participate in such project. "JPA Participant" means a public body, agency or entity that is a member of a Joint Powers Agency and a party to a JPA Participant Agreement with such Joint Powers Agency. "JPA Participant Agreement" means, with respect to a JPA Participant and the Joint Powers Agency of which it is a member, (i) an agreement or other arrangement entered into by the JPA Participant with such a Joint Powers Agency that is a Development Participant which provides for the JPA Participant to pay its share of the Development Costs Share (or Augmented Development Costs Share during the Transition Period, if applicable) of such Joint Powers Agency, or (ii) an agreement entered into by the JPA Participant with such Joint Powers Agency that provides for an unconditional obligation of the JPA Participant to pay its share of such Joint Powers Agency's share of its costs as a Unit 3 Participant including all capital costs, debt service, operating and maintenance expense and renewal and replacement costs. "JPA Participant Share" means, with respect to a JPA Participant, the share that such JPA Participant is obligated to pay under a JPA Participant Agreement with a Joint Powers Agency of which it is a member of the costs of such Joint Powers Agency payable by it as a Development Participant or as a Unit 3 Participant under the Project Agreements, as the case may be. "Project Agreements" means the Common Facilities Agreement, the Joint Ownership Agreement, the Joint Operating Agreement, the agreements providing for the construction and operation of Unit 3 and any other agreement or agreements designated as a Project Agreement by the Development Committee. "Project Agreements" does not include the Study Agreement or any JPA Participant Agreement. "Qualified Electric Provider" means any Governmental Entity or any corporation, partnership, limited liability company, trust or association, including any wholly owned subsidiary (which subsidiary may be a corporation, partnership, limited liability company, trust or association, of any such entity, whose financial obligations are guaranteed by its parent entity) that, in each case, (i) provides electric services at wholesale or retail, (ii) has been assigned, or in the case of such a wholly owned subsidiary whose obligations are so guaranteed, its guaranteeing parent entity has been assigned, a long-term senior debt rating of, or has outstanding debt obligations rated (without regard to any credit enhancement), at least `Baal" by Moody's hivestors Service or "BBB+" by Standard & Poor's Credit Market-Services, or the 5 #182113 0 i creditwortbiness of which is otherwise approved by the Jevclopment Committee, and (iii) has met the requirements of Section 5.1(1) of the Development Coordination Agreement. "Reimbursement Rate"means, at any particular time, the per annum interest rate equal to the cost of IPA funds (net of any credit for investment earnings) calculated with respect to its outstanding debt as set forth in JPA's most recent monthly report submitted to the IPA Board of Directors as shall be furnished to the Development Manager at its request and made available to the Development Committee. "Reimbursement Share" means, as to a particular Transition Development Participant and as of any particular time, the decimal amount (stated as a percentage), obtained by dividing (i) the Unsubscribed Development Costs Share assigned to such Transition Development Participant by (ii) the aggregate of all then outstanding Unsubscribed Development Costs Shares including the Unsubscribed Development Costs Share assigned to such Transition Development Participant. "Relative Development Costs Share" means, as to a particular Development Participant and as of any particular time, the decimal amount (stated as a percentage) that is obtained by dividing (i) such Development Participant's Development Costs Share by (ii) the aggregate Development Costs Shares of all of the Development Participants including such Development Participant, all as then set forth in Exhibit A. "Requesting Unit 3 Participants"has the meaning assigned to it in Section 10.3(a)(1). "Steering Committee" means the committee by that name established by the Study Participants under the Study Agreement. "Steering Committee Work Product" means: (a) all definitive studies, reports, subscription materials, memoranda, plans, specifications, meeting minutes and other work product developed, or tangible or intangible property obtained, under the Study Agreement; and (b) all right, title and interest of any Study Participant in the Air Permit. Steering Committee Work Product shall not include any document or item prepared by any Study Participant for its own use nor any document containing a communication between a Study Participant and its attorney unless such communication was provided to each of the other Study Participants. "Study Agreement" means the Unit Three Study Participation Agreement effective October 12, 2001 among the Study Participants. "Study Cost Participation Share" means with respect to Category 1 Study Expenses the following percentage shares: Department 41.666%, IPA 16.6667%, and UAMPS 41.6666%. "Study Participants"means the Department,IPA and UAMPS. "Subscription Notice"is defined in Section 10.1(b). 6 #182113 t9 "Transition Development Participant" means each Development Participant executing and delivering this Agreement after the Transition Effective Date. If a Development Participant subscribes to an Unsubscribed Development Costs Share after it acquires its initial Development Costs Share, it shall be treated as a Transition Development Participant with respect to such Unsubscribed Development Costs Share. "Transition Effective Date"is defined in Section 16.1. "Transition Period" means the period commencing on the Transition Effective Date (if applicable) and ending upon the earlier of(i) the commencement of the Full Subscription Period, or(ii) the termination of this Agreement pursuant to Section 16.1(c). "UAMPS"means Utah Associated Municipal Power Systems. "Unapplied Credit"is defined in Section 2.1(b)(ii). "Unit I and 2 Coordinating Committee" means the Coordinating Committee organized under the Unit 1 and 2 Power Sales Contracts. "Unit 1 and 2 Operating Agent" means the Department, in its capacity as Project Manager and Operating Agent under the Construction Management and Operating Agreement. "Unit 1 and 2 Participants" means the power purchasers under the Unit 1 and 2 Power Sales Contracts. "Unit I and 2 Power Sales Contracts"means the Power Sales Contracts entered into by IPA providing, among other things, for the sale of the output of Units 1 and 2. "Unit 3" means the coal-fired electric generating unit to be constructed at the site of the Intermountain Generating Station, the development of which is provided for pursuant to this Agreement and the Development Coordination Agreement. "Unit 3 Development Account" means the special account established and held by or under the direction of the Development Manager as provided in Section 7.2(b). "Unit 3 Participants"has the meaning assigned to it in Section 10.2. "Units 1 and 2" means the existing generating units nos. 1 and 2 at the Intermountain Generating Station. "Unreimbursed Incremental Development Costs" means, as to any particular Development Participant and as of any particular time, the aggregate amount of Development Costs theretofore paid from time to time by such Development Participant that are attributable to such Development Participant's Incremental Development Costs Share as in effect at the time of such payment, less the aggregate amount thereof, exclusive of interest, for which such Development Participant has been theretofore reimbursed pursuant to Section 15.3. For purposes 7 #182u3 v9 of determining a Development Participant's Unreimbursed Incremental Development Costs, Development Costs paid by such Development Participant shall first be allocated to such Development Participant's Development Costs Share as then set forth in Exhibit A of the Development Costs then payable by such Development Participant and the remainder, if any, shall be allocated to such Development Participant's Incremental Development Costs Share. "Unsubscribed Development Costs Shares" means, as of any particular time, the cost shares (stated as percentages) equal in the aggregate to the difference, (stated as a percentage) at such time between the aggregate percentage of the Development Costs Shares then set forth in Exhibit A and 100 percent. "Wiltfut Action"has the meaning assigned to it in Section 12.4. Section 1.2. Construction. Except where the context otherwise requires: (1) words importing the singular number includes the plural number and vice versa, (2) the term "person" includes any of the Development Participants, individuals, corporations, firms, associations, trusts and federal, state and local governments and agencies, and (3) the term "include" and its derivations are not limiting. References to Sections, Articles, Exhibits and Schedules are references to the Sections and Articles of and the Exhibits and Schedules to this Agreement. ARTICLE II DEVELOPMENT OF UNIT 3 Section 2.1. Development of Unit 3. (a) Based upon, among other things, the Steering Committee Work Product, the Development Participants have determined to continue with the investigation and the development of Unit 3. (b) (i) The Development Participants shall reimburse the Study Participants for the Category 1 Study Expenses in accordance with this subsection(b). (ii) During the ten day period beginning on the 120`h day after the Effective Date (if the same shall occur as provided in Section 16.1(a)), or, if earlier, at the time specified in subsection (vi) below, the Development Manager shall prepare (or shall cause to be prepared) and submit to each Development Participant an accounting statement and invoice showing the net amount due from it in respect of its Development Costs Share of Air Permit Incurred Costs, 8 #182113 v9 i i I I I plus, if there occurs a Transition Period, interest thereon Iat the Reimbursement Rate from the Transition Effective Date to the due date of such invoices, after credit for any amounts previously paid in respect of Category I Study Expenses by such De elopment Participant if it was also a Study Participant, provided that such credit shall not exceed such Development Participant's Study Cost Participation Share as a Study Participant of the amount of such Air Permit Incurred Costs. If the amount previously paid in respect of Category 1 Study Expenses by any Development Participant that was also a Study Participant exceeds such Development Participant's Development Costs Share of the Air Permit Incurred Costs, then such amount previously paid reduced by the amount of the credit applied pursuant to the next preceding sentence on account of Air Permit Incurred Costs and further reduced by the amount of any payment, other than interest, that has then been made to such Study Participant pursuant to subsection (iv) below (an "Unapplied Credit") shall be applied toward amounts billed to such Development Participant pursuant to subsection (iii)below. (iii) During the ten day period beginning on the 180`n day after the Effective Date (if the same shall occur as provided in Section 16.1(a)), or, if earlier, at the time specified in subsection (vi) below, the Development Manager shall prepare (or shall cause to be prepared) and submit to each Development Participant an accounting statement and invoice showing the net amount due from it in respect of its Development Costs Share of Category 1 Study Expenses other than Air Permit hicuned Costs, plus, if there occurs a Transition Period, interest thereon at the Reimbursement Rate from the Transition Effective Date to the due date of such invoices, after application of any Unapplied Credit with respect to such Development Participant if it was also a Study Participant. (iv) Each Development Participant shall pay promptly,but in no event more than 20 days after receipt of each invoice referenced in subsection (ii) or(iii) above, the amount so billed to it by the Development Manager. The Development Manager shall promptly pay from the proceeds of such invoices all reimbursements and, if applicable, interest owed to each Study Participant in respect of Category I Study Expenses to the extent such amounts are not credited to such Study Participant against amounts owed by it as a Development Participant pursuant to subsection (ii) or (iii) above, as applicable. Such payments shall be made to the Study Participants on a pro rata basis, in accordance with their respective Study Cost Participation Shares; provided, however, in determining the amount of each such payment to be made to any Study Participant that has received any credit referenced in the prior sentence, such credit shall be treated as though it were a payment made to such Study Participant as reimbursement for Category 1 Study Expenses paid by it. (v) If the Full Subscription Period shall not commence, the Development Participants shall have no obligation to reimburse the Study Participants for the Category 1 Study Expenses. (vi) Notwithstanding anything in subsection (ii), (iii) or (iv) above to the contrary, and subject to subsection (v) above, if the entire amount owed by any Development Participant to the Study Participants as reimbursement for the Category 1 Study Expenses has not otherwise become due and payable in full prior to the date upon which this Agreement terminates pursuant to Section 16.1 (b) or (c), then such amount shall be paid in full on the date of such 9 #182113 v9 termination of this Agreement. In such event, the Development Manager shall prepare and submit to each Development Participant all accounting statements and invoices referenced in subsection (ii) or (iii) above that have not previously been so prepared and submitted promptly after it appears, in the reasonable judgment of the Development Manager, that the due date of such reimbursements will be established as set forth in the preceding sentence. (c) The Development Participants shall obtain the right to the use of all of the Steering Committee Work Product pursuant to Section 3.4 of the Development Coordination Agreement. (d) The Development Participants have entered into this Agreement to provide for their joint and cooperative action with respect to the development of Unit 3. Pursuant to this Agreement, each of the Development Participants (i) agrees to pay its Development Costs Share (or Augmented Development Costs Share during the Transition Period, if applicable), of all Development Costs and (ii) shall have the right to elect to become a Unit 3 Participant with a percentage ownership interest in Unit 3 that is up to its Development Costs Share, or may, subject to compliance with the terms of this Agreement, otherwise elect to participate indirectly through a Joint Powers Agency, in Unit 3, all as more fully provided in Sections 10.2, 10.3, 10.4 and 14.2. (e) The Development Participants agree to cooperate together with respect to the development of Unit 3. Each Development Participant shall, at the request of the Development Committee or any Development Contractor, promptly furnish the information reasonably available to such Development Participant that the Development Committee may need in order to perform Development Work, to obtain the licenses, permits and other regulatory approvals required for Unit 3 and/or to meet the requirements of regulatory agencies having jurisdiction over the Development Participants or over Unit 3 or any part thereof. The cost of furnishing such information by any Development Participant shall be the sole responsibility of such Development Participant and shall not constitute Development Costs. Nothing in this Agreement shall be construed as prohibiting a Development Participant from, imposing upon a Development Participant any duties, fiduciary or otherwise, to any other Parties hereto respecting, or otherwise imposing any restriction upon any Development Participant with respect to, developing, constructing or operating, either by itself or with other entities, an electric generation facility other than Unit 3. (f) Concurrently with its execution and delivery of this Agreement, each Development Participant shall execute and deliver a Confidentiality Agreement in the form of Exhibit C attached hereto. Section 2.2. Development Work. The Development Work to be undertaken pursuant to this Agreement shall include all work determined to be necessary or desirable by the Development Committee for the benefit of the Development Participants in connection with the development of Unit 3, as more specifically set forth in the initial budget and the initial schedule provided for in Sections 6.2 and 6.3 (as the same may be modified or revised from time to time by the Development Committee). The Development Work shall include: 10 #182113 v9 (1) all activities approved by the Development Committee as necessary or advisable to maintain milestone completion dates, including incurring costs to facilitate the timely and cost-effective completion of Unit 3 and procurement of goods, assets, rights or services for Unit 3, (2) the development of the definitive budget and schedule for construction of Unit 3, (3) obtaining licenses, permits and approvals necessary for the construction and operation of Unit 3, (4) the preparation of all plans, studies and reports for submission to the Development Participants, (5) providing information and recommendations to better enable those Development Participants that elect to become Unit 3 Participants to coordinate the planning for their own financing or funding, as applicable, for their respective shares of the cost of construction of Unit 3, (6) the preparation and negotiation of definitive Project Agreements, (7) government affairs (including the development of any impact alleviation plan required under the Interlocal Act), legislative support and lobbying, (8) public relations, information and communication, (9) legal and tax support services, including tax and payment in-lieu-of tax matters relating to Unit 3, (10) legal and other services in connection with the defense or prosecution of any action, suit or regulatory proceeding relating to any license, permit or approval obtained or to be obtained as part of Development Work or otherwise arising out of Development Work, (11) administrative support, fiscal management, invoicing and related services necessary or desirable in connection with the Development Work, and (12) the performance of all other activities related to Unit 3 for the benefit of the Development Participants as determined by the Development Committee consistent with this Agreement. it #182113 0 i I i ARTICLE III ORGANIZATION OF THE DEVELOPMENT COMMITTEE Section 3.1. Organization. In order to provide for the development of Unit 3 and the performance, management and direction of the Development Work and to secure the effective cooperation and interchange of information among the Development Participants in connection with various administrative, technical, legal, contractual and other matters that may arise from time to time in connection with the Development Work, the Development Committee is hereby established under this Agreement. The Development Committee shall consist of representatives appointed by the Development Participants as provided in Section 3.2. Section 3.2. Representatives; Chair. (a) Each Development Participant shall appoint one representative to the Development Committee and shall designate such representative within 10 days after its execution and delivery of this Agreement (or within 10 days of any assignment of this Agreement pursuant to Section 14.2) by giving notice to the other Development Participants of such designation. Each Development Participant may, by giving notice to the other Development Participants, designate an alternate to act as its representative on the Development Committee in the absence of the regular member or to act on specified occasions with respect to specified matters (as shall be set forth in such notice); such notice to be effective, however, only if given not later than the first meeting of the Development Committee at which such alternate shall act as the representative of the Development Participant. (b) Each Development Participant shall promptly give notice to the other Development Participants of any change in the designation of its representative or alternate representative on the Development Committee and any other committee. Any such notice shall be effective when given. (c) A Development Participant that serves as Development Manager shall not, during the period it serves as Development Manager, be the Development Participant whose representative is the Chair of the Development Committee. The Chair of the Development Committee shall be the representative appointed by UAMPS, so long as UAMPS is a Development Participant; provided, however, if any Development Participant whose representative is Chair of the Development Committee ceases for any reason to be a Development Participant or becomes the Development Manager, then the Chair of the Development Committee shall be the representative of the Development Participant that is not then serving as the Development Manager with the largest Development Costs Share (without taking into account the Development Costs Share, if any, of the Development Manager). If two or more Development Participants have the same Development Costs Share, then the Development Participant whose representative serves as the Chair of the Development Committee shall be determined by a coin toss or other random means agreed to by such Development Participants. The Chair shall be responsible for calling and presiding over meetings of the Development Committee and shall cause minutes of all meetings to be kept. Section 3.3. Meetings. (a) At its first meeting, the Development Committee shall establish a schedule of regular meeting dates for the Development Committee for the ensuing 12 #182113 v9 calendar quarter. The Development Committee will from time to time revise and extend this schedule to provide at least 30 days' notice to all Development Participants of the regular meeting dates of the Development Committee. (b) The Chair may call a special meeting of the Development Committee at his own initiative or upon the request of any other representative on the Development Committee. The Chair shall promptly call a special meeting of the Development Committee at the request of representatives of Development Participants with Development Costs Shares totaling more than 20%. At least 48 hours' notice shall be given of special meetings of the Development Committee. (c) The Development Committee may meet in an assembled meeting at any location selected by it or may hold and conduct any meeting entirely by conference call. Any Development Participant may participate by conference call in any assembled meeting of the Development Committee. (d) IPA, apart from its role as Development Manager, and the Department, as Unit 1 and 2 Operating Agent, shall be entitled to attend and participate on a non-voting basis in Development Committee meetings, as provided in the Development Coordination Agreement. Section 3.4. Voting. (a) Except as provided in Sections 3.4(b), 3.4(c) or 6.1(e), all actions or decisions by the Development Committee shall be by the affirmative vote of Development Participants with Development Costs Shares (or in the event of the occurrence of a Transition Period, Augmented Development Costs Shares during the Transition Period) totaling at least 80%. Any vote of the Development Committee may be taken in an assembled meeting or by telephone, facsimile or electronic transmission, letter or by any combination thereof. A written record of each vote of the Development Committee shall thereafter be made as soon as possible by the Chair of the Development Committee or his designee. (b) The voting rights of any Development Participant that is 10 days or more in default in its payment of Development Costs shall be suspended for so long as such default continues. For all meetings held and votes taken while the voting rights of any Development Participant are suspended, the percentage of Development Costs Shares (or Augmented Development Costs Shares during the Transition Period, if applicable) required for an action of the Development Committee as specified in Section 3.4(a) shall be proportionately adjusted to disregard the voting rights attributable to the Development Costs Share (or Augmented Development Costs Share) of the Development Participant in default. (e) Any Development Participant that believes that the Development Manager should be removed for cause pursuant to Section 5.1(c) shall prepare and present to the Development Committee a written statement of the reason or reasons cause exists for such removal. The Development Committee shall consider such written statement and shall thereupon proceed to determine whether such reason or reasons constitute due cause for the removal of the Development Manager and whether to remove the Development Manager. The voting rights of any Development Participant that is then serving as the Development Manager shall be suspended with respect to any vote to determine whether to remove the Development Manager, 13 4182113 v9 and the percentage of Development Costs Shares (or Augmented Development Costs Shares during the Transition Period, if applicable) required for an action of the Development Committee as specified in Section 3.4(a) shall be proportionately adjusted to disregard the suspended voting rights. The removal of the Development Manager shall require the affirmative vote of Development Participants with Development Costs Shares (or Augmented Development Costs Shares during the Transition Period, if applicable) sufficient for an action of the Development Committee as set forth in the preceding sentence or, if greater the affirmative vote of Development Participants with Development Costs Shares (or Augmented Development Costs Shares during the Transition Period, if applicable) totaling at least 50 percent. If a Development Manager that is removed pursuant to this Section 3.4(c) is also a Development Participant and refuses to vote in favor of a Development Manager of its choice, other than itself, to replace it, the vote of such Development Participant shall be suspended in connection with such matter and the percentage of Development Costs Shares (or Augmented Development Costs Shares during the Transition Period, if applicable) required for an action of the Development Committee as specified in Section 3.4(a) shall be proportionately adjusted to disregard the suspended voting rights. (d) A Development Participant that is a Joint Powers Agency may, in its discretion, permit one or more of its JPA Participants to vote on Development Committee matters such portion of the Joint Powers Agency's Development Costs Share as corresponds to the JPA Participant's JPA Participant Share. Such Joint Powers Agency shall only be entitled to vote with respect to any such matters the portion of its Development Costs Share that it has not permitted to be voted by its JPA Participants. In order to permit a JPA Participant to so vote a portion of its Development Costs Share or to revoke such permission, the representative to the Development Committee of such Joint Powers Agency shall give written notice to the Development Committee and the Development Manager specifying the identity of each JPA Participant (and the name of its representative) to which it is granting such voting permission,the specific portion of its Development Costs Share that such JPA Participant will be entitled to vote, and the remaining portion of its Development Costs Share that the Joint Powers Agency will be entitled to vote, or if the Joint Powers Agency is revoking the voting permission it has given to any such JPA Participant, the identity of the JPA Participant as to which such permission is being revoked. Each such granting or revocation of voting permission shall be effective immediately upon the giving of the applicable written notice. Each JPA Participant to which such voting permission has been granted shall be entitled to attend Development Committee meetings so long as such permission is in effect. No such granting by a Joint Powers Agency to any of its JPA Participants of such voting permission shall release, either in whole or in part, such Joint Powers Agency from any of its duties or obligations under this Agreement, including, without limitation, its obligation under this Agreement to pay its entire Development Costs Share of Development Costs. Section 3.5. Written Records to be Kept. All actions, resolutions, determinations and reports made by the Development Committee shall be set forth in the minutes of its meetings. The Chair of the Development Committee shall cause such minutes and records to be maintained and to be made available to any Development Participant for inspection upon request, subject to Section 3.7. 14 #1821u W Section 3.6. Establishment of Subcommittees. The Development Committee may establish one or more subcommittees, including engineering, environmental, permitting, auditing, legal, financial, operating, insurance, and public information subcommittees. The authority, membership, rules and duties of each subcommittee shall be established by the Development Committee, and each such subcommittee shall be subject to the provisions of this Agreement. Each such subcommittee shall be responsible to the Development Committee. Section 3.7. Confidential Information Regarding Litigation. Notwithstanding anything in this Agreement to the contrary, no Development Committee Participant shall be entitled to receive, or participate in meetings in which there is discussed, confidential information regarding any pending, threatened or anticipated litigation involving Development Work unless such Development Committee Participant first executes a confidentiality or Air Permit Prosecution Agreement, as applicable, in form and substance acceptable to the Development Committee. Such agreements shall accommodate any disclosure requirements imposed by law on a Development Committee Participant. Among other matters with respect to which the Development Committee may require such agreements, it is contemplated that the Development Committee Participants would be required to enter into an Air Permit Prosecution Agreement. ARTICLE IV POwEBS,DUTIES AND RESPONSIBILITIES OF THE DEVELOPMENT COMMITTEE Section 4.1. Powers, Duties and Responsibilities of the Development Committee. During the term of this Agreement, the powers, duties and responsibilities of the Development Committee include, in addition to those described in Sections 3.3(a), 3.4(c), 3.6, 3.7, 5.1(b), 5.3(a), 5.3(c), 6.1(a), 6.1(b), 6.1(c), 6.2, 6.3, 6.4(a), 6.6(a), 6.6(b), 6.6(c), 7.5, 8.2, 9.1(b), 9.3, 9.4(a), 9.5, 10.1(a), 10.1(b), 10.3(a), 11.1(a), 11.1(b), 13.1, 13.2(b), 13.4(b), 13.4(c), 14.2(b), 14.2(c), 14.2(d), 15.5, 16.1(c), 16.1(d) and elsewhere in this Agreement, the following: (1) Directing and supervising the Development Work and the performance of it by the Development Manager; reassigning Development Work initially assigned to the Development Manager if the Development Manager is to be replaced as provided in Section 5.1. (2) Approving Development Contracts as and to the extent provided in Section 5.3. (3) Approving all expenditures, commitments of funds, costs, liabilities and obligations with respect to the Development Costs and the Development Work in accordance with the then-current budget provided for in Section 6.2. (4) Arranging for periodic audits of the books and cost records of the Development Manager and any Development Contractor relating to the performance of Development Work or the incurrence of Development Costs. 15 #1K113 v9 i (5) Reviewing and approving any I recommendations made by the Development Manager with respect to modifications to or amendments of the Initial Budget and the initial schedule for the Development Work attached as Exhibit B. (6) Approving the development and refinement of the description of Unit 3, including the determination of its design capacity and projected reliability, availability and efficiency, and review and approval of the plans, cost estimates and schedules for construction of Unit 3. (7) Reviewing and approving all applications for the permits, licenses and approvals necessary for the construction and operation of Unit 3. (8) Reviewing and approving fuel supply matters for Unit 3. (9) Reviewing and approving of all plans and Project Agreements for the construction and operation of Unit 3 in coordination with the existing facilities, infrastructure and operations of Units 1 and 2 so as to make the most efficient utilization of Common Facilities and existing assets. (10) Monitoring and analyzing, and directing the Development Manager to act to address factors or events which may affect, or have affected, Development Work, Development Costs,the schedule, the budget and other matters affecting Unit 3. (11) Providing liaison among the Development Participants and resolving any disputes among them with respect to Unit 3 or any part of the Development Work. (12) Directing and supervising subcommittees established pursuant to Section 3.6. (13) Causing the Development Manager or any Development Contractor to prepare reports, records and information with respect to the Development Work. (14) Reviewing and providing each of the Project Agreements and considering and recommending to the Development Participants any necessary amendments to this Agreement. (15) Reviewing and providing for the prosecution of or the defense against any litigation or potential litigation, including the settlement thereof, relating to Development Work or Unit 3, subject, however, in the case of any Development Participant, to the provisions of Section 8.1. (16) Reviewing and approving any impact alleviation plan for Unit 3 under the Interlocal Act. (17) Reviewing the monthly invoicing of Development Costs by the Development Manager as provided in Section 71. 16 4182113 v9 (18) Subject to Section 3.7 and any applicable confidentiality agreement, promptly responding to any requests for assistance or information by a Development Participant that pertains to Development Work or to Development Costs. (19) Providing for and distributing to each Development Participant the written notice and report and the other documents, materials, studies and information described in Section 10.1(a). (20) Taking the necessary actions required to cause the Development Committee to perform its covenants under Section 5.1 of the Development Coordination Agreement. (21) Conducting all other activities deemed necessary or desirable to complete Development Work and performing such other functions and duties as it may deem necessary to accomplish the purposes of this Agreement. Section 4.2. No Authority of Development Committee to Amend Agreement. Neither the Development Committee nor any of its appointed subcommittees shall have authority to amend this Agreement. This Agreement may be amended only as provided in Section 16.2; provided, however, that Exhibit A shall be amended as provided in Sections 9.3, 9.4, 9.5, 9.7, 13.4, 14.2 and 15.2, and Exhibit B shall be amended by the Development Committee to the extent provided in Sections 6.3 and 15.5,respectively. Section 4.3. No Joint Venture or Partnership. The Development Committee does not constitute a joint venture or partnership of the Development Participants. ARTICLE V DEVELOPMENT MANAGER AND DEVELOPMENT COORDINATION AGREEMENT Section 5.1. Development Manager. (a) IPA hereby agrees to act as Development Manager under and subject to the terms and conditions of this Agreement. (b) The Development Manager, under the direction of the Development Committee, shall perform or cause to be performed the following items of the Development Work: (1) Performing or assigning, contracting, delegating and otherwise arranging for the performance of Development Work by or through one or more Development Contractors. (2) Administering and enforcing all Development Contracts and enforcing all claims against Development Contractors and others arising out of Development Work, subject, however, in the case of any Development Participant, to the provisions of Section 8.1. 17 #182113 v9 (3) Preparing and submitting monthly invoices to the Development Participants for the payment of the Development Costs and administering the Unit 3 Development Account as provided in Sections 7.1, 7.2 and 15.3. (4) Preparing and submitting to the Development Committee for its review and approval any modifications or amendments to the budget for Development Costs or the schedule for the Development Work that it deems necessary or desirable. (5) Maintaining, updating and revising as necessary a schedule and a status report to reflect the progress of Development Work and the incurrence of Development Costs, recommending to the Development Committee any revisions that it deems necessary to the initial budget and the initial schedule (attached as Exhibit B) for the Development Work and furnishing such other reports, plans, studies and information as may be requested by the Development Committee. (6) Keeping and maintaining, or causing to be kept and maintained, records of all moneys received and expended, obligations incurred and credits accrued with respect to Development Costs, and making such records, together with books of original entry, ledgers, work papers and source documents, available for auditing pursuant to Section 6.6. (7) Preparing and submitting to the Development Committee for its review, comment and approval such Project Agreements as shall be assigned to it by the Development Committee. (8) Making application and incurring costs for and proceeding to obtain licenses, permits and approvals necessary for the construction and operation of Unit 3 (or causing such application and obtaining to occur). (9) Procurement of goods, assets,rights or services for Unit 3. (10) Preparation of definitive plans, budgets and schedules for the construction of Unit 3. (11) Performing such other duties as provided in this Agreement or performing any other duties as shall be assigned by the Development Committee and accepted by the Development Manager. Notwithstanding anything to the contrary herein, the Development Manager cannot bind any Development Participant without the written consent of the Development Participant for that specific instance. (c) The Development Manager may resign at any time upon 30 days' written notice to the Development Participants. The Development Manager may be removed for cause at any time by the Development Committee as provided in Section 3.4(c). Upon any resignation or removal of the Development Manager, (i) subject to the requirement in the first sentence of Section 18 #182113 v9 i i I 3.2(e), the Development Committee shall as soon as! practicable appoint a replacement Development Manager, (ii) the Development Manager shah turn over all records, documents and other materials relating to Development Work held by �it as Development Manager to the replacement Development Manager appointed by the Development Committee or to such other person as may be designated by the Development Committee, (iii) except as set forth below, the Development Manager shall turn over the Unit 3 Development Account and all amounts on deposit therein, together with an accounting statement showing, in reasonable detail, the receipts to and expenditures from such Account to the date of the replacement of the Development Manager, and (iv) the Development Manager shall execute and deliver such documentation, in form and substance acceptable to the Development Committee, as may be necessary to become a party to this Agreement in its capacity as Development Manager. Notwithstanding the foregoing, upon any resignation or removal of IPA as Development Manager, any funds set aside as provided in Section 5.3(d)(ii) to pay amounts thereafter payable by IPA under Development Contracts entered into by IPA as Development Manager shall either, in IPA's discretion: (i) not be turned over but shall be retained to the extent necessary to make such payments and IPA as Development Manager shall furnish appropriate documentation in support of such payments, or (ii) if the replacement Development Manager enters into an agreement in form and substance acceptable to IPA whereby it assumes IPA's duties and obligations to make each such payment and IPA is otherwise, in its discretion, satisfied with such assumption agreement and the probability that the replacement Development Manager will perform its duties thereunder, IPA may turn such funds over to the replacement Development Manager and the replacement Development Manager shall apply such funds to payments due under such Development Contract. The Development Manager shall be entitled to reimbursement for all Development Costs incurred by it to the date of such replacement provided however, that if the Development Manager is then in arrears in the payment of amounts owed by it as a Development Participant under this Agreement, then any such reimbursement shall be net of the amount in arrears. The Development Manager may enter into one or more Development Contracts for the performance of any part of the Development Work as provided in Section 5.3. (d) In its capacity as Development Manager, no Development Manager shall have any of the rights, duties and obligations of a Development Participant under this Agreement or any obligation to pay any part of the Development Costs. Subject to Section 8.1, the Development Manager shall be reimbursed for all costs, expenses and overheads incurred by it in performing its obligations under this Agreement (as an item of Development Costs payable by the Development Participants). The Development Manager shall not derive any profit from its activities or services as Development Manager. Section 5.2. Development Coordination Agreement. (a) Pursuant to the Development Coordination Agreement, IPA has agreed (i) that the Development Participants shall have the exclusive right to proceed with the development of Unit 3 as provided in this Agreement, (ii) to cooperate with the Development Committee to facilitate the development of Unit 3, and (iii) in the case of IPA, to give the Subscription Notice described in Section 10.1(b), all upon the terms and conditions and for the consideration set forth in the Development Coordination Agreement. Simultaneously with its execution and delivery of this Agreement, each Development Participant shall execute and deliver a counterpart of the Development Coordination Agreement. 19 4182113.9 (b) The costs, expenses and liabilities paid or incurred by the Development Manager and the Development Participants under the Development Coordination Agreement shall constitute Development Costs and each Development Participant shall be severally liable for its Development Costs Share (or Augmented Development Costs Share during the Transition Period, if applicable)of all such costs, expenses and liabilities. Section 5.3. Development Contracts and Contractors. (a) The Development Manager is hereby authorized to negotiate and enter into one or more Development Contracts for the performance of any part of the Development Work. The amounts payable under each such Development Contract shall constitute Development Costs. Subject to the obligation of the Development Participants to reimburse the Development Manager pursuant to this Agreement, any such Development Contract entered into by the Development Manager in its own name shall constitute the obligation of the Development Manager and not of any Development Participant. If the amount payable under any such Development Contract (or the increase in the amount payable as a result of any amendment of or change to a Development Contract) exceeds or is reasonably expected to exceed $50,000, the Development Manager shall submit such contract to the Development Committee for its approval prior to executing the same. Each Development Contract entered into by the Development Manager shall provide that it is fully assignable to any entity appointed by the Development Committee to replace the Development Manager. The Development Manager shall not be required to enter into any Development Contract in its own name. (b) If the Development Manager, in its sole discretion, determines that it is not willing to enter into any Development Contract or any amendment to a Development Contract in its own name, or if the Development Manager is otherwise precluded by the terms of this Agreement from entering into any Development Contract: (i) the Development Manager shall include in such Development Contract, or in the case of an amendment to a Development Contract that does not otherwise include the provisions required under Section 5.3(c) shall include in such amendment, the provisions required under Section 5.3(c); and (ii) submit such Development Contract or amendment thereto, after it has been approved by the Development Committee to each Development Participant for execution. No Development Participant shall be required to execute any such Development Contract or amendment; provided, however, if any Development Participant refuses to do so, the Development Manager may either, in its sole discretion: (i) unless precluded by the terms of this Agreement, enter into such Development Contract in its own name on behalf of the Development Committee and all amounts due and payable thereunder shall constitute Development Costs; or (ii) not allow such Development Contract to become effective by either not delivering it to the other party thereto or any other legal means. (c) The amounts payable under each Development Contract shall constitute Development Costs. In the case of each Development Contract or amendment thereto executed by the Development Participants, each Development Participant shall be severally liable for its Development Costs Share (or Augmented Development Costs Share during the Transition Period if applicable) of all costs, expenses and liabilities payable or incurred thereunder and such Development Contract shall contain provisions limiting the liability of each Development Participant that executes and delivers the same consistent with this Section 5.3(c) and Sections 6.1 and 8.1 In the case of Development Contracts executed by the Development Manager (but 20 #182113 v9 i i I not by the Development Participants), each such Development Contract: (i) shall recite that it is entered into by the Development Manager under the authority of this Agreement and is subject to the terms and provisions hereof; (ii) shall provide that the amounts due to the Development Contractor thereunder shall be payable solely from the Unit 3 Development Account; (iii) shall contain such standard contract terms and provisions as may be established by the Development Committee; and (iv) require, to the extent appropriate, maintenance of confidentiality by the counterparty. (d) (i) Notwithstanding anything to the contrary in this Agreement, no assets or revenues of the Development Manager, other than the payments made to the Development Manager with respect to Development Costs Shares, shall be subject to any claim or available to satisfy any liability that the Development Manager may have in its capacity as Development Manager to any Development Participant or any third party. Recourse for any liability of any type or nature of the Development Manager to any Development Participant or third party shall be limited to funds held by the Development Manager that are derived from payments made to it by Development Participants with respect to their Development Costs Shares. Each Development Participant hereby waives and releases the Development Manager, and each of its members, directors, officers, employees or affiliates, from and against, any claim, cause of action, statutory or common law right of recovery, or any other legal or equitable duty, obligation, liability or responsibility of any type or nature whatsoever to the extent arising out of, or resulting from any act, negligence or omission in connection with, the Development Manager's service as Development Manager, except claims that are limited to payments actually received by the Development Manager with respect to Development Costs Shares that have not been expended by the Development Manager for any purpose permitted under this Agreement, have not been committed to any such purpose or are not otherwise required for the Development Manager to meet any contractual or other obligation or liability it has incurred in its role as Development Manager. (ii) Notwithstanding anything to the contrary in this Agreement, IPA as Development Manager shall not enter into any Development Contract unless funds are then on deposit in the Unit 3 Development Account sufficient to: (A) satisfy the Development Manager's total payment obligations thereunder and each other Development Contract then outstanding (which payment obligations, in the case of any Development Contract that provides that the Development Manager shall only be obligated to pay fees, compensation, reimbursements and other amounts under such Development Contract that shall be authorized by the Development Committee by work order or otherwise, shall then be limited to the amounts that have been so authorized); and (B) all other then outstanding payment obligations of IPA as Development Manager. IPA as Development Manager shall not incur and the Development Committee shall not authorize any payment obligation, whether under any Development Contract or otherwise, that would cause the aggregate payment obligations of IPA as Development Manager to exceed the amount then on deposit in the Unit 3 Development Account when such obligation is incurred which is determined by IPA to be available to satisfy such payment obligations as the same become due. (iii) Upon any replacement of the Development Manager, the Development Manager that is replaced shall, upon the transfer to the replacement Development Manager of the 21 4182113 t9 iI "" Unit 3 Development Account pursuant to Section 5.1(c)(�n), be released of all liability under each Development Contract then outstanding and the replacement Development Manager shall assume all duties, obligations and liabilities of the Development Manager under such Development Contracts; provided, however, if IPA is replaced as Development Manager, it shall remain liable for the application of any funds set aside pursuant to clause (ii) above and retained by it pursuant to Section 5.1(c)(iii) to the Development Contracts for which such funds were set aside. (iv) If the Development Manager enters into any Development Contract or amendment thereto, in its capacity as Development Manager, the Development Manager may include in such Development Contract provisions that, to its reasonable satisfaction, effect the concepts set forth under clauses (i) and(iii) above. (e) Development Contractors selected by the Development Committee may include IPA or any Development Participant. ARTICLE VI DEVELOPMENT WORK LIMIT;INITIAL BUDGET; INITIAL SCHEDULE; DEVELOPMENT COSTS;AND AUDITS Section 6.1. Limit on Development Costs. (a) The Development Costs shall not exceed $13,043,000, unless the Development Committee shall approve an increase in such amount pursuant to Section 6.1(b) (such amount, as it may be so increased is referred to herein as the "Development Costs Limit'). The Development Committee shall not incur, and shall not authorize the Development Manager, any Development Participant or any Development Contractor to incur, any Development Costs in excess of the Development Costs Limit. (b) If and when Development Costs equal or exceed 80% of the Development Costs Limit or at such other time as it deems advisable in light of prevailing circumstances, the Development Manager shall consider such facts or circumstances and shall make such recommendations to the Development Committee as it deems appropriate, including revising the scope of the Development Work or increasing the Development Costs Limit. Any such revision or increase shall be subject to the approval of the Development Committee. The Development Committee may, at any time and with or without the recommendation of the Development Manager, revise the scope of the Development Work or increase the Development Costs Limit. If the Development Committee, at any time, adopts a budget in a total aggregate amount that would require an increase in the Development Costs Limit, the Development Committee shall be deemed to have approved the necessary increase. In no event shall any increase of the Development Costs Limit exceed 15% of the original Development Costs Limit specified in Section 6.1(a) nor shall any such increase cause the Development Costs Limit to exceed $14,999,450, except as provided in Section 6.1(c). (c) At any time or from time to time, the Development Costs Limit may also be increased by any amount in excess of the increases provided for under Section 6.1(b) upon 22 #182113 v9 approval by unanimous vote all members of the Development Committee and, where required, upon receipt of any authorization, approval or consent with respect to such increase by the governing body of or any board or agency having jurisdiction over any Development Participant or Participants. Section 6.2. Initial Budget. The Development Committee shall adopt and approve an initial budget (the "Initial Budget") for Development Costs that is consistent with Section 6.1. Any increase in or modification of such budget or any subsequently revised budget shall be subject to Section 6.1 and except as otherwise provided in Section 15.5, shall be made only upon the recommendation of the Development Manager and the approval of the Development Committee. Section 6.3. Initial Schedule. The Development Participants hereby approve the initial schedule for Development Work as set forth in Exhibit B. Such schedule specifies the overall schedule agreed to by the Development Participants with the major elements of the Development Work indicated therein. Except as otherwise provided in Section 15.5, any modification of such schedule or any subsequently revised schedule shall be made only upon the recommendation of the Development Manager and the approval of the Development Committee. Section 6.4. Development Costs;Audits. (a) Development Costs shall be set forth in the Initial Budget(as revised from time to time) and shall include: (1) All costs of work, services and studies performed by or under the supervision of the Development Manager and approved by the Development Committee. (2) Payroll and other expenses of the employees of the Development Manager and, as and to the extent specifically provided in a Development Contract, any Development Contractor while performing work in connection with this Agreement, including but not limited to applicable overhead costs and labor loading charges, time off allowances, payroll taxes, workers' compensation insurance, retirement and death benefits and other employee benefits. In the case of a Development Contractor, labor loading shall be in conformance with the Development Contractor's in-house rates as adjusted from time to time. (3) Costs of materials, supplies, goods,property,rights, services and apparatus used in connection with this Agreement or acquired for Unit 3. (4) Federal, state, and local taxes, payments in lieu of taxes, and permit, license and approval-related fees of any character arising out of the performance of this Agreement. (5) All costs for insurance in connection with the Development Work, in such form and amounts as determined by the Development Committee. (6) All costs of defense or prosecution of any action, suit or regulatory proceeding relating to any license, permit or approval obtained or to be obtained as part of 23 #182113 W Development Work or otherwise arising out of Development Work, including all costs of discharging or paying any liability and loss, damage and expense, including, without limitation, costs and expenses for attorneys' fees, and other costs of defending, settling or otherwise administering claims, liabilities or losses arising out of workers' compensation or employers' liability claims or by reason of property damage or injuries to or death of any person or persons or by reason of claims of any and every character resulting from, arising out of or connected with the performance of the Development Work, whether wholly or partially by the negligence of the Development Manager or the negligence (other than gross negligence, if such is determined by a court of competent jurisdiction) of any Development Contractor, except as may otherwise be provided in Section 8.1. (7) Administrative and general expenses to cover services in the performance of Development Work by the Development Manager or any Development Contractor that is also a Development Participant in such amounts or at such rates as may be approved by the Development Committee. (8) The Category 1 Study Expenses, including interest thereon payable as provided in Section 2.1(b). (9) Costs, expenses and liabilities incurred by the Development Participants under the Development Coordination Agreement. (10) Costs of the final accounting and reconciliation conducted pursuant to Section 6.6. (11) Any other costs designated in this Agreement as Development Costs. (b) Cost and expenses of officers, employees and agents of the Development Manager that constitute Development Costs as set forth above shall consist of those costs and expenses of the Development Manager properly allocable in accordance with generally accepted accounting principles to the performance of Development Work by such officers, employees and agents of the Development Manager under this Agreement. (c) Any Development Participant may at any time by written notice to the Development Manager and the other Development Participants request that any or all of the Development Costs be audited. The Development Manager shall cause such audit to be conducted promptly after its receipt of such notice and shall cause a written audit report to be prepared and provided to all of the Development Participants. The costs of such audit, including all costs incurred by the Development Manager in connection with the audit, shall not be Development Costs and shall be invoiced to and paid directly by the Development Participant that requested the audit. Section 6.5. Certain Costs Not Part of Development Costs. Costs incurred by any Development Participant which are not attributable to Development Work, and which shall not be shared by the Development Participants, include, without limitation, the following: 24 #182113 0 I i i (1) Costs of studies conducted by any Development Participant to determine for that Development Participant the usefulness, economics, and feasibility of proceeding with Unit 3. j (2) Costs incurred by each Development Participant associated with the negotiation of the Project Agreements. (3) Costs incurred by each Development Participant in connection with any JPA Participation Agreement to which it is a party. (4) Costs incurred by each Development Participant in all functions of the Development Committee, or any other committees established pursuant to this Agreement. Section 6.6. Final Accounting, Reconciliation and Audit of Development Costs. (a) Upon its determination that the Development Work (or substantially all of the Development Work) is complete or upon termination of this Agreement, the Development Committee shall cause the Development Manager to make a final accounting and reconciliation of all Development Costs. Upon completion of such accounting and reconciliation, the Development Manager shall prepare and submit to the Development Committee a final accounting statement showing in reasonable detail the receipts to and the expenditures from the Unit 3 Development Account. The Development Committee shall review such accounting statement and shall either approve the same or shall require that a final audit of all Development Costs be conducted by an appointed audit committee or an outside auditing firm or an individual. Costs incurred for any such audit shall constitute Development Costs. (b) Upon completion of the final accounting and reconciliation of the Development Costs, or the audit of the Development Costs if one is made as provided in paragraph (a) above, the Development Committee shall cause the Development Manager to make a final report of the Development Costs. Such final report shall identify the major categories of the Development Costs (e.g., engineering, permitting, project management, political and governmental affairs, legal, finance, etc.) and shall list and contain reasonable detail regarding the items of Development Costs within each category. Such report shall also contain a copy of the results of any audit conducted pursuant to paragraph (a) above and such additional information as the Development Committee may deem necessary or appropriate. Such final report shall be provided to the Development Participants within 60 days of the determination of the Development Committee of the completion (or substantial completion) of the Development Work. (c) Each Development Participant shall settle any balance of any amount owed within 30 days of the receipt of the final report pursuant to paragraph (b) above, or be reimbursed by or at the direction of the Development Committee from moneys received from Development Participants for any credit, in accordance with such final report. 25 #182113 0 Ii I ARTICLE VII BILLING AND PAYMENT OF DEVEL PMENT COSTS Section 7.1. Billing and Invoicing of Costs. The Development Manager shall cause an invoice to be given to each Development Participant within 10 days after the Effective Date, or the Transition Effective Date, as the case may be, of this Agreement and thereafter as soon as practicable after the end of each calendar month,but not later than the 10th day of the succeeding month. The notice and invoice shall show the Development Participant's Development Costs Share (or the Augmented Development Costs, Share during the Transition Period, if applicable) of the Development Costs, other than Category 1 Study Expenses, which shall be invoiced and paid in accordance with Section 2.1(b), and Category 2 Study Expenses, which shall be payable in accordance with Section 10.6, paid during the preceding month and of any adjustments to reflect variations between Development Costs previously invoiced to and amounts received from the Development Participants. The first invoices pursuant to this Section 7.1, in addition to the required amounts, shall include and provide for the pre-funding of each Development Participant's share of a working capital amount of Development Costs sufficient to pay two months average of the estimated Development Costs. If, at any time during the Development Period, the working capital amount held by the Development Manager for Development Costs is less than two months average of the estimated Development Costs, or if the Development Committee shall increase such working capital amount, the Development Manager shall include in the next invoices to be submitted to Development Participants pursuant to this Section 7.1, the amount required to restore the working capital amount to two months average of Development Costs or to increase the working capital amount to such increased level, as applicable. Section 7.2. Payment of Costs. (a) Within 20 days after receipt of an invoice for Development Costs furnished pursuant to Section 7.1, each Development Participant shall pay its Development Costs Share (or Augmented Development Costs Share during the Transition Period, if applicable) of such Development Costs. (b) All amounts collected from the Development Participants shall be deposited into a separate and segregated account to be established by the Development Manager and designated as the "Unit 3 Development Account". The Unit 3 Development Account shall be held by or under the direction of the Development Manager and shall be used solely for the receipt of the Development Costs Share (or Augmented Development Costs Share during the Transition Period, if applicable) payments and the payment of Development Costs, as the same shall become due and payable, in accordance with this Agreement. Section 7.3. Payment of Invoices. Each Development Participant shall make payment of invoices for the account of the Development Manager as follows: Unit 3 Development Manager c/o Intermountain Power Agency 10653 South River Front Parkway, Suite 120 South Jordan,Utah 84095 26 #192113 v9 or to such other address as may be specified in writing by the Development Manager. Section 7.4. Interest on Late Payments. Invoices not paid in full by the due date shall thereafter bear an additional charge on the unpaid portion at the "reference rate" of interest, plus 2%, established by the Bank of America, N.A., or its successor, or the rate of 1.5% per month, whichever is less, or the maximum interest rate allowable by law, if it is less, and shall be computed based on the actual number of days elapsed from the due date to the date payment is received. Section 7.5. Disputed Invoices. If any portion of an invoice is disputed by a Development Participant, the total invoice, including the disputed amount, shall be paid when due and under protest by the Development Participant. The Development Committee shall review the disputed amount at its next regular meeting and if it determines that such amount was properly disputed, it shall direct the Development Manager to cause such amount to be refunded to the protesting, and any other affected, Development Participant, including interest at the reference rate of interest established by the Bank of America,N.A., or its successor, or the rate of 1.5% per month, whichever is less, but in either case, no more than the maximum interest rate allowable by law, and shall be computed based on the actual number of days elapsed from the date paid to the date refunded. Such interest shall constitute a Development Cost. Payments not made under protest shall be deemed to be correct, except to the extent that audits may reveal overpayments or underpayments by a Development Participant. ARTICLE VU1 OBLIGATIONS OR THE DEVELOPMENT PARTICIPANTS Section 8.1. Development Participants'Obligations Several, Limited and Unconditional. The obligation of each Development Participant to make payments under this Agreement is (i) a several obligation and not a joint obligation with the other Development Participants, and (ii) limited to an amount equal to the product of its Development Costs Share (or Augmented Development Costs Share during the Transition Period, if applicable) and the Development Costs Limit. This obligation is absolute and unconditional, irrespective of any rights of setoff or counterclaim each Development Participant might otherwise have against any other Development Participant or against the other Development Participants. No Development Participant shall fail or refuse to make such payments. This provision shall not be construed to release any Development Participant from the performance of any of its obligations or undertakings contained in this Agreement or to release any Development Contractor from any of its obligations or undertakings. Notwithstanding anything to the contrary in this Agreement, nothing in the Agreement shall prevent or restrict any Development Participant, at its own cost and expense, from prosecuting or defending any claim or action with respect to its rights, interests or liabilities under this Agreement, or from entering into a settlement of any such claim or action, or taking any other action to secure or protect its rights under this Agreement. Any costs incurred by the Development Committee or the Development Manager in prosecuting or defending any such action or proceeding or taking any other action to secure or protect its rights under this Agreement shall be Development Costs which shall be paid by the Development 27 #182113 0 Participants based upon their respective Development Costs Shares (or Augmented Development Costs Shares during the Transition Period, if applicable). Section 8.2. Enforcement of this Agreement; Payment of Expenses. The Development Committee shall at all times cause the Development Manager to take all reasonable measures permitted by law or in equity (i) to collect and enforce prompt payment of all payments required to be made under this Agreement and (ii) to otherwise enforce the provisions of this Agreement; provided that amounts shall have been set aside in the Unit 3 Development Account sufficient in the Development Manager's opinion to pay for its costs of taking such measures. All costs and expenses (including attorneys' fees) incurred by the Development Manager with respect to the preceding sentence shall be Development Costs and shall be paid or reimbursed by the Development Participants based upon their respective Development Costs Shares (or Augmented Development Costs Shares during the Transition Period,if applicable). ARTICLE IX WITHDRAWAL OF DEVELOPMENT PARTICIPANTS; REDUCTION OF DEVELOPMENT COSTS SHARE Section 9.1. Withdrawal of Development Participant. (a) Each Development Participant shall have the right to withdraw from this Agreement at any time upon written notice to the other Development Participants. The written notice shall specify the effective date of such withdrawal, which shall be at least 30 days after the date of such notice. (b) As soon as practicable, but in no event more than 10 days, after written notice of withdrawal has been given by a Development Participant pursuant to Section 9.1(a), the Development Committee shall meet to discuss the withdrawal, its impact upon Unit 3 and the potential assumption by the non-withdrawing Development Participants of the withdrawing Development Participant's Development Costs Share. Section 9.2. Termination of Rights of Withdrawing Development Participant. As of the effective date of withdrawal, a withdrawing Development Participant shall no longer be considered to be a Development Participant under this Agreement and (i) shall no longer have any rights under this Agreement, except as may be provided in Sections 10.5 and 16.1(d) and (ii) shall no longer have any obligations under this Agreement except that any outstanding payment obligations of the withdrawing Development Participant due to Development Costs incurred or liabilities arising as a result of Development Work performed prior to the effective date of withdrawal shall continue until satisfied. The withdrawing Development Participant shall be entitled to access and, upon request, receive copies of documents relating to Development Work and the incurrence of Development Costs dated not later than the date of such Development Participant's withdrawal. Section 9.3. Voluntary Assumption of Development Costs Shares. Each non-withdrawing Development Participant may request, within 60 days (or such longer period as may be authorized by the Development Committee) after written notice of withdrawal has been 28 #182113 A i I given by the withdrawing Development Participant, t assume all or a portion of the Development Costs Share of the withdrawing Developme t Participant. Each non-withdrawing Development Participant agrees that it will (i) use its bes efforts to make its determination of whether to assume all or some portion of the withdrawing Development Participant's Development Costs Share as soon as practicable after its receipt of a notice of withdrawal and (ii) give prompt notice of such determination to the Development Committee. If more than all of the Development Costs Share of the withdrawing Development Participant is requested to be assumed by non-withdrawing Development Participants, the withdrawing Development Participant's Development Costs Share shall be allocated pro rata (based upon the amounts requested) to the requesting Development Participants, and such allocation shall be deemed to be effective as of the date of withdrawal of the withdrawing Development Participant. Notwithstanding the foregoing, the increase in the Development Costs Share of each Development Participant that would receive such an allocation from the withdrawing Development Participant's Development Costs Share shall be subject to compliance with Section 5.1(n) of the Development Coordination Agreement. In the event any such increase in the Development Costs Share of a Development Participant fails to comply with Section 5.1(1), (n) or (o) of the Development Coordination Agreement, such increase shall then be reallocated pro rata(based upon the amounts requested) to the Development Participants requesting an allocation of such increase. Section 9.4. Transfer of Development Costs Share by lthdrawing Development Participant. (a) If the amount of the withdrawing Development Participant's share voluntarily assumed by the non-withdrawing Development Participants is less than 100% of the withdrawing Development Participant's Development Costs Share, the Development Committee shall cause notice of such fact to be given to the withdrawing Development Participant. For such period as shall be designated in such notice, which period shall be not less than 40 days, the withdrawing Development Participant shall have the option to arrange for the transfer to and assumption by a Qualified Electric Provider of the unassumed balance of the withdrawing Development Participant's Development Costs Share. Any such transfer and assumption of the withdrawing Development Participant's Development Costs Share shall be deemed to be effective as of the date of withdrawal of the withdrawing Development Participant. Immediately following any such transfer and assumption of a withdrawing Development Participant's Development Costs Share,Exhibit A shall be deemed to be amended without further action to reflect such transfer. (b) A withdrawing Development Participant that exercises its option under Section 9.4(a) may arrange for the transfer of the unassumed balance of its Development Costs Share on such terms and for such consideration as it and the transferee may agree upon, including the reimbursement of the Development Costs paid by the withdrawing Development Participant to the date of its withdrawal and not reimbursed pursuant to Section 15.3. From and after the effective date of the transfer, the withdrawing Development Participant shall have no rights or obligations under this Agreement and shall have no right to receive reimbursement of any Development Costs paid by it to the date of its withdrawal. (c) A withdrawing Development Participant may transfer the unassumed balance of its Development Costs Share only to another entity that is then a Qualified Electric Provider. Any Qualified Electric Provider that assumes the Development Costs Share of a withdrawing 29 k 182113 v9 l Development Participant shall execute a counterpart of this Agreement, shall be a Development Participant hereunder and shall be bound by the terms and provisions of this Agreement, all from and after the effective date of the assumption. ' Section 9.5. Incomplete Allocation of Development Costs Shares. If, following the procedures set forth in Sections 9.3 and 9.4, less than 100% of the withdrawing Development Participant's Development Costs Share has been voluntarily assumed by non-withdrawing Development Participants or transferred to a Qualified Electric Provider, then the Chair of the Development Committee shall promptly call a meeting of the Development Committee to determine what actions shall be taken in light of the circumstances. Such actions may include additional efforts to obtain a full allocation of the withdrawing Development Participant's Development Costs Share, one or more changes to Unit 3 or the recommendation of amendments to this Agreement. In the event that such withdrawal shall occur during the Full Subscription Period and the Development Committee is unable to obtain a full allocation of the withdrawing Development Participant's Development Costs Share by the effective date of such withdrawal, this Agreement will terminate as provided in Section 16.1(c)unless the Development Committee determines that this Agreement should continue in effect for an additional period not to exceed 180 days and the remaining Development Participants agree to a temporary allocation of the withdrawing Development Participant's Development Costs Share during such period. Section 9.6. Reimbursement of Costs to Withdrawing Development Participant. Except as provided below, a withdrawing Development Participant shall not be entitled to reimbursement from any non-withdrawing Development Participant of Development Costs paid by the withdrawing Development Participant. A withdrawing Development Participant that does not transfer any unassumed balance of its Development Costs Share to a Qualified Electric Provider under Section 9.4 may receive reimbursement for Development Costs paid by it as and to the extent provided in Sections 10.5 and 16.1(d). Section 9.7. Reduction of Development Costs Share. (a) hi addition to its withdrawal rights under this Article IX, each Development Participant may elect to reduce its Development Costs Share under this Agreement at any time upon written notice to the other Development Participants. The written notice shall specify the amount of the reduction in the Development Costs Share and the effective date of such reduction, which shall be at least 30 days after the date of such notice. (b) The provisions of Section 9.1 through 9.6 (inclusive) shall apply to any reduction in a Development Participant's Development Costs Share,provided that: (1) The provisions of Section 9.3 shall not apply to a JPA Participant electing to withdraw from the Joint Powers Agency. (2) The references to a withdrawing Development Participant and its Development Costs Share in such Sections shall be deemed to refer, respectively, to the Development Participant that has elected to reduce its Development Costs Share and to the amount of its Development Costs Share that it has elected to reduce; 30 #182113 0 (3) The references to the non-withdrawing Development Participants shall be deemed to refer to the Development Participants other than the Development Participant making the election under Section 9.7(a); and (4) The provisions of Section 9.2 shall apply only to the amount of the Development Costs Share that the Development Participant has elected to reduce. ARTICLE X ELECTION TO PARTICIPATE IN UNIT 3;DISPOSAL OF NON-ELECTED AMOUNTS; REIMBURSEMENT OF DEVELOPMENT COSTS AND CERTAIN STUDY COSTS Section 10.1. Notification of Results of Development Work; Subscription Notice. (a) During the Full Subscription Period, based upon the results of Development Work and a determination of the Development Committee that the Development Work (or substantially all of the Development Work) is complete and that construction of Unit 3 should proceed, and in accordance with the permits, licenses, approvals and regulatory matters, the Development Committee shall review as soon as practicable and approve (i) the description of Unit 3, (ii) the proposed schedule and initial cost estimate for the construction of Unit 3 and (iii) final drafts of the Project Agreements. The Development Committee shall give formal written notice to each Development Participant of the completion (or substantial completion) of the Development Work. Such written notice shall be accompanied by a complete report of the results of the Development Work, the final drafts of the Project Agreements (which shall be complete except for the names of the Unit 3 Participants and the amounts of their participation in Unit 3, dates and other nonsubstantive matters) and such other materials, studies, documents and information as the Development Committee shall deem to be necessary or appropriate. (b) Pursuant to the Development Coordination Agreement, IPA has agreed to (i) act as the "project entity" (as defined in the hiterlocal Act) with respect to Unit 3 for purposes of making the offer of the generation output or electric energy production of Unit 3 in such form and manner as is necessary to comply with the requirements of Section 301(1) of the hiterlocal Act as then in effect, and (ii) offer to each Development Participant the opportunity to acquire an undivided ownership interest in Unit 3 equal to its Development Costs Share (such offer by IPA is referred to herein as the "Subscription Notice'). The Development Committee shall, at the time it gives notice to the Development Participants pursuant to Section 10.1(a), also give notice to IPA of the completion (or substantial completion) of the Development Work and shall request that IPA issue the Subscription Notice to the Development Participants. Section 10.2. Exercise of Right to Participate in Unit 3. After its receipt of the Subscription Notice from IPA, each Development Participant shall be required to elect whether or not it wishes to participate in Unit 3 as an owner of an undivided ownership interest in it. Each Development Participant shall have the right to elect to so participate in Unit 3 in an amount up to its Development Costs Share, subject, however, to the provisions of Section 10.7. Written notification of such election shall be sent by each Development Participant to IPA and the Development Committee within 120 days (or such longer period as may be authorized by IPA 31 #182113 s9 and the Development Committee) after the Subscription Notice has been sent to each Development Participant. Development Participants that elect to participate in Unit 3 shall be referred to hereinafter as "Unit 3 Participants". Section 10.3. Procedure For Disposal of Non-Elected Amounts. (a) hi the event that one or more Development Participants elect not to participate in Unit 3 or elect to participate in an amount less than their respective Development Costs Shares, the aggregate amount remaining (the "Non-Elected Amount') shall be disposed of as follows: (1) Within 10 days after receipt of the notices of election specified in Section 10.2, the Development Committee shall give written notification to each Unit 3 Participant that it may request to increase its elected participation in Unit 3 by an amount which shall not exceed such Non-Elected Amount, provided that such increase shall comply with Section 5.1(1), (n) and (o) of the Development Coordination Agreement. Such notice shall also describe any limitations or requirements resulting from the matters described in Section 10.7. Unit 3 Participants that request to increase their elected participation in Unit 3 shall be known as "Requesting Unit 3 Participants". (2) If such requests from Requesting Unit 3 Participants do not exceed the Non-Elected Amount, then each such Requesting Unit 3 Participant shall have its elected participation in Unit 3 increased by its requested amount. If the aggregate of the requests exceeds the Non-Elected Amount, then each such Requesting Unit 3 Participant shall have its elected participation in Unit 3 increased by its pro rata share (based upon the amount it requested as compared to all requests for the Non-Elected Amount) of the Non-Elected Amount. (b) A request to take any Non-Elected Amount shall be communicated by written notice to the Development Committee within 120 days (or such longer period as may be approved by the Development Committee) after notice has been sent by the Development Committee of the availability of such Non-Elected Amount. (c) Failure to elect, request or to notify in the manner provided in Sections 10.2 and 10.3 shall be deemed for all purposes an irrevocable determination not to exercise a right of election. Section 10.4. Disposal of Remaining Non-Elected Amount. In the event that the Non-Elected Amount is not disposed of completely pursuant to Section 10.3, a special committee comprised of Unit 3 Participants only shall determine what action shall be taken. Each Unit 3 Participant's representative on this special committee shall be entitled to vote based on its elected participation in Unit 3, as adjusted to disregard the voting percentage attributable to the remaining portion of the Non-Elected Amount. All actions or decisions relating to the remaining portion of the Non-Elected Amount shall be agreed to by Unit 3 Participants holding Unit 3 participation shares (after any elected increase in Unit 3 participation pursuant to Section 10.3(a)(1)) totaling at least 80% in interest, provided that such action or decisions shall comply with the requirements of Section 5.1(1), (n) and (o) of the Development Coordination Agreement. Any Unit 3 Participant that does not vote in favor of such action or decision may, by written 32 #1s2113 0 i notice given to each of the other Unit 3 Participants within`60 days after such vote, terminate its participation in Unit 3. Section 10.5. Reimbursement of Development Costs. (a) Reimbursement of Development Costs shall be made as and to the extent provided in this Section 10.5. The Development Participants and former Development Participants that are eligible for such reimbursement are: (1) Entities that withdrew as Development Participants pursuant to Section 9.1(a) and did not transfer their unassumed Development Costs Shares as provided in Section 9.4("Former Development Participants'); (2) Development Participants that reduced their Development Costs Shares pursuant to Section 9.7(a) and did not transfer their unassumed Development Costs Shares as provided in Section 9.4 ("Reduced Development Participants'); (3) Development Participants that elect not to participate in Unit 3 in any amount pursuant to Section 10.2 ("Non-Electing Development Participants'); and (4) Development Participants that elect to participate in Unit 3 pursuant to Section 10.2, but with participation interests in Unit 3 that are less than their Development Costs Shares("Reduced Unit 3 Participants'). (b) Reimbursement of Development Costs paid by Former Development Participants, Reduced Development Participants, Non-Electing Development Participants and Reduced Unit 3 Participants shall be subject to all of the following conditions: (1) The Unit 3 Participants agree to proceed with construction of Unit 3; (2) Definitive Project Agreements are executed; and (3) The Unit 3 Participants, individually or through one or more entities acting on their behalf, successfully issue bonds or other obligations to finance the initial costs of construction of Unit 3 (or otherwise obtain appropriations or allocations of funds sufficient to pay such costs of construction). (c) The amount of Development Costs for which reimbursement shall be provided to any Former Development Participant, any Reduced Development Participant, any Non-Electing Development Participant and any Reduced Unit 3 Participant shall be as follows: (1) Any Former Development Participant shall be entitled to reimbursement for 100% of the Development Costs paid by it and not reimbursed pursuant to Section 15.3. (2) Any Reduced Development Participant shall be entitled to reimbursement for 100% of the product of (i) the positive difference between its Development Costs 33 #182113 v9 i Share (or Augmented Development Costs Share, if!applicable) prior to the reduction and its reduced Development Costs Share (or Augmented Development Costs Share, if applicable) and (ii) the Development Costs that were paid by it while its Development Costs Share (or Augmented Development Costs Share, if applicable) was in effect prior to the reduction and that were not reimbursed pursuant to Section 15.3 . (3) Any Non-Electing Development Participant shall be entitled to reimbursement for 100%of the Development Costs paid by it. (4) Any Reduced Unit 3 Participant shall be entitled to reimbursement for 100% of the product of(i) the positive difference between its Development Costs Share and its percentage participation interest in Unit 3 and (ii) the Development Costs paid by it. The aggregate amount to be reimbursed to any Former Development Participants, any Reduced Development Participants, any Non-Electing Development Participants and any Reduced Unit 3 Participants is referred to in paragraph (d) below as the 'Development Costs Reimbursement". The parties to whom the Development Costs Reimbursement is owed are referred to in paragraph (d)below as the "Development Costs Payees". (d) After the execution and delivery of the Project Agreements as provided in Section 11.1(b), the Development Costs Payees shall be reimbursed by the Unit 3 Participants for the Development Costs Reimbursement as provided in this paragraph (d). Each of the Unit 3 Participants shall include an amount equal to its pro rata share of the Development Costs Reimbursement (based on its Unit 3 participation share) in its initial financing or other funding arrangements for its share of the costs of construction of Unit 3 and shall cause such amount to be deposited into the construction fund for Unit 3 under the Project Agreements. The total amount of the Development Costs Reimbursement shall be reimbursed to the Development Costs Payees out of the amounts so deposited into the Unit 3 construction fund within 30 days after the completion of the Unit 3 Participants' initial financing or other funding arrangements for the costs of construction of Unit 3. The Project Agreements shall contain a provision obligating the Unit 3 Participants to reimburse or cause to be reimbursed to the Development Costs Payees the Development Costs Reimbursement as provided in this Section 10.5, and the Development Costs Payees shall be stated to be third party beneficiaries of this provision. (e) No defaulting Development Participant as described in Section 13.4 shall be entitled to receive any reimbursement under this Section 10.5. Section 10.6. Reimbursement of Category 2 Study Expenses. After the execution and delivery of the Project Agreements as provided in Section 11.1(b), the Study Participants shall be reimbursed by the Unit 3 Participants for Category 2 Study Expenses as provided in this Section 10.6. Each of the Unit 3 Participants shall include an amount equal to its pro rata share of the Category 2 Study Expenses (based on its Unit 3 participation share) in its initial financing or other funding arrangements for its share of the costs of construction of Unit 3 and shall cause such amount to be deposited into the construction fund for Unit 3 under the Project Agreements. The total amount of the Category 2 Study Expenses shall be reimbursed to the Study Participants 34 #182113 v9 out of the amounts so deposited into the Unit 3 construction fund within 30 days after the completion of the Unit 3 Participants' initial financing or other funding arrangements for the costs of construction of Unit 3. The Project Agreements shall contain a provision obligating the Unit 3 Participants to reimburse or cause to be reimbursed to the Study Participants the Category 2 Study Expenses as provided in this Section 10.6, and the Study Participants shall be third party beneficiaries of this provision. Section 10.7. Compliance With Utah Interlocal Act. All Parties shall take or shall cause to be taken all actions necessary on their respective parts to ensure that their participation in Unit 3 complies with the requirements of the Interlocal Act. ARTICLE XI NEGOTIATION AND EXECUTION OF PROJECT AGREEMENTS Section 11.1. Negotiation and Execution of Project Agreements. (a) The Development Participants acknowledge and agree that the development of definitive Project Agreements is a key component of the Development Work that will require negotiations between and among the Development Participants, IPA, the Unit 1 and 2 Operating Agent and the Unit 1 and 2 Participants acting through the Unit 1 and 2 Coordinating Committee. The Development Committee shall have the responsibility for making arrangements for developing the terms of the Project Agreements other than those to which IPA and/or the Unit 1 and 2 Operating Agent shall be parties, all in accordance with assignments made by the Development Committee. The terms of the Project Agreements to which IPA and/or the Unit 1 and 2 Operating Agent shall be parties shall be initially proposed by IPA or the Unit 1 and 2 Operating Agent. (b) As soon as practicable after the election procedures pursuant to Article X have been completed, the Development Committee shall cause definitive Project Agreements to be completed (by the insertion of the names of the Unit 3 Participants and their participation interests, dates and other nonsubstantive information) and delivered for execution by the Unit 3 Participants and the other parties thereto, reflecting (i) the ownership interest of each Unit 3 Participant and (ii) such other matters as shall be necessary or desirable to complete said Project Agreements including, without limitation, a detailed description of Unit 3 as then proposed. The Development Committee shall, as soon as practicable after such completion for execution, deliver to each Unit 3 Participant two execution copies of the Project Agreements to which they are parties and as many counterpart signature pages of such Project Agreements as there are Unit 3 Participants. Each Unit 3 Participant shall be required to execute and deliver to the Development Committee or its designee one executed copy and the transmitted number of counterpart signature pages within 20 days (or such other period as shall be authorized by the Development Committee) after receipt thereof. Notwithstanding anything to the contrary in this Agreement, nothing in this Agreement obligates any Development Participant to execute any Project Agreement. 35 #182n3 v9 I ARTICLE XII LIABILITY Section 12.1. Limitation on Liability. Except for damage or loss resulting from Willful Action or breach of fiduciary obligation in connection with the performance or nonperformance of this Agreement and subject to the provisions of Section 12.3, a Development Participant shall not be liable to any other Development Participant for any loss or damage resulting from Development Work or the performance or nonperformance of its obligations under this Agreement, other than obligations of each Development Participant to pay its Development Costs Share of Development Costs. It is hereby recognized and agreed that the members, directors, governing body members, officers and employees of each Development Participant shall not be individually liable with respect to any loss or damage resulting from Development Work or the performance or nonperformance of any obligation under this Agreement. Section 12.2. Allocation of Costs to Discharge Liability. The costs and expenses of discharging liability of the Development Manager or a Development Participant to a person or entity other than a Development Participant resulting from Development Work, the incurrence of Development Costs or the performance or nonperformance of any obligation under this Agreement and for which payment is not made by insurance, shall be allocated, subject to the Development Costs Limit, among all Development Participants in proportion to their respective Development Costs Shares (or Augmented Development Costs Shares during the Transition Period, if applicable). To the extent a Development Participant pays more than its Development Costs Share (or Augmented Development Costs Share) for costs and expenses under this Section 12.2, such Development Participant shall have a right to receive such excess payment from those Development Participants which have not paid their full Development Costs Shares (or Augmented Development Costs Shares) of such costs and expenses to ensure allocation of costs and expenses as required by this Section 12.2. Section 12.3. Indemnification for Wilful Action. Each Development Participant shall be responsible for the consequences of its own Willful Action and breach of fiduciary obligation in connection with the performance or nonperformance of this Agreement and Development Work, and shall indemnify and hold harmless the other Development Participants, their members, directors, members of their governing body or bodies, officers and employees from the consequences thereof to the extent allowed by law. Section 12.4. Willful Action. (a) For the purpose of Article XH, "Willful Action" means action taken or not taken by or on behalf of the Development Manager or a Development Participant at the direction of its members, directors, members of its governing body or bodies, officers or employees having management or administrative responsibility affecting its performance under this Agreement,which is any of the following: (1) Action which is knowingly or intentionally taken or not taken with conscious indifference to the consequences thereof or with intent or knowledge that injury or damage would result or would probably result therefrom; 36 #182113 v9 (2) Action which has been determined by final arbitration award or final judgment or judicial decree to be a material default under this Agreement and which action occurs or continues beyond the time specified in such arbitration award,judgment or judicial decree for curing such default or, if no time to cure is specified therein, occurs or continues thereafter beyond a reasonable time to cure such default; or (3) Action which is knowingly or intentionally taken or not taken with the intent or knowledge that such action taken or not taken is a material default under this Agreement. (b) The phrase "employees having management or administrative responsibility" as used in this Section 12.4 means the employees of a Development Participant who are responsible for one or more of the executive functions of planning, organizing, coordinating, directing, controlling or supervising such Development Participant's performance under this Agreement with responsibility for results,but does not include any independent contractor. (c) Willful Action does not include any act or failure to act which is merely involuntary, accidental or negligent. Section 12.5. No Relief of Insured Obligations. The provisions of this Article XII shall not be construed so as to relieve any insurer of its obligation to pay any insurance proceeds in accordance with the terms and conditions of a valid and collectible insurance policy. All policies of insurance obtained with respect to the performance of the Development Work shall contain a waiver of subrogation. Section 12.6. Liability of Development Manager. Except as provided below, neither the Development Manager, in its capacity as Development Manager, nor any of its respective officers, employees or agents shall be liable for damages to any Development Participant for any act or failure to act, whether by negligence or otherwise, arising out of or pertaining to this Agreement. The Development Participants shall indemnify and hold harmless the Development Manager from all liability and expense on account of any and all damages, claims or actions, whether based on contract or tort, including injury to or death of persons or damage to property arising from any act or failure to act by the Development Manager, acting in its capacity as such, and its respective officers, employees and agents,whether by negligence or otherwise, arising out of or pertaining to this Agreement. Nothing in this Section 12.6 shall, however, be construed to: (i) exculpate or indemnify the Development Manager or any of its respective officers, employees and agents for damages resulting from Willful Action in connection with the performance or non-performance of the Development Work; provided, however, any such damages resulting from or attributable to the service of a Development Manager shall be limited to, and paid solely out of, payments actually received by such Development Manager with respect to Development Costs Shares that have not been expended by the Development Manager for any purpose permitted under this Agreement, have not been committed to any such purpose or are not otherwise required for the Development Manager to meet any contractual or other obligation or liability it has incurred in its role as Development Manager, nor (ii) exculpate or indemnify the Development Manager for any liability arising from its capacity, if any, as a Development Participant under this Agreement. 37 #182113 v9 ARTICLE X111 DEFAULT Section 13.1. Notice of Default. The failure of any Development Participant to pay any amount as and when due as provided in Section 7.2 shall constitute a default on the part of such Development Participant. The Development Committee shall cause written notice of such default to be given to the defaulting Development Participant by certified mail and shall cause copies of such notice to be sent to each non-defaulting Development Participant. Said notice shall include a demand to immediately cure the default. For purposes of the vote of the Development Committee to provide such a notice, the voting rights of the Development Participant alleged to be in default shall be suspended in connection with such matter and the percentage of Development Costs Shares (or Augmented Development Costs Shares during the Transition Period, if applicable) required for an action of the Development Committee as specified in Section 3.4(a) shall be proportionately adjusted to disregard the suspended voting rights. Section 13.2. Obligation to Cure Default; Payment of Defaulted Amount. (a) Subject to Section 13.3, a defaulting Development Participant to which notice was sent shall take all steps necessary to cure such default as promptly as possible by the payment of all amounts owed by it. (b) The amount not paid timely by the defaulting Development Participant shall constitute an item of Development Costs and shall be payable by the nondefaulting Participants, pro rata in accordance with their Development Costs Shares (or Augmented Development Costs Shares during the Transition Period, if applicable). Amounts subsequently recovered from the defaulting Development Participant shall be deposited into the Unit 3 Development Account and shall, at the direction of the Development Committee, be reimbursed to the nondefaulting Development Participants (in proportion to the payments made by them in respect of the defaulted amount) or retained therein for the payment of Development Costs. Section 13.3. Dispute of Default. In the event that any Development Participant shall dispute the existence or nature of a default asserted in the notice given by the Development Committee pursuant to Section 13.1, such Development Participant shall pay the disputed payment under protest as provided in Section 7.5. Any such protest shall be promptly made in writing to the Development Committee and shall specify the ground on which the protest is based. Copies of such protest shall be mailed at the same time by the protesting Development Participant to all the other Development Participants. Section 13.4. Termination of Rights of Defaulting Development Participant. (a) In the event a Development Participant does not take all steps necessary to cure a default in accordance with Section 13.3, then, 30 days after the mailing of notice to such Development Participant in accordance with Section 13.1 if no cure has occurred, the defaulting Development Participant shall no longer be considered to be a Development Participant under this Agreement and all rights (including but not limited to any rights to reimbursement that may be provided in Section Sections 10.5 and 15.3) and obligations of the defaulting Development Participant shall terminate, except that the outstanding payment obligations, including its obligation to pay its 38 9182113 W Development Costs Share of Developments Costs incurred prior to the effective date of such termination, of such defaulting Development Participant due to Development Costs incurred prior to the date of termination shall continue until satisfied, and the defaulting Development Participant shall not be entitled to access to or to receive copies of documents relating to Development Work after the date of such Development Participant's termination. (b) On or prior to the effective date of the termination of a Development Participant's rights and obligations, the Development Committee shall meet to discuss the termination, its impact upon Unit 3 and the potential assumption by the non-defaulting Development Participants of the defaulting Development Participant's Development Costs Share. Within 10 days of any such termination, the Development Committee shall give written notification of such termination to each non-defaulting Development Participant. (c) Each non-defaulting Development Participant may request, within 30 days (or such longer period as may be authorized by the Development Committee) after the Development Committee has sent the notification pursuant to Section 13.4(b), to assume all or a portion of the defaulting Development Participant's Development Costs Share. If more than the total amount of the defaulting Development Participant's Development Costs Share is requested to be assumed by non-defaulting Development Participants, the defaulting Development Participant's Development Costs Share shall be allocated pro rata (based upon the amounts requested) to the requesting Development Participants, and such allocation shall be deemed to be effective as of the date of termination of the defaulting Development Participant's rights and obligations hereunder. Notwithstanding the foregoing, the increase in the Development Costs Share of such Development Participant as a result of such an assignment shall be subject to compliance with Section 5.1(1), (n) and (o) of the Development Coordination Agreement. In the event any such increase in the Development Costs Share of a Development Participant fails to comply with Section 5.1(1), (n) or (o) of the Development Coordination Agreement, such increase shall then be allocated to the other Development Participants that request such increase, and, if more than such increase shall be so requested,then such increase shall be allocated among them based upon their Development Costs Shares then in effect. (d) In the case of such a default during the Full Subscription Period, if the amount of the defaulting Development Participant's share voluntarily assumed by the non-defaulting Development Participants is less than 100% of the defaulting Development Participant's Development Costs Share, each non-defaulting Development Participant that is able to comply with Section 5.1(1), (n) and (o) of the Development Coordination Agreement shall assume its respective portion of the balance of the defaulting Development Participant's Development Costs Share, in an amount proportionate to that which its Development Costs Share (prior to any increase thereof as a result of Section 13.4(c)) bears to the total Development Costs Shares of such other complying non-defaulting Development Participants, and such assumption shall be deemed to be effective as of the date of termination of the defaulting Development Participant's rights and obligations hereunder. (e) Immediately following the completion of the procedures described above that result in any adjustment in Development Costs Shares, Exhibit A shall be amended without further action to reflect such adjustment. 39 #182113 v9 (f) The defaulting Development Participant shall 'rot be entitled to reimbursement from any non-defaulting Development Participant of Development Costs paid by the defaulting Development Participant. Section 13.5. Waiver Not to Affect Subsequent Defaults. A waiver at any time by any Development Participant of its rights with respect to a default or any other matter arising in connection with this Agreement shall not be deemed a waiver with respect to any other or subsequent default or matter. ARTICLE XIV ASSIGNMENT Section 14.1. Binding Obligations. All of the obligations set forth in this Agreement shall bind the Development Participants and their successors and assigns. Section 14.2. Assignment. (a) A Development Participant, prior to the date it is required to give notice of its election to become a Unit 3 Participant in accordance with Section 10.2, may assign all or part of its rights, interests and obligations under this Agreement to a Qualified Electric Provider. Prior to making any such assignment, the assigning Development Participant shall first offer to assign all or such part of its rights and obligations to the other Development Participants; provided, however, no such offer shall be required in the case of such an assignment: (i) by a Development Participant to a Qualified Electric Provider that (A) is directly or through one or more other entities wholly owned by such Development Participant, (B) directly or through one or more other entities wholly owns such Development Participant, or (C) directly or through one or more other entities is wholly owned by an entity that directly or through one or more entities wholly owns such Development Participant, or (ii) that is described in subsection (b) or (c) of this Section 14.2. Such offer shall be made in writing and shall indicate the extent of the assigning Development Participant's interest to be assigned (expressed as a Development Costs Share). Such offer shall be given to all of the other Development Participants, shall set forth the proposed terms and conditions for the assignment and shall provide the other Development Participants with at least 60 days to accept such offer. In the event that the other Development Participants agree to accept an assignment of more than all of the Development Costs Share to be assigned, then such Development Costs Share shall be allocated among them based upon their Development Costs Shares in effect at the time of such offer. In the event, however, that none or less than all of the Development Costs Share is accepted by or otherwise allocated to the other Development Participants, then the assigning Development Participant may proceed to assign its rights and obligations hereunder to the Qualified Electric Provider. (b) Any Development Participant, in lieu of directly exercising its rights under this Agreement, may, prior to the date it is required to give notice of its election to become a Unit 3 Participant in accordance with Section 10.2, assign all or part of its rights, interests and obligations under this Agreement and the corresponding Development Costs Share to a Joint Powers Agency of which it is a member if such Development Participant shall or has become a 40 #182113 n9 JPA Participant under a JPA Participant Agreement with such Joint Powers Agency with respect to its participation in the Development Committee, the Development Work and Unit 3. Such Development Participant shall deliver written notice to the other Development Participants of such assignment to such Joint Powers Agency, together with a copy of the written instrument that assigns to such Joint Powers Agency its rights under this Agreement. Thereupon, the Joint Powers Agency may exercise such rights in the same manner and subject to the same terms and conditions as though such Joint Powers Agency had itself been such Development Participant; provided that, unless the Development Committee shall unanimously otherwise approve, the Development Costs Share of such Joint Powers Agency resulting from its exercise of such rights shall be payable in full from the JPA Participant Share of such Development Participant that has become the JPA Participant under such JPA Participant Agreement. Any right to participate in Unit 3 that is assigned as above provided shall not constitute a Non-Elected Amount under Section 10.3. No such assignment shall be treated as an assignment that is subject to Section 14.2(a) or 14.3. (c) Any Development Participant that is a Joint Powers Agency, in lieu of directly exercising its rights under this Agreement, may, prior to the date it is required to give notice of its election to become a Unit 3 Participant in accordance with Section 10.2, assign all or any portion of such rights and the corresponding Development Costs Share to any JPA Participant under its JPA Participant Agreement. Such Joint Powers Agency shall deliver a written notice to the other Development Participants of such assignment, together with a copy of the written instrument or instruments that assigns such rights to such JPA Participant. Thereupon, such JPA Participant may exercise such rights in the same manner and subject to the same terms and conditions as though such JPA Participant had been a Development Participant (i) with a Development Costs Share equal to such Joint Powers Agency's Development Costs Share multiplied by the percentage of the JPA Participant Share of such JPA Participant or (ii) with a different Development Costs Share that shall be approved unanimously by the Development Committee. Any right to participate in Unit 3 that is transferred as above provided shall not constitute a Non-Elected Amount under Section 10.3. No such assignment shall be treated as an assignment that is subject to Section 14.2(a)or 14.3. (d) No assignment made pursuant to subsection (a), (b) or (c) of this Section 14.2 shall become effective unless and until (i) the assignee assumes the assignor's rights, interests and obligations under this Agreement and pays any amount (or the applicable portion thereof) then due and owing by the assignor under this Agreement (unless the assignor has agreed pursuant to the applicable assignment agreement to pay all such amounts then due and owing by the assignor), (ii) if such assignment shall take place during the Full Subscription Period, assuming such assignment is consummated, Utah entities hold Development Costs Shares which will enable them to elect to become Unit 3 Participants with participation interests that comply with any applicable requirements of the Interlocal Act, as determined by the Development Committee, (iii) the assignee executes and delivers to the Development Committee a counterpart of this Agreement, together with the opinion and other evidences and documentation referred to in Section 16.14, (iv) the assignee executes and delivers to IPA a counterpart of the Development Coordination Agreement, together with the opinion and other evidences and documentation referred to in Section 16.14, and (v) the assignee delivers to the Development Committee an original counterpart or certified copy of such assignment. Upon any such assignment and 41 #182113 0 execution of this Agreement, the assignee shall become a party to, and a Development Participant under, this Agreement as of the effective date of the assignment. Immediately following such assignment and execution of this Agreement, the Development Committee promptly shall distribute to each Development Participant (i) a copy of the counterpart of this Agreement signed by the assignee, and (ii) a revised Exhibit A that reflects such assignment, including, without limitation, sets forth the name, Development Costs Share and address for purposes of Section 16.8 of the assignee and the reduction or elimination of the Development Costs Share of the assignor, as applicable. (e) Upon any assignment by a Development Participant of all or any portion of its Development Costs Share in accordance with the terms and conditions of this Agreement and the Development Coordination Agreement, and the assumption of such Development Participant's rights, interests and obligations with respect to such Development Costs Share or portion thereof by the assignee pursuant to the immediately preceding subsection (d), such assigning Development Participant shall be automatically released of all of its duties and obligations under this Agreement with respect to such assigned Development Costs Share or portion thereof, other than any such duties or obligations due, payable or performable prior to, or with respect to any period prior to, the date such assignment becomes effective. ARTICLE XV TRANSITION PERIOD Section 15.1. Occurrence of Transition Period. If a Transition Period occurs, the Development Agreement shall immediately become effective, notwithstanding that the Development Costs Shares of the Development Participants that executed and delivered the Development Agreement on or prior to the Transition Effective Date aggregate less than 100 percent, provided that the provisions of this Article (other than the next to the last sentence of Section 15.3, which shall continue into the Full Subscription Period) shall be in effect only during the Transition Period. If the Transition Period does not occur, then the provisions of this Article shall not become effective. Section 15.2. Transition Development Participants. A person or entity shall be allowed to become a Transition Development Participant only upon the following terms and conditions: (a) Subject to compliance with Sections 5.1(1), (n) and(o) of the Development Coordination Agreement, the Initial Development Participants shall unanimously approve the Transition Development Participant as a Development Participant. (b) Each Transition Development Participant shall, as a condition to becoming a Development Participant and subject to compliance with Sections 5.1(1), (n) and (o) of the Development Coordination Agreement, duly execute and deliver a counterpart of this Agreement (together with the opinion and other evidences and documentation referred to in Section 16.14), and the Development Coordination Agreement, and Exhibit A of this Agreement shall be updated to include such Transition Development Participant as a Development Participant and the Unsubscribed Development Costs Share to which it subscribed as its Development Costs Share 42 N,82u3 v9 i (or in the case of a then existing Development Participant that also becomes a Transition Development Participant, to increase its Development Costs Share by the Unsubscribed Development Costs Share to which it subscribed). Concurrently with such execution and delivery, such Transition Development Participant shall pay in full the amounts it is required to pay pursuant to Section 15.3. (c) Neither the Development Manager, IPA, the Unit 1 and 2 Operating Agent, any Study Participant nor any Development Participant shall have any liability to any Development Participant or other party to this Agreement as a result of a failure of the Full Subscription Period to occur. (d) Notwithstanding anything else in this Agreement to the contrary, the Initial Development Participants may, in their sole discretion and by their unanimous vote increase, subject to the availability of Unsubscribed Development Costs Shares, any of their respective Development Costs Shares under this Agreement at any time upon providing written notice to the other Development Participants of such increase, which notice shall specify the amount of the increase in the Development Costs Share of such Initial Development Participant and the effective date thereof. Section 15.3 Reimbursement of Incremental Development Costs. Upon entering into the Development Agreement, each Transition Development Participant shall pay to each of the then existing Development Participants (or pay to the Development Manager under arrangements whereby the Development Manager shall pay to each of the then existing Development Participants) such Transition Development Participant's Reimbursement Share of (i) the Unreimbursed Incremental Development Costs paid by such Development Participant, together with interest at the Reimbursement Rate that has accrued thereon, and (ii) in the event of any outstanding invoice of such Development Participant not yet due and payable, the amount of Development Costs set forth therein that are attributable to such Development Participant's Incremental Development Costs Share. Additionally, in the case of any invoice pursuant to Section 7.1 containing adjustments relating to Development Costs with respect to which payment was made as set forth above, such adjustments in the invoices to such Transition Development Participant and each of such Developmental Participants shall be further adjusted as necessary to provide for a settlement of accounts between such Transition Development Participant and each such Development Participant so as to give effect to the provisions of the next preceding sentence. Notwithstanding the forgoing, no defaulting Development Participant as described in Section 13.4 shall be entitled to receive any reimbursement under this Section 15.3. Section 15.4 Payment Obligations of Development Participants. During the Transition Period the Augmented Development Costs Share of each Development Participant shall be deemed to be its Development Costs Share for the purpose of calculating the share of Development Costs due and payable by such Development Participant under this Agreement. Section 15.5 Initial Budget and Initial Schedule. Promptly following the commencement of the Transition Period, the Development Committee shall adopt the Initial Budget, as referenced in Section 6.2, and consider the initial schedule, as referenced in Section 6.3, in light of the then existing circumstances and participation by Development Participants, 43 #182113 0 and the Development Committee may vote to revise either or both of such Initial Budget or initial schedule, in which case such revised initial schedule shall then be set forth in Exhibit B. Thereafter the budget and the schedule shall be revised as provided in Section 6.2 and Section 6.3, respectively. Section 15.6 Voting on Development Committee Matters. During the Transition Period the Augmented Development Costs Share of each Development Participant shall be deemed to be its Development Costs Share for the purpose of calculating its voting rights percentage with respect to all actions or decisions by the Development Committee. ARTICLE XVI GENERAL AND MISCELLANEOUS PROVISIONS Section 16.1. Effective Date and Termination. (a) This Agreement shall become effective on the first date upon which it has been duly executed and delivered by Development Participants that shall be assigned Development Costs Shares equal to or greater than 60 percent as shall be set forth in Exhibit A and by the Development Manager and the Development Coordination Agreement shall have been duly executed and delivered in accordance with its terms; provided, however, if this Agreement has not become effective on or before December 31, 2005, or such later date as determined by the Development Participants that have then executed and delivered this Agreement, it shall not become effective and shall not, thereafter, be subject to acceptance by additional Development Participants. For purposes of this Agreement: (i) the first date upon which this Agreement has been duly executed and delivered by Development Participants that shall be assigned Development Costs Shares equal to 100 percent as shall be set forth on Exhibit A and by the Development Manager and the Development Coordination Agreement shall have been duly executed and delivered in accordance with its terms is referred to as the `Effective Date"; and (ii) if this Agreement becomes effective pursuant to the first sentence of this subsection(a)based on its due execution and delivery by Development Participants that shall be assigned Development Costs Shares that equal or exceed 60 percent, but that are less than 100 percent, as shall be set forth in Exhibit A, then the date upon which this Agreement becomes effective is referred to as the "Transition Effective Date". (b) Unless terminated earlier pursuant to Section 16.1(c), this Agreement shall terminate upon the execution of the Project Agreements;provided, however, that any payment obligation hereunder (whether pursuant to Section 6.6, Article VII or another provision of this Agreement and regardless of whether a billing statement has been received by the date of termination) and any right to receive reimbursement pursuant to Sections 2.1(b), 10.5, 10.6 and 16.1(d) shall survive until satisfied. Upon execution of the Project Agreements, all rights and interests of the Development Participants in all the contracts, licenses, permits, studies, documents, materials, matters and things acquired under this Agreement shall vest in and become the property of the Unit 3 Participants and any amount remaining in the Unit 3 Development Account that is not required to pay any outstanding Development Costs shall be paid over to the 44 aie2nsys i �I Development Participants that received the Subscription I�Tbtice pursuant to Section 10.1(b),pro rasa in accordance with their Development Costs Shares. (c) This Agreement shall terminate on the first to occur of the following: (1) The Full Subscription Period shall not have commenced by a date as shall be determined from time to time by the Development Committee; (2) 90 days following the date on which the Development Costs equal or exceed 95% of the Development Costs Limit unless, on or before such 90th day, the Development Committee shall determine that the Development Work can be completed within the then-effective budget or shall have voted to increase the Development Costs Limit as provided in Section 6.1(b) or the Development Costs Limit has been increased as provided in Section 6.1(c); (3) The third anniversary of the Effective Date or the Transition Effective Date, as the case may be; (4) The failure during the Full Subscription Period of Utah entities to hold Development Costs Shares which exceed 50%, unless the Development Committee shall determine that all requirements of the Interiocal Act are expected to be met upon completion of the election process under Article X for participation in Unit 3; (5) The failure during the Full Subscription Period of the Development Committee to obtain a full allocation of the Development Costs Share of a Development Participant that has elected to withdraw from this Agreement by the effective date of such withdrawal (as specified in the written notice given by the withdrawing Development Participant pursuant to Section 9.1(a)) or by such later date as may be determined by the Development Committee pursuant to Section 9.5; (6) The failure during the Full Subscription Period of the Development Committee to obtain a full allocation of the reduction in Development Costs Share that has been elected by a Development Participant by the effective date of such reduction (as specified in the written notice given by the electing Development Participant pursuant to Section 9.7(a)) or by such later date as may be determined by the Development Committee pursuant to Section 9.5; (7) A failure of the electing Unit 3 Participants' representatives to effect complete allocation of any remaining Non-Elected Amount pursuant to Section 10.4 within 90 days or such longer period as shall be agreed to by Unit 3 Participants holding Unit 3 participation shares totaling at least 80%in interest; and (8) The date on which all Development Participants agree in writing to terminate this Agreement. 45 #182113 v9 I i Upon such termination of this Agreement, (i) the Development Committee shall terminate all Development Work in an orderly manner, (ii) the Development Participants shall fulfill all obligations hereunder to pay for the Development Costs that have been incurred, and (iii) any payment obligation hereunder(whether or not a billing statement has been received by the date of termination) and any right to receive reimbursement pursuant to Sections 2.1(b), 10.5, 15.3 and 161(d) shall survive until satisfied. (d) Except as provided in Section 161(b), upon termination of this Agreement, the Development Committee shall (i) sell any and all equipment relating to Unit 3 (including options to purchase any of same) the costs of which were Development Costs and (ii)promptly distribute the proceeds thereof(less any costs incurred in connection with the sale thereof) to all of the Development Participants (other than any defaulting Development Participant as described in Section 13.4), including any Development Participants that have withdrawn as provided in Section 9.1(a) (other than a withdrawn Development Participant that exercised its option under Section 9.4(a)), in proportion to the amount of Development Costs paid by each such Development Participant and not reimbursed pursuant to Section 15.3. (e) Unless this Agreement terminates as provided in Section 16.1(b), upon termination of this Agreement, the Development Manager or its designee shall retain for a period of 3 years from the date this Agreement is terminated in a reasonably accessible location all original accounting statements, reports, records and other accounting data relating to the incurrence and payment of Development Costs. Upon termination of this Agreement, and for a period of 3 years thereafter, each Development Participant shall have full access to accounting statements, reports, records and other accounting data with respect to the Development Costs retained by the Development Manager or its designee and upon reasonable notice may, at the requesting Development Participant's sole expense, reproduce any or all of such accounting statements, reports, records and other accounting data. In addition, any amount remaining in the Unit 3 Development Account that is not required to pay any outstanding Development Costs shall, upon such termination, be paid over to the Development Participants pro rats in accordance with their Development Costs Shares (or Augmented Development Costs Shares if such termination shall occur during the Transition Period, if applicable). Section 16.2. Amendments. Except as otherwise provided in Section 4.2, this Agreement may be amended only by a written amendment signed by the Development Participants and if such amendment shall adversely affect the rights and interests of the Study Participants as set forth in Section 16.6, such amendment shall be subject to the approval of the Study Participants, and, if such amendment shall adversely affect the rights and interests of IPA or the Unit 1 and 2 Operating Agent as set forth in Section 16.6, such amendment shall be subject to the approvals of IPA and the Unit 1 and 2 Operating Agent. Section 16.3 Representations and Warranties. (a) Each of the Development Participants represent and warrant to one another as follows: (1) It is duly organized and a validly existing Qualified Electric Provider with full power and authority to enter into this Agreement and to perform its obligations hereunder; 46 #182113 t9 (2) This Agreement has been duly authorized, executed and delivered by it and constitutes its legal, valid and binding obligation, enforceable in accordance with the terms hereof(except as enforceability of this Agreement may be affected by bankruptcy, insolvency and similar laws affecting creditors' rights generally and by the application of general principles of equity); and (3) Its execution, delivery or performance of this Agreement does not materially violate or materially conflict with (A) any provision of applicable law, (B) any provision of its governing charter, articles, bylaws, interlocal cooperation or joint powers agreement, or other organizational agreement, filing, decree or action applicable thereto, or (C) any provision of any material contract, instrument, agreement or other document to which it is a party. or by which it is legally bound. (b) The parties to the Development Coordination Agreement shall be entitled, and are hereby authorized, to rely upon the foregoing representations and warranties. Section 16.4. Entire Agreement. This Agreement, together with the Development Coordination Agreement and any confidentiality agreements or Air Permit Prosecution Agreement entered into concurrently with the execution and delivery of this Agreement, contains the entire understanding of the Development Participants with respect to Development Work and Unit 3 and supersedes any and all prior agreements,understandings and negotiations with respect to Development Work and Unit 3. Nothing in this Section 16.4 shall affect or limit the validity and enforceability of any agreement entered into by any Development Participant with respect to Development Work or Unit 3 after the Transition Effective Date or Effective Date, as applicable. Section 16.5. Relationship of Development Participants. The covenants, obligations and liabilities of this Agreement are several and not joint or collective and nothing herein contained shall ever be construed to create an association, joint venture, trust, partnership or other legal entity or to impose a trust or partnership covenant, obligation of liability on or with regard to any one or more of the Development Participants. Each Development Participant shall be individually responsible for its own covenants, obligations and liabilities under this Agreement. No Development Participant shall be under the control of or shall be deemed to control any other Development Participant. No Development Participant shall be the agent of or have a right or power to bind any other Development Participant without its express written consent. Section 16.6. Rights in Third Parties Created. Each of the Study Participants, in its capacity as a Study Participant, shall be a third party beneficiary of the provisions of Sections 2.1(b) with respect to the payment of Category I Study Expenses and Section 10.6 with respect to Category 2 Study Expenses. All payment obligations to the Study Participants under this Agreement shall survive the termination hereof; provided, however, this sentence shall not be interpreted to override any conditions to any such payment obligation that otherwise would apply under this Agreement. Each Study Participant, in its capacity as a Study Participant, IPA, in its capacity as the owner of Units I and 2, and the Department, as Unit 1 and 2 Operating Agent, shall be third party beneficiaries of each provision of this Agreement that states that it shall have any right, control, authority or entitlement or that provides for any party hereto to perform any duty or obligation for its benefit. Except as provided in this Section 16.6, this Agreement does 47 #182113 v9 not create any rights in or grant remedies to any third party as a beneficiary of this Agreement or create for the benefit of any third party any duty or standard of care by any covenant, obligation or undertaking established herein. Section 167. Arbitration; Attorneys Fees and Other Costs. (a) If a dispute arises between any of the Development Participants under this Agreement, all of the disputing Development Participants may submit the dispute to such form of arbitration as they may agree. (b) In any dispute between or among the Development Participants under this Agreement, each Development Participant shall pay its own attorney fees and costs. Section 16.8. Notices. (a) Any notice, demand or request provided for in this Agreement shall be in writing and shall be deemed properly served, given, or made if delivered in person or sent by registered or certified mail, postage prepaid, or by facsimile or other electronic transmission to the persons specified below: If to IPA, in its capacity as Development Manager: Intermountain Power Agency 10653 South River Front Parkway, Suite 120 South Jordan,Utah 84095 Attention: General Manager Telephone: (801) 938-1333 Facsimile: (801) 938-1330 If to any Development Participant, to such person and pursuant to such contact information as set forth for such Development Participant on Exhibit A attached hereto. (b) Any Development Participant may, at any time, by written notice to the other Development Participants, designate different persons or different addresses for giving of notices hereunder. Section 16.9. Headings Not Binding. The headings and captions in this Agreement are for convenience only and in no way define, limit or describe the scope or intent of any provisions or sections of this Agreement. Section 16.10. Severability. In the event that any provision of this Agreement shall be determined to be invalid or unenforceable in any respect, such determination shall not affect any other provision hereof,which shall remain in full force and effect. Section 16.11. Governing Law. This Agreement shall be interpreted, governed by and construed under the laws of the State of Utah, provided that the laws of the State under which a party hereto was created shall determine the authority of such party to execute and perform its obligations under this Agreement. 48 #182113 0 i �I I, Section 16.12. Independent Decision of DevelopmentI Participant. (i) Each Development Participant is acting for its own account, has been represented by attorneys selected by it in connection with the negotiation and execution of this ;Agreement, and has made its own independent decision to enter into this Agreement and as to whether this Agreement is appropriate or proper for it based upon its own judgment and upon advice from such attorneys and other advisers as it has deemed necessary, (ii) such Development Participant is not relying on any communication (written or oral) of any other Development Participant or the Development Manager as advice or as a recommendation to enter into this Agreement; it being understood that information and explanations related to the terms and conditions of this Agreement shall not be considered advice or a recommendation to enter into this Agreement, (iii) no communication (written or oral) received from any other Development Participant or the Development Manager shall be deemed to be an assurance or guarantee as to the expected results of this Agreement, (iv) such Development Participant is capable of assessing the merits of and understanding(on its own behalf or through independent professional advice), and understands and accepts, the terms, conditions and risks of this Agreement and it is also capable of assuming, and assumes, the risks of this Agreement, and (v) neither the Development Manager nor any Development Participant is acting as a fiduciary for or an adviser to such Development Participant in respect of this Agreement. Section 16.13. IPP Obligations of IPA. Each of the Development Participants recognizes that IPA as the owner of IPP and as a party to the IPP Agreements has obligations, duties and responsibilities to the Unit 1 and 2 Participants under the Unit 1 and 2 Power Sales Contracts and to the Unit 1 and 2 Operating Agent and the other parties to the IPP Agreements, and agrees that IPA's performance of such obligations, duties and responsibilities under the IPP Agreements and its observance of the rights and interests of the parties thereto and of all the other terms and provisions thereof shall not constitute or otherwise be deemed a conflict of interest or a breach or default under this Agreement. Section 16.14. Opinion of Counsel and Other Documentation. The execution and delivery of this Agreement, including any counterpart hereof, by each party to this Agreement, shall be accompanied by an opinion of counsel in form and substance reasonably satisfactory to the Development Manager together with such other evidences and documentation as the Development Manager shall reasonably request. Such opinion rendered on behalf of a party to this Agreement shall be for the benefit of and may be relied upon by each of the other parties to this Agreement, including, in the case of Development Participants, any entity thereafter becoming a Development Participant, and by third party beneficiaries under Section 16.6. Section 16.15. Execution in Counterparts. This Agreement may be executed in multiple counterparts, each of which shall constitute one and the same agreement. [Signature Page Follows] 49 #182113 0 i IN WITNESS WHEREOF, the Development . and the Development Manager have caused this Agreement to be executed by their respective authorized signatories, all as of the date first written above. INTERMOUNTAIN POWER AGENCY, as General By: Reed T. Searle, General Manager Address: 10653 South River Front Parkway Suite 120 South Jordan,Utah 84095 Attention: General Manager Telephone: (801) 938-1333 Facsimile: (801) 938-1330 UTAH ASSOCIATED MUNICIPAL POWER SYSTEMS By: W _ Print Name: D uglas O. Hunter Title: G neral_Manager Date: May 9,2005 Address: 2825 East Cottonwood Parkway, Suite 200 Salt Lake City, Utah 84121 Attention: General Manager Telephone: (801) 566-3938 Facsimile: (801) 561-2687 50 #182113 v9 SEMPRA GENERATION By: Print Name: Title: Date: Address: 101 Ash Street HQ14D San Diego, California 92101-3017 Attention: Telephone: Facsimile: CITY OF GLENDALE By: Print Name: Title: Date: Address: 141 North Glendale Avenue, Level 4 Glendale, California 91206 Attention: Telephone: Facsimile: PACIFICORP By: Print Name: Title: Date: Address: 201 South Main Street, Suite 2200 Salt Lake City, Utah 84111 Attention: Telephone: Facsimile: 51 #182113 0 �I EXHIBIT A DEVELOPMENT PARTICIPANTS AND DEVELOPMENT COSTS SHARES DEVELOPMENT PARTICIPANT DEVELOPMENT COSTS SHARE' INTERMOUNTAIN POWER AGENCY Address: 10653 South River Front Parkway, Suite 120 South Jordan,Utah 84095 Attention: General Manager Telephone: (801) 938-1333 Facsimile: (801) 938-1330 UTAH ASSOCIATED MUNICIPAL POWER SYSTEMS Address: 2825 East Cottonwood Parkway, 61.111% Suite 200 Salt Lake City, Utah 84121 Attention: General Manager Telephone: (801) 566-3938 Facsimile: (801) 561-2687 SEMPRA GENERATION Address: 101 Ash Street HQ14D San Diego, California 92101-3017 Attention: Telephone: Facsimile: CITY OF GLENDALE Address: 141 North Glendale Avenue, Level 4 Glendale, California 91206 Attention: Telephone: Facsimile: PACIFICORP Address: 201 South Main Street, Suite 2200 Salt Lake City,Utah 84111 Attention: Telephone: Facsimile: ' Development Cost Shares are subject to adjustment as provided in Article IX, Article XIII, Article XIV and Article XV. A-1 #182113 v9 EXHIBIT B INITIAL SCHEDULE Exhibit B consists of the attached 1 page. B-1 #182113 0 ?�—nsr,_r imL�—z�—zuae__�'—xi1 i—zwa zom" z'mo zmt L,yL.:i II-'�tTiTlTTli11l7T`Tf'T 1 � � _ INITIAL PROJECT DEFINITION =127WOMMNAM Present Amendrmda to Legislature Finalize Financial Prafornaa 11APR0251124APRUla New Itedocal B Thermal Acts be ENactive ceaatiDutucavott zUDAQewmtems on nat N01 Finaln Coordnaton Agr nt(Dw C=&VA) 0W Rev'iewRnal Staining Cornarr wPadoge alocrmA®tawwzA Finales Steering Conwrifts, Report 25rIW02e�17.W1a11 Draft Air PamN mccMirrini Distribute Stewing Corm se Paohage iwMAMOWEBM UAMPS Unft 3 Salw Pr OIFE - 19DM our Pemit Received .aOC111N I—Interim Developmmt CorrectW laocTa ir Defend Air Pemit 2toc *elopmori Commiteito 100% emems and CoMraete 23Aa1W6 2 Part ' adhw ganing be*project approval Famtaim Project *mseos Complete Brat Finarroit *am" FINALIZE DETAILED ENGINEERING o� CONSTRUCTION z+na p Set Stator *14OCf0a Boiler NYdn Complete *tauvaYto Steen Blew Complete *Ewis Turbine Rai *T/wm Camrercial Operadfan *mot Sheer 1 of 1 B-2 #182113 0 EXHIBIT C FORM OF CONFIDENTIALITY AGREEMENT INTERMOUNTAIN POWER PROJECT UNIT THREE CONFIDENTIALITY AGREEMENT DATED AS OF MAY 1,2005 AMONG THE DEVELOPMENT PARTICIPANTS SET FORTH IN EXHIBIT A TO THE DEVELOPMENT AGREEMENT AND INTERMOUNTAIN POWER AGENCY, AS DEVELOPMENT MANAGER C-1 #182113 0 it INTERMOUNTAIN POWER PROJEC UNIT THREE CONFIDENTIALITY AGREEMENT This Confidentiality Agreement, dated as of May 1, 2005 (this "Agreement'), among the Development Participants set forth in Exhibit A to the Development Agreement, as it may be modified from time to time in accordance with the Development Agreement (collectively, the `Development Participants'), and Intermountain Power Agency ("IPA" or the 'Development Manager"), in its capacity as Development Manager, is made with reference to the following: RECITALS The Development Participants and the Development Manager are parties to that certain Development Agreement, dated as of May 1, 2005 (the "Development Agreement), pursuant to which the Development Participants have formed the Development Committee to pursue the development of Unit 3 at the IPP site. Capitalized terms used but not defined in this Agreement shall have the meanings given to them in the Development Agreement. Section 2.1(f) of the Development Agreement provides that, concurrently with its execution and delivery of the Development Agreement, each Development Participant shall execute and deliver this Agreement. IPA is entering into this Agreement solely in its capacity as Development Manager under the Development Agreement and in not any other capacity. Therefore, in consideration of the terms of this Agreement and the mutual covenants and agreements contained in this Agreement, the Development Participants and the Development Manager agree as follows: Section 1. Definitions. In addition to the definitions of terms set forth elsewhere in this Agreement or in the Development Agreement, definitions for certain terms used in this Agreement are provided as follows: "Confidential Information"means any Development Participant Confidential Information or Unit 3 Confidential Information. `Development Participant Confidential Information" means information and materials owned or provided by and pertaining to a Development Participant that such Development Participant designates as confidential by describing such information or materials on Schedule I of this Agreement, as in effect from time to time, so long as (i) such Development Participant has made reasonable efforts to maintain the confidentiality of such information and materials, (ii) such information or materials are not public information through the action of the Development Participant, and (iii) such information or materials have not been obtained by any other Development Participant or the Development Manager from a source, other than such Development Participant, that is lawfully entitled to disclose the same. Any Development C-2 #182113 v9 Participant may, from time to time, revise Schedule 1 to include descriptions of additional information or materials owned or provided by it to any other Development Participant or the Development Manager. A Development Participant may revise Schedule 1 to remove the description of any information or materials owned or provided by it set forth therein. Upon the providing of each such revised Schedule 1 by a Development Participant to the Development Manager and each of the other Development Participants, such revised Schedule 1 shall replace, for all purposes of this Agreement,the Schedule 1 previously in effect. "Development Work Product" means all documents, materials, schematics, drawings, reports or other information on any type of Media generated, compiled or created, or caused to be generated, compiled or created, by the Development Committee in connection with the Development Work. "Governmental Entity" means any federal, state, interstate or local governmental entity, authority, agency, board, commission, council, county, municipality, department, district, division,political subdivision, court or officer. "Law" means any and all constitutional provisions, statutes, regulations, rules, ordinances, resolutions, orders and requirements, including, without limitation, the provisions of the Utah Government Records Access and Management Act and the regulations and requirements applicable to any public or investor owned utility or other Development Participant, including, without limitation regulations and requirements of the Utah Public Service Commission, of any Governmental Entity having jurisdiction over all or part of the Unit 3 Project or the activities or functions of any of the Parties to this Agreement. "Media" means all techniques, means and mechanisms for storing, preserving, memorializing or displaying information, including, without limitation, documents, notes, papers, magnetic tape, disks, ready access memory, recordings, photographs and other media of any type or nature. "Party" means each Person that is a party to this Agreement, from time to time. "Parties"means all such Persons. "Person" means a natural person, corporation, partnership, limited liability company, trust, association, Governmental Entity or any other person or entity. "Unit 3 Confidential Information" means all Development Work Product that the Development Committee or the Development Manager designates as confidential by describing such Development Work Product on Schedule 2 of this Agreement, as in effect from time to time, so long as: (i) the Development Committee has made reasonable efforts to maintain the confidentiality thereof, (ii) such information or materials are not public information and (iii) such information or materials have not been obtained independently by the Development Manager or any Development Participant from a source, other than the Development Committee, Development Manager or any Development Participant, that is lawfully entitled to disclose the same. The Development Committee or the Development Manager may from time to time revise Schedule 2 to include descriptions of Development Work Product or to remove descriptions of C-3 #182113 0 Development Work Product included in Schedule 2, and, upon the providing of each such revised Schedule 2 by the Development Committee or the Development Manager to each Development Participant such revised Schedule 2 shall replace, for all purposes of this Agreement, the Schedule 2 previously in effect. Section 2. Confidentiality. The Development Manager and the Development Participants will keep confidential and not use, reveal, provide or transfer to any third party any Confidential Information it obtains or has obtained except to Development Contractors as necessary for purposes of performing Development Work or to the extent that disclosure to a third party is required by Law. Prior to disclosing any Confidential Information to any Development Contractor, the Development Manager or the Development Committee shall cause the Development Contractor to execute, for the benefit of the Development Manager and each Development Participant that owns or provides such Confidential Information, a confidentiality agreement with respect to such Confidential Information in form and substance reasonably satisfactory to the Development Committee. Copies of each such confidentiality agreement shall be promptly provided by or on behalf of the Development Committee to the Development Manager and each Development Participant that owns or has provided such Confidential Information. Prior to disclosing Confidential Information to a third party where such disclosure is required by Law, the Development Manager or Development Participant, as applicable, subject to such requirement shall (A)promptly notify the Development Committee, in the case of Unit 3 Confidential Information, or, in the case of Development Participant Confidential Information, the Development Participant that owns or provided the same, in writing of the existence, terms and circumstances of such requirement so it may seek any appropriate protective order or waive compliance with the confidentiality terms of this Agreement; and (B) cooperate fully with the Development Committee, in the case of Unit 3 Confidential Information, or, in the case of Development Participant Confidential Information, the Development Participant that owns or provided the same, to seek whatever order or assurance is necessary to ensure that confidential treatment will be accorded to the Confidential Information. Section 3. Unauthorized Disclosure. If the Development Manager or any Development Participant, inadvertently or otherwise, makes an unauthorized disclosure of Confidential Information to a third party, the violating Development Manager or Development Participant shall immediately take reasonable action to recover the improperly disclosed Confidential Information, execute a retroactive protective agreement with the unauthorized third party if possible, and immediately notify the Development Committee, in the case of Unit 3 Confidential Information, or, in the case of Development Participant Confidential Information, the Development Participant that owns or provided the same, about the unauthorized disclosure and the corrective measures taken. The Parties agree that monetary damages are inadequate for any breach involving an unauthorized disclosure when the Development Committee, in the case of Unit 3 Confidential Information, or, in the case of Development Participant Confidential Information, the Development Participant that owns or provided the same, reasonably believe(s) it will suffer material harm from the unauthorized disclosure. If the Development Committee, in the case of Unit 3 Confidential Information, or, in the case of Development Participant Confidential Information, the Development Participant that owns or provided the same, reasonably believe(s) that it will suffer material harm from the unauthorized disclosure, and the corrective measures taken by the violating the Development Manager or Development C-4 #182113 0 I� I I Participant are inadequate to mitigate this harm, the Parties agree that the Development Committee, in the case of Unit 3 Confidential Information, or, in the case of Development Participant Confidential Information, the Devclopment Participant that owns or provided the same, shall be entitled to prompt injunctive relief. Thlp Parties' other legal and equitable remedies and defenses remain unchanged by this provision except that each Party specifically agrees that any damages shall be limited to direct actual damages and in no event shall such damages include any indirect, consequential, or punitive damages. Section 4. Limitation of Liability. Except as provided in the following sentence, no Party hereto nor the Unit 1 and 2 Operating Agent, nor IPSC,nor any of their respective officers, employees or agents shall be liable for damages to any Party for any act or failure to act, whether by negligence or otherwise, arising out of or pertaining to this Agreement. The prior sentence shall apply to all types of claims or actions including, but not limited to, claims or actions based on contract, tort, patent or trademark, except that such sentence shall not relieve any Party or its officers, employees or agents from liability for direct damages resulting from acts of intentional wrongdoing or acts of gross negligence or Willful Action. For purposes of this Section 4, direct damages shall include, in addition to any other elements of damage included in such term under applicable Law, any profit received by a Party as a result of its intentional wrongdoing gross negligence, but otherwise shall not include loss of profits or revenues or any other indirect, special, incidental or consequential damages. Section 5. Insurance. The provisions of Section 4 shall not be construed so as to relieve any insurer of its obligation to pay any insurance proceeds in accordance with the terms and conditions of any insurance policy. Section 6. Limitation of Development Manager Liability. Notwithstanding anything to the contrary in this Agreement, no assets or revenues of the Development Manager, other than the payments made to the Development Manager with respect to Development Costs Shares, shall be subject to any claim or available to satisfy any liability that the Development Manager may have under this Agreement to any Development Participant or any third party. Recourse for any liability of any type or nature of the Development Manager to any Development Participant or third party shall be limited to funds held by the Development Manager that are derived from payments made to it by Development Participants with respect to their Development Costs Shares. Each Development Participant hereby waives and releases the Development Manager, and each of its members, directors, officers, employees or affiliates, from and against, any claim, cause of action, statutory or common law right of recovery, or any other legal or equitable duty, obligation, liability or responsibility of any type or nature whatsoever to the extent arising out of, or resulting from any act, negligence or omission under or in connection with this Agreement except claims that are limited to payments actually received by the Development Manager with respect to Development Costs Shares that have not been expended by the Development Manager for any purpose permitted under the Development Agreement, have not been committed to any such purpose or are not otherwise required for the Development Manager to meet any contractual or other obligation or liability it has incurred in its role as Development Manager. C-5 i1182113 v9 Section 7. Effective Date and Termination. This Agreement shall become effective concurrently with the Development Agreement becoming effective. Section 8. Amendments. This Agreement may be amended only by a written amendment signed by all of the Parties. Section 9. Entire Agreement. This Agreement, including, without limitation, the portions of the Development Agreement incorporated or referenced herein, contains the entire understanding of the Parties with respect to the subject matter hereof and supersedes any and all prior agreements,understandings and negotiations with respect to such subject matter. Section 10. Relationship of Parties. The covenants, obligations and liabilities of the Parties under this Agreement are several and not joint or collective and nothing herein contained shall ever be construed to create an association, joint venture, trust, partnership or other legal entity or to impose a trust or partnership covenant, obligation of liability on or with regard to any one or more of the Parties. Each Party shall be individually responsible for its own covenants, obligations and liabilities under this Agreement. No Party shall be under the control of or shall be deemed to control any other Party. Except as otherwise provided in this Agreement, no Party shall be the agent of or have a right or power to bind any other Party without its express written consent. Section IL Arbitration; Attorneys Fees and Other Costs. If a dispute arises between any of the Parties under this Agreement, all of the disputing Parties may submit the dispute to such form of arbitration as they may agree. If the Parties to the dispute do not agree to arbitrate the matter, then each Party shall have all rights and remedies available to it at law or in equity and may enforce such rights and remedies in any court of competent jurisdiction. In any dispute between or among the Parties under this Agreement, each Party shall pay its own attorney fees and costs. Section 12. Notices. Any notice, demand or request provided for in this Agreement shall be in writing and shall be deemed properly served, given, or made if delivered in accordance with Section 16.8 of the Development Agreement, Section 13. Headings Not Binding. The headings and captions in this Agreement are for convenience only and in no way define, limit or describe the scope or intent of any provisions or sections of this Agreement. Section 14. Severability. If any provision of this Agreement shall be determined to be invalid or unenforceable in any respect, such determination shall not affect any other provision hereof,which shall remain in full force and effect. Section 15. Governing Law. This Agreement shall be interpreted, governed by and construed under the laws of the State of Utah, provided that the laws of the State under which a Party was created, shall determine the authority of such Party to execute and perform its obligations under this Agreement. C-6 #182113 v9 II Section 16. Independent Decision of Parties. I(i) Each Party is acting for its own account, has been represented by attorneys selected by it in connection with the negotiation and execution of this Agreement, and has made its own independent decision to enter into this Agreement and as to whether this Agreement is appropriate or proper for it based upon its own judgment and upon advice from such attorneys and other advisers as it has deemed necessary, (ii) such Party is not relying on any communication (written or oral) of any other Party as advice or as a recommendation to enter into this Agreement; it being understood that information and explanations related to the terms and conditions of this Agreement shall not be considered advice or a recommendation to enter into this Agreement, (iii) no communication (written or oral) received by a Party from any other Party shall be deemed to be an assurance or guarantee as to the expected results of this Agreement, (iv) such Party is capable of assessing the merits of and understanding (on its own behalf or through independent professional advice), and understands and accepts, the terms, conditions and risks of this Agreement and it is also capable of assuming, and assumes, the risks of this Agreement, and (v) none of the Parties is acting as a fiduciary for or an adviser to any other Party in respect of this Agreement. Section 17. IPP Agreements. Nothing in this Agreement shall be construed as changing, waiving or otherwise affecting any rights or obligations of any party to any of the IPP Agreements. Each of the Development Participants recognizes that IPA as the owner of IPP and as a party to the IPP Agreements has obligations, duties and responsibilities to the Unit 1 and 2 Participants under the Unit 1 and 2 Power Sales Contracts and to the Unit 1 and 2 Operating Agent and the other parties to the IPP Agreements, and agrees that IPA's performance of such obligations, duties and responsibilities under the IPP Agreements and its observance of the rights and interests of the parties thereto and of all the other terms and provisions thereof shall not constitute or otherwise be deemed a conflict of interest or a breach or default under this Agreement. Section 18. Execution in Counterparts. This Agreement may be executed in multiple counterparts (by original or facsimile signature), each of which shall constitute one and the same agreement. [Signature Page Follows] C-7 #182113 M i II In Witness Whereof, the Parties have caused thi� Agreement to be executed by their respective authorized signatories, all as of the date first writ i ten above. INTERMOUNTAIN POWER AGENCY, as Development Manager By: Reed T. Searle, General Manager Address: 10653 South River Front Parkway Suite 120 South Jordan,Utah 84095 Attention: General Manager Telephone: (801) 938-1333 Facsimile: (801) 938-1330 UTAH ASSOCIATED MUNICIPAL POWER SYSTEMS By: Print Name: Title: Date: Address: 2825 East Cottonwood Parkway, Suite 200 Salt Lake City, Utah 84121 Attention: Telephone: (801) 566-3938 Facsimile: (801) 561-2687 C-8 M782113 v9 SEMPRA GENERATION By: Print Name: Title: Date: Address: 101 Ash Street HQ14D San Diego, California 92101-3017 Attention: Telephone: Facsimile: CITY OF GLENDALE By: Print Name: Title: Date: Address: 141 North Glendale Avenue, Level 4 Glendale, California 91206 Attention: Telephone: Facsimile: PACIFICORP By: Print Name: Title: Date: Address: 201 South Main Street, Suite 2200 Salt Lake City,Utah 84111 Attention: Telephone: Facsimile: C-9 k 182113 v9 SCHEDULEI SCHEDULE OF STEERING COMMITTEE WORK COSTS Category I Number Amount Descri lion C1-001 20,000.00 Develop RFP for air permitting work-Paid to R.W.Beck CI-002 34,700.00 Preliminary conceptual design-Paid to Intermountain Power Service Corporation Cl-003 294,318.49 Engineering,operations and maintenance support-Paid to Intermountain Power Service Corporation "C1-004 63,542.39 Technical and engineering air quality support-Paid to Intermountain Power Service Corporation C1-005 28,306.25 Legal support-Paid to Hoime Roberts&Owen Cl-006 20,000.00 Estimate value for the common facilities.-Paid to R.W.Beck C1-007 23,434.18 Engineering support related to scheduling,participant share allocation,legal issues,project management,etc.-Paid to R.W.Beck Cl-008 65,681.23 Scheduling and cost monitoring services.-Paid to KDG CI-009 29,008,24 Legal Services-Paid to Hoime Roberts&Owen `C1-010 25,000.00 Engineering Services related to Air Quality Permitting.-Paid to R.W.Beds 'C1-011 210,000.00 Air Quality permitting and consulting services-Paid to CH2M HILL C1-012.1 1,268.63 Facilities and meals for Steering Committee Meetings-Paid to LeBceuf,Lamb,Greene&MacRae Ct-012.10 1,693.85 Facilities and meals for Steering Committee Meetings-Paid to Intermountain Power Agency C1-012.11 2,321,01 Facilities and meals for Steering Committee Meetings-Paid to Intermountain Power Agency C1-012.12 191.91 Facilities and meals for Steering Committee Meetings-Paid to Hoime Roberts&Owen C1-012.2 2,373.44 Facilities and meals for Steering Committee Meetings-Paid to Intermountain Power Agency CI-012.3 105.77 Facilities and meals for Steering Committee Meetings-Paid to Lance Lee C1.012.4 255.51 Facilities and meals for Steering Committee Meetings-Paid to Elizabeth's Custom Catering C1-012.5 55.56 Facilities and meals for Steering Committee Meetings-Paid to Hoime Roberts&Owen C1-012.6 113.30 Facilities and meals for Steering Committee Meetings-Paid to Mary Bridge C1-012.7 743.19 Facilities and meals for Steering Committee Meetings-Paid to Little America C1-012.8 2T95 Facilities and meals for Steering Committee Meetings-Paid to Hoime Roberts&Owen C1-012.9 849.88 Facilities and meals for Steering Committee Meetings-Paid to LeBceuf,Lamb,Greene&MacRae CI-013 61,269.00 Legal Fees-Paid to LAMPS CI-014 4,798.61 Increase CI-006$5,000-Paid to R.W.Beds C1-015 18,842.42 Moderator services to establish value of common facilities.-Paid to R,W.Beck CI-016 22,730.51 Support Technical Design Issues through June 2002-Paid to R.W.Beck C1-017 298,000.00 Engineering and support Services-Paid to Sargent&Lundy,LLC CI-019 41,303.93 Reimburse IPA for Hoime Roberts and Owen billings December 01 and January 02-Paid to Intermountain Power Agency C1-020 120,000.00 Management consulting services-Paid to R.W.Beck *CI-021 110,000.00 $110,000 addition to C1-011 -Paid to CH2M HILL Cl-022 68,167.41 Legal Fees-Paid to Los Angeles Department of Water and Power SCHEDULE I-I #1s2113 v9 CI-024 46,960.50 Reimburse LACWP for O'Meiveny&Meyers Cillings for February 02 through April 02-Paid to Los Angeles Department of Water and Power CI-025 71,899,50 Reimburse IPA for Holme Roberts&Owen billing February 02 through June 02-Paid to Intermountain Power Agency , C1-026 96,561.46 Legal fees-Paid to LAMPS *CI-027 50,000.00 Engineering services supporting air permitting.-Paid to Sargent&Lundy,LLC C1-028 37,660.07 Reimburse IPA for Orrick Herrington billings through June 02-Paid to Intermountain Power Agency *C1-029 75,000.00 Increase of APE CI-011.and Cl-021-Paid to CH2M HILL CI-030 73,414.24 Reimburse IPA for Holme Roberts&Owen billings July 02 through November 02-Paid to Intermountain Power Agency C1-031 66,181.59 Reimburse UAMPS for Chapman and Cutler billings March 02 through August 02-Paid to UAMPS *CI-032 100,000.00 Process IPSC Unit 3 NOI Permit-Paid to Utah Department of Air Quality Cl-033 100,000.00 Consultations services from January through September 2003-Paid to R.W.Bede *CI-034 55,000.00 Increase of the authorized amount to$450,000. (See CI-011,C1-021 and C1-029)-Paid to CH2M HILL C1-035 35,279.45 Orrick Herrington Legal Fees through September 2002-Paid to Intermountain Power Agency C1-036 20,000.00 Engineering services in support of air permitting process-Paid to Sargent&Lundy,LLC *CI-037 1,170.00 Perform Stack Test on Unit 1 or 2 to determine H2SO4 emissions.-Paid to intermountain Power Service Corporation CI-038 1,562.53 Facilities and meals for Steering Committee Meetings-Paid to Non-Specific Vendor C1-038A 191.02 Facilities and meals for Steering Committee Meetings-Paid to Holme Roberts&Owen C1-038.2 1,778.37 Facilities and meals for Steering Committee Meetings-Paid to Intermountain Power Agency C1-038.3 3,968.08 Facilities and meals for Steering Committee Meetings-Paid to Intermountain Power Agency *Cl-039 105,000.00 Engineering services in support of Unit 3 air permitting process.-Paid to Sargent&Lundy,LLC *C1-040 31,500.00 Engineering services in support of Unit 3 air permitting process.-Paid to Sargent&Lundy,LLC CI-041 12,707.35 Reimbursement of Orrick Herrington legal services through December 2002-Paid to Intermountain Power Agency C1-042 43,503.22 Reimburse legal fees for Holme Roberts&Owen December 02 through February 03-Paid to Intermountain Power Agency Cl-043 30,468A4 Subscription Materials-Paid to Brian Kearney Incorporated CI-044 112,455.00 Reimburse UAMPS for Legal fees through February 2003.-Paid to LAMPS *C1-045 20,000.00 Engineering services in support of Unit 3 air permitting.-Paid to Sargent&Lundy,LLC *C1-046 70,000.00 Air modeling services.-Paid to CH2M HILL *C1-048 73,101.67 Miscellaneous consulting services-Paid to R.W.Beck *Cl-049 120,000.00 -Paid to CH2M HILL *C1-050 40,000.00 Engineering services in support of air permitting.-Paid to Sargent&Lundy,LLC GI-051 40,994.62 Reimburse for legal expenses provided by Vancott and Chapman through April 2003-Paid to LAMPS C1-052 100,795.15 Legal fees from Helms Roberts&Owen Mar 03 through Jun 03-Paid to Intermountain Power Agency C7-053 4,519.22 Legal expenses paid to Orrick Herrington&Sutdiffe-Paid to Intermountain Power Agency CI-054 12,377.47 Consulting services related to media interfacing and project advocacy materials-Paid to JW Inc. C1-055 10,000.00 WECC transmission analysis-Paid to R.W.Beck C1-056 5,538.63 Facilities and meals for Steering Committee Meetings-Paid to Non-Specific Vendor C1-057 1,162.00 Consulting services-Paid to Rex Stanworth C1-058 7,090.83 Reimburse for production of fact sheets and kit covers-Paid to Intermountain Power Agency SCHEDULE 1-2 N182113 v9 i I i C1-059 6,500.00 -Paid to Sargent&Lundy,LLC *Cl-060 120,000.00 Engineering services for air permitting-Paid to C�2M HILL CI-061 49,906.47 Consulting Services-Paid to R.W.Beck Cl-062 88,116.03 HRO Legal Fees for July through December 2003-Paid to Intermountain Power Agency C1-063 16,467.62 Production of Printed Materials-Paid to Intermountain Power Agency C1-064 19,649.95 Reimburse legal expenses for Orrick Herrington for Jul 03 through Oct 03-Paid to Intermountain Power Agency "C1-065 40,000.00 Engineering Services for Air Permit-Paid to Sargent&Lundy,LLC 'C1-066 60,000.00 Engineering Services Supporting Air Permit-Paid to CH2M HILL C1-067 (7,090.83)Correction for duplicate charges on C1-058 and C1-063-Paid to Intermountain Power Agency C1-068 58,729.05 Reimburse for Legal and Consulting Expenses Through December 2003-Paid to UAMPS C1-069 53,834.98 Reimbursement of legal fees for January through March 2004-Paid to UAMPS 'C1-070 27,091.68 Engineering services in support of air permitting process-Paid to CH2M HILL 'C1-071 5,554.82 Engineering services in support of Unit 3 air permitting process-Paid to Sargent&Lundy,LLC C1-072 280,923.87 Reimburse HRO legal expenses for January through June 2004-Paid to Intermountain Power Agency CI.073 61,978.83 Reimburse legal fees-Paid to LAMPS C1-074 32,920.00 Reimburse for legal and other category one expenses-Paid to Los Angeles Department of Water and Power C1-076 7,329.52 Reimbursement of various expenditures-Paid to Intermountain Power Agency 01-077 181.927.13 Reimbursement of legal fees July 2004 through October 2004-Paid to Intermountain Power Agency C1-078 17,787.95 Reimburse legal fees for Van Cott Bagley Cornwall McCarthy for August 2004 Services.-Paid to UAMPS C1-079 36,112.25 Reimburse legal fees for Van Cott Bagley Cornwell McCarthy for September-October 2004-Paid to UAMPS "C1.080 33,005.00 Additional funds to AFE C1-032-Paid to Utah Department of Air Quality 4,437,687.39 Total Development Work Costs shared at 25160 proportionate share Cl-075 300,000.00 Legal support for air permit appeals shared at 25/35 billing percentage 717 687 3- Total Development Work Costs 1,734,965.56 Subtotal for approval order activities(Air Permit Incurred Costs) Fees paid for Dennis Armen 6,562.50 On AFE Ct-025 24,587.50 On AFE C1-030 24,800.00 On AFE CI-042 60,000.00 On AFE 01-052 41.169.25 On AFE C1-062 253,864.16 On AFE Cl-072 141.223.79 On AFE C1-077 67 172,5 Total for approval order activities(Air Permit Incurred Costs) 'Expenses exclusively for approval order activities. SCHEDULE 1-3 #182113 v9 SCHEDULE2 SCHEDULE OF STEERING COMMITTEE WORK COSTS Category 2 Number Amount Description Intermountain Power Agency 11-001 224,386.66 Legal support 11-002 279,750.00 Meteorological equipment and monitoring 11-003 130,000.00 Preliminary feasibility study 11-004 41,524.04 Legal expenses for October 01 through January 02 11-005 53,549.25 Legal expenses for February 02 through June 02 11-006 2,348.04 Legal Fees paid to Orrick Herrington 11-007 51,417.50 Legal expenses for July 02 through November 02 11_008 46,556.92 Legal fees for Holme Roberts&Owen December 02 through February 03 11-010 62,254.21 HRO Legal fees for Mar 03 through Jun 03 11-011 13,022.61 Legal expenses paid to Orrick Herrington&Sutcliffe 11-012 167,317.80 HRO Legal Fees for July through December 2003 I1-013 23,962.61 Orrick Herrington Legal expenses for July through October 2003 11-014 71,877.23 Reimburse HRO legal expenses for January through June 2004 11-015 111,197.34 Reimbursement of HBO legal fees July through October 2004 Total 1,278,16421 DAMPS U1-001 22,123.00 Legal Fees U1-002 51,141.09 Reimbursement of legal fees and other costs. Ul-003 2,030.00 Reimbursement of legal fees Ul-004 9,170.00 Vancott and Chapman through April 2003 Ul-005 1,900.58 Reimbursement of legal fees January,February 2004 Ul-006 1,194.38 Legal Fees U1.007 4,623.95 Legal fees for Van Cott Bagley Comwell McCarthy for August 2004 Services Total 92,183.00 Grand Total 1,370,347.21 SCHEDULE 2-I #182113 M i I I INTERMOUNTAIN POWER PROJECT UNIT THREE CONFIDENTIALITY AGREEMENT DATED AS OF MAY 1,2005 AMONG THE DEVELOPMENT PARTICIPANTS SET FORTH IN EXHIBIT A TO THE DEVELOPMENT AGREEMENT AND INTERMOUNTAIN POWER AGENCY, AS DEVELOPMENT MANAGER #l86850 Q INTERMOUNTAIN POWER PROJECT UNIT THREE CONFIDENTIALITY AGREEMENT This Confidentiality Agreement, dated as of May 1, 2005 (this "Agreement'), among the Development Participants set forth in Exhibit A to the Development Agreement, as it may be modified from time to time in accordance with the Development Agreement (collectively, the "Development Participants'), and Intermountain Power Agency ("IPA" or the "Development Manager"), in its capacity as Development Manager, is made with reference to the following: RECITALS The Development Participants and the Development Manager are parties to that certain Development Agreement, dated as of May 1, 2005 (the "Development Agreement', pursuant to which the Development Participants have formed the Development Committee to pursue the development of Unit 3 at the IPP site. Capitalized terms used but not defined in this Agreement shall have the meanings given to them in the Development Agreement. Section 2.1(f) of the Development Agreement provides that, concurrently with its execution and delivery of the Development Agreement, each Development Participant shall execute and deliver this Agreement. IPA is entering into this Agreement solely in its capacity as Development Manager under the Development Agreement and in not any other capacity. Therefore, in consideration of the terms of this Agreement and the mutual covenants and agreements contained in this Agreement, the Development Participants and the Development Manager agree as follows: Section 1. Definitions. In addition to the definitions of terms set forth elsewhere in this Agreement or in the Development Agreement, definitions for certain terms used in this Agreement are provided as follows: "Confidential Information"means any Development Participant Confidential Information or Unit 3 Confidential Information. "Development Participant Confidential Information"means information and materials owned or provided by and pertaining to a Development Participant that such Development Participant designates as confidential by describing such information or materials on Schedule 1 of this Agreement, as in effect from time to time, so long as (i) such Development Participant has made reasonable efforts to maintain the confidentiality of such information and materials, (ii) such information or materials are not public information through the action of the Development Participant, and(iii) such information or materials have not been obtained by any other Development Participant or the Development Manager from a source, other than such Development Participant, that is lawfully entitled to disclose the same. Any Development #186850 dt Participant may, from time to time, revise Schedule 1 to include descriptions of additional information or materials owned or provided by it to any other Development Participant or the Development Manager. A Development Participant may revise Schedule I to remove the description of any information or materials owned or provided by it set forth therein. Upon the providing of each such revised Schedule 1 by a Development Participant to the Development Manager and each of the other Development Participants, such revised Schedule 1 shall replace, for all purposes of this Agreement, the Schedule I previously in effect. "Development Work Product"means all documents,materials, schematics, drawings, reports or other information on any type of Media generated, compiled or created, or caused to be generated, compiled or created, by the Development Committee in connection with the Development Work. "Governmental Entity"means any federal, state,interstate or local governmental entity, authority, agency, board, commission,council, county, municipality, department,district, division,political subdivision, court or officer. "Law"means any and all constitutional provisions, statutes, regulations,rules, ordinances, resolutions, orders and requirements, including, without limitation, the provisions of the Utah Government Records Access and Management Act and the regulations and requirements applicable to any public or investor owned utility or other Development Participant, including, without limitation regulations and requirements of the Utah Public Service Commission, of any Governmental Entity having jurisdiction over all or part of the Unit 3 Project or the activities or functions of any of the Parties to this Agreement. "Media"means all techniques,means and mechanisms for storing,preserving, memorializing or displaying information, including, without limitation, documents,notes, papers, magnetic tape, disks, ready access memory, recordings,photographs and other media of any type or nature. "Party"means each Person that is a party to this Agreement, from time to time. "Parties"means all such Persons. "Person"means a natural person, corporation,partnership, limited liability company, trust, association, Governmental Entity or any other person or entity. "Unit 3 Confidential Information"means all Development Work Product that the Development Committee or the Development Manager designates as confidential by describing such Development Work Product on Schedule 2 of this Agreement, as in effect from time to time, so long as: (i)the Development Committee has made reasonable efforts to maintain the confidentiality thereof, (ii) such information or materials are not public information and (iii) such information or materials have not been obtained independently by the Development Manager or any Development Participant from a source, other than the Development Committee, Development Manager or any Development Participant, that is lawfully entitled to disclose the same. The Development Committee or the Development Manager may from time to time revise Schedule 2 to include descriptions of Development Work Product or to remove descriptions of Development Work Product included in Schedule 2, and, upon the providing of each such 3 #186850 Q revised Schedule 2 by the Development Committee or the Development Manager to each Development Participant such revised Schedule 2 shall replace, for all purposes of this Agreement, the Schedule 2 previously in effect. Section 2. Confidentiality. The Development Manager and the Development Participants will keep confidential and not use, reveal,provide or transfer to any third party any Confidential Information it obtains or has obtained except to Development Contractors as necessary for purposes of performing Development Work or to the extent that disclosure to a third party is required by Law. Prior to disclosing any Confidential Information to any Development Contractor,the Development Manager or the Development Committee shall cause the Development Contractor to execute, for the benefit of the Development Manager and each Development Participant that owns or provides such Confidential Information, a confidentiality agreement with respect to such Confidential Information in form and substance reasonably satisfactory to the Development Committee. Copies of each such confidentiality agreement shall be promptly provided by or on behalf of the Development Committee to the Development Manager and each Development Participant that owns or has provided such Confidential Information. Prior to disclosing Confidential Information to a third party where such disclosure is required by Law, the Development Manager or Development Participant, as applicable, subject to such requirement shall(A)promptly notify the Development Committee, in the case of Unit 3 Confidential Information, or,in the case of Development Participant Confidential Information, the Development Participant that owns or provided the same, in writing of the existence,terms and circumstances of such requirement so it may seek any appropriate protective order or waive compliance with the confidentiality terms of this Agreement; and 03)cooperate fully with the Development Committee,in the case of Unit 3 Confidential Information, or, in the case of Development Participant Confidential Information, the Development Participant that owns or provided the same,to seek whatever order or assurance is necessary to ensure that confidential treatment will be accorded to the Confidential Information. Section 3. Unauthorized Disclosure. If the Development Manager or any Development Participant, inadvertently or otherwise,makes an unauthorized disclosure of Confidential Information to a third party,the violating Development Manager or Development Participant shall immediately take reasonable action to recover the improperly disclosed Confidential Information, execute a retroactive protective agreement with the unauthorized third party if possible, and immediately notify the Development Committee, in the case of Unit 3 Confidential Information, or, in the case of Development Participant Confidential Information, the Development Participant that owns or provided the same, about the unauthorized disclosure and the corrective measures taken. The Parties agree that monetary damages are inadequate for any breach involving an unauthorized disclosure when the Development Committee, in the case of Unit 3 Confidential Information, or, in the case of Development Participant Confidential Information,the Development Participant that owns or provided the same,reasonably believe(s) it will suffer material harm from the unauthorized disclosure. If the Development Committee, in the case of Unit 3 Confidential Information,or, in the case of Development Participant Confidential Information, the Development Participant that owns or provided the same, reasonably believe(s) that it will suffer material harm from the unauthorized disclosure, and the corrective measures taken by the violating the Development Manager or Development Participant are inadequate to mitigate this harm, the Parties agree that the Development 4 #186M V2 i Committee, in the case of Unit 3 Confidential Information,or, in the case of Development Participant Confidential Information,the Development Participant that owns or provided the same, shall be entitled to prompt injunctive relief. The Parties' other legal and equitable remedies and defenses remain unchanged by this provision except that each Party specifically agrees that any damages shall be limited to direct actual damages and in no event shall such damages include any indirect, consequential, or punitive damages. Section 4. Limitation ofLiability. Except as provided in the following sentence, no Party hereto nor the Unit 1 and 2 Operating Agent, nor IPSC, nor any of their respective officers, employees or agents shall be liable for damages to any Party for any act or failure to act, whether by negligence or otherwise, arising out of or pertaining to this Agreement. The prior sentence shall apply to all types of claims or actions including, but not limited to, claims or actions based on contract, tort,patent or trademark, except that such sentence shall not relieve any Party or its officers, employees or agents from liability for direct damages resulting from acts of intentional wrongdoing or acts of gross negligence or Willful Action. For purposes of this Section 4, direct damages shall include, in addition to any other elements of damage included in such term under applicable Law, any profit received by a Party as a result of its intentional wrongdoing gross negligence,but otherwise shall not include loss of profits or revenues or any other indirect, special, incidental or consequential damages. Section 5. Insurance. The provisions of Section 4 shall not be construed so as to relieve any insurer of its obligation to pay any insurance proceeds in accordance with the terms and conditions of any insurance policy. Section 6. Limitation of Development Manager Liability. Notwithstanding anything to the contrary in this Agreement, no assets or revenues of the Development Manager, other than the payments made to the Development Manager with respect to Development Costs Shares, shall be subject to any claim or available to satisfy any liability that the Development Manager may have under this Agreement to any Development Participant or any third party. Recourse for any liability of any type or nature of the Development Manager to any Development Participant or third party shall be limited to funds held by the Development Manager that are derived from payments made to it by Development Participants with respect to their Development Costs Shares. Each Development Participant hereby waives and releases the Development Manager, and each of its members, directors, officers, employees or affiliates, from and against, any claim, cause of action, statutory or common law right of recovery, or any other legal or equitable duty, obligation, liability or responsibility of any type or nature whatsoever to the extent arising out of, or resulting from any act, negligence or omission under or in connection with this Agreement except claims that are limited to payments actually received by the Development Manager with respect to Development Costs Shares that have not been expended by the Development Manager for any purpose permitted under the Development Agreement, have not been committed to any such purpose or are not otherwise required for the Development Manager to meet any contractual or other obligation or liability it has incurred in its role as Development Manager. Section 7. Effective Date and Termination. This Agreement shall become effective concurrently with the Development Agreement becoming effective. 5 #186850 Q Section 8. Amendments. This Agreement may be amended only by a written amendment signed by all of the Parties. Section 9. Entire Agreement. This Agreement, including,without limitation, the portions of the Development Agreement incorporated or referenced herein, contains the entire understanding of the Parties with respect to the subject matter hereof and supersedes any and all prior agreements, understandings and negotiations with respect to such subject matter. Section 10. Relationship of Parties. The covenants, obligations and liabilities of the Parties under this Agreement are several and not joint or collective and nothing herein contained shall ever be construed to create an association,joint venture, trust,partnership or other legal entity or to impose a trust or partnership covenant, obligation of liability on or with regard to any one or more of the Parties. Each Party shall be individually responsible for its own covenants, obligations and liabilities under this Agreement. No Party shall be under the control of or shall be deemed to control any other Party. Except as otherwise provided in this Agreement, no Party shall be the agent of or have a right or power to bind any other Party without its express written consent. Section 11. Arbitration;Attorneys Fees and Other Costs. If a dispute arises between any of the Parties under this Agreement, all of the disputing Parties may submit the dispute to such form of arbitration as they may agree. If the Parties to the dispute do not agree to arbitrate the matter, then each Party shall have all rights and remedies available to it at law or in equity and may enforce such rights and remedies in any court of competent jurisdiction. h1 any dispute between or among the Parties under this Agreement, each Party shall pay its own attorney fees and costs. Section 12. Notices. Any notice,demand or request provided for in this Agreement shall be in writing and shall be deemed properly served, given, or made if delivered in accordance with Section 16.8 of the Development Agreement. Section 13. Headings Not Binding. The headings and captions in this Agreement are for convenience only and in no way define, limit or describe the scope or intent of any provisions or sections of this Agreement. Section 14. Severability. If any provision of this Agreement shall be determined to be invalid or unenforceable in any respect, such determination shall not affect any other provision hereof,which shall remain in full force and effect. Section 15. Governing Law. This Agreement shall be interpreted, governed by and construed under the laws of the State of Utah,provided that the laws of the State under which a Party was created, shall determine the authority of such Party to execute and perform its obligations under this Agreement. Section 16. Independent Decision of Parties. (i) Each Party is acting for its own account,has been represented by attorneys selected by it in connection with the negotiation and execution of this Agreement, and has made its own independent decision to enter into this Agreement and as to whether this Agreement is appropriate or proper for it based upon its own 6 #186850 v2 judgment and upon advice from such attorneys and other advisers as it has deemed necessary, ii) such Party is not relying on any communication (written or oral) of any other Party as advice or as a recommendation to enter into this Agreement; it being understood that information and explanations related to the terms and conditions of this Agreement shall not be considered advice or a recommendation to enter into this Agreement, (iii) no communication(written or oral) received by a Party from any other Party shall be deemed to be an assurance or guarantee as to the expected results of this Agreement, (iv) such Party is capable of assessing the merits of and understanding (on its own behalf or through independent professional advice), and understands and accepts, the terms, conditions and risks of this Agreement and it is also capable of assuming, and assumes, the risks of this Agreement, and (v) none of the Parties is acting as a fiduciary for or an adviser to any other Party in respect of this Agreement. Section 17. IPPAgreements. Nothing in this Agreement shall be construed as changing, waiving or otherwise affecting any rights or obligations of any party to any of the IPP Agreements. Each of the Development Participants recognizes that IPA as the owner of IPP and as a party to the IPP Agreements has obligations, duties and responsibilities to the Unit 1 and 2 Participants under the Unit I and 2 Power Sales Contracts and to the Unit 1 and 2 Operating Agent and the other parties to the IPP Agreements, and agrees that IPA's performance of such obligations, duties and responsibilities under the IPP Agreements and its observance of the rights and interests of the parties thereto and of all the other terms and provisions thereof shall not constitute or otherwise be deemed a conflict of interest or a breach or default under this Agreement. Section 18. Execution in Counterparts. This Agreement may be executed in multiple counterparts (by original or facsimile signature), each of which shall constitute one and the same agreement. [Signature Page Follows] 7 #186850 Y2 I i (a) In Witness Whereof, the Parties have,caused this Agreement to be executed by their respective authorized signatories, all as of the date first written above. INTERMOUNTAIN POWER AGENCY, as Development Manager By: Reed T. Searle, General Manager Address: 10653 South River Front Parkway Suite 120 South Jordan,Utah 84095 Attention: General Manager Telephone: (801) 938-1333 Facsimile: (801) 938-1330 UTAH ASSOCIATED MUNICIPAL POWER SYSTEMS By: Print Name: Don las O.Hunter Title: Gee al Mana er Date: May 4 2005 Address: 2825 East Cottonwood Parkway, Suite 200 Salt Lake City,Utah 84121 Attention: General Manager Telephone: (801) 566-3938 Facsimile: (801) 561-2687 8 #186850 v2 SEMPRA GENERATION By: Print Name: Title: Date: Address: 101 Ash Street HQ14D San Diego, California 92101-3017 Attention: Telephone: Facsimile: CITY OF GLENDALE By: Print Name: Title: Date: Address: 141 North Glendale Avenue, Level 4 Glendale, California 91206 Attention: Telephone: Facsimile: PACIFICORP By: Print Name: Title: Date: Address: 201 South Main Street, Suite 2200 Salt Lake City, Utah 84111 Attention: Telephone: Facsimile: 9 #186850 V1 I I I I