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HomeMy WebLinkAboutAgenda Report - September 21, 1983 (41)1 Y ' 400 v COU!ry C IR" MEET I1�G i . - TTY SEPTEMBER 21, 1'983 al CRDINANO Ordinance No. 1294 - An Ordinance including Amendment One - Ordinance of the City ComciI of the City of Lodi, approving NCPA CBMIOM, t he Te nm and Cond i t i ons o f an Agreemen t t o a hirci ber PROJI7CT NO. 3 Agreement Between Northern Ca 1 i forni a Power Agency and Certain MilRD PHASE Participating Members, and authorizing the Execution of and AGREH" TT Delivery of Said Agreement and Amendment by the Officers of the City of Lodi. NCPA Ceotherml Project No. 3 Third Phase Agreement having been reintroduced at a regular meeting of ./ the City Council held September 7, 1983 was brought up for passage on motion of Nbyor Pro Terzpure Snider, Reid second. r Second reading of the Ordinance was omitted after reading by title, and the Ordinance was then adopted and ordered to print by the following vote: CSD. ND. 1294 ADOP'T'ED Ayes: Counci 1 Nierrbers - Reid, Snider, and Olson (Mayor) Noes: Counci l Nimt)ers -Pinkerton Absent: Council Members - Nbrphy fi S YVY 1 ? �4uwlrY T n A t nl d. �y} J`•{ iyYw T .fl^� ! is 3 � �,y�?� � {� _ S �V +1�c �, � } CITY COUNCIL EVELYN M OLSON. Mayor JOHN R (Randy) SNIDER Mayor Pro Tempore MART G. MURPHY TAMES W PINKERTON, It FRED M REID CITY OF LODI CITY HAIL, 221 WEST PINE STREET POST OFFICE BOX 320 LOBI, CALIFORNIA 95241 (209)334-5634 September 28, 1938 HENRY A CLAVES, It City Manager ALICE 14 R EIMCHE City Clerk RONALD M STEIN City Attorney TO: Gail Sipple NCPA FROM: Alice M. Reimrhe City Clerk SUBJECT: Geothermal Proiect No. 3 Member Agreement (Third Phase) Supporting Ordinance and Amendment pursuant to your recent letter, enclosed herewith are the following doarrents pertaining to the above project: 1. A signed copy of the Subject Agreemnt 2. A signed copy of the Subject Amendment 3. A signed copy of the Ordinance (No. 1294) 4. Opinion of Counsel we will forward ,to you, shortly, the proof of publication and a certified copy of the minutes approving the Agreement and Ame xkent. Very truly yours, Alice M. Re' City Clerk AM.R: i J Enc. . CITY COUNCIL E VE LYN M OISON, Mayor JOHN R (RarWv) SNIDER Mayor Pro Tempnre ROBE RT G MURPHY IAMES W PINKIRTON, (r FRED M REID t CITY OF LODI CITY HAIL. 221 WEST PINE STREET POST OFFICE BOX 320 LODI, CALIFORNIA 95241 (209) 334-5634 HENRY A CLAVES. Ir City Manager ALICE M REINICHE City Clerk RONALD M STEIN C i ty Attorney Based upon the foregoing and an examination of such other information, papers and documents as I deem advisable to enable me to render this opinion, including the Constitution and laws of the State of California together with the charter, other governing instruments, ordinances and public proceedings of the Project Participant, I am of the opinion that: 1, The Project Participant is a municipal corporation of the State of California, duly created, organized and existing under the laws of the State of California and duly qualified to furnish electric service within said State. 2. The Project Participant has authority and right to execute deliver and perform, pursuant to the terms of the Agreement, and the Project Participant has complied with the provisions of applicable law in all matters relating to such transactions. 3. The Agreement has been duly authorized, executed and delivered by the Project Participant, is in full force and effect as to the Project Pa.rcicipant in accordance with its terms assuming the other Project Participants Northern California Power Agency 8421 Auburn Boulevard Suite 160 Citrus Heights, California 95610 Dear Sirs: I am acting as counsel to the City of Lodi (the "Project Participant"), under the Agreement for Construction, Operation aa Financing of Geothermal- eothermalGenerating GeneratingProject Number 3 dated as of July 1; 1983 (the "Agreement") among the Project Participant, the Northern California Power Agency (the "Agency") and certain other entities, and I have acted as counsel to the Project Participant in 'connection with the matters referred to herein. As such counsel, I have examined and am familiar with (i) those documents relating to the existence, organization and operation of the Project Participant, (ii) all necessary documentation of the Project Participant relating to the authorization, execution and delivery of the Agreement and (iii) an executed counterpart of the Agreement. Based upon the foregoing and an examination of such other information, papers and documents as I deem advisable to enable me to render this opinion, including the Constitution and laws of the State of California together with the charter, other governing instruments, ordinances and public proceedings of the Project Participant, I am of the opinion that: 1, The Project Participant is a municipal corporation of the State of California, duly created, organized and existing under the laws of the State of California and duly qualified to furnish electric service within said State. 2. The Project Participant has authority and right to execute deliver and perform, pursuant to the terms of the Agreement, and the Project Participant has complied with the provisions of applicable law in all matters relating to such transactions. 3. The Agreement has been duly authorized, executed and delivered by the Project Participant, is in full force and effect as to the Project Pa.rcicipant in accordance with its terms assuming the other Project Participants have complied with the requirements of Section 12(a) of• such Agreement and, assuming that the Agency has all the requisite power and authority, and has taken all necessary' action, to execute and deliver such Agreement, constitutes the legal, valid and binding obligation of the Project Participant enforceable in accordance with its terms. 4. Payments by the Project Participant under the Agreement will constitute an operating expense of the Project Participant and are to be made solely from the Revenues of its Electric System as provided in Section 5(c) of the Agreement. 5. No approval, consent or authorization of any governmental or public agency, authority or person is required for the execution and delivery by the Project Participant of the Agreement, or the performance by the Project Participant of its obligations thereunder. 6. The authorization, execution and delivery of the Agreement and compliance with the provisions thereof will not conflict with or constitute a breach of, or default under, any instrument relating to the organization, existence or operation of the Project Participant, any commitment, agreement or other instrument to which the Project Participant is a party or by which it or its property is bound or affected, or any ruling, regulation, ordinance, judgment, order or decree to which the Project Participant (or any of its officers in their respective capacities as such) is subject or any provision of the laws of the State of California relating to the Project Participant and its affairs. 7. There is no action, suit, proceeding, inquiry or investigation at law or in equity, or before any court, public board or body, pending or, to my knowledge, threatened against or affecting the Project Participant or any entity affiliated with the Project Participant or any of its officers in their respective capacities as such (nor to the best of my knowledge is there any basis therefor), which questions the powers of the Project Participant referred to in paragraph 2 above or the validity of the proceedings taken by the Project Participant in connection with the authorization, execution or delivery of the Agreement, or wherein any unfavorable decision, ruling or finding would materially adversely affect the transactions contemplated by the Agreement, or which, in any way, would adversely affect the validity or enforceability of the Agreement. The opinion expressed in paragraph 3 above is qualified to the extent that the enforceability of the Agreement may be limited by any applicable bankruptcy, insolvency, debt adjustment, moratorium, reorganization, or other similar laws affecting creditors' rights f generally or as to the availability of any particular remedy. This opinion is rendered only with respect to the laws of the State of. California and the United States of America, and is addressed only to the Agency. No other person is entitled to rely on this opinion, nor may you rely on it in connection with the transactions other than those described herein. (Note: Where it shall be necessary for the Project Participant to obtain the authorization or approval of a Federal, state or local regulatory authority relating to such Project Participant's performance under the Agreement, the form of opinions set forth in paragraphs 2, 5 and 6 hereof may be appropriately adjusted to reflect the necessity for such authorization or approval and paragraph 5 hereof shall be adjusted to include therein an exception thereto specifically describing the requisite authorization or approval and stating that it has been duly given or obtained and is in full force and effect.) Ve truly yours, RONALD M. STEIN City Attorney RMS :vc Draft of August 25 , 1983 AMENDMENT NUMBER ONE Dated as of August 1, 1983 TO AGREEMMM FOR CONSTRUCTION, OPERATION AND FINAMCM OF GEOTHERMAL GRNERATING PROJECT NUMBER 3 Dated as of July 1, 1983 By and Among NORTHERN CALIFORNIA POWER AGBRLT and CITY OF ALAMEDh CITY OF BIC�GS CITY OF GRIM" CITY OF HEALDSHUAG CITY OF LOW Cm OF LOMPOC CITY OF PAIR ALTO CITY OF ROSEV=- CITY OF SANTA CLARA CITY OF UEIAH PLUMAS-SIERRA RURAL ELXCTRIC COOPERATIVE 0 47? AMENDMENT NUMBER ONE TO AGREEMENT FOR CONSTRUCTION, OPERATION AND FINANCING OF GEOTHERMAL GENERATING PROJECT NUMBER 3 This Amendment Number One, dated as of August 1, 1983, by and among Northern California Power Agency, a joint powers agency of the State of California (hereinafter called "NCPA") and the other entities executing this Amendment Number One. WITNESSETH: WHEREAS, NCAA and the other entities executing this Amendment Number One have entered or will enter into an "Agreement for Construction, Operation and Financing of Geothermal Generating Project Number 3 dated as of July 1, 1983 (the "Original Agreement") to provide for the construction, operation and financing of the Project, the sale by NCPA of capacity and energy of the Project to the Project Participants and the security of the Bonds to be issued to finance the Projects and WHEREAS, NCPA and the other entities executing this Amendment Number One desire to amend the Original Agreement in vari- ous respects; NOW THEREFORE, the parties hereto do agree as follows: SECTION 1. Definitions. The capitalized terms used herein shall have the respective meanings in this Amendment Number One'as ascribed '=hereto in the Original Agreement. All references in this Amendment Number One to the Original Agreement shall mean the Original Agreement as amended by this Amendment Number One. SECTION 2. Amendments. ( a ) Section l(f) of the Original Agreement is hereby amended to read in its entirety as follows: "(f) "Project Entitlement Percentage" means, with respect to each Project Participant, the percentage so identified and set forth opposite the name of such Project Participant in Appendix A hereto, as such percentage shall be re,ised from time to time in accordance with Sections 7(d) and 13 hereof. "East Block Entitlement Percentage" and "Project No. 2 Entitlement Percentage" mean, with respect to each Project Participant, the percen- tages so identified and set forth opposite the name of such Project Participant in Appendix A hereto, as such percen- tages shall be revised from time to time in accordance with Sections 7(d) and 13 hereof." -2- (b) Section 7(d) of the Original Agreement is hereby amended by adding at the end thereof the following: "Upon any change in Project Entitlement Percentage pursuant to this Section: 7(d), (i) the Project No. 2 Entitlement Percentage (if any) and the East Block Entitlement Percentage of each Project Participant shall be automatically increased for the remaining term of this Agreement by allocating the Project No. 2 Entitlement Percentage (if any) and the East Block Entitlement Percentage of the defaulting Project Participant among'the non -defaulting Project Participants in proportion to each Project Participant's respective increase in its Project Entitlement Percentage, and (ii) the defaulting Project Participant's Project No. 2 Entitlement Percentage and East Block Entitlement Percentage shall (but only for the pur- poses of computing the respective Project No. 2 Entitlement Percentages and the respective East Block Entitlement Percentages of the nondefaulting Project Participants) be reduced correspondingly." (c) Section 12(a) of the Original Agreement is hereby amended to read in its entirety as follows: "(a) This Agreement shall not take effect until (i) it and/or any supplement to it provided for in Section 2(c) of the Second Phase Agreement has been duly executed and delivered to NCPA by Project Participants the Project Entitlement Percentagp:s of which, in the aggregate, equal 1008, all in accordance with Section 2(c) of the Second Phase Agreement and accompanied by an opinion for each Project Participant of an attorney or firm of attor- neys in substantially the form attached hereto as Appendix B, and (ii) the Refunding Date shall have occurred." (d) Section 16(e) of the Original Agreement is herel:y sup- plemented by adding at the end thereof the following: "(v) The third paragraph of Section SB of the Project No. 2 Member Agrecnent shall be superseded by Section 7(d) of the Agreement for Construction, Operation and Financing of Geothermal Generating Project Number 3. (vi) Agreement following: Section 1(g) of the Project No. 2 Member shall be amended by adding at the end thereof the -3- J i 'Any Project Participant under the Agreement for Construction, Operation and Financing of Geothermal Generating Project Number 3 that has a Project No. 2 Entitlement Percentage greater than 0% under such Agreement shall be a 'Purchasing Participating Member' for all pur- poses of this Agreement and such Purchasing Participating Member's Purc;:asing Participation Percentage shall be its Project No. 2 Entitlement Percentage'." (e) The first paragraph of Appendix B to the Original Agreement is hereby amended to read in its entirety as follows: "I am acting as counsel to the (the "Project Participant") under the Agreement for Construction, Operation and Financing of Geothermal Generating Project Number 3 dated as of July 1, 1982, as amended by Amendment Number Cne dated as of August 1, 1983 (the "Agreement") among the Project Participant, Northern California Power Agency (the "Agency") and certain other entities, and I have acted as counsel to the Project Participant in connec- tion with the matters referred to herein. As such counsel I have examined and am familiar with (i) those documents relating to the existence, organization and operation of the Project Participant, (ii) all necessary documentation of the Project Participant relating to the authorization, execution and delivery of the Agreement and (iii) an exe- cuted counterpart of the Agreement." SKCrIOH 3. Original Agreement Remains in Full Force and Mect. Except as amended by this Amendment Number One, the Original hgreement heretofore existing remains in full force and effect. This Amendment Number One may be execute -3 in several coun- :.e parts, all or any of which shall be regarded for all purposes as one original and shall constitute and be but one and the same instrument. -4-- IN WITNESS WHEREOF each Project Participant has executed this Amendment Number One with the approval of its governing body, and caused its official seal to be aif fixed and NCPA has executed this Amendment Number One in accordance with the authorization of its Commission. NORTHERN CALIFORNIA POWER CITY OF PALO ALTO AGENCY By By And And CITY OF ALAMEDA By And CITY OF BIGGS By And CITY -OF HEALDSBURG By And 17Y LaD By ;An d City Clerk CITY OF LOMPOC By 1 And -5- CITY OF ROSEVILLE By And CITY OF SANTA CLARA By And CITY OF GRIDLEY By And UKIAH B And PLUMAS— SIERRA RURAL ELECTRIC COOPERATIVE B And Final Dr of July 28, 1983 AGREEMENT FOR CONSTRO CTION, OPERATION AND. FIIIMCING OF GEOTHERA L GENERATIEZ PROJECT NUMBER 3 Dated as of July 1, 1983 By and ,Among NORTSERV CALIFORNIA POWER AGCY and C= OF ALARA CITY OF BIGGS CITY OF GRIELEY CITY OF HEAALDSEDRG • C=*OP OF LODI CITY OF LOXMC CITY OF PALO ALTO CITY OF ROSEV LE CITY OF SANTA CLARA CITY OF Uxim PLUVW-°-SIERRA RURAL ELECTRIC COOPERATIVE 'a -i- TABLE OF CONTaTIS SQ C t i.9 n 1. Definitions . . . . . . . . . . . . . . . 3 2. Purpose . . . . . . . . . . . . . . . . . . . 5 3. Construction and Operation . . . . . . . . . . 5 4. 'ale and Delivery of Capacity and Energy from the Project . 5 5. Rates and Charges . . . . . . . 6 6. Annual Budget and Billing Statement . . . . . 8 7. Obligation in the Event of Default . . . . . . 9 8. Transfers, Sales and Assignments of Capacity . . . . . . . . . . . . . . . . . . .10 9. Surplus Capacity and Energy .11 10. Insurance and Indemnification .12 11. Member Direction and Review . . . . . . . .12 12. Term . . . . . . . . . . . . . . . . . . . . .. 13. Termination and Amendments . . . . . . . . . .14 14. Member Service Agreement . . . . . . . . . . .14 15. Second Phase Agreement .14 16. Sharing of Resources, Facilities and Costs .15 17. Miscellaneous . . . . . . . . . . . . . . .18 APPENDIX A - Schedule of Project Participants and Project Entitlement Percentages .20 APPENDIX B - Form of Opinion of Counsel . .21 -i- AGREEMENT F07C CONSTRUCTION, OPERATION - D FINANCING OF GEOTHERMAL GENERATING PROJECT NUMBER 3 This Agreement, dated as of July 1, 1983, by and among Northern California Power Agency, a joint powers agency of the State of California (hereinafter called "NCPA") and the other entities exe- cuting this Agreement. WITNESSETH: IfflEREAS, NCPA has entered into the Steam Sales Agreement with Shell Oil Company (with its successors and assigns, the "Steam Supplier") , under which NCPA agreed to construct or cause to be con- structed, one or, upon the conditions stated therein, two 55 -megawatt geothermal generating units or, a leasehold specified therein (the "East Block"); and WHEREAS, pursuant to the Steam Sales Agreement and this Agreement, NCPA proposes to acquire and construct or cause to be acquired and constructed and to operate or cause to be operated the Project described herein; and WHEREAS, NCPA and certain of its members have entered into a "Member Agreement (Second Phase) for Financing of Planning and _.Development Activities of the Shell East Block Geothermal Project" made as of June 1, 1981, as amended by Amendment. No. One thereto, dated as of June 1, 1981 and :amendment No. Two thereto, dated as of January 13, 1983 providing for the financing of certain_ activities in connecL:ion with the East Block portion of the Project (said Agreement, as it may be amended and supplemented from time to time, being hereinafter call gid" the "Second Phase Agreement") ; and WHEREAS, this Agreement is the "Final Power Contract" con- templated in the Second Phase Agreement; and WHEREAS, NCPA and its members have entered into one of three Member Service Agreements, effective February 12, 1981 (said Agreements, as they may be amended and supplemented from time to time, being hereinafter called the "Member Service Agreement") , which provide for services which NCPA shall perfo*m for its members, among other things, and for the provisions to be contained in second and third phase agreements, such as the Second Phase Agreement, and this Agreement; and ' WHEREAS, all partic..pants in NCPA's Geothermal Generating Project No. 2 ("Project No. 2") are Project Participants (as hereinafter defined), the development of the Project will benefit Project No. 2 by, among other things, satisfying certain obligations -2- rpt P Sales s�� of NCPA under tr.e 5 .am S 1 Agreement, and the actions authorized 4 herein to be taken by NCPA with respect to Project No. 2 will benefit the Project; and WHEREAS, NCPA and the Project Participants wish to enter into this Agz�-ement to provide further for the construction, opera -- tion and finarcing of the Project, the sale by NCPA of capacity and energy of the Project to the Project Participants, and the security for. the Bonds to be issued to finance the Project; NOW THEREFORE, the parties hereto do agree as follows: 1. Definitions. The following terms shall, for all pur- poses of this Agreement, have the following meanings: (a) "Bonds" means bonds, notes or other evidences of indebtedness of NCPA (or of a nonprofit corporation on behalf of NCPA) issued to finance or refinance the Project, and includes addi- tional Bonds to complete the Project. (b) "Bond Resolution" means the resolution or resolutions providing for the issuance of Bonds and the terms thereof. (c) "Development Fund" means the fund authorized by the "NCPA Member Agreement for Participation in Electric Poker Development Fund," dated July 1, 1975, as amended. - (d) • "Electric System" means all properties and assets, real and personal; tangible and intangible, of the Project Participant now or hereafter existing, used or pertaining -to the generation, trans- mission, transformation, distribution and sale of electric capacity and energy, including all additions, extensions, expansions, improve- ments and betterments- thereto and equippings thereof; provided, how- ever, that to the extent the Project Participant is not the sole owner of an asset or property or to the extent that an asset or prop- erty is used in part for the above described electric purposes, only the Project Participant's ownership interest in such asset or prop- erty or only the part of the asset or property so used for electric purposes shall be considered to be part of its Electric System. (e) "Project" means a project consisting of (i) two 55 -megawatt geothermal generating units, on the East Block, and related facil7.ries, including transmission facilities to the generat- ing tie, in the State of California, and all rights, properties and improvements necessary therefor, including fuel and water facilities and resources, and capital improvements thereto that may be con- structed from time to time, and interests in certain other property and rights relating thereto, including a headquarters facility for use by NCPA in connection with the Project; provided that inclusion of such headquarters facility in this definition of "Project" shall only be effective upon the receipt, prior to the first issuance of Bo.i:d3 of either (a) a I C0% vote approving such inclusion of all Project Participants, taken at a meeting in accordance with -3- Section 11 hereof, cle(b) written approval of sLOO inclusion from the 'representative of ea,,n Project Participant on the Commission of NCPA; (ii) Project No. 2, subject tr the rights of the participants there- in; and (iii) such refinancing of Development Fund expenditures as shall, in the discretion of the Commission of NCPA, be included in any issue of Bonds. ( f) "Project Entitlement Percentage" means, with respect to each Project Participant, the percentage so identified and set forth opposite the name of such Project Participant in Appendix A hereto, as such Appendix A shall be amended from time to time in accordance with Section 13 hereof. "East Block Entitlement Percentage" and "Project No. 2 Entitlement Percentage" mean, with respect to each Project Participant, the percentages so identified and set forth opposite the name of such Project Participant in Appendix A hereto, as such Appendix A shall be amended from time to time in accordance with Section 13 hereof. (g) "Project No. 2 Member Agreement" mean:., the "Member Agreement for Construction, Operation and Financing of NCPA Geothermal Generating Unit No. 2 Project", dated as of June 15, 1977" as amended and supplemented. (h) "Project No. 2 Steam Sales Agreement" means the Geothermal Steam Sales Agreement between NCPA and the Steam Supplier dated June 27, 1977, as amended and supplemented. (i) ."Project Participants" means those entities listed in ---?appendix A hereto and execnsting this Agreement, together in each case with their respective successors or assigns. (j) "Refunding Date" means the date of the refinancing with Bonds of (i) the outstanding Public Power Revenue Bonds, 1981 Series A, dated July 1, 1981,' and the outstanding Public Power Revenue Bonds, 1982 Series A, dated July 1, 1982, (ii) the outstand- ing loan of NCPA pursuant to a Loan Agreement between NCPA and Bank of Montreal (California) , dated October •2, 1980, and (iii) certain Development Fund expenditures. (k) "Revenues" means all income, rents, rates, .fees, charges, and other moneys derived by the Project Participant from the ownership or operation of its Electric System, including, without limiting the generality of the foregoing, (i) all income, rents, rates, fees, charges or other moneys derived from the sale, furnish- ing, and supplying of the electric capacity and energy and other ser- vices, facilities, and commodities sold, furnished, or supplied through the facilities of its Electric System, (ii) the earnings on and income derived from the investment of such income, rents, rates, fees, charges or other moneys to the extent t'hat the use of such earnings and income is limited by or pursuant to law to its Electric Syst- -w and (iii) the proceeds derived by the Project Participant. directly or indirectly from the sale, lease or other disposition of all or a part of the Electric System a-. permitted hereby, but the -4- - (1) "Steam Sales Agr eoment" means the "NCPA East Block Steam Sales Agreement" with the Steam Supplier, dated September 15, 1980f as amended and supplemented. (m) "Trustee" means the entity or entities designated by NCPA pursuant to any Bond Resolution, to administer any funds or accounts required by such Bond Resolution or otherwise. 2. Purpose. The purpose of thi e, Agreement is to sell capacity and energy of the Project to the Project Participants; to provide the terms and conditions of such sale and to provide for the financing of the Project. 3. Construction and Operation. NCPA will use its best efforts to cause or accomplish the construction, operation and financing of the Project, the obtaining of all necessary authority and rights, and the performance of all things necessary and conven- ient therefor. Each Project Participant will cooperate with NCPA to that -end, and will give any and all clarifying assurances by supple- mental agreements that may to reasonably necessary in the opinion of NCPA' s legal counsel to make the obligations herein more specific and to satisfy legal requirements and provide security for .the Bonds. NCPA may pledge and assign to any Trustee for any Bonds, all or any portion of the payments received hereunder from Project Participants, and upon notice from NCPA, each Project Participant shall make payments due by it hereunder directly to any Trustee for the Bonds. Such pledge and assignment by NCPA shall be made effec- tive for such time as NCPA shall determine and provide. 4. Sale and Delivery of Capacity and Energy from the Project. (a) Pursuant to the terms of this Agreement NCPA shall provide to each Project Participant, and each Project Participant shall take, or cause to be taken, such Project Participant's Project - Entitlement Percentage of the capacity and energy of the Project; provided, however, that NCPA shall first provide to each project par- ticipant for Project No. 21 and each such project participant shall take, or cause to be taken, such project participant's Project No. 2 Entitlement Percentage of the capacity and energy of Project No. 2, in accordance with the terms of the Project No. 2 Member Agreement. (b) NCPA will remain available to do all things necessary and possible to deliver or cause to be delivered to or for the Project Participants, in accordance with their respective Project Entitlement Percentages, subject to the terms of the Project No. 2 Member Agreeme..t, the capacity and energy of the Project. Such delivery shall be at points mutually agreed upon by NCPA and each -5- Q: -term "Revenues" sRall not include (y) customers' deposits or any other deposits subject to refund until such deposits have become the property of the Project Participant, or (z) contributions from cus- tomers for the payment of costs of construction of facilities to E �: serve them. (1) "Steam Sales Agr eoment" means the "NCPA East Block Steam Sales Agreement" with the Steam Supplier, dated September 15, 1980f as amended and supplemented. (m) "Trustee" means the entity or entities designated by NCPA pursuant to any Bond Resolution, to administer any funds or accounts required by such Bond Resolution or otherwise. 2. Purpose. The purpose of thi e, Agreement is to sell capacity and energy of the Project to the Project Participants; to provide the terms and conditions of such sale and to provide for the financing of the Project. 3. Construction and Operation. NCPA will use its best efforts to cause or accomplish the construction, operation and financing of the Project, the obtaining of all necessary authority and rights, and the performance of all things necessary and conven- ient therefor. Each Project Participant will cooperate with NCPA to that -end, and will give any and all clarifying assurances by supple- mental agreements that may to reasonably necessary in the opinion of NCPA' s legal counsel to make the obligations herein more specific and to satisfy legal requirements and provide security for .the Bonds. NCPA may pledge and assign to any Trustee for any Bonds, all or any portion of the payments received hereunder from Project Participants, and upon notice from NCPA, each Project Participant shall make payments due by it hereunder directly to any Trustee for the Bonds. Such pledge and assignment by NCPA shall be made effec- tive for such time as NCPA shall determine and provide. 4. Sale and Delivery of Capacity and Energy from the Project. (a) Pursuant to the terms of this Agreement NCPA shall provide to each Project Participant, and each Project Participant shall take, or cause to be taken, such Project Participant's Project - Entitlement Percentage of the capacity and energy of the Project; provided, however, that NCPA shall first provide to each project par- ticipant for Project No. 21 and each such project participant shall take, or cause to be taken, such project participant's Project No. 2 Entitlement Percentage of the capacity and energy of Project No. 2, in accordance with the terms of the Project No. 2 Member Agreement. (b) NCPA will remain available to do all things necessary and possible to deliver or cause to be delivered to or for the Project Participants, in accordance with their respective Project Entitlement Percentages, subject to the terms of the Project No. 2 Member Agreeme..t, the capacity and energy of the Project. Such delivery shall be at points mutually agreed upon by NCPA and each -5- Project Participa"P. Such agreement shallot be unreasonably withheld by either NCPA or a Project Participant. NICPA will remain available to make or cause to be made all necessary and possible arrangements for transmission of such capacity and energy to such points over the lines of NCPA or others, and for additional capacity and energy required from others as reserves against planr.,�d or eaner- gency service interruptions with respect to the Project. Wheeling or delivery services by NCPA with related energy sales to the Project Participants shall be as proviOad in service schedules as provided in Article III of the member Service Agreement. 5. Rates and Charges. (a) Commencing on the Refunding' Date, NCPA shall fix charges to the Project Participants under this ' Agreement to produce revenues to NCPA from the Project equal to the amounts anticipated to be needed by NCPA to meet rhe total costs of NCPA to provide capacity and energy from the Project, including but not limited to (i) dent service on the Bonds, reserves for the pay- ment of debt service on the Bonds and other payments required under the Bond Resolution other than payments described in (i.,i) and (iv) below, (ii) all other payments provided to be made by NCPA Sander the Steam Sales Agreement and the Project No. 2 Steam Sales Agreement, (iii) any other operation, maintenance and replacement costs of the Project, a reasonable reserve for contingencies, and all other Project costs other than costs and expenses of NCPA for delivering Project capacity and energy pursuant to Section 4(b) hereof, and (iv) costs and expenses of NCPA for delivering Project capacity and energy pursuant to Section 4(b) of this Agreement. NCPA shell fix charges to the Project Participants to produce revenues to NCPA from the Project to meet the costs described in (i) and (ii) above based on East Block Entitlement Percentages applied to such costs allocable to the East Block portion of the Project and Project No. 2 Entitlement Percentages applied to such costs allocable to the Project No. 2 por- tion of the Project; and to meet the costs described in (iii) above based on the ,anticipated energy sales of the the East Block portion of the Project and, on the anticipated energy sales of the Project No. 2 portion of the Project, respectively. If NCPA delivers ProjFct capacity and energy to or for any Project Participant pursuant to Section 4(b) hereof, NCPA shall fix charges to each such Project Participant so as to pay the costs of such delivery without liability under this Section 5(a) of any Project Participant for whoa Project capacity and energy is not so delivered by NCPA. Tie obligations of the respective Project Participants that are participants in Project No. 2 under this Section 5(a) shall be deemed to be satisfied to the extent such obligations are satisfied pursuant to the Project No. 2 Member Agreement. (b) To the extent that the funds provided under Section 5(a) of this Agreement are at any time not sufficient for such pur- poses, each Project Participant shall pay to NCPA an amount equal to such Project Participant's Project Entitlement Percentage of the total cost to pay all amounts of principal and interest on the Bonds, mc reserves for the payment of debt service and other payments required under the Bond Resolution and all other payments req[ai red to be made by NCPA under the Steam Sales Agreement. The obligation of this Section 5(b) is incurred by each Project Participant for the benefit of future holders of Bonds, and shall commence and continue to exist and be honored by Project Participants whether or not capacity or energy is furnished to them from '.he Project at all tires or at all (which provision may be characterized as an obligation to pay a.11 costs on a take -or -pay basis whether or not such Project capacity or energy is delivered or provided). (c) Notwithstanding that NCPA may utilize services unde the PG and E Interconnection Agreement among Pacific Cas and Electra Company, NCPA and certain of the Project Participants (the "PG and E Interconnection Agreement") in complying with Section d(b) hereof, any payments required to be made by, or costs incurred by NCPA or the Project Participants pursuant to Section 9.5 of the Interconnection Agreement shall not be made u:lder this Agreement. r c (d) Each Project Participant shall make payments under this Agreement solely from the Revenues of, and as an operating expense of, its Electric System. Nothing herein shall be construed as pro- hibiting any Project Participant from using any other funds and reve- nues for purposes of satisfying any provisions of this Agreement. (e) Each Project Participant shall make payments under this Agreement whether or not the Project is completed, operable, operas - i.ng or retired and notwithstanding the suspension, interruption, interference, reduction or curtailment of Project output or the capacity and energy contracted for in whole or in part for any reason whatsoever. Such payments are not subject to any reduction, whether by offset or otherwise, and are not conditioned upon performance by NCPA or any Project Participantunder this Agreement or any other agreement; provided, however, that the obligations of the respective Project Participants that are participants in Project No. 2 under Section 5(a) hereof shall be deemed to be satisfied to the extent such obligations are satisfied pursuant to the Project No. 2 Member Agreement. (f) No Project Participant shall be liable under this Agreement for the obligations of any other Project Participant. Each Project Participant shall he solely responsible and liable for per- formance of its obligations under this Agreement and for .the mainte- nance and operation of its respective properties not included as part of the Project. The obligation of each Project Participant to make payments under this Agreement is a several obligation and nota joint obligation with those of the other Project Participants. (g) Each Project Participant covenants and agrees to establish and collect fees and charges for electric capacity and energy furnished through facilities of its Electric System sufficient -7- to provide Revenuef adequate to meet its obligations under this Agreement and to pay any and all other amou.-its payable from or con- stituting a charge or lien upon any or all such Revenues. (h) Each Project Participant covenants and agrees that It shall, at all times, operate the properties of its Electric System and the business in connection therewith in an efficient manner and at reasonable cost and shall maintain its Electric System in good repair, working order and condition. 6. Annual Budget and Billing Statement. Prior to the beginning of each t"CPA fiscal year, the Commission of NCPA will adopt an annual budget for such fiscal year for costs and expenses relating to the Project and shall promptly give notice to each Project Participant of its projected share of such costs and expenses. A billing statement prepared by NCPA based on estimates will be sent to each Project Participant not later than the fifteenth (15th) day of each calendar month shcwing the amount payable by such Project Participant of costs payable -under Section 5(a) hereof for the second succeeding calendar month, any amount payable by such Project Participant as its Project Entitlement Percentage of costs payable under Section 5(b) hereof, and the amount�S2fy credit a or debits as a result of any appropriate adjustments. Amounts shown. on the billing statement are due and payable thirty (30) days after the date of the billing statement. Any amount due and not paid try the Project Participant within thirty (30) days after the date of the -billing statement shall bear interest from the due date until paid at an annual rate to be established by the Coma►Assion of NCPA at the time of adoption of the then most recent annual budget. on or before the day five (5) calendar months after the end of each NCPA fiscal year, NCPA shall submit to each Project Participant a statement of the aggregate monthly costs for such fiscal year. If the actual aggregate monthly costs and the Project Participant's share thereof pursuant to this Agreement, and other amounts payable for any fiscal year, exceed the billings to the Project Participant, the deficiency shall be added to the Project Participant's immediately succeeding billing statement. If the actual aggregate monthly costs and the Project Participant's share thereof pursuant to this Agreement, and other amounts payable for any fiscal year, are less than the billings to the Project Participant, such excess shall be credited to the Project Participant's billing statements for such period (not to exceed the immediately succeeding six months) and in such amounts as shall be determined by NCPA. J. if a Project Participarit questions or disputes the correct- ness of any billing statement by NCPA, it shall pay DCPA the amount claimed when due and shall within, thirty (30) days of the receipt of such billing statement request an explanation from NCPA. If the bila. is determined to be incorrect., NCPA will issue a corrected bill and W10 ref and any amount't-tich may be due the Pro:~at Participant whi ch refund shall bear interest from the date NCPA received payment until the date of the refund at an annual rate to be established by the Commission of NCPA at the time of adoption of the then most recent annual budget. If NCPA and the Project Participant fail to agree on the correctness of a bill within thirty (30) days after the Project Participant has requested an explanation, the parties shall promptly submit the dispute to arbitration under section 1280 ,Qtaq. of the Code of Civil Procedure. 7. obligation in the Event of Default. (a) Upon fail- ure of any Project Participant to make any payment in full when due under this Agreement, NCPA shall make written demand upon such Project Participant, and if said failure is not remedied within thirty (30) days from the date of such demand, such failure shall constitute a default at the expiration of such period. Notice of such demand shall be provided to each other Project Participant by NCPA. (b) Upon the failure of any Project Partici )ant to make any payment which failure constitutes a default under this Agreement, NCPA shall use its best efforts to sell and transfer for the default- ing Project Participant's account all or a portion of such Project Participant's Project Entitlement Percentage of Project capacity and energy for all or a portion of the remainder of the term of this Agreement. NCPA shall not sell such capacity and energy, directly or indirectly, in any manner, and shall not take or permit to be taken any other action or actions, which would result in any of the Bonds being treated as an obligation not described in Section 103(a) of the Internal Revenue Code of 1954, as amended, by reason of classifica- tion of such Bond as an "industrial development bond" within the meaning of Section 103(b) of said Cods. Notwithstanding that all or any portion of the Project Participant's Project Entitlement Percentage of Project capacity and energy is so sold or transferred, the Project Participant shall remain liable to NCPA to pay the full amount of its Project Entitlement Percentage of monthly costs as if such sale or transfer had not been made, except that such liability shall be discharged to the extent that NCPA shall receive payment from the purchaser or transferee thereof. (c) Upon the failure of any Project Participant to make any payment which failure constitutes a default under this Agreement and causes NCPA to be in default under the Steam Sales Agreement, the Project No. 2 Steam Sales Agreement or any Bond Resolution, NCPA may (in addition to the remedy provided by subsection b) of this Section 7) terminate the provisions of this Agreement insofar as the same entitle the defaulting Project Participant to its Project Entitlement Percentage of Project capacity and energy. Irrespective of such ter- mination, the obligations of the Project Participant under this Agreement shall continue in full force and effect. -9- Y (d) Upon A failure of any Project PaOicipant to make any payment which failure constitutes a default under this Agreement, and � except as sales or transfers are made pursuant to subsection (b) of this. Section 7, (i) the Project Entitlement Percentage of each nonde- faulting Project Participant shall be automatically increased for the remaining term of this Agreemen*-- pro rata with those of the other nondefaulting Project Participants and (ii) the defaulting Project Participant's Project Entitlement Percentage shall (but only for pur- poses of computing the respective Project Entitlement Percentages of the nondefaulting Project Participants) be reduced correspondingly; provided, however, that the sum of such increases for any nondefault- ing Project Participant shall not exceed, without written consent of such nondefaulting Project Participant, an accumulated maximum of 2S% of the nondefaulting Project Participant's Project Entitlement Percentage, all .as initially set forth in Appendix A. (e) If a Project Participant shall fail or refuse to pay any amounts due to NCPA, the fact that other Project Participants have increased their obligation to NCPA pursuant to this Section 7 shall not relieve the defaulting Project Participant of its liability under this Agreement, and any Project Participant increasing such obligation shall have a right of recovery from the defaulting Project Participant to the extent of such respective increase in obligation caused by the defaulting Project Participant. (f) Any Trustee for any Bonds the payment of which is secured by payments made by the Project Participants under this _Agreement sh411 have the right, as a third party beneficiary, to ini- tiate and maintain suit to enforce this Agreement to the extent pro- vided in the related Bond Resolution. 8. Transfers, Sales and Assignments of Capacity. Each Project Participant has full and. unfettered rights to make transfers, sales, assignments and exchanges (collectively "transfers") of capac- ity, energy, and rights thereto except as expressly provided other- wise in this Agreement. (a) No Project Participant shall transfer ownership of all or substantially all of its Eleztric System to another entity until it has first complied with the provisions of this subsection (a) . A consolidation with another governmental entity or change in govern- mental form is not deemed a transfer of ownership. (1) Such disposition or transfer shall be'under terms and conditions that provide assurance that the obli- gations of the transferring Project Participant under this Agreement, and that NCPA's obligations under this r,greement, the Steam Sales Agreement, and any Bond Resolution, and the Pr--ject No. 2 Steam Sales Agreement, and under other agreements made or to be made by NCPA to carry out the Proje,7t, will be promptly and adequately -1Q- met. NCPA may require that sufficiencmonevs of the \6 transferring Project Partici j pant to discharge such oblica- tions be irrevocabl} set aside and maintained in a trust account, as a condition to the transfer of the Electric System, if no other adequate assurance is available. (2) The transferring Project Participant shall give ninety (90) days' advance written notice to NCPA of any proposed transfer pursuant to this subsection (a) . Appendix A to this Agreement shall be amended as appropri- ate to reflect any transaction pursuant to this subsection (a) . (b) Notwithstanding any other provision of this Agreement, no Project Participant shall transfer, assign, sell or exchange any Project capacity and energy, directly or indirectly, in any manner, and shall not take or permit to be taken any other action or actions, which would result in any of the Bonds being treated as an obligation not described in Section 103(a) of the Internal Revenue Code of 1954, as amended, by reason of classification of such Bond as an "industrial development bond" within the meaning of Section 103(b) of said Code. . 9. Surplus Capacity and Energy. W h e n a P r o j e c t Participant has surplus capacity and/or energy from the Project, NCPA shall, if requested by such Project Participant to do so, sell such surplus capacity and/or energy on behalf of such Project Participant in the f olloWing manner: (a) NCPA shall use its best efforts to sell such surplus capacity and/or energy at a price at least equal to the Project Participant's cost therefor. (b) Other Project Participants shall have a right of first refusal, and other NCPA members shall have the second right at the sales prices set forth in subsections (c) and (d) of this Sectica 9. (c) If NCPA can purchase equivalent capacity and/or energy from other sources for less than the Project Participant's cost for surplus capacity and/or energy from the Project, as the case may be, the sales price of such capacity and/or energy to another Project Participant or NCPA member shall be equal to the cost of purchasint1 the capacity and/or energy from such other source. -(d) If the alternative cost of purchasing capacity and/or energy for other Project Participants or members of NCPA is more than the Project Partic pant's cost of surplus capacity and/or energy from the Project, then the sales price shall be the Project Participant's cost plus one-half the difference between the Project Participant's cost from the Project and the cost of capacity acid/or energy from an alternative source. -11- . - k �: (e) NCPA s.011 not sell such stir plus lapacity and energy, directly or indirectly, in any manner, and shall not take or Pnxmiit to be taken any other action or actions, which would result in any of the Bonds being treated as an obligation not described in Section 103(a) of the Internal Revenue Code of 1954, as amended, by reason of classification of such Bond as an "industrial develop_zent bond" within the meaning of Section 103(b) of said Code. 10. Insurance and Indemnification. NCPA shall obtain or cause to be obtained insurance for the Project covering such risks (including earthquakes) , in such amou.-its and with such deductibles as shall be determined by NCPA. NCPA shall indemnify and hold han-Aess each Project Participant from any liability for personal injury or property damage resulting from any accident or occurrence arising cut of or in any way related to the construction or operation of the Project, provided, however, that such liability of NCPA shall be limited to the extent the proceeds of insurance and other moneys available to NCPA hereunder are available therefore. 11. Member Direction and Review. NCPA shall comply with all lawful directions of the Project Participants with respect to this Agreement, while not stayed or nullified, to the fullest extent authorized by-law. Actions of Project Participants, including giving such directions to NCPA, will be taken only at meetings of authorized representatives of Project Participants duly called and held pursuant to the Ralph M. Brown Act or other laws applicable to such meetings, in effect from time to time. (a) -A quorum of the Commission of NCPA for purposes of acting upon matters related to the Project shall consist of those Commissioners (including for all purposes of this Section 11, their designated alternates)? representing a numerical majority of the Project Participants, or, in the absence of such, representing Project Participants having a combined Project Entitlement Percentage of at least a majority in interest at such time. (b) Special meetings of the Commission to act only on mat- ters relating to the Project may be called by a majority of the Commissioners of Project Participants upon notice as required by the Ralph M. Brown Act or other laws applicable to such meetings, in effect from time to brae. (c) At regular Or special meetings of the Commission, voting on matters relating to the Project shall be 'by Project Entitlement Percentage, and the affirmative vote of a majority in interest at such time shall be required to take action, unless the Project Participants agree at such meetings that voting will be on a one member one vote basis, with a majority vote of those present required for action. -12- (d) Notwithstanding subsection (c) of this Section ll, upon demand of any Commissioner of any Project Participant, at any meeting of the Commission other than a special meeting referred to in subsec- tion (b) of this Section 11, the vote on any issue relating to the Project shall be by Project Entitlement Percentage at such time and 65% or greater affirmative vote shall be required to take action. (e) Any Project Participant may veto a discretionary action of the Project Participants relating to the Project that was not taken by a 658 or greater Project Entitlement Percentage vote within 10 days following mailing of notice of such Commissioners' action, by giving written notice of veto to NCPA, unless at a meeting of Commissioners of Project Participants called for the purpose of con- sidering the veto and held within 30 days after such veto notice, the holders of 658 or greater of the Project Entitlement Percentage shall vote to override the veto. (f) The sixty-five percent of the Project Entitlement Percentage specified in this Section 11 shall be reduced by the amount that the Project Entitlement Percentage of any Project Participant shall exceed 358, but such 658 shall not be reduced below a majority in interest. 12. Term. (a) This Agreement shall not take effect until (i) it and/or any supplement to it provided for in Section 2(c) of the Second Phase Agreement has been duly executed and delivered to NCPA by Project Participants the Project Entitlement Percentages of which, in the aggregate, equal 1008, all in accordance with Section 2(c) of the Second Phase Agreement and accompanied by an opinion for each Project Participant of an attorney or firm of attor- neys in substantially the form attached hereto as Appendix B, and (ii) the Refunding Date shall have occurred. (b) Notwithstanding the delay in the effective date of this Agreement until Project Entitlement Percentages in the aggregate equal 1008 and the other provisions of Section 12(a) hereof have been complied with, it is agreed by all signatories hereto ghat in consid- eration for NCPA's signature hereto and for its commitment to use its beat efforts to obtain the commitment for Project Entitlement Percentages in the aggregate equal to 1008, each Project Participant upon its execution and delivery of this Agreement to NCPA along with required opinion and any required evidence of compliance as required by Section 12(a) hereof shall be immediately bound not to withdraw its respective offer herein made to enter into this Agreement as exe- cuted and/or supplemented or to decrease or terminate its Project Entitlement Percentage. Such a decrease or termination by a Project Participant may be made only if this Agreement has not taken effect -13- 1� before January 1, 15 and only by giving written notice thereof t©.. NCPA between January 1 and January 15, 1984. (c) Notwithstanding the foregoing, each Project Participant shall he entitled to decrease or terminate its Project Entitlement: Percentage upon giving written notice thereof to NCPA within fifteen (15) days after January 1, 1986, if by January 11 1986 NCPA shall not have issued any Bonds the payment of which is secured by payments made by the Project Participants under this Agreement. (d) The term of this Agreement shall continue until the later of (i) the expiration of the useful life or the Project, of (ii) the date on which all Bonds issued have been retired, or full. provision made for their retirement, including interest until their retirement date; provided, however, that in no event shall the term of this Agreement extend beyond the date of the termination of the existence of NCPA. In the event of the termination of the existence of NCPA it is the intent of the Project Participants that the Agreement be construed as an agreement among the Project Participants. 13. Termination and Amendments. This Agreement shall not be subject to termination by any party under any circumstances, whether based upon the default of any other party under this Agreement, or any other instrument, or otherwise, except as specifi- cally provided herein. Except as otherwise provided in this Agreement, so long as any Bonds are outstanding and unpaid and funds are not set aside for the payment or retirement thereof in accordance with the applicable Bond Resolution, this Agreement shall not be amended, modified or otherwise changed or rescinded by agreement of the parties without the consent of each Trustee for Bonds whose consent is required under the applicable Bond Resolution. 14. Member Service Agreement. This Agreement is a ser- vice schedule and a third phase agreement attached to and incorpo- rated into the Member Service Agreement. This Agreement shall be construed as the more specific terms governing the general relation- ship between the parties set out in the Member Service Agreement in connection with the Project. 15. Second Phase Agreement. The Second Phase Agreement is superseded by this Agreement upon the issuance of any Bonds the payment of which is secured by payments made by the Project Participants under this Agreement and upon provision for payment of any notes or other evidences of indebtedness of NCPA secured by pay- ments made by the Project Participants under the Second Phase Agreement, except that section 4 thereof shall remain in effect as provided by section 5 of the Second Phase Agreement unless changed by -14- formal action of all of the Project Participants. Said section 4 as follows: "Section 4. Conditional Repayment to Members. All payments and advances made heretofore, including Development Fund Advances, and those hereafter mad` pursu- ant to Section 1, excluding interest pa:3 on delinquent payments, shall be repaid to each of the entities making such payments and advances pursuant to this Agreement out of t;le proceeds of the first issuance of the Project bonds or as and when there are sufficient funds available from the partial sale of Bonds. Such reimbursements shall be made within 60 da -yr, following the sale of any Project bonds and shall include interest computed monthly at a rate equivalent to the prime rate of the Bank of Pmerica NT&SA at the end of such month. Any interest due under the third paragraph of section 1 of this Agreement and unpaid shall be deducted from the repayment. If NCPA is not successful in financing the Project, there shall be no reimbursement except out of unused Project funds along with all other receipts to which NCPA is entitled in connection with the Project." 16. Sharing of Resources, Facilities and Costs. (a) NCPA may, in accordance with Section 11 hereof, enter into agreements for the transfer or sharing of resources, facilities and costs between and among the Project and other entities and projects (including without limitation Project No. 2) , which agreements may provide, among other things, for the transfer or sharing of steam, transmission facilities and rights to use the same, maintenance and repair facilities, generating equipment, spare parts, staff, insur- ance, taxes and payment in lieu thereof, and delay payments under the Steam Sales Agreement and the Project No. 2 Steam Sales Agreement and for the integrated operation of the Project and Project No. 2 by NCPA. (b) NCPA may, in accordance with the Project No. 2 Member Agreement and upon compliance with the requirements of any trust indenture or other instrument applicable thereto, including without limitation any consents required thereby, enter into agreements for (i) the transfer or sharing of resources, facilities and costs between and among Project No. 2 and other entities and projects (including without limitation the Project) , which agreements may pro- vide, among other things, for the transfer or sharing of steam, transmission facilities and rights to use the same, maintenance and repair facilities, generating equipment, spare parts, staff, insur- ance, taxes and payment in lieu thereof, and delay rayments under the Project No. 2 Steam Sales Agreement, and for the integrated operation of the Project and Project No. 2 by NC.aA, and (ii) the modification or refinancing of all or any portion of the obligations incurred by NCPA or a nonprofit corporation for Project No. 2, including without -15- ^'!';'F+�'It e } ->S } �' Lmj`3t,•Eyy�",X�ga„Y'iA..k 4'.:.`:' �'1 x x' limitation the reffillicing thereof with Bonds ar# the moc'ification or refinancing of the loan guaranteed by the United States Department of Energy. (c) This Agreement shall constitute approval by the partic- ipants in Project No. 2 of (i) the refinancing of (a) the outstandirig Public Power Revenue Bonds, 1981 Series A, dated July 11 1981, and the outstanding Public Poker Revenue Bonds, 1982 Series A, dated July J.. 1982, (b) the outstanding loan of NCPA pursuant- to a Loan Agreement between NCPA and Bank of Montreal (California), dated October 2, 1980, and (c) certain Development Fund expenditures, with Bonds so long as, in the judcment of the Commissioners of NCPA repre- senting the participants in Project No. 2, the debt service secured or to be secured by the Project No. 2 Member Agreement is not increased thereby and the other terms of such refinancing are not materially adverse to the participants in Project No. 2; and (ii) equal sharing between Project No. 2 and the East Block portion of the Project of steam from the Project No. 2 azea and the East Block area. (d) The Project No. 2 Member Agreement shall be construed so as to be compatible with this Agreement to accomplish the purposes hereof. Any financing or refinancing of Project No. 2 shall be accomplished by the issuance of Bonds secured by this Agreement unless the Project Participants refuse to authorize such financing or refinancing as may be requested by the participants in Project No. 2. The respective obligations of NCPA under Section 4 hereof and of the . Project Participants under Section 5 hereof shall be deemed satisfied to the extents of performance thereof pursuant to the Project No. 2 Member Agreement, and (iv) subject to the specific terms of the agreement or agreements contemplated by subsections (a) and (b) of this ,Section 16, Project No. 2 and the East Block portion of the Project shall be conducted for the mutual benefit of all par- ticipants therein. (e) The Project No. 2 Member Agreement shall be amended by the provisions hereof as follows: (i) Section 6 of the Project No. 2 Member Agreement shall be superseded by Sections 8, and 9 hereof, (ii) subsection (a) of Section 5 of the Project No. 2 Member Agreement shall be superseded by the following: "(a) Commencing with the commercial operation of the Project, NCPA shall fix charges to the Purchasing Participating Member under this Agreement to produce revenues to NCPA from the Project equal to the amowzts anticipated to be needed by NCPA to meet the total costs of NCPA to prov,_de ca�aciy and enezc#y from the Project, including buh nor limited to (i) debt service --16- Any payments required to be made, or costs i ncbr r ed, by NCPA o:, the Project Participants pursuant to the PG and E Interconnection Agreement shall not be made or incurred under this Agreement." (iii) Section 3 of the .Project No. 2 member Agreement shall be supplemented by the following: "NCPA may pledge and assign to any Trustee for any Bonds all or any portion of the payments received hereunder from Purchasing Participating Members and upon notice from NCPA, each Purchasing Participating Member shall make payments due by it hereunder directly to any Trustee for the Bonds. Such pledge and assignment by NCPA shall be made effective for such time as NCPA shall determine and provide. For the purposes of this Agreement the term "Bonds" shall Include any bonds, notes or other evidences of indebt- edness issued by NCPA to refinance the cost of the Project." (iv) Section 5C of the Project No. 2 Me..,ber Agreement shall be deleted. -17- r A on the Bonds, reserves for the payment of debt service on the Bonds and other payments required under the Bond Indenture or other agreement or instrument pro- viding for the issuance and payment of Bonds other than payments described in (iii) and (iv) below, (ii) all other payments provided to be made by NCPA under the Shell Agreement, ( iii) any other operation, main- tenance and replacement costs of the Project, a rea- sonable reserve for contingencies, and all other Project costs other than costs and expenses pursuant _ to Section 4 hereof, and (iv) costs and expenses of NCPA for delivering Project capacity and energy pursu- ant to Section 4 hereof. NCPA shall fix charges to the Purchasing Participating Members to produce reve- nues to NCPA from the Project to meet the costs described in (i) and (ii) above based on Purchasing Participating Member's Purchasing Participation Percentage and to meet the costs described in (ii?.) above based on the anticipated energy sales of the Project. If NCPA delivers Project capacity and energy to or for any Purchasing Participating Member pursuant to Section 4 of this Agreement, NCPA shall fix charges to each such Purchasing Participating Member so as to pay the costs of such delivery without liabil'.ty to any Purchasing Participating Member for whom Project capacity and energy is not so delivered by NCPA. Any payments required to be made, or costs i ncbr r ed, by NCPA o:, the Project Participants pursuant to the PG and E Interconnection Agreement shall not be made or incurred under this Agreement." (iii) Section 3 of the .Project No. 2 member Agreement shall be supplemented by the following: "NCPA may pledge and assign to any Trustee for any Bonds all or any portion of the payments received hereunder from Purchasing Participating Members and upon notice from NCPA, each Purchasing Participating Member shall make payments due by it hereunder directly to any Trustee for the Bonds. Such pledge and assignment by NCPA shall be made effective for such time as NCPA shall determine and provide. For the purposes of this Agreement the term "Bonds" shall Include any bonds, notes or other evidences of indebt- edness issued by NCPA to refinance the cost of the Project." (iv) Section 5C of the Project No. 2 Me..,ber Agreement shall be deleted. -17- 1111.. , . 17.. Miscellaneous. The headings of the sections hereof are inserted for convenience only and shall not be deemed a part ©f this Agreement. if any one or more of the covenants or agreements provided in this Agreement to be performed should be determined to be invalid or contrary to law, such covenant or agreement shall be deemed and construed to be severable from the remaining covenants and agreements herein contained and shall in no way affect the validity of the remaining provisions of this Agreement. This Agreement may be executed in several counterparts, a31 1 - or any of which shall be regarded for all purposes as one original and shall constitute and be but one and the same instrument. i -18- IN WITNESS WHEREOF each Project Participant has executed t- ' this Agreement with the approval of its governing body, and caused its official seal to be affixes: and NCPA has executed this Agree.-nent in accordance with the authorization of its Commission. NORTHERN CALIFORNIA POW EE AGENCY By And - CITY OF ALAnEDA By CITY OF BIGGS By And^ CITY OF HEALDSBURG By -- And CITY -BQ Y An �'Ea- CIT)Yt dF' 'T'OMPOC W= CITY OF PALO ALTO By. And CITY OF ROSEVILLE By And CITY OF SANTA CLARA By And _ CITY OF GRIDLEY By And UKIAH BY And PLUMAS-SIERRA RURAL ELECTRIC COOPERATIVE By_ And 0 SCHEDULE OF PROJECT PARTICIPANTS AND PROJECT ENTITLEMEINT PERCENTAGES Project No. 2 Entitlement Percentage 14.994% 0.000 .334 3.252 14.560 3.266 0.000 3.252 54 .6 51 4.972 .719 100.000% -20- East Block Entitlement Percentage 18.771CL .454 .45F, 4.096 9.158 4.096 9.158 12.514 34.13 6.257 .91 100.000% APPENDIX A Project Entitlement Percentag4e 16.8825%; .227 .395 3.674 11.859 3.681 4.579 7.883 44 .3 905 5.6145 .8145 100.000% N Proj ect Participant City of Alameda City of Biggs City of Gridley City of Healdsburg City of Lodi City of Lompoc City of Palo Alto City of Roseville City of Santa Clara r j City of Ukiah Plumas-Sierra Rural Electric Cooperative Total Project No. 2 Entitlement Percentage 14.994% 0.000 .334 3.252 14.560 3.266 0.000 3.252 54 .6 51 4.972 .719 100.000% -20- East Block Entitlement Percentage 18.771CL .454 .45F, 4.096 9.158 4.096 9.158 12.514 34.13 6.257 .91 100.000% APPENDIX A Project Entitlement Percentag4e 16.8825%; .227 .395 3.674 11.859 3.681 4.579 7.883 44 .3 905 5.6145 .8145 100.000% N ����, �i^sJ 'F:,.`. x, .: _( .,� - t ). ;.�.� �r.r ..,qa, b.�oJ',"�1� �Y T _ 'S .. !E; �.. �-a_ ,l• APPENDIX B FOIUI OF OPM ION OF CCU SEL Northern California Power Agency 8421 Auburn Boulevard Suite 160 Citrus heights, California 95610 Dear Sirs: I am acting as counsel to the (the "Project Participant") under the Agreement for Construction, Operation and Financing of Geothermal Generating Project Number 3 dated as of 1982 (the "Agreement") among the Project Participant, Northern California Power Agency (the "Agency") and certain other entities, and I have acted as counsel to the Project Participant in connection with the matters referred to herein. As such counsel I have examined and am familiar with (i) those documents relating to the existence, organization and operation of the Project Participant, (ii) all necessary documentation of the Project Participant relating to the authorization, execution and delivery of the Agreement and (iii) an executed counterpart of the Agreement. Based upon the foregoing and an examination of such other information, papers and documents as I deem necessary or advisable to enable me to render this opinion,* including the Constitution and laws of the state of California together with the [charter],, other govern- ing instruments, ordinances and public proceedings of the Project Participant, I am of the opinion that: 1. The Project Participant is (state form of organization) , duly created, organized and existing under the laws of the State of California and duly qualified to furnish electric service within said State. 2. The Project Participant has authority and right to execute, deliver and perform, pursuant to the terms of, the Agreement, and the Project: Participant has complied with the provisions of applicable law in all matters relat- ing to such transactions. 3. Tile Agreement has been duly authorized, executed and delivered by the Project Participant, is in full force and effect as to the Project Participant in accordance with -21- *, gl t�i;if1 ,. 7 H!.'y Yr L,bi''Sr £ 7'°" 9T`st ;•a: ki ;ru.Yj x^. vk Za Y"..Y1*Yt 1.,....:... its terms assn )ng the other Project PaAcipants have complied with the requirements of Section 12(a) of such Agreement and, assum;ng that the Agency has all the requi- site power and authority, and has taken all necessary action, to execute and deliver such Agreement, constitutes the legal, valid and binding obligation of the Project Participant enforceable in accordance with its terms. 4. Payments by the Project Participant under the Agreement will constitute an operating expense of the project Participant and are to be mace solely from the Revenues of its Electric System as provided in Sect_ion 5(c) of the Agreement, 5. No approval, consent or authorization of any gov- ernmental or public agency, authority or person is required for the execution and delivery by the Project Participant of the Agreement, or the performance by the Project Participant of its obligations thereunder. G. The authorization, execution and delivery of the Agreement and compliance with the provisions theraof will not conflict with or constitute a breach of, or default under, any instrument relating to the organization, exis- tence or operation of the Project Participant, any co„miit- ment, agreement or other instrument to which the Project Participant is a party or by which it or its property is bound or Affected, or any ruling, regulation, ordinance, judgment,, order or decree to which the Project Participant (or any of its officers in their respective capacities as such) is subject or any provision of the laws of the State of California relating to the Project Participant and its affairs. 7. There is no action, suit, proceeding, inquiry or investigation at law or in equity, or before any court, public board or body, pending or, to my knowledge, threat- ened against or affecting the Project Participant or any entity affiliated with the Project Participant or any of its officers in their respective capacities as such (nor to the best of my knowledge is there any basis therefor) , which questions the powers of the Project Participant referred to in paragraph 2 above or the validity of the proceedings taken by the Project Participant in connection with the authorization, execution or ?elivery of the Agreement, or wherein any unfavorable decision, ruling or finding would materially adversely affect the transactions contemplated by the Agreement, or which, in any way, would adversely affect the validity or enforceability of the Agreement. -22- M� i --19" ,.: ".;.�p't.; The opiniois"xpressed in paragraph 3 ile is qualified to . the extent that the enforceability of the Agreement may be limited by any applicable bankruptcy, insolvency, debt adjustment, moratorium, reorganization, or other similar laws affecting auditors' rights. gen- erally or as to the availability of any particular remedy. This opinion is rendered only with respect to the laws of the State of California and the United States of America, and is addressed only to the Agency. No other person is entitld to rely on this opinion, nor may you rely on it in connection with any transac- tions other than those described herein. (Note : Where it shall be necessary for the Project Participant to obtain the authorization or approval of a Federal, state or local regulatory authority relating to such Project Participant's performance under the Agreement, the form of opirdons set forth in paragraphs 2, 5 and 6 hereof may be appropriately adjusted to r af-lect the necessity for such authorization or approval and paragraph 5 hereof shall be adjusted to include therein an excep- tion thereto specifically describing the requisite authorization or approval and stating that it has been duly given or obt-:fined and is in full force and effect.] Very truly yours, -23- V �1 Nosth*m Calftmia Powor Ag*ncy 3421 Auburn Boulevard. Suite 160 Citrus Heights. California 95610 ROSEAT E GRIMSHAW General Manager (915) 722-7815 August 2, 1983 4I' RECEIVED f983 AUG -3 AN & 56 AJX Y CLR01�cHE Carr of TO: Geothermal Project No. 3 Participants Transmission Project No. 1 participants FROM: Gail Sipple SUBJECT: Third Phase Agreements Pursuant to the Commission meeting of July 28, 1983, enclosed are two Third Phase Agreements and supporting documents to be presented to your governing body for approval. (Santa Clara will only receive documents relating to Geothermal Project No. 3) . These documents are: 1. Geothermal Project No. 3 Member Agreement (Third Phase) . Supporting Ordinance 2. Transmission Project No. 1 Member Agreement (Third Phase) . Supporting Ordinance As .You will recall, Mr. Grimshaw discussed the urgency in approving these agreements and, therefore, it is requested that they be approved no later than September 2, 1983. Upon approval, please return to me the following: 1. A signed copy of each agreement 2. A legal opinion in the form of Appendix B (attached to agreements) 3. A signed copy of each ordinance 4. Proof of publication of each ordinance 5. A certified copy of the minutes approving each agreement By copy of this letter I am also forwarding these documents to your City Clerk for processing. Page Two 0 If you have any Questions, please contact me or Mike De Angelis of Mudge Rose at (212) 701-1256. Yours truly, 6IL SIPPLE E ecuti va Assistant Enc. FOR 4 4b MUDGe Ro:sE GUTHRIE.ALEXANDER & rERDON MEMORANDUM To the Protect Participants August 1 , 1983 Re: Publication requirements for the ordinances approving the Transmission Member Agreement and the Geothermal Member Agreement The ordinance approving the Transmission Member Agreement and the ordinance approving the Geothermal Member Agreement (the "Agreements") should be published in the same manner as all other ordinances of the City are published. If the City has no procedure for the publication of: ordi- nances then under Section 54242 of the Cal. Gov't Code the ordi- nances approving the Agreements must each be published once in a newspaper of general circulation in the city within 11 days after their adoption. A "newspaper of general circulation" is a newspaper published for the dissemination of local or telegraphic news and intelligence of a general character, w;.ich has a Nona fide subscrip- tion list of paying subscribers and has been established, printed and publishers at regular intervals in the City for at least one year pre- ceding the date of publication of the ordinances. All publications of the ordinr,-ices must be set in nonpareil type and must be preceded by a notice of adoption worded in black - face, nonpareil type that generally describes the terms or character of the ordinances approving the Agreements. r i \ ` RESOLUTION NO. 83- 56 NORTHERN CALIFORNIA POWER AGENCY r BE IT RESOLVED BY THE COKMISSIO'N Of THE NORTHERN CALIFORNIA POWER AGENCY, as follows: Section 1. The form of "Agreement for Construction, Operation and. Financing o+* Geothermal Generating Project Number Three designated July 28, 1983, a Third Phase Agreement under the Member Services Agreements, is hereby approved; and the Assistant Secretary is directed to send copies of the same to the Project Participants named therein, and request that it be approved and executed by ordinance in accordance with the terms of Section 13 thereof. Section 2. The General Manager is authorized to execute said agreement on behalf of this Agency. Vote Abstained Absent City of - Alameda Biggs Gridley Heal dsburg Lodi Lompoc Palo Alto Redding Roseville Santa Clara eq Uk i ah l c PIumas-Sierra ADOPTED AND APPROVED this � � day l of 1983. 0. ORDINANCE NO. 14 0 AN ORDINANCE OF THE CITY COUNCIL OF TETE CITY OF CALIFORNIA, APPROVING THE TERMS AND CONDITIONS OF A MEMBER AGREEMENT BETWEEN NORTHERN CALIFORNIA POWER AGENCY AND CERTAIN PARTICIPATING MEMBERS AND AUTHORIZING THE EXECUTION OF AN DELIVERY OF SAID AGREEMENT BY OFFICERS OF THE CITY OF WHEREAS, pursuant to the provisions of Chapter 5, Division 7, Title 1 of the Goverament Code of the State of California, as amended (the "Joint Powers Act") , the City of (the "City") and certain other public agencies cre- ated pursuant to the laws of the State of California (collectively, the "Members") , have entered into a Joint Powers Agreement ( the "Agreement") creating the Northern California Power Agency (the "Agency"), a public entity separate and apart from the Members; and WHEREAS, in accordance with the Agreement and the Joint Powers Agreement the Agency proposes to acquire and construct or cause to be acquired and constructed and to operate or cause to be operated a project (the "Project") consisting of (i) two 55 -megawatt geothermal generating units, and related facilities, including trans- mission facilities to the generating tie, in the State of California, and all rights, properties and improvements necessary therefor, including fuel and water facilities and resources, and capital improvements thereto that may be constructed from time to time, and interests in certain other property and rights relating thereto, including a headquarters facility for use by the Agency in connection with the Project; (ii) Project No. 2, subject to the rights of the participants therein; and (iii) the refinancing of certain Development Fund expenditures; and WHEREAS, the City has .need for an economical, reliable source of electric power and energy to meet the demands of the cus- tomers of its electric system, and, as such WHEREAS, this City Council finds and determines that it is in the best interests of the customers of the electric system of the City for the City to enter into the Agreement for construction, oper- ation and financing of Geothermal Generating Project Number 3 (the "Member Agreement") in substantially the form submitted to this City Council and dated for convenience as of July 1, 1583; WHEREAS, this City Council finds and deteL...iines that it is in 'he best interests of the customers of the electric system of the City for the City to purchase electric capacity and energy of the Project from the Agency; WHEREAS, payments by the City pursuant to the Member Agreement will `�e used in part by the Agency for payment of principal .1,R of and interest on its bonds, notes indebtedness issued in connection with the and financing of the Project; 11 ;, 3 Or - or other evidences of construction, operation NOW, THEREFORE, the City Council of the City of does ordain as follows: 1. The City Council hereby finds and determines that the terms and conditions of the Member .Agreement (including the East Block Entitlement Percentage and the Project Entitlement Percentage of the City set forth in Appendix A thereto) in substantially the form submitted to this City Council be, and the same are hereby, approved. 2. The East Block Entitiemc.•.c Percentage of the City as set forth in Appendix A to said Member AJ ; eemen'; may be increased to such percentage, not be exceed .� _ percent as shall be determined by the of t!Ie City. 3. The Project Entitlement Percentage of the City as set forth. in Appendix A to said Memt;er Agreement may be increased to such percentage, not be exceed percent ( $), as shall be deter- mined by the _ of the City. 4. The City is hereby authorized to enter into the Member Agreement and the and the are hereby authorized to execute and deliver the Member Agreement by and on behalf of the City. 5. Pursuant to Section 54241 of the Government Code of the State of California, this Ordinance ;s subject to the provisions for referendum applicable to the City. 6. The City Clerk shall certify to the enactment of this Ordinance and shall cause this Ordinance to be published in accor- dance with Section 54242 of the Government Code of the State of California. 7. Thirty (30) days from and after its enactment, this Ordinance shalt take effect and be in full force, in the manner pro- vided by law. -2- u1 r�,w,*'�,`ti "�°F."` htAk!!NRh:.."h a .rNYtw �-+,m•.,map :,,-�yq��eaC;a*+.�'.��eAi9K.a: k ADOPTED by the City Council and signed by the and attested by the *..hip _______ day of , 1983. Attest: -3- w "twX Mt2 etec. ?wxrav , r n a ra_, .. +'+ rst ? : t. w n:,r.wr:xa3i4a��dcFK:+ e t; e / � N Final Draft of ,July 28, 1983 AGREEXJKNT FOR CONSTRUCTION, OPERATION AND FINANCING OF GE07HERMAL GENERATING PROJECT NUMBER 3 Dated as of July 1, 1983 By and Among NORTHERN CALIFORNIA POSTER AGENCY and CITY OF ALBA CITY OF BIGGS CITY OF GRIMR'Y CITY OF HEALDSBURG CITY'OF LODI CITY OF L02UM CITY OF PALO ALM CITY OF ROSEVI LE CITY OF SANTA CLARA CITY OF UXIAH PLUNAS-SIERRA RURAL KLECTR.IC COOPERATIVE 1. Definitions 3 2. Purpose 5 3. Construction and Operation . . . . . . . . . . 5 4. Sale and Delivery of Capacity and Energy fro;n the Project . . . . . . . . . . . . . . . 5 5. Rates and Charges . . . . . . . . . . . . . . 6 6. Annual Budget and Billing Statement . . . . . 8 7. Obligation in the Event of Default . . . . . . 9 8. Transfers, Sales and Assignments of Capacity . . . . . . . . . . . . . . . . . . .10 9. Surplus Capacity and Energy . . . . . . . . .11 10. Insurance and Indemnification . . . . . . . .12 11. Member Direction and Review . . . . . . . . .12 12. Term . . . . . . . . . . . . . . . . . . . . .13 13. Termination and Amendments . . . . . . . . . .14 14. Member Service Agreement . . . . . . . . . . .I4 15. Second Phase Agreement . . . . . . . ... . . .^14 16. Sharing of Resources, Facilities and Costs . .15 17. Miscellaneous . . . . . . . . . . . . . . . .18 APPENDIX A - Schedule of Project Participants and Project Entitlement Percentages . . . .20 APPENDIX B - Form of Opinion of Counsel . . . . . . .21 -�,...Ja-.. ....r._:,oro-a,��&t;DI�V%5G*S'ked;?�1`Cf'��•��°Cw!ltf?a'��:w�s.•r::.-.:n•..,:'ID..;,xxw,tyb%�ac:?�n�a'.x�t•ii.ac-s•.a-� .: :,..,.:.., w,.H...•._.,. „�ik:.,�0'',ik, c�:.;- ,.., .. v.... ,. _., ,'?,T�.'�i;��l�'F AGREEMENT FOR CONSTRUCTION, OPERATION AND FINANCING OF GEOTHERMAL GENERATING PROJECT NUMBER 3 This Agreement, dated as of July 1, 1983, by and among Northern California Power Agency, a joint powers agency of the State of California (hereinafter called "NCPA") and the other entities exe- cuting this Agreement. WIT;AESSETH : WHEREAS, NCPA has entered into the Steam Sales Agreement with Shell Oil Company (with its successors and assigns, the "Steam Supplier") , under which NCPA agreed to construct or cause to be con- structed, one or, upon the conditions stated therein, two 55 -megawatt geothermal generating units on a leasehold specified therein (the "East Block"); and WHEREAS, pursuant to the Steam Sales Agreement and this Agreement, NCPA proposes to acquire and construct or cause to be acquired and constructed and to operate or cause to be operated the Project described herein; and WHEREAS, NCPA and certain of its members have entered into a "Member Agreement (Second Phase) for Financing of Planning and Development Activities of the Shell East Block Geothermal Project" made as of June 1, 1981, as amended by Amendment No. One thereto, dated as of June 1, 1981 and Amendment No. Two thereto, dated as of January 13, 1983 providing for the financing of certain activities in connection with the East Block portion of the Project (said Agreement, as it may be amended and supplemented from time to time, being hereinafter called the "Second Phase Agreement"); and WHEREAS, this Agreement is the "Final Power Contract" con- templated in the Second Phase Agreements and WHEREAS, NCPA and its members have entered into one of three Member Service Agreements, effective February 12, 1981 (said Agreements, as they may be amended and supplemented from time to time, being hereinafter called the "Member Service Agreement"),, which provide for services which NCPA shall perform for its members, among other things, and for the provisions to be contained in second and third phase agreements, such as the Second Phase Agreement, and this Agreement; and ` WHEREAS, all participants in NCPA's Geothermal Generating Project No. 2 ("Project No. 2") are Project Participants (as hereinafter defined), the development of the Project will benefit Project No. 2 by, among other things, satisfying certain obligations -2- of NCPA under the Steam Sales Agreement, and the actions authorized herein to be taken by NCPA with respect to Project No. 2 will benefit the Project; and WHEREAS, NCPA and the Project Participants wish to enter into this Agreement to provide further for the construction, opera- tion and financing of the Project, the sale by NCPA of capacity and energy of the Project to the Project Participants, and the security for the Bonds to be issued to finance the Project.- NOW roject; NOW THEREFORE, the parties hereto do agree as hollows: 1. Definitions. The following terms shall, for all pur- poses of this Agreement, have the following meanings: (a) "Bonds" means bonds, notes or other evidences of indebtedness of NCPA (or of a nonprofit corporation on behalf of NCPA) issued to finance or refinance the Project, and includes addi- tional Bonds to complete the Project. (b) "Bond Resolution" means the resolution or resolutions providing for the issuance of Bonds and the terms thereof. (c) "Development Fund" means the fund authorized by the "NCPA Member Agreement for Participation in Electric Power Development Fund," dated July 1, 1975, as amended. (d) • "Electric System" means all properties and assets, real and personal; tangible and intangible, of the Project Participant now or hereafter existing, used or pertaining to the generation, trans- mission, transformation, distribution and sale of electric capacity and energy, including all add -.tions, extensions, expansions, improve- ments and betterments thereto and equippings thereof; provided, how- ever, that to the extent the Project Participant is not the sole owner of an asset or property or to the extent that an asset or prop- erty is used in part for the above described electric purposes, only the Project Participant's ownership interest in such asset or prop- erty or only the part of the asset or property so used for electric purposes shall be considered to be part of its Electric System. (e) "Project" means a project consisting of (i) two 55 -megawatt geothermal generating units, on the East Block, and related facilities, including transmission facilities to the generat- ing tie, in the State of California, and all rights, properties and improvements necessary therefor, including fuel and water facilities and resources, and capital improvements thereto that may be con- structed from time to time, and interests in certain other property and rights relating thereto, including a headquarters facility for use by NCPA in connection with the Project; provided that inclusion of such headquarters facility in this definition of "Project" shall only be effective upon the receipt, prior to the first issuance of Bonds, of either (a) a 100% vote approving such inclusion of all Project Participants, taken at a meeting in accordance with -3- t-" Section 11 hereof, off" (b) written approval of such inclusion from the representative of each Project Participant on the Commission of NCPA; (ii) Project No. 2, subject to the rights of the participants there- in; and (iii) such refinancing of Development Fund expenditures as shall, in the discretion of the Commission of NCPA, be included in any issue of Bonds. (f) "Project Entitlement Percentage" means, with respect to each Project Participant, the percentage so identified and set forth opposite the name of such Project Participant in Appendix A hereto, as such Appendix A shall be amended from time to time in accordance with Section 13 hereof. "East Block Entitlement Percentage" and "Project No. 2 Entitlement Percentage" mean, with respect to each Project Participant, the percentages so identified and set forth opposite the name of such Project Participant in Appendix A hereto, as such Appendix A shall be amended from time to time in accordance with Section 13 hereof. (g) "Project No. 2. Member Agreement" means the "Member Agreement for Construction, Operation and Financing of NCPA Geothermal Generating Unit No. 2 Project", dated as of June 15, 1.977 , as amended and supplemented. (h) "Project No. 2 Steam Sales Agreement" means the Geothermal Steam Sales Agreement between NCPA and the Steam Supplier dated June 27, 1977, as amended and supplemented. (i) ,"Project Pe:rticipants" means those entities listed in Appendix A hereto and executing this Agreement, together in each case with their respective successors or assigns. (j) "Refunding Date" means the date of the reZinanci.ng with Bonds of (i) the outstanding Public Power Revenue Bonds, 1981 Series A, dated July 1, 1981,' and the outstanding Public Power Revenue Bonds, 1982 Series A. dated July 1, 1982, (ii) the outstand- ing loan of NCPA pursuant to a Loan Agreement between NCPA and Bank of Montreal (California) , dated October •2, 1980, and (iii) certain Development Fund expenditures. (k) "Revenues" means all income, rents, rates, fees, charges, and other moneys derived by the Project Participant from the ownership or operation of its Electric System, including, without limiting the generality of the foregoing, (i) all income, rents, rates, feesr charges or other moneys derived from the sale, furnish- ing, and supplying of the electric capacity and energy and other ser- vices, facilities, and commodities sold, furnished, or supplied through the facilities of its Electric System, (ii) the earnings on and income derived from the investment of such income, rents, rates, fees, charges or other moneys to the extent that the use of such earnings and income is limited by or pursuant to law to its Electric System and (iii) the proceeds derived by the Project Participant directly or indirectly from the sale, lease or other disposition of all or a part of the Electric System as permitted hereby, but the -4- term "Revenues" shall not include (y) customers' deposits or any other deposits subject to refund until such deposits have become the property of the Project Participant, or (z) contributions from cus- tomers for the payment of costs of construction of facilities to serve them. (1) "Steam Sales Agreement" means the "NCPA East Block Steam Sales Agreement" with the Steam Supplier, dated September 15, 1980, as amended and supplemented. (m) "Trustee" means the entity or entities designated by NCPA pursuant `.o any Bond Resolution, to administer any funds or accounts required by such Bond Resolution or otherwise. 2. Purpose. The purpose of this Agreement is to sell capacity and energy of the Project to the Project Participants; to provide the terms and conditions of such sale and to provide for the financing of the Project. 3. Construction and Operation. NCPA will use its best efforts to cause or accomplish the construction, operation and financing of. the Project, the obtaining of all necessary authority and rights, and the performance of all things necessary and conven- ient therefor. Each Project Participant will cooperate with NCPA to that end, and will give any and all clarifying assurances by supple- mental agreements that may be reasonably necessary in the opinion of NCPA' s legal counsel to make the obligations herein more specific and to satisfy legal requirements and provide security for , the Bonds. NCPA may pledge and assign to any Trustee for any Bonds, all or any portion of the payments received hereunder from Project Participants, and upon notice from NC'A, each Project Participant shall make payments due by it hereunder directly to any Trustee for the Bonds. Such pledge and assignment by NCPA shall be made effee- tive for such time as NCPA shall determine and provide. .4. Sale and Delivery of Capacity and Energy from the Project. (a) Pursuant to the terms of this Agreement NCPA shall provide to each Project Participant, and each Project Participant shall take, or cause to be taken, such Project Participant's Project Entitlement Percentaae of the capacity and energy of the Project; provided, however, that NCPA shall first provide to each project par- ticipant for Project No. 2, and each such project participant shall take, or cause to be taken, such project participant's Proiect No. 2 Entitlement Percentage of the capacity and energy of Project No. 2, in accordance with the terms of the Project No. 2 Member Agreement. (b) NCPA will remain available to do all things necessary and possibly to deliver or cause to be delivered to or for the Project Participants, in accordance with their respective Project Entitlement Percentages, subject to the terms of the Project No. 2 Member Agreement,, the capacity and energy of the Project. Such delivery shall be at points mutually agreed upon by NCPA and each -5- Project Participant. Such agreement shall not be unreasonably withheld by either NCPA or a Project Participant. NCPA will remaa_r available to make or cause to be made all necessary and possible arrangements for transmission of such capacity and energy to sucl points over the lines of NCPA or others, and for additional capacity and energy required from others as reserves against planned or -emer- gency service interruptions with respect to the Project. Wheeling ox delivery services by NCPA with related energy sales to the Project Participants shall be as provided in service schedules as provided it Article III of the Member Service Agreement. 5. Rates and Charges. (a) Commencing on the Ref unding Date, NCPA shall fix charges to the Project Participants under this Aireement to produce revenues to NCPA from the Project equal to the ame:unts anticipated to be needed by NCPA to meet the total costs of NCPA to provide capacity and energy from the Pr,-ject, including but not limit -d to (i) debt service on the Bonrl:;, reserves for the pay- ment of debt ate::" rP on the Bonds An:2 .,cher payments required under the Bond Resolution, other than payments described in (iii) and (iv) below, (ii) all other payments provided to be made by NCPA under the Steam Sales Agreement and the Project No. 2 Steam Sales Agreement, (iii) any other operation, maintenance and replacement costs of the Project, a reasonable reserve for contingencies, and all other Project costs other than costs and expenses of NCPA for delivering Project capacity and energy pursuant to Section 4(b) hereof, and (iv) costs and expenses of NCPA for delivering Project capacity and energy pursuant to Section 4(b) of this Agreement. NCPA shall fix charges to the project Participants to produce revenues to NCPA from the Project to meet the costs described in (i) and (ii) above based on East Block Entitlement Percentages applied to such costs allocable to the East Block portion of the Project and Project No. 2 Entitlement Percentages applied to such costs allocable to the Project No. 2 por- tion of the Project; and to meet the costs described in (iii) above based on the anticipated energy sales of the the East Block portion of the Project and, on the anticipated energy sales of the Project No. 2 portion of the Project, respectively. If NCPA delivers Project capacity and energy to or for any Project Participant pursuant to Section 4(b) hereof, NCPA shall fix charges to each such Project Participant 5o as to pay the costs of such delivery without liability under this Section 5(a) of any Project Participant for whom Project capacity and energy is not so delivered by NCPA. The obligations of the respective Project Participants that are participants in Project No. 2 under this Section 5(a) shall be deemed to be satistied to the extent such obligations are satisfied pursuant to the Project No. 2 Member Agreement. (b) To the extent that the funds provided under Section 5(a) of this .Agreement are at any time not sufficient for such pur- poses, each Project Participant shall pay to NCPA an amount equal to such Project Participant's Project Entitlement Percentage of the total cost to pay all amounts of principal and interest on the Bonds, reserves for the payment of debt service and other payments required under the Bond Resolution and all other payments required to be macle by NCPA under the Steam Sales Agreement. The obligation of this Section 5(b) is incurred by each Project Participant for the benefit of future holders of Bonds, and shall commence and continue to exist and be honored by Project Participants whether or not capacity or energy is furnished to them from the Project at all times or at all (wbi ch provision may be characterized as an obligation to pay all costs on a take -or -pay basis whether or not such Project capacity or energy is delivered or provided) . (c) Notwithstanding that NCPA may utilize services under the PG and E Interconnection Agreement an, Pacific Gas and Electric Company, NCPA and certain of the Project Participants (the "PG and E Interconnection Agreement") in complying with Section 4(b) hereof, any payments required to be made by, or costs incurred by NCPA or the Project Participants pursuant to Section 9.5 of the Interconnection Agreement shall not be made under this Agreement. (d) Each Project Participant shall make payments under this Agreement solely from the Revenues of, and as an operating expense of, its Electric System. Nothing herein shall Le construed as pro- hibiting any Project Participant from using any other funds and reve- nues for purposes of satisfying any provisions of this Agreement. (e) Each Project Participant shall make payments under this Agreement whether or not the Project is completed, operable, operat- ing or retired and notwithstanding the suspension, interruption, interference, reduction or curtailment of Project output or the capacity and ener%, contracted for in whole or in part for any reason whatsoever. Such payments are not subject to any reduction, whether by offset or otherwise, and are not conditioned upon performance by NCPA or any Project Participant under this Agreement or any other agreement; provided, however, that the obligations of the respective Project Participants that are participants in Project No. 2 under Section 5(a) hereof shall be deemed to be satisfied to the extent such obligations are satisfied pursuant to the Project No. 2 Member Agreement. (f) No Project Participant shall be liable under this Agreement for the obligations of any other Project Participant. Each Project Participant shall be solely responsible and liable for per- formance of its obligations under this Agreement and for the mainte- nance and operation of its respective properties not included as part of the Project. The obligation of each Project Participant to make payments under this Agreement is a several obligation and not a joint obligation with those of the ether Project Participants. (g) Each Proicct Participant establish and collect fees and charges energy furnished through facilities of it -7- scovenants and agrees to for electric capacity and Electric System- sufficient A r to provide Revenues adequate to meet its obligations under this Agreement and to pay any and all other amounts payable from or con— stituting a charge or lien upon any or all such Revenues. (h) Each Project Participant covenants and agrees that it shall, at all times, operate the properties of its Electric System and the business in connection therewith in an efficient manner and at reasonable cost and shall maintain its Electric System in good repair, working order and condition. 6. Annual Budget and Billing Statement. Pr i or to t h e beginning of each NCPA fiscal year, the Commission of NCPA will adopt an annual budget for such fiscal year for costs and expenses relating to the Project and shall promptly give notice to each Project Participant of its projected share of such costs and expenses. A billing statement prepared by NCPA based on estimates will be sent to each Project Participant not later than the fifteenth (15th) day of each calendar month showing the amount payable by such Project Participant of costs payable under Section 5(a) hereof for the second succeeding calendar month, any amount payable by such Project Participant as its Project Entitlement Percentage of costs payable under Section 5(b) hereof, and the arnoLnt of any credits or debits as a result of any appropriate adjustments. Amounts shown on the billing statement are due and payable thirty (30) days after the date of the billing statement. Any amount due and not paid by the Project Participant within thirty (30) days after the date of the billing statement shall Bear interest from the due date until paid at an annual rate to be established by the Commission of NCPA at the time of adoption of the then most recent annual budget. On or bef ore the day f ive (5) calendar months of ter the end of each NCPA fiscal year, NCPA shall submit to each Project Participant a statement of the aggregate monthly costs for such fiscal year. If the actual aggregate monthly costs and the Project Participant's share thereof pursuant to this Agreement, and other amounts payable for any fiscal year, exceed the billings to the Project Participant, the deficiency shall be added to the Project Participant's immediately succeeding billing statement. If the actual aggregate monthly costs and the Project Participant's share thereof pursuant to this Agreement, and other amounts payable for any fiscal year, are less than the billings to the Project Participant, such excess shall be credited to the Project Participant's billing statements for such period (not to exceed the immediately succeeding six months) and in such amounts as shall be determined by NCPA. If a Project Participant questions or disputes the correct— ness of any billing statement by NCPA, it shall pay NCPA the amount claimed when due and shall within thirty (30) days of the receipt of such billing statement request an explanation from NCPA. If the bill is determined to be incorrect, NCPA will issue a corrected bill and refund any amount wnich may be due the Project Participant which refund shall bear interest from the date NCPA received payment unti3. the date of the refund at an annual rate to be established by the Commission of NCPA at the time of adoption of the then most recent: annual budget. If NCPA and the Project Participant fail to agree on the correctness of a bill within thirty (30) days after the Project Participant has requested an explanation, the parties shall promptly submit the dispute to arbitration under section 1280 ,t =. of the Code of Civil Procedure. 7. Obligation in the Event of Default. (a) Upon fail- ure ail- ure of any Project Participant to make any payment in full when due under this Agreement, NCPA shall make written demand upon such Project Participant, and if said failure is not remedied within thirty (30) days from the date of such demand, such failure shall. constitute a default at the expiration of such period. Notice o£ such demand shall be provided to each other Project Participant by NCPA. (b) Upon the failure of any Project Participant to make any payment which failure constitutes a default under this Agreement, NCPA shall use its best efforts to sell and transfer for the default- ing Project Participant's account all or a portion of such Project Participant's Project Entitlement Percentage of Project capacity and energy for all or a portion of the remainder of the term of this .Agreement. NCPA shall not sell such capacity and energy, directly or indirectly, in any manner, and shall not take or permit to be taken any other action or actions, which would result in any of the Bonds being treated as an obligation not described in Section 103(a) of the Internal Revenue Code of 1954, as amended, by reason of classifica- tion of such Bond as an "industrial development bond" within the meaning of Section 103(b) of said Code. Notwithstanding that all or any portion of the Project Participant's Project Entitlement Percentage of Project capacity and energy is so sold or transferred, the Project Participant shall remain liable to NCPA to pay the full amount of its Project Entitlement Percentage of monthly costs as if such sale or transfer had not been made, except that such liability shall be discharged to the extent that NCPA shall receive payment from the purchaser or transferee thereof. (c) Upon the failure of any Project Participant to make any payment which failure constitutes a default under this Agreement and causes NCPA to be in default under the Steam Sales Agreement, the Project No. 2 Steam Sales Agreement or any Bond Resolution, NCPA may (in addition to the remedy provided by subsection (b) of this Section 7) terminate the provisions of this Agreement insofar as the same entitle the defaulting Project Participant to its Project Entitlement Percentage of Project capacity and energy. Irrespective of such ter- mination, the obligations of the Project Participant under this Agreement shall continue in full force and effect. -9- (d) Upon the f ailuro of any Project Participant to make any payment which failure constitutes a default under this Agreement, and except as sales or transfers are rade pursuant to subsection (b) of this Section 7, (i) the Project Entitlement Percentage of each nonde- faulting Project Participant shall be automatically increased for the remaining term of this Agreement pro rata with those of the other nondefaulting Project Participants and (ii) the defaulting Proiect Participant's Project Entitlement Percentage shall (but only for pur- poses of computing the respective Project Entitlement Percentages of the nondefaulting Project Participants) be reduced corresfondiiigly; provided, however, that the sum of such increases for any nondefault- ing Project Participant shall not exceed, without written consent of such nondefaulting Project Participant, an accernulated maximum of 25$ of the nondefaulting Project Participant's Project Entitlement Percentage, all as initially set forth n Appe:,dix A. (e) If a Project Participant shall fail or refuse to pay any amounts due to NCPA, the fact that other Project Participants have increased their obligation to NCPA pursuant to this Section 7 shall not relieve the defaulting Project Participant of its liability under this Agreement, and any Project Participant increasing such obligation shall have a right of recovery from the defaulting Project Participant to the extent of such respective increase in obli gaticn caused by the defaulting P::oject Participant. (f) Any Trustee for any Bonds the payment of which is secured by payments made by the Project Participants under this Agreement shall have the right, as a third party beneficiary, to ini- Ciate and maintain suit to enforce this Agreement to the extent pro- vided in the related Bond Resolution. 8. Transfers, Sales and Assignments of Capacity. Each Project Participant has full and. unfettered rights to make transfers, sales, assignments and exchanges (collectively "transfers") of capac- ity, energy, and rights thereto except as expressly provided other- wise in this Agreement. (a) No Project Participant shall transfer ownership of all or substantially all of its Electric SyE-tem to another entity until it has first complied with the provisions of this subsection (a) . A consolidation with another governmental entity or change in govern- mental form is not deemed a transfer of ownership. (1) Such disposition or transfer shall be under terms and conditions that provide assurance that the obli- gations of the transferring Project Participant under this Agreement, and that NCPA's obligations under this Agreement, the Steam Sales Agreement, and any Bond Resolution, and the Project No. 2 Steam Sales Agreement, and under ocher agreements made or to be made by NCPA to carry out the Project, will be promptly and adequately -10- U11 #4 met. NCPA may require that sufficient moneys of the ransf erring Project Participant to discharge such obliga- tions be irrevocably set aside and maintained in a trust account, as a condition to the transfer of the Electric System, if no other adequate assurance is available. (2) The transferring Project Participant shall give ninety (90) days' advance written notice to NCPA of any proposed transfer pursuant to this subsection (a) . Appendix A to this Agreement shall be amended as appropri- ate to reflect any transaction pursuant to this subsection (a) . (b) Notwithstanding any other provision of this Agreement, no Project Participant shall transfer, assign, sell or exchange any Project capacity and energy, directly or indirectly, in any manner, and shall not take or permit to be taken any other action or actiozis, which would result in any of the Bonds being treated as an obligation not described in Section 103(a) of the Internal Revenue Code of 1954, as amended, by reason of classification of such Bond as an "industrial development bond" within the meaning of Section 103(b) of said Code. 9. Surplus Capacity and Energy. W h e n a P r o j e c t Participant has surplus capacity and/or energy from the Project, NCPA shall, if requested by such Project Participant to do so, sell such surplus capacity and/or energy on behalf of such Project Participant in the f of l oW i ng manne .r : (a) NCPA shall use its best efforts to sell such surplus capacity and/or energy at a price at least equal to the Project Participant's cost therefor. (b) Other Project Participants shall have a right of first refusal, and other NCPA members shall have the second right at the sales prices set forth in subsections (c) and (d) of this Section 9. (c) If NCPA can purchase equivalent capacity and/or energy from other sources for less than the Project Participant's cost for surplus capacity and/or energy from the Project, as the case may be, the sales price of such capacity and/or energy to another Project Participant or NCPA member shall be equal to the cost of purchasing the capacity and/or energy from such other source. -(d) If the alternative cost of purchasing capacity and/or energy fc•: Wither Project Participants or members of NCPA is more than the Project Participant's cost of surplus capacity and/or energy from the Project, then the sales price shall be the Project Participant's cost plus one-half the difference between the Project Participant's cost from the Project and the cost of capacity and/or energy from an alternative source. -11- # � l met. NCPA may }require that sufficient moneys of the transferring Project Participant to discharge such obliga- tions be irrevocably set aside and maintained in a trust account, as a condition to the transfer of the Electric System, if no other adequate assurance is available. (2) The transferring Project Participant shall give ninety (90) days' advance written notice to NCPA of any proposed transfer pursuant to this subsection (a) . Appendix A to this Agreement shall be amended as appropri- ate to reflect any transaction pursuant to this subsection (a) . (b) Notwithstanding any other provision of this Agreement, no Project Participant shall transfer, assign, sell or exchange any Pi:oject capacity and energy, directly or indirectly, in any manner, and shall not take or permit to be taken any other action or actions, which would result in any of the Bonds being treated as an obligation not described in Section 103(a) of the Internal Revenue Code of 1954, as amended, by reason of classification of such Bond as an "industrial development bond" within the ►nea-ling of Section 103(b) of said Code. 9. Surplus Capacity and Energy. W h e n a P r o j e c t Participant has surplus capacity and/or energy from the Project, NCPA shall, if requested by such Project Participant to do so, sell such surplus capacity and/or energy on behalf of such Project Participant in the following manner: (a) NCPA shall use its best efforts to sell such surplus capacity and/or energy at a price at least equal to the Project Participant's cost therefor. (b) Other Project Participants shall have a right of first refusal, and other NCPA members shall have the second right at the sales prices set forth in subsections (c) and (3) of this Section 9. (c) If NCPA can purchase equivalent capacity and/or energy from other sources for less than the Project Participant's cost for surplus capacity and/or energy from the Project, as the case may be, the sales price of such capacity and/or energy to another Project Participant or NCPA member shall be equal to the cost of purchasing the capacity and/or energy from such other source. -(d) If the alternative cost of purchasing capacity and/or energy for other Project Participants or members of NCPA is more than the Project Participant's cost of surplus capacity and/or energy from the Project, then the sales price shall be the Project Participant's cost plus one-half the difference between the Project Participant's cost from the Project and the cost of capacity and/or energy from an alternative source. -ll- (e) NCPA shall not sell such surplus capacity and energy, directly or indirectly, in any manner, and shall not take or permit to be taken any other action or actions, which would result in any of the Bonds being treated as an obligation not described in Section 103(a) of the Internal Revenue Code of 1954, as amended, by reason of classification of such Bond as an "industrial development bond" within the meaning of Section 103(b) of said Code. 10. Insurance and Indemnification. NCPA shall obtain or cause to be obtained insurance for the Project covering such risks ( including earthquakes) , in such amounts and with such deductibles as shall be determined by NCPA. NCPA shall indemnify and hold harmless each Project Participant from any liability for personal injury or property damage resulting from any accident or occurrence arising out of or in any way related to the construction or operation of the Project, provided, however, that such liability of NCPA shall be limited to the extent the proceeds of insurance and other moneys available to NCPA hereunder are available therefore. 11. Member Direction and Review. NCPA shall comply with all lawful directions of the Project Participants with respect to this Agreement, while not stayed or nullified, to the fullest extent authorized by law. ActUdons of Project Participants, including giving such directions to NCPA, will be taken only at meetings of authorized representatives of Project Participants duly called and held pursuant to the Ralph M. Brown Act or other laws applicable to such meetings, in effect from time to time. (a) A quorum of the Commission of NCPA for purposes of acting upon matters related to the Project shall consist of those Commissioners (including for all purposes of this Section 11, their designated alternates) , representing a numerical majority of the Project Participants, or, in the absence of such, representing Project Participants having a combined Project Entitlement Percentage of at least a. majority in interest at such time. (b) Spacial meetings of the Commission to act only on mat— ters relating to the Project may be called by a majority of the Conuaissioners of Project Participants upon notice as required by the Ralph M. Brown Act or other laws applicable to such meetings, in effect from time to time. (c) At regular or special meetings of the Commission, voting on matters relating to the Project Shall be *by Project Entitlement Percentage, and the affirmative vote of a majority in interest at such time shall be required to take action, unless the Project Participants agree at such meetings that voting will be on a one member one vote basis, with a majority vot- - of those present required for action. -12- i 1 (e) NCPA shall not sell such surplus capacity and energy, directly or indirectly, in any manner, and shall not take or permit to be taken any other action or actions, which would result in any of the Bonds being treated as an obligation not described in Section 103(a) of the Internal Revenue Code of 1954, as amended, by reason of classification of such Bond as an "industrial development bond" within the meaning of Section 103(b) of said Code. 10. Insurance and Indemnification. NCPA shall obtain or cause to be obtained insurance for the Project covering such risks ( including earthquakes) , in such amounts and with such deductibles as shall be determined by NCPA. NCPA shall indemnify and hold harmless each Project Participant from any liability for personal injury or property damage resulting from any accident or occurrence arising out of or in any way related to the construction or operation of the Project, provided, however, that such liability of NCPA shall be limited to the extent the proceeds of insurance and other moneys available to NCPA hereunder are available therefore. 11. Member Direction and Review. NCPA shall comply with all lawful directions of the Project Participants with respect to this Agreement, while not stayed or nullified, to the fullest extent authorized by law. ActUdons of Project Participants, including giving such directions to NCPA, will be taken only at meetings of authorized representatives of Project Participants duly called and held pursuant to the Ralph M. Brown Act or other laws applicable to such meetings, in effect from time to time. (a) A quorum of the Commission of NCPA for purposes of acting upon matters related to the Project shall consist of those Commissioners (including for all purposes of this Section 11, their designated alternates) , representing a numerical majority of the Project Participants, or, in the absence of such, representing Project Participants having a combined Project Entitlement Percentage of at least a. majority in interest at such time. (b) Spacial meetings of the Commission to act only on mat— ters relating to the Project may be called by a majority of the Conuaissioners of Project Participants upon notice as required by the Ralph M. Brown Act or other laws applicable to such meetings, in effect from time to time. (c) At regular or special meetings of the Commission, voting on matters relating to the Project Shall be *by Project Entitlement Percentage, and the affirmative vote of a majority in interest at such time shall be required to take action, unless the Project Participants agree at such meetings that voting will be on a one member one vote basis, with a majority vot- - of those present required for action. -12- .g. V a� - ^` (d) Notwiti,standing subsection (c) of this Section 11, upon demand of any Commissioner of any Project Participant, at any meeting of the Commission other than a special meeting referred to in subsec- tion (b) of this Section 11, the vote on any issue relating to the Project shall be by Project Entitlement Percentage at such time and 653 or greater affirmative vote shall be required to take action. (e) Any Project Participant may veto a discretionary action of the Project Participants relating to the Project that was not taken by a 65% or greater Project Entitlement Percentage vote within 10 days following mailing of notice of such Commissioners' action, by giving written notice of veto to NCPA, unless at a meeting of Commissioners of Project Participants called for the purpose of con- sidering the veto and held within 30 days after such veto notice, the holders of 65% or greater of the Project Entitlement Percentage shall vote to override the veto. (f) The sixty-five percent of the Project Entitlement Percentage specified in this Section 11 shall be reduced by the amount- that the Project Entitlement Percentage of any Project Participant shall exceed 353, but such 653 shall not be reduced below a majority in interest. 12. Term. (a) This Agreement shall not take effect until (i) it and/or any supplement to it provided for in Section 2(c) of the Second Phase Agreement has been duly executed and delivered to NCPA-by Project Participants the Project Entitlement Percentages of which, in the aggregate, equal 1003, all in accordance with Section 2 (c)� of the Second Phase Agreement and accompanied by an opinion for each Project Participant of an attorney or firm of attor- neys in substantially the form attached hereto as Appendix B, and by evidence satisfactory to NCPA of compliance by such Project Participant with Section 5C of the Project No. 2 Member Agreement and in compliance with any other similar requirements of other agreements between NCPA and such Project Participant, and (ii) the Refunding Date shall have occurred. (b) Notwithstanding the delay in the effective date of this Agreement until Project Entitlement Percentages in the aggregate equal 100% and the other provisions of Section 12(a) hereof have been complied with, it is agreed by all signatories hereto that in consid- eration for Nr'PA's signature hereto and for its commitment to use its best efforts to obtain the commitment for Project Entitlement Percentages in the aggregate equal to 100%, each Project'Participant upon its execution and delivery of this Agreement to NCPA along with required opinion and any required evidence of compliance as required by Section 12(a) hereof shall be insnediately bound not to withdraw its respective offer herein made to enter into this Agreement as exe- cuted and/or supplemented or to decrease or terminate its Project Entitlement Percentage. Such a decrease or termination by a Project Participant may be made only if this Agreement has not taken effect -13- . '.T4 i s t4 .h • y tes $ J";35 r before Januar 1, 1984 and only b thereof y y giving written notice thereon. to NCPA between January 1 and January 15, 1984. (c) Notwithstanding the foregoing, each Project Participant shall be entitled to decrease or terminate its Project Entitlement Percentage upon giving written notice thereof to NCPA within f if teen (15) days after January 1, 1986, if by January 1, 1986 NCPA shall not have issued any Bonds the payment of which is secured by payments made by the Project Participants under this Agreement. (d) The term of this Agreement shall continue until the later of (i) the expiration of the useful life of the Project, or (ii) the date on which all Bonds issued have been retired, or full provision made for their retirement, including interest until their retirement date; provided, however, that in no event shall the terZn of this Agreement extend beyond the date of the termination of the existence of NCPA. In the event of the termination of the existence of NCPA it is the intent of the Project Participants that th:e Agreement be construed as an agreement among the Project Participants. 13. . Termination and Amendments. This Agreement shall not e subject to termination by any party under any circumstances, whether based upon the default of any other party under this Agreement, or any other instrument, or otherwise, except as specifi- cally provided herein. Except as otherwise provided in this Agreement, so long as any Bonds are outstanding and unpaid and funds are not set aside for the payment or retirement thereof in accordance with the applicable Bond Resolution, this Agreement shall not be amended, modified or otherwise changed or rescinded by agreement of the parties without the consent of each Trustee for Bonds whose consent is required under the applicable Bond Resolution. 14. Member Service Agreement. This Agreement is a ser- vice schedule and a third phase agreement attached to and incorpo- rated into the Member Service Agreement. This Agreement shall be construed as the more specific teras governing the general relatiocr- ship hetween the parties set out in the Member Service Agreement in connection with the Project. 15. Second Phase Agreement. The Second Phase Agreement is superseded by this Agreement upon the issuance of any Bonds the payment of which is secured by payments made by the Project Participants under this Agreement and upon provision for payment of any notes or other evidences of indebtedness of NCPA secured by pay- ments made by the Project Participants under the Second Phase Agreement, except that section 4 thereof shall remain in effect as provided by section 5 of the Second Phase Agreement unless changed by -14- R formal action of all of the Project Participants. Said section 4 as follows: "Section 4. Conditional Repayment to Members. All payments and advances made heretofore, including Development Fund Advances, and those hereafter made pursu- ant to Section 1, excluding interest paid on delinquent payments, shall be repaid to each of the entities making such payments and advances pursuant to this Agreement out of the proceeds of the first issuance of the Project bonds or as and when there are sufficient funds available from the partial sale of Bonds. Such reimbursements shall be made within 50 days following the sale of any Project bonds and shall include interest computed monthly at a rate equivalent to the prime rate of the Bank of America NT&SA at the end of such month. Any interest due under the third paragraph of section 1 of this Agreement and unpaid shall be deducted from the repayment. If NCPA is not successful in financing the Project, there shall be no reimbursement except out of unused Project funds along with all other receipts to which NCPA is entitled in connection with the Project.*. 16. Sharing of Resources, Facilities and Costs. (a) NCPA may, in accordance with Section 11 hereof, enter into agreements for the transfer or sharing of resources, facilities and costs between and among the Project and other entities and projects (including without limitation Project No. 2), which agreements may provide, among other things, for the transfer or sharing of steam, transmission facilities and rights to use the same, maintenance and repair facilities, generating equipment, spare parts, staff, insur- ance, to xes end payment in lieu thereof, and delay payments under the Steam Sales Agreement and the Project No. 2 Steam Sales Agreement and for the integrated operation of the Project and Project No. 2 by NCPA. (b) NCPA may, in accordance with the Project No. 2 Member Agreement and upon compliance with the requirements of any trust indenture or other instrument applicable thereto, including without limitation any consents required thereby, enter into agreements for (i) the transfer or sharing of resources, facilities and costs between and among Project No. 2 and other entities and projects ( including without limitation the Project) , which agreements may pro- vide, among other things, for the transfer or sharing of steam, transmission facilities and rights to use the same, maintenance and repair facilities, generating equipment, spare parts, staff, insur- ance, taxes and payment in lieu thereof, and delay payments under the Project No. 2 Steam Sales Agreement, and for the integrated operation of the Project and Project No. 2 by NCPA, and (ii) the modification or refinancing of all or any portion of the obligations incurred 5y NCPA or a nonprofit corporation for Project No. 2, including without -15- limitation the refinancing thereof'with Bonds and the modification or refinancing of the loan guaranteed by the United States Department of Energy. (c) This Agreement shall constitute approval by the partic- ipants in Project No. 2 of (i) the refinancing of (a) the outstanding Public Power Revenue Bonds, 1981 Series A, dated July 1, 1981, and the outstanding Public Power Revenue Bonds, 1982 Series A, dated July 1, 1982, (b) the outstanding loan of NCPA pursuant to a Loan Agreement between NCPA and Bank of Montreal (California) , dated October 2, 1980, and (c) certain Development Fund expenditures, with Bonds so long as, in the judgment of the Commissioners of NCPA repre- senting the participants in Project No. 2, the debt service secured or to be secured by the Project No. 2 Member Agreement is not increased thereby and the other terms of such refinancing are not materially adverse to the participants in Project No. 2; and (ii) equal sharing between Project No. 2 and the East Block portion of the Project of steam from the Project No. 2 area and the East Block area. (d) The Project No. 2 Member Agreement shall be construed so as to be compatible with this Agreement to accomplish the purposes hereof. Any financing or refinancing of Project No. 2 shall be accomplished by the issuance of Bonds secured by this Agreement unless the Project Participants refuse to authorize such financing or refinancing as may be requested by the participants in Project No. 2. The respective obligations of NCPA under Section 9 hereof and of the Project Participants under Section 5 hereof shall be deemed satisfied to the extent of performance thereof pursuant to the Project No. 2 Member Agreement, and (iv) subject to the specific terms of the agreement or agreements contemplated by subsections (a) and (b) of this Section 16, Project No. 2 and the East Block portion of the Project shall be conducted for the mutual benefit of all par- ticipants therein. (e) The Project No. 2 Member Agreement shall be amended by the provisions hereof as follows: (i) Section 6 of the Project No. 2 Member Agreement shall be superseded by Sections 8, and 9 hereof, (ii) subsection (a) of Section 5 of the Project No. 2 Member Agreement shall be superseded by the following: "(a) Commencing with the commercial operation of the Project? NCPA shall fix charges to the Purchasing Participating Member under this Agreement to produce revenues to NCPA from the Project equal to the amounts anticipated to be needed by NCPA to meet the total costs of NCPA to provide car- and energy from the Project, including but nvr limited to (i) debt service -16- *., tow\ on the Bonds, reserves for the payment of debt service on the Bonds and other payments required under the Bond Indenture or other agreement or instrument pro- viding for the issuance and payment of Bonds other than payments described in (iii) and (iv) below, (ii) all other payments provided to be made by NCPA under the Shell Agreement, (iii) any other operation, main- tenance and replacement costs of the Project, a rea- sonable reserve for contingencies, and all other Project costs other than costs and expenses pursuant to Section 4 hereof, and (iv) costs and expenses of NCPA for delivering Project capacity and energy pursu- ant to Section 4 hereof. NCPA shall fix charges to the Purchasing Participating Members to produce reve- nues to NCPA from the Project to meet the costs described in (i) and (ii) above based on Purchasing Participating Member's Purchasing Participation Percentage and to meet the costs described in (iii) above based on the anticipated energy sales of the Project. If NCPA delivers Project capacity and energy to or for any Purchasing Participating Member pursuant to section 4 of this Agreement, NCPA shall fix charges to each such Purchasing Participating Member so as to pay the costs of such delivery without liability to any Purchasing Participating Member for whom Project capacity and energy is not so delivered by NCPA. Any payments required to be made, or costs incurred, by NCPA or the Project Participants pursuant to the PG and E Interconnection Agreement shall not be made or incurred under this Agreement." (iii) Section 3 of the .Project No. 2 Member Agreement shall be supplemented by the following: "NCPA may pledge and assign to any Trustee for any Bonds all or any portion of the payments received hereunder from Purchasing Participating Members and upon notice from NCPA, each Purchasing Participating Member shall make payments due by it hereunder directly to any Trustee for the Bonds. Such pledge and assignment by NCPA shall be made effective for such time as NCPA shall determine and provide. For the purposes of this Agreement the term "Bonds" shall include any bonds, notes or other evidences of indebt- edness issued by NCPA to refinance the cost of the Project." (iv) Section 5C of the Project No. 2 Member Agreement shall be deleted. -17- h Tf� .000— '%Ik— 8'. 17. Miscellaneous. The headings of the sections hereof are inserted for convenience only and shall not be deemed a part of this Agreement. If any one or more of the covenants or agreements provided in this Agreement to be performed should be determined to be invalid or contrary to law, such covenant or agreement shall be deemed and construed to be severable from the remaining covenants and agreements herein contained and shall in no way affect the validity of the remaining provisions of this Agreement. This Agreement may be executed in several counterparts, all or any of which shall be regarded for all purposes as one original and shall constitute and be but one and the same instrument. r l� IN WITNESS WHEREOF each Project Participant has executed this Agreement with the approval of its governing body, and caused its official seal to be affixed and NCPA has executed this Agreement in accordance with the authorization of its Commission. NORTHERN CALIFORNIA POWER AGENCY By And CITY OF ALAMEDA By. And CITY OF BIGGS k By An CITY OF HE:ALDSBURG By An _ CITY OF LCDI By An d CITY OF LOMPOC By— An -19- CITY OF PALO ALTO B And CITY OF ROSEVILLE B And CITY OF SANTA CLARA By And CITY OF GRIDLEY By _ And _ UKIAH By And____—._____ PLUMAS-SIERRA RURAL ELECTRIC COOPERATIVE B And E v. APPENDIX A SCHEDULE OF PROTECT PARTICIPANTS P.ND P110JECT ENTITLEMENT PERCENTAGES -20- Project No. 2 East Block Project Project Entitlement Entitlement Entitlement Partici ant _ Percentage Percentage Percentage City of Alamed%. 14.994% 18.771% 16.8825% City of Biggs 0.000 .454 .227 City of Gridley .334 .456 .395 City of Healdsburg 3.252 4.096 3.674 City of Lodi 14.560 9.158 11.859 City of Lompoc 3.266 4.096 3.681 City of Palo Alto 0.000 9.158 4.579 City of Roseville 3.252 12.514 7.883 City of Santa Clara 54.651 34.13 44.3905 City of Ukiah 4.972 6.257 5.6145 Plumas-Sierra Rural Electric Cooperative .719 .91 .8145 Total 100.000% 100.000% 100.000% -20- APPENDIX B FORM OF OPINION OF COMSEL Northern California Power Agency 8421 Auburn Boulevard Suite 160 Citrus Heights, California 95610 Dear Sirs: I am acting as counsel to the _ (the "Project Participant") under the Agreement for Construction, Operation and Financing of Geothermal Generating Project Number 3 dated as of 11982 (the "Agreement") among the Project Participant, Northern California Power Agency (the "Agency") and certain other entities, and I have acted as counsel to the Project Participant in connection with the matters referred to herein. As such counsel I have examined and am familiar with (i) those documents relating to the existence, organization and operation of the Project Participant, (ii) all necessary documentation of the Project Participant relating to the authorization, execution and delivery of the Agreement and (iii) an executed counterpart of the Agreement. Based upon the foregoing and an examination of such other information, papers and documents as I deem necessary or advisable to enable me to render this opinion, including the Constitution and laws of the State of California together with the [charter], other govern- ing instruments, ordinances and public proceedings of the Project Participant, I am of the opinion that: 1. The Project Participant is (state form of organization] _._._, duly created, organized and existing under *,e laws of the State of California and duly qualified to furnish electric service within said State. 2. The Project Participant has authority and.right to execute, deliver and perform, pursuant to the terms of, the Agreement, and the Project Participant has complied with the provisions of applicable lac.^ in all matters relat- ing to such transactions. 3. The Agreement has been duly authorized, executed and delivered by the Project Participant, is in full force and effect as to the Project Participant in accordance Ath -21- its terms assuming the other Project Participants have complied with the requirements of Section 12(a) of such Agreement and, assuming that the Agency has all the requi- site power and authority, and has taken all necessary action, to execute and deliver such Agreement, constitutes the legal, valid and binding obligation of the Project Participant enforceable in accordance with its terms. 4. Payments by the Project Participant under the Agreement will constitute an operating expense of the Project Participant and are to be made solely from the Revenues of its Electric System as provided in Section 5(c) of the Agreement. 5. No approval, consent or authorization of any gov- ernmental or public agency, authority or person is required for the execution and delivery by the Project Participant of the Agreement, or the performance by the Project Participant of its obligations thereunder. 6. The authorization, execution and delivery of the Agreement.and compliance with the provisions thereof will not conflict with or constitute a breach of, or default under, any instrument relating to the organization, exis- tence or operation of the Project Participant, any commit- ment, agreement or other instrument to which the Project Participant is a party or by which it or its property is bound or affected, or any ruling, regulation, ordinance, judgment, order or decree to which the Project Participant (or any of its officers in their respective capacities as such) is subject or any provision of the laws of the State of California relating to the Project Participant and its affairs. 7. There is no action, suit, proceeding, inquiry or investigation at law or in equity, or before any court, public board or body, pending or, to my knowledge, threat-- ened against or affecting the Project Participant or any entity affiliated with the Project Participant or any of its officers in their respective capacities as such (nor to the best of my knowledge is there any basis therefor) , which questions the powers of the Project participant referred to in paragraph 2 above or the validity of the proceedings taken by the Project Participant in connection with the authorization, execution or delivery of the Agreement, or wherein any unfavorable decision, ruling or finding would materially adversely affect the transactions contemplated by the Agreement, or which, in any way, would adversely affect the validity or enforceability of the Agreement. -22- The opinion expressed in paragraph 3 above is qualified to the extent that the enforceability of the Agreement may be limited bly any applicable bankruptcy, insolvency, debt adjustment, moratoriums, reorganization, or other similar laws affecting auditors' rights gen:- erally or as to the availability of any particular remedy. This opinion is rendered only with respect to the laws of the State of California and the United States of America, and is addressed only to the Agency. No other person is entitl.d to rely an this opinion, nor may you rely on it in connection with any transac- tions other than those described herein. (Note: Where it shall be necessary for the Project Participant to obtain the authorization or approval of a Federal, state or local regulatory authority relating to such Project Participant's performance under the Agreement, the form of opinions set forth in paragraphs 2, 5 and 6 hereof may be appropriately adjusted to reflect the necessity for such authorization or approval and paragraph 5 hereof shall be adjusted to include therein an excep- tion thereto specifically describing the requisite authorization or approval and stating that it has been duly given or obtained and is in full force -and effect.) Very truly yours, IJ -23- r LJ RESOLUTION NO. 83- 56 NORTHERN CALIFORNIA POWER AGENCY C BE IT RESOLVED BY THE COMMISSION OF THE NORTHERN CALIFORNIA POWER AGENCY, as follows: Section 1. The form of "Agreement for Construction, OperF.Lion and Financing of Geothermal Generating Project Number Three", de•,ignated July 28, 1983, a Third Phase Agreement under the Member Services Agreements, is hereby approved; and the Assistant Secretary is directed to send copies of the same to the Project Participants named therein, and request that it be approved and executed by ordinance in accordance with the terns of Section 13 thereof, Section 2. The General Manager is authorized to execute said agreement on behalf of this Agency. Vota Abstained Absent City of - Alameda Biggs_ — Gri dl ey Healdsburg _ Lodi Lompoc . , Palo Alto Al Redding u Roseville �.,. Santa Clara Ukiah c '� PIumas-Sierra l ' 1 / ADOPTED AND APPROVED this -ri �� day of - �.E�. _ , 1983. 0 ORDINANCE NO. AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF CALIFORNIA, APPROVING THE TERMS AND CONDITIONS OF A MEMBER AGREEMENT BETWEEN NORTHERN CALIFORNIA POWER AGENCY AND CERTAIN PARTICIPATING MEMBERS AND AUTHORIZING THE EXECUTION OF AN DELIVERY OF SAID AGREEMENT BY OFFICERS OF THE CITY OF 61 WHEREAS, pursuant to the provisions of Chapter 5, Division 7, Title 1 of the Government Code of the State of California, as amended (the "Joint Powers Act"), the City of (the "City") and certain other public agencies cre- ated pursuant to the laws of the State of California (collectively, the "Members"), have entered into a Joint Powers Agreement (the "Agreement") creating the Northern California Power Agency (the "Agency") , a public entity separate and apart from the Members; and WHEREAS, in accordance with the Agreement and the Joint Powers Agreement the Agency proposes to acquire and construct or cause to be acquired and constructed and to operate or cause to be operated a project (the "Project") consisting of (i) two 55 -megawatt geothermal generating units, and related facilities, including trans- mission facilities to the generating tie, in the State of California, and all rights, properties and improvements necessary therefor, including fuel and water facilities and resources, and capital improvements thereto that may be constructed from time to time, and interests in certain other property and rights relating thereto, including a headquarters facility for use by the Agency in connection with the Project; (ii) Project No. 2, subject to the rights of the participants therein; and (iii) the refinancing of certain Development Fund expenditures; and WHEREAS, the City has need for an economical, reliable source of electric power and energy to meet the demands of the cus- tomers of its electric system, and, as such WHEREAS, this City Council finds and determines that it is in the best interests of the customers of the electric system of the City for the City to enter into the Agreement for construction, oper- ation and financing of Geothermal Generating Project Number 3 (the "Member Agreement") in substantially the form submitted to this City Council and dated for convenience as of July 1, 1983; WHEREAS, this City Council finds and determines that it is in the best interests of the customers of the electric system of the City for the City to purchase electric capacity and energy of the Project from the Agency; WHEREAS, payments by the City pursuant to the Member Agreement will be used in part by the Agency for payment of principal of and interest on its bonds, notes indebtedness issued in connection with the and financing of the Project; 0 (D or other evidences of construction, operation NOW, THEREFORE, the City Council of the City of does ordain as follows: 1. The City Council hereby finds and determines that the terms and conditions of the Member Agreement (including the Z ast Block Entitlement Percentage and the Project Entitlement Percentage of the City set forth in Appendix A thereto) in substantially the form submitted to this City Council be, and the same are hereby, approved. 2. The East Block Entitlement Percentage of the City as set forth in Appendix A to said Member Agreement may be increased to such percentage, not be exceed percent (_%)., as shall be determined by the of the City. 3. The Project Entitlement Percentage of the City as set forth in Appendix A to said Member Agreement may be increased to such percentage, not be exceed percent ( $), as shall be deter- mined by the of the City. 4. The City Agreement and the authorized to execute behalf of the City. is hereby authorized to enter into and the and deliver the Member Agreement the Membe r are hereby by and on 5. Pursuant to Section 54241 of the Government Code of the State of California, this Ordinance is subject to the provisions for referendum applicable to the City. 6. The City Clerk shall certify to the enactment of this Ordinance and shall cause this Ordinance to be published in accor- dance with Section 54242 of the Government Code of the State of California. 7. Thirty (30) days from and after its enactment, this Ordinance shall take effect and be in full force, in the manner pro- vided by law. -2- 1 or— ADOPTED by the City Council and signed by the and attested by the this day of , 1983 . Attest: (SEAL) -3- .:... _ _: r .... ... .. .'x n Y; � `c??y'�ef'i • ,,j-.ry. �, .;,A -r• ��> t G^' � rrs:Y � "v;' k K :: - n'�° Final Draft of ,July 28, 1983 AGREEMENT FOR CONSTRUCTION, OPERATION AND PIMCING OF GEOTHERMAL GENERATTHG PROTECT NU?K= 3 Dated as of July 1;, 1983 By and Among NOiRTSERN CALIFO=IA POWER AGENCY and CITY 02F AIM CITY OF B IgG3 CITY OF GRIELEX CITY OF REALOSBOii7 CM OF LODI CITY OF LOMIOC CITY OF PALO ALTO CITY OF ROSBVIEZE CITY OF SANTA CLARA CITY OF OKIAH PLUMAS-SIERRA FMRAL ELECTRIC COOPERATIVE TABLE OF CONTUM 1. Definitions 3 2. Purpose 5 3. Construction and Operation . . . . . . . . . . 5 4. Sale and Delivery of Capacity and Energy from the Project . . . . . . . . . . . . . . . 5 5. Rates and Charges . . . . . . . . 5 . . . 6 6. Annual Budget atiid Billing Statement . . . 8 7. Obligation in the Event of Default . . . . . . 9 8. Transfers, Sales and Assignments of Capacity . . . . . . . . . . . . . . . . . . .10 9. Surplus Capacity and Energy . . . . . . .11 10. Insurance and Indemnification . . . . . .12 11. Member Direction and Review . . . s . . .12 12. Term . . . . . . . . . . . . . . . . . . . . .13 13. Termination and Amendments . . . . . . . . . .14 14. Member Service Agreement . . . . . . . . . . .14 15. Second Phase Agreement . . . . . . . . . . s .14 16. Sharing of Resources, Facilities and Costs . .15 17. Miscellaneous . . . . . . . . . . . . . . . .18 APPENDIX A - Schedule of Project Participants and Project Entitleraent Percentages . . . .20 APPENDIX B - Form of Opinion of Counsel . . . . . . ,21 -i- 0 E AGREEMENT FOR CONSTRUCTION, OPE'tATION AND FINANCING OF GEOTHERMAL GENERATING PROJECT NUMBER 3 (3 This Agreement, dated as of July 1, 1983, by and among Northern California Power Agency, a joint powers agency of the State of California (hereinafter called "NCPA") and the other entities exe- cuting this Agreement. WIT'.05.0'ETH : WHEREAS, NCPA has entered into the Steam Sales Agreement with Shell Oil Company (with its successors and assigns, the "Steam Supplier") , under which NCPA agre. d to conotruct or cause to be con- structed, one or, upon the conditions stated therein, two 55 -megawatt geothermal generating units on a leasehold specified therein (the "East Block"); and WHEREAS, pursuant to the Steam Sales Agreement and this Agreement, NCPA proposes to acquire and construct or cause to be acquired and constructed and to operate or cause to be operated the Project described herein; and WHEREAS, NCPA and certain of its members have entered into a "Member Agreement (Second Phase) for Financing of Planning and Development Activities of the Shell East Block Geothecrosl Project" made as of June 1, 1981, as amended by Amendment No. One thereto, dated as of June 1, 1981 and Amendment No. Two thereto, dated as of January 13, 1983 providing for the financing of certain activities in connection with the East Block portion of the Project (said Agreement, as it may be amended and supplemented from time to time, being hereinafter called the "Second Phase Agreement") ; and WHEREAS, this Agreement is the "Final Power Contract" con- templated in the Second Phase Agreement; and WHEREAS, NCPA and its members have entered into one of three Member Service Agreements, effective February 12, 1981 (said Agreements, as they may be amended and supplemented from time to time, being hereinafter called the "Member Service Agreement") , which provide for services which NCPA shall perform for its members, among other things, and for the provisions to be contained in second and third phase agreements, such as the Second Phase Agreement, and this Agreement; and WHEREAS, all participants in NCPA's Geothermal Generating Project No. 2 ( "Project No. 2") are Project Participants (as hereinafter defined) , the development of the Project will benefit Project No. 2 by, among other things, satisfying certain obligations -2- of NCPA under the Steam Sales Agreement, and the actions authorized herein to be taken by NCPA with respect to Project No. 2 will benef it the Project; and WHEREAS, NCPA and the Project Participants wish to enter into this Agreement to provide further for the construction, opera- tion and financing of the Project, the sale by NCPA of capacity and energy of the Project to the Project Participants, and the security for the Bonds to be issued to finance the Project; NOW THEREFORE, the parties hereto do agree as follows: 1. Definitions. The 1:;llowing terms shall, for all pur- poses of this Agreement, have the following meanings: (a) "Bonds" means tonds, notes or other evidences of indebtedness of NCPA (or of a nonprofit corporation on behalf of NCPA) issued to finance or refinance the Project, and includes addi- tional Bonds to complete the Project. (b) "Bond Resolution" means the resolution or resolutions providing for the issuance of Bonds and the terms thereof. (c) "Development Fund" means the fund authorized by the "NCPA Member Agreement for Participation in Electric Power Development Fund," dated July 1, 1975, as amended. (d) "Electric System" means all properties and assets, real and personal, tangible and intangible, of the Project Participant now or hereafter existing, used or pertaining to the generation, trans- mission, transformation, distribution and sale of electric capacity and energy, including all additions, extensions, expansions:, improv�- ments and betterments thereto and equippings thereof; provided, haus-- ever, that to the extent the Project Participant is not the sole owner of an asset or property or to the extent that an asset or prop- erty is used in part for the above described electric purposes, only the Project Participant's ownership interest in such asset or prop- erty or only the part of the asset or property so used for electric purposes shall be considered to be part of its Electric System. (e) "Project" means a project consisting of (i) two 55 -megawatt geothermal generat-ing units, on the East Block, and related facilities, including transmission facilities to the generat- ing tie, in the State of California, and all rights, properties and improvements necessary therefor, including fuel and water facilities and resources, and capital improvements thereto that may be con- structed from time to time, and interests in certain other property and rights relating thereto, including a headquarters facility for use by NCPA in connection with the Project; provided that inclusion of such headquarters facility in this definition of "Project" shall only be effective upon the receipt, prior to the first issuance of Bonds, of either (a) a 100% vote approving such inclusion of all Project Participants, taken at a meeting in accordance with -3- f L_ Section 11 hereof, or (b) written approval of such inclusion from the representative of each Project Participant on the Commission of NCPA; (ii) Project No. 2, subject to the rights of the participants there- in; and ( iii) such refinancing of Development Fund expenditures as shall, in the dis 'etion of the Commission of NCPA, be included in any issue of Bonds. (f) "Project Entitlement Percentage" means, with respect to each Project Participant, the percentage so identified and set forth opposite the name of such Project Participant in Appendix A hereto, as such Appendix A shall be amended from time to time in accordance with Section 13 hereof. "East Block Entitlement Percentage" and "Project No. 2 Entitlement Percentage" mean, with respect to each Project Participant, the percentages so identified and set forth opposite the name of such Project Participant in Appendix A hereto, as such Appendix A shall be amended from time to time in accordance with Section 13 hereof. (g) "Project No. 2 Member Agreement" means the "Member Agreement for Construction, Operation and Financing of NCPA Geothermal Generating Unit No. 2 Project", dated as of June 15, 1977, as amended and supplemented. (h) "Project No. 2 Steam Sales Agreement" means the Geothermal Steam Sales Agreement between NCPA and the Steam Supplier dated June 27, 1977, as amended and supplemented. (i) "Project Participants" Appendix A hereto and executing this with their respective successors or means those entities listed in Agreement, together in each case assigns. (j) "Refunding Date" means the date of the refinancing with Bonds of (i) the outstanding Public Power Revenue Bonds, 1951 Series A, dated July 1, 1981, and the outstanding Public Power Revenue Bonds, 1982 Series A, dated July 1, 1982, (ii) the outstand- ing loan of NCPA pursuant to a Loan Agreement between NCPA and Bank of Montreal (California) , dated October .2, 1980, and (iii) certain Development Fund expenditures, (k) "Revenues" means all income, rents, rates, fees, charges, and other moneys derived by the Project Participant from the ownership or operation of its Electric System, including, without limiting the generality of the foregoing, (i) all income, rentst rates, fees, charges or other moneys derived from the sale, furnish- ing, and supplying of the electric capacity and energy and other ser- vices, facilities, and commodities sold, furnished, or supplied through the facilities of its Electric System, (ii) the earnings on and income derived from the investment of such income, rents, rates, fees, charges or other moneys to the extent that the use of such earnings and income is limited by or pursuant to law to its Electric System and (iii) the proceeds derived by the Project Participant directly or indirectly from the sale, lease or other disposition of all or a part of the Electric System as permitted hereby, but the -4- term "Revenues" shall not include (y) customers' deposits or any, other deposits subject to refund until such deposits have become the property of the Project Participant, or (z) contributions from cus- tomers for the payment of costs of construction of facilities to serve them. (1) "Steam Sales Agreement" means the "NCPA East Block: Steam Sakes Agreement" with the Steam Supplier, dated September 15, 1980, as amended and supplemented. (m) "Trustee" means the entity or entities designated by NCPA pursuant to any Bond Resolution, to administer any funds or- accounts raccounts required by such Bond Resolution or otherwise. 2. Purpose. The purpose of this Agreement is to sell capacity and energy of the Project to the Project Participants; to provide the terms and conditions of such sale and to provide for the financing of the Project. 3. Construction and Operation. NCPA will use its best efforts to cause or accomplish the construction, operation and financing of the Project, the obtaining of all necessary authority and rights, and the performance of all things necessary asid conven- ient therefor. Each Project Participant will cooperate with NCPA to that end, and will give any and all clarifying assurances by supple- mental agreements that may be reasonably necessary in the opinion of NCPA' s legal counsel to make the obligations herein more specific and to satisfy legal requirements and provide security for the Bonds. NCPA may pledge and assign to any Trustee for any Bonds, all or any portion of the payments received hereunder from Project Participants, and upon notice from NCPA, each Project Participant shall make payments due by it hereunder directly to any Trustee for the Bonds. Such pledge and assignment by NCPA shall be made effec- tive for such time as NCPA shall determine and provide. 4. Sale and Delivery of Capacity and Energy from the Project. (a) Pursuant to the terms of this Agreement NCPA shall provide to each Project Participant, and each Project Participant shall take, or cause to be taken, such Project Participant's Project Entitlement Percentage of the capacity and energy of the Project; provided, however, that NCPA shall first provide ;:o each project par- ticipant for Project No. 2, and each such project participant shall take, or cause to be taken, such project participant's Project No. 2 Entitlement Percentage of the capacity and energy of Project No. 2, in accordance with the terms of the Project No. 2 Member Agreement. (b) NCPA will remain available to do all things necessary and possible to deliver or cause to be delivered to or for the Project Participants, in accordance with their respective Project Entitlement Percentages, subject to the terms of the Project No. 2 Member Agreement, the capacity and energy of the Project. Such delivery shall be at points mutually agreed upon by NCPA and each -5- E E Project Participant. Such agreement shall not be unreasonabl3l withheld by either NCPA or a Project Participant. NCPA will remain c.vailable to make or cause to be made all necessary and possible arrangements for transmission of such capacity and energy to such points over the lines of NCPA or others, and for additional capacity and energy required from others as reserves against planned or emer— gency service interruptions with respect to the Project. Wheeling or delivery services by NCPA with related energy sales to the Project rarticipants shall be as provided in service schedules as provided it Article III of the Member Service Agreement. 5. Rates and Charges. (a) Commencing on the Refunding Date, NCPA shall fix charges to the Project Participants under this Agreement to produce revenues to NCPA from the Project equal to the amounts anticipated to be needed by NCPA to meet the total costs of NCPA to provide capacity and energy from the Project, including but not limited to (i) debt service on the Bonds, reserves for the pay— ment of debt service on the Bonds and other payments required under the Bond Resolution other than payments described in (iii) and (iv) below, (ii) all other payments provided to be made by NCPA under the Steam Sales Agreement and the Project No. 2 Steam Sales Agreement, ( iii) any other operation, maintenance and replacement costs of the Project, a reasonable reserve for contingencies, and all other Project costs other than costs and expenses of NCPA for delivering Project capacity and energy pursuant to Section 4(b) hereof, and (iv) costs and expenses of NCPA for delivering Project capacity and energy pursuant- to. Section 4(b) of this Agreement. NCPA shall fix chargee to the Project Participants to produce revenues to NCPA from the Project to meet the costs described in (i) and (ii) above based on East Block Entitlement Percentages applied to such costs allocable to the East Block portion of the Project and Project No. 2 Entitlement Percentages applied to such costs allocable to the Project No. 2 por— tion of the Project; and to meet the costs described in (iii) above based on the anticipated energy sales of the the East Block portion of the Project and, or the anticipated energy sales of the Project No. 2 portion of the Project, respectively. If NCPA delivers Project capacity and energy to or for any Project Participant pursuant to Section 4(b) hereof, NCPA shall fix charges to each such ; roject Participant so as to pay the costs of such delivery without liaoility under this Section 5(a) of any Project Participant for whom Project capacity and energy is not so delivered by NCPA. The obligations of the respective Project Participants that are participants in Project No. 2 under this Section 5(a) shall be deemed to be satisfied to the extent such obligations are satisfied pursuant to the Project No. 2 Member Agreement. (b) To the extent that the funds provided under Section 5(a) of this Agreement are at any time not sufficient for such pur— poses, each Project Participant shall pay to NCPA an amount equal to such Project Participant's Project Entitlement Percentage of the total cost to pay all amo,�nts of principal and interest on the Bonds, sm E reserves f or the payment of debt service and other payments require=d under the Bond Resolution and all other payments required to be made by NCPA under the Steam Sales Agreement. The obligation of this, Section 5(b) is incurred by each Project Participant for the benefit of future holders of Bonds, and shall commence and continue to exist and be honored by Project Participants whether or not capacity or energy is furnished to them from the Project at all times or at all (whish provision may be characterized as an obligation to pay all costs on a take -or -pay basis whether or not such Project capacity or energy is delivered or provided) . (c) Notwithstanding that NCPA may utilize services under the PG and E Interconnection Agreement among Pacific Gas and Electric Company, NCPA and certain of the Project Participants (the "PG and E Interconnection Agreement") in complying with Section 4(b) hereof, any payments required to be made by, or costs incurred by NCPA or the Project Participants pursuant to Section 9.5 of the Interconnection Agreement shall not be made under this Agreement. (d) Each Project Participant shall make payments under this Agreement solely from the Revenues of, and as an operating expense of, its Electric System. Nothing herein shall be construed as pro- hibiting any Project Participant from using any other funds and reve- nues for purposes of satisfying any provisions of this Agreement. (e) Each Project Participant shall make payments under this Agreement whether or not the Project is completed, operable, operat- ing or retired and notwithstanding the suspension, interruption, interference, reduction or curtailment of Project output or the capacity and energy contracted for in whole or in part for any reason whatsoever. Such payments are not subject to any reduction, whether by offset or otherwise, and are not conditioned upon performance by NCPA or any Project Participant under this Agreement or any other agreement; provided, however, that the obligations of the respective Project Participants that are participants in Project No. 2 under Section 5(a) hereof shall be deemed to be satisfied to the extent such obligations are satisfied pursuant to the Project No. 2 Member Agreement. (f) No Project Participant shall be liable under this Agreement for the obligations of any other Project Participant. Each Project Participant shall be solely responsible and liable for per- formance of its obligations under this Agreement and for the mainte- nance and operation of its respective properties not included as part of the Project. The obligation of each Project Participant to make payments under this Agreement is a several obligation and not a joint obligation with those of the other Project Participants. (g) Each Project Participant establish and collect fees and charges snergy furnished through facilities of it -7- scovenants and agrees to for electric capacity and Electric System sufficient 19 to provide Revenues adequate to meet its obligations under this Agreement and to pay any and all other amounts payable from or con— stituting a charge or lien upon any or all such Revenues. (h) Each Project Participant covenants and ag-ees that it: shall, at all times, operate the properties of its Electric System and the business in connection therewith in an efficient manner and at reasonable cost and shall maintain its Electric System in good repair, working order and condition. 6. Annual Budget and Billing Statement. Prior to the beginning of each NCPA fiscal year, the Commission of NCPA will adopt an annual budget for such fiscal year for costs and expenses relating to the Project and shall promptly give notice to each Project Participant of its projected share of such costs and expenses. A billing statement prepared by NCPA based on estimates will be sent to each Project Participant not later than the fifteenth (15th) day of each calendar month showing the amount payable by such Project Participant of costs payable under Section 5(a) hereof for the second succeeding calendar month, any amount payable by such Project Participant as its Project Entitlement Percentage of costs payable under Section 5(b) hereof, and the amount of.. any credits or debits as a result of any appropriate adjustments. Amounts shown on the billing statement are due and payable thirty (30) days after the date of the billing statement. Any amount due and not paid by the Project Participant within thirty (30) days after the date of the billing statement shall bear interest from the due date until paid at an annual rate to be established by the Commission of NCPA at the time of adoption of the then most recent annual budget. On or bef ore the day f ive (5) calendar months of ter the end of each NCPA fiscal year, NCPA shall submit to each Project Participant a statement of the aggregate monthly casts for such fiscal year. If the actual aggregate monthly costs and the Project Participant's share thereof pursuant to this Agreement, and other amounts payable for any fiscal year, exceed the billings to the Project Participant, the deficiency shall be added to the Project Participant's immediately succeeding billing statement. If the actual aggregate monthly costs and the Project Participant's share thereof pursuant to this Agreement, and other amounts payable for any fiscal year, are less than the billings to the Project Participant, such excess shall be credited to the Project Participant's billing statements for such period (not to exceed the immediately succeeding six months) and in such amounts as shall be determined by NCPA. If a Project Participant questions or disputes the correct- ness of any billing statement by NCPA, it shall pay NCPA the amount claimed when due and shall within thirty (30) days of the receipt of such billing statement request an explanation from NCPA. If the bill is determined to be incorrect, NCPA will issue a corrected bill and -8- F 4 refund any amount which may be due the Project Participant whicb. refund shall bear interest from the date NCPA received payment until the date of the ref and at an annual rate to be established by the Commission of NCPA at the time of adoption of the then most recent annual budget. If NCPA and the Project Participant fail to agree on the correctness of a bill within thirty (30) days after the Project participant has requested an explanation, the parties shall promptly submit the dispute to arbitration under section 1280 gt meq. of the Code of Civil Procedure. 7. obligation in the Event of Default. (a) Upon fail- ure ail-- ure of any Project Participant to make any payment in full when due under this Agreement, NCPA shall make written demand upon succi Project Participant, and if said failure is not remedied within thirty (30) days from the date of such demand, such failure shall constitute a default at the expiration of such period. Notice of such demand shall be provided to each other Project Participant by NCPA. (b) Upon the failure of any Pr%act Participant to make any payment which failure constitutes a default under this Agreement, NCPA shall use its best efforts to sell and transfer for the default- ing Project Participant's account all or a portion of such Project Participant's Project Entitlement Percentage of Project capacity and energy for all or a portion of the remainder of the term of this Agreement. NCPA shall not sell such capacity and energy, directly or indirectly, in any manner, and shall not take or permit to be taken any other action or actions, which would result in any of the Bonds being treated as an obligation not described in Section 103(x) of the internal Revenue Code of 1954, as amended, by reason of classifica- tion of such Bond as an "industrial development bond" within the meaning of Section 103(b) of said Code. Notwithstanding that all or any portion of the Project Participant's Project Entitlement Percentage of Project capacity and energy is so sold or transferred, the Project Participant shall remain liable to NCPA to pay the full amount of its Project Entitlement Percentage of monthly costs as if such sale or transfer had not been made, except that such liability shall be discharged to the extent that NCPA shall receive payment from the purchaser or transferee thereof. (c) Upon the failure of any Project Participant to make my payment which failure constitutes a default under this Agreement and causes NCPA to be in default under the Steam Sales Agreement, the Project No. 2 Steam Sales Agreement or any Bond Resolution, NCPA may (in addition to the remedy provided by subsection (b) of this Section 7) terminate the provisions of this Agreement insofar as the same entitle the defaulting Project Participant to its Project Entitlement Percentage of Project capacity and energy. Irrespective of such ter- mination, the obligations of the Projekt Participant under this Agreement shall continue in full force and effect. 0 (d) Upon the f ailure of any Project Participant to make any payment which failure constitutes a default under this Agreement, and except as sales or transfers are made pursuant to subsection (b) of this Section 7, (i) the Project Entitlement Percentage of each nonde- faulting Project Participant shall be automatically increased for the remaining term of this Agreement pro rata with those of the other nondefaulting Project Participants and (ii) the defaulting Project Participant's Project Entitlement Percentage shall (but only for pur- poses of computing the respective Project Entitlement Percentages of the nondefaulting Project Participants) be reduced correspondingly; provided, however, that. the sum of such increases for any nondefault- ing Project Participant shall not exceed, without written consent of such nondefaulting Project Participant, an accumulated maximum of 258 of the nondefault: n - ?roject Participant's Project Entitlament Percentage, all. as-Laitially set forth in Appendix A. (e) If a Project Participant shall fail or refuse to pay any amounts due to NCPA, the fact that other Project Participants have inc--eased their obligation to NCPA pursuant to this Section 7 shall not relieve the defaulting Project Participant of its liability under this Agreement, and any Project Participant increasing such obligation shall have a right of recovery from the defaulting Project Participant to the extent of such respective increase in obligation caused by the defaulting Project Participant. (f) Any Trustee for any Bondi the payment of which is secured by payments made by the Project Participants under this Agreement shall have the right, as a third party beneficiary, to ini- tiate and maintain suit to enforce this Agreement to the extent pro- vided in the related Bond Resolution. 8. Transfers, Sales and Assignments of Capacity. Each Project Participant has full and unfettered rights to make transfers, sales, assignments and exchanges (collectively "transfers") of capac- ity, energy, and rights thereto except as expressly provided other- wise in this Agreement. (a) No Project Participant shall transfer ownership of all or substantially all of its Electric System to another entity until it has first complied with the provisions of this subsection (a) . A consolidation with another governmental entity or change in govern- mental form is not deemed a transfer of ownership. (1) Such disposition or transfer shall be under terms and conditions that provide assurance that the obli- gations of the transferring Project Participant under this Agreement, and that NCPA's obligations under this Agreement, the Steam Sales Agreement, and any Bond Resolution, and the Project No. 2 Steam Sales Agreement, and under other agreements made or to be made by NCPA to carry out the Project, will be promptly and adequately MEM 0 z met. NCPA may require that sufficient moneys of the transferring Project Participant to discharge such obliga- tions be irrevocably Fat aside and maintained in a trust account, as a condition to the transfer of the Electric System, if no other adequate assurance is available. (2) The transferring Project ninety (90) days' advance written proposed transfer pursuant to Appendix A to this Agreement shall ate to reflect any transaction pur. (a). Participant shall give notice to NCPA of any this subsection (a) . be amended as appropri- ;uant to this subsection (b) Notwithstanding any other provision of this Agreement, no Project Participan,' shall transfer, assign, sell or exchange any Project capacity and energy, directly or indirectly, in any manner, and shall not take or permit to be taken any other action or actions, which would result in any of the Bonds being treated as an obligation not described in Section 103(a) of the Internal Revenue Code of 1954, r.s amended, by reason of classification of such Bond as an ' industrial development bond" within the meaning of Section 103 (b) of said Code. 9. Surplus Capacity and Energy. W h e n a P r o j e c t Participant has surplus capacity and/or energy frau the Project, NCPA shall, if requested by such Project Participant to do so, sell such surplus capacity and/or energy on behalf of such Project Participant in the following manner: (a) NCPA shall use its best efforts to sell such surplus capacity and/or energy at a price at least equal to the Project Participant's cost therefor. (b) Other Project Participants shall have a right of first refusal, and other NCPA members shall have the second right at the sales prices set forth in subsections (c) and (d) of this Section 9. (c) If NCPA can purchase equivalent capacity and/or energy from other sources for less than the Project Participant's cost for surplus capacity and/or energy from the Project, as the case may be, -the sales price of such capacity and/or energy to another Project Participant or NCPA member shall be equal to the cost of purchasing the capacity and/or energy from such other source. (d) If the alternative cost of purchasing capacity and/or energy for other Project Participants or members of NCPA is more than the Project Participant's cost of surplus capacity arid/or energy from the Project, then the sales price shall be the Project Participar,t' s cost plus one-half the difference between the Project Participant's ::ost from the Project and the cost of capacity and/or energy from an alternative source. -11- 0 i (e) NCPA shall not sell such surplus capacity and energy, directly or indirectly, in any manner, and shall not take or permit to be taken any other action or actions, which would result in any of the Bonds being treated as an obligation not described in Section 103(a) of the Internal Revenue Code of 1954, as amended, by reason of classification of such Bond as an "industrial development bond" within the meaning of Section 103(b) of said Code. 10. Insurance and Indennification. NCPA shall obtain or cause to be obtained insurance for the Project covering such risks (including earthquakes), in such amounts and with such deductibles as shall be determined by NCPA. NCPA shall indemnify and hold harmless each Project Participant from any liability for personal injury or property damage resulting from any accident or occurrence arising out of or in any way related to the construction or operation of the Project, provided, however, that such liability of NCPA shall be limited to the extent the proceeds of insurance and other moneys available to NCPA hereunder are available therefore. 11. Member Direction and Review. NCPA shall comply with all lawful directions of the Project Participants with respect to this Agreement, while not stayed or nullified, to the fullest extent authorized by law. Actions of Project Participants, including giving such directions to NCPA, will be taken only at meetings of authorized representatives of Project Participants duly called ani' held pursuant to the Ralph M. Brown Act or other laws applicable to such meetings, in effect from time to time. (a) A quorum of the Commission of NCPA for purposes of acting upon matters related to the Project shall consist of those Commissioners (including for all purposes of this Section 11, their designated alternates) , representing a numerical majority of the Project Participants, or, in the absence of such, representing Project Participants having a combined Project Entitlement Percentage of at least a majority in interest at such time. (b) Special meetings of the Commission to act only on mat- ters relating to the Project may be called by a majority of the Commissioners of Project Participants upon notice as required by the Ralph M. Brown Act or other laws applicable to such meetings, in effect from time to time. (c) At regular or special meetings voting on matters relating to the Project Entitlement Percentage, and the affirmative v< interest at such time shall be required to tal Project Participants agree at such meetings tha one member one vote basis, with a majority v(: ra2auired for action. -12- of the Commission, shall be by Project )te of a majority in ce action, unless the t voting will be on a ate of those present 0 (d) Notwithstanding subsection (c) of this Section 11, upon demand of any Commissioner of any Project Participant, at any meeting of the Commission other than a special meeting referred to in subsec— tion (b) of this Section 11, the vote on any issue relating to the Project shall be by Project Entitlement Percentage at such time anti 658 or greater affirmative vote shall be required to take action. (E.) Any Project Participant may veto a discretionary action of the Project Participants relating to the Project that was not taken by a 658 or greater Project Entitlement Percentage vote within 10 days following mailing of notice of such Commissioners' action, by- giving ygiving written notice of veto to NCPA, unless at a meeting of Commissiooers of Project Participants called for the purpose of con- sidering the veto and held within 30 days after such veto notice, the holders of 658 or greater of the Project Entitlement Percentage shall vote to override the veto. (f) The sixty-five percent of the Project Entitlement Percentage specified in this Section 11 shall be reduced by the amount that the Project Entitlement Percentage of any Project Participant shall exceed 35%, but such 658 shall not be reduced below a majority in interest. 12. Term. (a) This Agreement shall not take effect until (i) it and/or any supplement V:o it provided for in Section 2(c) of the Second Phase Agreement has been duly executed and delivered to NCPA by Project Participants the Project Entitlement Percentages of which, in the aggregate, equal 1008, all in accordance with Section 2(c) of the Second Phase Agreement and accompanied by an opinion for each Project Participant of an attorney or firm of attor- neys in substantially the form attached hereto as Appendix B. and by evidence satisfactory to NCFA of compliance by such Project Participant with Section 5C of the Project No. 2 Member Agreement and in compliance with any other similar requirements of other agreements between NCPA and such Project Participant, and (ii) the Refunding Date shall have occurred. (b) Notwithstanding the delay in the effective date of this Agreement until Project Entitlement Percentages in the aggregate equal 1008 and the other provisions of Section 12(a) hereof have been complied with, it is agreed by all signatories hereto that in consid- eration for NCPA's signature hereto and for its commitment to use its best efforts to obtain the commitment for Project Entitlement Percentages in the aggregate equal to 1008, each Project Participant upon its execution and delivery of this Agreement to NCPA along with required opinion and any required evidence of compliance as required by Section 12(a) hereof shall be immediately bound not to withdraw its respective offer herein made to enter into this Agreement as exe- cuted and/or supplemented or to decrease or terminate its Project Entitlement Percentage. Such a decrease or termination by a Project Participant may be made only if this Agreement has not taken effect -13- before January 11 1984 and only by giving written notice thereof to NCPA between January 1 and January 15, 1984. (c) Notwithstanding the foregoing, each Project Participant shall be entitled to decrease or terminate its Project Entitlement Percentage upon giving written notice thereof to NCPA within f if teem (15) days after January 1, 1986, if by January 1, 1986 NCPA shall not have issued any Bonds the payment of which is secured by payment3 made by the Project Participants under this Agreement. (d) The term of this Agreement shall continue until the later of (i) the expiration of the useful life of the Project, or (ii) the date on which all Bonds issued have been retired, or full- provision ullprovision made for their retirement, including interest until their retirement date; provided, however, that in no event shall the term: of this Agreement extend beyond the date of the termination of the existence of NCPA. In the event of the termination of the existence of NCPA it is the intent of the Project Participants that the Agreement be construed as an agreement among the Project Participants. 13. Termination and Amendments. This Agreement shall not be subject to termination by any party under any circumstances, whether based upon the default of any other party under this Agreement, or any other instrument, or otherwise, except as specifi- cally provided herein. Except as otherwise provided in this Agreement, so long as any Bonds are outstanding and unpaid and funds are not set aside for the payment or retirement thereof in accordance with the applicable Bond Resolution, this Agreement shall not be amended, modified or otherwise changed or rescinded by agreement of the parties without the consent of each Trustee for Bonds whose consent is required under the applicable Bond Resolution. 14. Member Service Agreement. This Agreement is a ser- vice schedule and a third phase agreement attached to and incorpo- rated into the Member Service Agreement. This Agreement shall be construed as the more specific terms governing the general relation- ship between the parties set out in the Member Service Agreement in connection with the Project. 15. Second Phase Agreement. The Second Phase Agreement is superseded by this Agreement upon the issuance of any Bonds the payment of which is secured by payments made by the Project Participants under this Agreement and upon provision for payment of any notes or other evidences of indebtedness of NCPA secured by pay- ments made by the Project Participants under the Second Prase Agreement, except that section 4 thereof shall remain in effect as provided by section 5 of the Second Phase Agreement unless changed by -14- It formal action of all of the Project Participants. Said section 4 as follows: "Section 4. Conditional Repayment to Members. All payments and advances made heretofore, including Development Fund Advances, and those hereafter made pursu- ant to Section 1, excluding interest paid on delinquent payments, shall be repaid to each of the entities making such payments and advances pursuant to this Agreement out of the proceeds of the first issuance of the Project bonds or as and when there are sufficient funds available from the partial sale of Bonds. Such reimbursements shall be made within 60 days following the sale of any Project bonds and shall include interest computed monthly at a rate equivalent to the prime rate of the Bark of America NT&SA at the end of suctr month. Any interest due under the third paragraph of section 1 of this Agreement and unpaid shall be deducted from the repayment. If NCPA is not successful in financing the Project, there shall be no reimbursement except out of unused Project funds along with all other receipts to which NCPA is entitled in connection with the Project." 16. Sharing of Resources, Facilities and Costs. (a) NCPA may, in accordance with Section 11 hereof, enter into agreements for the transfer or sharing of resourcear facilities and costs betr:aen and among the Project and other entities and projects (including without limitation Project No. 2) , which agreements may provide, among other things, for the transfer or sharing of steam, transmission facilities and rights to use the same, maintenance and repair facilities, generating equipment, spare parts, staff, insur- ance, taxes and payment in lieu thereof, and delay payments under the Steam Sales Agreement and the Project No. 2 Steam Stiles Agreement and for the integrated operation of the Project and Project No. 2 by NCPA. (b) NCPA may, in accordance with the Project No. 2 Member Agreement and upon compliance with the requirements of any trust indenture or other instrument applicable thereto, including without limitation any consents required thereby, enter into agreements for (i) the transfer or sharing of resources, facilities and costs between and among Project No. 2 and otter entities and project: (including without limitation the Project), which agreements may pro- vide, among other things, for the transfer or sharing of steam, transmission facilities and rights to use the same, maintenance and repair facilities, generating equipment, spare parts, staff, insur- ance, taxes and payment in lieu thereof, and delay payments :aider the Project No. 2 Steam Sales Agreement, and for the integrated operation of the Project and Project No. 2 by NCPA, ,and (ii) the modification or refinancing rf all or any portion of the obligations incurred by NCPA or a nonprofit corporation for Project No. 2, including without -15- limitation the refinancing thereof with Bonds and the modification oc refinancing of the loan guaranteed by the United States Department of: Energy. (c) This Agreement shall constitute approval by the partic— ipants in Project No. 2 of (i) the refinancing of (a) the outstanding Public Power Revenue Bonds, 1981 Series A, dated July 1, 1981, and the outstanding Public Power Revenue Bonds, 1982 Series A, dated July 1, 1982, (b) the outstanding loan of NCPA pursuant to a Loan Agreement between NCPA and Bank of Montreal (California), dated October 2, 1980, and (c) certain Development Fund expenditures, with Bonds so long as, in the judgment of the Commissioners of NCPA repre— senting the participants in Project No. 20, the debt service secured or to be secured by the Project No. 2 Member Agreement is not: increased thereby and the other terms of such refinancing are not materially adverse to the participants in Project No. 2; and (ii) equal sharing Between Project No. 2 and the East Block portion of the Project of steam from the Project: No. 2 area and the East Block area. (d) The Project No. 2 Membsr Agreement shall be construed so as to be compatible with this Agreement to accomplish the purposes hereof. Any financing or refinancing of Project No. 2 shall be accomplished by the issuance of Bonds secured by this Agreement unless the Project Participants refuse to authorize such financing or ?refinancing as may be requested by the participants in Project- No. rojectNo. 2. The respective obligations of NCPA under Section 4 hereof and of the Project Participants under Section 5 hereof shall be deemed satisfied to the extent of performance thereof pursuant to the Project No. 2 Member Agreement, and (iv) subject to the specific terms of the agreement or agreements contemplated by subsections (a) and (b) of this Section 16, Project No. 2 and the East Block portion of the Project shall be conducted for the mutual benefit of all par— ticipants therein. (e) The Project No. 2 Member Agreement shall be amended by the vrovisions hereof as follows: (i) Section 6 of the Project No. 2 Member Agreement shall be superseded by Sections 8, and 9 hereof, (ii) subsection (a) of,. Section 5 of the Project No. 2 Member Agreement shall be superseded by the following: (a) Cr-wwncing with the commercial operation of the Project, NCPA shall .fix charges to the Purchasing Participating Member under this Agreement to produce revenues to NCPA from the Project equal to the amounts anticipated to be needed by NCPA to meet the total costs of NCPA to provide capxc1hy .vid energy from the Project, including but nvt limited to (i) debt service -1`- 0 inN on the Bonds, reserves f or the payment of debt service on the Bonds and other payments required under the Bond Indenture or other agreement or instrument pro- viding for the issuance and payment of Bonds other than payments described in (iii) and (iv) below, (ii) all other payments provided to be made by NCPA under the Shell Agreement, (iii) any other operation, main- tenance and replacement costs of the Project, a rea- sonable reserve for contingencies, and all other Project costs other than costs and expenses pursuant to Section 4 hereof, and (iv) costs and expenses of NCPA for delivering Project capacity and energy pursu- ant to Section 4 hereof. NCPA shall fix charges to the Purchasing Participating Members to produce reve- nues to NCPA from the Project to meet the costs described in (i) and (ii) above based on Purchasing Participating Member's Purchasing Participation Percentage and to meet the costs descried in (iii) above based on the anticipated energy sales of the Project. If NCPA delivers Project capacity and energy to or for any Purchasing Participating Member pursuant to Section 4 of this Agreement, NCPA shall fix charges to each such Purchasing Participating Member so as to pay the costs of such delivery without liability to any Purchasing Participating Member for whom Project capacity and energy is not so delivered by NCPA. Any payments required to be made, or costs incurred, by NCPA or the Project Participants pursuant to the PG and E Interconnection Agreement shall not be made or incurred under this Agreement." (iii) Section 3 of the Project No. 2 Member Agreement shall be supplemented by the following: "NCPA may pledge and assign to any Trustee for any Bonds all or any portion of the payments received hereunder from Purchasing Participating Members and upon notice from NCPA, each Purchasing Participating Member shall make payments due by it hereunder directly to any Trustee for the Bonds. Such pledge and assignment by NCPA shall be made effective for such time as NCPA shall determine and provide. For the purposes of this Agreement the term "Bonds" shall include any bonds, notes or other evidences of indebt- edness issued by NCPA to refinance the cost of the Project." (iv) Section 5C of the Project No. 2 member Agreement shall be deleted. 101 n 17. Miscellaneous. The headings of the sections hereof are inserted for convenience only and shall not be deemed a part of this Agreement. If an- one ur more of the covenants or agreements provided in this Agreement to be performed should be determined to be invalid or contrary to law, such covenant or agreement shall be deemed and construed to be severable from the remaining covenants and agreemei:ts herein contained and shall in no way affect the validity of the remaining provisions of this Agreement. This Agreement may be executed in several counterparts, all or any of which shall be regarded for all purposes as one original and shall constitute and be but one and the same instrument. -18- (3 IN WITNESS WHEREOF each Project Participant has executed this Agreement with the approval of its governing body, and caused its official seal to be affixed and NCPA has executed this Agreement in accordance with the authorization of its Commission. NORTHERN CALIFORNIA POWER CITY OF PALO ALTO AGENCY By By And And CITY OF ALAMEDA CITY OF ROSEVILLE By BY And And CITY OF BIGGS CITY OF SANTA CLARA By BY And_ And CITY OF HEALDSBURG CITY OF GRIDLEY By BY And Ani CITY OF LCDI UKIAH By BY And And CITY OF LOMPOC PLUMAS-SIERRA RURAL ELECTRIC COOPERATIVE By BY And_ And -19- SCHEDULE OF PROJECT PARTICIPANTS AND PROJECT ENTITLEMENT PERCENTAGES Project Participant City of Alameda City of Biggs City of Gridley City of Healdsburg City of Lodi City of Lompoc City of Palo Alto City of Roseville City of Santa Clara City of Ukiah Plumas-Sierra Rural Electric Cooperative Total :0 APPENDIX A Project No. 2 East Block Project Entitlement Entitlement Entitlement Percentage Percentage Percentage 14.994% 18.771% 16.8825% 0.000 .454 .227 .334 .456 .395 3.252 4.096 3.674 14.560 9.158 11.859 3.266 4.096 3.681 0.000 9.158 4.579 3.252 12.514 7.883 54 .6 51 34.13 44 .3 905 4 .97 2 6.257 5.6145 .719 .91 .8145 100.0008 100.0008 100.0008 -20- C\l � r , North*m Califomla Powtf Agtncy 8421 Auburn Boulevard. Suite 160 Citrus Heights, California 95610 ROBERT E. GAIMSMAhv General Manager (916) 722-7815 August 26, 1983 TO: Geothermal Project No. 3 Participants Calaveras Project Participants R ECi I VFp =3 AUG 29 AN 8- S 4 ALICE M, fiEt►KCK� CtT)CLERY, C. i Y Gr LIODI FROM: Gail Sipple SUBJECT: Amendment No. 1 to the Project No. 3 Third Phase Agreement Amendment No. 1 to the Calaveras Project Third Phase Agreement Pursuant to the Commission meeting of August 25, 1983, enclosed are the follow- ing documents to be presented to your governing body for approval: 1. Amendment No. 1 to the Geothermal Project No. 3 (Third Phase Agreement) . Supporting Ordinance 2. Amendment No. 1 to the North Fork Stanislaus Hydro Project (Calaveras Third Phase Agreement) Supporting Ordinance As you are aware, the financing package cannot be completed until these docu- ments are adopted. Therefore, it is requested that these amendments be pre— sented for approval as soon as possible. Upon approval, please return to me the following: 1. A signed copy of each amendment 2. A signed copy of each ordinance 3. Proof of publication of each ordinance 4. A certified copy of the minutes approving each amendment By copy of this letter I am also forwarding these documents to your City Clerk fcr processing. Yours truly, GAI SIPPLE IE;utive Assistant Enc. NCPA 3 GEOTHERMAL PROJECT PHASE 3 SUMMARY LODI'S BENEFITS/OBLIGATIONS Lodi % Base Load rarticipation Growth to Yr, : Lc,''_ Debt -$M1 Debt Reduction - $Ht Comments r� 9.16 1999 19.39 - Lodi's Phase 2 Participation 7.00 1996 15.26 4.13 Maximum Suggested Phase 3 Participation 6.00 1994 13.34 6.05 Recommended Phase 3 Participation 4.00 1991 9.51 9.88 Minimum Suggested Phase 3 Participation 1 Includes financing for transmission . 2 Compared to Lodi's Phase 2 participation debt obligation ($19,39 M), JA ., MARTIN MCDOf1000- ALFRED E.-OLLANO BRUCE F ALLEN V. OARLOIP GOFf JOSEPH E COOVU- JP WILLIAM G HOLLIMAN JA DAM J Sr10'TISR000 ELMIP A MALA.Orf RICHARD N NIC -OLS DONALD C POOLE RIC HAPO R CIS Eh RICHARD E BRAND - GAA, F LOVIAIDGE G R:C-AAO SAO*% DINNIS D ONVL DA00 A POST SUSAN A EDL,NG BRUCE VCDON000- TFILL+AM L OIAEN 0- MILLIAM DENTING DAVID f SE.ATT♦ :AA.ES S O'NIAL ALICE A IVOODIAR:. MIC -AIL T 1OGAA11 w HARAV E NULL.JP STEPHEN ROBBINS DENNIS N. DE CUM ANN 07CONNELL JEFFPr R.JONES POSIAT * O'CONhOR SITSv S KIMBALL WILSON S. -ART SUSAN L SC-OENI', SAO -%A 0 WtIf O' DA*% - COLE JO-% M TAVLOA JANET N1 E -E1 0.AP41 JO -N E 01 GVSTC JO -.4 L CAPPI(P CAA,G A oO Fv MAP. J-UEDSC- S-A" 0 POSE VE JO -h 1 I k, %h �- POhAI[ A *DALE` •PIS 0 -NG MCDONOLTOIi, HOLLAND 8C ALLEN A PROrES51ONAL CORPORATION ATTORNEYS 555 CAPITOL MALL,SUITE950 SACRAMENTO, CALIrORNIA 958.4 (9 16) 444-7900 August 15, 1983 T0: NCPA LEGAL COMMITTOE Gentlemen: r COSTA MESA Orr/CE 3:00 PARA CENTER DRIVC SUITE 710 COSTA MESA CALIFORNIA 62626 (714) goo -1160 IN RE►L• RErER TO: Subject: Third Phase Agreements for Project No. Three, and Transit,ission Projects Enclosed are a revised page 13 to the Project 3 Agreement, and revised pages 11 and 12 to the Transmission Agreement, prepared by bond counsel to eliminate any sugges- tions that Section 5C of the Shell member agreement requires an engineer certificate; the principle is that the Third Phase Agreement for Project No. Three will eliminate the regvirement in the Shell Member Agreement by its express terms. Please telephone me if you have a question about this. We will depend upon the lawyers to get the replacement pages in the documents that their Councils are approving; Gail thinks that if she sends it to the City Clerks it will cause confusion. Let me know if you can't handle it. Sincerely yours, Martin McDonough Attorney MMcD:pa enc. cc: Robert E. Grimshaw AUG 16 1983 +_.Fi .rf �" . ,,.. '•`�` - MuD E ROsE GUTHRM ALEXANDER & FERDON NATHAN ADRAMOW1TZ N JOHN. ALCIIANOCw JOHN L ALTICR., Jw 20 BROAD STREET GEORGE •. ANOCOEGG. JR 8L,SS ANSNES TN,�jMAS SARR ZY NEW YORK, N.Y. 10005-2680 JOHN 0 f2OVC WALTER E SRUEN vn ll.AM N CANNON '00 CRT A CANTOR NIC ')LAS J CA►OZZOLI, JR ALAN I CAR.ODI 'OSE.. J CARROLL J D CLAYTON JOSE►% C DALLY IwIOCw ICK N pANZ10[R JOEL DA_00w OE NNIS R DEVCNE" MARTIN ., DO._KcR THOMAS W EY.INS RIC ... 0 A /AR RLIW ROSE -T C I[w0<^N JANE O IR ANOOS LAWRENCE J GANNON OCww.T aRUf ROSCRT J , 0SI NOWAwO .` 00OOT[Ih JVDAN ORISCTZ M,CNA[L J NAN N10Ah MATT%CW G 1 CROLO. JR DANA .n %.Scot^ JO%N J K1RSY, -10W.LLIAM J KRAM[R %AwOLO a LC ­ SON JO. N C L•LL.E IRANKLIN S LINCOLN, JM eo. .0 W LONG CA.iI I LION, JR W, LL.AM A MADISON ART%VR J .^-ON IR.NCIf • NALONCI J^_ CS ► ...ARI IN Ot'OwG[ J N<RTIH, JA AAT%VR I N MA%ON J MITC%CL_ C -ENA -E'• J RCO[w ✓CHT: "CNAw0 % WC%OLIS DOVOL.S N MwK[R .06ERT C ►LOU'ZZ. JED S RAKOI♦ THOMAS C RLISSL[R NORMAN N SEGAL LAVwENC" v SENN, Jw NARRI a fILLEC R, JR OTTO O STOLZ to C a!L•' ARNOLD % TRACI 0.1-0 A vAVG %Ah W:,LIAM h WALKCR DONALD J ZOELLER Martin McDonough, Esq. Mctonough Holland & Allen 555 Capital Mall Sui::e 950 Sacramento, California 94814 2212-701-1000 :IED n August 12, 1983 Re: Project No. 3 Third Phase Agreement and Transmission Project Third phase Agreement Dear Martin: RANDOLPI• N. GVTNRIE MILTON C. ROSE NENRT ROOT STERN,JR N. R10J CLT SULLOCw CouNSEL CASL C ADDRESS BALTVCF INS-NCW YORK TEL Lx .27*69 TELECO►IER 212 -70.1667 212-s2S-4.09 2-2 701•.698/99 2-21 K STREET, N W WAf %ING TON, D C 20037 202_429.0365 12, RV C OC LA PAIR T30J2. F. X. S, IMANIC E 26.-57-71 SU:T[ 3166 733 SOOT N DRANO AVCNVE LOS ANGELES, CAV• 00071 Zi> -013-1112 Since some question has been raised concerning the effec- tiveness of the above agreements and the timing of the amendment to the Calaveras third phase agreement to delete the requirement of an engineer's certificate, I have enclosed a revised page 13 to the Project 3 Agreement and revised pages 11 and 12 to the Transmission Agreement to clarify the fact that the effectiveness of the agreement is not to b.? contingent on such certificates. These changed pages should be provided to the respective city clerks for the participants. Very truly yours, Michael A. DeAngelis cc: Gail Sipple 'i� :'�dA.--0�1':. "Gri:rw',i99+°iris,:4.v�a:X:.�.`sr�.�tt:i.':,tc 'isc:3.S::7ia::ieivr-ci.L•rYSAs:.N1T,5tSdt'iCGiOF:ii.�t:.N6L�5i�A4iVGiGit::�.C.wJY'aW+7t�ne:>'t,1'::Tteose�xaamolwe.00lv....- ----- - - � _ TRANSMISSION AGREEMENT, pages 11 and 12 PROJECT AGREEMENT, page 13 NcrU C®mfohnala Poww Agncy 8421 Auburn &.ulevard, Suite 160 Citrus Heights. California 95&11ti R00ERT R Q•i1MSNAW General Manag .f (916) 722-7815 August 5, 1983 T0: City Clerk FROM: Gail Sipple SUBJECT: Publication Requirements for Ordinances Approving the Transmission Project Third Phase Agreement and the Geothermal Project No. 3 Third Phase Agreement On August 2, 1983, 1 forwarded to you a package containing the above- mentioned agreements along with other supporting docunients. One of items included was a memo from Mudge Rose outlining the publication requirements. Because there war some confusion over the last paragraph, Mudge Rose has prepared a revised metrto which is attached. Yours truly, GAIL'PPLE ecu ive Assistant �tachment MUDGE 1-(08E GUTHRIE ALEXANDER & FERDON MEMORANDUM FOR Project Participants August 4 , 1983 Publication requirements for the *eparate ordi- nances approving the Transmission Member Agreement and the Geothermal Member Agreement The separate ordinances approving the Transmission [ember Agreement and the Geothermal Member Agreement should be published in the same: manner as all other ordinances of the Project Porti ipant are put,lished. If the Project Participant has no procedure for the publi- cation of ordinances, then a special, procedure Dander Section 54242 of the California Government Code applies. Under the special procedure the separate ordinance approving each Agreement must be puLlishas ongg in a newspaper of general circulation in the city within 13, days after its adoption. A "newspaper of general circulation" is r news- paper published for the dissemination of local or telegraphic news and intelligence of a general chv.racter, which has a bona fide sub- scription list of paying subscribers and has been established, printed and published at regular intervals in thl city for at least one year preceding the' date of publication of the ordinance. Further, under the special procedure, all publications of the separate ordinances must be set in nonpareil type and must be preceded by a notice of adoption worded in blackface, nonpa:ell type substantially as follows: NOTICE OF ADOPTION OF AN ORDINANCE APPROVING THE EXECUTION AND DELIVERY OF THE MEMBER AGREEMENT WHEREBY -THE CITY ENTERS INTO A FORMAL LEASEBACK AGP.EEiy M WITH NORTHERN CALIFORNIA POWER AGENCY. RESOLUTION NO. 83- 56 NORTHERN CALIFORNIA PO:dER AGENCY BE IT RESOLVED BY THE COMMISSION' OF THE NORTHERN CALIFORNIA POWER AGENCY, as follows: Section 1. The farm of "Agreement for Construction, Operation and Financing of Geothermel Generating Project Number Three", designated duly 28, 1903, a Third Phase Agreement under the Member Services Agreements, is hereby approved; and the Assistant Secretary is directed to send copies of the same to the Project Participants named therein, and request that it be ,approved and executed by ordinance in accordance with the terms of Section 13 thereof. Section L. The General Manager is authorized to execute said agreement on behalf of this Agency. Vote • Abstained Absent City of - Alameda _ BiggsGridley.� Healdsburg Lodi Lompoc Z Palo Alto Redding '� • �� Roseville Santa Clara r t� Ukiah' _ Pl umas-Sierras ADOPTED AND APPROVED this y ' 1 �,� �'_ day of 1983.