3.1.D ERMUSR 09-13-2011 - Laserfiche WebLink

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August 5, 2011 Page 2 of 3 Each Participant indicated its preference as to how much of the increased participation commitment it wished take on. Some Participants were willing to take on more than apro-rata increase in their participation levels, while others preferred to take on less. In aggregate, there was more than enough interest among Participants to cover 100% of the increase in CMMPA's share of the Brookings Project. )n fact, we worked out a methodology to allocate portions of the available increase among those Participants whose collective interests exceeded the additional investment available for allocation. Section 2 of Attachment 3 to each Participant's Development Agreement provides that each Participant's Election Share "shall be subject to adjustment if CMMPA's Brookings Share is adjusted pursuant to the CapX 2020 Development Agreement." This passage lays out atwo-step process by which the increase in CMMPA's Brookings Share is to be allocated.r The first step is voluntary upward and downward adjustments to the various Participants' Election Shares. The second step is a fallback procedure whereby any unsubscribed portion of the increase is allocated among all Participants pro rata. Because the voluntary adjustments were more than sufficient to cover the increase in CMMPA's Brookings Share, we didn't need to apply the second step in the process. As indicated in the opening paragraph of this letter, the enclosed Attachment A reflects the cumulative effects on the Participants' Election Shares of the negotiated adjustments due to the increase in CMMPA's Brookings Share, Delano's withdrawal as a Participant, and the redistribution of Delano's Election Share among the six Participants that agreed to acquire Delano's Election Share (provided the planned construction of the Brookings Project goes forward). To be clear, until the Brookings Project transitions from development to construction, we will continue to operate under the terms (and Election Shares) of the Development Agreements as they now exist. The adjustments to the Participants' Election Shares, as reflected in Attachment A, will take effect when CMMPA enters into "upstream" agreements with the other Brookings Owners. At that time, CMMPA's Brookings participation share (referred to in the upstream agreements as its "Percentage Interest") will increase to 3.6%. The Election Shares as shown in Attachment A to this letter would then also be reflected in the exhibits and attachments to the Participants' Brookings -Twin Cities Transmission Project Agreements (which take effect concurrently with CMMPA's execution of the upstream agreements) and the associated Transmission Owner Services and Asset Assignment Agreements. t The entire text of Section 2 of Attachment 3 to the Development Agreements reads as follows: "In addition, the Participant Election Share shall be subject to adjustment if CMMPA's Brookings Share is adjusted pursuant to the CapX 2020 Development Agreement. For each occurrence of such an event, each Participant shall have the first right to voluntarily accept an increase or decrease pro rata based on its Participant Election Share among those exercising such right before an automatic increase or decrease is made to all Participants pro rata. The Participant Election Share, as adjusted by the preceding sentence, shall then be further adjusted until the sum of all Participant Election Shares is equal to 100% of the adjusted CMMPA's Brookings Share under the CapX 2020 Development Agreement."