LETTER AGREEMENT
[____], 2024
City of Anaheim
201 S. Anaheim Blvd, #1101
Anaheim, CA 92805
Re: Prepay Limited Assignment Agreements
Ladies and Gentlemen:
This Letter Agreement (this “ Letter Agreement”) confirms our mutual agreement with respect to the matters set forth below and relates to those certain Limited Assignment Agreements listed on Exhibit A under the heading titled “Purchaser Assignment Agreements” (the “Assignment Agreements”, which definition shall include any new Assignment Agreements identified by SCPPA’s delivery of an updated Exhibit A consistent with Section 2), with each of the PPA Sellers identified in Exhibit A (each, individually, a “PPA Seller” and collectively the “PPA Sellers”, and which definitions shall include any new PPA Seller identified by SCPPA’s delivery of an updated Exhibit A consistent with Section 2). Any capitalized term used in this Letter Agreement and not otherwise defined herein shall have the meaning assign ed to such term in the Clean Energy Purchase Contract. In consideration of each Party’s execution of the Assignment Agreements, and the mutual covenants and agreements set forth herein, the City of Anaheim, California (“Anaheim”) and Southern California Public Power Authority (“ SCPPA” and together with Anaheim, collectively the “Parties” and each a “Party”) agree as follows:
1. Assignment Early Termination . Each of the Parties agrees that it shall only exercise its right to deliver a written notice of termination of an Assignment Period under an Assignment Agreement consistent with the following:
(a) Any Party may deliver a notice of termination under an Assignment Agreement in the event of (i) the suspension of performance under or expiration or termination of the relevant PPA by either Anaheim or the applicable PPA Seller; (ii) the termination or suspension of deliveries for any reason other than force majeure under (A) that certain Clean Energy Purchase
Contract (the “Clean Energy Purchase Contract”), dated as of [____], 2024 by and between SCPPA and Anaheim (including, for the avoidance of doubt, due to a “Remarketing Election” by Anaheim unde
r the Clean Energy Purchase Contract), (B) that certain Electricity Purchase, Sale and Service Agreement, dated as of [____], 2024 by and between J. Aron and Aron Energy Prepay 23 LLC (the “Electricity Sale and Service Agreement”) or (C) that certain Master Power Supply Agreement, dated as of [___], 2024, by and between SCPPA and Aron Energy Prepay 23 LLC; (iii) the California Renewable Portfolio Standard Portfolio Content Category designation of the renewable energy assigned under the Assignment Agreements is altered, reclassified, or invalidated as a direct or indirect result of the transaction contemplated by the Assignment Agreements or t he Clean Energy Purchase Contract; or (i v) in the event that the relevant Assignment Agreement is subject to termination due to the bankruptcy or insolvency of the PPA Seller, however defined therein;
2 (b) SCPPA shall deliver a notice of termination contemporaneous with any assignment by SCPPA of its interest in the Clean Energy Purchase Contract, provided that Anaheim in any event shall be entitled to deliver a notice of termination to the extent SCPPA fails to do so in connection with the assignment of SCPPA’s interest under the Clean Energy Purchase Contract; and
(c) Either Party may deliver a notice of termination of an Assignment Agreement to the extent that the Parties have mutually agreed upon an assignment of Replacement Assigned Rights and Obligations (as defined in the Clean Energy Purchase Contract) that will replace the Assigned Rights and Obligations under such Assignment Agreement immediately following the termination thereof; provided that such notice is conditioned on the execution and delivery of such Assignment Agreement.
For the avoidance of doubt, each of the Parties agrees that it shall not terminate an Assignment Agreement pursuant to the at will termination provision thereof except in the circumstances set forth immediately above. The at will termination provision referenced in the immediately preceding sentence (x) is set forth in [ Section 2(a)(1) of the form of Purchaser Assignment Agreement attached to the Clean Energy Purchase Contract ] and (y) shall refer to any such provision set forth in an Assignment Agreement entered into by the Parties consistent with the terms of the Clean Energy Purchase Contract and the Electricity Sale and Service Agreement.
2. Exhibit A . Promptly following execution of the Assignment Agreements with respect to the Initial Assigned Rights and Obligations, SCPPA shall deliver an Exhibit A that lists such Assignment Agreements. SCPPA shall deliver an updated Exhibit A to this Agreement to reflect any changes to the information set forth therein in connection with the termination, expiration or replacement of an Assignment Agreement consistent with the terms of the Clean Energy Purchase Contract.
3. Representations, Warranties and Covenants.
(a) Anaheim agrees that it shall provide a true, complete, and correct copy to SCPPA and SCPPA’s assigns of any PPA to be assigned pursuant to an Assignment Agreement.
(b) Each Party represents to the other:
(i) Status. It is duly organized and validly existing under the laws of the jurisdiction of its organization or incorporation and, if relevant under such laws, in good standing.
(ii) Powers. It has the power to execute, deliver and perform its obligations under this Letter Agreement, the Assignment Agreement s and any other documentation to which it is a party relating to this Letter Agreement and any Assignment Agreement, and it has taken all necessary action to authorize such execution, delivery and performance.
(iii)No Violation or Conflict. Such execution, delivery and performance of this Letter Agreement and the Assignment Agreement s and the consummation of the 3 transactions contemplated hereby and thereby, including the incurrence by such Party of its obligations under this Letter Agreement and the Assignment Agreements, will not result in any violation of or conflict with: (i) any term of any material contract or agreement applicable to it; (ii) any of its charter, bylaws, or other constitutional documents; (iii) any determination or award of any arbitrator applicable to it; or (iv) any license, permit, franchise, judgment, writ, injunction or regulation, decree, order, charter, law, ordinance, rule or regulation of any government agency, applicable to it or any of its assets or properties or to any obligations incurred by it or by which it or any of its assets or properties or obligations are bound or affected, and shall not cause a breach of, or default under, any such term or result in the creation of any lien upon any of its properties or assets.
(iv) Consents. All consents, approvals, orders or authorizations of; registrations, declarations, filings or giving of notice to; obtaining of any licenses or permits from; or taking of any other action with respect to, any Person or Government Agency, that are required to have been obtained or made by such Party with respect to this Letter Agreement and Assignment Agreement s and the transactions contemplated hereby and thereby, including the due authorization of such Party and its governing body and any approval or consent of any security holder of such Party or any holder (or any trustee for any holder) of any indebtedness or other obligation of such Party, have been obtained and are in full force and effect and all conditions of any such consents have been complied with.
(v) Obligations Binding. Its obligations under this Letter Agreement and the Assignment Agreement s constitute its legal, valid and binding obligations, enforceable in accordance with their respective terms (subject to applicable bankruptcy, reorganization, insolvency, moratorium or similar laws affecting creditors’ rights generally and subject, as to enforceability, to equitable principles of general application (regardless of whether enforcement is sought in a proceeding in equity or at law)).
(vi) Non-Reliance. It is acting for its own account, and it has made its own independent decisions to enter into this Letter Agreement and the Assignment Agreements and as to whether this Letter Agreement and the Assignment Agreement s are appropriate or proper for it based upon its own judgment and upon advice from such advisers as it has deemed necessary. It is not relying on any communication (written or oral) of the other Parties as investment advice or as a recommendation to enter into this Letter Agreement or the Assignm ent Agreement s, it being understood that information and explanations related to the terms and conditions of this Letter Agreement and the Assignment Agreement s shall not be considered investment advice or a recommendation to enter into this Letter Agreement. It is entering into this Letter Agreement and the Assignment Agreements as a bona-fide, arm’s-length transaction involving the mutual exchange of consideration and, once executed by the applicable parties , considers this Letter Agreement and the Assignment Agreements to be legally enforceable contract s. No communication 4 (written or oral) received from any of the other Parties shall be deemed to be an assurance or guarantee as to the expected results of this Letter Agreement or the Assignment Agreements.
(vii) Assessment and Understanding. It is capable of assessing the merits of and understanding (on its own behalf or through independent professional advice), and understands and accepts, the terms, conditions and risks of this Letter Agreement and the Assignment Agreements. It is also capable of assuming, and assumes, the risks of this Letter Agreement and the Assignment Agreements.
(viii) Status of Parties. Neither Party is acting as a fiduciary for or an adviser to the other in respect of this Letter Agreement or the Assignment Agreements.
4. Miscellaneous
(a) Governing Law. This Letter Agreement and the rights and duties of the P arties will be governed by and construed, enforced and performed in a ccordance with the laws of the State of California , without reference to any conflicts of laws provisions that would direct the application of another jurisdiction’s laws.
(b) Jurisdiction. Each Party submits to the exclusive jurisdiction of the courts of the State of California or of the United States of America, in either case located in Los Angeles County, California.
(c) Waiver of Right to Trial by Jury. Each Party waives, to the fullest extent permitted by applicable law, any right it may have to a trial by jury in respect of any suit, action or proceeding relating to this Letter Agreement.
(d) Third Party Beneficiary. Any Party that takes assignment of SCPPA’s rights pursuant to an Issuer Assignment Agreement (as defined in the Clean Energy Purchase Contract) shall be a third-party beneficiary of this Letter Agreement with right to enforce the terms hereof.
(e) Limited Obligation. Notwithstanding anything to the contrary herein, all obligations of SCPPA under this Letter Agreement, including without limitation all obligations to make payments of any kind whatsoever, are special, limited obligations of SCPPA, payable solely from the Trust Estate (as such term is defined in the Trust Indenture, dated as of [____], 2024, between SCPPA and U.S. Bank Trust Company, National Association, as trustee) as and to the extent provided in such Trust Indenture, including with respect to Operating Expenses (as such term is defined in such Trust Indenture). SCPPA shall not be required to advance any moneys derived from any source other than the Revenues (as such term is defined in such Trust Indenture) and other assets pledged under such Trust Indenture for any of the purposes in this Letter Agreement. Neither the faith and credit of SCPPA nor the taxing power of the State of California or any political subdivision thereof is pledged to payments pursuant to this Letter Agreement.
SCPPA shall not be directly, indirectly, contingently or otherwise liable for any costs, expenses, losses, damages, claims or actions, of any conceivable kind on any conceivable theory, under or by reasons of or in connection with this Letter Agreement, except solely to the extent Revenues 5 (as such term is defined in such Trust Indenture) are received for the payment thereof and may be applied therefor pursuant to the terms of such Trust Indenture.
[Signature Pages to Follow]
Signature Page to Letter Agreement
Very truly yours,
SCPPA
SOUTHERN CALIFORNIA PUBLIC POWER
AUTHORITY
By:
Name:
Title:
ACKNOWLEDGED, ACCEPTED AND AGREED TO as of the date first set forth above:
ATTEST:
By: ___________________________
Name: Theresa Bass
Title: City Clerk
CITY OF ANAHEIM
By: ___________________________
Name: Dukku Lee
Title: Public Utilities General Manager
APPROVED AS TO FORM:
ANAHEIM CITY ATTORNEY’S OFFICE
By: ___________________________
Name: Andrew Lee
Title: Deputy City Attorney
A-1
Exhibit A
Assignment Agreements
Purchaser Assignment Agreements Issuer Assignment Agreements
1. Limited Assignment Agreement dated
[____], by and among Purchaser, the Issuer
and [PPA Seller]
Assigned PPA: [____]
Assignment Period:
PPA Seller:
PPA Seller Payment Instructions:
1. Limited Assignment Agreement dated
[____], by and among J. Aron, the Issuer
and [PPA Seller]
2. Limited Assignment Agreement dated
[____], by and among Purchaser, the Issuer
and [PPA Seller]
Assigned PPA: [____]
Assignment Period:
PPA Seller:
PPA Seller Payment Instructions:
2. Limited Assignment Agreement dated
[____], by and among J. Aron, the Issuer
and [PPA Seller]