1 AGREEMENT FOR PURCHASE AND SALE OF RENEWABLE ENERGY CERTIFICATES
THIS AGREEMENT FOR THE PURCHASE AND SALE OF RENEWABLE ENERGY CREDITS (this “Agreement”) is made as of the Effective Date, by and between City of Burbank; Burbank Water and Power whose address is 164 W. Magnolia Blvd PO Box 631 Burbank, CA 91503-0631 (“Burbank”) and 3 Degrees Group, Inc., whose address 235 Montgomery St, Suite 320, San Francisco CA USA 94104 (“3 Degrees”). Burbank and 3 Degrees are each a “Party” and, collectively, are the “Parties.”
WHEREAS, the Parties wish to provide terms and conditions pursuant to which they are entering into this Agreement for the purchase and sale of Renewable Energy Certificates pursuant to both the Commercial Terms (“Part A”) and the General Terms (“Part B”), as set forth below;
NOW, THEREFORE, in consideration of their mutual covenants herein, the Parties , intending to be legally bound, agree as follows:
Part A – Commercial Terms
Commercial Terms--Generally:
Transaction Reference: 3D - 33043
Effective Date: The latter of _________ or the date Buyer and Seller sign this Agreement
Trade Date: December 13, 2023
Seller: 3 Degrees
Buyer: City of Burbank
Product: Firm Category 3 RECs
Applicable Standards: California Renewable Portfolio Standard Portfolio Content Category 3 (PCC3) as defined by California
Code, Public Utilities Code - PUC § 399.16, and Section 3203(c) of the Regulations Specifying Enforcement
Procedures for the Renewables Portfolio Standard for
Local Publicly Owned Electric Utilities, as adopted by
the California Energy Commission, effective July 12,
2021
Renewable Energy Facility: RPS facilities list with CEC RPS IDs and WREGIS IDs
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2 * Seller reserves the right to utilize other facilities in compliance with the Applicable Standards to fulfill the Contract Quantity as long as the terms of this
Confirmation Agreement are met by any such
replacement or substitute Product and other RPS
facilities added through documentary writing updating
the Initial Renewable Energy Facility table (above), prior to delivery of REC
Term 10 years following Execution Date
Vintage(s):
REC Vintage 2024 (1/1/2023-12/31/2024), 35,000 MWh of
Product
REC Vintage 2025 – (1/1/2024-12/31/2025), 35,000 MWh
of Product
REC Vintage 2026 – (1/1/2025-12/31/2026), 35,000 MWh
of Product
REC Vintage 2027 – (1/1/2026-12/31/2027), 35,000 MWh
of Product
REC Vintage 2028 – (1/1/2027-12/31/2028), 35,000 MWh
of Product
REC Vintage 2029 – (1/1/2028-12/31/2029), 35,000 MWh
of Product
REC Vintage 2030 – (1/1/2029-12/31/2030), 35,000 MWh
of Product REC Vintage 2031 –
35,000 MWh of Product
REC Vintage 203 1 – (1/1/2030-12/31/2031), 35,000 MWh
of Product
REC Vintage 203 2 – (1/1/2031-12/31/2032), 35,000 MWh
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3 of Product
REC Vintage 2033 – (1/1/2032-12/31/2033), 35,000 MWh
of Product
Generation Period: From January 1, 2023 through December 31, 2024 for REC Vintage 2024 and for any subsequent Vintages, January 1 of the prior Calendar Year through December 31 of the
applicable Vintage (each such period, a “Generation Period”).
In the event that delivering Product with a Vintage from a prior Calendar Year for REC Vintage Years 2025, 2028
and 2031, is not allowed by the California Energy
Commission under the Applicable Standards, Seller will
provide another product that meets the Applicable
Standards for the REC Vintage Year.
Seller to provide notification to Buyer of the generation year volume breakdown for the current Vintage year on
or before July 1st (i.e. for vintage 2024, the breakdown of 2023 vs. 2024 generation will be provided by
7/1/2024).
End of Generation Period: December 31 of the applicable Vintage Contract Quantity (MWh, REC)/
Delivery Obligation:
For each Generation Period from 2024 through 2033:
35,000 PCC3 Firm REC annually (each, an “Annual
Contract Quantity”); 350,000 Firm REC Total (“Total
Contract Quantity”)
Seller shall be obligated to deliver the Annual Contract Quantity for each Contract Year during the Term and
shall be obligated to deliver the Total Contract Quantity for the entire Term.
Contract Price ($/MWh or $/REC): $9.20/REC
Total Contract Price: $3,220,000 (including all broker fees, seller pays all broker fees)
Payment Before Delivery [Yes][No]: No, Payments will occur after the RECs are delivered and accepted into Buyers WREGIS account.
Payment Due Date: Payments for undisputed amounts billed under this Agreement shall be paid 20 days after the invoice was
received. In no event shall Seller submit an invoice prior to the Delivery Date.
Delivery Date(s): Annual: For each Annual Contract Quantity, Firm volumes will be delivered on or before March 15th following the applicable Generation Period; provided that for the first- Generation Period such Firm volumes shall not be delivered any sooner than July 1st of the first-Generation Period; provided, that for the final Generation Period, the Annual ATTACHMENT 1
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4 Contract Quantity shall be delivered before the expiration of the Term.
For Example: The delivery of the Annual Contract
Quantity for 2024 Vintage, between Effective Date and
December 31, 2024, must be delivered in WREGIS no
sooner than July 1, 2024 but no later than March 15,
2025.
Applicable Tracking System: Western Renewable Energy Generation Information System (WREGIS) or it’s successor
Buyer Tracking System Account Name: City of Burbank, Burbank Water and Power Buyer Delivery Contact [Name, Email]: Anthony D’Aquila, [email protected]
Seller Delivery & Invoice Contact
[Name, Email]:
Settlements: [email protected]
Special Provisions, if any: N/A
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5 Part B – General Terms
1. DEFINITIONS
1.1 Definitions. In addition to any other terms defined in the Agreement, the following terms shall have the meaning ascribed to them as set forth below:
“Accept” or “Acceptance” means Buyer’s electronic receipt and acceptance in the Applicable Tracking System of the Delivery of the RECs in its Account, in accordance with the operating rules and procedures of the Applicable Tracking System.
“Acceptance Deadline” means the amount of time Buyer has to Accept the RECs pursuant to Section 2.2 of this Agreement.
“Account” means a Party’s electronic account with the Applicable Tracking System.
“Administrator” means the entity with jurisdiction over the Applicable Tracking System.
“Annual Contract Quantity” means, for any Vintage, the annual amount set forth set forth in Part A.
“Applicable Laws” means federal, state , county, local, and other laws, statutes, regulations, rules, codes, ordinances, resolutions, standards, guidebooks (including the most -recent Renewables Portfolio Standard Eligibility Guidebook issued by the California Energy Commission, as amended from time to time, or its successor document), directives, executive and other orders, judgments, decrees, rulings or determinations enacted, adopted, issued or promulgated by any federal, state, county, local or other Governmental Authority (including without limitation those pertaining to electrical, building, zoning, environmental laws, tax, international trade laws, and occupational safety and health requirements).
“Applicable Standard ” means any provincial, state or federal program, other mandatory or voluntary standard(s), or set of rules set forth in Part A.
“Applicable Tracking System ” means the environme ntal registry and information system set forth in Part A that tracks the environmental and fuel attributes of generation, and any successor tracking system that both Parties agree in their reasonable commercial judgment facilitates the sale and purchase of the REC.
“Business Day” means any day except a Saturday or Sunday or a Federal Reserve Bank holiday.
A Business Day opens at 8:00 a.m. and close at 5:00 p.m. Eastern Prevailing Time.
“Buyer” means the Party set forth in Part A that is obligated to purchase, receive and Accept the RECs, under the conditions specified in this Agreement.
"Category 3 REC " or “PCC3” means a REC that satisfies the requ irements of Section 399.16(b)(3) of the California Public Utilities Code, and Section 3203(c) of the Regulations Specifying ATTACHMENT 1
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6 Enforcement Procedures for the Renewables Portfolio Standard for Local Publicly Owned Electric Utilities, as adopted by the California Energy Commission, effective July 12, 2021.
“Claiming Party” has the meaning set forth in Section 6.
“Compliance Period” means each compliance period as defined in the RPS Law.
“Compliance Requirements” means the standards required to be RPS Compliant.
“Confidential Information” has the meaning defined in Section 10.1.
“Contract Price” means the amount payable by Buyer to Seller for each REC set forth in Part A.
“Contract Quantity” means the quantity of RECs set forth in Part A to be Delivered by Seller to Buyer.
“Defaulting Party” shall have the meaning set forth in Section 8.
“Deliver”, “Delivered” or “Delivery(ies)” means the initiation of the electronic transfer of RECs from Seller’s Account to Buyer’s Account in accordance with the Applicable Standard and the operating rules and procedures of the Applicable Tracking System.
“Delivered Quantity” means the quantity of RECs Delivered.
“Delivery Date(s)” means the date(s) by which Delivery of the Contract Quantity shall occur as set forth in Part A; provided that Delivery is not required to occur prior to one (1) Business Day after full execution of this Agreement.
“Delivery Shortfall” has the meaning set forth in Section 7.1.
“Eastern Prevailing Time” or “EPT” means the prevailing time (i.e., Standard Time or Daylight Savings Time) on any given day in the Eastern Time Zone.
“Economic Sanctions” has the meaning set forth in Section 2.8.
“Effective Date” means the date set forth in Part A.
“Energy” means three-phase, 60 Hz electrical energy expressed in MWhs produced during the Generation Period giving rise to the creation of the REC.
“Event of Default” shall have the meaning set forth in Section 8.
“Environmental Attributes” means any and all certificates, credits, benefits, emissions reductions, environmental air quality credits, emissions reduction credits, offsets, claims, and allowances, howsoever entitled, resulting from the avoidance of the emission of any gas, chemical , or other substance attributable to the generation of the specified energy, but specifically excluding only the wind production tax credits. One REC represents the Environmental Attributes made available by the generation of 1 megawatt- hour (“MWh”) of specified Energy.
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7 “Firm” means Seller shall Deliver the Contract Quantity of RECs by the Delivery Date, unless excused by Force Majeure or Buyer’s failure to perform.
“Force Majeure” means any event or circumstance that materially prevents a Party from performing its obligations under this Agreement, which event or circumstance (A) was not reasonably anticipated as of the date this Agreement was entered into, (B) is not within the reasonable control of or the result of the negligence or misconduct of a Party, and (C) a Party, by the exercise of due diligence, is unable to overcome or avoid or cause to be avoided. Force Majeure may not be based on (i) the loss or failure of Buyer’s markets; (ii) Buyer’s inability economically to use or resell the RECs; (iii) Seller’s ability to sell the RECs to another at a price greater than the Contract Price; (iv) Buyer’s ability to produce RECs; or (v) Buyer’s ability to purchase product similar to the RECs at a price less than the Contract Price. Events of Force Majeure do not include (w) any change in applicable law or regulations, (x) Seller’s ability to sell the Contract RECs at a price greater than the Contract Price per REC, or (y) Buyer’s ability to purchase the Contract RECs at a price less than the Contract Price per REC.
“Generation Period” means the calendar year, quarter, or other specified period of time set forth in Part A in which the Energy associated with the RECs is or will be generated.
“Governmental Authority” means any federal, state, regional, city or local government, any intergovernmental association or political subdivision thereof, other governmental, regulatory or administrative agency, court, commission, administration, department, board, other governm ental subdivision, legislature, rulemaking board, tribunal, other governmental authority or any Person acting as a delegate or agent of any Governmental Authority.
“Guarantor” means, with respect to a Party, the guarantor, if any, specified for such Party on the line “Special Provisions” in Part A. A guarantor shall be identified as either Seller’s Guarantor or Buyer’s Guarantor, as applicable.
“Guaranty” means a guaranty of payment from a Guarantor, in a form, amount and for a term all reasonably acceptable to the Party to whom the Guaranty is being issued.
“Interest Rate” means a per annum rate of interest equal to two (2%) percent over the prime lending rate as published from time to time in The Wall Street Journal under “Money Rates” on such day (or if not published on such day , on the most recent preceding day on which published), but in no event to exceed the maximum lawful rate.
“Letter of Credit” means an irrevocable, transferable, standby letter of credit, governed by the International Standby Practices rules, International Chamber of Commerce Pub. 590 and issued by a Qualified Institution utilizing such form as may be required by such Qualified Institution and as may be reasonably acceptable to the Party in whose favor the letter of credit is issued.
“Market Exposure” means, as reasonably calculated and substantiated upon request, the product of: (i) the difference between the Contract Price and the Market Price for the Undelivered Quantity, and (ii) the Undelivered Quantity.
“Market Price” means the greater of (a) the market price actually paid by Buyer for PCC3s of the applicable Vintage within the past 180 days, or (b) the average of market quotes for the Undelivered Quantity for an applicable Annual Contract Quantity for the applicable Vintage from three reputable brokerage firms or third-party intermediaries actively engaged in the purchase and sale of RECs under ATTACHMENT 1
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8 the Applicable Standard or, if no such quotes from such firms or intermediaries are available, any other reasonable method selected by Buyer to value the Undelivered Quantity for an applicable Annual Contract Quantity for an applicable Vintage.
“MWh” means megawatt-hour.
“Non-Defaulting Party” shall have the meaning given in Section 9.1.
“Payment Amount” means an amount equal to the product of: (i) the Contract Price, and (ii) the Delivered Quantity . If this Agreement requires Buyer to pay Seller before the Delivery of RECs, then Delivered Quantity means the expected Delivery Quantity.
“Payment Due Date” has the meaning set forth in Section 4.1.
“Performance Assurance” may include (a) posting of a Letter of Credit in a form, in an amount and by an issuing bank reasonably acceptable to the Party in whose favor Performance Assurance is being provided or (b) other security reasonably acceptable to the Party in whose favor Performance Assurance is being provided.
“Person” means any individual, corporation, partnership, joint venture, limited liability company, association, joint stock company, trust, unincorporated organization, entity, government or other political subdivision.
“Qualified Institution” means a commercial bank or trust company organized under the laws of the United States or a political subdivision thereof or foreign bank with a US branch office, with (i) a rating for its deposit obligations of at least (a) “A -” by Standard & Poor’s Fi nancial Services LLC (“S&P”) and “A3” by Moody’s Investors Service, Inc. (“Moody’s”), if such entity is rated by both S&P and Moody’s , or (b) “A-” by S&P or “A3” by Moody’s, if such entity is rated by either S&P and Moody’s, but not both.
“Renewable Energy Certificate(s)” or “ REC(s)” means a certificate of proof (as defined in Public Utilities Code section 399.12 (h)) , credit, allowance, green tag, or other transferable indicium, howsoever entitled, that is associated with, but separate from, the generation of one (1) MWh of Energy from a Renewable Energy Facility, and which includes all Environmental Attributes associated with the MWh of E nergy. To the extent applicable, the term “RECs” includes Solar Renewable Energy Certificate(s) (“SRECs”).
“Renewable Energy Facility” means an eligible electric generating facility set forth in Part A, each of which Seller hereby represents and warrants meet the requirements of the Applicable Standard.
“Renewable Portfolio Standard ” or “ RPS” means renewable e nergy programs and policies established and amended by California State Senate Bills 1078 (2002), X1-2 (2011), 350 (2015) and 100 (2018) and codified in California Public Utilities Code Sections 399.11 through 399.31 and California Public Resources Code Sections 25740 through 25751, as such provisions are amended or supplemented from time to time, and all related policies, regulations and guidelines, including the Guidebook.
“RPS Compliant” means, when used with respect to the Facility or any other facility at any time, that all Energy generated by such Facility or other facility, as applicable, at all times shall, together with ATTACHMENT 1
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9 all of the associated Environmental Attributes, qualify at least as a PCC3 REC under the RPS Law and meet the requirements of Public Utilities Code Section 399.16(b).
“Seller” means the Party set forth in Part A that is obligated to sell and Deliver the RECs, under the circumstances specified in this Agreement.
“Settlement Amount” means, as determined in a commercially reasonable manner by the Non- Defaulting Party as of the Early Termination Date:
(a) if Seller is the Defaulting Party, an amount equal to the sum of: (i) the positive difference, if any, obtained by subtracting the Contract Price from the Market Price multiplied by the Undelivered Quantity, plus (ii) if and as applicable, any broker costs charged by brokers actively engaged in the purchase and sale of RECs under the Applicable Standard in curred by Buyer for entering into any replacement transaction to purchase the Undelivered Quantity minus (iii) the Contract Price multiplied by the Delivered Quantity for which Seller has not been paid by Buyer, if any; and
(b) if Buyer is the Defaulting Party, an amount equal to the sum of: (i) the positive difference, if any, obtained by subtracting the Market Price from the Contract Price multiplied by the Undelivered Quantity, plus (iii) if and as applicable, any broker costs charged by brokers actively engaged in the purchase and sale of RECs under the Applicable Standard incurred by Seller for entering into any replacement transaction to sell the Undelivered Quantity plus (iii) the Contract Price multiplied by the Delivered Quantity for which Seller has not been paid, if any.
“Shortfall Compliance Damages” has the meaning set forth in Section 7.1.
“Shortfall Damages” has the meaning set forth in Section 7.1.
“Shortfall Delivery Damages” has the meaning set forth in Section 7.1.
“State Executive Order” has the meaning set forth in Section 2.8.
“Term” has the meaning set forth in Section 2.1.
“Total Contract Quantity” means, for the Term, the aggregate amount of Product set forth set forth in Part A.
“Undelivered Quantity” means the difference between the Contract Quantity and the Delivered Quantity.
“Vintage(s)” means the time period(s), e.g., calendar year, energy year, reporting year, etc., set forth in Part A for which RECs produced during the Generation Period are eligible for the purpose of complying with the Applicable Standard as that time period is defined by the Applicable Standard.
2. TERM; SALE & PURCHASE OBLIGATIONS; OTHER PARTY OBLIGATIONS
2.1 Term. This Agreement shall commence on the Effective Date and shall terminate on the latter of the following (a) the 10th anniversary of the Effective Date or (b) on the date on which both Parties have completed the performance of their obligations hereunder ; provided that this Agreement may be ATTACHMENT 1
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10 terminated earlier or discharged pursuant to the terms hereof (the “Term”). Provisions of this Agreement which are stated or reasonably implied to survive such termination or discharge shall so survive until satisfied or waived.
2.2 Sale and Purchase Obligations . Seller will sell and Deliver the Contract Quantity to Buyer’s Account on or before the Delivery Date, and Buyer will receive and Accept the Contract Quantity, using the Applicable Tracking System, on or before Acceptance Deadline and purchase on or before the Payment Due Date in accordanc e with Part A . With respect to each Delivery, upon receiving confirmation from the Applicable Tracking System that a transfer has been initiated by Seller, Buyer will Accept the RECs within two (2) Business Days.
2.3 Buyer’s Account Name, Rejection Rights; & Related Issues.
(a) Buyer’s Account Name. In the event that Buyer’s Account name in the Applicable Tracking System is different than Buyer’s legal name, Buyer shall set forth its Account name on the line “Applicable Tracking System Account Name” in Part A.
(b) Buyer’s Rejection Rights. If the RECs Delivered to Buyer do not meet the terms of this Agreement as of the date Delivery was made by the Seller , Buyer may reject Delivery of such RECs within two (2) Business Days of Delivery by Seller. If Buyer justifiably and timely rejects Delivery, then Seller must, within two (2) Business Days of such rejection , take the necessary steps to fulfill its performance obligations under this Agreement. If Seller timely replaces the RECs as stated above, then Seller shall have satisfied its obligations regarding timely Delivery.
(c) Firm Delivery Obligation. Unless otherwise set forth on the line “Contract Quantity (MWh)/Delivery Obligation:” in Part A, the Delivery obligation for each REC is a Firm obligation.
(d) Delivery Costs. Each Party shall bear its own expenses associated with Delivery and Acceptance.
2.4. Transfer of Title. All rights, title and interest to and in the Delivered Quantity shall transfer from Seller’s Account to Buyer’s Account when recorded in the Applicable Tracking System consistent with the operating procedures thereof. Upon either Party’s receipt of notice from the Administrator that transfer of the Delivered Quantity pursuant to this Agreement will not be recognized or Delivery was not made as required, that Party will promptly notify the other Party by providing a copy of such notice.
Both Parties shall cooperate in taking necessary and commercially reasonable actions to cause such transfer to be recognized by the Administrator and have the Delivered Quantity be transferred and Accepted to the Buyer’s Account.
2.5 Representations and Warranties of Both Parties . As of the Effective Date and upon each subsequent Delivery, each Party hereby represents and warrants to the other Party that:
(a) it is duly organized, validly existing and in good standing under the laws of the jurisdiction of its formation;
(b) it has all regulatory authorizations necessary for it to legally perform its obligations under this Agreement;
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11 (c) the execution, delivery and performance of this Agreement is within its powers, have been duly authorized by all necessary action and do not violate any of the terms and conditions in its governing documents, any contracts to which it is a party or a ny law, rule, regulation, order or the like applicable to it;
(d) this Agreement and each other document executed and delivered in accordance with this Agreement constitutes its legally valid and binding obligation enforceable against it in accordance with its terms; subject to any equitable defenses, bankruptcy principles, or the like;
(e) no Event of Default with respect to it has occurred and is continuing and no such event or circumstance would occur as a result of its entering into or performing its obligations under this Agreement;
(f) it is acting for its own account, has made its own independent decision to enter into this Agreement and as to whether this Agreement is appropriate or proper for it based upon its own judgment, is not relying upon th e advice or recommendations of the other Party in so doing, and is capable of assessing the merits of and understanding, and understands and accepts, the terms, conditions and risks of this Agreement;
(g) it is a “forward contract merchant” within the meaning of the United States Bankruptcy Code; and
(h) it has entered into this Agreement in connection with the conduct of its business and it has the capacity or ability to make Delivery or Accept Delivery, as applicable, of all RECs set forth in Part A.
2.6 Representations and Warranties of Seller . As of the relevant Delivery Date, Seller hereby represents and warrants to Buyer that:
(a) it has the right to sell the RECs;
(b) the RECs have not been sold for any other purpose or use;
(c) the RECs are free and clear of all liens or other encumbrances; and
(d) the RECs were generated to meet the applicable Vintage(s) and meet the requirements of the Applicable Standards.
2.7 Performance Assurance.
(a) Seller’s Performance Assurance. As of the Effective Date, Seller shall execute, deliver to Buyer and maintain a Letter of Credit or another acceptable Performance Assurance in the amount of $322,000, which acceptable Performance Assurance shall guarantee Seller’s obligations under this Agreement from and after the Effective Date. Seller shall replenish any drawn amounts from the Performance Assurance. As of January 1 of each succeeding year, Seller may elect to amend the amount of the Performance Assurance to an amount equal to ten percent (10%) multiplied by the Annual Contract Quantity multiplied by the Contract Price (or Replacement Product, as applicable) multiplied by the number of years remaining in the Term. If Seller makes such election, it must deliver an amendment or ATTACHMENT 1
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12 replacement Performance Assurance, in form and substance reasonably satisfactory to Buyer, within two weeks of January 1.
(b) Draws on Seller’s Performance Assurance . Buyer may draw on the Performance Assurance (i) upon Seller’s failure to pay Buyer the Shortfall Damages as provided in Section 7.1, (ii) upon Seller’s failure to make any other payment due to Buyer hereunder in the amount of such unpaid payment or (iii) upon the occurrence and during the continuation of any event of Default by Seller to pay all amounts due to Buyer hereunder at such time and all damages, costs, losses, expenses and other liabilities incurred by Buyer resulting from such event of Default. Buyer may draw all or a ny part of such amounts due to Buyer from any form of security provided under this Section 2.7, and in any sequence, Buyer may elect, in its sole discretion. Any failure of, or delay by, Buyer in electing to draw any amount from the Performance Assurance s hall in no way prejudice Buyer’s rights to subsequently recover such amounts from the Performance Assurance or in any other manner.
2.8 Compliance With Laws
(a) Seller has been and will continue to be in Compliance in all respects with all Applicable Laws during the Term of this Agreement.
(b) Seller will use reasonable best efforts to ensure that Seller complies with California State Executive Order N -6-22, dated March 4, 2022 (“ State Executive Order ”) concerning economic sanctions (“Economic Sanctions”). Seller has read the State Executive Order, is not the subject or target of any Economic Sanctions, and will use reasonable best efforts to comply with any reasonable request to report information or submit documents to the State, or Buyer, or both, before or after the expiration, termination, or cancellation of this Agreement. At any time and upon written notice to Buyer, Seller, in its sole discretion, may either immediately invoke any one or more of the remedies listed in Paragraph
13.2 for Default under Paragraph 13.1(b), or terminate this Agreement for Buyer’s convenience under Paragraph 13.3, if Buyer determines that any one or more of the following circumstances or events have occurred:
(1) Seller is the subject or target of Economic Sanctions; (2) Seller is conducting prohibited transactions with sanctioned individuals or entities; or
(3) Seller has failed to comply, in any manner, with the State Executive Order.
3. TAXES AND FEES
Each Party shall be responsible for the taxes levied upon it by any governmental authority; provided, however, that Buyer will be responsible for any sales tax imposed under this Agreement. As used herein “taxes” means, but is not limited to, any or all ad valorem, property, occupation, severance, fi rst use, conservation, gross receipts, privilege, sales, use, consumption, excise, lease, transaction, and other taxes, governmental charges, licenses, fees, permits and assessments, or increases therein, other than taxes based on net income or net worth. A tax is not a penalty or a fine.
4. BILLING AND PAYMENT INSTRUCTIONS
4.1. Invoicing and Payment. Payments for amounts billed under this Agreement shall be paid on the 20 days from the date when the invoice was received for RECs received and accepted into Buyer’s WREGIS ATTACHMENT 1
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13 account or within ten (10) Business Days of receipt of Seller’s invoice, whichever is later (the “Payment Due Date”). Buyer shall pay Seller the Contract Price for the Delivered Quantity; provided that in no event shall receipt of an invoice be deemed to occur prior to the Delivery Date . If counterparty is the Buyer, then Seller must properly complete and return Buyer’s IRS Form W -9, and Electronic Funds Transfer Form, unless previously provided, before Buyer is obligated to make payment. If payment is not made by the Payment Due Date, without limiting Seller’s rights and remedies, the past due amount shall carry interest at the Interest Rate.
4.2. Payment Netting. If Buyer and Seller are each requ ired to pay amounts in respect of purchases and/sales hereunder and under any other REC agreement between the Parties on the same day, then, upon written notice (e.g., electronic, etc.) from one Party to the other, such amounts with respect to each Party shall be aggregated , and the Parties shall discharge their obligations to pay through netting, in which case the Party, if any, owing the greater aggregate amount shall pay to the other Party the difference between the amounts owed.
4.3 Payment Instructions. Payment shall be made by electronic funds transfer, or by other mutually agreed upon method, in immediately available funds, to the bank account name and account number as set forth below, or as otherwise notified in writing to the Party mak ing payment by the Party to whom payment is to be made.
If to Burbank:
Invoices to Burbank will be sent to:
Attn: Allison Mao
164 W. Magnolia Blvd. Burbank, CA 91502
Email: [email protected]
Payments to Burbank will be sent to:
Bank Name: Bank of America, Branch 1431
ABA Number: 026009593
Account Name: City of Burbank
Account Number: 02179-80201
If to 3 Degrees:
Invoices to 3 Degrees will be sent to:
3 Degrees Group, Inc.
Attn: Settlements
Phone:
Email: [email protected]
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14 Payments to 3 Degrees will be sent to:
3 Degrees Attn: 3Degrees Group, Inc.
Phone:
Email: [email protected]
Wire transfer instructions:
Beneficiary Bank Name: California Bank of Commercia
Bank Address: 2999 Oak Road, Suite 210
Walnut Creek, CA 94597
Phone:
Routing ABA Number: 121144696
Account # 1043868
5. ASSIGNMENT
Neither Party shall assign this Agreement, in whole or in part, without the other's written consent, which will not be unreasonably withheld, conditioned or delayed; except that a Party may, without consent (i) pledge, encumber or assign this Agreement or the accounts, revenues or proceeds hereof in connection with any financing or other financial arrangements; (ii) assign this Agreement to an affiliate if the affiliate’s creditworthiness is equal to or higher than that of the assigning Party; or (iii) assign this Agreement to any person or entity succeeding to all or substantially all of the assets of the assigning Party whose creditworthiness is equal to or higher than that of the assigning Party; provided, however, that in each such case, (i) any such assignee shall agree in writing to be bound by the terms and conditions of this Agreement , (ii) such assignment shall not result in any violation of law and (iii) such assignee shall not be in material dispute or litigation with the non -assigning Party. Any assignment without the requisite prior consent is void ab initio. All of the rights, benefits, liabilities, and obligations of the Parties shall inure to the benefit of and be binding upon their respective successors and permitted assigns. By consenting to one assignment a Party will not be deemed to have consented to a subsequent assignment.
6. FORCE MAJEURE
If either Pa rty is rendered unable, wholly or in part, by Force Majeure to materially carry out its obligations with respect to this Agreement , then the obligations of such Party ( the “Claiming Party”) will, only to the extent they are affected by such Force Majeure, be suspended during the continuance of said inability, but for no longer period, and the Claiming Party will not be liable to the other Party for, or on account of, any loss, damage, injury or expense resulting from, or arising out of such event of Force Majeure; provided, that the application of this Section 6 shall apply so long as the Claiming Party uses commercially reasonable efforts to diligently avoid, overcome or otherwise address such Force Majeure so that it can continue to perform its obligation s under this Agreement. Such Party must give notice and full particulars of such Force Majeure as soon as reasonably possible after the occurrence of the cause relied upon, and such notice must be confirme d in writing to the other Party. The Party receiving such notice of Force Majeure will have until the end of the second Business Day following such receipt to notify the Claiming Party that it objects to or disputes the existence of an event of Force Majeure.
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15 7. REMEDIES FOR FAILURE TO DELIVER/RECEIVE & ACCEPT
7.1 Seller’s Failure.
(a) Delivery Shortfall. If Seller fails to sell and Deliver, all or part of the Annual Contract Quantity of RECs for a particular Vintage to the Buyer by the applicable Delivery Date for such Vintage (a “Delivery Shortfall”), and such failure is not excused under the terms of this Agreement or by Buyer’s failure to perform, then Seller shall pay liquidated damages to Buyer within ten (10) Business Days after a notice delivered by Buyer to Seller, the sum of (i) the positive difference, if any, obtained by subtracting the Contract Price from the Market Price multiplied by the Undelivered Quantity portion of the Annual Contract Quantity for the applicable Vintage, plus (ii) if and as applicable, any broker costs charged by brokers actively engaged in the purchase and sale of RECs under the Applicable Standard incurred by Buyer for entering into any replacement transaction to purchase the Undelivered Quantity (the “Shortfall Delivery Damages”). The notice delivered by Buyer for such amount shall include a written statement explaining in reasonable detail the calculation of such amount.
(b) If Seller’s failure to pay the full amount of the Shortfall Delivery Damages for any Delivery Shortfall for a Vintage by the end of a Compliance Period for such Vintage and such failure results in penalties and fines imposed on Buyer for non -compliance with Compliance Requirements, to the extent such non -compliance was caused by the Delivery Shortfall (the “ Shortfall Compliance Damages” and together with Shortfall Delivery Damages, “ Shortfall Damages ”), then Buyer may deliver a notice to Seller to demand payment for cover damages. Seller shall pay such Shortfall Compliance Damages within thirty (30) days of receiving notice from Buyer under this Section 7.1(b).
The Parties acknowledge that the amount of Shortfall Compliance Damages may not be known at the end of the Compliance Period, and that Buyer will deliver notice following the determination of fines and penalties, if any, by the applicable Governmental Authority.
7.2 Buyer’s Failure. If Buyer fails to receive and Accept, all or part of the Delivered Quantity of RECs by the Acceptance Deadline, and such failure is not excused by Seller’s failure to perform, then Buyer shall pay Seller within ten (10) Business Days after invoice receipt, the product of: (A) the Contract Price and (B) the unpaid portion of the Delivered Quantity.
8. EVENTS OF DEFAULT
An “Event of Default” means, with respect to a Party (the “Defaulting Party”), the occurrence of any of the following : (i) f ailure by such Party to make, when due, any payment required under this Agreement, if such failure is not remedied within two (2) Business Days after written notice of such failure is given by the other Party; (ii) any representation or warranty made by such Party that is incorrect or misleading in any material respect when made or when deemed made or repeated ; (iii) the failure by such Party to perform any material covenant or obligation set forth in this A greement if such failure is not remedied within three (3) Business Days after written notice is given by the other Party; or (iv) such Party becomes Bankrupt.
9. REMEDIES UPON DEFAULT
9.1 Remedies. If an Event of Default with respect to a Defaulting Party has occurred and is continuing, the other Party (the “ Non-Defaulting Party”) shall have the right : (i) to designate a date, upon at least two Business Days’ written notice to the Defaulting Party , as an early termination date (“Early Termination Date”) to accelerate the amounts owing under this Agreement and liquidate and ATTACHMENT 1
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16 terminate this Agreement, (ii) withhold any payments due in respect of this Agreement, and (iii) suspend performance. The Non -Defaulting Party shall calculate, in a commercially reasonable manner, a Settlement Amount for the termination of this Agreement as of the Early Termination Date.
9.2 Notice of Payment of Settlement Amount. As soon as practicable after a liquidation, notice shall be given by the Non -Defaulting Party to the Defaulting Party of the Settlement Amount and whether the Settlement Amount is due to or due from the Non-Defaulting Party. The notice shall include a written statement explaining in reasonable detail the calculation of such amount. The Settlement Amount shall be paid by the Party that owes it within two (2) Business Days after the notice is received.
9.3 Calculation Disputes. If the Defaulting Party disputes the Non-Defaulting Party’s calculation of the Settlement Amount, the Defaulting Party shall, within two (2) Business Days of receipt of the Non- Defaulting Party’s calculation, pay the undisputed amount and provide the Non -Defaulting Party a detailed written explanation of the basis for such dispute.
9.4 Setoff. Each Party reserves all rights, setoff, recoupments, counterclaims or other remedies and defenses (to the extent not expressly waived or denied in this Agreement) that such Party has or to which such Party may be entitled arising from or out of this Agreement.
9.5 Limitation of Remedies, Liability and Damages. EXCEPT AS SET FORTH HEREIN, THERE
IS NO WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, AND ANY AND ALL IMPLIED WARRANTIES ARE DISCLAIMED. THE PARTIES CONFIRM
THAT THE EXPRESS REMEDIES AND MEASURES OF DAMAGES PROVIDED IN THIS AGREEMENT SATISFY THE ESSENTIAL PURPOSES HEREOF. FOR BREACH OF ANY
PROVISION FOR WHICH AN EXPRESS REMEDY OR MEASURE OF DAMAGES IS PROVIDED,
SUCH EXPRESS REMEDY OR MEASURE OF DAMAGES SHALL BE THE SOLE AND EXCLUSIVE REMEDY, THE OBLIGOR’S LIABILITY SHALL BE LIMITED AS SET FORTH IN
SUCH PROVISION AND ALL OTHER REMEDIES OR DAMAGES AT LAW OR IN EQUITY ARE WAIVED. IF NO REMEDY OR MEASURE OF DAMAGES IS EXPRESSLY PROVIDED HEREIN OR IN A TRANSACTION, THE OBLIGOR’S LIABILITY SHALL BE LIMITE D TO DIRECT ACTUAL DAMAGES ONLY. SUCH DIRECT ACTUAL DAMAGES SHALL BE THE SOLE AND
EXCLUSIVE REMEDY AND ALL OTHER REMEDIES OR DAMAGES AT LAW OR IN EQUITY ARE WAIVED. UNLESS EXPRESSLY HEREIN PROVIDED, NEITHER PARTY SHALL BE
LIABLE FOR CONSEQUENTIAL, INCIDENTAL, PUNITIVE, EXEMPLARY OR INDIRECT
DAMAGES, LOST PROFITS OR OTHER BUSINESS INTERRUPTION DAMAGES, BY STATUTE, IN TORT OR CONTRACT, UNDER ANY INDEMNITY PROVISION OR OTHERWISE. IT IS THE
INTENT OF THE PARTIES THAT THE LIMITATIONS HEREIN IMPOSED ON REMEDIES AND
THE MEASURE OF DAMAGES BE WITHOUT REGARD TO THE CAUSE OR CAUSES
RELATED THERETO, INCLUDING THE NEGLIGENCE OF ANY PARTY, WHETHER SUCH NEGLIGENCE BE SOLE, JOINT OR CONCURRENT, OR ACTIVE OR PASSIVE. TO THE
EXTENT ANY DAMAGES REQUIRED TO BE PAID HEREUNDER ARE LIQUIDATED, THE
PARTIES ACKNOWLEDGE THAT THE DAMAGES ARE DIFFICULT OR IMPOSSIBLE TO
DETERMINE, OR OTHERWISE OBTAINING AN ADEQUATE REMEDY IS INCONVENIENT
AND THE DAMAGES CALCULATED HEREUNDER CONSTITUTE A REASONABLE APPROXIMATION OF THE HARM OR LOSS.
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17 10. CONFIDENTIALITY
10.1 Confidentiality Generally. “Confidential Information” means all oral and written information exchanged between the Parties with respect to the subject matter of this Agreement. The following information does not constitute Confidential Information for purposes of this Agreement: (a) information that is or becomes generally available to the public other than as a result of a disclosure by e ither Party in violation of this Agreement, (b) information that was already known by either Party on a non-confidential basis prior to this Agreement, (c) information that becomes available to either Party on a non-confidential basis from a source other t han the other Party if such source was not subject to any prohibition against disclosin g the information to such Party, and (d) information that is developed by receiving Party or its affiliates independently and without access to the Confidential Informat ion of disclosing Party. Except as provided in this Section 10.1 and 10.2, neither Party shall publish, disclose, or otherwise divulge Confidential Information to any person at any time during or after the term of this Agreement, without the other Party’s prior express written consent. Each Party shall permit knowledge of and access to Confidential Information only to those of its affiliates and to persons investing in, providing funding to or acquiring it or its affiliates, and to its and the foregoing p ersons’ respective attorneys, accountants, representatives, agents and employees who have a need -to-know such Confidential Information related to this Agreement.
10.2 Authorization to Disclose. The Parties are expressly authorized to disclose the existence of this Agreement and certain REC details to affect Delivery of such RECs or otherwise comply with any relevant Applicable Standard while using commercially reasonable efforts to preserve the confidentiality of any other information unnecessary for su ch requirements, notwithstanding any agreement between the Parties regarding the protection of Confidential Information. If required by any law, statute, ordinance, decision, order or regulation passed, adopted, issued or promulgated by a court, governmental agency or authority having jurisdiction over a Party, that Party may release Confidential Information, or a portion thereof, to the court, governmental agency or authority, as required by the applicable law, statute, ordinance, decision, order or regulation. Before such disclosure such Party shall promptly notify the other Party of the required disclosure , if legally permissible , such that the other Party may attempt (if such other Party so chooses and at such other’s Party’s expense ) to cause that cour t, governmental agency or authority to treat such information in a confidential manner and to prevent such information from being disclosed or otherwise becoming part of the public domain. Notwithstanding the foregoing, if a Party is required to make a disclosure pursuant to this Section 10.2, then it will, if possible, request that such disclosure be accorded confidential treatment.
10.3 Injunctive Relief; Survival. Each of the Parties acknowledges and agrees that the other Party would be irreparably harmed if any Confidential Information of the Disclosing Party were to be disclosed to third persons, or if any use were to be made of such Confidential Information other than that permitted under this Agreement, and further agrees that the disclosing Party shall have the right to seek injunctive relief upon any violation or threatened violation of the terms of this Section 10, in addition to all other rights and remedies available at law or in equity, without having to post a bond or other security. The Parties’ obligations under this Section 10 shall survive for a period of two (2) year s following the expiration or termination of this Agreement.
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18 11. ENVIRONMENTAL ATTRIBUTES
The transaction represents the conveyance of all Environmental Attributes associated with the generation of electricity associated with the RECs and rights to any Environmental Attributes which may be generated for any state, federal or voluntary programs which recognize the attributes associated with the MWh represented in this transaction. The transaction does not convey any right or title to state or federal tax credits.
12. REGULATORY CHANGE
If, after the Effective Date, any statutes, rules, regulations, permits or authorizations (“Regulatory Change”) are enacted, amended, granted or revoked which have the effect of changing the transfer and sale procedure set forth in this Agreement so that the implementation of this Agreement becomes impossible or impracticable, or otherwise revokes or eliminates the Applicable Standard, the Parties hereto agree to negotiate in good faith to amend this Agreement to conform with such new statutes, regulations, or rules in order to maintain the original intent of the Parties under this Agreement. If any of these changes occur and cause the Product to not meet the Applicable Standards, Seller has the obligation to deliver a replacement Product that meets the Applicable Standards (as may have been modified by Regulatory Change) with the applicable Vintage(s) and that is consistent with the original intent of delivery of a PCC3 Product (“Replacement Product”). Replacement Product shall be priced as follows:
(a) If the market cost of the Replacement Product is below the Contract Price, Buyer will accept the Replacement Product and pay the contract price.
(b) If the market cost for the Replacement Product is above the Contract Price, Seller will provide a price proposal to Buyer that shall include the proposed price (the “Proposed Price”), the applicable Vintages, the Delivery Date(s), the term, sources and supporting documentation supporting the Proposed Price, including, but not limited to the underlying purchase agreement (collectively, the “Price Proposal”). Delivery of a Price Proposal in good faith shall not release Seller from its obligations to deliver the Product (or Replacement Product) for the Contract Quantities over the remaining Term, unless Buyer rejects such Price Proposal. Buyer has the option, in its sole and absolute discretion, to take the Replacement Product or not. If Buyer choses to accept the Replacement Product, Buyer will pay 30% of the difference between the Contract Price and the Proposed Price for the balance of the term of the contact. .
13. BANKRUPTCY CODE PROVISIONS
The Parties intend that: (i) this Agreement is a “forward contract” within the meaning of the Bankruptcy Code and (ii) each Party’s rights under Section 9.1 of this Agreement constitutes a “contractual right to liquidate” this Agreement within the meaning of the United Stated Bankruptcy Code.
14. CONSENT TO RECORDING
Each Party consents to the creation of a tape or electronic recording (“ Recording”) of telephone conversations between each Party’s trading, marketing or scheduling employees or contractors. Such Recordings shall be retained in confidence, secured from improper access, and may be submitted in evidence in any proceeding or action relat ing to this Agreement. Each Party waives any further notice of such monitoring or recording and agrees to notify its employees and contractors of such monitoring or recording and to obtain any necessary consent of such employees and contractors.
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19 15. ENTIRE AGREEMENT; SEVERABILITY
This Agreement, together with any attachments or exhibits specifically referenced herein, constitutes the entire agreement between the Seller and the Buyer with respect to the subject matter hereof, supersedes all prior oral or written representations and contracts, and may be modified only by a written instrument signed by Buyer and Seller.
Any part of this Agreement that is or becomes invalid, illegal, or unenforceable may be severed from the remainder hereof, and to the extent possible, the Parties will use reasonable efforts to replace any such part with provisions that preserve their original intent.
16. COUNTERPARTS
This Agreement may be executed by PDF or facsimile and in one or more counterparts, all of which taken together will constitute one and the same original instrument.
17. GOVERNING LAW; WAIVER OF TRIAL BY JURY & ATTORNEYS’ FEES
17.1 Governing Law and Venue. This Agreement shall be construed, enforced, and performed in accordance with the laws of the State of California, without recourse to its principles governing conflicts of law that would apply the law of another jurisdiction . All litigation arising out of, or relating to, this Agreement shall be brought in a state or federal court in the County of Los Angeles in the State of California. The Parties irrevocably agree to submit to the exclusive jurisdiction of such courts in the State of California and waive any defense of forum non conveniens.
17.2 Attorneys’ Fees. In the event of any suit or other proceeding between the Parties arising out of this Agreement , the prevailing Party shall be entitled to recover reasonable attorneys ’ fees, costs (including at the trial and appellate levels) and expenses of investigation.
18. WAIVER; AMENDMENT
None of the terms or conditions of this Agreement may be amended or waived except in writing and signed by both Parties. The Parties agree that no waiver, amendment, or modification of this Agreement will be established by conduct, custom, or course of dealing. The failure of a Party to require performance of any provision of this Agreement will not limit such Party ’s right to seek such performance at a later time. Similarly, a Party’s waiver of its rights with respect to any Event of Default or any other matter arising in connection with this Agreement will not be considered a waiver with respect to any subsequent Event of Default or matter.
19. NOTICES
All notices, payments and other formal communications which either Party may give to the other under or in connection with this Agreement shall be in writing and shall be sent by any of the following methods: hand delivery, reputable overnight courier, electronic mail or the electronic equivalent. The communications shall be sent to the following addresses, and shall be effective when received:
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If to:
3 Degrees
)Degrees Group, Inc.
235 Montgomery Street, Suite 320
San Francisco, CA 94 104
Attn: Contracts Manager
Email: [email protected]
If to Burbank:
Burbank Water and Power
164 W. Magnolia Blvd.
Burbank, CA 91502
Attn: Stela Kalomian
Email: [email protected]
Each Party represents that the person signing this Agreement on its behalf is authorized to enter into this Agreement. Each Party also understands and agrees to the terms and conditions herein and agrees to be bound thereby. Each Party acknowledges its obligations of good faith and fair dealing under this Agreement (including commercially reasonable mitigation of damages, if any, so far as possible), notwithstanding any contrary provision herein or in applicable law.
City of Burbank, Buyer
By: -----------Name: Title: ----------
Date: ----------
3 Degrees, Seller
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