Execution Version
DB2/ 48370541.18
OPTION AGREEMENT
by and between
MILFORD SOLAR PHASE II, LLC
as “Seller”
and
SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY
as “Buyer”
Dated as of [__________]
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TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS ........................................................................................................... 1
1.1 Definitions............................................................................................................... 1
1.2 Rules of Interpretation ............................................................................................ 1 ARTICLE II OPTION TO PURCHASE; CLOSING ................................................................ 1
2.1 Option to Purchase .................................................................................................. 1
2.2 Exercise of Project Purchase Option....................................................................... 2
2.3 Tentative Exercise Notice ....................................................................................... 2
2.4 Fair Market Value; Exercise Notice ....................................................................... 2
2.5 Memorandum of Option ......................................................................................... 4
2.6 Closing .................................................................................................................... 4
2.7 No Additional Warranties ....................................................................................... 4
2.8 Assumed Liabilities ................................................................................................ 4
2.9 Excluded Liabilities ................................................................................................ 5
2.10 Schedule Updating: Final Purchase Price ............................................................... 7
2.11 Proration .................................................................................................................. 8
2.12 Closing Costs; Transfer Taxes and Fees ................................................................. 9
2.13 Decommissioning and Other Costs ......................................................................... 9
2.14 Closing Obligations ................................................................................................ 9
2.15 Bulk Sales Law ....................................................................................................... 9 ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLER ........................... 9
3.1 Organization and Good Standing ............................................................................ 9
3.2 Authority; Absence of Conflict or Breach .............................................................. 9
3.3 Real Property Matters ........................................................................................... 10
3.4 Consents ................................................................................................................ 11
3.5 Assets of the Business ........................................................................................... 12
3.6 Title to Facility Assets .......................................................................................... 12
3.7 Environmental ....................................................................................................... 12
3.8 No Undisclosed Liabilities .................................................................................... 14
3.9 Taxes ..................................................................................................................... 14
3.10 Compliance With Laws......................................................................................... 15
3.11 Litigation ............................................................................................................... 15
3.12 Assumed Contracts ............................................................................................... 15
3.13 Intellectual Property .............................................................................................. 15
3.14 Brokers or Finders................................................................................................. 16
3.15 Permits .................................................................................................................. 16
3.16 Investment Company Act ..................................................................................... 16
3.17 Employees and Employee Benefit Plans .............................................................. 17
3.18 General Representation ......................................................................................... 17
3.19 Regulatory Status .................................................................................................. 17 ATTACHMENT 3
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ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BUYER ................................. 17
4.1 Organization .......................................................................................................... 17
4.2 Authority; Absence of Conflict or Breach ............................................................ 18
4.3 Consents ................................................................................................................ 18
4.4 Brokers or Finders................................................................................................. 18
4.5 Litigation ............................................................................................................... 18 ARTICLE V COVENANTS OF SELLER PRIOR TO CLOSING DATE .......................... 18
5.1 Access to Materials ............................................................................................... 18
5.2 Investigations ........................................................................................................ 19
5.3 Financial Statements ............................................................................................. 19
5.4 Operation of the Business ..................................................................................... 19
5.5 Disposition of Assets ............................................................................................ 20
5.6 Required Approvals .............................................................................................. 20
5.7 Notification ........................................................................................................... 20
5.8 Reasonable Efforts ................................................................................................ 20
5.9 Waivers of Claims................................................................................................. 20
5.10 Additional Contracts ............................................................................................. 21
5.11 Transitional Services ............................................................................................. 21 ARTICLE VI COVENANTS OF BUYER PRIOR TO CLOSING DATE ................................... 21
6.1 Notification ........................................................................................................... 21
6.2 Required Approvals .............................................................................................. 22
6.3 Reasonable Efforts ................................................................................................ 22 ARTICLE VII CONDITIONS PRECEDENT TO BUYER’S OBLIGATION TO CLOSE ....... 22
7.1 Accuracy of Representations ................................................................................ 22
7.2 Seller’s Performance ............................................................................................. 22
7.3 Consents ................................................................................................................ 22
7.4 Additional Seller Documents ................................................................................ 22
7.5 Litigation ............................................................................................................... 24
7.6 Liens ...................................................................................................................... 24
7.7 No Material Adverse Effect .................................................................................. 24 ARTICLE VIII CONDITIONS PRECEDENT TO SELLER’S OBLIGATION TO CLOSE ..... 24
8.1 Accuracy of Representations ................................................................................ 24
8.2 Buyer’s Performance ............................................................................................ 24
8.3 Consents ................................................................................................................ 25
8.4 Additional Buyer Documents ............................................................................... 25
8.5 Litigation ............................................................................................................... 25 ARTICLE IX MUTUAL COVENANTS, TAXES AND OTHER MATTERS ........................... 25
9.1 Tax Matters ........................................................................................................... 25
9.2 Seller Cooperation Post-Closing ........................................................................... 27
9.3 Risk of Loss .......................................................................................................... 27
9.4 Liabilities .............................................................................................................. 28 ATTACHMENT 3
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9.5 Insurance ............................................................................................................... 28
9.7 RWI Insurance Proposal ........................................................................................ 29 ARTICLE X TERM AND TERMINATION ............................................................................... 29
10.1 Term ...................................................................................................................... 29
10.2 Termination Events ............................................................................................... 29
10.3 Effect of Termination ............................................................................................ 30 ARTICLE XI LIMITATION OF LIABILITY ........................................................................ 30
11.1 Survival of Representations, Etc. .......................................................................... 30
11.2 Limitation of Liability........................................................................................... 31 ARTICLE XII GENERAL PROVISIONS ................................................................................ 31
12.1 Indemnification ..................................................................................................... 31
12.2 Expenses ............................................................................................................... 33
12.3 Ambiguity ............................................................................................................. 34
12.4 Voluntary Execution ............................................................................................. 34
12.5 Notices .................................................................................................................. 34
12.6 Entire Agreement; Amendments........................................................................... 34
12.7 Further Assurances................................................................................................ 34
12.8 Waiver ................................................................................................................... 34
12.9 Severability ........................................................................................................... 34
12.10 Consequential or Punitive Damages ..................................................................... 35
12.11 Equitable Remedies .............................................................................................. 35
12.12 Time of Essence .................................................................................................... 35
12.13 Governing Law ..................................................................................................... 35
12.14 Execution in Counterparts..................................................................................... 35
12.15 Relationship of the Parties .................................................................................... 35
12.16 Third Party Beneficiaries ...................................................................................... 35
12.17 Provisions of PPA ................................................................................................. 35
12.19 Exhibits and Schedules ......................................................................................... 36
12.20 Relationship with PPA .......................................................................................... 36
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Exhibits
Exhibit 1.1 Definitions
Exhibit 2.4 Purchase Price
Exhibit 2.5 Form of Memorandum of Option
Exhibit 5.11 Form of Transition Services Agreement
Exhibit 7.4(i) Form of Seller Guaranty
Schedules
Schedule 3.3 Real Property Matters
Schedule 3.4 Seller’s Consents
Schedule 3.5 Certain Assets
Schedule 3.6 Title to Facility Assets
Schedule 3.7 Environmental Matters
Schedule 3.8 Liabilities
Schedule 3.9 Tax Matters
Schedule 3.10 Compliance with Laws
Schedule 3.11 Litigation
Schedule 3.12(a) Contracts
Schedule 3.12(b) Exceptions to Assumed Contracts
Schedule 3.13 Intellectual Property
Schedule 3.15 Permits
Schedule 3.17 Employee Matters
Schedule 3.18 General Matters
Schedule 3.20 Support Obligations
Schedule 4.3 Buyer’s Consents
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OPTION AGREEMENT
THIS OPTION AGREEMENT is entered into as of this [____] day of [______], 20[__], by and between Milford Solar Phase II, LLC, a limited liability company organized and existing under the laws of the State of Delaware (“Seller”), and SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY (“Buyer”), a joint powers agency and a public entity organized under the laws of the State of California and created under the provisions of the California Joint Exercise of Powers Act (California Government Section 6500 et seq.). Each of Buyer and Seller is referred to individually in this Agreement as a “Party” and together they are referred to as the “Parties.”
RECITALS
WH
EREAS, Seller and Buyer have entered into that certain Power Purchase Agreement of even date herewith (the “PPA”) relating to the purchase by Buyer of Delivered Energy, Capacity Rights and associated Environmental Attributes (each as defined in the PPA) generated by a photovoltaic solar facility to be developed, constructed, owned or leased (in accordance with the PPA) and operated by Seller in Beaver County, Utah; and WHEREAS, Seller desires to grant to Buyer, and Buyer wishes to have, an option, exercisable at various times as set forth herein, to purchase the Facility Assets (as defined herein) on the terms and subject to the conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the foregoing Recitals, which are incorporated herein, and Buyer entering into the PPA, and in consideration of the agreements herein and in the other Operative Documents (as defined herein) and in reliance upon the repr esentations and warranties therein and herein , Buyer and Seller, intending to be legally bound, hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1 D
efinitions . Except as otherwise expressly provided herein, capitalized terms used in this Agreement, including in its Recitals, Schedules and Exhibits, shall have the meanings given in Exhibit 1.1. Capitalized terms used herein but not defined in Exhibit 1.1 shall have the meanings ascribed thereto in the PPA.
1.2 Rules of Interpretation. E xcept as otherwise expressly provided herein, the rules of interpretation set forth in the PPA shall apply to this Agreement.
ARTICLE II
O
PTION TO PURCHASE; CLOSING
2.1 O ption to Purchase. Seller hereby grants Buyer an option, on the terms and conditions set forth in this Agreement, to purchase all of Seller’s right, title and interest in and to the Facility Assets, but not the Excluded Assets, and to assume the Assumed Liabilities, but not the Excluded Liabilities, on and subject to the terms and conditions set forth in this Agreement (the “Project Purchase Option ”). The Project Purchase Option may only be exercised with respect to all of Seller’s right, title and interest in and to the Facility Assets, and not with respect to only a portion thereof.
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2 2.2 Exercise of Project Purchase Option . Buyer may exercise the Project Purchase Option in accordance with the provisions of Section 2.3 and Section 2.4 at any time following the Approvals Date:
(a) one (1) year prior to the tenth (10th) anniversary of the Commercial Operation Date;
(b) one (1) year prior to the fifteenth (15th) anniversary of the Commercial Operation Date;
(c) one (1) year prior to every subsequent five (5) years after the fifteenth (15th) anniversary of the Commercial Operation Date until the end of the Agreement Term; (d) dur ing the sixty (60) day period commencing on the date on which a Termination Notice is provided by Buyer to Seller pursuant to Section 13.3(a) of the PPA.
Each opportunity of Buyer to exercise the Project Purchase Option set forth in Sections 2.2(a),
2.2(b), 2.2(c) and 2.2(d) above shall be referred to herein as a “Purchase Option Opportunity.” Seller acknowledges that Buyer has no obligation to exercise the Project Purchase Option and that Buyer may decline to exercise the Project Purchase Option for any or no reason, as Buyer deems appropriate in its sole discretion.
2.3 T entative Exercise Notice. Buyer shall exercise the Project Purchase Option (if at all) by delivering to Seller a written notice of exercise signed by Buyer (the “ Purchase Option Tentative Exercise Notice”) within the periods of time specified in Section 2.2. Within forty-five (45) days after it receives the Purchase Option Tentative Exercise Notice, Seller will deliver to Buyer (the date of such delivery being the “ Schedule Delivery Date”) the following, dated as of the Schedule Delivery Date: (a) Schedule 3.3 (Real Property Matters); (b) Schedule 3.4 (Seller’s Consents); (c) Schedule 3.5 (Certain Assets); (d) Schedule 3.6 (Title to Facility Assets); (e) Schedule 3.7 (Environmental Matters); ( f) Schedule 3.8 (Liabilities); ( g) Schedule
3.9 (Tax Matters); ( h) Schedule 3.10 (Compliance with Laws); ( i) Schedule 3.11 (Litigation); (j) Schedule 3.12 (a) (Contracts); ( k) Schedule 3.12 (b) (Exceptions to Assumed Contracts ); (l) Schedule 3.13 (Intellectual Property); ( m) Schedule 3.15 (Permits); ( n) Schedule 3.17 (Employee Matters) ; (o ) Schedule 3.18 (General Matters) ; and ( p) Schedule 3.20 (Support Obligations) ((a) through ( p) collectively, the “ Seller Disclosure Schedules ”), each of which shall be applicable to the Facility and be reasonably acceptable to Buyer, and which shall include , as required, any qualifications or exceptions required to make the representations in Article III true and correct in all material respects , and Seller, at its sole discretion, may elect, to submit a n RWI Proposal along with the submission of the Seller Disclosure Schedules .
Thereupon, Buyer will deliver to Seller Schedule 4.3 (Buyer’s Consents ) (together with the Seller Disclosure Schedules, the “Disclosure Schedules ”). Each Disclosure Schedule shall include and set forth the properties, materials, instruments, matters and all other specifications and information as indicated in the form of such Disclosure Schedule attached to this Agreement.
2.4 Fair Market Value; Exercise Notice.
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3 (a) The Fair Market Value shall be determined in accordance with Exhibit 2.4.
After the Disclosure Schedules have been delivered and the Fair Market Value has been determined pursuant to Section 2.4(a), Buyer may elect, in its sole discretion to (i) decline to exercise the Project Purchase Option with respect to the applicable Purchase Option Opportunity, or (ii) exercise the Project Purchase Option for the Final Purchase Price determined in accordance with Exhibit 2.4. If Buyer elects to exercise the Project Purchase Option, upon determination of the Final Purchase Price in accordance with Exhibit 2.4, Buyer shall give written notice (the “Purchase Option Exercise Notice”) to Seller no later than the Purchase Option Exercise Deadline, which notice shall state that Buyer is electing to exercise the Project Purchase Option under this Agreement and designating the applicable Closing Date. If Buyer elects not to exercise the Project Purchase Option, Buyer shall notify Seller of such election. The delivery of a Purchase Option Exercise Notice by Buyer shall constitute a binding and irrevocable commitment by Buyer to purchase, subject to the acceptance of such Purchase Option Exercise Notice by Seller in accordance with Section 2.4(c) and the satisfaction or waiver of each of the conditions to Closing set forth in Article VII and Article VIII by the applicable Closing Date. (b) If Buyer (i) declines to exercise the Project Purchase Option pursuant to Section 2.4(b)(i), or (ii) fails to timely deliver a Purchase Option Tentative Exercise Notice or Purchase Option Exercise Notice with respect to any Purchase Option Opportunity within the deadlines therefor under Sections 2.3 and 2.4(a) respectively, then Buyer’s right to exercise the Project Purchase Option with respect to such Purchase Option Opportunity shall expire and shall no longer be effective (but such expiration shall not a ffect Buyer’s right to exercise any Project Purchase Option with respect to any future Purchase Option Opportunity).
(c) If Buyer elects to exercise the Project Purchase Option, then S eller may
elect, in its sole and absolute discretion, within thirty (30) days after Buyer delivers the Purchase Option Exercise Notice, to (i) decline to accept the Purchase Option Exercise Notice with respect to the applicable Purchase Option Opportunity, or (ii) accept Buyer’s exercise of the Project Purchase Option for the Final Purchase Price determined in accordance with Exhibit 2.4 by providing written notice of such acceptance to Buyer (t he “Acceptance Notice ”); provided, that if Seller submitted an RWI Proposal pursuant to Section 2.3, then such Acceptance Notice may be contingent upon Buyer’s agreement to accept such proposal . The delivery of the Acceptance Notice shall create a binding obligation of Seller to sell, the Facility Assets as specified herein, subject to the provisions set forth in Exhibit 2.4 and the satisfaction or waiver of each of the conditions to Closing set forth in Article VII and Article VIII, by the applicable Closing Date. (d) If Buyer delivers the Purchase Option Exercise Notice and Seller delivers the Acceptance Notice, then, subject to Section 2.6, the Closing Date shall occur (i) in the case of a Project Purchase Option exercised pursuant to Section 2.2(a), on the tenth (10th) anniversary of the Commercial Operation Date, (ii) in the case of a Project Purchase Option exercised pursuant to Section 2.2(b), on the fifteenth (15th) anniversary of the Commercial Operation Date, (iii) in the case of a Project Purchase Option exercised under Section
2.2(c), on the twentieth (20th), twenty- fifth (25th) or thirtieth (30th) anniversary of the ATTACHMENT 3
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4 Commercial Operation Date, as applicable, and (iv) in the case of a Project Purchase Option exercised under Section 2.2(d), no later than twelve (12) months after the delivery by Buyer of a Purchase Option Exercise Notice.
(e) If Seller doe s not provide an Acceptance Notice within the time period set forth in Section 2.4(d) , then Buyer’s right to exercise the Project Purchase Option with respect to such Purchase Option Opportunity shall expire and shall no longer be effective (but such expiration shall not effect Buyer’s right to exercise any Project Purchase Option with respect to any future Purchase Option Opportunity). For the avoidance of doubt, neither Party shall have any liability to the other as a result of Seller’s elec tion not to provide an Acceptance Notice within the time period set forth in Section 2.4(c).
2.5 Memorandum of Option. Concurrently with the Approvals Date, the Parties shall execute and acknowledge a memorandum of option in the form attached hereto as Exhibit 2.5, and Seller shall record such memorandum in the Official Records of Beaver County, Utah. Seller shall be responsible for payment of all fees and Taxes associated with such recording.
2.6 Closing. In the event Buyer delivers a Purchase Option Exercise Notice, the closing of the purchase and sale of the Facility Assets (the “ Closing”) shall occur at 11:59 p.m. local time on the Closing Date designated pursuant to Section 2.4(d), or such later date within the following fourteen (14) days as shall be thereafter designated by Buyer due to conditions affecting Buyer’s bond financing with respect to the acquisition of the Facility Assets. The Closing shall be held at the offices of Buyer in Glendora, California, or such other reasonable location in California that Buyer designates in a timely notice to Seller, unless the Parties otherwise agree.
All events at the Closing shall be deemed to occur simultaneously, unless otherwise provided herein. In the event the Closing has not occurred by the Closing Date in respect of a Purchase Option Opportunity, then Buyer (in the case of the conditions set forth in Article VII) or Seller (in the case of the conditions set forth in Article VIII), upon written notice to the other Party and without liability, may terminate the Project Purchase Option with respect to such Purchase Option Opportunity, and such Purchase Option Opportunity shall expire and shall no longer be effective (but such termination shall not effect Buyer’s right to exercise any Project Purchase Option with respect to any future Purchase Option Opportunity); provided that a Party cannot terminate any Project Purchase Option with respect to a Purchase Option Opportunity if the failure of the Closing to occur is the result of the failure on the part of such Party to perform its obligations under this Agreement.
2.7 No Additional Warranties. OTHER THAN THE REPRESENTATIONS AND
WARRANTIES EXPLICITLY SET FORTH IN THIS AGREEMENT, NO OTHER
REPRESENTATIONS OR WARRANTIES WHETHER EXPRESS OR IMPLIED SHALL BE
GIVEN OR DEEMED GIVEN AS TO THE FACILITY OR THE FACILITY ASSETS CONSTITUTING THE FACILITY.
2.8 Assumed Liabilities. A
t the Closing, Buyer shall assume and agree to pay for, perform, fulfill and discharge from and after the Closing, the liabilities and obligations relating to the Facility Assets or the Business that are first required to be performed after the Closing or arising or occurring after the Closing, other than the Excluded Liabilities (collectively, the “Assumed Liabilities”), including the following:
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5 (a) Any Taxes attributable to the ownership of the Facility Assets or operation of the Business for any Post -Closing Tax Period, except for those Taxes attributable to a Pre-Closing Tax Period imposed on Buyer as transferee or successor by contract or under any Requirement of Law as set forth in Section 2.9(b)(iii); (b) Any liability or obligation arising from or relating to any period of time or event occurring after the Closing or that, with notice or lapse of time, could constitute or result in a breach of any Assumed Contracts or Transferred Permit arising from or relating to any period of time or event occurring after the Closing , but only to the extent such liability or obligation does not (i) arise from or relate to any breach by Seller of any Assumed Contract or Transferred Permit prior to Closing, (ii) arise from or relate to any event, circumstance, or condition occurring or existing on or prior to Closing that, with notice or the lapse of time, would constitute a breach of any such Assumed Contract or Transferred Permit, and (iii) arise from any violation of law, breach of warranty, tort or infringement committed by Seller at any time;
(c) Any liability or obligation for the remediation or cleanup of the Facility Site under applicable Environmental Laws attributable to the Release of Hazardous Substances arising or occurring after the Closing Date; but only to the extent such liability or obligation does not (i) arise from or relate to any act or omission of Seller prior to Closing, and (ii) arise from any violation of law, breach of any Permit or breach of any Contract committed by Seller at any time; or
(d) Any liability or obligation for the decommissioning or demolition of the Facility and any environmental and other liability associated with such decommissioning or demolition, without regard to the timing or cause of such decommissioning or demolition.
2.9 E
xcluded Liabilities . Notwithstanding anything in this Agreement to the contrary, Buyer shall not assume, and shall not be deemed to have assumed, and shall have no liability with respect to (whether asserted before or after the Closing and regardless of whether the same or the basis therefor may have been disclosed to Buyer by Seller or otherwise be known to Buyer), any liabilities or obligations of any nature, fixed or contingent or known or unknown related to the Facility Assets or the Business other than as specifically se t forth in Section 2.7 (with all such unassumed obligations referred to in this Agreement as the “ Excluded Liabilities ”). Without limiting the generality of the preceding sentence, it is agreed that Buyer shall have no liability with respect to any of the following liabilities or obligations (whether asserted before or after the Closing and regardless whether the same or the basis therefor may have been disclosed to Buyer by Seller or otherwise be known to Buyer), all of which are included in the Excluded Liabilities:
(a) A
ny liability or obligation with respect to any Taxes due from Seller, and any Taxes on or attributable to Facility Assets with respect to any Pre-Closing Tax Period; (b) (i) Any and all Taxes of any member of an affiliated, consolidated, combined or unitary group of which Seller (or any predecessor thereto) is or was a member, including under Treasury Regulations Section 1.1502-6 or any analogous or similar state, local or non-U.S. law or regulation, (ii) all Transfer Taxes, and (iii) all Taxes imposed on ATTACHMENT 3
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6 Buyer in respect of Seller and the transactions contemplated hereby as transferee or successor, by contract or under any Requirement of Law, in each case with respect to any Pre-Closing Tax Period;
(c) Any liability or obligation of Seller (other than for Taxes) , whether it is ascertainable in nature and amount by reference to the express written terms of any Assumed Contracts or Transferred Permits, relating to the Facility Assets or the Business, including arising out of Seller’s ownership and operation of the Facility Assets to the extent that such liability or obligation (i) arose, or otherwise relates to the period, prior to Closing, or (ii) relates to Seller’s ownership or operation of the Facility Assets or the Business prior to Closing;
(d) Any liability or obligation of Seller arising out of Seller’s ownership and operation of any assets other than the Facility or any business other than the Business at any time;
(e) Any liability or obligation of Seller under (i) any Contract (including with respect to any contractors or subcontractors thereunder) other than an Assumed Contract or (ii) any Permit other than a Transferred Permit;
(f) Any liability or obligation under any Assumed Contract or a Transferred Permit to the extent such liability or obligation arises from or relates to any breach by Seller of any provision of any such Assumed Contracts or Transferred Permits on or prior to the Closing;
(g) Any liability or obligation (other than for Taxes) arising from or relating to any period of time or event occurring prior to the Closing or that, with notice or lapse of time, could constitute or result in a breach of any Assumed Contracts or Transferred Permit arising from or relating to any period of time or event occurring on or prior to the Closing; (h) Any liability or obligation with respect to any Assumed Contracts or Transferred Permits that is not ascertainable, in nature and amount, solely by reference to the express written terms of any Assumed Contracts or Transferred Permits; (i) Any liability or obligation of Seller arising from or relating to any breach by Seller of any provision of this Agreement, or arising from a breach by Seller, or any event, circumstance or condition occurring or existing on or prior to the Closing that, with notice or lapse of time, constitutes or results in a breach by Seller under this Agreement, the PPA (including the Ancillary Documents), or any of the Operative Documents; (j) A
ny liability or obligation under any Contract entered into during the Applicable Diligence Period and not assumed by Buyer pursuant to Section 5.10; (k) Any liability or obligation for the remediation or cleanup of the Facility Site under applicable Environmental Laws attributable to the Release of Hazardous Substances arising or occurring on or prior to the Closing Date;
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7 (l) Any liability or obligation of Seller with respect to the employment or termination of any employee or group of employees by Seller, or the terms thereof, whether union or nonunion, whether the liability or obligation calls for performance or observance before or after the Closing and whether the liability or obligation arises from a collective bargaining agreement, pension trust fund plan, or other agreement or arrangement to which Seller is a party or by which Seller is bound (whether oral or written and whether express or implied in fact or in law) or any past practice or custom or otherwise, it being understood and agreed that after the Closing, Buyer will itself be specifying the terms on which it offers employment to any individual to whom it, in its sole discretion, chooses to offer employment and will not be bound by any term of employment of Seller in effect at or at any time prior to the Closing;
(m) Any liability or obligation of Seller for pension fund payments or unfunded pension fund liabilities;
(n) Any liability or obligation arising from or associated with any of the Excluded Assets;
(o) Any liability or obligation of Seller or its Affiliates (other than for Taxes) arising out of or related to any claim or loss against Seller or its Affiliates or any third - party claims or losses which adversely affects the Facility Assets and which shall have been asserted prior to the Closing or to the extent the basis of which sha ll have arisen exclusively prior to the Closing;
(p) Any liability or obligation of Seller or its Affiliates to a third party arising from any indemnification claim, injury to or death of any person or damage to or destruction of any property (and including workers’ compensation claims, discrimination, wrongful discharge, or unfair labor practice), whether based on negligence, breach of warranty, strict liability, enterprise liability or any other legal or equitable theory arising from actions by, for or on behalf of Seller or its Affiliates arising prior to the Closing; and (q) Any liability or obligation of Seller or its Affiliates representing Facility Debt incurred by Seller or its Affiliates or Liens or encumbrances other than Closing Permitted Encumbrances.
Seller shall remain liable for or otherwise pay or discharge, or cause the payment or discharge, of all Excluded Liabilities prior to the Closing.
2.10 S
chedule Updating: Final Purchase Price.
(a) No later than the date that is thirty (30) days prior to the designated Closing Date (the “Updated Schedule Delivery Date ”), Seller shall have provided Buyer with updated Seller Disclosure Schedules which shall be the final Seller Disclosure Schedules for purposes of its representation and warranties made under Article III as of the Closing.
Notwithstanding the foregoing, any update included in an updated Seller Disclosure Schedule delivered pursuant to this Section 2.9(a) shall have no effect for purposes of ATTACHMENT 3
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8 determining the satisfaction of any condition to Closing set forth in Article VII and shall not alter the effect of Buyer’s right to terminate this Agreement pursuant to Section 10.2. (b) At the Closing, upon the terms and subject to the conditions set forth herein, Buyer shall, in exchange for the sale, transfer, assignment, conveyance and delivery of the Facility Assets by Seller, and the assumption by Buyer of the Assumed Liabilities in accordance with this Agreement, pay Seller the Final Purchase Price determined in accordance with Exhibit 2.4. Such Final Purchase Price shall be paid by Buyer by wire transfer of immediately available funds to an account designated in writing by Seller. The Parties agree to allocate the Final Purchase Price (and all other capitalizable costs) among the Facility Assets in accordance with Code §1060 and the U.S. Department of Treasury regulations thereunder (and any similar provision of state, local, or no n-U.S. law, as appropriate).
2.11 Proration. B
uyer and Seller agree that any items normally prorated, including those listed below, relating to the Business and the Facility Assets, shall be prorated as of the Closing, with Seller being liable therefor to the extent such items relate to periods (or portions thereof) ending on or prior to the Closing, and Buyer being liable to the extent such items relate to periods (or portions thereof) beginning after the Closing with, to the extent practicable, a cash settlement on the Closing:
(a) p
ersonal property and real estate Taxes, assessments and other charges, if any, by the applicable municipality, on the basis of the applicable municipality’s fiscal year, on or with respect to the Business;
(b) rent, Taxes and other items payable by or to Seller under any of the Assumed Contracts assigned to and assumed by Buyer hereunder which are associated with the Facility Assets;
(c) any Permit, registration, compliance, assurance fees or other fees with respect to any Transferred Permit comprising part of the Facility Assets; and (d) sewer rents and charges for water, telephone, electricity and other utilities.
In connection with the prorations referred to in this Section 2.11 , in the event that the actual
amounts for such items are not available on the Closing Date, the proration to be used as of the Closing Date shall be based upon actual Taxes or fees for the preceding year (or such other appropriate period of time) for which actual Taxes or fees are available. The prorated amounts of Taxes or fees shall be adjusted upon the request of Seller, on the one hand, or Buyer, on the other hand, within sixty (60) days following the date on which actual amounts become available. Seller and Buyer shall furnish each other with such documents and other records as may be reasonably requested in order to confirm any adjustments to the proration calculations made pursuant to this Section 2.11. The Parties shall make any true -up payments owed to the other Party within thirty (30) days following receipt by the Parties of all required information required in connection with the prorations referred to in this Section 2.11. Taxes shall be prorated as provided in the definition of “Straddle Period”.
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9 2.12 Closing Costs; Transfer Taxes and Fees. Seller shall be solely responsible for all recording, documentary and transfer Taxes and any sales, use or other Taxes imposed by reason of the transfer of the Facility Assets as provided hereunder (collectively, “Transfer Taxes”), and any deficiency, interest or penalty asserted with respect thereto, under applicable Requirements of Law. Seller shall provide Buyer with evidence reasonably satisfactory to Buyer that all Transfer Taxes have been paid by Seller. If any Transfer Taxes are imposed on Buyer and Buyer pays such Transfer Taxes , Buyer shall have the right to seek reimbursement for its payment of such Transfer Taxes from Seller , and Seller shall be obligated to reimburse Buyer for such payment.
2.13 Decommissioning and Other Costs. Unless a Closing occurs pursuant to the exercise by Buyer of the Project Purchase Option, Buyer shall not be responsible for any cost of decommissioning or demolition of the Facility or any environmental or other liability associated with such decommissioning or demolition, without regard to the timing or cause of such decommissioning or demolition.
2.14 Closing Obligations.
At the Closing: (a) Seller will deliver (or will have delivered) to Buyer each of the certificates, instruments, documents and agreements referred to in Article VII to be provided by Seller on or prior to the Closing, and (b) Buyer will deliver (or will have delivered) to Seller (i) the Final Purchase Price, and (ii) each of the certificates, instruments, documents and agreements referred to in Article VIII to be provided by Buyer on or prior to the Closing.
2.15 Bulk Sales Law. U nless waived by Buyer or otherwise not applicable, Seller shall, prior to the Closing, comply with the requirements of sellers under any applicable bulk sales law.
ARTICLE III
RE
PRESENTATIONS AND WARRANTIES OF SELLER
Upon the exercise of the Project Purchase Option, Seller represents and warrants to Buyer a
s follows as of the Schedule Delivery Date and the Closing Date and, with respect to Sections 3.1 and 3.2, the Effective Date (with the understanding that, following the Schedule Delivery Date, Seller shall have the right, until it delivers final Seller Disclosure Schedules as provided in Section 2.10(a), to update any information contained in the Seller Disclosure Schedules if the occurrence of events or the discovery of new information makes the revision of such Seller Disclosure Schedules necessary, but subject to a Purchase Price adjustment as set for th in Exhibit 2.4 and the limitations on the effect of such revisions set forth in Section 2.10(a)):
3.1 Organization and Good Standing. Seller is a limited liability company duly organized, validly existing and in good standing under the laws of its state of organization and is qualified to do business in the State of California, and has the legal power and authority to own its properties, to carry on its Business as now being conducted and to enter into and perform its obligations under this Agreement and each of the Operative Documents to which Seller is a party.
3.2 Authority; Absence of Conflict or Breach. The sale of the Facility Assets and the execution, delivery and performance by Seller of this Agreement and each of the Operative Documents have been duly authorized by all necessary limited liability company action on the part of Seller and the owners of any interest in Seller and do not requir e any consent or approval ATTACHMENT 3
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10 other than those which have already been obtained or otherwise as disclosed in the Seller Disclosure Schedules. This Agreement and each of the Operative Documents to which Seller is a party constitute the legal, valid and binding obligation of Seller, enforceable in accordance with their respective terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization or similar laws relating to or affecting the enforcement of creditors’ rights generally or by general equitable princ iples, regardless of whether such enforceability is considered in a proceeding in equity or at law. The execution and delivery of this Agreement and each of the Operative Documents to which Seller is a party, the consummation of the sale of the Facility Assets and the fulfillment of and compliance with the provisions of this Agreement and the Operative Documents to which Seller is a party do not conflict with or constitute a breach of or a default under, any of the terms, conditions or provisions of any Requirements of Law, or any Organizational Documents, agreement, deed of trust, mortgage, loan agreement, other evidence of indebtedness or any other agreement or instrument to which Seller is a party or by which it or any of its property is bound, or result in a breach of or a default under any of the foregoing or result in or require the creation or imposition of any Lien upon any of the properties or assets of Seller (except as contemplated hereby).
3.3 R
eal Property Matters .
(a) If Seller entered into a Sale L easeback Financing of the Facility Site in accordance with the PPA, the Lessor (as defined in the PPA) has provided Buyer evidence, which evidence Buyer has either confirmed in writing is satisfactory to Buyer or has not objected to in writing, of a binding obligation of such Lessor or Lessors and Seller to terminate such Sale Leaseback Financing (as defined in the PPA) on or prior to the Closing by the (i) reconveyance of the Facility Site by such Lessor or Lessors to Seller and the termination of the lease of the Facility Site by such Lessor or Lessors and Seller, or (ii) transfer of the Facility Site directly by such Lessor or Lessors to Buyer, provided that any such transfer from Lessor directly to Buyer shall be on the same terms and conditions as a transfer of the Facility Site from Seller to Buyer as set forth in this Agreement. (b) As of the Closing Date, Schedule 3.3 contains a true, correct and complete list of any Contracts, including the Land Documents, that provide Seller with any rights in or to real property (“ Real Property Contracts ”), including rights in the nature of leases, easements, licenses, rights of way, franchise agreements, restrictive covenants, purchase agreements, agreements to relinquish or limit surface access rights with regards to minerals, options to purchase or lease, or applications for or bids to Governmental Authorities with respect to any of the foregoing interests in real property (collectively, “Real Property Interests”), as well as leases (including farm and grazing leases) and other agreements that grant or purport to grant, or reserve or purport to reserve to third parties, interests in or to the land which is subject to Real Property Interests (“Third Party Property Interests”). True, correct and complete copies of the Real Property Contracts have been delivered to Buyer. As of the Closing Date, Seller holds no Real Property Interests other than those that are set forth in such Real Property Contracts. Neither Seller, nor to Seller’s Knowledge, any counterparty thereto, is in default in any material respect of any material obligation with respect to the Real Property Contracts. Each of the Real Property Interests granted by a Real Property Contract provides legal, valid, and enforceable rights in favor of Seller and constitutes a legal, valid and binding obligation of Seller and, to Seller’s ATTACHMENT 3
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11 Knowledge, of the other parties thereto. To the extent obtained by or in the possession or control of Seller, or any Affiliate of Seller, t rue, correct and complete copies of all title reports, surveys, mineral reports for any severed minerals (including any evaluation as to feasibility or likelihood of mineral extraction and any separate chain of title for severed minerals), material records searches (for any governmental records not included in any title reports) and exception documents referenced in such reports, policies, or searches have been delivered to Buyer.
(c) E
xcept as set forth in Schedule 3.3, Seller has not received any written notice of any appropriation, condemnation or like proceeding, or of any violation of any applicable zoning or land use law, regulation or rule or other Requirement of Law relating to or affecting any of the Real Property Interests.
(d) Except as set forth in Schedule 3.3, S
eller has not previously severed any
mining, mineral or water rights from any of the Real Property Interests and has disclosed to Buyer any information known to Seller or any Affiliate of Seller regarding any severed mining, mineral or water rights affecting the Real Property Interests. (e) Except as set forth in Schedule 3.3, other t
han with respect to the Real
Property Contracts or Permits and any Third- Party Property Interests, Seller has not received any written notice that any agreements with any Governmental Authority or public or private utility affect the Real Property Interests. (f) Except as set forth in Schedule 3.3, e a
ch of the Real Property Interests
consisting of a “fee estate” has been legally subdivided and is assessed for real estate tax purposes as one or more wholly independent tax lot or lots, separate from any adjoining land or improvements not constituting a part of such lot or lots, and no other land or improvements is a ssessed and taxed together with any such Real Property Interests consisting of a Fee Estate or any portion thereof. Except as set forth in Schedule 3.3, with respect to Real Property Interests comprising either a leasehold or easement estate, the Facility Assets have either been separately assessed for real estate tax purposes by Beaver County or any liability of the holder of such leasehold or easement est ate for real estate taxes has been apportioned pursuant to the Real Property Contracts creating the leasehold or easement estate.
(g) Except as set forth in Schedule 3.3, none of the Real Property Interests has been designated as “Border Zone Property” under the provisions of California Health and Safety Code, Sections 25220 et seq. or any regulation adopted in accordance therewith, and there has been no occurrence or condition on any real property adjoining any of the Real Property Interests that is reasonably likely to cause such Real Property Interest or any part thereof to be designated as border zone property.
3.4 Consents. E
xcept as set forth in Schedule 3.4, including the Consent required under the Federal Power Act, other than those that have been obtained or filed, no Consent of, or registration, qualification or filing with , any Person, including any Governmental Authority, is required for the sale of the Facility Assets or the execution and delivery by Seller of this ATTACHMENT 3
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12 Agreement or any of the Operative Documents to which it is a party or in order for Seller to perform its obligations hereunder or thereunder.
3.5 A ssets of the Business. Except as set forth in Schedule 3. 5, the Facility Assets (a) constitute all of the assets, properties, rights, privileges, claims , Permits and Contracts of every kind and nature, real or personal, tangible or intangible, absolute or contingent, wherever located, owned or used (including those necessary to access and utilize any common use facilities) necessary to conduct operations on the Premises, to operate the Facility, and to sell , and deliver Energy generated by the Facility, in substantially the same manner as it has historically been operated by Seller, and (b) are free from material defects caused by errors or omissions in design, engineering or construction, and are generally consistent with the description of the Facility set forth in the PPA. Except as provided in Schedule 3.5, the Fixtures and Equipment are in good repair and operating condition, ordinary wear and tear excepted.
3.6 Title to Facility Assets . E xcept as provided in Schedule 3.6, o n the Schedule Delivery Date, Seller has good (and , with respect to real property, marketable) title to all of the Facility Assets, free and clear of all Liens, except for the Purchase Option Permitted Encumbrances. Except as provided in Schedule 3.6, at the Closing, Seller shall deliver and Buyer shall acquire good (and, with respect to the real property, marketable) title to all of the Facility Assets free and clear of all Liens, except for Closing Permitted Encumbrances.
3.7 Environmental. Except as set forth in Schedule 3.7:
(a) There are no pending or outstanding or threatened Agency Actions concerning the Facility or the Premises with respect to Environmental Laws applicable to Seller, the Facility or the Premises, or to Seller’s ownership, operation and use of the Facility. Seller is, and at all times has been, and has owned (except in connection with any Sale Leaseback Financing) and operated (or its designated Qualified Operator has operated) the Facility and the Premises in compliance with all applicable Environmental Laws. There are no writs, injunctions, decrees, Orders or judgments outstanding, or any notices, actions, suits, Proceedings or investigations outstanding or pending or threatened involving Seller relating to (i) its compliance with any Environmental Laws with respect to any of the Facility Assets, the Premises, or any other asset owned or used by Seller or in which it has or had an interest in connection with the Facility, or (ii) the Release of any Hazardous Substances at the Premises.
(b) All Permits required by Environmental Laws and necessary for the operation of the Facility have been obtained and are currently in full force and effect.
Seller’s operations at the Premises and in connection with the Facility Assets are in compliance with all the requirements of such Permits. Seller is not in possession of any current written notice of violation or other notification from any Governmental Authority or from any other Person alleging that Seller has committed any act, or failed to act, in any manner or under any circumstance that would preclude continued operation of the Facility Assets, including the Premises, under any of these Permits. (c) Each of the Facility Assets and Seller are in compliance with all Environmental Laws. There are currently no circumstances or conditions existing on the ATTACHMENT 3
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13 Premises which could reasonably be expected to prevent or substantially interfere with Seller’s compliance with Environmental Laws in connection with Seller’s operation of the Facility Assets and use of the Premises.
(d) Hazardous Substances have not been generated, used, treated or stored on, or transported to or from, any of the Premises in violation of Environmental Laws. (e) There is no asbestos contained in or forming any part of any building, building component, structure or other asset that is part of the Facility Assets, and no asbestos is or has been stored, disposed of or otherwise been present at the Premises or on or in any of the Facility Assets, and Seller does not have any liability for asbestos in connection with the use, operation, renovation or demolition of any of the Facility Assets. (f) There has been no Release or threatened Release of Hazardous Substances by Seller or any party under the reasonable control of Seller and, to Seller’s Knowledge, there has been no Release or threatened Release of Hazardous Substances by any other party at, on, under or from any of the Premises or at, on, under or from any property adjoining any of the Premises, other than in compliance with applicable Environment al Laws or as has previously been remediated in accordance with applicable Environmental Laws.
(g) In connection with its ownership and operation of the Facility Assets, Seller has disposed of all wastes, including those containing any Hazardous Substances, in compliance with all applicable Environmental Laws, and Seller has not received any notice or demand letter from any Person claiming Seller may be liable for any on - or off-site Release or threatened Release of Hazardous Substances. Seller has not received written notice from any Person or Governmental Authority indicating that there has been ongoing or past Release of Hazardous Substances at, from or migrating beneath of on to any of the Real Property Interests.
(h) There are not now, and never have been, any above-ground or underground storage tanks or PCB-containing transformers or equipment located at the Premises. (i) To the extent obtained by or in the possession or control of Seller or any Affiliate of Seller, Seller has provided Buyer with all reports, surveys, studies, correspondence, investigations, tests and environmental sampling and analyses (whether commissioned by Seller or otherwise) concerning the wildlife, cultural resources, natural resources, the Environmental Condition of any of the Facility Assets, and Hazardous Substances in, at, on and under the Premises, regardless of whether such Environmental Conditions were caused by, or arose from , Seller’s operation of the Facility , Seller’s ownership of all or any portion of the Facility Assets, Seller’s compliance with applicable Environmental Laws in the operation of the Facility, the use of the Facility Assets, or otherwise.
(j) Seller has not received any written request for information nor any written notification that it is a potentially responsible party under CERCLA or any similar state Environmental Laws, including any such request or notification relating directly or
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14 indirectly to any of the Facility Assets, and none of the Premises is proposed to be listed or is listed on the National Priorities List under CERCLA or any similar state Environmental Laws requiring environmental investigation or cleanup.
3.8 No Undisclosed Liabilities. S
eller has no liabilities (absolute, accrued, contingent or otherwise) in excess of Twenty Five Thousand Dollars ($25,000) in the aggregate, except for those (a) set forth in Schedule 3.5, Schedule 3.7, Schedule 3.8, Schedule 3.9, Schedule 3.10, or Schedule 3.11, (b) otherwise disclosed in writing to Buyer or explicitly set forth in any of the Assumed Contracts , Transferred Permits, or Support Obligations , (c) constituting Excluded Liabilities, or (d) disclosed in the Financial Statements.
3.9 Taxes. As of the Schedule Delivery Date, and again as of the designated Closing Date, any Liens for Taxes are set forth in Schedule 3.9, and, except to the extent set forth therein:
(a) There are no Liens for Taxes on any of the Facility Assets, except for Purchase Option Permitted Encumbrances and, upon the Closing, Closing Permitted Encumbrances.
(b) The Facility Assets do not include, for Taxes purposes, any equity interest in any corporation, any partnership or other entity.
(c) All Tax Returns that Seller (or any Affiliate of Seller) is required to file with respect to the Facility Assets have been filed with the appropriate Governmental Authorities, all such Tax Returns were correct and complete in all material respects and all Taxes due and payable by Seller and all Tax assessments made against Seller by any Governmental Authority have been paid whether or not shown to be due on such Tax Returns. All property Taxes due and payable with respect to the Facility Assets or any fee property thereunder have been paid (whether or not shown to be due on any Tax Return) and all Tax Returns related thereto have been filed with the appropriate Governmental Authorities.
(d) Seller has not received any written notice from any Governmental Authority of, and has no other Knowledge of, any outstanding claims or assessments with respect to any Tax relating to the Facility Assets and no such claim is pending or is presently being asserted in writing against the Seller or with respect to any of the Facility Assets. (e) Seller has no Knowledge of any proposed T ax assessment against the Facility Assets, other than a proposed T ax assessment that is being actively contested by Seller in good faith and by appropriate proceedings, so long as the results of any such actively-contested assessment could not reasonably be expected to have a Material Adverse Effect hereunder.
(f) Seller is not subject to any pending Tax audit, investigation, action or Proceeding with any Governmental Authority that has been asserted in writing, and there is no threatened Tax audit, investigation, action or Proceeding by any Governmental Authority that has been asserted in writing with respect to any of the Facility Assets that remains pending. Seller has not received written notice of any claim by any Governmental
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15 Authority in any jurisdiction where it does not file Tax Returns or pay Taxes that it is or may be subject to Tax by that jurisdiction.
(g) Seller has timely withheld and timely paid all Taxes that are required to have been withheld and paid by it in connection with amounts paid or owing to any employee, independent contractor, creditor or other Person.
3.10 Compliance With Laws .
Except as set forth in Schedule 3.10, Seller is in full compliance in all respects with all Requirements of Law applicable to the Facility Assets and operation and use of the Facility, and there are no condemnations or similar proceedings applicable to any part of the Facility.
3.11 Litigation. Exc
ept as set forth in Schedule 3.11:
(a) There are no Proceedings pending, or to Seller’s Knowledge threatened, against the Facility or any material portion thereof;
(b) There are no existing Orders, writs, injunctions, judgments or decrees of any court, arbitrator, tribunal or other Governmental Authority against the Facility or any material portion thereof.
3.12 Assumed Contracts.
(a) Seller has delivered or made available to Buyer true and complete copies of all Contracts. Schedule 3.12(a) contains a true, correct and complete list of all Contracts (excluding Land Contracts) and any Contract listed therein that is not an Assumed Contract is identified with an asterisk (*).
(b) Except as set forth in Schedule 3.12(b), all Assumed Contracts are in full force and effect, and neither Seller nor, to Seller’s Knowledge, any other party thereto is in default under or in breach of any of them, nor does any event or condition exist that after notice or lapse of time or both could constitute a default thereunder or breach thereof on the part of Seller or, to Seller’s Knowledge, any other party thereto (except for defaults, events of default and other events as to which requisite waivers have been, or prior to Closing will have been, obtained). Except as set forth in Schedule 3.12(b), no approval, consent, or waiver of or by any Person that has not already been obtained is needed in order that the Assumed Contracts continue in full force and effect following the consummation of the transactions contemplated by this Agreement, and no A ssumed Contract includes any provision, the effect of which may be to terminate (or give rise to a right of termination under) such Assumed Contract, to give ris e to, enlarge, or accelerate any obligations of Seller thereunder, or to give additional rights to any other Person, upon or by reason of the consummation of the transactions contemplated by this Agreement.
3.13 Intellectual Property.
(a) Schedule 3.13 lists all of the patents, patent applications, inventions, improvements, computer programs, computer applications, operating programs, other programs and software, including system documentation and instructions, engineering,
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16 construction and other drawings (other than drawings not needed for the operation, maintenance or repair of the Facility), designs, technology, know -how, trade secrets, trademarks, trademark applications, trade names, copyrights and other proprietary right s and proprietary information used in connection with the operation and/or maintenance of the Facility as of the Schedule Delivery Date, including control room operating system software (collectively, the “Intellectual Property Assets”). (b) Except as set forth in Schedule 3.13, Seller ow ns or is the licensee of, the Intellectual Property Assets. No assignment or Consent from any third party is necessary to transfer, license, assign or convey to Buyer, as appropriate, any of the Intellectual Property Assets.
(c) Except as set forth in Schedule 3.13, none of the Intellectual Property Assets infringes on or conflicts with the intellectual property rights of others. (d) Except as set forth in Schedule 3.13, there have been no claims, and there is no basis for any claim, challenging the scope, validity or enforceability of any of the Intellectual Property Assets. Except as set forth in Schedule 3.13, there are no instances where it has been held, or to Seller’s Knowledge claimed or alleged, whether directly or indirectly, and, to Seller’s Knowledge, there is no basis upon which a claim may be made, that any activity of Seller relating to the
operation or maintenance of the Facility, infringes
or may infringe upon, is in violation of, or misappropriates, any rights of a third party.
3.14 Brokers or Finders. Neither Seller nor any of its officers, directors, employees, shareholders or Affiliates has employed or made any agreement with any broker, finder or similar agent or any Person which will result in the obligation of Buyer or any of its Affiliates to pay any finder’s fee, brokerage fees or commission or similar payment in connection with the transactions contemplated hereby.
3.15 Permits. A
ll Permits are set forth on Schedule 3.15 and any Permit listed therein that is not a Transferred Permit is identified with an asterisk (*). Except as set forth on Schedule
3.15, all non-environmental Permits required by any Requirement of Law for the operation of the Facility have been obtained, are currently in effect, are final and non -appealable, and are transferrable to Buyer. Except as set forth on Schedule 3.15, Seller’s operations at the Premises and in connection with the Facility Assets are in compliance with all the requirements of suc h Permits and, as of Closing, Seller is not in possession of, and, to the Knowledge of Seller, there is no basis for the issuance of, any written notice of violation or other notification from any Governmental Authority or from any other Person alleging that the Facility is in violation of such Permits or that Seller has committed any act, or failed to act, in any manner or under any circumstance that could have a Material Adverse Effect on the continued operation of the Facility Assets, including the Premises, by Buyer under any of these Permits. Seller has made available to Buyer complete and correct copies of each such Permit, together with all amendments thereto.
Except as set forth on Schedule 3.15, no suspension, cancellation of termination of any such Permit is, to Seller’s Knowledge, threatened or imminent.
3.16 Investment Company Act. Seller is not an “investment company” or a company “controlled” by an “investment company” within the meaning of the Investment Company Act.
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17 3.17 Employees and Employee Benefit Plans. Except as set forth in Schedule 3.17, Seller does not have and has never had any employees, and Seller does not maintain or contribute to, and has not ever maintained or contributed to, any pension, profit -sharing, deferred compensation, bonus, stock, option, share, appreciation right, severance, group or individual health, dental, medical, life, insurance, survivor benefit or similar plan, policy or arrangement for the benefit of any director, officer, consultant or employee, whether active or terminated, of Seller.
3.18 General Representation. E
xcept as set forth in Schedule 3.18, no representation or warranty made by Seller, its agents and Representatives in this Agreement, including the schedules and exhibits hereto, or any of the Operative Documents, or in any certificate or other agreement delivered by Seller to Buyer in connection with the transactions contempla ted hereby or thereby, contains any untrue statement of a fact, or omits to state a fact necessary in order to make the statements contained herein, in light of the circumstances in which they were made, not misleading. All information contained in the
Provided Materials is or will be, or is or will be
consistent with, the information which has been used by Seller in the management of the Business and also with what has been or will be reported to Seller’s management, equity holders and the Facility Lender in connection with the Business.
3.19 Regulatory Status. T he Facility is an “Exempt Wholesale Generator,” as that term is defined under 18 C.F.R. § 366.1, and is also a “public utility” under the Federal Power Act, and the regulations of the Federal Energy Regulatory Commission (“ FERC”) thereunder (collectively, the “ FPA”). The status of Seller and the Facility hereunder is not subject to any pending or threatened challenge, petition or investigation by or before the FERC. Seller requires no authorization under the FPA to execute, deliver, and perform its obligations under this Agreement, apart from such authorizations from FERC that have already been received or will be received as of the Closing Date. The Facility is interconnected to the electrical grid pursuant to a valid and effective agreement for such interconnection, which agreement is sufficient to permit the delivery of the Facility’s entire net electrical output to the therein -specified point of interconnection.
3.20 Support Obligations. All of the Support Obligations that have been provided by, on behalf of, or for the benefit of, Seller or the Facility are as described on Schedule 3.20. True, correct and complete copies of each Support Obligation have been delivered to Buyer and such Support Obligations constitute all of the credit and other contractual support and assurance that Buyer is required by any law (including any Permit) or Contract to provide as of the Closing Date.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
Upon the exercise of the Project Purchase Option, Buyer represents and warrants to Seller as
follows as of the date on which Buyer delivers the Purchase Option Exercise Notice to Seller and the Closing Date and, with respect to Sections 4.1 and 4.2, the Effective Date:
4.1 Organization. Buyer is a validly existing joint powers agency formed under the laws of the State of California and has the legal power and authority to own its properties, to carry on its business as now being conducted and to enter into and perform its obligations under this Agreement and each of the Operative Documents to which Buyer is a party.
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18 4.2 Authority; Absence of Conflict or Breach. The purchase of the Facility Assets and the execution, delivery and performance by Buyer of this Agreement and each of the Operative Documents executed and delivered by Buyer in connection with such purchase have been duly authorized by all necessary action on the part of each of Buyer’s Members and do not require any consent or approval of Buyer’s regulatory or governing bodies other than that which has been obtained; provided that further authorizations from Buyer and Buyer’s Members will be required for Buyer to exercise the Project Purchase O ption; provided, further, that on the date on which Buyer delivers the Purchase Option Exercise Notice to Seller and the Closing Date, Buyer and Buyer’s Members shall have obtained all required authorizations, consents or approvals of Buyer’s or Buyer’s Members’ regulatory or governing bodies required for Buyer to consummate the Closing, except for the required authorizations, consents or approvals of Buyer or Buyer Members with respect to Buyer’s bond financing for the acquisition of the Facility Assets . This Agreement and each of the Operative Documents to which Buyer is a party constitute the legal, valid and binding obligation of Buyer enforceable in accordance with their respective terms, except as such enforceability may be limited by bankruptcy, i nsolvency, reorganization or similar laws relating to or affecting the enforcement of creditors’ rights generally or by general equitable principles, regardless of whether such enforceability is considered in a proceeding in equity or at law.
4.3 Consents. E
xcept as set forth in Schedule 4.3, other than those that have been obtained or filed, no Consent of, or registration, qualification or filing with any Person, including any Governmental Authority, is required for the purchase of the Facility Assets or the execution and delivery by Buyer of any of the Operative Documents to which it is a party or in order for Buyer to perform its obligations hereunder.
4.4 Brokers or Finders. Neither Buyer nor any of Buyer’s Members, officers, directors, employees, shareholders or Affiliates has employed or made any agreement with any broker, finder or similar agent or any Person which will result in the obligation of Seller or any of its Af filiates to pay any finder’s fee, brokerage fees, or commission or similar payment in connection with the transactions contemplated hereby.
4.5 Litigation. T
here are no Proceedings pending or , to Buyer’s knowledge, threatened, against Buyer which could reasonably be expected to materially adversely affect its ability to perform its obligations with respect to the purchase of the Facility Assets pursuant to the Project Purchase Option.
ARTICLE
V
COVENANTS OF SELLER PRIOR TO CLOSING DATE
5.1 A ccess to Materials . Prior to the Schedule Delivery Date, Seller will furnish to Buyer all information required hereunder to be furnished by the Schedule Delivery Date. Between the Schedule Delivery Date and the earlier of (a) the Closing Date or (b) the date upon which Buyer has declined to exercise the applicable Purchase Option Opportunity, such Purchase Option Opportunity has expired or is no longer in effect, or the Agreement has terminated (such period, the “Applicable Diligence Period”), upon reasonable advance notice, Seller will (i) afford Buyer and its Representatives (and the Qualified Appraiser) full and complete access during normal business hours to the Facility and to Seller’s personnel, Assumed Contracts, Permits, Books and Records, properties and other docum ents and data relating to the Facility (provided that Buyer shall observe, and shall cause its Representatives to observe, all of Seller’s security protocols and ATTACHMENT 3
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19 such access shall not disturb or interfere with the normal operations of the Facility Assets in any material respect), (ii) furnish Buyer and Buyer’s Representatives (and the Qualified Appraiser) with copies of all such Assumed Contracts, Permits, Books and Records, and other existing documents and data in Seller’s possession or to which Seller has access with respect to the Facility or pertaining to the design of the Facility (including design schematics, blueprints or other similar documents) and other Facility Assets as Buyer or the Qualified Appraiser may reasonably request, and (iii) furnish Buyer and its Representatives (and the Qualified Appraiser) with such additional financial, operating, and other data and information of or pertaining to the Busine ss in Seller’s possession or to which Seller has access as Buyer and its representatives (and the Qualified Appraiser) may reasonably request. All such Assumed Contracts, Books and Records, documents, data and information required to be furnished by Seller under this Section 5.1 are collectively referred to as the “ Provided Materials .” Buyer shall have the right to diligently review the Provided Materials. The Provided Materials may be redacted as necessary to allow for disclosure to Buyer and the Qualified Appraiser to the extent any Provided Materials are (A) subject to confidentiality, non-disclosure or similar agreements in favor of third parties whose consent to disclose cannot be obtained by the Closing, (B) legally-privileged information of Seller, (C) concerning any alleged dispute or pending litigation, investigation or Proceeding involving Seller or its Affiliates that is protected by or subject to a court order or the attorney- client privilege or (D) sensitive and proprietary economic information of Seller that is not relevant to the purchase, ownership, operation, maintenance, repair or use of the Facility or Facility Assets.
5.2 Investigations. D
uring the Applicable Diligence Period, upon reasonable advance notice (but not less than twenty four (24) hours), Seller shall afford Buyer and its Representatives (and the Qualified Appraiser) with reasonable access to the Facility Assets for the purp ose of inspecting the same, to conduct any performance tests or physical inspections or otherwise, including to conduct a phase 1 environmental site assessment and, in Buyer’s sole discretion, a phase 2 environmental site assessment , during normal business hours in such manner that complies with Seller’s safety protocols and in such manner so as not to materially disturb or interfere with the normal operations of the Facility Assets and subject to a reasonable number of visits.
5.3 Financial Statements. O
n the Schedule Delivery Date, Seller will deliver to Buyer unaudited balance sheets and unaudited statements of income and cash flow of Seller for the three (3) most recent fiscal years of Seller, prepared in material compliance with GAAP. From and after the Schedule Delivery Date, as soon as available and in any event during the Applicable Diligence Period or the end of each fiscal quarter of Seller, Seller will provide Buyer with unaudited statements of income and cash flow for such quarter, setting forth in comparative form figures for the corresponding period of the preceding fiscal year. All Financial Statements (as defined below) shall be accompanied by a certificate signed by an authorized officer of Seller stating that such financial statements present fairly in all material respects the financial condition of Seller and that the same have been prepared in compliance with GAAP. Seller will also deliver to Buyer copies of all financial statements or other financial information delivered to any Facility Lender during the Applicable Diligence Period contemporaneously with the delivery thereof to such Facility Lender. The financial statements required to be provided by Seller to Buyer under this Section are collectively referred to as the “Financial Statements.”
5.4 Operation of the Business .
During the Applicable Diligence Period, Seller will
conduct its Business with respect to the Facility in accordance with the ordinary course of business consistent with past practices and Prudent Utility Practices.
ATTACHMENT 3
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20 5.5 Disposition of Assets. During the Applicable Diligence Period, unless required by any contract entered into by Seller prior to the Schedule Delivery Date, Seller shall not (a) sell or otherwise dispose of or encumber (other than Purchase Option Permitted Encumbrances) any of the Facility Assets or any other property or assets which are primarily related to the operation, maintenance and use of the Facility (other than sales, leases, transfers or dispositions in the ordinary course of business consistent with past practice and Prudent Utility Practices), or (b) except as may be required by their terms, and except in the ordinary course of business consistent with past practice, modify, subordinate, amend, terminate, cancel, sever or surrender, or permit or suffer the modification, subordination, amendment, termination, cancellation, severance or surrender of any Assumed Contract, Permit or Warranties, without the prior written approval of Buyer.
5.6 Required Approvals. As promptly as practicable following Buyer’s delivery of the Purchase Option Exercise Notice until the end of the Applicable Diligence Period, Seller will make, and thereafter diligently pursue during the Applicable Diligence Period, all registrations, qualifications or filings to be identified in Schedule 3.4 or necessary or appropriate to obtain all the Consents therein identified.
5.7 Notification. D uring the Applicable Diligence Period, Seller shall give prompt notice (each notice, a “ Change Notice”) to Buyer of the occurrence or non- occurrence of any event, change, effect or development of any kind which would or could reasonably be expected to result in: (a) any representation or warranty of Seller contained in any Operative Document or this Agreement being untrue or incorrect in any material respect on the date such representation or warranty is to be made or that w ould otherwise result in a Material Adverse Effect, or (b) a breach of any of Seller’s covenants under this Agreement or any Operative Document. Each Change Notice must include a detailed description of the event, change, effect, development or failure and a description of the action Seller has taken and proposes to take with respect thereto.
The delivery of a Change Notice will not be deemed to (i) modify any representation or warranty hereunder (other than to the extent included in updated Seller Disclosure Schedules in accordance with Section 2.9), (ii) modify any condition set forth in Article VII, or (iii) limit or otherwise affect the remedies available hereunder to Buyer. Buyer shall thereafter have the right, but not the obligation, to terminate the Project Purchase Option with respect to the applicable Purchase Option Opportunity, in which case such Purchase Option Opportunity shall no longer be effective; provided, however, that such termination shall not affect Buyer’s right to exercise any Project Purchase Option with respect to a future Purchase Option Opportunity.
5.8 Reasonable Efforts. Following Buyer’s delivery of the Purchase Option Exercise Notice and until the end of the Applicable Diligence Period, Seller will, and will cause its Affiliates to, use all commercially reasonable efforts to satisfy the conditions in Article VII and Article VIII to be performed by Seller and its Affiliates.
5.9 Waivers of Claims. During the Applicable Diligence Period, Seller shall not incur, create, assume or otherwise become liable for indebtedness for borrowed money, or issue any debt securities, other than those that are or will be discharged at or prior to Closing, nor shall it waive or release any right that it has relating to the Facility Assets or any Assumed Liabilities (other than to the extent provided for pursuant to Section 5.5). If any Assumed Contract necessary for the operation of the Facility (and is required for ongoing operations of the Facility consistent with past practices and Prudent Utility Practices) expires or is terminated prior to the Closing Date, then Seller will replace same with a contract approved by Buyer, such approval not to be ATTACHMENT 3
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21 unreasonably withheld. The preceding sentence shall not be deemed a limitation of the obligations of Seller under Section 5.5.
5.10 Additional Contracts. Any Contract entered into by Seller during the Applicable Diligence Period shall be an Excluded Liability unless Buyer agrees in writing to include such Contract as an Assumed Contract.
5.11 Transitional Services. D uring the period between Buyer’s delivery of the Purchase Option Tentative Exercise Notice until the earliest to occur of (a) Buyer’s delivery of the Purchase Option Exercise Notice, (b) the Purchase Option Exercise Deadline, (c) termination of the relevant Purchase Option Opportunity, or (d) termination of this Agreement, Buyer and Seller shall negotiate in good faith an agreement for transition operation and maintenance services upon terms and conditions to be mutually agreed upon by both Parties, in form and substance consistent with Exhibit 5.11.
5.12 Replacing or Procuring Intellectual Property Assets . If Seller within six (6) months prior to the Closing Date has information or reasonably believes that (1) any of the Intellectual Property Assets allegedly or actually infringes or is likely to infringe upon any third- party intellectual property rights, or (2) any of the Intellectual Property Assets licenses used to operate or maintain the Facility and the Facility Site is to expire, to be terminated or enjoined within six (6) months prior to or after the Closing Date, Seller shall immediately notify Seller of such alleged, actual or potential infringement or license status. Upon Buyer’s request, Seller shall, at Seller’s own expense: (i) procure for Buyer the right or license to continue using the Intellectual Property Asset(s) at issue; or (ii) replace the Intellectual Property Asset(s) at issue with a functionally equivalent, non-infringing product, if commercially practicable. Exercise of any of the above -mentioned options shall not cause undue business interruption to the operation or maintenance of the Facility and the Facility Site, or diminish the intended benefits, output and enjoyment of the Facility and the Facility Site by the Seller under this Agreement or the PPA.
5.13 Shared Facilities .
If in connection with Seller’s or any of its Affiliates’ development of additional phases of the Facility or additional projects that interconnect through the Milford Generator Lead, Seller reasonably determines that it requires the use of certain shared facilities, the right to occupy or use shared real property, or the ownership or governance of the rights associated with either , then upon written notice to Buyer from Seller, Buyer shall reasonably cooperate and negotiate in good faith with Seller or Seller’s Affiliates to enter into one or more Shared Facilities Agreements with Seller’s Affiliates , subject to the approval of Buyer, which approval shall not be unreasonably withheld so long as Buyer is not materially adversely impacted (including under this Agreement or in connection with its use of the Facility ) by the terms and conditions of any such Shared Facilities Agreement.
ARTICLE VI
COVENANTS OF BUYER PRIOR TO CLOSING DATE
6.1 N otification . During the Applicable Diligence Period, Buyer shall give reasonable notice to Seller of the occurrence or non-occurrence of any event, change, effect or development of which Buyer has knowledge and that would cause (a) any representation or warranty of Buyer contained in any Operative Document or this Agreement to be untrue or incorrect in any material respect on the date such representation or warranty is to be made, or (b) a breach of any of Buyer’s covenants under this Agreement or any Operative Document. Each Change Notice must include ATTACHMENT 3
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22 a detailed description of the event, change, effect, development or failure and a description of the action Buyer has taken and proposes to take with respect thereto. The delivery of a Change Notice will not be deemed to (i) modify any representation or warranty hereunder, (ii) modify any condition set forth in Article VII, or (iii) limit or otherwise affect the remedies available hereunder to Seller.
6.2 Required Approvals. As promptly as practicable following Buyer’s delivery of the Purchase Option Exercise Notice and until the end of the Applicable Diligence Period, Buyer will make, and thereafter during the Applicable Diligence Period pursue, all registrations, qualifications or filings identified in Schedule 4.3 or necessary or appropriate to obtain any Consent therein identified.
6.3 Reasonable Efforts. F ollowing Buyer’s delivery of the Purchase Option Exercise Notice until the end of the Applicable Diligence Period, Buyer will use reasonable efforts to cause the conditions in Article VII and Article VIII to be performed by Buyer, to be satisfied.
ARTICLE VII
CONDITIONS PRECEDENT TO BUYER’S OBLIGATION TO CLOSE
Buyer’s obligation to purchase the Facility Assets and to take the other actions required to be taken by Buyer at the Closing Date is subject to the satisfaction, at or prior to the Closing, of each of the following conditions (any of which may be waived by Buyer in its sole discretion, in whole or in part):
7.1 Accuracy of Representations.
All of Seller’s representations and warranties in this
Agreement and the other Operative Documents (considered collectively), and each of these representations and warranties (considered individually), must have been accurate in all material respects as of the date when deemed made and must be accurate in all material respects as of the Closing Date as if made on the Closing Date.
7.2 Seller’s Performance. All of the covenants and obligations that Seller is required to perform or to comply with pursuant to this Agreement or any of the other Operative Documents at or prior to the Closing (considered collectively), and each of these covenants and obligations (considered individually), must have been duly performed and complied with in all material respects.
7.3 Consents. Each of the Consents identified in Schedule 3.4 and Schedule 4.3 must have been obtained and must be in full force and effect.
7.4 Additional Seller Documents . S eller, at its sole cost and expense, shall deliver each of the following documents to Buyer:
(a) legal opinion of S eller’s counsel, dated the Closing Date, with respect to the enforceability of the Agreement and due authorization by Seller to sell the Facility Assets and related matters, in form and substance reasonably acceptable to Buyer;
ATTACHMENT 3
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23 (b) a written certificate, in form and substance satisfactory to Buyer, executed and delivered by Seller by its authorized officer, certifying that each of the conditions specified in Sections 7.1, 7.2, and 7.3, have been satisfied; (c) a Bill of Sale, dated as of the Closing Date, in form and substance reasonably acceptable to Buyer (“Bill of Sale ”), and executed by Seller by its authorized officer;
(d) agreements and related documentation effective to transfer to Buyer the Real Property Interests, Transferred Permits, the Assumed Contracts, and any other Facility Assets (together with the Bill of Sale, the “ Asset Assignment Documents ”) in form and substance reasonably acceptable to Buyer, executed by Seller by its authorized officer;
(e) an irrevocable commitment by a title company acceptable to Buyer to issue an extended coverage owner’s policy of title insurance based upon a recent ALTA survey, including such endorsements as Buyer may reasonably require, insuring Buyer in the amount of the Final Purcha se Price, that title to the Premises (in fee, leasehold and/or easement, as applicable) is vested in Buyer, subject only to those exceptions that are Closing Permitted Encumbrances;
(f) confirmation in writing by Seller that any existing operations and maintenance agreement with respect to the Facility shall terminate upon the Closing Date (unless Buyer elects to assume such agreement, in which case such agreement shall be deemed an Assumed Contract);
(g) duly executed pay- off letters for the release or termination of all Liens securing Facility Debt, if any, that acknowledge repayment in full of such Facility Debt (unless Buyer otherwise agrees in writing that any such Liens shall not be released or terminated);
(h) if Seller has entered into a Sale Leaseback Financing, evidence satisfactory to Buyer of the (i) reconveyance of the Facility Site by Lessor or Lessors to Seller and the termination of the lease of the Facility by such Lessor or Lessors and Seller or (ii) transfer of the Facility Site directly by such Lessor or Lessors to Buyer on the same terms and conditions as a transfer of the Facility Site from Seller to Buyer as set forth in this Agreement;
(i) the Seller Guaranty, dated as of the Closing Date and executed by Seller Guarantor; and
(j) suc
h other documents as Buyer may reasonably request for the purpose of (i) evidencing the accuracy of any of Seller’s representations and warranties, (ii) evidencing the performance by Seller of, or the compliance by Seller with, any covenant or obligation required to be performed or complied with by Seller , or (iii) evidencing the satisfaction of any condition referred to in this Article VII; provided, ATTACHMENT 3
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24 that any such documentation shall have been identified by Buyer in writing on or prior to the date upon which Buyer delivers the Purchase Option Exercise Notice to Seller.
7.5 L itigation . No Proceeding shall have been instituted or any other action taken or Requirement of Law or Environmental Law enacted, promulgated or deemed applicable by any Governmental Authority or by any other Person and, at what would otherwise have been the Closing Date, remain pending, that could reasonably be expected to delay, restrain or prohibit any part of the transactions contemplated by this Agreement or to seek any divestiture or to revoke or suspend any Permit by reason of any or all of the transactions contemplated by this Agreement; nor shall any Governmental Authority have notified either Party or any of their respective Affiliates that consummation of all or any part of the transactions contemplated by this Agreement would constitute a violation of the Requirements of Law or Environmental Laws of any jurisdiction or that it intends to commence a Proceeding to restrain or prohibit all or any part of the transactions contemplated by this Agreement or to require such divestiture, revocation or suspension; unless, in any such case, such Governmental Authority or other Person could not reasonably be expected to prevail or shall have withdrawn such notice and abandoned such Proceeding, action, Requirement of Law or Environmental Law , in each case, to the reasonable satisfaction of Buyer.
7.6 Liens.
Title to the Facility Assets shall be free and clear at the Closing of all Liens other than Closing Permitted Encumbrances (which shall include any Lien approved in writing by Buyer as a Purchase Option Permitted Encumbrance following the Schedule Delivery Date).
7.7 No Material Adverse Effect . D
uring the Applicable Diligence Period, no action
shall have been taken or omitted and no event shall have occurred or be threatened which has had or could reasonably be expected to result in a Material Adverse Effect.
Assets and Property. If
a Material Casualty Event occurs prior to the Closing Date, the Parties shall have complied with the terms of Section 9.3.
ARTICLE VIII
CONDITIONS PRECEDENT TO SELLER’S OBLIGATION TO CLOSE
Seller’s obligation to sell the Facility Assets and to take the other actions required to be taken by Seller at the Closing Date is subject to the satisfaction, at or prior to the Closing, of each of the following conditions (any of which may be waived by Seller in its sole discretion, in whole or in part):
8.1 A
ccuracy of Representations . All of Buyer’s representations and warranties in this Agreement and the other Operative Documents (considered collectively), and each of these representations and warranties (considered individually), must have been accurate in all material respects as of the date of this Agreement and as of the date when deemed made.
8.2 Buyer’s Performance.
(a) All of the covenants and obligations that Buyer is required to perform or to comply with pursuant to this Agreement or any of the other Operative Documents at or ATTACHMENT 3
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25 prior to the Closing, and each of these covenants and obligations (considered c ollectively and individually), must have been performed and complied with in all material respects. (b) Buyer must have paid the Final Purchase Price to Seller.
8.3 C onsents. Each of the Consents identified in Schedule 3.4 and Schedule 4.3 must have been obtained and must be in full force and effect.
8.4 Additional Buyer Documents. Buyer shall deliver each of the following documents to Seller:
(a) a legal opinion with respect to the enforceability and due authorization by Buyer (but not with respect to any of Buyer’s Members) of this Agreement and the purchase of the Facility Assets;
(b) t he Bill of Sale and other Asset Assignment Documents (as delivered by Seller pursuant to Section 7.4) executed by Buyer by its authorized Representative; and (c) any Performance Security then held by Buyer pursuant to Section 5.6 of the PPA.
8.5 Litigation. N o Proceeding shall have been instituted or any other action taken or Requirement of Law or Environmental Law enacted, promulgated or deemed applicable by any Governmental Authority or by any other Person and, at what would otherwise have been the Closing Date, remain pending, that could reasonably be expected to delay, restrain or prohibit any material part of the transactions contemplated by this Agreement; nor shall any Governmental Authority have notified either Party or any of their respective Affiliates that consummation of any part of the transactions contemplated by this Agreement would constitute a violation of the Requirements of Law or Environmental Laws of any jurisdiction or that it intends to commence a Proceeding to restrain or prohibit any part of the transactions contemplated by this Agreement, unless, in any such case, such Governmental Authority or other Person could not reasonably be expected to prevail or shall have withdrawn such notice and abandoned such Proceeding, action, Requirement of Law or Environmental Law, in each case, to the reasonable satisfaction of Seller.
ARTICLE IX
M
UTUAL COVENANTS, TAXES AND OTHER MATTERS
9.1 T ax Matters . Seller, at its own expense, will file, to the extent required by applicable Requirements of Law, all necessary Tax Returns and other documentation with respect to its portion of any Transfer Taxes, and, if required by applicable Requirements of Law, Buyer will join in the execution of any such Tax Returns or other documentation and will take such positions in such returns as are reasonably requested by Seller. (a) Wi
th respect to any Tax Return reporting Taxes with respect to the ownership or operation of the Facility Assets for any taxable period ending on or before the Closing Date that is due after the Closing Date or for any Straddle Period, Buyer shall prepare and timely file all such Tax Returns, if any, and shall duly and timely pay all such Taxes, whether imposed on Buyer or Seller, shown to be due on such Tax Returns. Buyer ATTACHMENT 3
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26 shall make such Tax Returns available for Seller’s review and approval no later than fifteen (15) Business Days prior to the due date for filing such Tax Return. With respect to each Tax Return filed in accordance with this Section 9.1(a), each Party shall reimburse the other Party , within ten (10) Business Days of demand therefor, for any such Taxes shown as due on such Tax Return that it is responsible for under this Agreement but that were paid by the other Party or economically borne by the other Party pursuant to Section
2.11 in accordance with the reimbursement procedures set forth in the flush language of Section 2.11, mutatis mutandis.
(b) Each of Buyer and Seller shall provide the other with such assistance as may reasonably be requested by the other Party in connection with the preparation of any Tax Return, any audit or other examination by any taxing authority, or any judicial or administrative Proceeding relating to liability for Taxes, and each will retain and provide the requesting Party with any records or information which may be relevant to such return, audit or examination, Proceedings or determination. Each Party will take any and all commercially reasonable steps, act in good faith, and cooperate fully, to permit the other Party to comply with its/their obligations and secure its/their rights to indemnification hereunder.
(c) Seller will be entitled to any refunds or credits of Taxes with respect to the ownership or operation of the Facility Assets that pertains to any Pre-Closing Tax Period (and such refunds and credits shall be Excluded Assets), and Buyer shall be entitled to such refunds or credits of Taxes that pertain to any Post-Closing Tax Period. Each of Buyer and Seller will promptly notify and forward to the other Party the amounts of any such refunds or credits received by such Party, but to which the other Party is entitled, within sixty (60) days after receipt thereof.
(d) After the Closing, Buyer will notify Seller in writing, within thirty (30) days after its receipt, of any correspondence, notice or other communication from a taxing authority or any Representative thereof, of any pending or threatened T ax audit, or any pending or threatened Proceeding that involves Taxes relating to the Facility Assets that pertains to any Pre -Closing Tax Period, and furnish Seller with copies of all correspondence received from any taxing authority in connection with any audit or information request with respect to any such Taxes relating to the Facility Assets that pertains to any Pre- Closing Tax Period. After the Closing, Seller will notify Buyer in writing, within thirty (30) days after its receipt, of any correspondence, notice or other communication from a taxing authority or any Representative thereof, of any pending or threatened Tax audit, or any pending or threatened judicial or administrative Proceeding that involves Taxes relating to the Facility Assets, and furnish Buyer with copies of all correspondence received from any taxing authority in connection with any audit or information request with respect to any such Taxes relating to the Facility Assets. (e) Notwithstanding any provision of this Agreement to the contrary, with respect to any claim for refund, audit, examination, notice of deficiency or assessment or any Proceeding that involves Taxes relating to the Facility Assets (collectively, “ Tax Claim”), each of Buyer and Seller will reasonably cooperate with the other Party in
ATTACHMENT 3
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27 prosecuting or contesting any Tax Claim, including making available original books, records, documents and information for inspection, copying and, if necessary, introduction of evidence at any such Tax Claim contest or Proceeding and making employees available on a mutually convenient basis to provide additional information or explanation of any material provided hereunder with respect to such Tax Claim or to testify at Proceedings relating to such Tax Claim. Seller will control all Proceedings taken in c onnection with any Tax Claim that pertains entirely to any period ending on or prior to the Closing Date, and Buyer will control all Proceedings taken in connection with any Tax Claim that pertains to any period commencing after the Closing Date, and Seller and Buyer will jointly control all Proceedings taken in connection with any Tax Claim pertaining to any period commencing prior to and ending after the Closing. Seller shall have no right to settle or otherwise compromise any Tax Claim which pertains entirely to a period ending on or prior to the Closing without Buyer’s prior written consent, which consent shall not be unreasonably withheld or delayed; neither Buyer nor Seller shall have the right to settle or otherwise compromise any Tax Claim which pertains to a Straddle Period without the other Party’s prior written consent, which consent shall not be unreasonably withheld or delayed; and Seller shall have no right to settle or other compromise any Tax Claim which pertains entirely to any taxable period or portion thereof beginning after the Closing.
9.2 S
eller Cooperation Post -Closing. In furtherance, and not in limitation of, the transitional services agreement to be executed in connection with Section 5.11, Seller agrees that, for a period of two (2) years after the Closing, it will use good faith efforts to respond to Buyer’s inquiries relating to the Facility or the Facility Assets.
9.3 Risk of Loss.
(a) Promptly following the delivery by Buyer of a Purchase Option Exercise Notice and delivery by Seller of the Acceptance Notice, Seller shall make Buyer a named insured under Seller’s all risk property insurance policy through the Applicable Diligence Period. If, either at the time of Buyer’s delivery of a Purchase Option Exercise Notice or at any time during the Applicable Diligence Period, all or any portion of the Facility is damaged or destroyed in whole or in part by a Material Casualty Event or becomes subject to or threatened with any condemnation or eminent domain proceeding (the “ Affected Portion”), and the amount that is the greater of the (i) fair market value of the Affected Portion (such value to be determined as of the date immediately prior to such damage, destruction or actual or threatened condemnation or eminent domain proceeding) or (ii) the cost of repair of the Affected Portion, as determined by a qualified independent engineer (which engineer has appropriate training and sufficient experi ence to evaluate the proper repair scope) (such greater amount, the “Diminished Amount”) is equal to or greater than three percent (3%) of the then-current Fair Market Value, then such Fair Market Value shall be reduced by an amount equal to one hundred percent (100%) of the Diminished Amount; provided, that (1) notwithstanding whether Buyer is named as a “named insured” on any such all -risk property insurance policy, Seller shall receive all proceeds from all risk property insurance with respect to such Ma terial Casualty Event (whether paid out prior to or after the Closing Date) or any such condemnation or eminent domain proceeding, (2) Buyer shall have the option to either (A) if Buyer requests Seller to repair ATTACHMENT 3
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28 the Facility, to delay the Closing Date for such reasonable time as may be necessary for Seller to complete restoration of the Affected Portion, or (B) proceed with Closing on the scheduled Closing Date with the Final Purchase Price adjusted to reflect the Diminished Amount, and (3) if Seller , at Buyer’s request, restores the Affected Portion prior to the Closing Date (if and as extended by Buyer pursuant to the foregoing clause (2)(A)) to the reasonable satisfaction of Buyer utilizing all available insurance proceeds and equity contributed by Seller, the Fair Market Value shall be adjusted to the Fair Market Value as computed prior to deduction of the Diminished Amount.
(b) If, during the Applicable Diligence Period, all or any portion of the Facility is damaged or destroyed in whole or in part by a Material Casualty Event or becomes subject to or threatened with any condemnation or eminent domain proceeding, such that it cannot reasonably be expected (as determined by the Qualified Appraiser(s)), that, (i) in the case of a Material Casualty Event, the Facility will be fully repaired within sixty (60) days after the Closing Date or (ii) in the case of a condemnation or eminent domain proceeding, such condemnation or eminent domain proceeding would not have a Material Adverse Effect, then Buyer may, in its sole discretion, elect to terminate this Agreement or withdraw from the present Project Purchase Opportunity.
9.4 L
iabilities .
(a) From and after Closing, Buyer shall assume, pay, perform and discharge when due, and, as between Buyer and Seller, shall be solely responsible for, the Assumed Liabilities. Other than as set forth in Section 9.1, Seller shall have no liability or obligation for the Assumed Liabilities from and after the Closing Date (and Buyer shall have no liability or obligation for the Assumed Liabilities prior to the Closing Date). (b) E
xcept for the Assumed Liabilities, Buyer shall not assume by virtue of this Agreement or the transactions contemplated by this Agreement, and shall have no liability under this Agreement for, the Excluded Liabilities.
9.5 I
nsurance . Buyer acknowledges and agrees that, effective upon the Closing, Seller’s insurance policies in respect of the Facility and the Facility Assets shall be terminated or modified to exclude coverage of the Facility Assets, except to the extent required to a ddress a Material Casualty Event under Section 9.3. Buyer acknowledges and agrees that it may need to provide to certain Governmental Authorities and third parties evidence of replacement or substitute insurance coverage for the continued operation of the Facility Assets following the Closing.
9.6 Securities Replacement. Within ten (10) Business Days after the Closing Date, Buyer shall, at its sole cost, (i) with respect to any Support Obligations set forth on Schedule 3.20 (whether any such Support Obligation is in the form of a letter of credit, bond or cash deposit) (“Seller Support Obligations”), deliver to the applicable beneficiary or counterparty duly executed replacement or substitute Support Obligations, in each case, in a form that satisfies the requirements of the beneficiaries of the Seller Support Obligations (such replacement or substitute security, the “Replacement Security”), and (ii) use commercially reasonable efforts to cause the beneficiary of each such Seller Support Obligation, as soon as practicable following receipt of the ATTACHMENT 3
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29 Replacement Security thereof pursuant to this Section 9.6, to terminate, surrender, and redeliver to Seller each instrument constituting or evidencing such Seller Support Obligation. If the applicable beneficiary of any Seller Support Obligation delivers or returns any such Seller Support Obligations, including any cash deposit amounts, to Buyer and Seller has not previously been reimbursed for such amounts, Buyer shall promptly, and in any event within seven (7) Business Days, deliver such Seller Support Obligations to Seller or, in the case of cash deposit amounts, pay such cash deposit amounts to Seller. Except as set forth in the immediately preceding sentence, Buyer shall have no obligation pursuant to this Section 9.6 to pay any amount to Seller in respect of any Seller Support Obligation that is in the form of a cash deposit.
9.7 RWI Insurance Proposal. Seller may propose to procure , at its sole cost and expense, insurance coverage for misrepresentation s or breaches by Seller of its representations and warranties made to Buyer pursuant to Article I II, subject to customary exclusions , in which case, Seller shall provide Buyer relevant details of the proposed representations and warranties insurance and such insurance coverage may be Buyer’s sole recourse (subject to customary exclusions) for breaches by Seller of its representations and warranties made to Buyer pursuant to Article III that are covered by such representations and warranties insurance (the “RWI Proposal”) and Buyer shall consider such proposal in good faith.
ARTICLE X
TERM AND TERMINATION
10.1 T erm . This Agreement shall become effective when it is executed by each of the Parties and delivered to the other Party and the term of this Agreement shall continue for the Agreement Term (including any survival periods set forth in Section 2.4 of the PPA), or such other period as may be provided in this Agreement, but in any event up to and including the Closing Date, if any, unless terminated earlier as provided in Section 10.2.
10.2 Termination Events. This Agreement shall be terminated upon the delivery of a termination notice under Section 2.6 of the PPA. In addition, this Agreement may, by notice given prior to the Closing, be terminated:
(a) by e ither Buyer or Seller upon (i) a failure by the other Party to perform any of its duties or obligations under this Agreement when and as due which is not cured to the reasonable satisfaction of the Party obligated to perform such duties or obligations under this Agreement by the earlie r of the Closing Date or the date that is thirty (30) days after receipt of written notice thereof from the other Party, or (ii) an inaccuracy in any material respect of any representation, warranty, certification or other statement made by the other Party herein or in any other document contemplated hereby or in any Operative Document at any time given by a Party in writing pursuant hereto or thereto, or in connection herewith or therewith at the time made or deemed to be made;
(b) ei
ther (i) by Buyer if satisfaction of any of the conditions in Article VII has become impossible due to an event outside of Buyer’s reasonable control despite the exercise of due care and diligence (and in no event through the failure of Buyer to comply with its obligations under this Agreement) and Buyer has not previously waived such condition; or (ii) by Seller if satisfaction of any of the conditions in Article VIII has become impossible due to an event outside of Seller’s reasonable control despite the exercise of ATTACHMENT 3
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30 due care and diligence (and in no event through the failure of Seller to comply with its obligations under this Agreement) and Seller has not previously waived such condition; (c) (i) by either Party, if a Default of the other Party shall have occurred under the PPA or any Ancillary Document or the PPA or any Ancillary Document is terminated or shall fail to be in full force and effect prior to or concurrently with this Agreement, or (ii) by either Party, if the other Party or such other Party’s Affiliates shall contest the validity or enforceability of the PPA or any provision thereof in writing or deny that it has any further liability thereunder; or
(d) by mutual consent of Buyer and Seller.
10.3 Effect of Termination.
In the event of termination of this Agreement:
(a) To the extent reasonably available, upon a request from the other Party, each Party will redeliver all documents, work papers and other material of the other Party relating to the transactions contemplated hereby or by the other Operative Documents to the Party furnishing the same, whether so obtained before or after the execution hereof, and each Party will withdraw any applications for approval of transfer of Permits and surrender any Permits already transferred, as necessary; (b) The provisions of Article
XII shall survive in full force and effect;
(c) Neither Party shall have any liability or further obligation to the other Party, except as stated in subsections (a) and (b) of this Section 10.3, and except for any breach of representation, warranty or obligation arising under this Agreement or otherwise occurring prior to the proper termination of this Agreement. The foregoing provisions shall not limit or restrict the availability of specific performance or other injunctive relief to the extent that specific performance or such other relief would otherwise be available to a Party hereunder; and
(d) The PPA shall remain in full force and effect in accordance with its terms.
ART
ICLE XI
LIMITATION OF LIABILITY
11.1 Survival of Representations, Etc.. The representations, warranties, covenants and agreements of Seller and Buyer contained herein shall survive the consummation of the transactions contemplated hereby and the Closing Date, without regard to any investigation made by either of the Parties or, subject to Section 11.2, the fact that the damaged Party had knowledge of any misrepresentation or breach of warranty or covenant at the time of Closing or at any other time, until the e xpiration of two (2) years after the Closing Date (a) other than with respect to the covenants set forth in Section 2.11 and Section 9.1 and the representation and warranties set forth in Sections 3.1 , 3.2, 3.5, 3.6 and 3.9 , which shall survive for the applicable statute of limitations , and (b) Section 3.7, which shall survive upon expiration of five (5) years after the Closing Date (at which time, in each case, the other Party shall be precluded from making a claim or commencing a cause of action with respect thereto) . The termination
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31 of any representation and warranty provided herein shall not affect the rights of a Party in respect of a Claim made by such Party with specificity and in a writing received by the other Party prior to the expiration of the applicable survival period provided herein.
11.2 Limitation of Liability.
(a) Notwithstanding anything contained in this Agreement to the contrary:
(i) In no ev ent shall Seller’s aggregate liability to Buyer (1) for breach of Seller’s representations and warranties under Article 3 of this Agreement exceed twenty percent (20%) of the Final Purchase Price, and (2) otherwise under this Agreement or any Operative Document to Buyer under any theory of liability (whether contract, tort, strict liability or otherwise) exceed one hundred percent (100%) of the Final Purchase Price; provided that the foregoing limitation s shall not apply (A) to any liability arising under or caused in whole or in part by Seller’s fraud, (B) to the extent based upon a breach of any covenant made in Section 2.11 and Section 9.1 or any representation or warranty made in Section 3.1, 3.2, 3.4, 3.6,
3.9, 3.13 or 3.14, (C) to Excluded Liabilities or (D ) to bodily injury or property damage arising from activities conducted on any Premises on or prior to the Closing or from Hazardous Substances that were present at or on the Premises on or prior to the Closing and that were released by Seller or any other Person for whose conduct Seller is held responsible at any time on or prior to the Closing. (ii) in no eve
nt shall Seller have any liability under this Agreement or any Operative Document following the Closing for any event, circumstance or condition arising from Facility Assets to the extent that, prior to the Purchase Option Exercise Deadline, Buyer (A ) had actual knowledge of such event, circumstance or condition, (B) such event, circumstance or condition was disclosed to Buyer in a Disclosure Schedule , or (C) such event has been included in the determination of Fair Market Value.
(iii) payments by a Party in respect of any claim for indemnification pur
suant to Section 12.1 shall be limited to the amount of any liability or damage that remains after deducting therefrom any insurance proceeds and any indemnity, contribution or other similar payment received by the Party being indemnified in respect of any such claim.
(iv) Each Party being indemnified under this Agreement shall take all r
easonable steps to mitigate any loss upon becoming aware of any event or circumstance that would be reasonably expected to, or does, give rise thereto, including incurring costs only to the minimum extent necessary to remedy the breach that gives rise to such loss.
ARTICLE XII
GENERAL PROVISIONS
12.1 Indemnification.
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32 (a) Seller undertakes and agrees to indemnify and hold harmless Buyer, and its officers, agents, employees, attorneys, consultants, advisors, and representatives (collectively, “Indemnitees”) from and against any and all charges, damages, demands, judgments, civil fines and penalties, or losses of any kind or nature whatsoever, arising by reason of any (i) material breach of this Agreement or any of the Operative Documents by Seller, (ii) failure of any representation, warranty or guarantee made by Seller herein or in any of the other Operative Documents that is qualified by materiality to have been true when made, (iii) failure of any representation, warranty or guarantee made by Seller herein or in any of the other Operative Documents that is not so qualified by materiality to have been true in all material respects when made, or (iv) Excluded Liabilities. (b) B
uyer shall promptly notify Seller of any action, suit, proceeding, demand, or breach (a “Claim”) with respect to which Buyer claims indemnification; provided, however, that failure of Buyer to give such notice shall not relieve Seller of its obligations under this Section 12.1, unless such failure or delay actually and demonstrably prejudices Seller’s ability to effectively defend such Claim. If such Claim relates to any action, suit, proceeding, or demand instituted by a third party against the Indemnite es (a “Third Party Claim”), Buyer shall notify Seller thereof, and upon receipt of notice from Buyer, Seller shall be entitled to participate in the defense of such Third Party Claim, and if and only if each of the conditions set forth in clauses (i) through (iii) below is satisfied, Seller shall be entitled to assume the defense of such Third Party Claim, and in the case of such an assumption, Seller shall have the authority to negotiate, compromise, and settle such Third Party Claim ( provided that Seller shall not settle any such Third Party Claim without consent of Buyer, not to be unreasonably withheld or delayed, unless such settlement (x) includes a full and complete release of Buyer and Indemnitees by the claimant, (y) does not include an admission of guilt or responsibility of Buyer, and (z) does not include any non-monetary conditions that would be binding on Buyer):
(i) S
eller has selected counsel to handle the defense that is reasonably acceptable to Buyer;
(ii) Buyer does not give Seller written notice, which shall be given within sixty (60) days of Buyer’s notice to Seller of the Claim, that, in the exercise of its reasonable discretion, matters of policy or a conflict of interest make separate representation by Buyer’s own counsel advisable; and
(iii) Seller establishes to the reasonable satisfaction of Buyer that Seller has (and will continue to have) adequate financial resources to satisfy and discharge such Claim.
(c) Buyer shall retain the right to participate in the defense of any Third Party Claim, the defense of which has been assumed by Seller pursuant hereto, but Buyer shall bear and shall be solely responsible for its own costs and expenses in connection with such participation, unless such Claim is determined by a court of competent jurisdiction against Seller, in which case, Seller shall be solely responsible for Buyer’s reasonable and documented costs and expenses in connection with Buyer’s participation. In t he event ATTACHMENT 3
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33 Seller shall fail or not be entitled to assume the defense of any Third Party Claim, then Buyer shall control the defense and settlement thereof, and Seller shall be responsible for (i) the reasonable and documented costs and expenses of a single counsel selected by Buyer, and (ii) any judgment on or settlement of such Third Party Claim entered into by Buyer with the consent of Seller (not to be unreasonably withheld or delayed), which shall be conclusive and binding on Seller for all purposes.
(d) A
ny liability for indemnification under this Section 12.1 shall be determined without duplication of recovery by Indemnitees. (e) No individual Representative of either Party shall be personally liable for a
ny losses under the provisions contained in this Section 12.1. Nothing herein shall relieve either Party of any liability to make any payment expressly required to be made by such Party pursuant to this Agreement.
(f) Subject to Section
12.2, Section 12.12 and except in the case of fraud,
willful misconduct or negligence Buyer acknowledges and agree s that its sole and exclusive remedy with respect to any and all Claims for any breach of any representation, warranty, covenant, agreement or obligation set forth herein or otherwise relating to the subject matter of this Agreement from and after the Closing Date, shall be pursuant to the indemnification provisions set forth in this Section 12.1 and in Section 12.2. Nothing in this Section 12.1(f) shall limit any Person’s right to seek and obtain any specific performance of the obligations set forth in this Agreement or equitable relief to which any Person shall be entitled pursuant to Section 12.12.
(g) Any payment pursuant to this Article XII shall be treated by the Parties hereto as an adjustment to the purchase consideration for the Facility Assets by the Parties for income Tax purposes, unless otherwise required by Law.
12.2 Intellectual Property Indemnification . S
eller, at its own expense, undertakes and
agrees to defend, indemnify and hold harmless Buyer and the Indemnitees from and against all charges, damages, civil fines and penalties, or losses of any kind or nature whatsoever arising out of any Third Party Claim of infringement, actual or alleged, direct or contributory, caused by the use of any Intellectual Property Assets in connection with the operation and maintenance of the Facility in accordance with industry standards for its intended use as designed; provided, however, that this Section 12.2 will not apply to the extent the underlying actual or alleged infringement arises from (a) the Buyer’s material breach of this Agreement or (b) the combination of the Intellectual Property Assets with any materials not used by Seller immediately prior to the Closing Date, except that Seller’s obligations under this Section will apply to any Third Party Claims arising from the combination of the Intellectual Property Assets with any other materials or products where such combination is described in or contemplated by the applicable written specifications, documentation, usage manuals or other instructions or information guides.
12.3 Expenses. E
xcept as otherwise expressly provided in this Agreement, each Party will bear its respective expenses incurred in connection with the preparation, execution, and performance of this Agreement and the transactions contemplated by this Agreement, including all fees and expenses of agents, representatives, counsel, and accountants. Both Parties agree that, ATTACHMENT 3
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34 in any action to enforce the terms of this Agreement, each Party shall be responsible for its own attorney fees and costs. Each of the Parties was represented by its respective legal counsel during the negotiation and execution of this Agreement.
12.4 Ambiguity. T
he Parties acknowledge that this Agreement was jointly prepared by them, by and through their respective legal counsel, and any uncertainty or ambiguity existing herein shall not be interpreted against either Party on the basis that the Party drafted the language, but otherwise shall be interpreted in accordance with Exhibit 1.1 and according to the application of the rules on interpretation of contracts.
12.5 Voluntary Execution. The Parties acknowledge that they have read and fully understand the content and effect of this Agreement and that the provisions of this Agreement have been reviewed and approved by their respective counsel. The Parties further acknowledge that they have executed this Agreement voluntarily, subject only to the advice of their own counsel, and do not rely on any promise, inducement, representation or warranty that is not expressly stated herein.
12.6 Notices. A
ll notices, requests, demands, consents, waivers, and other communications which are required or may be given under this Agreement shall be in writing and shall be deemed to have been duly given when given in the manner set forth in Section 14.2 of the PPA.
12.7 Entire Agreement; Amendments.
(a) This Agreement (including all Schedules and Exhibits) and the PPA contain the entire understanding concerning the subject matter herein and supersede and replace any prior negotiations, discussions or agreements between the Parties concerning that subject matter, whether written or oral, except as expressly provided for herein. This is a fully integrated document. Each Party acknowledges that no other party, representative or agent has made any promise, representation or warranty, express or implied, that is not expressly contained in this Agreement or the other documents of even date herewith between the Parties that induced the other Party to sign this document. (b) This Agreement may be amended or modified only by an instrument in writing signed by both Parties.
12.8 Further Assurances. The Parties agree to furnish upon request to the other Party such further information, to execute and deliver to the other Party such other documents, and to do such other acts and things, all as the other Party may reasonably request for the purpose of carrying out the intent of this Agreement and the other Operative Documents.
12.9 Waiver. Th e failure of either Party to enforce or insist upon compliance with or strict performance of any of the terms or conditions hereof, or to take advantage of any of its rights hereunder, shall not constitute a waiver or relinquishment of any such terms, conditions or rights, but the same shall be and remain at all times in full force and effect.
12.10 Severability. I
n the event all or part of any of the terms, covenants or conditions of this Agreement, or the application of any such terms, covenants or conditions, shall be held
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35 invalid, illegal or unenforceable by any court having jurisdiction, all other terms, covenants and conditions of this Agreement and their application not adversely affected thereby shall remain in force and effect; provided, however, that the remaining valid and enforceable provisions materially retain the essence of the Parties’ original bargain.
12.11 Consequential or Punitive Damages. Neither Party shall be liable to the other Party for special, incidental, exemplary, indirect, punitive or consequential damages arising out of a Party’s performance or non -performance under this Agreement, whether based on or claimed under contract, tort (including such Party’s own negligence) or any other theory at law or in equity, including damages for lost revenues, income or profits.
12.12 Equitable Remedies. T
he Parties acknowledge that money damages may not be
an adequate remedy for violations of this Agreement by either Party and that irreparable damage would occur if any provision of this Agreement were not performed in accordance with the terms hereof and that the Parties shall be entitled to specific performance of the terms hereof, in addition to any other remedy to which they are entitled at law or equity. The Parties hereby waive any objection to specific performance or injunctive or other equitable relief.
12.13 Time of Essence. With regard to all dates and time periods set forth or referred to in this Agreement, time is of the essence.
12.14 Governing Law. This Agreement shall be interpreted, governed by, and construed under the laws of the State of California without consideration of conflicts of law principles. The venue for any litigation relating to this Agreement shall be in Los Angeles, California and each Party hereby waives any objections on the basis of forum non-conveniens or otherwise with respect to the venue of any such action being heard in Los Angeles, California.
12.15 Execution in Counterparts. This Agreement may be executed in counterparts and upon execution by each signatory, each executed counterpart shall have the same force and effect as an original instrument and as if all signatories had signed the same instrument. Any signature page of this Agreement may be detached from any counterpart of this Agreement without impairing the legal effect of any signature thereon, and may be attached to another counterpart of this Agreement identical in form hereto by having attached to it one or more signature pages.
12.16 Relationship of the Parties . T
his Agreement shall not be interpreted to create an
association, joint venture or partnership between the Parties or to impose any partnership obligation or liability upon either such Party. Neither Party shall have any right, power or authority to enter into any agreement or undertaking for, or act on behalf of, or to act as an agent or representative of, the other Party.
12.17 Third Party Beneficiaries . Exc
ept as expressly provided herein, this Agreement
shall not be construed to create rights in, or to grant remedies to, any third party as a beneficiary of this Agreement or any duty, obligation or undertaking established herein.
12.18 Provisions of PPA. The provisions of Section 14.3 (“Dispute Resolution”), Section 14.6 (“Assignment of Agreement; Change in Control ”), Section 14.17(a) (“Indemnification”), Section 14.19 (“Confidentiality”) and Section 14.20 (“Mobile Sierra”) of the PPA are incorporated herein in their entirety, mutatis mutandis.
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36 12.19 Exhibits and Schedules. The Exhibits and Schedules referred to in and attached to this Agreement are incorporated herein in full by this reference. To the extent that the terms and conditions of an Exhibit or Schedule conflict with the terms and conditions of the main body of this Agreement, the terms and conditions of the main body of this Agreement shall control.
12.20 Relationship with PPA . Except as otherwise specifically stated herein, this Agreement is independent of the PPA and, as a separate agreement, shall survive the amendment, modification, or termination of the PPA, except as otherwise provided herein. In the event of a conflict between this Agreement and the PPA, this Agreement shall control. [Remainder of Page Intentionally Left Blank]
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Signature Page of Milford Solar Phase II Option Agreement DB2/ 48370541.18
IN WITNESS WHEREOF, the Parties have executed and delivered this Agreement as of the date first written above.
MILFORD SOLAR PHASE II, LLC, a Delaware limited liability company
By: [_________________]
SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY
Date:
By:
President
Attest:
Assistant Secretary
Approved as to legal form and content:
By:
Christine Godinez
General Counsel
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Exhibit 1.1 – Page 1
EXHIBIT 1.1
to
OPTION AGREEMENT
dated as of [__________]
by and between
MILFORD SOLAR PHASE II, LLC
and
SCPPA
DEFINITIONS
“AAA ” shall have the meaning ascribed to it in Exhibit 2.4. “Acceptance Notice” shall have the meaning ascribed to it in Section 2.4(c). “Affected Portion” shall have the meaning ascribed to it in Section 9.3(a). “Agency Action” means any notice of violation, complaint, order, consent order, consent agreement, assessment of a fine or penalty or other similar demand for action brought by a Governmental Authority having the requisite authority and jurisdiction to bring such action. “Agreement” means this Option Agreement.
“A pplicable Diligence Period ” shall have the meaning ascribed to it in Section 5.1. “Asset Assignment Documents” shall have the meaning ascribed to it in Section 7.4(d). “Assumed Contracts” means all of Seller’s rights under the Contracts to which Seller is a party or to which the Facility is subject, as set forth in Schedule 3.3 and Schedule 3.12(a) (excluding any Contract identified with an asterisk (*)). “Assumed Liabilities” s hall have the meaning ascribed to it in Section 2.7. “Bill of Sale” means the document described in Section 7.4(c). “Books and Records ” means, to the extent relating to any period of time prior to the Closing, (a) all books, records, purchasing records, lists, files and papers in the possession or control of Seller or its Affiliates pertaining to the Facility Assets and the Facility, and all records and lists concerning suppliers to and personnel of the Facility or Taxes with respect thereto; (b) all ledgers, and reports, plans, drawings, maps, photographs, technical manuals and operating records of every kind maintained by Seller with respect to the Facility, whether in hard copy or electronic format; and (c) all software used by Seller primarily in connection with the operation of the Facility, in each case to the extent transferable; provided that Books and Records may include inextricable information or data unrelated to the Facility, in which case such information or data may be redacted; provided, further that Books and Records shall not include income Tax Returns and associated workpapers and other documentation.
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Exhibit 1.1 – Page 2
“Business” means the business of owning and operating the Facility. “Buyer” shall have the meaning ascribed to it in the first paragraph of this Agreement. “CEQA” means the California Environmental Quality Act, as amended from times to time, and any successor statute.
“CERCLA” means the federal Comprehensive Environmental Response, Compensation and Liability Act.
“C hange Notice ” shall have the meaning ascribed to it in Section 5.7. “Claim” shall have the meaning ascribed to it in Section 12.1(b). “Closing” shall have the meaning ascribed to it in Section 2.6. “Closing Date” means the date on which the Closing is required to take place, as set forth in Section 2.6.
“Closing Permitted Encumbrances” means any Purchase Option Permitted Encumbrances other than those (i) that secure any form of Facility Debt, if any, or any other monetary obligation (other than Liens for Taxes not yet due and payable) and (ii) otherwise accepted by Buyer in writing.
“Consent” means any approval, consent, ratification, waiver, license, permit, certification, registration or other authorization (including any issued, granted, given, or otherwise made available by or under the authority of any Governmental Authority or pursuant to any Requirement of Law or Environmental Law).
“Contract” means any agreement, arrangement, lease, commitment, sales order, purchase order, indenture, mortgage, right, warrant or instrument, which provides for ownership or operation of the Facility or the Premises and is intended to, or purports to be, or is required to be binding and enforceable as contemplated under this Agreement, including the Land Documents, but excluding the Permits.
“D
iminished Amount” shall have the meaning ascribed to it in Section 9.3(a). “Disclosure Schedules” shall have the meaning ascribed to it in Section 2.3. “Environment” includes (a) the navigable waters, the contiguous zone, and the ocean waters of which the natural resources are under the exclusive management authority of the United States under the Magnuson-Stevens Fishery Conservation and Management Act and (b) any other surface water, ground water, drinking water supply, stream sediments, soil, land surface or subsurface strata, or ambient air, plant and animal life, and any other environmental medium or natural resource within the United States, or a foreign nation or under jurisdiction of the United States or a foreign nation.
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Exhibit 1.1 – Page 3
“Environmental Conditions” means the presence of Hazardous Substances which have been Released into the Environment or the presence of Hazardous Substances that could reasonably be expected to pose a threat of Release of Hazardous Substances into the Environment. “Excluded Assets ” means, notwithstanding any other provision of this Agreement, the following assets:
(a) cash, certificates of deposit and other bank deposits, treasury bills and other cash equivalents or other investments, on hand or in bank accounts, and all of Seller’s bank accounts, intercompany accounts and accounts receivable; (b) accounts and notes receivable relating to the period prior to the Closing Date, including amounts owing under the PPA;
(c) all of Seller’s rights under the PPA and any other Contract between Seller and Buyer or between Seller and any other third party for the sale of Facility Energy or Capacity Rights from the Facility;
(d) any Contract between Seller and its Affiliates, other than for on-going operations and maintenance of the Facility on commercially reasonable terms; (e) any Contract that is not an Assumed Contract;
(f) any Permit that is not a Transferred Permit;
(g) any computers not used primarily in connection with the Facility, any communication or data network systems not used primarily in connection with the Facility, and any other equipment not reasonably required to operate the Facility; (h) all refunds or credits, if any, of Taxes of, due to or from Seller and any refunds of Taxes with respect to the ownership or operation of the Facility Assets for any Pre-Closing Tax Period;
(i) any income Tax Returns of Seller;
(j) all corporate, financial and tax records of Seller that (i) do not relate in whole or in part to the Facility, (ii) relate solely to any Excluded Asset, (iii) relate solely to any Excluded Liability, (iv) relate to the organization, existence, capitalization or debt financing of Seller, (v) relate to information about Seller or its Affiliates pert aining to energy or project evaluation methodologies, economic evaluation of the Facility Assets (other than the Financial Statements) , energy or other economic pr edictive models, or (vi) do not constitute Books and Records;
(k) all rights to claims, refunds or adjustments against Buyer or any other third parties arising out of the period prior to the Closing Date; (l) Seller’s insurance policies; and
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Exhibit 1.1 – Page 4
(m) the assets identified as “Excluded Assets” in Schedule 3.5; provided that no asset that is required for the operation or maintenance of the Facility in the ordinary course and as intended may be listed on Schedule 3.5.
“Excluded Liabilities” shall have the meaning set forth in Section 2.8. “Facility Assets” means all of the following (excluding those assets constituting Excluded Assets):
(a) the Facility;
(b) the Premises;
(c) all Assumed Contracts (including all Real Property Contracts and the Interconnection Agreements);
(d) all Transferred Permits;
(e) all Fixtures and Equipment;
(f) all Books and Records;
(g) all Permits;
(h) all Intellectual Property Assets;
(i) all Supplies;
(j) all Transmission Assets;
(k) all Warranties; and
(l) all other assets, properties, rights, privileges, claims and Contracts (excluding any Contract identified with an asterisk(*)) of every kind and nature, real or personal, tangible or intangible, absolute or contingent, wherever located, owned or used (including those necessary to access to utilize any common use facilities), comprising the Facility.
“Fair Market Value ” shall mean, with respect to a particular time of calculation, the amount a willing buyer would pay for the Facility Assets and all rights, title and interests associated therewith, in an arm’s -length transaction, to a willing seller under no compulsion to sell on the applicable Closing Date, taking into account all relevant facts and circumstances relating to the Facility Assets, the Excluded Assets, the Assumed Liabilities, the Excluded Liabilities and the Disclosure Schedules, as of the Closing Date, and assuming (1) compliance with the terms and provisions of the PPA through the Agreement Term, including delivery of the generation for the then-remaining Agreement Term at the Contract Price or Replacement Energy, as applicable, and (2) that the Facility is able to generate revenue for the remaining Useful Life of the Facility Assets ATTACHMENT 3
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Exhibit 1.1 – Page 5
at a price per MWh equal to the then fair market price for Energy, Capacity Rights, Environmental Attributes and other products generated by the Facility (except in the case Buyer is exercising its Project Purchase Option as a result of a Default of Seller under the PPA, in which case the Energy, Capacity Rights, Environmental Attributes and other products generated by the Facility will be assumed to be sold at their fair market price as of the Closi ng Date for the remaining Useful Life of the Facility Assets), as determined in accordance with Exhibit 2.4. “Final Purchase Price” shall have the meaning ascribed to it in Exhibit 2.4. “Financial Statements” shall have the meaning ascribed to it in Section 5.3. “Fixtures and Equipment” means the fixtures, equipment (including solar panels, control rooms and other auxiliaries, furniture, office equipment, communications equipment, fixtures, furnishings, machinery, vehicles, computers, air conditioning ventilation and heating equipment and control stations), but excluding Supplies and other tangible personal property located on the Premises and owned or used by Seller in connection with the operation of the Facility. “FPA” means the Federal Power Act.
“Hazardous Substances ” means any substance, material or waste that is regulated by or forms the basis of liability now or hereafter under, any Hazardous Substances Law or Environmental Law, including any material, substance or waste that is (a) defined as a “solid waste,” “hazardous waste,” “hazardous material,” “hazardous substance,” “extremely hazardous waste,” “restricted hazardous waste,” “pollutant,” “contaminant,” “hazardous constituent,” “special waste,” “toxic substance” or other similar term or phrase under any Environmental Law, (b) petroleum or any fraction or by- product thereof, asbestos, polychlorinated biphenyls (PCB’s), or any radioactive substance. “Hazardous Substances Law” means any current or future treaty, constitution, law, statute, ordinance, rule, Order, decree, regulation or other directive which is legally binding and has been enacted, issued or promulgated by any Governmental Authority that imposes liability for or standards of conduct or compliance concerning the generation, distribution, use, treatment, storage, disposal, cleanup, transport or handling of Hazardous Substances, including, the Federal Water Pollution Control Act, the Resource Conservation and Recovery Act of 1976, CERCLA, the Toxic Substances Control Act, the Oil Pollution Act, the Safe Drinking Water Act, and includes the Occupational Safety and Health Act of 1970, to the extent that it relates to the handling of and exposure to hazardous or toxic materials or similar substances. “I
ndemnitees ” shall have the meaning ascribed to it in Section 12.1(a). “Intellectual Property Assets” shall have the meaning ascribed to in in Section 3.13(a). “Interconnection Agreements” shall have the meaning ascribed to it in the PPA. “Investment Company Act” means the Investment Company Act of 1940.
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Exhibit 1.1 – Page 6
“Knowledge” means the actual, current knowledge after due inquiry of any officer or any other agent, employee or representative of Seller responsible for the management of the operation or maintenance of the Facility, of any fact, circumstance or condition. “Land Documents” means the documents listed in Appendix H of the PPA, as may be updated.
“M aterial Adverse Effect ” means a material adverse change (or changes which, taken together, result in a material adverse change) in, or effect on, Seller, the Facility, the business, condition (financial or otherwise) or results of operations of the Business, or any of the Facility Assets; provided, however, that “Material Adverse Effect” shall not include any event, occurrence, fact, condition or change arising out of or attributable to: (i) general economic, political or regulatory conditions; (ii) conditions generally affecting the electric generating, transmission or distribution industries; (iii) changes in the national, regional, state or local renewable energy industry or wholesale or retail markets for electric power, power generation, power transmission or other fuel supply or transportation or related products and operations, including those due to actions by competitors and regulators; (iv) changes in the markets for or costs for electricity, generally; (v) new generating facilities and their effect on pricing or transmission; (vi) labor strikes, requests for representation, organizing campaigns, work stoppages, slowdowns or other labor disputes; (vii) epidemics, pandemics or disease outbreaks (including COVID -19) and any material worsening of any epidemic, pandemic or disease outbreak threatened or existing as of the Closing Date, or nay shutdown or material limitation of federal, state or local government services, declaration of martial law, quarantine or similar directive, guidance, policy or other similar action by any Governmental Authority in connection with any epidemic, pa ndemic or disease outbreak; (viii) any changes in financial, banking or securities markets in general, including any disruption thereof and any decline in the price of any security or any market index; (ix) acts of war (whether or not declared), armed hostilities or terrorism, or the escalation or worsening thereof; (x) any action required or expressly permitted by this Agreement or any action taken (or omitted to be taken) with the written consent of or at the written request of the Buyer; (xi) any changes in applicable Requirements of Law or accounting rules (including GAAP) or the interpretation or enforcement thereof; (xii) the announcement, pendency or completion of the transactions contemplated by this Agreement; (xiii) any breach, violation or non- performance of any provision of this Agreement by Buyer; (xiv) changes in or effects on the Facility A ssets which are cured (including by the payment of money) by Seller; (xv) effects of weather, meteorological conditions or events or other natural disasters or acts of God; or (xvi) any failure by the Facility to meet any internal or published projections, forecasts or revenue or earnings predictions (provided that the underlying causes of such failures (subject to the other provisions of this definition) shall not be excluded); provided further, that the exclusions provided in clauses (i) -(ix), (xi) and (xv) shall not apply to the extent the Facility is disproportionately adversely affected by any such event, occurrence, fact, condition or change relative to other similarly situated participants in the industries in which the Facility generally operates .
“M
aterial Casualty Event” means any physical damage or destruction to all or a portion of the Facility that would materially and adversely affect the capacity or output of the Facility, or Buyer’s ownership or operation of the Facility Assets as of and following the Closing.
ATTACHMENT 3
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“National Priorities List” means the list of national priorities among the known releases or threatened releases of hazardous substances, pollutants, or contaminants throughout the United States and its territories and that guides the Environmental Protection agency in determining which sites warrant further investigation.
“Operations Period” means the six (6) month period of time prior to the delivery by Buyer of the Purchase Option Exercise Notice.
“Operative Documents” means each of the agreements, instruments, certificates and other documents executed and delivered by a Party under this Agreement in connection with the performance and consummation of the transaction contemplated by this Agreement, but excluding the PPA and Ancillary Documents as defined in the PPA.
“Order” means any final, non- appealable award, decision, injunction, judgment, order, ruling, subpoena, or verdict entered, issued, made, or rendered by any court, administrative agency, or other Governmental Authority, or by any arbitrator.
“Organizational Documents ” means as applicable, (a) the articles or certificate of incorporation and the bylaws of a corporation; (b) any charter or similar document adopted or filed in connection with the creation, formation, or organization of a Person; (c) the certificate of organization and the operating agreement of a limited liability company; and (d) any amendment to any of the foregoing.
“Party” and “Parties ” shall have the meaning ascribed to it in the preamble to this Agreement.
“Post-Closing Tax Period” means any taxable period, or portion thereof for any Straddle Period, that does not constitute a Pre -Closing Tax Period. “PPA” shall have the meaning ascribed to it in the recitals to this Agreement. “Pre-Closing Tax Period ” means any taxable period ending on or before the Closing Date and the portion of any Straddle Period ending on the Closing Date. “Premises” means the fee, leasehold, easement and other Real Property Interests held by Seller in connection with the ownership or operation of the Facility, together with all buildings, improvements, structures and fixtures thereon owned by Seller, and all easements, privileges, rights -of-way, lands underlying any adjacent streets or roads, appurtenan ces, licenses and other rights owned by Seller pertaining to or accruing to the benefit of such property.
“Proceeding” means any action, order, writ, judgment or decree outstanding, arbitration, audit, hearing, investigation, claim, litigation, or suit (whether civil, criminal, regulatory, administrative, investigative, or informal) commenced, brought, conducted, or heard by or before, or otherwise involving, any Person.
“P
roject Purchase Option ” shall have the meaning ascribed to it in Section 2.1.
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“Provided Materials” shall have the meaning ascribed to it in Section 5.1. “Purchase Option Exercise Deadline ” means a period of one hundred eighty (180) days after the date of delivery of the Disclosure Schedules for the applicable Purchase Option Opportunity.
“P urchase Option Exercise Notice ” shall have the meaning ascribed to it in Section 2.4(a).
“Purchase Option Opportunity” shall have the meaning ascribed to it in Section 2.2. “Purchase Option Permitted Encumbrances ” means (a) any Lien approved by Buyer in a writing ; (b) Liens for Taxes not yet due and payable or for Taxes being contested in good faith by appropriate proceedings, so long as either (i) such proceedings do not involve a substantial risk of the sale, forfeiture, loss or restriction on the use of the Facility or any part thereof, or (ii) a bond or other security reasonably acceptable to Buyer that has been posted or provided in such manner and amount as to assure Buyer that any Taxes determined to be due will be promptly paid in full when such contest is determined; (c) zoning, building codes and other land use laws regulating the use or occupancy of the Premises or the activities conducted thereon which are imposed by any Governmental Authority having jurisdiction over the Premises; (d) suppliers’, vendors’, mechanics’, workman’s, repairman’s, employees’ or other like Liens arising in the ordinary course of business for work or service performed, or materials furnishe d in connection with, the Facility for amounts the payment of which is either not yet delinquent or is being contested in good faith by appropriate proceedings, so long as either (i) such proceedings do not involve a substantial risk of the sale, forfeitur e, loss or restriction on use of the Facility or any part thereof, or (ii) a bond or other security reasonably acceptable to Buyer has been posted or provided in such manner and amount as to assure Buyer that any amounts determined to be due will be prompt ly paid in full when such contest is determined; (e) easements, rights of way, use rights, exceptions, encroachments, reservations, restrictions, conditions or limitations which do not materially impair the Premises affected thereby for the purpose for whi ch title was acquired or materially interfere with or impair the operation of the Facility Assets; (f) Liens in favor of Facility Lenders ; (g) the Real Property Agreements, or memoranda of such Real Property Agreements , or Liens contemplated the Real Property Agreements ; and (h) Liens created or reserved pursuant to or contemplated by the PPA (including Section 14.6 thereof) , this Agreement (including any Liens imposed by the memorandum of this Agreement) or any Performance Security under the PPA. “P
urchase Option Tentative Exercise Notice” shall have the meaning ascribed to it in Section 2.3.
“Qualified Appraiser ” means a nationally recognized, appropriately licensed, certified general real estate appraiser, which shall (a) be qualified to appraise independent electric generating businesses, (b) have been engaged in the appraisal or business valuation and consulting business for a period of not less than five (5) years, (c) be qualified and have expertise at calculating forward projections of power curves and valuations, and (d) not be associated with Seller, Buyer or any of their respective Affiliates.
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“Real Property Contracts” shall have the meaning ascribed to it in Section 3.3(b). “Real Property Interests” shall have the meaning ascribed to it in Section 3.3(b). “Release” means any physical release, spill, emission, leaking, pumping, injection, deposit, disposal, discharge, dispersal, dumping, leaching or migration of Hazardous Substances in the Environment, including the movement of Hazardous Substances through or in the Environment, including the Premises.
“R eplacement Security” shall have the meaning ascribed to it in Section 8.4(d)(i). “Representative” means, with respect to a particular Person, any director, officer, employee, agent, consultant, advisor, or other representative of such Person, including legal counsel, accountants, and financial advisors,
“Sc
hedule Delivery Date” shall have the meaning ascribed to it in Section 2.3. “Seller” shall have the meaning ascribed to it in the first paragraph of this Agreement. “S eller Disclosure Schedules ” shall have the meaning ascribed to it in Section 2.3. “Seller Guarantor” means an entity to be mutually agreed by the Parties. “S eller Guaranty ” means the guaranty to be executed by Seller Guarantor in the form attached hereto as Exhibit 7.4(i).
“Straddle Period” means any taxable period that includes but does not end on the Closing Date. For all purposes of this Agreement, with respect to Taxes for any Straddle Period, the portion of such Taxes related to the portion of the Tax period ending on and including the Closing Date shall, (i) in the case of any property or ad valorem Taxes, equal the product of (A) the amount of such Tax for the entire Straddle Period and (B) a fraction the numerator of which is the total number of days from the beginning of the Straddle Period through and including the Closing Date and the denominator of which is the total number of days in the entire Straddle Period and (ii) in the case of all other Taxes other than Transfer Taxes (such as franchise Taxes, Taxes that are based upon or related to income or receipts, based upon production or occupancy or imposed in connection with any sale or other transfer or assignment of property (real or personal, tangible or intangible) be computed on a “closing-of-the-books” basis as though the relevant Straddle Period ended at the end of the Closing Date. “Supplies” means those supplies, inventories and spare parts on the Premises or otherwise dedicated to the Facility as of the Closing Date.
“Support Obligations ” means any letters of credit, cash collateral, parent company guaranties, surety bonds and other similar credit support. “T ax Claim ” shall have the meaning ascribed to it in Section 9.1(e).
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“Tax Return” means any return, report, information return or other document (including any related or supporting information) required to be supplied to any authority with respect to Taxes, and including any amendment thereof or thereto.
“T hird Party Claim” shall have the meaning ascribed to it in Section 12.1(b). “Third Party Property Interests” shall have the meaning ascribed to it in Section 3.3(b). “Transfer Taxes” shall have the meaning ascribed to it in Section 2.11. “Transferred Permit” means any Permit transferred to Buyer at Closing, as set forth in Schedule 3.15 (excluding any Permit identified with an asterisk (*)). “Transmission Assets” means the fixtures, equipment (including transformers and switchgear) and other tangible property interests owned by Seller and required for the interconnection and transmission of Energy to the Point of Delivery. “U
pdated Schedule Delivery Date” shall have the meaning ascribed to it in Section 2.9(a). “Useful Life of the Facility Assets” shall mean no less than thirty-five (35) years from the Commercial Operation Date.
“Warranties” means all rights of Seller under or pursuant to all third- party warranties, representations and guarantees made by manufacturers and suppliers in connection with the Facility Assets or services furnished to Seller pertaining to the Facility or affecting the Facility Assets.
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EXHIBIT 2.4
to
OPTION AGREEMENT
dated as of [__________]
by and between
MILFORD SOLAR PHASE II, LLC
and
SCPPA
PURCHASE PRICE
The “Fair Market Value, ” as defined for purposes of this Agreement in Exhibit 1.1, shall be determined in accordance with this Exhibit 2.4.
Within sixty ( 60) days following the delivery of the Disclosure Schedules, the Parties shall meet and attempt to agree on the Fair Market Value based on the Disclosure Schedules. If the Parties are unable to agree on the Fair Market Value within six ty (60) days after the delivery of the Disclosure Schedules, then each of Seller and Buyer shall , within fourteen (14) additional days, select an independent recognized appraiser who will meet the requirements for the Qualified Appraiser. Within forty- five (45) days following the deadline for the Parties to select Qualified Appraisers, e ach such independent recognized appraiser shall determine the Fair Market Value. Upon completion of the two appraisals, each of Buyer and Seller shall deliver the results to the other Party. If the Fair Market Value appraisals of the two independent appraisers vary by less than ten percent (10%), the Fair Market Value determination shall be the simple average of the Fair Market Value determinations of the two appraisals. If the variance is greater than ten percent (10%), the two independent appraisers shall either select a third independent appraiser, who meets the requirements for a Qualified Appraiser, or, if the two independent appraisers fail to agree on a third independent app raiser within fourteen (14) days following delivery of the second appraisal, a third independent appraiser shall be appointed by the American Arbitration Association (“ AAA”) upon application by either Party in accordance with the applicable rules and regul ations of the AAA for such selection. The third independent appraiser shall select one of the appraisals generated by the two independent appraisers within thirty (30) days of retention and such appraisal shall be the Fair Market Value determination . If the third independent appraiser selects the appraisal originally prepared by Buyer’s independent appraiser, Seller shall pay the fees and costs of the third independent appraiser. If the third independent appraiser selects the appraisal originally pr epared by Seller’s independent appraiser, Buyer shall pay the fees of the third independent appraiser.
T
he Fair Market Value shall be adjusted from time to time by the amount (as determined by the Parties in good faith, or absent their mutual agreement, by the Qualified Appraiser or the independent appraisers using the same methodology set forth in paragraph 2 above) necessary to compensate Buyer for (i) any differences between the Seller Disclosure Schedules originally delivered to Buyer on the Schedule Delivery Date and any updated Seller Disclosure Schedules delivered to Buyer from time to time prior to C losing, (ii) any item or omission in a Seller Disclosure Schedule that is not resolved to the reasonable satisfaction of Buyer, (iii) any differences in Facility Assets, Excluded Assets, Assumed Liabilities or ATTACHMENT 3
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Excluded Liabilities from the Schedule Delivery Date to the Closing, (iv) the inability of Seller to satisfy any of the Buyer Closing Conditions set forth in Article VII, (v) a Material Casualty Event or any real or threatened condemnation or eminent domain proceeding as described under Section 9.3(a) of the Agreement, but solely to the extent an adjustment to Fair Market Value is required under such Section 9.3, or (vi) any issue that requires the delivery of a Change Notice.
The “Final Purchase Price ” t o be paid by Buyer at the Closing shall be t he Fair Market Value determined in accordance with this Exhibit 2.4 , as such may be adjusted hereunder .
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EXHIBIT 2.5
to
OPTION AGREEMENT
dated as of [__________]
by and between
MILFORD SOLAR PHASE II, LLC
and
SCPPA
FORM OF MEMORANDUM OF OPTION
AFTER RECORDING, RETURN TO:
Attn: ___________________
MEMORANDUM OF OPTION AGREEMENT
THIS MEMORANDUM OF OPTION AGREEMENT (this “Memorandum”) is dated as of _________________, 202_ (the “Effective Date”), by and between MILFORD SOLAR PHASE II, LLC, a Delaware limited liability company (the “ Seller”), and SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY, a joint powers agency and a public entity organized under the laws of the State of California and created under the provisions of the California Joint Exercise of Powers Act (California Government Section 6500 et seq.) (together with its successors and assigns, “Buyer”).
RECITALS
A. Buyer and Seller entered into that certain Option Agreement dated of even date herewith (the “Agreement”), which by its terms grants to Buyer an option to purchase the Facility Assets, including the Premises as legally described on Exhibit A attached hereto, all as more particularly described in the Agreement and incorporated herein by this reference.
B. B uyer and Seller have executed and acknowledged this Memorandum for the purpose of providing constructive notice of the Agreement.
C. Capitalized terms used but not otherwise defined in this Memorandum shall have the meanings given to such terms in the Agreement.
NOW, THEREFORE, in consideration of the mutual covenants contained herein and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, Seller and Buyer provide record notice of the following:
(a) 1. G rant of Option and Option Term . Pursuant to the Agreement, Seller has granted to Buyer an exclusive, irrevocable option to purchase the Facility Assets (the “Project Purchase Option ”). The Project Purchase Option may be exercised at any time: (a) one (1) year prior to the tenth (10th) anniversary of the Commercial Operation ATTACHMENT 3
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Date; (b) one (1) year prior to the fifteenth (15th) anniversary of the Commercial Operation D
ate; (c) one (1) year prior to every subsequent five (5) years after the fifteenth (15th) anniversary of the Commercial Operation Date until the end of the Agreem ent Term; (d) during the sixty (60) day period commencing on the date on which a Termination Notice is provided by Buyer to Seller pursuant to Section 13.3(a) of the PPA.
2. Manner of Exercise. Buyer may exercise the Project Purchase Option during a Purchase Option Opportunity by delivering written notice to Seller and complying with the terms of Section
2.3 of the Agreement.
3. Covenant by Seller. Seller hereby covenants to and for the benefit of Buyer that neither Seller nor any of its agents, employees, directors, officers, shareholders, members, or representatives shall contract with any other party to sell, convey, lease, sublease, grant any option rights with respect to, or encumber in any way all or any portion of the Facility Assets in a manner that would adversely affect the rights of Buyer under the Agreement.
4. Effect of Agreement. T
he Parties intend that the Agreement create a valid option in favor of Buyer as to the Facility Assets on the terms set forth in the Agreement and shall inure to the benefit of, and bind, each of the Parties and their respective successors and assigns.
5. No Conflict. In the event of any conflict or inconsistency between the provisions of this Memorandum and the provisions of the Agreement, the provisions of the Agreement shall control.
Nothing in this Memorandum shall be deemed to amend, modify, change, alter, ampl ify, limit, interpret or supersede any provision of the Agreement or otherwise limit or expand the rights and obligations of the Parties under the Agreement.
6. Counterparts. T
his Memorandum may be executed in two or more counterparts, each of which will be deemed an original, but all of which together shall constitute one and the same instrument.
[Remainder of Page Intentionally Left Blank. Signature Pages Follow.]
IN WITNESS WHEREOF, Buyer has caused this Memorandum to be executed and delivered by its duly authorized representative.
BUYER:
SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY
Date: By:
Name:
Title:
ATTACHMENT 3
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Attest:
Name:
Title:
Approved as to legal form and content:
By:
Name:
Title:
CALIFORNIA ALL-PURPOSE ACKNOWLEDGEMENT
A Notary Public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document.
STATE OF CALIFORNIA
COUNTY OF ___________
On ,
before me, , Notary Public personally appeared ____________________________________________________________ who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged t o me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
I
certify under PENALTY OF PERJURY under the laws of State of California that the foregoing paragraph is true and correct.
WITNESS my hand and official seal.
SIGNATURE
PLACE NOTARY SEAL ABOVE
ATTACHMENT 3
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IN WITNESS WHEREOF, Seller has caused this Memorandum to be executed and delivered by its duly authorized representative.
SELLER:
MILFORD SOLAR PHASE II, LLC,
a Delaware limited liability company
By: __________________________
Name: ________________________
Its: ___________________________
STATE OF ____________________)
COUNTY OF __________________)
This instrument was acknowledged before me this _____ day of _______________, 202_, by _______________, as ________________ of Milford Solar Phase II, LLC, a Delaware limited liability company.
__________________________________________
[SEAL] Notary Public
My commission expires:
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Exhibit 2.5 – Page 1
Exhibit A – Legal Description of the Premises
[LEGAL DESCRIPTION + TAX PARCEL NUMBER TO BE INSERTED]
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EXHIBIT 5.11
FORM OF TRANSITION SERVICES AGREEMENT
to
OPTION AGREEMENT
dated as of [____________]
by and between
MILFORD SOLAR PHASE II, LLC
and
SCPPA
This T RANSITION SERVICES AGREEMENT (this “Agreement”) is entered into on [•], 20[__] (the “ Effective Date”), by and between Milford Solar Phase II , a Delaware limited liability company (“Seller”) and SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY, a joint powers agency and a public entity organized under the laws of the State of California and created under the provisions of the California Joint Exercise of Power Act (California Government Section 6500 et seq.) (“Buyer”). Seller and Buyer are hereinafter sometimes collectively referred to as the “Parties,” and each individually as a “Party.” W I T N E S S E T H:
WHEREAS, the Parties have entered into that certain Option Agreement, dated as of [
_________] (the “Option Agreement”), pursuant to which, among other things, Seller has agreed to sell, transfer, assign, convey and deliver to Buyer, and Buyer has agreed to purchase, receive and assume from Seller, the Facility Assets (as defined in the Option Agreement), upon the terms and subject to the conditions set forth in the Option Agreement; and WHEREAS, Section 5.11 o
f the Option Agreement provides that Seller or its Affiliates will provide Buyer with transitional operation and maintenance services; and WHEREAS, Buyer hereby requests that Seller (or its Affiliates) perform certain transitional operation and maintenance services for a period of time following the Closing Date to facilitate the transition of the operations of the Facility to Buyer; and WHEREAS, Seller is willing to provide, or cause its Affiliates to provide, such services to Buyer subject to the terms and conditions set forth herein:
NOW, THEREFORE, in consideration of the premises and the covenants set forth herein and the benefits to be derived herefrom, the Parties hereby agree as follows:
ARTICLE I
DEFINED TERMS
Capitalized terms used in this Agreement shall have (unless provided elsewhere in this Agreement) the meanings given to such terms in the Option Agreement and as set forth below:
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“S ervices ” means the services that are listed on Schedule 1 attached hereto; provided, however, that the term “Services” shall not include the services listed under the heading “Excluded Services” on Schedule 1 attached hereto.
ARTICLE II
DESCRIPTION OF SERVICES
2.1 S eller’s Undertakings. The purpose of this Agreement is to give Buyer the option, but not the obligation, to receive the Services from Seller or Seller’s Affiliates on an interim basis in order to permit Buyer the opportunity to obtain alternate sources of supply of such Services prior to the expiration of the Initial Term, or if extended, the Extension Term (as such terms are defined in Section 3.1 below). Seller agrees to provide, or to cause the provision through its Affiliates, the Services to Buyer during the Initial Term or Extension Term, if any, in accordance with the terms and conditions of this Agreement, in a professional, workmanlike manner, subject to the applicable Laws and in a manner that is substantially the same as the manner in which such Services were performed prior to the date of this Agreement.
2.2 Resources Committed.
Seller shall provide the Services set forth on Schedule 1, provided that Seller shall not be required to provide any services to Buyer that neither Seller nor its Affiliates previously provided and/or performed in connection with the ownership of the Facility Assets or the Business prior to the Closing Date. No thing herein shall require Seller to install equipment, acquire licenses, expand any systems or services or expend or devote any resources beyond the level provided by Seller and its Affiliates to the Business during the Operations Period. In connection with the performance of the Services, Seller may, at its sole cost and expense and at all times on an arms -length basis: (a) subcontract with a non- Affiliate and/or personnel of a non-Affiliate to perform any portion of the Services to be performed hereunder; (b) utilize personnel who are employees of Affiliates of Seller; or (c) subcontract work to Affiliates of Seller; provided that all such personnel and subcontractors shall be fully qualified to perform the applicable Services pursuant to the terms and conditions of this Agreement and Buyer shall have consented in writing to such personnel and subcontracts, such consent not to be unreasonably withheld or delayed; provided, that if such subcontract is on substantially the same terms and conditions as was being provided to Seller prior to the Closing Date, then such subcontract shall be deemed to be acceptable to Buyer.
ARTICLE III
T
ERM AND TERMINATION
3.1 T erm . The initial term of this Agreement (the “Initial Term”) shall commence as of the Closing Date and shall continue in effect for a maximum of six (6) months; provided, however, that following the expiration of the Initial Term this Agreement may be extended for up to three additional terms (or such greater number that is agreed by the Parties), each not to exceed two (2) months (each such two (2) month extensions, an “Extension Term ” and collectively with the Initial Term, the “Term”) if Buyer provides written notice not less than thirty (30) days prior to the expiration of the Initial Term.
ATTACHMENT 3
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3.2 T ermination of Entire Agreement. Notwithstanding anything herein or elsewhere to the contrary, this Agreement may be terminated and the transactions contemplated hereby abandoned, at any time, upon the occurrence of any of the following events or conditions:
(a) u pon the mutual written agreement of the Parties to terminate this Agreement;
(b) by Seller, upon Buyer’s breach of a material obligation under this Agreement (including Buyer’s failure to pay Seller amounts owing hereunder) and such breach is not remedied to Seller’s reasonable satisfaction within thirty (30) days after notice to Buyer of such breach; or
(c) by B
uyer, upon Seller’s breach of a material obligation under this Agreement and such breach is not remedied to Buyer’s reasonable satisfaction within fifteen (15) days after notice to Seller of such breach or if such breach is not capable of rectification within fifteen (15) days, if Seller has not promptly commenced to rectify the breach within such fifteen (15)-day period and is not proceeding diligently to rectify the breach; provided, however, that such right to continue to rectify a breach shall end upon expiration of this Agreement.
In the event of termination of this Agreement pursuant to this Section 3.2, no P arty will have any further liability or obligation hereunder, except that any such termination will not affect (i) the provisions of Section 4.1, Article V and Article VI, which will survive any such termination, or (ii) the rights and obligations of the Parties accruing prior to such termination.
3.3 Termination of Particular Service. N otwithstanding anything herein or elsewhere to the contrary, Buyer shall have the right, upon thirty (30) days written notice to Seller, to terminate this Agreement as to any Service listed on Schedule 1. Upon the effectiveness of the termination of any particular Service, Seller shall no longer be required to provide such Service to Buyer, and Buyer shall incur no additional obligations to pay Seller the fee associated with the provision of such Service, other than obligations that have accrued prior to the termination of such Service, including, without limitation, any third-party fees, penalties or other payments related to the termination by Seller of such Service.
3.4 Termination Procedures. Upon any termination of this Agreement (in whole or in part), each Party shall cooperate with the other Party as reasonably necessary to assist Buyer in transferring responsibility for the provision of the terminated Service(s) to Buyer (or any third party as designated in writing by Buyer).
ARTICLE IV
F
EES, BILLING, AND PAYMENT
4.1 Compensation. Buyer shall, in accordance with Section 4.2 , (a) pay Seller the fees set forth on Schedule 1 attached hereto for the provision of each particular Service provided under this Agreement and (b) except as set forth in Section 3.3 above, reimburse Seller for any incidental, out-of-pocket expenses reasonably incurred by Seller or Seller’s Affiliates in connection with ATTACHMENT 3
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performing the Services. All amounts paid by Buyer to Seller hereunder shall be paid in full without any deduction or withholding for taxes or any other fees or expenses.
4.2 B illing and Payment. After the end of each calendar month, Seller shall send to Buyer an invoice, setting forth a description of the Services provided during the prior calendar month and identifying the fees that are to be paid. Buyer shall pay to Seller the amounts due and payable on each such invoice within sixty (60) days after its receipt thereof. If Buyer in good faith disputes any portion of an invoice, and Buyer notifies Seller in writing of the nature and basis of such good faith dispute within sixty (60) days after Buyer’s receipt of such invoice, Buyer shall have the right to withhold payment of the disputed portion and Buyer shall pay only the undisputed portion. Seller shall be entitled to a late fee on any undisputed amounts, and any amounts not disputed in good faith by Buyer, due hereunder that remain unpaid following the date due hereunder at the rate of one percent (1%) per month.
4.3 Access.
During the Term, Buyer will provide Seller, Seller’s Affiliates and their respective authorized representatives, at each such Party’s sole risk, reasonable access (during regular business hours and upon reasonable prior notice), to Buyer and its employe es, representatives, facilities and books and records as Seller, Seller’s Affiliates and their respective authorized representatives may reasonably request which are reasonably necessary for providing the Services and not subject to confidentiality restrictions; provided, that (i) Buyer shall have the right to have a representative present for any communication with employees or representatives of Buyer; (ii) such access and activities incidental thereto shall be undertaken in accordance with applicable Laws and Buyer’s generally applicable policies and procedures; and (iii) Buyer shall have the right to impose reasonable restrictions and requirements for safety purposes. Buyer grants to Seller and its representatives access to the Facility for a period of thirty (30) days after the expiration or termination of this Agreement so that Seller may demobilize its work force, including the removal of its personal property that was brought to the Facility by Seller to provide the Services.
4.4 Records Retention.
Each Party shall retain all records relating to this Agreement for so long as required by any Governmental Authority having jurisdiction.
ARTICLE V
IN
DEMNIFICATION; LIMITATION OF LIABILITY; INSURANCE
5.1 I ndemnification . Each Party shall indemnify, defend and hold harmless either Party and its officers, directors, employees, agents and representatives from and against any and all suits, sanctions, liabilities, legal proceedings, claims, demands, losses, costs and expenses of whatsoever kind or character, including reasonable attorneys’ fees and expenses, for injury or death of persons or physical loss of or damage to property of Persons to the extent arising from either Party ’s (including its employees or agents) negligence, breach or willful misconduct in connection with the performance of Services under this Agreement. Each Party shall also indemnify, defend and hold harmless either Party and its officers, directors, employees, agents and representatives from and against any and all regulatory penalties or fines and reasonable expenses (including attorneys’ fees and expenses) to the extent arising from the either Party ’s violation of ATTACHMENT 3
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any law, regulation, or government approval in connection with the performance of this Agreement.
5.2 L imitation of Liability . Each Party’s liability in connection with its performance of the Services hereunder, regardless of whether such liability arises in contract, tort or otherwise, shall not exceed the aggregate amount of the fees payable hereunder ; provided that, the such limitation shall not apply to, and each Party shall be liable for, Losses arising under or caused in whole or in part by either Party’s gross negligence, fraud or willful misconduct or the Party’s third party indemnification obligations under Section 5.1. The Parties agree that for any loss implicating any of the liability or property insurance required to be carried by Seller under this Agreement, or otherwise carried by Buyer in relation to the Facility, the limitation of liability in this Section 5.2 shall correspond to and not reduce the coverage limits in all such primary and excess insurance policies. The Parties’ liability shall be covered, at a minimum, to the full extent of the limits of their respective insurance cover ages. Nothing in this Section 5.2 inures to the benefit of the Parties’ insurers. NOTWITHSTANDING ANY OTHER PROVISION OF THIS AGREEMENT
TO THE CONTRARY, IN NO EVENT SHALL EITHER PARTY , OR ANY OF ITS
AFFILIATES, HAVE ANY LIABILITY HEREUNDER TO THE CLAIMING PARTY OR ITS
AFFILIATES IN RESPECT OF ANY INCIDENTAL, SPECIAL, INDIRECT,
CONSEQUENTIAL OR PUNITIVE DAMAGES, LOSSES, OR EXPENSES ARISING OUT
OF, OR IN CONNECTION WITH, THIS AGREEMENT OR THE PERFORMANCE OR NONPERFORMANCE OF SERVICES HEREUNDER.
5.3 Insurance. Seller s
hall at its sole cost and expense procure, provide, and maintain, and shall require each subcontractor (regardless of tier) to provide and maintain, in effect during the performance of any Services under this Agreement, and with respect to subparagraphs (d) and (e) below, the period of time specified therein, insurance coverage with carriers reasonably satisfactory to Buyer, as follows (collectively, the “Required Policies”) 1:
(a) Workers’ Compensation insurance in accordance with statutory limits, as required by the state in which the services are to be performed, including a waiver of subrogation favoring Buyer, and Employer’s Liability insurance with limits of not less than [ one million dollars ($1,000,000)] each employee for accident, [ one million dollars ($1,000,000)] each employee for disease, and [one million dollars ($1,000,000)] policy limit for disease. (b) Commercial General Liability insurance providing coverage for bodily injury, property damage, personal injury, advertising liability, blanket contractual liability, Seller ’s obligations under this Agreement, products and completed operations, and coverage for independent contractors with limits of not less than [ one million dollars ($1,000,000) ] for each occurrence. Such policy shall cover Buyer as an additional insured, include a severability of
1 Note to the Form: Parties to negotiate the policy limits and deductions to reflect customary and market limits at the time of signing the Transition Services Agreement.
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interest provision, and be primary and not contributory with respect to any insurance carried by Buyer.
(c) Commercial Automobile Liability insurance providing coverage for all owned, non-owned, and hired automobiles used by Seller in the performance of the Services with a combined single limit of not less than [ one million dollars ($1,000,000) ] for each occurrence of bodily injury and property damage.
(d) Errors & Omissions/Professional Liability insurance, including coverage for liability arising from intellectual property infringement, information technology and software development services, with limits of [ one million dollars ($1,000,000) ] per claim and in the aggregate. The policy must be kept in force during the life of the contract and for three years (either as a policy in force with “prior acts” coverage covering the Agreement’s term, or under an extended reporting provision) after contract termination. (e) Cyber Security Coverage including technology / professional liability insurance, intellectual property infringement, and data protection liability insurance. Seller shall procure and maintain coverage for cyber liabilities and financial loss resulting or arising from acts, errors, or omissions, in connection with data maintenance, hosting, software development and other information technology services provided under this agreement. Coverage shall include protection for liability arising from:
(i) intellectual property infringement arising out of software and/or content (excluding patent infringement and misappropriation of trade secrets); (ii) breaches of security;
(iii)violation or infringement of any right, privacy, breach of federal, state, or foreign security and/or privacy laws or regulations; and (iv) data theft, damage, destruction, or corruption, including without limitation, unauthorized access, unauthorized use, identity theft, theft of personally identifiable information or confidential corporate information, transmission of a computer virus or other type of malicious code; and participation in a denial of service attack on a third party.
The minimum limits shall be [three million dollars ($3,000,000)] for each claim and in the aggregate.
The Required Policies must address all of the foregoing without limitation if caused by an employee of Seller or an independent contractor working on behalf of Seller in performing Services under this Agreement . Policy must provide coverage for wrongful acts, claims, and lawsuits anywhere in the world. The Required Policies must be kept in force during the Term and for three years (either as a policy in force with “prior acts” coverage covering the Agreement’s Term, or under an extended reporting provision) after contract termination.
All Required P olicies shall provide not less than thirty (30) calendar day notice of cancellation to Buyer. The Required Policies shall not include any of the following: except for ATTACHMENT 3
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Professional Liability Insurance, any claims -made insurance policies; any self -insured retention or deductible amount greater than [two hundred fifty thousand dollars ($250,000)] unless approved in writing by Buyer ; any endorsement limiting coverage available to Buyer that is otherwise required by this Section 5.3; and any policy or endorsement language that (A) negates coverage to Buyer for Buyer’s own negligence; ( B) limits the duty to defend Buyer under the policy; ( C) provides coverage to Buyer only if Seller is negligent, or (D) permits the recovery of defense costs from any additional insured. The insurance provided under this Agreement shall not contain any restrictions or limitations which are inconsistent with Buyer’s rights under this Agreement.
Seller shall furnish Buyer proof of all Required Policies evidencing the required coverages prior to commencement of Services under this Agreement. Seller shall provide Buyer a new or renewed certificate of insurance upon any changes or modifications to coverage including any extension or renewal of required insurance coverage; provided that any changes or modifications to coverage shall be consistent with the requirements of this Agreement.
The insurance requirements set forth in this Section 5.3 are separate and independent from the indemnification and defense provisions of this Agreement. The insurance provisions do not limit the applicability, scope, or obligations of indemnification and defense obligations of this Agreement, and this Agreement’s indemnification and defense obligations do not limit the insurance coverage requirements of this Agreement.
ARTICLE VI
RELATIONSHIP OF PARTIES
This Agreement is not intended to and shall not be construed as creating a joint venture, partnership, agency or other association within the meaning of the common law or under the laws of the state in which any Party is incorporated, organized, or conducting business. Except for the obligations arising from the authorized activities of Seller as described herein, no Party shall be responsible for the obligations or actions of any other Party, each Party being severally responsible only for its obligations and actions arising hereunder. It is the intent of the Parties that with respect to performing the Services, the Seller and its Affiliates are independent contractors, and shall provide the Services in accordance with the reasonable instructions provided by authorized representatives of Buyer, subject to the provisions of this Agreement.
ARTICLE VII
FORCE MAJEURE
7.1 F
orce Majeure Event . No Party shall be liable to any other Party for its failure or delay in performing its obligations hereunder (other than its obligation to pay money for Services rendered hereunder) due to any contingency beyond such Party’s reasonable control (a “ Force Majeure Event”) including, without limitation, acts of God, fires, floods, wars, acts of war, sabotage, terrorism, accidents, labor disputes (whether or not such disputes are within the power of the Party to settle), shortages, governmental laws, ordinances, rules or regulations.
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7.2 N otice of Force Majeure Event. Each Party affected by a Force Majeure Event will give notice to the other Party as promptly as practicable of the nature and probable duration of the Force Majeure Event as well as of the anticipated termination of such Force Majeure Event. The Party affected by the Force Majeure Event will use commercially reasonable efforts to remove the Force Majeure Event and, in the case of Seller, to resume the performance of the Services as soon as reasonably practicable after such removal.
ARTICLE VIII
CO
NFIDENTIALITY
This Agreement is subject to the terms and conditions of Section 14.19 of that certain Power Purchase Agreement between the Parties.
ARTICLE IX
MISCELLANEOUS
9.1 O perational Coordination. Buyer designates [_______] as Buyer’s representative[s] for purposes of operational coordination under this Agreement. Seller designates [_______] as Seller’s representative[s] for purposes of operational coordination under this Agreement. Either Part y may change its designee for purposes of this Section 9.1 by providing notice thereof to the other Party in accordance with this Section.
9.2 Notices. A ll notices and other communications required or permitted to be given or delivered hereunder shall be in writing signed by or on behalf of the Party making the same, shall specify the Section under this Agreement pursuant to which it is given or made and shall be delivered personally, transmitted by facsimile with answerback confirmed or sent by recognized overnight courier service or United States mail, postage prepaid and return receipt requested, directed to the Party intended at the addre ss or facsimile number set forth in Section 12.5 of the Option Agreement, or at such other address or facsimile number as may be designated by such Party by notice given to the other Party in the manner aforesaid, and shall be effective upon receipt.
Such address may be changed from time to time by means of a notice given in the manner provided in this Section 9.2.
9.3 Waiver. The failure of a Party at any time or times to enforce or require performance of any provision hereof shall in no way operate as a waiver or affect the right of such Party at a later time to enforce the same. No waiver by a Party of any condition or the breach of any term, covenant, representation or warranty contained in this Agreement, whether by conduct or otherwise, in any one or more instances, shall be deemed to be or construed as a further or continuing waiver of any such condition or breach, or a waiver of any other condition or of any breach of any other term, covenant, representation or warranty contained in this Agreement. Any waiver of an obligation, agreement or condition contained herein shall be valid and effective only if in writing and signed by the Party making such waiver.
9.4 Severability.
In the event any provision of this Agreement is held to be invalid by a court or arbitrator of competent jurisdiction, the invalidity of any such provision shall in no way ATTACHMENT 3
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affect any other provision contained herein; provided, however, t hat any such invalidity does not materially prejudice either Buyer or Seller in their respective rights and obligations contained in the valid provisions of this Agreement.
9.5 Dispute . In the event of any claim, controversy or dispute between the Parties arising out of or relating to or in connection with this Agreement (including any dispute concerning the validity of this Agreement or the scope and interpretation of this Section 9.5 (a “Dispute”), either Party (the “Notifying Party”) may deliver to the other Party (the “Recipient Party”) notice of the Dispute with a detailed description of the underlying circumstances of such Dispute (a “Dispute Notice”). The Dispute Notice shall include a schedule of the availability of the Notifying Party’s senior officers (having a title of senior vice president (or its equivalent) or higher) duly authorized to settle the Dispute during the thirty (30) day period following the delivery of the Dispute Notice. The Recipient Party shall within five (5) B usiness Days following receipt of the Dispute Notice, provide to the Notifying Party a parallel schedule of availability of the Recipient Party’s senior officers (having a title of senior vice president (or its equivalent) or higher) duly authorized to settle the Dispute. Following delivery of the respective senior officers’ schedules of availability, the senior officers of the Parties shall meet and confer as often as they deem reasonably necessary during the remainder of the thirty (30) day period in good faith negotiations to resolve the Dispute to the satisfaction of each Party. In the event a Dispute is not resolved pursuant to the procedures set forth herein by the expiration of the thirty (30) day period set forth above, then either Party may pursue any legal remedy available to it in accordance with the provisions of this Agreement. In the event of a dispute regarding payments due hereunder, each Party shall continue to perform its respective obligations hereunder pending the resolution of such dispute.
9.6 Governing Law; Venue. This Agreement shall be governed by, interpreted and enforced in accordance with laws of the State of California, without regard to the conflict of laws principles thereof. In addition to the Dispute resolution process set forth above, the Parties must comply with California law governing claims against public entities and presentment of such claims. All litigation arising out of, or relating to this Agreement, shall be brought in a state or federal court in the County of Los A ngeles 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. Both Parties agree that in any action to enforce the terms of this Agreement that each Party shall be responsible for its own attorney fees and costs. Each of the Parties was represented by its respective legal counsel during the negotiation and execution of this Agreement.
9.7 No Third- P
arty Beneficiaries . Nothing in this Agreement, whether express or implied, is intended or shall be construed to confer any rights or remedies under or by reason of this Agreement on any persons other than the Parties and their respective successors and assigns permitted hereby, nor is anything in this Agreement intended to relieve or discharge the obligation or liability of any third person to any Party to this Agreement, and no provision of this Agreement shall give any third persons any right of subrogation or action over and against any Party to this Agreement.
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9.8 Counterparts . T his Agreement may be executed in any number of original or facsimile counterparts and by different Parties on separate counterparts, all of which shall be considered one and the same agreement, and each of which shall be deemed an original, and this Agreement shall become binding when one or more such counterparts have been signed by each of the Parties and delivered to the other Parties.
9.9 Assignment; Delegation.
No Party may assign any right, interest, or obligation
granted it under this Agreement without the express written consent of the other Party. Subject to the foregoing, this Agreement shall be binding upon, shall inure to the benefit of, and shall be enforceable by the Parties and their permitted successors and assigns.
9.10 Entire Agreement; Amendments . T
his Agreement (including Schedule 1 hereto)
and the Option Agreement (a) constitute the entire agreement among the Parties with respect to the subject matter hereof and (b) supersede all prior statements, representations, discussions and understandings relating to such subject matter. This Agreement shall only be amended or modified by a written instrument signed by a duly authorized representative of each of the Parties.
9.11 Headings . T he headings of Articles and Sections contained in this Agreement have been inserted for convenience of reference only and shall not be deemed to be a part of or to affect in any way the meaning or interpretation of this Agreement. [SIGNATURE PAGE FOLLOWS]
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The Parties have caused this Agreement to be executed and delivered as of the date first set forth above by their duly authorized representatives.
SELLER
MILFORD SOLAR PHASE II, LLC
By:
Name:
Title:
BUYER
SOUTHERN CALIFORNIA PUBLIC
POWER AUTHORITY
By:
Name:
Title:
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SCHEDULE 1
T
O TRANSITION SERVICES AGREEMENT
SERVICES2
Following the Closing Date, during the Initial Term and, if applicable, the Extension Term, Seller shall perform (or shall cause its Affiliates to perform) the following Services:
1. A ccess, Information and Training. Seller shall provide Buyer and Buyer’s representatives, agents, employees and personnel (“Buyer’s Personnel ”) with access, information and training as may be reasonably required so that the transfer of the duties and responsibilities of Seller cause as little disruption as possible to the Facility.
2. System Monitoring. Seller shall conduct system monitoring or assist Buyer’s Personnel with conducting system monitoring, including, as applicable, continued upkeep and operation of any operations center that monitors project metrics or hosts SCADA activities, retrieval and storage of performance data and remote or on - Premises monitoring and support.
3. Preventative and Scheduled Maintenance. Seller shall perform or assist Buyer’s Personnel with performing maintenance duties for the Facility Assets, which may include, but are not limited to, the following duties:
• R
egular inspection, repair and functional testing of Facility components, including, as necessary, of photovoltaic modules, mounting systems, combiner boxes and fuse boxes, inverter shelters, power conversion station performers, switchgear and other components.
• Regular inspection, repair and functional testing of inverters in compliance with, and to ensure continued coverage under, any applicable warranties. • Regular inspection and repair, adjustment or cleaning, in accordance with manufacturers’ recommendations, of filters, cable connections, warning labels, paint and exterior, operators and handles, weather stripping, relays, transistors and other items.
• Visual inspection of the Facility and the Premises and correction of undesirable conditions, including fencing, shading, vegetation, animal damage, erosion, corrosion and discolored panels.
• Inspection and correction of loose electrical connections and ground connections.
• Training regarding Seller’s Quality Assurance Program (as defined in the Power Purchase Agreement between the Parties), and provision of and
2 NTD: To be updated in connection with execution.
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training regarding Seller’s operation and maintenance plan and related records.
• Maintain records of service history and information and training regarding such maintenance.
• Maintenance and testing of sensors and meters.
4. E
mergency Response. Seller shall provide or assist Buyer’s Personnel with providing responses to emergency events that reduce or halt power production and with performing unscheduled repairs. Seller shall provide, and provide training regarding, any documents, plans or protocols Seller has developed in relation to such events.
5. Warranty Management. S
eller shall verify and enforce or assist Buyer’s Personnel with verifying and enforcing all warranties applicable to the Facility Assets.
6. Spare Parts Inventory Management . Seller shall maintain or assist Buyer’s Personnel with maintaining spare parts inventories for the Facility and documentation related to the usage and location of spare parts. Seller shall assist Buyer’s Personnel in determining appropriate quantities of inventory and with the procurement of goods and materials that Buyer will need for continued operating and maintenance of the Facility.
7. Performance Reporting. Seller shall continue to generate or assist Buyer’s Personnel with generating appropriate reports from Facility data.
8. Compliance with Requirements. S eller shall comply with, assist Buyer’s Personnel in complying with, and provide information and training regarding compliance with all applicable permits, Operative Documents, Assumed Contracts, warranties, and other requirements applicable to the Facility Assets.
9. Data Transfer.
Seller shall transfer the data from the Computerized Maintenance Management System (“CMMS”) to Buyer.
B. Excluded Services.
[Seller and Buyer shall mutually agree on any Excluded Services on or before the Closing Date.]
C. Fees for Services.
[Seller and Buyer shall mutually agree on fees for Services on or before the Closing Date.]
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EXHIBIT 7.4(i)
to
OPTION AGREEMENT
dated as of [____________]
by and between
MILFORD SOLAR PHASE II, LLC
and
SCPPA
SELLER GUARANTY
[To come.]
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SCHEDULE 3.3
to
OPTION AGREEMENT
dated as of [____________]
by and between
MILFORD SOLAR PHASE II, LLC
and
SCPPA
REAL PROPERTY MATTERS
[All Real Property Contracts and Real Property Interests of Seller to be set forth in accordance w
ith Section 3.3 shall be specified and briefly described in this Schedule] ATTACHMENT 3
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SCHEDULE 3.4
to
OPTION AGREEMENT
dated as of [_____________]
by and between
MILFORD SOLAR PHASE II, LLC
and
SCPPA
SELLER’S CONSENTS
[All Consents of Seller which are necessary or incidental to the Facility shall be specified and briefly described in this Schedule]
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SCHEDULE 3.5
to
OPTION AGREEMENT
dated as of [___________]
by and between
MILFORD SOLAR PHASE II, LLC
and
SCPPA
CERTAIN ASSETS
[Any Assets that are not in good repair and operating condition, normal wear and tear excepted, and Excluded Assets.]
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SCHEDULE 3.6
to
OPTION AGREEMENT
dated as of [___________]
by and between
MILFORD SOLAR PHASE II, LLC
and
SCPPA
TITLE TO FACILITY ASSETS
[Any exceptions to Seller’s representation regarding having good title to the Facility Asset, free and clear of all Liens, except for certain permitted liens.] ATTACHMENT 3
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SCHEDULE 3.7
to
OPTION AGREEMENT
dated as of [___________]
by and between
MILFORD SOLAR PHASE II, LLC
and
SCPPA
ENVIRONMENTAL MATTERS
[All environmental matters referred to in Section 3.7 s hall be specified and briefly described in this Schedule]
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SCHEDULE 3.8
to
OPTION AGREEMENT
dated as of [_____________]
by and between
MILFORD SOLAR PHASE II, LLC
and
SCPPA
LIABILITIES
[All liabilities referred to in Section 3.8 s hall be specified and briefly described in this Schedule] ATTACHMENT 3
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SCHEDULE 3.9
to
OPTION AGREEMENT
dated as of [____________]
by and between
MILFORD SOLAR PHASE II, LLC
and
SCPPA
TAX MATTERS
[All tax matters referred to in Section 3.9 s hall be specified and briefly described in this Schedule] ATTACHMENT 3
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SCHEDULE 3.10
to
OPTION AGREEMENT
dated as of [___________]
by and between
MILFORD SOLAR PHASE II, LLC
and
SCPPA
COMPLIANCE WITH LAWS
[All non-co mpliance with laws referred to in Section 3.10 shall be specified and briefly described in this Schedule]
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SCHEDULE 3.11
to
OPTION AGREEMENT
dated as of [___________]
by and between
MILFORD SOLAR PHASE II, LLC
and
SCPPA
LITIGATION
[All litigation proceedings referred to in Section 3. 11 shall be specified and briefly described in this Schedule]
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SCHEDULE 3.12(a)
to
OPTION AGREEMENT
dated as of [________]
by and between
MILFORD SOLAR PHASE II, LLC
and
SCPPA
CONTRACTS
[All Contract matters referred to in Section 3.12(a) of the Agreement shall be specified and briefly described in this Schedule, with any Contract not constituting an Assumed Contract identified by an asterisk (*)]
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SCHEDULE 3.12(b)
to
OPTION AGREEMENT
dated as of [________]
by and between
MILFORD SOLAR PHASE II, LLC
and
SCPPA
EXCEPTIONS TO ASSUMED CONTRACTS
[All exceptions to the Assumed Contracts referred to in Section 3.12(a) and 3.12(b) of the Agreement shall be specified and briefly described in this Schedule.] ATTACHMENT 3
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SCHEDULE 3.13
to
OPTION AGREEMENT
dated as of [_______________]
by and between
MILFORD SOLAR PHASE II, LLC
and
SCPPA
INTELLECTUAL PROPERTY
[All Intellectual Property Asset matters referred to in Section 3.13 with respect to the Facility shall be specified and briefly described in this Schedule] ATTACHMENT 3
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SCHEDULE 3.15
to
OPTION AGREEMENT
dated as of [________]
by and between
MILFORD SOLAR PHASE II, LLC
and
SCPPA
PERMITS
[All Permit matters referred to in Section 3.15 of the Agreement shall be specified and briefly described in this Schedule, with any Permit not constituting a Transferred Permit identified by an asterisk (*)]
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SCHEDULE 3.17
to
OPTION AGREEMENT
dated as of [__________]
by and between
MILFORD SOLAR PHASE II, LLC
and
SCPPA
EMPLOYEE MATTERS
[All Employee matters referred to in Section 3.17 s hall be specified and briefly described in this Schedule]
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SCHEDULE 3.18
to
OPTION AGREEMENT
dated as of [__________]
by and between
MILFORD SOLAR PHASE II, LLC
and
SCPPA
GENERAL MATTERS
[All general representation matters referred to in Section 3.18 s hall be specified and briefly described in this Schedule]
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SCHEDULE 4.3
to
OPTION AGREEMENT
dated as of [_________]
by and between
MILFORD SOLAR PHASE II, LLC
and
SCPPA
BUYER’S CONSENTS
[All Consents of Buyer which are necessary or incidental to the Closing shall be specified and briefly described in this Schedule]
31954473
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