Staff Report Item 17
Staff Report Item 17
To: Ava Community Energy Authority
From: Russell Mills, SVP and CFO
Subject: Approval of Prepay Financings #4&5
Date: June 18, 2025
__________________________________________________________________ Summary/Recommendation
Adopt a Resolution authorizing the execution and delivery of a Prepaid Energy Agreement, a Master Power Supply Agreement, a Project Administration Agreement, a PPA Custodial Agreement, and certain other documents in connection with the issuance of California Community Choice Financing Authority (“CCCFA”) Clean Energy Project Revenue bonds to enable Ava to enter into its fourth and fifth energy prepayment transactions.
Background and Discussion
Commodity Prepay Financings are a unique financing structure giving tax-exempt entities that sell commodities to end-use customers a mechanism to provide more affordable energy through savings received by the energy recipient for buying the power through long-term contracts.
These are complex transactions with several entities. At a minimum, an energy recipient, a commodity supplier, and a conduit bond issuer are involved. The conduit issuer is necessary to provide legal separation to both the supplier and recipient from the issuing entity.
Ava has executed three prepay transactions in the past, including the first ever CCA prepay in 2021, and then subsequent transactions in 2022 and 2023. Many of the CCA’s in California have utilized this structure to provide discounted power and further enable a value proposition for CCA customers. The bonds have been sold through the California Community Choice Financing Authority (CCCFA) as a conduit issuer, which was initially set up to enable these transactions. The benefits received for Ava and its customers are derived from the lower cost of funding from tax-exempt financing that is provided to the supplier than what they would receive Staff Report Item 17
from taxable markets and their own internal cost of capital. The energy recipient commits to buying a commodity over a long term and receives a discount to the contracted or market price throughout the term, lowering current and future energy costs.
After holding an RFQ in April, staff selected Morgan Stanley (MS) for its 4th prepay and Goldman Sachs (Goldman) for its 5th prepay. Both firms have substantial CCA Prepay experience and competitive cost structures. Staff opted to utilize MS for the 4th prepay to take advantage of efficiencies that were developed and memorialized by contract amendments with MS during the third prepay process in 2023. That said, staff opted to go with Goldman for the 5th prepay transaction to help mitigate risks associated with using one counterparty as the energy supplier over multiple transactions. A transaction with Goldman will largely look the same as with MS, with the use of Goldman as the energy supplier will help to diversify the risk to Ava related to unforeseen supplier issues.
Staff also determined to utilize a competitive process to choose the funding recipient. This new process improves economics by creating better credit risk diversification for investors and will enhance the savings potential obtained when bonds are sold.
Additional information about this complex structure was presented to the Board in April and with the Finance Administrative and Procurement Committee in May and the Executive Committee in June. Assuming the Board of Directors supports staff’s recommendation, the transaction will be presented to the CCCFA Board later in June for its approval before bond sales would occur.
The details of the requested board approval are as follows:
Adopt the Resolution which authorizes Ava to sign:
• Power Supply Contract with CCCFA (Issuer)
• Letter Agreement Regarding PPA Assignments with Morgan Stanley and Goldman Sachs (Prepay Suppliers) with Form of Limited Assignment Agreements with Morgan Stanley & Goldman Sachs and future PPA sellers
• Project Administration Agreement with CCCFA (Issuer)
• PPA Payments Custodial Agreements with Morgan Stanley and BONY, & Goldman Sachs and BONY
• Cost Share Memorandum of Understandings (MOUs), by and between Ava, CCCFA and the Prepaid Supplier; and
The approval provided shall be subject to the following parameters:
(a) no more than two total prepayment transactions will be completed on behalf of Ava pursuant to the authorizations granted by the Resolution; (b) the Bonds will not be obligations of Ava, but will be limited obligations of the Issuer payable solely from the revenues and other amounts pledged therefor under each Indenture, including amounts payable by Ava under the Power Supply Contract(s) and/or the Clean Energy Purchase Contract(s), respectively; Staff Report Item 17
(c) the aggregate principal amount of each series of Bonds shall not exceed $1,250,000,000 per series issued;
(d) the “Monthly Discount” and “Minimum Discount” as provided for in a Power Supply Contract for any MS Project shall be at least 8.0% of the fixed cashflows or equivalent $ per MWh; and
(e) the “Monthly Discount Percentage” as provided for in a Clean Energy Purchase Contract shall result in at least an average annual savings of 8.0% during the Initial Reset Period (as such term is defined in such Clean Energy Purchase Contract).
Financial Impact
The purpose of pursuing the prepay transaction is to achieve meaningful energy procurement cost savings. These transactions are targeting an 8-12% discount at the outset, which translates to approximately $3-4MM of annual savings. Ava has saved $21.7 million from 2022 through year-end 2024 on the energy purchased through the three prepays it has closed, and savings are now expected to be approximately $14 million annually from those prepays into the future.
With the addition of prepays 4 and 5, savings will be expected to rise to approximately $20-21 million annually on energy purchased through the Power Supply Contracts related to the prepay transactions.
Most of the parties assisting Ava with the prepay will be paid from the proceeds of the prepay bonds. With that said, certain fees, such as rating agency fees and green bond designation fees, are not contingent on a successful prepay transaction closing. Ava negotiated to have the prepay supplier(s) split these costs with Ava if the deal does not close. To minimize this modest risk, Ava will only authorize these fees when necessary.
Additionally, it is important to note that the prepay transaction itself is non-recourse to Ava. The ultimate counterparty with the Prepay Supplier is the CCCFA JPA, so CCCFA is therefore the counterparty to all the underlying agreements. CCCFA is a public entity separate and apart from the parties to the JPA Agreement, and the debts, liabilities and obligations of CCCFA will not constitute debts, liabilities or obligations of Ava or any representative of Ava serving on the governing body of Ava.
Attachments
A. Resolution
B. Presentation
C. Master Power Supply Agreement with Goldman Sachs
D. Prepaid Agreement with Morgan Stanley
E. Letter Agreement Regarding PPA Assignments
F. Project Administration Agreement with Morgan Stanley G. Operational Services Agreement with Goldman Sachs
H. PPA Payments Custodial Agreement
I. Trust Indenture
J. Re-pricing Agreements with and Goldman Sachs
Staff Report Item 17
K. Preliminary Offering Statement (POS) for Prepay with Morgan Stanley L. Preliminary Offering Statement (POS) for Prepay with Goldman Sachs M. MOU for Cost Share with CCCFA
N. MOU for Cost Share with Morgan Stanley
O. Re-pricing Agreements with Morgan Stanley
P. Form of Limited Assignment for Morgan Stanley
Q. Form of Limited Assignment for Goldman Sachs
R. Ava Appendix A for inclusion in POS
Attachment Staff Report Item 17A
RESOLUTION R-2025-[__]
A RESOLUTION OF THE BOARD OF DIRECTORS OF THE AVA
COMMUNITY ENERGY AUTHORIZING THE EXECUTION AND DELIVERY OF
A POWER SUPPLY CONTRACT OR POWER SUPPLY CONTRACTS AND/OR
A CLEAN ENERGY PURCHASE CONTRACT OR CLEAN ENERGY
PURCHASE CONTRACTS AND CERTAIN OTHER DOCUMENTS IN
CONNECTION WITH THE ISSUANCE BY THE CALIFORNIA COMMUNITY
CHOICE FINANCING AUTHORITY OF TWO SEPARATE SERIES OF CLEAN ENERGY PROJECT REVENUE BONDS, SERIES 2025; AND CERTAIN
OTHER ACTIONS IN CONNECTION THEREWITH
WHEREAS, Ava Community Energy (formerly East Bay
Community Energy) (“Ava”) was formed as a community choice aggregation agency (“CCA”) on December 1, 2016, under the Joint Exercise of Power Act, California Government Code sections 6500 et seq. (the “Act”), among the County of Alameda, and the Cities of Albany, Berkeley, Dublin, Emeryville, Fremont, Hayward, Livermore, Piedmont, Oakland, San Leandro, and Union City to study, promote, develop, conduct, operate, and manage energy-related climate change programs in all of the member jurisdictions. The cities of Newark and Pleasanton, located in Alameda County, along with the City of Tracy, located in San Joaquin County, were added as members of Ava and parties to the Joint Powers Agreement (as defined below) in March of 2020. The City of Stockton, located in San Joaquin County, was added as a member of Ava and party to the Joint Powers Agreement in 2022. San Joaquin County was added as a member of Ava and party to the Joint Powers Agreement in 2024;
WHEREAS, pursuant to the provisions of the Act, Ava and certain other California “community choice aggregators” entered into a joint powers agreement (the “Joint Powers Agreement”) pursuant to which the California Community Choice Financing Authority (the “Issuer”) was organized for the purpose, among other things, of entering into contracts and issuing bonds to assist Ava in financing the acquisition of supplies of clean energy; WHEREAS, the Issuer is authorized by its Joint Powers Agreement to acquire supplies of clean energy by any means and to issue revenue bonds to finance the cost of acquisition of such supplies, and is vested with all powers necessary to accomplish the purposes for which it was created; WHEREAS, Ava has determined that it is desirable to acquire long-term supplies of clean energy from the Issuer; WHEREAS, Ava is requesting that the Issuer agree to enter into one or two transactions to (i) purchase certain quantities of clean energy from a Delaware limited liability company (the “Prepaid Supplier”) the sole member of which is Morgan Stanley Capital Group Inc., a Delaware corporation (“MSCG”) on a prepaid basis and to sell such clean energy to Ava, as described herein (the 2 “MS Project”) and/or (ii) purchase certain quantities of clean energy from a Delaware limited liability company, the sole equity member of which is J. Aron & Company LLC, a New York limited liability company (the “Electricity Supplier”) on a prepaid basis and to sell such clean energy to Ava, as described herein (the “GS Project” and together with the MS Project, the “Projects”); WHEREAS, Ava has determined to authorize a total of two transactions, consisting of one MS Project and one GS Project or, in the alternative two MS Projects or two GS Projects;
WHEREAS, Ava is requesting that the Issuer finance the costs of the Projects with the proceeds of two separate series of its Clean Energy Project Revenue Bonds, Series 2025 (together, the “Bonds”);
WHEREAS, Ava has determined to authorize the officers of Ava to take all necessary action to accomplish the purchase of clean energy from the Issuer and to assist the Issuer in the issuance, sale and delivery of the Bonds; and
WHEREAS, there have been made available to the Board of Directors of Ava for approval forms of the following agreements to which Ava is a party:
The following “MS Project documents”:
1. Power Supply Contract between Ava and the Issuer;
2. Second Consolidated, Amended and Restated Custodial
Agreement by and among Ava, Morgan Stanley Capital Group Inc., a Delaware corporation (“MSCG”), the Prepaid Supplier, the Issuer and the custodian to be named therein;
3. Letter Agreement among Ava, the Prepaid Supplier and MSCG regarding matters relating to Assignment Agreements with form of Limited Assignment Agreement, by and among Ava, the counterparty to the power purchase agreement described therein, and MSCG; and
4. Prepaid Energy Project Administration Agreement, by and between Ava and the Issuer;
5. Cost Share Memorandum of Understanding (MOU), by and between Ava, Morgan Stanley & Co. LLC and CCCFA, if necessary; and The following “GS Project documents”:
1. Clean Energy Purchase Contract between Ava and the
Issuer;
3 2. PPA Custodial Agreement by and among Ava, J. Aron & Company LLC, a New York limited liability company (“J. Aron”), the Issuer, and a custodial bank agreed to by the Issuer and Ava;
3. Letter Agreement between Ava and J. Aron regarding
matters relating to Limited Assignment Agreements;
4. A form of Limited Assignment Agreement, by and among Ava, the counterparty to the power purchase agreement to be described therein, and J. Aron;
5. Clean Energy Project Operational Services Agreement, by and between Ava and the Issuer;
6. Cost Share Memorandum of Understanding (MOU), by and between Ava and CCCFA, if necessary; and
The MS Project documents and the GS Project documents collectively referred to herein as the “Ava Documents”.
WHEREAS, there have also been made available to the Board of Directors of Ava forms of the following additional documents relating to the Projects:
1. Trust Indentures (the “Indentures”) each between the Issuer and the trustee to be named therein, providing for, among other things, the issuance of and security for the respective series of Bonds;
2. Prepaid Energy Sales Agreement (the “Prepaid Agreement”) between the Issuer and the Prepaid Supplier, providing for the delivery of the prepaid energy supply to the Issuer;
3. Master Power Supply Agreement (the “Master Power Supply Agreement”) between the Issuer and the Electricity Supplier, providing for the delivery of the energy supply to the Issuer;
4. Re-Pricing Agreements (the “Re-Pricing Agreements”)
between the Issuer and the Prepaid Supplier and Electricity Supplier, respectively, providing for the remarketing or refunding of the Bonds from time to time and the establishment of the Monthly Discount available to Ava under the Power Supply Contract and the Clean Energy Purchase Contract, respectively, from time to time during the term of the transactions; and
5. Preliminary Official Statements (the “Preliminary Official Statements”), to be used in connection with the offering and sale of the respective series of Bonds, including the information relating to Ava included in each Appendix A thereto (the Indentures, the Prepaid 4 Agreement, the Master Supply Agreement, the Re-Pricing Agreements and the Preliminary Official Statements, together with the Ava Documents, the “Project Documents”);
NOW THEREFORE, BE IT RESOLVED by the Ava Board of
Directors, as follows:
Section 1. The proposed forms of the Ava Documents, as made available to the Board of Directors for this meeting, are hereby approved. The forms of Limited Assignment Agreements may be used, in substantially the same form, for the initial assignments of Ava power purchase agreements, and in a similar form for additional power purchase agreements as needed to maintain the transactions approved hereby, with such changes as may be necessary to conform to the requirements of such power purchase agreements or as may be necessary to effect such assignment, and any such Limited Assignment Agreements shall be included in the Ava Documents hereby approved. Subject to the parameters set forth in Section 4 of this Resolution, any of the Chief Executive Officer, Chief Financial Officer or Chair of the Board (each an “Authorized Officer”) is hereby authorized and directed, for and on behalf of Ava, to execute and deliver the Ava Documents in substantially said form, with such changes and insertions therein as the Authorized Officer executing the same may approve, such approval to be conclusively evidenced by the execution and delivery thereof.
Section 2. The proposed forms of the Preliminary Official Statements, as made available to the Board of Directors for this meeting, are hereby approved. Any Authorized Officer is hereby authorized and directed, for and on behalf of Ava, to execute and deliver a certificate as to the information regarding Ava contained therein and in the final versions of the Official Statements, with such changes and insertions therein as the Authorized Officer approving the same may deem necessary or appropriate. Subject to approval by the Issuer, Ava hereby authorizes the distribution of the Preliminary Official Statements to persons who may be interested in the purchase of the Bonds, and the delivery of the Official Statements in final form to the purchasers of the respective Bonds, in each case with such changes as may be approved as aforesaid.
Section 3. Each Authorized Officer is hereby authorized and directed, for and in the name and on behalf of Ava, to execute and deliver any and all documents, including, without limitation, any tax certificates relating to its expected use of the energy to be purchased by it from the respective Project, any continuing disclosure certificates or similar agreements required for the offering or sale of the Bonds, and any and all closing certificates to be executed in connection with the issuance of the Bonds and to take any and all actions which may be necessary or advisable, in the discretion of such Authorized Officers, to effectuate the actions which Ava has approved in this Resolution, for the issuance, sale and delivery of the Bonds, and to consummate by Ava the 5 transactions contemplated by the Ava Documents approved hereby and the other Project Documents presented to the Board herewith, including any subsequent amendments, waivers or consents entered into or given under or in accordance with such documents.
Section 4. The approvals provided for herein shall be subject to the following parameters:
(a) no more than two total prepayment transactions will be completed on behalf of Ava pursuant to the authorizations granted by this Resolution;
(b) the Bonds will not be obligations of Ava, but will be limited obligations of the Issuer payable solely from the revenues and other amounts pledged therefor under each Indenture, including amounts payable by Ava under the Power Supply Contract(s) and/or the Clean Energy Purchase Contract(s), respectively;
(c) the aggregate principal amount of each series of Bonds shall not exceed $1,250,000,000 per series issued;
(d) the “Monthly Discount” and “Minimum Discount” as provided for in a Power Supply Contract for any MS Project shall be at least 8.0% of the fixed cash flows or equivalent $ per MWh; and
(e) the “Monthly Discount Percentage” as provided for in a Clean Energy Purchase Contract shall result in at least an average annual savings of 8.0% during the Initial Reset Period (as such term is defined in such Clean Energy Purchase Contract).
Section 5. Execution and delivery of the Ava Documents by an Authorized Officer or Officers shall be conclusive evidence that the parameters set forth in Section 4 have been met, and all actions heretofore taken by the Authorized Officers with respect to the issuance of the Bonds are hereby ratified, confirmed and approved.
Section 6. If the conditions set forth in Section 4 have been met, an Authorized Officer may direct the payment to professionals that provided services to Ava in connection with the Projects. These professional services include legal counsel, bond counsel, tax counsel, Municipal Financial Advisor, Swap Advisor, and any other consultant needed to complete the transactions contemplated herein for Ava. Payment to these professionals will be made from the proceeds of the sale of the Bonds respectively and pursuant to the terms of the applicable agreements executed with Ava.
Section 7. If the conditions set forth in Section 4 have been met, an Authorized Officer may direct the payment to additional vendors and/or parties 6 to the Ava Documents or other Project Documents to complete the issuance of the Bonds. These vendors, if any, will be paid pursuant to an agreement for services rendered in completing the issuance of the Bonds and from the proceeds of the sale of the Bonds.
Section 8. This Resolution shall take effect immediately. 7 ADOPTED AND APPROVED at a regular meeting of the Ava Board of Directors on this 18th day of June, 2025.
______________________________________
Jack Balch, Chair
Attest:
___________________________________________
Adrian Bankhead, Clerk of the Board
Board Presentation:
Prepay Financing Approval
June 18, 2025
Attachment Staff Report Item 17B
• IRS Regulations codified in 2005 allow for tax-exempt debt to be issued for the prepayment of electricity to serve load
• Cost of funding with tax-exempt debt is lower than supplier would otherwise receive borrowing from taxable market or from using internal funding at their cost of capital • Energy supply agreement where buyer (Ava) commits to purchase the commodity over a 30-year term, receiving a discount to the market price
▪ Lowers Ava's costs on existing and future energy contracts • Bond investor risk is tied to the supplier and corporate guarantor to make debt service payments and redeem bonds if termination events occur or bankruptcy Prepay Financing Background
2 Goal: Reduce the cost of power purchases
Attachment Staff Report Item 17B
• 2019 - Ava issued RFP for Prepay Services (Prepay
Provider)
• 2021 – Ava closes first-ever CCA energy prepay
bond transaction
Ava’s Prepay Experience:
3 Timeline of Ava Prepay Activity:
• 2024 - Ava amended prepays to maximize savings
and optimize operations
Ava’s Prepays to Date
Prepay Date Closed Provider/Supplier Bond Size
1 9/23/21 Morgan Stanley $1.20B
2 7/12/22 Morgan Stanley $0.93B
3 8/16/23 Morgan Stanley $0.99B
Ava is part of a list of leading CCAs
that have issued energy prepay bonds:
• Ava Community Energy
• Clean Power Alliance (CPA)
• Silicon Valley Clean Energy (SVCE)
• Peninsula Clean Energy (PCE)
• Marin Clean Energy (MCE)
• Sonoma Clean Power (SCE)
• Valley Clean Energy (VCE)
Attachment Staff Report Item 17B
Ava’s Prepay Savings Through ‘24 Total $21.7M
4 -
500,000
1,000,000
1,500,000
2,000,000
2,500,000
3,000,000
3,500,000
4,000,000
4,500,000
Q1 '22 Q2 '22 Q3 '22 Q4 '22 Q1 '23 Q2 '23 Q3 '23 Q4 '23 Q1 '24 Q2 '24 Q3 '24 Q4 '24 Quarterly Savings by Prepay
Prepay #1 Prepay #2 Prepay #3
Attachment Staff Report Item 17B
Benefits and Risks to Prepay Transactions
5 Benefits
• Power Contract Assignment: Existing renewable PPAs are assigned to the taxable Prepay Supplier. Ava continues to take and pay for the contract energy and attributes. All other PPA terms are unchanged • Contract Reverts to Original Upon Termination: If the prepay program terminates early, prepaid supplier fails to perform or Ava fails to perform, Ava forgoes the future savings • Debt Issued by Conduit Issuer: Non-Recourse: Prepays utilize non-recourse municipal bonds and are not secured or guaranteed by the Ava (off balance sheet), the debt is recourse to the Prepay funding recipient Risks
• Out of Pocket Costs - Loss of staff time; Rating agency and green bond designation fees are paid regardless of a successful transaction
• Opportunity Cost- higher savings through the prepay transaction initiated at a different time. • Load loss or inability to assign a PPA into the prepay due to contractual limitations would likely lead to remediation or remarketing activities and potentially result in the loss of the discount through deal termination.
• Tax and Regulatory risk - changes to tax exempt financing rules or changes to RPS standards Attachment Staff Report Item 17B
Transaction Structure Prepays 4 & 5
6 1. Bond Issuance: CCCFA issues
the Bonds to fund the
prepayment
2. Prepayment: CCCFA will apply
bond proceeds to prepay Energy
Supplier for approximately 30
years of Energy deliveries:
3. Energy Supplier Commodity
Swap
4. CCCFA Commodity Swap
5. Project Participant: Under the
Power Supply Contract, Ava
buys all of the Energy
delivered by the Energy
Supplier less a discount
6. Funding Agreement: Between
Energy Supplier and Funding
Recipient
7. Assigned PPAs: The Project
Participant, Ava assigns
its existing and future PPAs to
the Energy Supplier
Attachment Staff Report Item 17B
Diversification Benefits Within Prepays
7 CCA prepays have primarily always been with the same supplier and funding recipient
1. Diversifying the Energy Supplier reduces risk to Ava • By diversifying, Ava can better protect its risk to losing the discount, if the supplier becomes insolvent or other unforeseen supply concerns
• Staff proposing Morgan Stanley for Prepay 4 and Goldman Sachs for Prepay 5 to diversify
2. Investors seek to diversify their portfolio credit risk to the funding recipient • Can increase savings offered due to higher investor demand for the new funding recipient credit risk • Ava proposes utilizing this new structure for Prepay's 4 & 5 to access new funding counterparties Attachment Staff Report Item 17B
Potential Funding Recipients & CCA Experience
8 Firm Rating
Morgan Stanley & Co. A1
Deutsche Bank Baa1
Canadian Imperial Bank of
Commerce Aa2
Bank of Montreal Aa2
Athene Annuity and Life Company A1
Global Atlantic (Forethought Life
Ins. Co.) A2
Sumitomo Mitsui Banking
Corporation A1
Nomura Holdings Baa1
Pacific Life Aa3
American General Life Ins. A2
New York Life Aaa
Delaware Life Insurance A-Societe Generale Baa2
BNP Paribas, New York Branch Baa1
Recent Transactions Using New Structure
CPA/ CCCFA Series 2023C: Deutsche Bank
CPA / CCCFA Series 2023D: American General Life
Insurance Co.
3CE / CCCFA Series 2023F: National Bank of Canada
SMUD / NCEA Series 2024: Pacific Life Insurance
Company
CPA / CCCFA Series 2024B: Athene Annuity & Life Co.
PCE / CCCFA 2024C: American General Life Insurance Co.
Sonoma / CCCFA 2024G: Athene Annuity & Life Co
CPA/ CCCFA Series 2024H: New York Life
TID/ CVEA Series 2025A: Pacific Life Insurance Co.
VCE/ CCCFA Series 2025A: Athene Annuity & Life Co.
Attachment Staff Report Item 17B
Documents Overview: Ava Signs
9 1. Power Supply Contract
– Sets forth terms for which CCA receives energy for 30-year term – Signed by Ava and CCCFA
2. Letter Agreement Regarding PPA Assignments
– Details the terms of the limited assignment of PPAs between Ava and 3rd party energy sellers – Signed by Ava and Morgan Stanley/Goldman Sachs (Prepay Supplier)
3. Form of Limited Assignment
– Details the terms of the limited assignment of each energy PPA Ava assigns into prepay – Signed by Ava, the original PPA counterparty, and Morgan Stanley/Goldman Sachs (Prepay Supplier)
4. Project Administration Agreement
– Sets out terms for CCA to act on behalf of the Issuer – Signed by Ava and CCCFA
5. PPA Payments Custodial Agreement
– Details cash flows between PPA Buyer (CCA), Prepay Supplier, and Custodian – Signed by Ava, Morgan Stanley, and Custodial Bank
6. Cost Share Memorandum of Understanding (MOU)
– Details the cost share arrangement with MS/GS to cover rating agency and green bond designation fees and Ava responsibility to cover costs in place of CCCFA
Attachment Staff Report Item 17B
Documents Overview: CCCFA Signs
10 1. Prepaid Agreement
– Details the flow of power and payments between the Prepay Supplier and the Issuer (CCCFA) – Terms are largely mirrored in the Power Supply Contract
2. Re-pricing Agreement
– Sets forth terms for remarketing and repricing for future bond repricing periods
3. Trust Indenture
– Sets forth terms of bond issuance and rights of bondholders – Details that all revenues relevant to transaction flow to and through conduit issuer (CCCFA)
4. Commodity Swap documents
– Docs pursuant to which the commodity price is hedged with a 3rd-party swap counterparty (to insulate transaction from market volatility)
5. Parent Guarantee
– Guarantee of “due and punctual payment” from Prepay Supplier to conduit issuer (CCCFA) – Flows in favor of conduit issuer and swap counterparty, respectively
6. Front-End Custodial Agreement
– Outlines payment flows through the transaction, signed by CCCFA, Custodian, and Bond Trustee – Also a Back-End Custodial Agreement which is signed by Morgan Stanley/Goldman Sachs, Custodian, and Bond Trustee Attachment Staff Report Item 17B
Green Bond Designation
What are Green Bonds?
• Bonds offered to investors that qualify as “Green Bonds” per ICMA’s Green Bond Principles. • Targets the marketing of bonds to investors who are seeking investments that support carbon reduction efforts aligning with Ava’s core values
• Potential pricing benefits by driving demand for these investments that improve transaction economics • Verifiers certify through a Second Party Opinion (SPO) that the bonds adhere to Green Bond Principles, Ava Green Bonds
• Ava’s three prior Prepay transactions were sold as Green Bonds • Ava intends to seek Green Bond designation for the upcoming prepay transactions. • Kestrel Verifiers will be engaged to review the use of proceeds and determine eligibility, and if qualified, Ava will use the Green designation
• Kestrel will issue a Second Party Opinion (SPO) to be included in the Offering Statement 11 Attachment Staff Report Item 17B
▪ RFP and selection of providers for Prepays 4 & 5 March/April ▪ Discussed at April Board and further at May FAP and June Ex Comm ▪ Seek Ava Board and CCCFA Board Approval (June)
▪ Marketing and Pricing Bonds late June through July/Aug market depending ▪ Staff is seeking approval for two transactions
Approval Parameters
▪ No more than two total prepayment transactions will be completed on behalf of Ava pursuant to the authorizations granted by the Resolution;
▪ The aggregate principal amount of each series of Bonds shall not exceed $1,250,000,000 per series issued;
▪ Prepay #4 Morgan Stanley – plan to issue up to $1.25 billion prepay bonds late June ▪ Prepay #5 Goldman Sachs – plan to issue up to $1.25 billion prepay bonds in July/August ▪ The “Minimum Discount” as provided for in both transactions shall be at least 8.0% annually Prepay Planning & Approval
12 Attachment Staff Report Item 17B
Q&A- Discussion
13 Attachment Staff Report Item 17B
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14 Attachment Staff Report Item 17B
Attachment Staff Report Item 17B
SM Draft 30 May 2025
Relates to Clean Energy Purchase Contract with Ava Community Energy
MASTER POWER SUPPLY AGREEMENT
between
ARON ENERGY PREPAY [__] LLC
and
CALIFORNIA COMMUNITY CHOICE FINANCING AUTHORITY
Dated as of [_____], 2025
Attachment Staff Report Item 17C
i
TABLE OF CONTENTS
Page
ARTICLE I. DEFINITIONS ....................................................................................................... 1 Section 1.1 Defined Terms................................................................................................... 1 Section 1.2 Definitions; Interpretation ............................................................................... 13 ARTICLE II. EXECUTION DATE; DELIVERY PERIOD; J. ARON AS AGENT .......... 14 Section 2.1 Execution Date; Delivery Period..................................................................... 14 Section 2.2 Termination by Seller Prior to Prepayment..................................................... 14 ARTICLE III. SALE AND PURCHASE ................................................................................. 14 Section 3.1 Sale and Purchase of Product .......................................................................... 14 Section 3.2 Limited Obligation to Take Base Quantities................................................... 15 Section 3.3 Prepayment ...................................................................................................... 15 Section 3.4 Other Amounts Payable with Respect to Assigned Products.......................... 16 ARTICLE IV. FAILURE TO SCHEDULE PRODUCT ........................................................ 16 Section 4.1 Failure to Schedule or Deliver Base Quantity (Not Due to Force Majeure) ... 16 Section 4.2 Buyer’s Failure to Schedule or Receive Base Quantities (Not Due to Force Majeure) 17
Section 4.3 Failure to Deliver or Take Due to Force Majeure ........................................... 17 Section 4.4 Assigned Product............................................................................................. 17 Section 4.5 Sole Remedies ................................................................................................. 18 ARTICLE V. DELIVERY POINTS; SCHEDULING ............................................................ 18 Section 5.1 Delivery Points................................................................................................ 18 Section 5.2 Transmission and Scheduling.......................................................................... 18 Section 5.3 Title and Risk of Loss...................................................................................... 19 Section 5.4 PCC1 Product and Long-Term PCC1 Product................................................ 19 Section 5.5 Communications Protocol ............................................................................... 22 Section 5.6 Deliveries Within CAISO or Another Balancing Authority ........................... 22 Section 5.7 Assigned Products ........................................................................................... 22 ARTICLE VI. ASSIGNMENT OF POWER PURCHASE AGREEMENTS....................... 22 Section 6.1 Assignments Generally.................................................................................... 22 Section 6.2 Failure to Obtain EPS Compliant Energy........................................................ 23 Section 6.3 Adjustments to Swaps ..................................................................................... 23 Section 6.4 Adjustments to Base Quantities....................................................................... 23 Attachment Staff Report Item 17C
ii
Section 6.5 APC Party Make-Whole.................................................................................. 23 ARTICLE VII. PRODUCT REMARKETING ....................................................................... 23 Section 7.1 Product Remarketing ....................................................................................... 23 ARTICLE VIII. REPRESENTATIONS AND WARRANTIES ............................................ 24 Section 8.1 Representations and Warranties ...................................................................... 24 Section 8.2 Additional Representations and Warranties of Buyer..................................... 25 Section 8.3 Funding Agreement ......................................................................................... 25 Section 8.4 Notice of CEPC Remarketing Election ........................................................... 26 Section 8.5 Warranty of Title ............................................................................................. 26 Section 8.6 Disclaimer of Warranties................................................................................. 26 ARTICLE IX. TAXES................................................................................................................ 26 ARTICLE X. JURISDICTION; WAIVER OF JURY TRIAL .............................................. 27 Section 10.1 Consent to Jurisdiction .................................................................................... 27 Section 10.2 Waiver of Jury Trial ........................................................................................ 27 ARTICLE XI. FORCE MAJEURE.......................................................................................... 28 Section 11.1 Applicability of Force Majeure ....................................................................... 28 Section 11.2 Settlement of Labor Disputes.......................................................................... 28 ARTICLE XII. GOVERNMENTAL RULES AND REGULATIONS.................................. 28 Section 12.1 Compliance with Laws.................................................................................... 28 Section 12.2 Contests ........................................................................................................... 28 Section 12.3 Defense of Agreement..................................................................................... 28 ARTICLE XIII. ASSIGNMENT............................................................................................... 29 ARTICLE XIV. PAYMENTS.................................................................................................... 30 Section 14.1 Monthly Statements......................................................................................... 30 Section 14.2 Payment ........................................................................................................... 31 Section 14.3 Payment of Disputed Amounts........................................................................ 31 Section 14.4 Late Payment ................................................................................................... 32 Section 14.5 Audit; Adjustments.......................................................................................... 32 Section 14.6 Netting ............................................................................................................. 32 ARTICLE XV. RECEIVABLES PURCHASES...................................................................... 32 ARTICLE XVI. NOTICES........................................................................................................ 33 ARTICLE XVII. DEFAULT; REMEDIES; TERMINATION.............................................. 33 Section 17.1 Product Delivery Termination Events and Termination Payment Events....... 33 Section 17.2 Payments Following a Ledger Event............................................................... 38 Attachment Staff Report Item 17C
iii
Section 17.3 Reserved .......................................................................................................... 38 Section 17.4 Remedies and Termination.............................................................................. 38 Section 17.5 Replacement of Swaps..................................................................................... 39 Section 17.6 Present Assignment and Waiver of Right to Swap Termination Payments.... 42 Section 17.7 Limitation on Damages ................................................................................... 42 Section 17.8 Termination Payment Adjustment Schedule ................................................... 43 ARTICLE XVIII. MISCELLANEOUS.................................................................................... 43 Section 18.1 Indemnification Procedure .............................................................................. 43 Section 18.2 Deliveries......................................................................................................... 43 Section 18.3 Entirety; Amendments..................................................................................... 44 Section 18.4 Governing Law................................................................................................ 44 Section 18.5 Non-Waiver ..................................................................................................... 44 Section 18.6 Severability...................................................................................................... 45 Section 18.7 Exhibits............................................................................................................ 45 Section 18.8 Winding Up Arrangements.............................................................................. 45 Section 18.9 Relationships of Parties; Beneficiaries............................................................ 45 Section 18.10 Immunity ......................................................................................................... 45 Section 18.11 Rates and Indices............................................................................................. 45 Section 18.12 Limitation of Liability ..................................................................................... 46 Section 18.13 Counterparts..................................................................................................... 46 Section 18.14 Rights of Trustee ............................................................................................. 47 Section 18.15 Operational Services Agreement..................................................................... 47 Section 18.16 Waiver of Defenses ......................................................................................... 47 Section 18.17 U.S. Resolution Stay Provisions...................................................................... 47 Section 18.18 Seller Tariff...................................................................................................... 47 Section 18.19 No Recourse .................................................................................................... 47 Section 18.20 Rate Changes................................................................................................... 47 Section 18.21 Delivering Entity Tariff................................................................................... 48 Exhibit A-1 — Base Quantities; Base Delivery Point; Commodity Reference Prices Exhibit A-2 — Assigned Rights and Obligations
Exhibit B — Notices
Exhibit C — Product Remarketing
Attachment Staff Report Item 17C
iv
Exhibit D-1 — Termination Payment Schedule
Exhibit D-2 — Termination Payment Adjustment Schedule
Exhibit D-3 — Post-Termination Payment Schedule
Exhibit E — Receivables Purchase Exhibit
Exhibit F — Pricing and Other Terms
Exhibit G — Communications Protocol
Attachment Staff Report Item 17C
1 MASTER POWER SUPPLY AGREEMENT
This Master Power Supply Agreement (hereinafter, this “Agreement”) is made and entered into as of [_____], 2025 (the “Execution Date”), by and between Aron Energy Prepay [__] LLC, a Delaware limited liability company (“Seller”), and California Community Choice Financing Authority, a joint powers authority and a public entity of the State of California established pursuant to the provisions of the Joint Exercise of Powers Act (Article 1, Chapter 5, Division 7, Title 1, Section 6500 et seq. of the California Government Code, as amended) (“Buyer”). Each of Seller and Buyer is sometimes individually referred to herein as a “Party”, and collectively as the “Parties”.
W I T N E S S E T H:
WHEREAS, Buyer desires to purchase Product from Seller or Seller’s designee, as applicable, upon the terms and conditions hereinafter set forth; WHEREAS, in connection with the execution of this Agreement, Seller shall enter into that certain Electricity Purchase, Sale and Service Agreement, dated as of the date hereof (the “Electricity Sale and Service Agreement”), with J. Aron (as defined below), pursuant to which (a) Seller shall (i) delegate its power sale and delivery obligations under this Agreement to J. Aron and (ii) acquire Product for sale under this Agreement and (b) J. Aron shall act as Seller’s agent hereunder and the other agreements entered into by Seller in connection with the Clean Energy Project (as defined below); and
WHEREAS, concurrently with Buyer’s execution of the Clean Energy Purchase Contract (as defined below), the Project Participant (as defined below) under such Clean Energy Purchase Contract shall assign to J. Aron certain Assigned Rights and Obligations, including the right to receive Assigned Product, which Assigned Product will be resold to Seller under the Electricity Sale and Service Agreement, then resold to Buyer hereunder and then resold to the Project Participant under the Clean Energy Purchase Contract.
NOW, THEREFORE, in consideration of the premises above and the mutual covenants and agreements herein set forth, the Parties agree as follows:
ARTICLE I.
DEFINITIONS
Section 1.1 Defined Terms. The following terms, when used in this Agreement (including the preamble or recitals to this Agreement) and identified by the capitalization of the first letter thereof, have the respective meanings set forth below, unless the context otherwise requires:
“Additional Termination Payment” means, with respect to a Product Delivery Termination Date that results from a Termination Payment Event where the Additional Termination Payment is designated in Exhibit F as applying, the net present value sum as of such Early Termination Payment Date of a stream of Monthly values for each Month that would have Attachment Staff Report Item 17C
2 remained in the then-current Reset Period had such Early Termination Payment Date not occurred, with each such Monthly value equal to (A) the quantity of Energy (in MWh) that Seller would have been required to cause to be delivered during such Month if Seller was delivering only Base Quantities, multiplied by (B) $0.50/MWh. The net present value sum shall be calculated (i) assuming each such future Monthly value would have been realized on the last day of the Month, (ii) using a 30/360 day basis, and (iii) using the standard present value formula (present value = future value / (1 + i)^n) for each such Monthly value, where “i” is the SOFR Discount Rate for such Month plus the Discount Rate Spread (the sum expressed as an annual rate) and “n” is the number of years, including any fractional portion of a year, between such Month and the Early Termination Payment Termination Date. The “SOFR Discount Rate” for each Month is the fixed interest rate determined by Seller in a Commercially Reasonable manner and in accordance with standard market practices for such Month based on otherwise receiving/paying Simple Average SOFR with a designated maturity of one Month. “Simple Average SOFR” means the simple average of SOFRs for the applicable tenor, with the determination of this rate (which will be in arrears with a lookback) being established by Seller or its designee in accordance with (a) the conventions for this rate selected or recommended by the relevant Governmental Agency for determining Simple Average SOFR; and (b) to the extent that the Seller or its designee determines that Simple Average SOFR cannot be determined in accordance with clause (a) above, then the conventions for this rate that have been selected by the Seller or its designee giving due consideration to industry-accepted market practices for U.S. dollar denominated floating rate notes at such time.
“Administrative Fee” means the amount per MWh specified as such in Exhibit F. “Affiliate” means, with respect to either Party, any entity which is a direct or indirect parent or subsidiary of such Party or which directly or indirectly (i) owns or controls such Party, (ii) is owned or controlled by such Party, or (iii) is under common ownership or control with such Party. For purposes of this definition, “control” of an entity means the power, directly or indirectly, either to (a) vote 50% or more of the securities having ordinary voting power for the election of directors or Persons performing similar functions or (b) direct or cause the direction of the management and policies, whether by contract or otherwise. “Agreement” has the meaning specified in the preamble and shall include exhibits, recitals and attachments referenced herein and attached hereto. “Alternate Delivery Point” has the meaning specified in Section 5.1(a). “APC Contract Price” means (i) the fixed prices specified in Exhibit A-2 as of the date hereof with respect to the Assigned Prepay Quantities for the Initial Assignment Periods and (ii) the Day-Ahead Average Price with respect to the Assigned Prepay Quantities for any Assignment Period outside of the Initial Assignment Periods. “APC Party” means the seller under an Assignable Power Contract (as defined in the Clean Energy Purchase Contract).
“Applicable Project” has the meaning specified in the Clean Energy Purchase Contract.
Attachment Staff Report Item 17C
3 “Assigned Delivery Point” means, with respect to any Assigned Energy, the Assigned Delivery Point as set forth in the applicable Assignment Schedule for such Assigned Energy.
“Assigned Energy” means any Energy, including Energy associated with PCC1 Product and Long-Term PCC1 Product, to be delivered to J. Aron pursuant to any Assigned Rights and Obligations and re-delivered by J. Aron to Seller under the Electricity Sale and Service Agreement.
“Assigned PAYGO Product” has the meaning specified in the Clean Energy Purchase Contract.
“Assigned PPA” has the meaning specified in the Clean Energy Purchase Contract. “Assigned Prepay Quantity” has the meaning specified in the Clean Energy Purchase Contract.
“Assigned Product” means, as applicable, PCC1 Product, Long-Term PCC1 Product, Assigned Energy, Assigned RECs and any other Product included on an Assignment Schedule, subject to the limitations for such other Product set forth in Exhibit F of the Clean Energy Purchase Contract.
“Assigned Quantity” has the meaning specified in the Clean Energy Purchase Contract.
“Assigned RECs” means any RECs associated with PCC1 Product or Long-Term PCC1 Product to be delivered to J. Aron pursuant to any Assigned Rights and Obligations and re-delivered by J. Aron to Seller under the Electricity Sale and Service Agreement. “Assigned Rights and Obligations” has the meaning specified in the Clean Energy Purchase Contract.
“Assignment Agreement” has the meaning specified in the Clean Energy Purchase Contract.
“Assignment Period” has the meaning specified in the Clean Energy Purchase Contract.
“Assignment Schedule” has the meaning specified in Exhibit F of the Clean Energy Purchase Contract.
“Automatic Product Delivery Termination Event” has the meaning specified in Section 17.1.
“Balancing Authority” has the meaning specified in the CAISO Tariff. “Base Delivery Point” has the meaning specified in Section 5.1(a).
Attachment Staff Report Item 17C
4 “Base Product” means Firm (LD) Energy delivered to the Base Delivery Point. “Base Quantity” means, with respect to each Delivery Hour during the Delivery Period, the Base Unadjusted Quantity for such Delivery Hour less the Base Quantity Reduction for such Delivery Hour, each as set forth on Exhibit A-1, as Exhibit A-1 may be revised pursuant to Article VI.
“Base Quantity Reduction” means, with respect to each Delivery Hour during the Delivery Period, the “Base Quantity Reduction” of Base Product (in MWh) set forth for such Delivery Hour on Exhibit A-1, as Exhibit A-1 may be revised pursuant to Article VI. “Base Unadjusted Quantity” means, with respect to each Delivery Hour during the Delivery Period, the “Base Unadjusted Quantity” of Base Product (in MWh) set forth for such Delivery Hour on Exhibit A-1.
“Billing Statement” has the meaning specified in Section 14.1(b). “Bond Closing Date” means the first date on which the Bonds are issued pursuant to the Trust Indenture.
“Bonds” means the bonds issued pursuant to the Trust Indenture. “Business Day” means any day other than (i) a Saturday or Sunday, (ii) a Federal Reserve Bank Holiday, (iii) any other day on which commercial banks generally in either New York, New York or the State of California are authorized or required by Law to close, or (iv) any day excluded from a “Business Day,” as therein defined, pursuant to the Trust Indenture. “Buyer” has the meaning specified in the preamble.
“Buyer Swap” means (i) the transaction confirmation entered into under the ISDA Master Agreement, [dated as of the date hereof], between Buyer and the Swap Counterparty, and (ii) each replacement Buyer Swap entered into pursuant to Section 17.5. “Buyer Swap Custodial Agreement” means the Custodial Agreement, dated as of the Bond Closing Date, by and among Buyer, the Trustee, the Custodian, and the Swap Counterparty, and any replacement thereof entered into in connection with Buyer’s entry into a replacement Buyer Swap pursuant to Section 17.5.
“Buyer’s Statement” has the meaning specified in Section 14.1(a). “CAISO” means California Independent System Operator or its successor. “CAISO Tariff” means CAISO’s FERC-approved tariff, as modified, amended or supplemented from time to time.
“California Long-Term Contracting Requirements” means the long-term contracting requirement set forth in the Clean Energy and Pollution Reduction Act of 2015 (SB 350), California Public Utilities Code Section 399.13(b), and CPUC Decision 17-06-026 and Attachment Staff Report Item 17C
5 CPUC Decision 18-05-026, as may be modified by subsequent decision of the California Public Utilities Commission or by other Law.
“CEC” means California’s State Energy Resources Conservation and Development Commission, also known as the California Energy Commission, and any successor agency thereto. “CEPC Remarketing Election” means, for any Reset Period, issuance of a Remarketing Election Notice other than a Voided Remarketing Election Notice (each as defined under the Clean Energy Purchase Contract).
“Claiming Party” has the meaning specified in Section 11.1. “Claims” means all third party claims or actions, threatened or filed and, whether groundless, false, fraudulent, or otherwise, that directly or indirectly relate to the subject matter of the indemnities provided herein, and the resulting losses, damages, expenses, attorneys’ fees, experts’ fees, and court costs, whether incurred by settlement or otherwise, and whether such claims or actions are threatened or filed prior to or after the termination of this Agreement. “Clean Energy Project” has the meaning specified in the Clean Energy Purchase Contract.
“Clean Energy Purchase Contract” means that certain Clean Energy Purchase Contract between Buyer and Project Participant to be entered into in connection with the Clean Energy Project.
“Commercially Reasonable” or “Commercially Reasonable Efforts” means, with respect to any purchase or sale or other action required to be made, attempted or taken by a Party under this Agreement, such efforts as a reasonably prudent Person would undertake for the protection of its own interest under the conditions affecting such purchase or sale or other action, including without limitation, the amount of notice of the need to take such action, the duration and type of the purchase or sale or other action, the competitive environment in which such purchase or sale or other action occurs, and the risk to the Party required to take such action. “Commodity Reference Price” means either (i) the Day-Ahead Market Price, or (ii) the Real-Time Market Price, as applicable.
“Contract Price” has the meaning specified in the Clean Energy Purchase Contract. “Custodian” means initially [____], a [____], as custodian under each of the Swap Custodial Agreements.
“Day” means each period of 24 consecutive Hours commencing at the Hour ending at 01:00 (LPT) through the Hour ending at 24:00 (LPT).
“Day-Ahead Average Price” means, for any Assigned Products after the Initial Assignment Periods, the result of (i) (x) the sum of the Day-Ahead Market Prices for each Pricing Interval in a Month, divided by (y) the number of Pricing Intervals in such Month; plus (ii) Attachment Staff Report Item 17C
6 $[____]/MWh. As used in this definition, “Pricing Interval” means the unit of time for which CAISO establishes a separate price.
“Day-Ahead Market Price” has the meaning specified on Exhibit A-1 for the Primary Delivery Point.
“Deemed Remarketing Notice” has the meaning specified in Exhibit C. “Default Rate” means, as of any date of determination, the lesser of (a) the sum of (i) the rate of interest per annum quoted in The Wall Street Journal (Eastern Edition) under the “Money Rates” section as the “Prime Rate” for such date of determination, plus (ii) one percent per annum, or (b) if a lower maximum rate is imposed by applicable Law, such maximum lawful rate.
“Delivering Entity” means any Person designated by Seller in writing to effectuate the Product sale, delivery and scheduling obligations hereunder. The Delivering Entity shall initially be J. Aron, provided that any subsequent designation of a different Delivering Entity must be provided at least 30 days prior to the effectiveness thereof and must take effect on the first day of a Month.
“Delivering Entity Tariff” means the tariff or rate schedule that the Delivering Entity filed with FERC, and FERC has accepted for filing, as may be modified, amended or supplemented from time to time, authorizing the sale of energy, capacity, and certain ancillary services at market-based rates.
“Delivery Hour” has the meaning specified in Exhibit A-1. “Delivery Period” means the period specified in Exhibit F. “Delivery Point” means the Base Delivery Point or an Assigned Delivery Point, as applicable.
“Discount Rate Spread” has the meaning specified in Exhibit F. “Early Termination Payment Date” means the last Business Day of the first Month that commences after a Termination Payment Event; provided that, in the case of a Termination Payment Event due to a Failed Remarketing, the Early Termination Payment Date shall be the last Business Day of the then-current Interest Rate Period.
“Electricity Sale and Service Agreement” has the meaning specified in the recitals. “Eligible Renewable Energy Resource” has the meaning set forth in California Public Utilities Code Section 399.12(e) and California Public Resources Code Section 25741(a), as either code provision is amended or supplemented from time to time. “Energy” means three-phase, 60-cycle alternating current electric energy, expressed in MWh.
Attachment Staff Report Item 17C
7 “EPS” means California’s Emissions Performance Standards, as set forth in Sections 8340 and 8341 of the California Public Utilities Code, as implemented and amended from time to time, and any successor Law.
“EPS Compliant Energy” has the meaning specified in the Clean Energy Purchase Contract.
“EPS Energy Period” has the meaning specified in the Clean Energy Purchase Contract.
“Execution Date” has the meaning specified in the preamble. “Failed Remarketing” has the meaning specified in the Trust Indenture. “FERC” means the Federal Energy Regulatory Commission or any successor thereto.
“Firm (LD)” means, with respect to a Party’s obligation (i) to cause to be sold and delivered and (ii) to purchase and receive, as applicable, that such Party’s liability for the failure to meet such obligation shall only be excused to the extent that, and for the period during which, such performance is prevented by Force Majeure, and that in the absence of Force Majeure, the Party to which performance of such obligation is owed shall be entitled to receive from the Party which failed to cause to be delivered or to receive, as applicable, an amount determined pursuant to Section 4.1 or Section 4.2.
“Force Majeure” means an event or circumstance which prevents a Party or the Delivering Entity from performing its obligations under this Agreement, which event or circumstance was not anticipated as of the Execution Date, which is not within the reasonable control of, or the result of the negligence of, the Claiming Party, and which, by the exercise of due diligence, the Claiming Party is unable to overcome or avoid or cause to be avoided. Force Majeure shall include, provided the criteria in the first sentence are met, riot, insurrection, war, labor dispute, natural disaster, vandalism, terrorism, and sabotage. Force Majeure shall not be based on (i) the loss of Buyer’s markets; (ii) Buyer’s inability economically to use or resell the Product purchased hereunder; (iii) the delay, loss or failure of the Delivering Entity’s supply; or (iv) the Delivering Entity’s ability to sell the Product at a higher price. Neither Party may raise a claim of Force Majeure based in whole or in part on curtailment by a Transmission Provider unless (x) such Party has contracted for firm transmission with such Transmission Provider for the Product to be delivered to or received at the applicable Delivery Point and (y) such curtailment is due to “force majeure” or “uncontrollable force” or a similar term as defined under the Transmission Provider’s tariff; provided, however, that existence of the foregoing factors shall not be sufficient to conclusively or presumptively prove the existence of Force Majeure absent a showing of other facts and circumstances which in the aggregate with such factors establish that Force Majeure as defined in the first sentence hereof has occurred. For the avoidance of doubt, and notwithstanding anything herein to the contrary, (I) the declaration of force majeure by an APC Party under a PPA (as defined in an Assignment Agreement) or the declaration of “Force Majeure” by the Project Participant under the Clean Energy Purchase Contract shall each constitute Force Majeure hereunder, and (II) to the extent that an Assignment Agreement is terminated early, Attachment Staff Report Item 17C
8 such termination shall constitute Force Majeure with respect to the Delivering Entity hereunder until the earlier of (A) the commencement of an “Assignment Period” under a replacement Assignment Agreement, (B) the commencement of a J. Aron EPS Energy Period (as defined in the Electricity Sale and Service Agreement) or (C) the end of the second Month following the Month in which such early termination occurs.
“Funding Agreement” means initially that certain [____], dated as of [____], by and between Seller and the Funding Recipient and any replacement funding agreement entered into for a subsequent Reset Period.
“Funding Recipient” means initially [____] or its successors to or permitted assignees under the Funding Agreement, and any other Person that becomes a counterparty to Seller under a Funding Agreement for a subsequent Reset Period. 1 “Government Agency” means the United States of America, any state thereof, any municipality, or any local jurisdiction, or any political subdivision of any of the foregoing, including, but not limited to, courts, administrative bodies, departments, commissions, boards, bureaus, agencies, or instrumentalities.
“Governmental Approval” means any authorization, consent, approval, license, ruling, permit, exemption, variance, order, judgment, registration, filing, giving of notice to, decree, declaration of or regulation by any Government Agency relating to the valid execution, delivery or performance of this Agreement or the consummation of any of the transactions contemplated hereby.
“Hour” means the 60-minute period commencing at 00:00 (LPT) on the first Day of the Delivery Period and ending at 01:00 (LPT) on the first Day of the Delivery Period, and each 60-minute interval thereafter.
“Initial Assigned Rights and Obligations” means the Assigned Rights and Obligations set forth in Exhibit A-2 hereto as of the date hereof. “Initial Assignment Periods” means the Assignment Periods for the Initial Assigned Rights and Obligations specified in Exhibit A-2 hereto as of the date hereof. “Interest Rate Period” has the meaning specified in the Trust Indenture. “ISTs” has the meaning specified in Section 5.1(a).
“J. Aron” has the meaning specified in the recitals.
“J. Aron Acceleration Option” means the exercise by J. Aron of its right under the Electricity Sale and Service Agreement to pay the Termination Payment to Seller following the 1 NTD: Funding Recipient provisions are subject to review and revision to reflect final terms agreed upon with Funding Recipient.
Attachment Staff Report Item 17C
9 occurrence of a Ledger Event, which shall be subject to Seller’s prior consent thereto as provided in the Electricity Sale and Service Agreement.
“J. Aron Fixed Payment” has the meaning specified in the PPA Custodial Agreement.
“J. Aron Prepay Payment” has the meaning specified in the PPA Custodial Agreement.
“Law” means any statute, law, rule or regulation or any written judicial or administrative decision, ruling or interpretation with respect thereto or thereof having the effect of the foregoing enacted, promulgated, or issued by a Government Agency whether in effect as of the Execution Date or at any time during the term of this Agreement. “Ledger Event” has the meaning specified in Exhibit C.
“Long-Term PCC1 Product” means bundled renewable energy and RECs meeting the requirements of Portfolio Content Category 1, and the California Long-Term Contracting Requirements, to be delivered to J. Aron or any successor thereto pursuant to any Assigned Rights and Obligations.
“LPT” means the local prevailing time then in effect in the State of California. “Mandatory Purchase Date” has the meaning specified in the Trust Indenture. “MCE Gross Payment” has the meaning specified in the PPA Custodial Agreement. “Minimum Discount Percentage” has the meaning specified in the Clean Energy Purchase Contract.
“Month” means a period beginning on the first Day of a calendar month and ending immediately prior to the commencement of the first Day of the next calendar month. The term “Monthly” shall be construed accordingly.
“MWh” means megawatt-hour.
“Net Participant Price” means, for any Product and Delivery Hour, the Contract Price (as defined in the Clean Energy Purchase Contract) for such Product and Delivery Hour under the Clean Energy Purchase Contract.
“Optional Product Delivery Termination Event” has the meaning specified in Section 17.1.
“Party” has the meaning specified in the preamble.
“PCC1 Product” means bundled renewable energy and RECs meeting the requirements of Portfolio Content Category 1 to be delivered to J. Aron or any successor thereto pursuant to any Assigned Rights and Obligations.
Attachment Staff Report Item 17C
10 “Person” means any individual, corporation, partnership, joint venture, trust, unincorporated organization or Government Agency.
“Portfolio Content Category 1” or “PCC1” means any Renewable Energy Credit associated with the generation of electricity from an Eligible Renewable Energy Resource consisting of the portfolio content set forth in California Public Utilities Code Section 399.16(b)(1), as may be amended from time to time or as further defined or supplemented by Law. “PPA Custodial Agreement” means that certain PPA Custodial Agreement, dated as of the Bond Closing Date, by and among the Project Participant, Buyer, J. Aron and the PPA Custodian.
“PPA Custodian” means U.S. Bank Trust Company, National Association, a national banking association, and its successors as custodian under the PPA Custodial Agreement. “Prepayment” means the amount specified as such in Exhibit F. “Prepayment Outside Date” means the date specified as such in Exhibit F. “Primary Delivery Point” has the meaning specified in Section 5.1(a). “Product” means Energy and, to the extent included on an Assignment Schedule, associated RECs or other products related to the foregoing; provided that the inclusion of any Product on an Assignment Schedule is subject to the limitation set forth in Exhibit F of the Clean Energy Purchase Contract.
“Product Delivery Termination Date” means a date that occurs automatically pursuant to Section 17.1 or that is designated pursuant to Section 17.4(b) upon which the Delivery Period will end and Buyer’s and Seller’s respective obligations to receive and deliver or cause the delivery of Product under this Agreement will terminate. “Product Delivery Termination Event” has the meaning specified in Section 17.1. “Project Participant” means Ava Community Energy, a joint powers authority and a community choice aggregator organized under the Laws of the State of California. “Rating Confirmation” has the meaning specified in the Trust Indenture. “Re-Pricing Agreement” means the Re-Pricing Agreement, dated as of the Bond Closing Date, by and between Buyer and Seller.
“Real-Time Market Price” has the meaning specified on Exhibit A-1 for each Delivery Point.
“Remarketing Fee” means the amount specified in Exhibit F. “Remarketing Notice” has the meaning specified in Section 1 of Exhibit C.
Attachment Staff Report Item 17C
11 “Renewable Energy Credit” or “REC” has the meaning specified for “Renewable Energy Credit” in California Public Utilities Code Section 399.12(h), as may be amended from time to time or as further defined or supplemented by Law. “Replacement Assigned Rights and Obligations” has the meaning specified in the Clean Energy Purchase Contract.
“Replacement Price” means, with respect to any Shortfall Quantity of Base Quantities and Delivery Hour, (a) the price at which Buyer or Project Participant, acting in a Commercially Reasonable manner, purchases at the applicable Delivery Point Replacement Product for such Shortfall Quantity, plus (i) costs reasonably incurred by Buyer or Project Participant in purchasing Replacement Product for such Delivery Hour, and (ii) additional transmission charges, if any, reasonably incurred by Buyer or the Project Participant to the applicable Delivery Point, or at (b) Buyer’s option, the market price at such Delivery Point and for such Delivery Hour for Product not delivered as Replacement Product as determined by Buyer in a Commercially Reasonable manner. The Replacement Price for any Shortfall Quantity shall not include any administrative or other internal costs incurred by Buyer or the Project Participant and shall be limited to a price that is Commercially Reasonable with respect to the timing and manner of purchase. In no event shall the Replacement Price include any penalties, ratcheted demand or similar charges, nor shall Buyer or the Project Participant be required to utilize or change its utilization of its owned or controlled assets or market positions to minimize Seller’s liability. “Replacement Product” means any Energy purchased by Buyer or the Project Participant to replace any Shortfall Quantity at the Delivery Point where such Shortfall Quantity occurred; provided that such Energy is purchased for delivery in the Delivery Hour to which such Shortfall Quantity relates.
“Reset Period” means each “Reset Period” under the Re-Pricing Agreement. “RPS Law” means the California Renewable Energy Resources Act, including the California Renewables Portfolio Standard Program, Article 16 of Chapter 2.3, Division 1 of the California Public Utilities Code, as implemented and amended from time to time, and any successor Law.
“Schedule”, “Scheduled” or “Scheduling” means the actions of the Delivering Entity, Buyer and/or their designated representatives, including each Party’s Transmission Providers, if applicable, of notifying, requesting and confirming to each other the quantity and type of Product to be delivered during any given portion of the Delivery Period at a specified Delivery Point.
“Seller” has the meaning specified in the preamble.
“Seller Swap” means (i) the transaction confirmation entered into under the ISDA Master Agreement, [dated as of the date hereof], between Seller and the Swap Counterparty, and (ii) each replacement Seller Swap entered into pursuant to Section 17.5. “Seller Swap Custodial Agreement” means the Custodial Agreement, dated as of the Bond Closing Date, by and among Seller, the Trustee, the Custodian, and the Swap Attachment Staff Report Item 17C
12 Counterparty, and any replacement thereof entered into in connection with Seller’s entry into a replacement Seller Swap pursuant to Section 17.5.
“Seller Tariff” means the tariff that Seller has received from FERC, as may be modified, amended or supplemented from time to time.
“Shortfall Quantity” has the meaning specified in Section 4.1. “SOFR” means the Secured Overnight Financing Rate reported by the Federal Reserve Bank of New York.
“SPE Master Custodial Agreement” means that certain SPE Master Custodial Agreement, dated as of the date hereof, by and among the Seller, J. Aron, Buyer and the SPE Master Custodian.
“SPE Master Custodian” means initially The Bank of New York Mellon, a New York banking corporation as custodian under the SPE Master Custodial Agreement. “Special Tax Counsel” has the meaning specified in the Trust Indenture. “Specified Fixed Price” means the amount specified in Exhibit F. “Specified Investment Agreement” means a guaranteed investment contract between the Trustee and a provider concerning the investment of funds in the Commodity Reserve Account, the Debt Service Reserve Account and/or the Debt Service Account (each as defined in the Trust Indenture).
“Swap Counterparty” means (i) [____], a [____], and (ii) and any other Person that becomes counterparty to Buyer under a Buyer Swap or to Seller under a Seller Swap, in each case pursuant to Section 17.5.
“Swap Custodial Agreements” means the Buyer Swap Custodial Agreement and the Seller Swap Custodial Agreement.
“Swap Replacement Period” has the meaning specified in Section 17.5(c). “Terminating Party” means any Party that has the right to terminate this Agreement pursuant to Article XVII.
“Termination Payment” means, with respect to any Early Termination Payment Date, the amount specified on Exhibit D-1 for the Month in which such Early Termination Payment Date occurs (as increased or decreased (as applicable) by any applicable Termination Payment Adjustment Amount) without any set-off or netting of amounts then due from Buyer. “Termination Payment Adjustment Amount” means, with respect to any Early Termination Payment Date, the amount, if any, specified on Exhibit D-2 for the Month in which such Early Termination Payment Date occurs. For the avoidance of doubt, the Termination Payment Adjustment Amount is initially zero.
Attachment Staff Report Item 17C
13 “Termination Payment Adjustment Schedule” means the schedule of Termination Payment Adjustment Amounts set forth in Exhibit D-2, as such exhibit may be populated and amended from time to time in accordance with Section 17.8. “Termination Payment Event” means a Product Delivery Termination Event specified as a Termination Payment Event in Section 17.1 or (ii) a J. Aron Acceleration Option. 2 “Transaction Documents” has the meaning specified in Article XIII. “Transmission Provider” means any entity or entities transmitting or transporting the Product on behalf of the Delivering Entity or Buyer to or from the applicable Delivery Point. “Trust Indenture” means (i) the Trust Indenture to be entered into prior to the commencement of the Delivery Period between Buyer and the Trustee, and (ii) any trust indenture entered into in connection with the commencement of any Interest Rate Period after the initial Interest Rate Period between Buyer and the Trustee containing substantially the same terms as the indenture described in clause (i) and which is intended to replace the indenture described in clause (i) as of the commencement of such Interest Rate Period. “Trustee” means [____], a [____], and its successors as trustee under the Trust Indenture, and its successors as Trustee under the Trust Indenture. “Western EIM” has the meaning ascribed to “Energy Imbalance Market (EIM)” under the CAISO Tariff.
“WREGIS” means the Western Renewable Energy Generation Information System or its successor.
Section 1.2 Definitions; Interpretation. References to “Articles,” “Sections,” “Schedules” and “Exhibits” shall be to Articles, Sections, Schedules and Exhibits, as the case may be, of this Agreement unless otherwise specifically provided. Section headings in this Agreement are included herein for convenience of reference only and shall not constitute a part of this Agreement for any other purpose or be given any substantive effect. Any of the terms defined herein may, unless the context otherwise requires, be used in the singular or the plural, depending on the reference. The use herein of the word “include” or “including”, when following any general statement, term or matter, shall not be construed to limit such statement, term or matter to the specific items or matters set forth immediately following such word or to similar items or matters, whether or not nonlimiting language (such as “without limitation” or “but not limited to” or words of similar import) is used with reference thereto, but rather shall be deemed to refer to all other items or matters that fall within the broadest scope of such general statement, term or matter.
Except where expressly provided otherwise, any reference herein to any agreement or document includes all amendments, supplements or restatements to and of such agreement or document as may occur from time to time in accordance with its terms and the terms hereof, and any reference 2 NTD: Termination Payment Events are subject to further review and revision based on terms agreed upon with Funding Recipient.
Attachment Staff Report Item 17C
14 to a party to any such agreement includes all successors and assigns of such party thereunder permitted by the terms hereof and thereof.
ARTICLE II.
EXECUTION DATE; DELIVERY PERIOD; J. ARON AS AGENT
Section 2.1 Execution Date; Delivery Period. This Agreement shall become effective upon the Execution Date and, unless this Agreement is terminated early pursuant to Section 2.2, all of Seller’s and Buyer’s obligations under this Agreement shall be deemed to have been incurred upon the Execution Date. Unless this Agreement is sooner terminated pursuant to Section 2.2, the delivery of Product under this Agreement shall commence at the beginning of and continue for the Delivery Period.
Section 2.2 Termination by Seller Prior to Prepayment. Seller shall have no obligation to perform under this Agreement unless and until it has received the Prepayment from Buyer pursuant to Section 3.3. In the event Seller has not received the Prepayment prior to 24:00 LPT on the Prepayment Outside Date, Seller shall have the right, until such Prepayment has been paid, to terminate this Agreement without any further obligation or liability of either Party, it being understood and agreed that in the event Seller so terminates, such termination shall be effective as of Hour ending 24:00 LPT on the Prepayment Outside Date, regardless of whether Buyer tenders the Prepayment prior to such termination. For the avoidance of doubt, no Termination Payment or Additional Termination Payment shall be payable under any circumstances if this Agreement terminates pursuant to this Section 2.2; provided furthermore that, to the extent J. Aron designates a termination of the Electricity Sale and Service Agreement pursuant to Section 2.2 thereof, Seller shall be deemed to have designated a termination of this Agreement pursuant to this Section 2.2.
Section 2.3 J. Aron as Agent. Pursuant to the terms of the Electricity Sale and Service Agreement, Seller has irrevocably appointed J. Aron as its agent to issue notices and, as set forth therein, to take any other actions that Seller is required or permitted to take under this Agreement and the other agreements entered into by Seller in connection with the Clean Energy Project so long as the Electricity Sale and Service Agreement remains in effect. Buyer may rely on notices or other actions taken by J. Aron on Seller’s behalf; provided that, if (a) the Electricity Sale and Service Agreement is terminated and (b) Seller notifies Buyer that it has removed J. Aron as its agent, Buyer may no longer rely on notices or other actions taken by J. Aron.
ARTICLE III.
SALE AND PURCHASE
Section 3.1 Sale and Purchase of Product.
(a) Seller shall cause to be sold and delivered to Buyer, and Buyer hereby purchases and shall receive, or cause to be received, from the Delivering Entity, the applicable Product in the quantities and at the times and subject to the terms and conditions set forth in this Agreement. The quantities of Product to be sold and purchased and delivered and received pursuant to the terms and conditions set forth in this Agreement shall be equal to (a) the Base Attachment Staff Report Item 17C
15 Quantity, if any, for each Delivery Hour and (b) the Assigned Quantity delivered to J. Aron in each Month of the Delivery Period pursuant to the Assignment Agreements. Any such sale is made pursuant to and in accordance with the Seller Tariff.
(b) In recognition that Seller will have increased floating price payment obligations to the Swap Counterparty under the Seller Swap with respect to negatively priced Energy and the Swap Counterparty will have increased floating price payment obligations to Buyer under the Buyer Swap with respect to negatively priced Energy, the Parties acknowledge and agree that Seller shall have no payment obligations to Buyer with respect to negatively priced Energy.
Furthermore, with respect to any negatively priced Energy remarketed pursuant to this Agreement, Seller’s payment obligations under Exhibit C shall be reduced to the extent that such Energy is negatively priced.
(c) Buyer acknowledges and agrees that (A) in connection with the execution hereof, Seller has delegated all of its Product sale delivery, Scheduling and remarketing obligations under this Agreement to J. Aron as the initial Delivering Entity hereunder pursuant to the Electricity Sale and Service Agreement; (B) all Product sale, delivery and Scheduling obligations shall be performed by the Delivering Entity pursuant to and in accordance with the Delivering Entity Tariff and the Electricity Sale and Service Agreement; (C) Seller shall have no obligation to sell, deliver or Schedule Product hereunder unless Seller obtains a market-based rate tariff from FERC, and Buyer accordingly waives any and all rights to maintain an action against Seller for specific performance of (x) the Delivering Entity’s Product delivery and Scheduling obligations or (y) Seller’s obligation to cause Products to be sold and delivered; and (D) the Delivering Entity may identify (x) Buyer as the entity to which it makes Product sales and (y) the Electricity Sale and Service Agreement as the contract pursuant to which it makes Product sales to Buyer in the Delivering Entity’s electric quarterly reports and other submissions required to be filed with FERC. Notwithstanding the foregoing, any payment obligations under this Agreement relating to a failure to deliver or remarketing of Product shall remain Seller’s sole obligation, and Buyer agrees that it shall have no recourse whatsoever against J. Aron for such amounts. The Delivering Entity shall be a third-party beneficiary of this Agreement with the right to rely upon and enforce the terms hereof relating to the Delivering Entity’s rights and obligations. (d) To the extent that Seller has obtained a market-based rate tariff from FERC, Seller may designate itself as the Delivering Entity under this Agreement by writing notice to Buyer and subject to requirements set forth in the definition of Delivering Entity, and in such case the provisions of Error! Reference source not found. regarding the delegation of Seller’s Product sale and delivery obligations shall no longer apply; provided, however, that Seller’s delegation of its remarketing obligations to J. Aron shall remain in effect and any references to the Delivering Entity in Exhibit C shall be deemed to refer to J. Aron in such case.
Section 3.2 Limited Obligation to Take Base Quantities. Notwithstanding anything to the contrary in this Agreement, Buyer shall not be required to purchase and receive any Base Quantities hereunder, and Seller will remarket any Base Quantities that otherwise would be delivered hereunder pursuant to the provisions of Exhibit C.
Section 3.3 Prepayment. Prior to the commencement of the Delivery Period and subject to Buyer’s issuance of the Bonds, Buyer shall pay an amount equal to the Prepayment as Attachment Staff Report Item 17C
16 payment to Seller for all Product (other than Assigned PAYGO Product) to be delivered during the Delivery Period, and Seller shall accept the Prepayment as payment in full for all Product to be delivered hereunder. Buyer shall pay the Prepayment in a single lump sum payment by wire transfer of immediately available funds to an account designated by Seller. In no event shall Buyer be entitled to any rebate or refund of the Prepayment, but nothing in this Section 3.3 shall limit Buyer’s rights under (i) Article IV for Seller’s failure to Schedule or deliver Product (whether or not excused), (ii) Article XVII upon early termination of this Agreement or deliveries of Product or (iii) Exhibit C with respect to remarketing of Product in accordance therewith.
Section 3.4 Other Amounts Payable with Respect to Assigned Products. With respect to Assigned PAYGO Product delivered by the Delivering Entity, Buyer shall pay Seller an amount equal to the quantity of such Assigned PAYGO Product multiplied by the contract price then in effect under the applicable Assigned PPA for such Assigned PAYGO Product; provided that the Parties acknowledge and agree that the portion of any MCE Gross Payment paid pursuant to the PPA Custodial Agreement and attributable to such Assigned PAYGO Product shall be deemed to satisfy Buyer’s payment obligation hereunder with respect to such Assigned PAYGO Product.
ARTICLE IV.
FAILURE TO SCHEDULE PRODUCT
Section 4.1 Failure to Schedule or Deliver Base Quantity (Not Due to Force Majeure).
(a) If, for any Delivery Hour during the Delivery Period:
(i) Seller breaches its obligation to Schedule or deliver all or any portion of the Base Quantity at any Delivery Point pursuant to the terms of this Agreement; and
(ii) such failure is not due to either (A) the actions or inactions of Buyer (including Buyer’s breach of subsection (c) of this Section 4.1) or (B) Force Majeure, then the portion of the Base Quantity that Seller or the Delivering Entity, as applicable, failed to Schedule or deliver shall be a “Shortfall Quantity”.
(b) Seller shall pay to Buyer for each Shortfall Quantity in each Delivery Hour the result determined by the following formula:
P = Q x (HP + AF)
Where:
P = The amount payable by Seller under this Section 4.1(b); Q = Such Shortfall Quantity;
Attachment Staff Report Item 17C
17 HP = The higher of (i) the Replacement Price, as applicable or (ii) the Day-Ahead Market Price applicable to the Delivery Hour and the Delivery Point for which the Shortfall Quantity arose; and AF = The Administrative Fee
(c) Buyer shall cause Project Participant to comply with its obligations under Section 4.1(c) of the Clean Energy Purchase Contract to mitigate damages paid by Seller hereunder.
Section 4.2 Buyer’s Failure to Schedule or Receive Base Quantities (Not Due to Force Majeure). If, for any Delivery Hour during the Delivery Period, Buyer breaches its obligation to Schedule or receive, or cause to be Scheduled and received, all or any portion of the Base Quantity at any Delivery Point pursuant to the terms of this Agreement and such failure is not due to Force Majeure, the actions or inactions of Seller or is not with respect to any portion of the Base Quantity for which Buyer has previously issued a Remarketing Notice in accordance with Section 3 of Exhibit C, then Buyer shall be deemed to have issued a Deemed Remarketing Notice with respect to the portion not Scheduled or received.
Section 4.3 Failure to Deliver or Take Due to Force Majeure. If with respect to all or any portion of Base Quantities or Assigned Prepay Quantities and subject to Section 12 of Exhibit C:
(a) Buyer fails to Schedule or receive, or cause to be Scheduled and received, or the Delivering Entity fails to Schedule or deliver, or cause to be Scheduled and delivered, all or any portion of such quantities at any Delivery Point pursuant to the terms of this Agreement; and (b) such failure is due to Force Majeure claimed,
then Seller shall pay to Buyer the result determined by the following formula with respect to each such Delivery Point:
P = Q x IP
Where:
P = The amount payable by Seller under this Section 4.3; Q = The quantity of Energy described in the lead-in to this Section 4.3; and
IP = (i) The Day-Ahead Market Price applicable to the Delivery Hour and the Delivery Point with respect to any such Base Quantities and (ii) the applicable APC Contract Price with respect any such Assigned Prepay Quantities.
Section 4.4 Assigned Product. Notwithstanding anything herein to the contrary, neither Buyer nor Seller shall have any liability or other obligation to one another for any failure Attachment Staff Report Item 17C
18 to Schedule, receive, or deliver Assigned Product, except as expressly set forth in Section 4.3 and Section 12 of Exhibit C.
Section 4.5 Sole Remedies. Except with respect to (i) termination of this Agreement pursuant to Section 17.4 and (ii) the obligations of the Delivering Entity under Section 8(b) of Exhibit C, the remedies set forth in this Article IV shall be each Party’s sole and exclusive remedies for any failure by the other Party to Schedule, deliver or receive Product, as applicable, pursuant to this Agreement.
ARTICLE V.
DELIVERY POINTS; SCHEDULING
Section 5.1 Delivery Points.
(a) Base Delivery Points. All Base Product delivered under this Agreement shall be Scheduled for delivery to and receipt at (i) the CAISO delivery point set forth in Exhibit A-1 (the “Primary Delivery Point”) or (ii) any other CAISO delivery point (an “Alternate Delivery Point”) that has been mutually agreed by Buyer, the Project Participant, and Seller (the Primary Delivery Point or, to the extent specified, any Alternate Delivery Point being the “Base Delivery Point”). Delivery of Energy to Seller at the Primary Delivery Point shall be facilitated through submission of Inter-SC Trades, as defined in the CAISO Tariff (“ISTs”). Seller shall designate a scheduling coordinator in the CAISO market for this purpose as specified in Exhibit G. (b) Alternate Base Market Prices. The Day-Ahead Market Price and Real-Time Market Price for each Alternate Delivery Point, as applicable, shall be the price mutually agreed and identified by the Parties, or if no such price is identified for such Alternate Delivery Point, the price shall be the Day-Ahead Market Price and Real-Time Market Price, as applicable, specified on Exhibit A-1 for the Primary Delivery Point from which quantities are being shifted to such Alternate Delivery Point.
(c) Assigned Energy Delivery Points. Assigned Energy delivered by the Delivering Entity to Buyer under this Agreement shall be Scheduled for delivery to and receipt at the applicable Assigned Delivery Point specified in the applicable Assignment Schedule. All other Assigned Product shall be delivered consistent with the terms of the applicable Assignment Agreement.
(d) Updates to Swap Exhibits. If the Parties at any time amend Exhibit A-1 and/or Exhibit A-2, the Parties shall promptly notify the Swap Counterparty of any such amendment and furthermore shall update the corresponding exhibits to the Buyer Swap and the Seller Swap in accordance with the terms thereof.
Section 5.2 Transmission and Scheduling. Seller shall Schedule or arrange for Scheduling services with CAISO in accordance with the CAISO Tariff, to deliver the Base Product to the Base Delivery Point. Buyer shall Schedule or arrange for Scheduling services with CAISO in accordance with the CAISO Tariff, to receive the Base Product at the Base Delivery Point. If the J. Aron Schedules or arranges for Scheduling services for the delivery of the Base Product at the Base Delivery Point, then Seller’s obligations under this Section shall be relieved pro tanto. If Attachment Staff Report Item 17C
19 the Project Participant Schedules or arranges for Scheduling services to receive the Base Product at the Base Delivery Point, then Buyer’s obligations under this Section shall be relieved pro tanto.
Scheduling of Assigned Energy shall be in accordance with the applicable Assignment Schedule.
Section 5.3 Title and Risk of Loss. Title to and risk of loss of the Energy delivered under this Agreement shall pass from the Delivering Entity to Buyer at the applicable Delivery Point. The transfer of title and risk of loss for all Assigned Product shall be in accordance with the applicable Assignment Agreement; provided that all Assignment Agreements shall provide for the transfer of Renewable Energy Credits in accordance with WREGIS. Seller warrants that it will deliver to Buyer the Base Quantity of Product free and clear of all liens, security interests, claims and encumbrances or any interest therein or thereto by any person arising prior to the Delivery Point. Subject to Section 18.1, each Party shall indemnify, defend and hold harmless the other Party from and against any Claims made by a third party arising from or out of any event, circumstance, act or incident related to the Energy delivered hereunder first occurring or existing during the period when control and title to Base Product or Assigned Product is vested in the indemnifying Party as provided in this Section 5.3; provided that, notwithstanding the foregoing, (a) Seller shall have no obligations to indemnify, defend or hold harmless Buyer for any such Claims relating to replacement costs, cover damages or similar liabilities that are payable to the Project Participant or other Person because of Buyer’s failure to deliver any Product to the Project Participant or other Person through no fault of Seller and (b) no obligation to indemnify, defend or hold harmless shall supplant or control the provisions of this Agreement relating to Force Majeure. Notwithstanding anything to the contrary herein, no Party shall have any obligations to indemnify, defend or hold harmless the other Party in respect of any Claims relating to any Assigned Product.
Section 5.4 PCC1 Product and Long-Term PCC1 Product. To the extent that any Assigned Product is PCC1 Product or Long-Term PCC1 Product, the following provisions apply:
(a) Eligibility. Seller, and, if applicable, its successors, represents and warrants that throughout the Delivery Term of this Agreement that: (i) the Project qualifies and is certified by the CEC as an Eligible Renewable Energy Resource (“ERR”) as such term is defined in Public Utilities Code Section 399.12 or Section 399.16; and (ii) the Project’s output delivered to Buyer qualifies under the requirements of the California Renewables Portfolio Standard. To the extent a change in law occurs after execution of this Agreement that causes this representation and warranty to be materially false or misleading, it shall not be an Event of Default if Seller has used commercially reasonable efforts to comply with such change in law. [STC 6, Non-Modifiable. (Source: D.07-11-025, Attachment A.) D.08-04-009]. As used above, any capitalized terms not otherwise defined herein shall have the meaning specified in the Assigned PPA. (b) Transfer of Renewable Energy Credits. Seller and, if applicable, its successors, represents and warrants that throughout the Delivery Term of this Agreement the Renewable Energy Credits transferred to Buyer conform to the definition and attributes required for compliance with the California Renewables Portfolio Standard, as set forth in California Public Utilities Commission Decision Attachment Staff Report Item 17C
20 08-08-028, and as may be modified by subsequent decision of the California Public Utilities Commission or by subsequent legislation. To the extent a change in law occurs after execution of this Agreement that causes this representation and warranty to be materially false or misleading, it shall not be an Event of Default if Seller has used commercially reasonable efforts to comply with such change in law. [STC REC-1, Non-modifiable. D.11-01-025]. As used above, any capitalized terms not otherwise defined herein shall have the meaning specified in the Assigned PPA.
(c) Tracking of RECs in WREGIS. Seller warrants that all necessary steps to allow the Renewable Energy Credits transferred to Buyer to be tracked in the Western Renewable Energy Generation Information System will be taken prior to the first delivery under the contract. [STC REC-2, Non-modifiable. D.11-01- 025]. As used above, any capitalized terms not otherwise defined herein shall have the meaning specified in the Assigned PPA.
(d) Governing Law. This Agreement and the rights and duties of the Parties hereunder shall be governed by and construed, enforced and performed in accordance with the laws of the state of California, without regard to principles of conflicts of law. To the extent enforceable at such time, each Party waives its respective right to any jury trial with respect to any litigation arising under or in connection with this Agreement. [STC 17, Non-Modifiable. (Source: D.07-11- 025, Attachment A) D.08-04-009].
(e) Seller Representations and Warranties.
Seller represents and warrants:
(i) Seller has the right to sell the Assigned Product from the Applicable Project;
(ii) Seller has not sold the Assigned Product or any REC or other attributes of the Assigned Product to be transferred to Buyer to any other person or entity;
(iii) The Energy component of the Assigned Product produced by the Applicable Project and purchased by Seller for resale to Buyer hereunder is not being sold by Seller back to the Applicable Project or APC Party;
(iv) Assigned Product to be purchased and sold pursuant to this Agreement has not been committed to another party;
(v) The Assigned Product is free and clear of all liens or other encumbrances;
(vi) Seller will deliver to Buyer all Assigned Energy and associated RECs generated by the Applicable Project for Long-Term PCC1 Product in compliance with the California Long-Term Contracting Requirements, if applicable
Attachment Staff Report Item 17C
21 (vii) The Assigned Product supplied to Buyer under this Agreement that is Long-Term PCC1 Product will be sourced solely from Applicable Projects that have an Assignment Period of ten years or more in length, or otherwise in compliance with the California Long Term Contracting Requirements; and
(viii) Seller will cooperate and work with Buyer, the CEC, and/or the CPUC to provide any documentation required by the CPUC or CEC to support the Product’s classification as a Portfolio Content Category 1 Product as set forth in California Public Utilities Code Section 399.16(b)(1) or, if applicable, or compliance with the California Long-Term Contracting Requirements.
Seller further represents and warrants to Buyer that, to the extent that the Product sold by Seller is a resale of part or all of a contract between Seller and one or more third parties, Seller represents, warrants and covenants that the resale complies with the following conditions in (i) through (iv) below throughout the Assignment Period:
(i) The original upstream third-party contract(s) meets the criteria of California Public Utilities Code Section 399.16(b)(1);
(ii) This Agreement transfers only electricity and RECs that have not yet been generated prior to the Assignment Period;
(iii) The electricity transferred by this Agreement is transferred to Buyer in real time; and
(iv) If the Applicable Project has an agreement to dynamically transfer electricity to a California balancing authority, the transactions implemented under this Agreement are not contrary to any condition imposed by a balancing authority participating in the dynamic transfer arrangement.
(f) Subsequent Changes in Law. In the event that the qualifications or requirements of the RPS program, PCC1 Product or the California Long-Term Contracting Requirements change, Seller shall take commercially reasonable actions to meet the amended qualifications or requirements of the RPS Law, PCC1 Product or the California Long-Term Contracting Requirements but will not be required to incur any unreimbursed costs to comply with the RPS Law, PCC1 or the California Long- Term Contracting Requirements, collectively. (g) Limitations. Notwithstanding anything to the contrary in this Agreement, the Parties acknowledge and agree as follows:
(i) Seller has relied exclusively upon the representations and warranties of each respective APC Party set forth in the Assigned PPAs in making the representations and warranties set forth in this Section 5.4 and has not performed any independent investigation with respect thereto; Attachment Staff Report Item 17C
22 (ii) J. Aron has agreed under the Electricity Sale and Service Agreement to terminate the applicable Assignment Period in the event that any representation or warranty in this Section 5.4 proves to be incorrect in any respect;
(iii)Buyer agrees that its sole recourse for any breach of the provisions of this Section 5.4 shall be the termination of the applicable Assignment Period and Buyer shall have no other recourse against Seller or remedies under this Agreement; and
(iv)Section 5.4(d) shall only apply to the provisions of this Section 5.4 and all other provisions of this Agreement shall remain subject to and interpreted in accordance with Section 18.4.
Section 5.5 Communications Protocol. With respect to the Scheduling and delivery of Base Quantities, Buyer shall comply and Prepay LLC shall cause the Delivering Entity to comply with the communications protocol set forth in Exhibit G. Scheduling and transmission of Assigned Energy shall be in accordance with the applicable Assignment Agreement pursuant to which the Project Participant shall act as scheduling agent for each of J. Aron, Seller and Buyer.
Section 5.6 Deliveries Within CAISO or Another Balancing Authority. The Parties acknowledge that Energy delivered by Seller at a Delivery Point within CAISO or another Balancing Authority (including a Balancing Authority operating within the Western EIM) will be delivered in accordance with the CAISO Tariff and rules of the Balancing Authority as applicable.
Scheduling such Energy in accordance with the requirements of the applicable Product into the applicable Balancing Authority shall constitute delivery of such Product to Buyer hereunder, provided that any associated Renewable Energy Credits and other Assigned Products associated with the Energy are also delivered to Buyer.
Section 5.7 Assigned Products. Notwithstanding anything to the contrary herein, Seller shall have no liability under this Article V with respect to any Assigned Products.
ARTICLE VI.
ASSIGNMENT OF POWER PURCHASE AGREEMENTS
Section 6.1 Assignments Generally. The Project Participant and the Buyer have agreed pursuant to Article VI of the Clean Energy Purchase Contract that (a) prior to the commencement of the Delivery Period, the Project Participant will exercise Commercially Reasonable Efforts to assign the Initial Assigned Rights and Obligations to J. Aron, and (b) in the event of (i) any expiration, termination or anticipated termination of the Assignment Period for the Initial Assigned Rights and Obligations or any subsequent EPS Energy Period or (ii) a failure to assign any portion of the Initial Assigned Rights and Obligations, the Project Participant is obligated to exercise Commercially Reasonable Efforts and cooperate with J. Aron in good faith to assign certain Replacement Assigned Rights and Obligations to J. Aron and, under certain circumstances specified in the Electricity Sale and Service Agreement, J. Aron shall have the ability to procure EPS Compliant Energy for ultimate redelivery to the Project Participant under Attachment Staff Report Item 17C
23 the Electricity Sale and Service Agreement. Following the effectiveness of any Assignment Agreement and Assignment Schedule executed in connection with any Replacement Assigned Rights and Obligations or J. Aron’s procurement of EPS Compliant Energy consistent with Section
6.1(c) of the Electricity Sale and Service Agreement, the Base Quantities shall be reduced as provided by Article VI and Exhibit F of the Clean Energy Purchase Contract. References to Article VI and Exhibit F of the Clean Energy Purchase Contract mean such provisions of the Clean Energy Purchase Contract (including any embedded definitions or cross-referenced provisions) as they originally exist, as modified, amended, supplemented or waived with the consent of J. Aron.
Section 6.2 Failure to Obtain EPS Compliant Energy. To the extent an EPS Energy Period terminates or expires and EPS Compliant Energy is not available for delivery hereunder upon such termination or expiration, then Seller shall remarket the Base Quantities pursuant to the provisions of Exhibit C until EPS Compliant Energy is available for delivery hereunder.
Section 6.3 Adjustments to Swaps. The Parties agree to issue appropriate notices to cause the Buyer Swap and the Seller Swap to be revised in connection with the commencement or termination of any Assignment Period such that the notional quantities under such swaps will be adjusted to be consistent with any changes to the Base Quantity determined pursuant to Section 6.4.
Section 6.4 Adjustments to Base Quantities. The Base Quantity Reductions set forth on Exhibit A-1 hereto have been calculated to reflect the Initial Assigned Rights and Obligations using the methodology described in Exhibit F of the Clean Energy Purchase Contract.
Effective on the first day of the third Month following the early termination of an EPS Energy Period for any reason, Seller shall revise Exhibits A-1 and A-2 (i) as provided by Article VI and Exhibit F to the Clean Energy Purchase Contract to the extent a subsequent EPS Energy Period will commence on such date or (ii) to reverse such Base Quantity Reductions associated with the EPS Energy Period that terminated for all remaining Hours in the Delivery Period to the extent a replacement EPS Energy Period will not commence on such date. In the case of any other commencement of a subsequent EPS Energy Period, Seller shall revise (a) the Base Quantity Reductions in Exhibit A-1 as provided by Article VI and Exhibit F of the Clean Energy Purchase Contract and (b) Exhibit A-2 to reflect the details for such EPS Energy Period.
Section 6.5 APC Party Make-Whole. Seller shall reimburse Buyer for any amounts owed by Buyer to the Project Participant pursuant to [Section 6.4] of the Clean Energy Purchase Contract due to J. Aron’s failure to pay when due any J. Aron Prepay Payment under the PPA Custodial Agreement.
ARTICLE VII.
PRODUCT REMARKETING
Section 7.1 Product Remarketing. If the Project Participant is in default under the Clean Energy Purchase Contract or is unable to receive all or any portion of the Product purchased by Buyer under this Agreement due to (a) insufficient demand by the Project Participant’s retail customers, (b) the existence of an Assigned Prepay Shortfall Amount from any Attachment Staff Report Item 17C
24 prior Month or the occurrence of an Assigned PPA FM Remarketing Event (as defined in Exhibit F), (c) a change in Law, or (d) the application of Section 3.2 requiring the remarketing of Base Quantities, and the Project Participant requests (or in the case of clauses (b) and (d), is deemed to have requested) remarketing services from the Delivering Entity pursuant to the provisions of Exhibit C; provided that any remarketing request delivered under clause (c) above shall constitute a “Structural Remarketing Notice” and any Structural Remarketing Notice (i) must be provided at least six Months in advance of the requested remarketing services and (ii) shall be subject to Seller’s consent in its reasonable discretion. If Buyer requests remarketing of any Assigned Product under any of the circumstances described in the preceding sentence other than clause (b) thereof, then J. Aron will have the right to terminate the Assignment Period applicable to such Assigned Product effective as of the first Delivery Hour to which such remarketing applies. If J.
Aron does not elect to terminate the Assignment Period, Buyer and Seller shall negotiate in good faith to adjust the provisions of Exhibit C to reflect pricing, delivery and other terms related to such Assigned Product, and the Delivering Entity shall have no obligation to remarket such Assigned Product unless and until Buyer and the Delivering Entity have mutually agreed to such adjustments to Exhibit C. The Delivering Entity has agreed to observe and perform its obligations set forth in Exhibit C.
ARTICLE VIII.
REPRESENTATIONS AND WARRANTIES
Section 8.1 Representations and Warranties. As a material inducement to entering into this Agreement, each Party, with respect to itself, hereby represents and warrants to the other Party as of the Execution Date as follows:
(a) for Buyer as the representing Party, Buyer is a joint powers authority duly organized and validly existing under the laws of the State of California; (b) for Seller as the representing Party, it is duly organized, validly existing and in good standing under the Laws of the state in which it is organized and in good standing in the State of California;
(c) it has all requisite power and authority, corporate or otherwise, to own its material properties, carry on its material business as now being conducted, enter into, deliver and to perform its obligations under this Agreement and to carry out the terms and conditions hereof and the transactions contemplated hereby;
(d) there is no litigation, action, suit, proceeding with service of process accomplished with respect to such Party or investigation pending or, to the best of such Party’s knowledge, threatened, in each case before or by any Government Agency and, in each case, which could reasonably be anticipated to materially and adversely affect such Party’s ability to perform its obligations under this Agreement or that questions the validity, binding effect or enforceability hereof, any action taken or to be taken by such Party pursuant hereto, or any of the transactions contemplated hereby;
Attachment Staff Report Item 17C
25 (e) the execution, delivery, and performance of this Agreement by such Party have been duly authorized by all necessary action on the part of such Party and do not require any approval or consent of any security holder of such Party or any holder (or any trustee for any holder) of any indebtedness or other obligation of such Party; (f) this Agreement has been duly executed and delivered on behalf of such Party by an appropriate officer or authorized Person of such Party and constitutes the legal, valid and binding obligation of such Party, enforceable against it in accordance with its terms, as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium and similar Laws affecting creditors’ rights generally and by general principles of equity; (g) the execution, delivery and performance of this Agreement by such Party shall not violate any provision of any Law, order, writ, judgment, decree or other legal or regulatory determination applicable to it;
(h) the execution, delivery and performance by such Party of this Agreement, and the consummation of the transactions contemplated hereby, including the incurrence by such Party of its financial obligations under this Agreement, shall not result in any violation of any term of any material contract or agreement applicable to it, or any of its charter or bylaws or of any license, permit, franchise, judgment, writ, injunction or regulation, decree, order, charter, Law or ordinance applicable to it or any of its properties or to any obligations incurred by it or by which it or any of its properties or obligations are bound or affected, or of any determination or award of any arbitrator applicable to it, and shall not conflict with, or cause a breach of, or default under, any such term or result in the creation of any lien upon any of its properties or assets, except with respect to Buyer, the lien of the Trust Indenture;
(i) to the best of the knowledge and belief of such Party, no Governmental Approval is required in connection with the valid authorization, execution, delivery and performance by such Party of this Agreement or the consummation of any of the transactions contemplated hereby other than those Governmental Approvals that have been obtained; and (j) it enters this Agreement as a bona-fide, arm’s-length transaction involving the mutual exchange of consideration and, once executed by both Parties, considers this Agreement a legally enforceable contract.
Section 8.2 Additional Representations and Warranties of Buyer. As a material inducement to entering into this Agreement, Buyer hereby represents and warrants to Seller as of the Execution Date as follows:
(a) Buyer is entering into this Agreement for the purpose of acquiring Product for sale to the Project Participant pursuant to the Clean Energy Purchase Contract; and (b) any amounts payable by Buyer under this Agreement shall (i) other than the Prepayment, be payable as an item of Operating Expense under (and as defined in) the Trust Indenture, and (ii) not constitute an indebtedness or liability of Buyer within the meaning of any constitutional or statutory limitation or restriction applicable to Buyer.
Section 8.3 Funding Agreement.
Attachment Staff Report Item 17C
26 (a) Except (i) to cure any ambiguity, supply any omission, or cure or correct any defect or inconsistent provision in a Funding Agreement, (ii) to insert such provisions clarifying matters or questions arising under a Funding Agreement as are necessary or desirable and are not contrary to or inconsistent therewith or (iii) to convert or supplement any provision in a manner consistent with the intent of a Funding Agreement and the other Transaction Documents, Seller agrees that it shall not (x) agree to any amendment, alteration, assignment or modification to any Funding Agreement or any guaranty of Funding Recipient’s obligations thereunder or (y) enter into any agreements with the initial Funding Recipient other than the Funding Agreement without receipt of (A) a Rating Confirmation and (B) the prior written consent of Buyer; provided that, for the avoidance of doubt, no such consent of Buyer shall be required in connection with (I) the replacement, refinancing or re-pricing of a Funding Agreement at the end of any Interest Rate Period or (II) Seller’s assignment of its interest in a Funding Agreement or consent to Funding Recipient’s assignment of its interest in a Funding Agreement by Funding Recipient to the extent Seller provides a Rating Confirmation to Buyer with respect to any such assignment. (b) [To the extent an Early Termination Payment Date is designated hereunder, Seller agrees that it shall promptly withdraw the entire amount of the [Funding Account] under and as defined in the Funding Agreement to the extent permitted by the terms thereof.
Additionally, Seller agrees that it shall not withdraw the [Early Repayment Amount] under and as defined in the Funding Agreement pursuant to the provision of Exhibit A to the Funding Agreement titled “Early Repayment Date and Early Repayment Amount” unless such Early Repayment Amount plus other available funds are sufficient for the early redemption of the Bonds].
3 Section 8.4 Notice of CEPC Remarketing Election. Seller covenants and agrees that it shall provide prompt notice to J. Aron if the Project Participant makes a CEPC Remarketing Election for any Reset Period.
Section 8.5 Warranty of Title. Seller warrants that it will deliver to Buyer (a) all Base Product free and clear of all liens, security interests, claims and encumbrances or any interest therein or thereto by any Person arising prior to the Delivery Point, and (b) all Assigned Product free and clear of all liens, security interests, claims and encumbrances or any interest therein or thereto by any Person that are imposed on such Assigned Product solely as a result of Seller’s actions.
Section 8.6 Disclaimer of Warranties. EXCEPT FOR THE WARRANTIES
EXPRESSLY MADE BY SELLER IN THIS ARTICLE VIII, SELLER HEREBY DISCLAIMS
ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
ARTICLE IX.
TAXES
As between Seller and Buyer, Seller shall (i) be responsible for, and pay or cause to be paid, all ad valorem, excise, severance, production and other taxes assessed with respect to 3 NTD: Subject to review of final Funding Agreement.
Attachment Staff Report Item 17C
27 Product (other than any Assigned Product) delivered by the Delivering Entity or Seller, as applicable, pursuant to this Agreement arising prior to the applicable Delivery Point and (ii) indemnify Buyer and its Affiliates for any such taxes paid by Buyer or its Affiliates. As between Seller and Buyer, Buyer shall (i) be responsible for all taxes with respect to Product received pursuant to this Agreement assessed at or from the applicable Delivery Point, and (ii) indemnify Seller and its Affiliates for any such taxes paid by Seller or its Affiliates. Nothing shall obligate or cause a Party to pay or be liable for any tax for which it is exempt under Law.
ARTICLE X.
JURISDICTION; WAIVER OF JURY TRIAL
Section 10.1 Consent to Jurisdiction. ALL JUDICIAL PROCEEDINGS
BROUGHT AGAINST EITHER PARTY ARISING OUT OF OR RELATING HERETO
SHALL BE BROUGHT EXCLUSIVELY IN THE FEDERAL COURTS OF THE UNITED
STATES OF AMERICA FOR THE NORTHERN DISTRICT OF CALIFORNIA SITTING IN THE CITY AND COUNTY OF SAN FRANCISCO. BY EXECUTING AND DELIVERING
THIS AGREEMENT, EACH PARTY AGREES THAT SERVICE OF ALL PROCESS IN ANY
SUCH PROCEEDING IN ANY SUCH COURT MAY BE MADE BY REGISTERED OR
CERTIFIED MAIL, RETURN RECEIPT REQUESTED, TO THE PARTY AT ITS ADDRESS PROVIDED IN ACCORDANCE WITH Article XVI; AND AGREES THAT SERVICE AS
PROVIDED ABOVE IS SUFFICIENT TO CONFER PERSONAL JURISDICTION OVER
THE PARTY IN ANY SUCH PROCEEDING IN ANY SUCH COURT, AND OTHERWISE CONSTITUTES EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT.
Section 10.2 Waiver of Jury Trial. TO THE EXTENT PERMITTED BY LAW,
EACH OF THE PARTIES HEREBY AGREES TO WAIVE ITS RESPECTIVE RIGHTS TO A
JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING UNDER THIS AGREEMENT. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT
AND THAT RELATE TO THE SUBJECT MATTER OF THIS AGREEMENT, INCLUDING
CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS. EACH PARTY ACKNOWLEDGES THAT
THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS
RELATIONSHIP, THAT EACH HAS ALREADY RELIED ON THIS WAIVER IN
ENTERING INTO THIS AGREEMENT, AND THAT EACH WILL CONTINUE TO RELY ON THIS WAIVER IN ITS RELATED FUTURE DEALINGS. EACH PARTY FURTHER
WARRANTS AND REPRESENTS THAT IT HAS REVIEWED THIS WAIVER WITH ITS
LEGAL COUNSEL AND THAT IT KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. THIS
WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER
ORALLY OR IN WRITING (OTHER THAN BY MUTUAL WRITTEN WAIVER SPECIFICALLY REFERRING TO THIS Section 10.2 AND EXECUTED BY EACH OF THE
PARTIES), AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS HERETO. IN THE EVENT OF
LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY A COURT.
Attachment Staff Report Item 17C
28 ARTICLE XI.
FORCE MAJEURE
Section 11.1 Applicability of Force Majeure. To the extent either Party is prevented by Force Majeure from carrying out, in whole or part, its obligations under this Agreement and such Party (the “Claiming Party”) gives notice and details of the Force Majeure to the other Party as soon as practicable, then the Claiming Party shall be excused from the performance of its obligations with respect to this Agreement (other than the obligation to make payments then due or becoming due with respect to performance prior to the Force Majeure and as provided in Section 4.3 and Section 17.4). The Claiming Party shall remedy the Force Majeure with all reasonable dispatch. For the duration of the Claiming Party’s non-performance (and only for such period), the non-Claiming Party shall not be required to perform or resume performance of its obligations to the Claiming Party corresponding to the obligations of the Claiming Party excused by Force Majeure.
Section 11.2 Settlement of Labor Disputes. Notwithstanding anything to the contrary herein, the Parties agree that the settlement of strikes, lockouts or other industrial disturbances shall be within the sole discretion of the Party experiencing such disturbance, and the failure of a Party to settle such strikes, lockouts or other industrial disturbances shall not prevent the existence of Force Majeure or of reasonable dispatch to remedy the same.
ARTICLE XII.
GOVERNMENTAL RULES AND REGULATIONS
Section 12.1 Compliance with Laws. This Agreement shall be subject to all present and future Laws of any Government Agency having jurisdiction over this Agreement or the transactions to be undertaken hereunder, and neither Party has knowingly undertaken or will knowingly undertake or knowingly cause to be undertaken any activity that would conflict with such Laws; provided, however, that nothing herein shall be construed to restrict or limit either Party’s right to object to or contest any such Law, or its application to this Agreement or the transactions undertaken hereunder, and neither acquiescence therein or compliance therewith for any period of time shall be construed as a waiver of such right.
Section 12.2 Contests. Excluding all matters involving a contractual dispute between the Parties, no Party shall contest, cause to be contested or in any way actively support the contest of the equity, fairness, reasonableness or lawfulness of any terms or conditions set forth or established pursuant to this Agreement, as those terms or conditions may be at issue before any Government Agency in any proceeding, if the successful result of such contest would be to preclude or excuse the performance by either Party of this Agreement or any provision hereunder.
Section 12.3 Defense of Agreement. Excluding all matters involving a contractual dispute between the Parties, each Party shall hereafter exercise Commercially Reasonable Efforts to defend and support this Agreement before any Government Agency in any proceeding, if the substance, validity or enforceability of all or any part of this Agreement is hereafter directly challenged or if any proposed changes in regulatory practices or procedures Attachment Staff Report Item 17C
29 would have the effect of making this Agreement invalid or unenforceable or would subject either Party to any greater or different regulation or jurisdiction that materially affects the rights or obligations of the Parties under this Agreement.
ARTICLE XIII.
ASSIGNMENT
Neither Party shall assign this Agreement or any of its rights or obligations under this Agreement without the prior written consent of the other Party; provided, however, that:
(a) pursuant to the Trust Indenture, Buyer may, without the consent of Seller, transfer, sell, pledge, encumber or assign this Agreement to the Trustee in connection with any financing or other financial arrangements; provided that Buyer shall not assign this Agreement unless, contemporaneously with the effectiveness of such assignment, Buyer also assigns the Buyer Swap (and the Buyer Swap Custodial Agreement) to the same assignee; (b) upon written notice to Buyer, Seller may, without Buyer’s consent, assign this Agreement to an Affiliate of Seller, which assignment shall constitute a novation; provided that the assignee shall agree in writing to be bound by the terms and conditions of this Agreement and Seller shall not assign this Agreement unless (i) Seller delivers a Rating Confirmation to Buyer with respect to such assignment, (ii) contemporaneously with the effectiveness of such assignment, Seller also assigns the Seller Swap, the Seller Swap Custodial Agreement and the SPE Master Custodial Agreement to the same assignee and either (A) Seller assigns the Funding Agreement and Electricity Sale and Service Agreement to the same assignee or (B) the assignee provides to Buyer a guarantee of its obligations by GSG (as defined in the Electricity Sale and Service Agreement) and GSG continues to guarantee J. Aron’s performance under the Electricity Sale and Service Agreement, and (iii) the assignee is a special purpose entity approved by Buyer or its obligations under this Agreement are guaranteed by Funding Recipient to the satisfaction of Buyer; and
(c) if (i) Seller notifies Buyer that the Funding Agreement will not be replaced, refinanced or re-priced as of the end of any Interest Rate Period or (ii) Seller is unable to provide, under the Re-Pricing Agreement, an estimated Available Discount Percentage (as defined in the Re-Pricing Agreement) that is equal to or greater than the applicable Minimum Discount Percentage under the Clean Energy Purchase Contract, then, at the request of Buyer, Seller will reasonably cooperate with Buyer to cause Seller’s (or Seller’s Affiliate’s, if applicable) interest in this Agreement, the Re-Pricing Agreement, the Seller Swap, the Seller Swap Custodial Agreement, the SPE Master Custodial Agreement and any Specified Investment Agreement with a term that extends past the then-current Interest Rate Period to which Seller or any Affiliate is a party and all agreements related to any of the foregoing (the “Transaction Documents”) to be novated to a replacement seller; provided that (x) a Rating Confirmation is obtained for any Bonds required to be redeemed on the first Mandatory Purchase Date following the effective date of such novation, (y) the Swap Counterparty shall have provided its prior written consent to such novation in accordance with the terms of the Seller Swap to which it is a party, and (z) after giving effect to such novation, Seller will have no obligations (contingent or otherwise, including any obligation to make or repeat any representations or warranties other than basic representations on authority Attachment Staff Report Item 17C
30 and the right to transfer its interests under this Agreement without encumbrances) or be required to make any payment under any Transaction Document or otherwise in connection with or following such novation other than any obligations that would have existed or payments that would have been required had this Agreement terminated as of the end of the last Reset Period that commenced prior to such novation.
ARTICLE XIV.
PAYMENTS
Section 14.1 Monthly Statements.
(a) Buyer’s Statements. No later than the 5th day of each Month during the Delivery Period (excluding the first Month of the Delivery Period) and the first Month following the end of the Delivery Period, Buyer shall deliver to Seller a statement (a “Buyer’s Statement”) listing (i) in respect of any Shortfall Quantity in the prior Month, the Replacement Price applicable to such Shortfall Quantity, and (ii) any other amounts due to Buyer in connection with this Agreement with respect to the prior Months.
(b) Billing Statements.
(i) No later than the 20th day of each Month during the Delivery Period (excluding the first Month of the Delivery Period) and the first Month following the end of the Delivery Period (the “Billing Date”), Seller shall deliver a statement (a “Billing Statement”) to Buyer and the Project Participant indicating (i) the total amount due to Buyer, if any, under Article IV, Article V, Article VI, Article VII and Exhibit C with respect to the prior Months, (ii) any amounts due to Seller in connection with this Agreement with respect to the prior Months, and (iii) the net amount due to Buyer or Seller; provided that, notwithstanding the foregoing, invoicing for all Assigned PAYGO Products shall occur under the PPA Custodial Agreement. The Parties acknowledge and agree that Seller may consolidate Billing Statements under this Agreement with billing statements delivered by Affiliates of Seller under other master power supply agreements between Buyer and Affiliates of Seller.
(ii) For each Month of any Assignment Period, the Billing Statement prepared by Seller shall assume that all Assigned Prepay Quantities under each Assigned PPA were actually delivered for such Month. To the extent that a Monthly Statement (as defined in the PPA Custodial Agreement) for an Assigned PPA delivered under the PPA Custodial Agreement reflects that less than the Assigned Prepay Quantities were actually delivered under any such Assigned PPA, then (A) the previously delivered Billing Statement shall be deemed to be updated in accordance with such Monthly Statement, (B) subject to the application of Section 12(b) of Exhibit C regarding remediation by Assigned PAYGO Product delivered under any other Assigned PPA in the Month in which an Assigned Prepay Shortfall Amount (as defined in the PPA Custodial Agreement) occurs, the Delivering Entity shall be deemed to remarket and purchase such undelivered portion of the Assigned Prepay Quantities for its own account resulting in a Ledger Entry (as defined in Exhibit C) and (C) the Seller shall owe a resettlement payment to Buyer in an Attachment Staff Report Item 17C
31 amount equal to the product of (x) the applicable APC Contract Price multiplied by (y) the portion of the Assigned Prepay Quantities not delivered in such Month. The Parties acknowledge and agree that J. Aron shall have a separate resettlement payment obligation under the Electricity Sale and Service Agreement with respect to the amounts described in clause (C) of the preceding sentence, and J. Aron’s payment of the J. Aron Resettlement Payment as defined in and pursuant to the PPA Custodial Agreement shall satisfy the corresponding obligations of the respective parties under each of the Electricity Sale and Service Agreement, this Agreement and the Clean Energy Purchase Contract. (c) Supporting Documentation. Upon request by either Party, the other Party shall deliver such supporting documentation of the foregoing statements and information described in this Section 14.1 as such requesting Party may reasonably request.
Section 14.2 Payment.
(a) Payments Due. If the Billing Statement indicates an amount due from Buyer, then Buyer shall remit such amount to Seller by wire transfer (pursuant to the instructions set forth in the SPE Master Custodial Agreement), in immediately available funds, on or before the 25
th day of the Month following the most recent Month to which such Billing Statement relates, or if such day is not a Business Day, the following Business Day. If the Billing Statement indicates an amount due from Seller, then Seller shall remit such amount to Buyer by wire transfer (pursuant to Buyer’s instructions), in immediately available funds, on or before the 24 th day of the Month
following the most recent Month to which such Billing Statement relates, or if such day is not a Business Day, the preceding Business Day. Notwithstanding the foregoing, payments due from Buyer for Assigned PAYGO Product shall be due one Business Day preceding the payment date specified in the PPA (as defined in the applicable Assignment Agreement); provided that, as set forth in Section 3.4, such payment obligation will be satisfied to the extent such amounts are paid by the Project Participant pursuant to the PPA Custodial Agreement. (b) No Duty to Estimate. If Buyer fails to issue a Buyer’s Statement with respect to any Month, Seller shall not be required to estimate any amounts due to Buyer for such Month, provided that Buyer may include any such amount on subsequent Buyer’s Statements issued within the next sixty (60) days. The sixty (60)-day deadline in this subsection (b) replaces the two (2) year deadline in Section 14.5 with respect to any claim by any non-delivering Party of inaccuracy in any estimated invoice issued or payment made pursuant to this subsection (b).
Section 14.3 Payment of Disputed Amounts. If Seller disputes any amounts included in a Buyer’s Statement, Seller shall (a) (except in the case of manifest error) nonetheless calculate the Billing Statement based on the amounts included in Buyer’s Statement and (b) pay any amount required by the Billing Statement in accordance with Section 14.2 without regard to any right of set-off, counterclaim, recoupment or other defenses to payment that Seller may have; provided, however, that Seller shall have the right, after payment, to dispute any amounts included in a Buyer’s Statement or otherwise used to calculate payments due under this Agreement pursuant to Section 14.5. If Buyer disputes any amounts included in the Billing Statement, Buyer may withhold payment to the extent of the disputed amount; provided, however, that interest shall be due at the Default Rate for any withheld amount later found to have been properly due.
Attachment Staff Report Item 17C
32 Section 14.4 Late Payment. If a Party owing a net payment under Section 14.2 fails to remit the full amount payable within one Business Day of when due, interest on the unpaid portion shall accrue from the date due until the date of payment at the Default Rate.
Section 14.5 Audit; Adjustments.
(a) Right To Audit. A Party shall have the right, at its own expense, upon reasonable notice to the other Party and at reasonable times, to examine and audit and to obtain copies of the relevant portion of the books, records, and telephone recordings of the other Party to the extent reasonably necessary, but only to such extent, to verify the accuracy of any statement, charge, payment, or computation made under this Agreement. This right to examine, audit, and obtain copies shall not be available with respect to proprietary information not directly relevant to transactions under this Agreement; provided that, notwithstanding the foregoing, to the extent any such examination and audit reveals any material discrepancy in the other Party’s books and records, the examining Party shall have a right to be reimbursed by the other Party for costs reasonably incurred with such examination and audit.
(b) Deadline for Objections. Each Buyer’s Statement and each Billing Statement shall be conclusively presumed final and accurate and all associated claims for under-or overpayments shall be deemed waived unless such Buyer’s Statement or Billing Statement is objected to in writing, with adequate explanation and/or documentation, within two (2) years after the applicable Month of Product delivery.
(c) Payment of Adjustments. All retroactive adjustments shall be paid in full by the Party owing payment within 30 days of notice and substantiation of such inaccuracy. If the Parties are unable to agree upon any retroactive adjustments requested by either Party within the time period specified in Section 14.5(a), then either Party may pursue any remedies available with respect to such adjustments at law or in equity. Retroactive adjustments for payments made based on incorrect Buyer’s Statements or Billing Statements shall bear interest at the Default Rate from the date such payment was made. To the extent necessary to allow Seller to verify any amounts due under this Agreement, Buyer shall cause the Project Participant to comply with the provisions of Section 14.5(a) to the extent necessary to allow Seller to verify any amounts due under this Agreement.
Section 14.6 Netting. The Parties shall net all amounts due and owing, including any past due amounts (which, for the avoidance of doubt, shall include any accrued interest), arising under this Agreement such that the Party owing the greater amount shall make a single payment of the net amount to the other Party in accordance with this Article XIV. Notwithstanding the foregoing, no Party shall be entitled to net (i) any amounts that are in dispute or (ii) any payments due to Seller against (A) the Termination Payment if it becomes due or (B) any payments due from Seller pursuant to Article IV, Article V or Exhibit C.
ARTICLE XV.
RECEIVABLES PURCHASES
Attachment Staff Report Item 17C
33 Subject to the terms set forth in Exhibit E, Seller has the obligation to purchase Put Receivables (as defined in Exhibit E) and the option to purchase Elective Call Receivables and Swap Deficiency Receivables (each as defined in Exhibit E). The Parties acknowledge and agree that (a) any Elective Call Receivables and Swap Deficiency Call Receivables purchased by Seller under Exhibit E shall be re-purchased by J. Aron from Seller to the extent the conditions set forth in Exhibit C of the Electricity Sale and Service Agreement are satisfied (provided that any Elective Call Receivables purchased by Seller pursuant to Section 2.3(c) of Exhibit E shall be transferred by Seller to J. Aron as a credit against amounts due from Seller to J. Aron under the Electricity Sale and Service Agreement); and (b) the purchase of any Put Receivables by Seller will be funded solely from amounts available, if any, under the SPE Master Custodial Agreement for such purpose.
ARTICLE XVI.
NOTICES
Any notice, demand, statement or request required or authorized by this Agreement to be given by one Party to the other Party (or to any third party) shall be in writing and shall either be sent by email transmission, courier, or personal delivery (including overnight delivery service) to each of the notice recipients and addresses specified in Exhibit B for the receiving Party. Any such notice, demand, or request shall be deemed to be given (i) when delivered by email transmission, or (ii) when actually received if delivered by courier or personal delivery (including overnight delivery service). Each Party shall have the right, upon 10 days’ prior written notice to the other Party, to change its list of notice recipients and addresses in Exhibit B. The Parties may mutually agree in writing at any time to deliver notices, demands or requests through alternate or additional methods, such as electronic mail. Notwithstanding the foregoing, either Party may at any time notify the other that any notice, demand, statement or request to it must be provided by email transmission for a specified period of time or until further notice, and any communications delivered by means other than email transmission during the specified period of time shall be ineffective.
ARTICLE XVII.
DEFAULT; REMEDIES; TERMINATION
Section 17.1 Product Delivery Termination Events and Termination Payment Events. Each event listed on the table below constitutes a “Product Delivery Termination Event”.
This table also specifies the potential Terminating Party for each Product Delivery Termination and identifies which Product Delivery Termination Events are also “Termination Payment Events” and the potential Terminating Party for each Product Delivery Termination Event. For each Product Delivery Termination Event where the potential Terminating Party is listed as “Automatic”, such event is an “Automatic Product Delivery Termination Event” and each other Product Delivery Termination Event is an “Optional Product Delivery Termination Event.” [Table on following page.]
Attachment Staff Report Item 17C
34 Event Related to:
Product Delivery
Termination Event:
Potential
Terminating
Party:
Termination
Payment
Event?
a) Failure of Seller to
pay Buyer due to
Funding Recipient
failure to pay
Seller
Seller fails to pay when due any amounts owed to Buyer pursuant to this Agreement because of a failure by Funding Recipient to pay when due any amounts owed to Seller pursuant to the Funding Agreement and such failure continues for 30 days after receipt by Seller and Funding Recipient of notice thereof from Buyer.
Automatic Yes
b) Failure of bond
remarketing or re-pricing
As of one week prior to the beginning of the first Month following a Reset Period, either:
(i) Buyer has not entered into a bond purchase agreement, firm remarketing agreement or similar agreement with respect to the remarketing or refunding of the existing Bonds; or
(ii) The initial Funding Recipient or successor Funding Recipient and Seller are unable to replace, refinance or re-price the Funding Agreement for a subsequent Reset Period.
Automatic Yes
c) Failure to
remarket
A Failed Remarketing occurs. Automatic Yes
d) Ledger Event The occurrence of a Ledger Event. Seller No e) Failure to
purchase
Identified
Receivables (as
defined in Exhibit
E)
Both:
(i) Seller has received a Swap Deficiency Call Receivables Offer (as defined in Exhibit E) pursuant to Section 2.2(a) of the Exhibit E and
(ii) Seller has not exercised or is deemed not to have exercised its related option to purchase the Identified Receivables described in such Swap Deficiency Call Receivable Offer.
Automatic No
f) Designation of an
Early Termination
Date as defined
and under the
Electricity Sale
and Service
Agreement
J. Aron designates an Early Termination Date (as defined in the Electricity Sale and Service Agreement) under the Electricity Sale and Service Agreement due to a CEPC Remarketing Election by the Project Participant for any Reset Period.
Automatic Yes
Attachment Staff Report Item 17C
35 Event Related to:
Product Delivery
Termination Event:
Potential
Terminating
Party:
Termination
Payment
Event?
g) Termination of
Electricity Sale
and Service
Agreement and
Failure to Replace
J. Aron
Both:
(i) an Early Termination Date occurs due to a J. Aron Default (as each such term is defined under the Electricity Sale and Service Agreement) under the Electricity Sale and Service Agreement, and
(ii) Seller is unable to enter into a replacement Electricity Sale and Service Agreement with substantially the same terms or terms approved by Buyer by the date that is 120 days following such Early Termination Date as defined and occurs under the Electricity Sale and Service Agreement.
For the avoidance of doubt, Seller may only enter into such a replacement Electricity Sale and Service Agreement if (I) the GSG Guaranty (as defined in the Electricity Sale and Service Agreement) applies to the obligations of the replacement seller thereunder or (II) Seller delivers a Rating Confirmation to Buyer with respect to its entry into such replacement Electricity Sale and Service Agreement.
Automatic No
h) Termination of
Electricity Sale
and Service
Agreement and
Failure to Replace
J. Aron
Both:
(i) an Early Termination Date (as defined under the Electricity Sale and Service Agreement) occurs under the Electricity Sale and Service Agreement for any reason other than as specified in clauses (f) and (g) above, and (ii) Seller is unable to enter into a replacement Electricity Sale and Service Agreement with substantially the same terms or terms approved by Buyer by the date that is 120 days following such Early Termination Date as defined and occurs under the Electricity Sale and Service Agreement.
Seller shall not enter into such a replacement Electricity Sale and Service Agreement unless (I) the GSG Guaranty (as defined in the Electricity Sale and Service Agreement) applies to the obligations of the replacement seller thereunder or (II) Seller delivers a Rating Confirmation to Buyer with respect to its entry into such replacement Electricity Sale and Service Agreement.
Automatic No
i) Termination of a
Buyer Swap
Except in the case where an Automatic Product Delivery Termination Event has occurred under Sections 17.1(e) [Failure to Purchase Identified Call Receivables],
17.1(f)-(h) [Termination of Electricity Sale and Service Agreement], 17.1(j) Seller No
Attachment Staff Report Item 17C
36 Event Related to:
Product Delivery
Termination Event:
Potential
Terminating
Party:
Termination
Payment
Event?
[Termination of a Buyer Swap for Certain Buyer Defaults], 17.1(k) [Termination of Seller Swap for Seller Defaults] or 17.(l) [Dissolution or Bankruptcy of Buyer], both:
(i) an Early Termination Date (as defined in a Buyer Swap) is designated by a Swap Counterparty pursuant to the terms of a Buyer Swap or occurs automatically pursuant to the terms of a Buyer Swap based on a Termination Event where Buyer is the sole Affected Party (as each term is defined in the Buyer Swap), and (ii) either the corresponding Seller Swap or such Buyer Swap is not replaced within the Swap Replacement Period.
j) Termination of a
Buyer Swap for
Certain Buyer
Defaults and
Termination
Events
An Early Termination Date (as defined in the Buyer Swap) is designated by a Swap Counterparty pursuant to the terms of a Buyer Swap based on an Event of Default under Section 5(a)(vii) (Bankruptcy) of a Buyer Swap where Buyer is the Defaulting Party (as each term is defined in the Buyer Swap).
Automatic No
k) Termination of a
Seller Swap for
Seller Defaults
and Termination
Events
Both:
(i) an Early Termination Date (as defined in the Seller Swap) is designated by a Swap Counterparty pursuant to the terms of a Seller Swap based on an Event of Default where Seller is the Defaulting Party or a Termination Event where Seller is the sole Affected Party (as each term is defined in the Seller Swap) or otherwise occurs automatically pursuant to the terms of a Seller Swap, but excluding any termination as a result of the termination of this Agreement based on a Product Delivery Termination Event under Section 17.1(d) [Ledger Event] or Section 17.1(h) [Termination of a Buyer Swap], and (ii) such Seller Swap or the corresponding Buyer Swap is not replaced within the Swap Replacement Period.
Automatic No
l) Dissolution or
Bankruptcy of
Buyer
If (i) an involuntary case or other proceeding shall be commenced against Buyer seeking liquidation, reorganization or other relief with respect to it or its debts under any applicable Federal or State bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium or similar law now or hereafter in effect or seeking the appointment of a custodian, receiver, liquidator, assignee, trustee, sequestrator or similar official of it or any substantial part of its property, and such involuntary case or Automatic No
Attachment Staff Report Item 17C
37 Event Related to:
Product Delivery
Termination Event:
Potential
Terminating
Party:
Termination
Payment
Event?
other proceeding shall remain undismissed and unstayed, or an order or decree approving or ordering any of the foregoing shall be entered and continued unstayed and in effect, in any such event, for a period of 60 days; or (ii) if Buyer shall commence a voluntary case or proceeding under any applicable Federal or State bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium or other similar law or any other case or proceeding to be adjudicated a bankrupt or insolvent, or shall consent to the entry of a decree or order for relief in an involuntary case or proceeding under any applicable Federal or State bankruptcy, insolvency, reorganization or other similar law or to the commencement of any bankruptcy or insolvency case or proceeding against it, or if it shall file a petition or answer or consent seeking reorganization or relief under any applicable Federal or State law, or consent to the filing of such petition or to the appointment of or taking possession by a custodian, receiver, liquidator, assignee, trustee, sequestrator or similar official of Buyer or any substantial part of its property, or shall make an assignment for the benefit of creditors, or admit in writing its inability to pay its debts generally as they become due, or shall take corporate action in furtherance of any such action.
Attachment Staff Report Item 17C
38 Section 17.2 Payments Following a Ledger Event. Following the occurrence of a Ledger Event, Seller shall pay to Buyer any amounts that become payable from J. Aron to Seller pursuant to Section 17.6 of the Electricity Sale and Service Agreement.
Section 17.3 Reserved.
Section 17.4 Remedies and Termination.
(a) Automatic Product Delivery Termination Event. Upon the occurrence of any Automatic Product Delivery Termination Event, a Product Delivery Termination Date shall be deemed to be designated as of the end of the Month in which such Automatic Product Delivery Termination Event occurs.
(b) Optional Product Delivery Termination Event. If at any time an Optional Product Delivery Termination Event has occurred and is continuing, then the Terminating Party, by notice to the other Party specifying the relevant Optional Product Delivery Termination Event, may designate a day not earlier than the last day of the Month in which such notice is deemed given under Article XVI as the Product Delivery Termination Date; provided, however, that with respect to an Optional Product Delivery Termination Event related to a Buyer Swap or Seller Swap, the Terminating Party may, at any time after the commencement of the Swap Replacement Period, conditionally designate a Product Delivery Termination Date, with such designation being conditioned upon (i) the termination and failure to replace either the corresponding Seller Swap or such Buyer Swap and (ii) the Product Delivery Termination Date occurring no earlier than the last day of the Month in which the Swap Replacement Period ends. (c) Effect of Product Delivery Termination Date. As of the Product Delivery Termination Date, (i) the Delivery Period shall end, (ii) the obligation of Buyer to Schedule or receive deliveries of Product from Seller under this Agreement shall terminate, and (iii) the obligation of Seller to Schedule or make any further deliveries of Product to Buyer under this Agreement shall terminate and, unless such Product Delivery Termination Date resulted from a Termination Payment Event, such obligation to deliver Product shall be replaced with a continuing obligation to make payment of the amounts set forth in Exhibit D-3 to Buyer until the earlier of (A) the Month in which a Termination Payment Event occurs and (B) the last due date for such payments under Exhibit D-3. For the avoidance of doubt, (i) except as set forth in this Section
17.4(c) and in Section 17.4(d), this Agreement will continue past a Product Delivery Termination Date, and (ii) a Termination Payment Event may arise contemporaneously with a Product Delivery Termination Date or at any time thereafter and the occurrence of a Product Delivery Termination Date shall not prevent the occurrence of a Termination Payment Event. (d) Early Termination Payment Date. A Termination Payment Event shall occur upon (i) a Product Delivery Termination Event that is specified as a Termination Payment Event in Section 17.1 or (ii) a J. Aron Acceleration Option. Following a Termination Payment Event, Seller on the Early Termination Payment Date shall (A) pay the Termination Payment and (B) if applicable, pay the Additional Termination Payment, in each case, to the Trustee pursuant to payment instructions issued by Buyer or, in the absence of such instructions, by wire transfer.
Such amounts shall be paid together with interest thereon (before as well as after judgment) from (and including) the Early Termination Payment Date to (but excluding) the date such amount is Attachment Staff Report Item 17C
39 paid, at the Default Rate. The obligation of Seller to pay the Termination Payment and, if applicable, the Additional Termination Payment on the Early Termination Payment Date is unconditional, irrespective of the validity or enforceability of this Agreement or any other agreement contemplated hereby, any waiver or consent by Buyer, or any other circumstances that might otherwise constitute a legal or equitable discharge of Seller or a defense of Seller to pay the Termination Payment and, if applicable, the Additional Termination Payment. Seller waives all rights to set-off, counterclaim, recoupment and any other defenses that might otherwise be available to Seller with regard to Seller’s obligation to pay the Termination Payment and, if applicable, the Additional Termination Payment on the Early Termination Payment Date. (e) Acknowledgement of Parties. The Parties acknowledge that it is impractical and difficult to assess actual damages as a result of a termination of the Delivery Period under this Agreement, and the Parties therefore agree that the payment of the Termination Payment and any applicable Additional Termination Payment or the continued payment of amounts specified in Exhibit D-3, as applicable, is a fair and reasonable pre-estimate of the actual damages that would be incurred by Buyer as a result of termination of the Delivery Period under this Agreement for any reason and is not a penalty.
(f) Exclusive Termination Rights. Neither this Agreement nor the Delivery Period may be terminated for any reason except as specified in this Article XVII and in Section
2.2. Except with respect to amounts due for periods prior to the Product Delivery Termination Date, the continued payment of amounts required to be made under Section 17.4(c), and, as applicable, the payment of the Termination Payment and any Additional Termination Payment shall be the sole and exclusive remedy for each Party upon the termination of the Delivery Period and this Agreement for any reason, including as a result of rejection of this Agreement by either Party in any bankruptcy proceedings.
(g) Payment of Investment Agreement Breakage Costs. In the event that a payment in respect of breakage costs becomes due from Buyer under a Specified Investment Agreement due to the occurrence of an Early Termination Payment Date, Seller shall pay to Buyer an amount equal to the amount of such payment no later than the later of (A) one (1) Business Day prior to the date such payment is required to be paid by Buyer pursuant to such Specified Investment Agreement and (B) one (1) Business Day following receipt by Seller of a statement setting forth in reasonable detail the amount of such payment. In the event that a payment in respect of breakage costs becomes payable to Buyer under a Specified Investment Agreement due to the occurrence of an Early Termination Payment Date, Buyer shall pay to Seller an amount equal to the amount of such payment no later than one (1) Business Day following receipt of such payment by Buyer.
Section 17.5 Replacement of Swaps.
(a) Neither Party shall exercise any optional right it may have to terminate this Agreement as a result of the termination of any Seller Swap or any Buyer Swap without first complying with this Section 17.5. Each of Buyer and Seller agrees that it will not replace any Buyer Swap or Seller Swap, as applicable, unless the other Party is replacing its Buyer Swap or Seller Swap, as applicable, with the same replacement Swap Counterparty.
Attachment Staff Report Item 17C
40 (b) If:
(i) any Buyer Swap or any Seller Swap terminates,
(ii) Buyer or Seller delivers a termination notice under a Buyer Swap or Seller Swap,
(iii) a Swap Counterparty delivers a termination notice under a Buyer Swap or Seller Swap, or
(iv) any Buyer Swap or any Seller Swap is otherwise reasonably anticipated to become subject to immediate termination, then each Party whose swap is affected shall notify the other Party of the existence of such circumstances and identify the affected Buyer Swap or Seller Swap (the “Affected Swap”). (c) Following receipt of a notice under Section 17.5(b), the Parties shall attempt to replace both the Affected Swap and the corresponding unaffected Seller Swap or Buyer Swap with the same Swap Counterparty (the “Unaffected Swap”) by:
(i) if a Buyer Swap and a Seller Swap with another Swap Counterparty are in effect and otherwise are not subject to termination, (A) exercise any rights they may have to increase their notional quantities under such Buyer Swap and Seller Swap in order to effect a replacement upon termination of the Affected Swap (which increase shall be deemed to be a replacement of both the Buyer Swap and Seller Swap for purposes of Section 17.5 if the full notional quantities of the Affected Swap are thereby replaced), and (B) subsequent to such a replacement, Seller and Buyer shall cooperate in good faith to locate replacement agreements with a second Swap Counterparty and, upon locating a second Swap Counterparty, Seller and Buyer shall reduce their notional quantities under the remaining Seller Swap and Buyer Swap to their original levels and enter into a replacement Seller Swap and Buyer Swap with the replacement Swap Counterparty for the remaining notional quantities; or
(ii) to the extent Seller or Buyer cannot increase their notional quantities under another Buyer Swap and Seller Swap as contemplated by clause (i), cooperate in good faith to locate replacement agreements with an alternate Swap Counterparty to replace both the relevant Seller Swap and relevant Buyer Swap within the Swap Replacement Period.
(d) The “Swap Replacement Period” is a period (i) commencing on the earlier of the date of (x) any termination of a Buyer Swap or Seller Swap designated by a Swap Counterparty, and (y) delivery of a notice of anticipated termination of a Buyer Swap or Seller Swap by a Swap Counterparty, and (ii) ending 60 days after either (A) the commencement of the Swap Replacement Period if Base Quantities are above zero MWhs upon the commencement of such period or otherwise (B) any date on which Base Quantities are increased above zero MWhs, provided that:
Attachment Staff Report Item 17C
41 (i) the Swap Replacement Period will end immediately once it starts if such Buyer Swap or Seller Swap is subject to termination due to the insolvency or bankruptcy of Buyer or Seller;
(ii) the Swap Replacement Period will end five Business Days after it starts if such Seller Swap is subject to termination due to Seller’s failure to pay amounts due or post credit support, other than where (A) any such failure to pay or post credit support was caused solely by error or omission of an administrative or operational nature; (B) funds were available to enable Seller to make such payment when due; and (C) such payment is made within two (2) Business Days of Seller’s receipt of written notice of its failure to pay or post credit support;
(iii) if (A) the Unaffected Swap has been terminated on or prior to the last day of the Month in which the Affected Swap is terminated and (B) the Parties continue to make payments under the Swap Custodial Agreement consistent with Section 17.5(f) hereof, the Swap Replacement Period will end on the last day of the Month in which the 120th day following (1) the commencement of the Swap Replacement Period if Base Quantities are above zero MWhs upon the commencement of such period or otherwise (2) any date on which Base Quantities are increased above zero MWhs; and (iv) if Buyer or Seller delivers a Reset Termination Exercise Notice or Optional Termination Notice (as each term is defined in the Buyer Swap and the Seller Swap), then the Swap Replacement Period shall be the notice period specified under the applicable Buyer Swap or Seller Swap.
(e) If during a Swap Replacement Period Seller:
(i) presents to Buyer a proposed alternate Swap Counterparty, (ii) requests in writing that Buyer enter into a replacement swap with such alternate Swap Counterparty, and
(iii) agrees to pay Buyer’s reasonable expenses in connection therewith, then, to the extent permitted by the Buyer Swap and the Trust Indenture and as requested by Seller, Buyer shall: (A) enter into a master agreement with such alternate Swap Counterparty and (B) either (1) terminate the Buyer Swap when permitted thereby and enter into a replacement transaction under such new master agreement to the same effect as the terminated Buyer Swap, or (2) cause such Buyer Swap to be novated to such replacement Swap Counterparty. (f) If a Seller Swap terminates or is no longer in effect and a Prepay LLC Payments Period (as defined in the Seller Swap Custodial Agreement) is in effect, then, during such Prepay LLC Payments Period, Seller in connection with the delivery of Product hereunder shall comply with the terms of the applicable Seller Swap Custodial Agreement and make all payments as and when required under such Seller Swap Custodial Agreement. If a Buyer Swap terminates or is no longer in effect and an Issuer Payments Period (as defined in the Buyer Swap Custodial Agreement) is in effect, then, during such Issuer Payments Period, Buyer in connection with the delivery of Product hereunder shall comply with the terms of the applicable Buyer Swap Attachment Staff Report Item 17C
42 Custodial Agreement and make all payments as and when required under such Buyer Swap Custodial Agreement. The Parties agree that during any Prepay LLC Payments Period and during any Issuer Payments Period, Seller shall act as calculation agent under an applicable Seller Swap Custodial Agreement or an applicable Buyer Swap Custodial Agreement with respect to any terminated Seller Swap or Buyer Swap. Seller agrees not to permit any amendment or other modification to a Seller Swap Custodial Agreement that could adversely affect the right of Buyer to receive payments pursuant such Seller Swap Custodial Agreement. Buyer agrees not to permit any amendment or other modification to a Buyer Swap Custodial Agreement that could adversely affect the right of Seller to receive payments pursuant to such Buyer Swap Custodial Agreement.
Section 17.6 Present Assignment and Waiver of Right to Swap Termination Payments.
(a) Assignment of Seller MTM Payment. The Parties hereto acknowledge that (i) the terms of the Buyer Swap do not entitle Buyer to any payments in respect of any termination of the Buyer Swap other than for Unpaid Amounts (as therein defined), (ii) the terms of the Seller Swap do not entitle the Swap Counterparty to any payments in respect of any termination of a Seller Swap other than in respect of Unpaid Amounts (as defined therein), and (iii) pursuant to the terms of the Buyer Swap, the Swap Counterparty have assigned to Buyer all rights to any payments and rights to receive payments that such Swap Counterparty receives or becomes entitled to receive in the future arising as a result of or otherwise in respect of any early termination of a Seller Swap, excluding only any right for the Swap Counterparty to receive Unpaid Amounts (as defined therein) (any such payment under clause (iii), excluding any such Unpaid Amounts, a “Seller Swap MTM Payment”). As additional consideration hereunder, Buyer hereby transfers and assigns to Seller all of Buyer’s right, title, and interest to all payments and rights to receive payments, if any, that Buyer receives or becomes entitled to receive in the future arising as a result of or otherwise in respect of a Seller Swap MTM Payment. Buyer agrees that it will not take any steps to enforce any right to receive any payments that it has assigned to Seller pursuant to this Section 17.6(a). (b) Assignment of Swap Counterparty MTM Payment. The Parties further acknowledge that the terms of the Seller Swap do not entitle Seller to any payments in respect of any termination of a Seller Swap other than for Unpaid Amounts (as defined therein). Nonetheless, Seller hereby presently transfers and assigns to Buyer all of Seller’s right, title and interest to any payments and rights to receive payments that Seller receives or becomes entitled to receive in the future arising as a result of or otherwise in respect of any early termination of a Seller Swap, excluding only any right for Seller to receive Unpaid Amounts thereunder.
Section 17.7 Limitation on Damages. THE PARTIES CONFIRM THAT THE
EXPRESS REMEDIES AND MEASURES OF DAMAGES PROVIDED IN THIS AGREEMENT SATISFY THE ESSENTIAL PURPOSES HEREOF. FOR BREACH OF ANY
PROVISION FOR WHICH AN EXPRESS REMEDY OR MEASURE OF DAMAGES IS
HEREIN PROVIDED, SUCH EXPRESS REMEDY OR MEASURE OF DAMAGES SHALL BE THE SOLE AND EXCLUSIVE REMEDY, THE OBLIGOR’S LIABILITY SHALL BE
LIMITED AS SET FORTH IN SUCH PROVISION, AND ALL OTHER REMEDIES OR DAMAGES AT LAW OR IN EQUITY ARE WAIVED. NEITHER PARTY SHALL BE
LIABLE FOR CONSEQUENTIAL, INCIDENTAL, PUNITIVE, EXEMPLARY, OR INDIRECT
DAMAGES, LOST PROFITS OR OTHER BUSINESS INTERRUPTION DAMAGES, BY Attachment Staff Report Item 17C
43 STATUTE, IN TORT OR CONTRACT, UNDER ANY INDEMNITY PROVISION, OR OTHERWISE. IT IS THE INTENT OF THE PARTIES THAT THE LIMITATIONS HEREIN
IMPOSED ON REMEDIES AND THE MEASURE OF DAMAGES BE WITHOUT REGARD
TO THE CAUSE OR CAUSES RELATED THERETO, INCLUDING WITHOUT LIMITATION
THE NEGLIGENCE OF EITHER PARTY, WHETHER SUCH NEGLIGENCE BE SOLE, JOINT OR CONCURRENT, OR ACTIVE OR PASSIVE. TO THE EXTENT ANY DAMAGES
REQUIRED TO BE PAID UNDER THIS AGREEMENT ARE LIQUIDATED, THE PARTIES
ACKNOWLEDGE THAT THE DAMAGES ARE DIFFICULT OR IMPOSSIBLE TO
DETERMINE, OTHERWISE OBTAINING AN ADEQUATE REMEDY IS INCONVENIENT,
AND THE LIQUIDATED DAMAGES CONSTITUTE A REASONABLE APPROXIMATION OF THE HARM OR LOSS. IN DETERMINING THE APPROPRIATE MEASURE OF
DAMAGES THAT WOULD MAKE THE PARTIES WHOLE, THE PARTIES HAVE
THOROUGHLY CONSIDERED, INTER ALIA, THE UNCERTAINTY OF FLUCTUATIONS
IN PRODUCT PRICES, THE ABILITY AND INTENTION OF THE PARTIES TO HEDGE
SUCH FLUCTUATIONS, THE BARGAINED-FOR ALLOCATION OF RISK, THE
KNOWLEDGE, SOPHISTICATION AND EQUAL BARGAINING POWER OF THE PARTIES, THE ARM’S-LENGTH NATURE OF THE NEGOTIATIONS, THE SPECIAL
CIRCUMSTANCES OF THIS TRANSACTION, THE ACCOUNTING AND TAX
TREATMENT OF THE TRANSACTION BY THE PARTIES, AND THE ENTERING INTO OF
OTHER TRANSACTIONS IN RELIANCE ON THE ENFORCEABILITY OF THE LIQUIDATED DAMAGES PROVISIONS CONTAINED HEREIN.
Section 17.8 Termination Payment Adjustment Schedule. Seller shall prepare revisions to the then-current Exhibit D-2 (Termination Payment Adjustment Schedule) in connection with each successive Interest Rate Period pursuant to the terms of the Re-Pricing Agreement by delivering a revised Exhibit D-2 to Buyer no later than the last day of the applicable Reset Period, in which case such amendments will be effective as of the first day of the next Interest Rate Period.
ARTICLE XVIII.
MISCELLANEOUS
Section 18.1 Indemnification Procedure. With respect to each indemnification included in this Agreement, the indemnity is given to the fullest extent permitted by applicable Law and the following provisions shall be applicable. The indemnified Party shall promptly notify the indemnifying Party in writing of any Claim and the indemnifying Party shall have the right to assume its investigation and defense, including employment of counsel, and shall be obligated to pay related court costs, attorneys’ fees and experts’ fees and to post any related appeals bonds; provided, however, that the indemnified Party shall have the right to employ at its expense separate counsel and participate in the defense of any Claim. The indemnifying Party shall not be liable for any settlement of a Claim without its express written consent thereto. In order to prevent double recovery, the indemnified Party shall reimburse the indemnifying Party for payments or costs incurred in respect of an indemnity with the proceeds of any judgment, insurance, bond, surety or other recovery made by the indemnified Party with respect to a covered event.
Section 18.2 Deliveries. No later than delivery of the Prepayment, Buyer will deliver to Seller a copy of the Trust Indenture. The following documents shall be executed and Attachment Staff Report Item 17C
44 delivered by the Parties contemporaneously with the execution of this Agreement (unless otherwise specified):
(a) by Seller no later than the date of issuance of the Bonds, the Funding Agreement;
(b) by Buyer, a certificate of the Secretary or Assistant Secretary of Buyer setting forth (i) the resolutions of its governing body with respect to the authorization of Buyer to execute and deliver this Agreement, the Trust Indenture and the Clean Energy Purchase Contract, (ii) the appropriate individuals who are authorized to sign such agreements, (iii) specimen signatures of such authorized individuals, and (iv) the organization documents of Buyer, certified as being true and complete;
(c) by Seller, evidence reasonably satisfactory to Buyer of (i) Seller’s authority to execute and deliver this Agreement and (ii) the appropriate individuals who are authorized to sign this Agreement; and
(d) by Buyer, on or prior to the Execution Date a valid sales tax exemption certificate and any other required exemption or resale certificate in jurisdictions where sales of Product occur under this Agreement to the extent such a certificate is necessary under applicable law for exemption from any relevant state taxes that may be levied against the Parties in relation to the transactions under, or pursuant, to this Agreement.
Section 18.3 Entirety; Amendments. This Agreement and the Re-Pricing Agreement, including the exhibits and attachments hereto and thereto and the Seller Tariff, constitute the entire agreement between the Parties and supersede all prior discussions and agreements between the Parties with respect to the subject matter hereof. There are no prior or contemporaneous agreements or representations affecting the same subject matter other than those expressed herein (including the Exhibits hereto) and the Re-Pricing Agreement. Except for any matters that, in accordance with the express provisions of this Agreement, may be resolved by oral agreement between the Parties, no amendment, modification, supplement, or change hereto shall be enforceable unless reduced to writing and executed by both Parties.
Section 18.4 Governing Law. THIS AGREEMENT AND THE RIGHTS AND
DUTIES OF THE PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED, ENFORCED AND PERFORMED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW YORK, WITHOUT REGARD TO ANY CONFLICTS OF LAW PRINCIPLE THAT WOULD DIRECT THE APPLICATION OF ANOTHER JURISDICTION’S LAW; PROVIDED, HOWEVER, THAT THE AUTHORITY OF BUYER TO ENTER INTO
AND PERFORM ITS OBLIGATIONS UNDER THIS AGREEMENT SHALL BE DETERMINED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA.
Section 18.5 Non-Waiver. No waiver of any breach of any of the terms of this Agreement shall be effective unless such waiver is in writing and signed by the Party against whom such waiver is claimed. No waiver of any breach or breaches shall be deemed a waiver of any other subsequent breach.
Attachment Staff Report Item 17C
45 Section 18.6 Severability. If any provision of this Agreement, or the application thereof, shall for any reason be invalid or unenforceable, then to the extent of such invalidity or unenforceability, the remainder of this Agreement and the application of such provision to other Persons or circumstances shall not be affected thereby, but rather shall be enforced to the maximum extent permissible under applicable Law, so long as the economic and legal substance of the transactions contemplated hereby is not affected in any materially adverse manner as to either Party.
Section 18.7 Exhibits. Any and all Exhibits referenced in this Agreement are hereby incorporated herein by reference and shall be deemed to be an integral part hereof.
Section 18.8 Winding Up Arrangements. All indemnity and confidentiality obligations, audit rights, and other provisions specifically providing for survival shall survive the expiration or termination of this Agreement. The expiration or termination of this Agreement shall not relieve either Party of (a) any unfulfilled obligation or undischarged liability of such Party on the date of such termination or (b) the consequences of any breach or default of any warranty or covenant contained in this Agreement. All obligations and liabilities described in the preceding sentence of this Section 18.8, and applicable provisions of this Agreement creating or relating to such obligations and liabilities, shall survive such expiration or termination.
Section 18.9 Relationships of Parties; Beneficiaries. The Parties shall not be deemed to be in a relationship of partners or joint venturers by virtue of this Agreement, nor shall either Party be an agent, representative, trustee or fiduciary of the other, except that Seller shall act on behalf of Buyer in remarketing Product pursuant to Exhibit C. Neither Party shall have any authority to bind the other to any agreement. This Agreement is intended to secure and provide for the services of each Party as an independent contractor. Except as provided in Section 18.14 with respect to the Trustee, this Agreement shall not impart any rights enforceable by any third party (other than a permitted successor or assignee bound to this Agreement).
Section 18.10 Immunity. Buyer represents and covenants to and agrees with Seller that it is not entitled to and shall not assert the defense of sovereign immunity with respect to its obligations or any Claims under this Agreement.
Section 18.11 Rates and Indices.
(a) Commodity Reference Prices.
(i) Price Replacement Process for Delayed Publication. If a Commodity Reference Price is not expected to be available for any period (or portion thereof) for any calculation that is required hereunder or under the Buyer Swap or the Seller Swap prior to a relevant calculation being made under any of them, then, upon notice from either Party, the Parties shall promptly endeavor to agree on an alternative source for determination of such Commodity Reference Price for the applicable periods. If such agreement is not reached by the Parties within three Business Days, the Parties shall request quotations for the applicable Commodity Reference Price from four recognized dealers in the electric energy (two selected by each Party) for the period that such Commodity Reference Price is expected to be unavailable. If four quotations are provided as requested, Attachment Staff Report Item 17C
46 the applicable Commodity Reference Price for the applicable days shall be the arithmetic mean of the quotations provided by each recognized dealer after disregarding the quotations having the highest and lowest values. If exactly three quotations are provided, the applicable Commodity Reference Price for the applicable days shall be the quotation provided by the relevant dealer that remains after disregarding the quotations having the highest and lowest values. For this purpose, if more than one quotation has the same highest value or lowest value, then one of such quotations shall be disregarded. (ii) Price Replacement Process for Non-Published Index. If a Commodity Reference Price is not available because it has permanently ceased to be published, then the Parties shall promptly endeavor to agree on an alternative source for determination of such Commodity Reference Price. If such agreement is not reached by the Parties within three Business Days, then the replacement Commodity Reference Price shall be selected by Seller, acting reasonably.
(b) Corrections. If a value published for any rate or index used or to be used in this Agreement is subsequently corrected and the correction is published or announced by the Person responsible for that publication or announcement within 30 Days after the original publication or announcement, either Party may notify the other Party of (i) that correction and (ii) the amount (if any) that is payable as a result of that correction. If, not later than 30 Days after publication or announcement of that correction, a Party gives notice that an amount is so payable, the Party that originally either received or retained such amount shall, not later than three Business Days after the effectiveness of that notice, pay, subject to any other applicable provisions of this Agreement, to the other Party that amount, together with interest on that amount at the Default Rate for the period from and including the day on which a payment originally was (or was not) made to but excluding the Day of payment of the refund or payment resulting from that correction.
Section 18.12 Limitation of Liability. Notwithstanding anything to the contrary herein, all obligations of Buyer under this Agreement, including without limitation all obligations to make payments of any kind whatsoever, are special, limited obligations of Buyer, payable solely from the Trust Estate (as such term is defined in the Trust Indenture) as and to the extent provided in the Trust Indenture, including with respect to Operating Expenses (as such term is defined in the Trust Indenture). Buyer shall not be required to advance any moneys derived from any source other than the Revenues (as such term is defined in the Trust Indenture) and other assets pledged under the Trust Indenture for any of the purposes in this Agreement mentioned. Neither the faith and credit of Buyer nor the taxing power of the State of California or any political subdivision thereof is pledged to payments pursuant to this Agreement. Buyer shall not be directly, indirectly, contingently or otherwise liable for any costs, expenses, losses, damages, claims or actions, of any conceivable kind on any conceivable theory, under or by reasons of or in connection with this Agreement, except solely to the extent Revenues (as such term is defined in the Trust Indenture) are received for the payment thereof and may be applied therefor pursuant to the terms of the Trust Indenture.
Section 18.13 Counterparts. This Agreement may be executed and acknowledged in multiple counterparts and by the Parties in separate counterparts, each of which shall be an original and all of which shall be and constitute one and the same instrument.
Attachment Staff Report Item 17C
47 Section 18.14 Rights of Trustee. Pursuant to the terms of the Trust Indenture, Buyer has irrevocably appointed the Trustee as its agent to issue notices (including Remarketing Notices) and as directed under the Trust Indenture, to take any other actions that Buyer is required or permitted to take under this Agreement. Seller may rely on notices or other actions taken by Buyer or the Trustee and Seller has the right to exclusively rely on any notices delivered by the Trustee, regardless of any conflicting notices that it may receive from Buyer.
Section 18.15 Operational Services Agreement. Seller acknowledges that Buyer and the Project Participant will enter into that certain Clean Energy Project Operational Services Agreement, dated as of the Bond Closing Date, pursuant to which the Project Participant will have the right to direct Buyer with respect to any directions, consents or waivers by Buyer under this Agreement and the Re-Pricing Agreement.
Section 18.16 Waiver of Defenses. Seller waives all rights to set-off, counterclaim, recoupment and any other defenses that might otherwise be available to Seller with regard to Seller’s obligations pursuant to the terms of this Agreement.
Section 18.17 U.S. Resolution Stay Provisions. Seller and Buyer hereby confirm that they are adherents to the ISDA 2018 U.S. Resolution Stay Protocol (“ISDA U.S. Stay Protocol”), the terms of the ISDA U.S. Stay Protocol are incorporated into and form a part of this Agreement, and for the purposes of such incorporation, (i) Seller shall be deemed to be a Regulated Entity, (ii) Buyer shall be deemed to be an Adhering Party, and (iii) this Agreement shall be deemed a Protocol Covered Agreement. In the event of any inconsistences between this Agreement and the ISDA U.S. Stay Protocol, the ISDA U.S. Stay Protocol will prevail.
Section 18.18 Seller Tariff. Seller agrees that if it seeks to amend the Seller Tariff during the Delivery Period, such amendment will not in any way affect this Agreement without the prior written consent of the other Party. Seller further agrees that it will not assert, or defend itself on the basis that the Seller Tariff is inconsistent with this Agreement.
Section 18.19 No Recourse. Buyer shall have no claims against J. Aron or any of its Affiliates (other than Seller), any present or future holder (whether direct or indirect) of any Equity Interests in Seller, or, in the case of any of their respective Affiliates (other than Seller), shareholders, officers, directors, employees, representatives, controlling persons, executives or agents (collectively, the “Non-Recourse Persons”) with respect to the transactions contemplated under this Agreement or under any other document, certificate or instrument executed by Seller in connection herewith, such claims against such Non-Recourse Persons (including as may arise by operation of law) being expressly waived hereby. The limitations on recourse set forth in this Error! Reference source not found. shall survive any Early Termination Payment Date, Product Delivery Termination Date, or other termination or expiration of this Agreement. As used in this Error! Reference source not found., “Equity Interests” means, with respect to any Person, any and all shares, interests, participations or other equivalents (however designated) of capital stock in such Person, or any and all equivalent ownership interests in such Person, including partnership interests, limited liability company interests and membership interests, and any and all warrants, rights or options to purchase any of the foregoing.
Section 18.20 Rate Changes.
Attachment Staff Report Item 17C
48 (a) Standard of Review. Absent the agreement of the Parties to the proposed change, the standard of review for changes to any rate, charge, classification, term or condition of this Agreement, whether proposed by a Party (to the extent that any waiver in Error! Reference source not found. below is unenforceable or ineffective as to such Party), a non-party or FERC acting sua sponte, shall solely be the “public interest” application of the “just and reasonable” standard of review set forth in United Gas Pipe Line Co. v. Mobile Gas Service Corp., 350 U.S. 332 (1956) and Federal Power Commission v. Sierra Pacific Power Co., 350 U.S. 348 (1956) and clarified by Morgan Stanley Capital Group Inc. v. Public Util. Dist. No. 1 of Snohomish, 554 U.S. 527 (2008).
(b) Waiver. In addition, and notwithstanding Section 18.21, to the fullest extent permitted by applicable Law, each Party, for itself and its successors and assigns, hereby expressly and irrevocably waives any rights it can or may have, now or in the future, whether under Section 205 and/or 206 of the Federal Power Act or otherwise, to seek to obtain from FERC by any means, directly or indirectly (through complaint, investigation or otherwise), and each hereby covenants and agrees not at any time to seek to so obtain, an order from FERC changing any section of this Agreement specifying the rate, charge, classification, or other term or condition agreed to by the Parties, it being the express intent of the Parties that, to the fullest extent permitted by applicable Law, neither Party shall unilaterally seek to obtain from FERC any relief changing the rate, charge, classification, or other term or condition of this Agreement, notwithstanding any subsequent changes in applicable Law or market conditions that may occur. In the event it were to be determined that applicable Law precludes the Parties from waiving their rights to seek changes from FERC to their market-based power sales contracts (including entering into covenants not to do so) then this Error! Reference source not found. shall not apply, provided that, consistent with Section 18.21, neither Party shall seek any such changes except solely under the “public interest” application of the “just and reasonable” standard of review and otherwise as set forth in Section 18.21.
Section 18.21 Delivering Entity Tariff. If the Delivering Entity seeks to amend the Delivering Entity Tariff during the Delivery Period, such amendment will not in any way affect this Agreement without the prior written consent of Buyer. Seller shall cause the Delivering Entity to agree that the Delivering Entity will not assert, or defend itself on the basis that the Delivering Entity Tariff is inconsistent with this Agreement or the Electricity Sale and Service Agreement.
IN WITNESS WHEREOF, the Parties have caused this Master Power Supply Agreement to be duly executed and delivered by their respective officers thereunto duly authorized as of the date first above written.
[Separate Signature Page(s) Attached]
Attachment Staff Report Item 17C
Signature Page to the Master Power Supply Agreement
ARON ENERGY PREPAY [__] LLC
By: J. Aron & Company LLC, its Manager
By:____________________________________
Name:______________________________
Title:_______________________________
Attachment Staff Report Item 17C
Signature Page to the Master Power Supply Agreement
CALIFORNIA COMMUNITY CHOICE
FINANCING AUTHORITY
By:____________________________________
Name:______________________________
Title:_______________________________
Attachment Staff Report Item 17C
A-1
EXHIBIT A-1
BASE QUANTITIES; BASE DELIVERY POINTS; COMMODITY REFERENCE PRICES
[To be attached.]
Attachment Staff Report Item 17C
A-2
EXHIBIT A-2
ASSIGNED RIGHTS AND OBLIGATIONS
[To be attached.]
Attachment Staff Report Item 17C
B-1
EXHIBIT B
NOTICES
IF TO SELLER: Aron Energy Prepay [__] LLC
c/o J. Aron & Company LLC
200 West Street
New York, NY 10282
Email: [email protected]
Trading: Timothy Capuano
Telephone: (212) 357-2542
[email protected]
Scheduling: Email: [email protected]
Direct Phone: (212) 855-6188
Fax: (212) 493–9847
Kelly Brooks
Email: ficc-jaron [email protected]
Direct Phone: (212) 855-6188
Fax: (212) 493-9847
Payments/Invoicing: Telephone: (212) 855-0880
[email protected]
General Notices: Andres E. Aguila
Telephone: (212) 855-6008
Fax: (212) 291-2124
[email protected]
IF TO BUYER: California Community Choice Financing Authority 1125 Tamalpais Avenue
San Rafael, CA 94901
Email: [email protected] and [email protected]
Attachment Staff Report Item 17C
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EXHIBIT C
PRODUCT REMARKETING
Section 1. Defined Terms. Capitalized terms used but not otherwise defined in this Exhibit shall have the meanings given to such terms in the Agreement, unless otherwise indicated.
The following terms, when used in this Exhibit C and identified by the capitalization of the first letter thereof, have the respective meanings set forth below, unless the context otherwise requires.
In the event that any of the provisions of the Code or the Treasury Regulations referenced in Section 1 of this Exhibit C (the “Original Code Provisions”) (x) cease to be effective or no longer apply to remarketing and remediation under this Agreement and (y) upon or following such change to the Original Code Provisions, other Code provisions, Treasury Regulations or Laws apply to remarketing and remediation under this Agreement (the “New Code Provisions”), then the references herein to any such Original Code Provisions shall be deemed to refer to the applicable New Code Provisions.
“Code” means the Internal Revenue Code of 1986, as amended. “Daily Remarketing Notice” has the meaning specified in Section 3(c) of this Exhibit C. “Deemed Remarketing Notice” has the meaning specified in Section 3(d) of this Exhibit C. “Expired Non-Private Business Sales Ledger” has the meaning specified in Section 9(a) of this Exhibit C.
“Expired Private Business Sales Ledger” has the meaning specified in Section 9(a) of this Exhibit C.
“Initial Remarketing” has the meaning specified in Section 5 of this Exhibit C. “Ledger Entry” has the meaning specified in Section 7(b) of this Exhibit C. “Ledger Event” has the meaning specified in Section 9(c) of this Exhibit C. “Minimum Remarketing Sales Price” is, for each MWh of Base Product and Hour, an amount determined by the following formula:
MRSP = RRPP – (RRPP x (RRA/CLB))
Where:
MRSP = The Minimum Remarketing Sales Price for such MWh of Base Product and Hour
RRPP = The Remediation Remarketing Purchase Price for one MWh of Base Product and Hour
RRA = The balance of the Remarketing Reserve Fund at such time Attachment Staff Report Item 17C
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CLB = The combined cash balance of the Non-Private Business Sales Ledger and the Private Business Sales Ledger at such time “Municipal Utility” means any Person that (i) is a “governmental person” as defined in Treasury Regulations Section 1.141-1(b), and (ii) owns either or both a Base Product distribution utility or an electric distribution utility (or provides Product or natural gas at wholesale to entities described in clause (i) that own such utilities). Buyer shall from time to time to the extent necessary revise the definition of “Municipal Utility” to conform to the applicable provisions of the Code or Treasury Regulations by delivery of written notice to Seller setting forth the revised definition together with a Tax Opinion.
“Non-Private Business Remarketing Proceeds” means all proceeds received by Buyer under Section 5(c) of this Exhibit C from the Delivering Entity’s remarketing of Base Product in any Non-Private Business Sale.
“Non-Private Business Sale” means a sale (other than a Qualified Sale) of Base Product to a “governmental person” as defined in Treasury Regulation Section 1.141-1(b) that in each case agrees in writing to not use any part of such Base Product for a Private Business Use. “Non-Private Business Sales Ledger” has the meaning specified in Section 7(a)(i) of this Exhibit C.
“Non-Qualifying Remarketing Limit” means a quantity of Product, in MWhs, equal to 10% of the total quantity of Base Product set forth in Exhibit A-1 to be delivered hereunder, as such Non-Qualifying Remarketing Limit may be increased from time to time upon receipt by Buyer and Seller of a Tax Opinion setting forth a higher Non-Qualifying Remarketing Limit. “Private Business Remarketing Limit” means a quantity of Product, in MWhs, equal to (a) $15,000,000, divided by (b) the Specified Fixed Price, as such Private Business Remarketing Limit may be increased from time to time upon receipt by Buyer and Seller of a Tax Opinion setting forth a higher Private Business Remarketing Limit. “Private Business Remarketing Proceeds” means all proceeds received by Buyer under Section 5(d) of this Exhibit C in connection with the Delivering Entity’s remarketing of Base Product in any Private Business Sale.
“Private Business Sale” means any sale of Base Product other than in a Non-Private Business Sale or a Qualified Sale.
“Private Business Sales Ledger” has the meaning specified in Section 7(a)(ii) of this Exhibit C.
“Private Business Use” has the meaning ascribed to such term in Section 141 of the Code. “Qualified Sale” means any sale of Product or natural gas:
(x) to a Municipal Utility that agrees in writing (i) to use all of such Product or natural gas for a Qualifying Use that is not a Private Business Use and (ii) not to count any purchase of Attachment Staff Report Item 17C
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such Product or natural gas towards any remediation obligations such Municipal Utility may have with respect to proceeds received from the sale of property purchased with tax-exempt financing proceeds other than the Bonds; or
(y) that would not (i) cause interest on the Bonds to be included, or increase the risk of interest on the Bonds of being included, in gross income for purposes of federal income taxation under applicable Law at the time of such sale, or (ii) count towards any limit under applicable Law at the time of such sale, beyond which limit interest on the Bonds would become included in gross income for purposes of federal income taxation after the passage of time and lack of any remediation.
Buyer shall from time to time to the extent necessary revise the definition of “Qualified Sale” to conform to the applicable provisions of the Code or Treasury Regulations by delivery of written notice to Seller setting forth the revised definition together with a Tax Opinion. “Qualifying Use” with respect to Product or natural gas has the meaning ascribed to such term in Treasury Regulations Section 1.148-1(e)(2)(iii)(A)(2) or (B)(2), as applicable. “Remarketing Fee” has the meaning specified in Exhibit F. “Remarketing Notice” means either a Daily Remarketing Notice or a Monthly Remarketing Notice, but shall not include a Deemed Remarketing Notice. “Remarketing Reserve Fund” means an account established under the Trust Indenture into which Buyer shall deposit the amounts specified in Section 5(e) of this Exhibit C. “Remediation Remarketing” means the remarketing of Product or natural gas in Qualified Sales by either of Buyer or the Delivering Entity pursuant to Section 8 of this Exhibit C in an effort to reduce to zero any Ledger Entry balances in either the Non-Private Business Sales Ledger or the Private Business Sales Ledger.
“Remediation Remarketing Purchase Price” has the meaning specified in Section 8(a)(ii)(B) of this Exhibit C.
“Tax Opinion” means an [Opinion of Bond Counsel or Special Tax Counsel (as defined in the Trust Indenture)] to the effect that an action proposed to be taken or an event will not, in and of itself, cause interest on the applicable Bonds to be included in gross income for purposes of federal income taxation.
“Treasury Regulations” means the U.S. Treasury Regulations under the Code.
Section 2. Buyer’s Right and Obligation to Request Remarketing. Buyer may, and, if required to do so under the Trust Indenture or Article VII of the Agreement shall, and the Project Participant (subject to the conditions set forth in the Clean Energy Purchase Contract) may, request the Delivering Entity to remarket, pursuant to this Exhibit C, all or a specified part of the applicable Quantities for any Delivery Point.
Section 3. Remarketing Notice.
Attachment Staff Report Item 17C
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(a) Generally. To request remarketing under this Exhibit C, Buyer or the Project Participant must issue a Remarketing Notice substantially in the form attached as Attachment 3 of Exhibit G to the Agreement, which Remarketing Notice must state the portion of the applicable Quantity to be remarketed in each Hour in each Day from each relevant Delivery Point.
(b) Monthly Remarketing Notice. Buyer or the Project Participant may designate a Remarketing Notice as a “Monthly Remarketing Notice” if the Remarketing Notice is delivered to the Delivering Entity not later than three Business Days prior to the start of the first Month in which it applies, and applies to a period of one Month or more; provided furthermore that, in the event Seller is obligated to remarket Base Quantities under Section 3.2 of the Agreement, Buyer shall be deemed to have delivered a Monthly Remarketing Notice with respect thereto.
(c) Daily Remarketing Notice. Buyer or the Project Participant may designate a Remarketing Notice as a “Daily Remarketing Notice” if the Remarketing Notice is delivered to the Delivering Entity not later than three Business Days prior to the start of the first Day in which it applies.
(d) Deemed Remarketing Notice. Any other notice to remarket Base Product given by Buyer (or deemed to be given by Buyer pursuant to Section 4.2 of the Agreement) will be a “Deemed Remarketing Notice.”
Section 4. Delivering Entity’s Remarketing Obligations Generally. (a) Sales for Buyer’s Account. All Base Product remarketed by the Delivering Entity pursuant to this Exhibit C shall be for the benefit of Buyer, meaning all remarketed Base Product shall first be sold by the Delivering Entity to Buyer and then resold by or for the account of Buyer pursuant to the terms and provisions of this Exhibit C. (b) Limitation on Seller Duties. The Delivering Entity may act directly as principal to the remarketing buyer, or may cause a supplier to the Delivering Entity to act directly as principal to the remarketing buyer. Neither the Delivering Entity nor any Person acting on the Delivering Entity’s behalf shall owe any fiduciary duties to Buyer with respect to the remarketing of any Base Product. Buyer acknowledges and agrees that the Delivering Entity or a Person acting on the Delivering Entity’s behalf in remarketing Base Product may have other supplies of Base Product available to sell to potential remarketing buyers, and Base Product designated for remarketing shall not be entitled to any preference over any such other supplies of Base Product. (c) Monthly Records. The Delivering Entity shall prepare, maintain and provide monthly to Buyer and Seller accurate and complete records showing (i) the identity of each purchaser in a Qualified Sale, a Non-Private Business Sale, or a Private Business Sale undertaken by the Delivering Entity on Buyer’s behalf, (ii) the aggregate amount of Base Product remarketed under this Agreement in Qualified Sales, (iii) the aggregate amount of Base Product remarketed under this Agreement in Non-Private Business Sales, and (iv) the aggregate amount of Base Product remarketed under this Agreement in Private Business Sales. Notwithstanding the foregoing or anything to the contrary herein, in the event that either Party (x) reasonably Attachment Staff Report Item 17C
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determines that interest on the Bonds is not excluded from gross income for federal income tax purposes due to a change in Law, (y) receives an opinion of counsel to such effect (provided that such opinion of counsel shall be rendered by counsel of nationally recognized standing in matters pertaining to the tax exempt status of interest on obligations issued by states and their political subdivisions, duly admitted to the practice of law before the highest court of any state of the United States) and (z) notifies the other Party of such determination (which notice shall include a copy of the opinion of counsel referenced in clause (y)), then (I) the terms of this Exhibit C regarding the remediation obligations of the Parties shall cease to apply and shall be of no further force and effect, and (II) Seller shall no longer maintain the records described in the immediately preceding sentence and shall not record Ledger Entries or otherwise maintain the ledgers described in Error! Reference source not found. and Error! Reference source not found. of this Exhibit C. (d) Remission of Sales Proceeds. Any amounts due to Buyer for Base Product remarketed by the Delivering Entity or purchased by the Delivering Entity under this Exhibit C shall be remitted to Buyer pursuant to Section 14.2 of the Agreement in the Month following the Month in which such Base Product is remarketed or purchased, as applicable.
Section 5. Initial Remarketing. The following provisions shall apply to the initial remarketing of any Base Product to be remarketed by the Delivering Entity pursuant to a Remarketing Notice (an “Initial Remarketing”):
(a) Delivering Entity’s Remarketing Duties. The Delivering Entity shall use Commercially Reasonable Efforts to remarket or cause to be remarketed all Base Product specified for Initial Remarketing. In exercising such Commercially Reasonable Efforts, the Delivering Entity shall first attempt to remarket or cause to be remarketed all Base Product specified in a Remarketing Notice in Qualified Sales and then, if the Delivering Entity is unable to remarket all of such Base Product for such purposes, in Non-Private Business Sales. If the Delivering Entity is unable to remarket all or any portion of the Base Product designated in a Remarketing Notice in Qualified Sales and Non-Private Business Sales, then the Delivering Entity shall purchase such Base Product for its own account at the prices set forth in Section 5(d) of this Exhibit C as if such Base Product had been remarketed to it.
(b) Floor Price. The Delivering Entity shall not be required to remarket any Base Product in an Initial Remarketing for any Hour at a net price to the Delivering Entity (after deducting all transportation costs and all other costs) that is anticipated to be less than (i) the Day-Ahead Market Price applicable to such Base Product and Hour in the case of an Initial Remarketing pursuant to a Monthly Remarketing Notice, or (ii) the Real-Time Market Price applicable to such Base Product and Hour in the case of an Initial Remarketing pursuant to a Daily Remarketing Notice.
(c) Proceeds from Qualified Sales and Non-Private Business Sales. (i) For any Base Product specified in a Monthly Remarketing Notice that the Delivering Entity remarkets in a Qualified Sale or Non-Private Business Sale, Seller shall pay to Buyer the actual proceeds of such remarketing received by the Delivering Entity, less the Remarketing Fee per MWh sold; provided that the aggregate amount paid by Seller under this clause (i) for any Month shall not be less than the Attachment Staff Report Item 17C
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aggregate quantity so remarketed during such Month multiplied by the Net Participant Price.
(ii) For any Base Product specified in a Daily Remarketing Notice that the Delivering Entity remarkets in a Qualified Sale or Non-Private Business Sale, Seller shall pay to Buyer the actual proceeds of such remarketing received by the Delivering Entity, less the Remarketing Fee per MWh sold, provided that the aggregate amount paid by Seller under this clause (ii) for any quantity of Base Energy remarketed shall not be less than the result of (x) the quantity so remarketed multiplied by (y) the product of the Real-Time Market Price(s) for the relevant Hour(s) multiplied by the applicable Monthly Discount Percentage (as defined in the Clean Energy Purchase Contract) with respect to any Base Product specified in a Daily Remarketing Notice. (iii) In the event the payment due date under a Qualified Sale or Non-Private Business Sale has not yet occurred prior to the date upon which payment is due under this Agreement for the applicable Month, the Parties shall nonetheless issue statements as if the full amount from such Qualified Sale or Non-Private Business Sale had been paid and, if such full payment is not received prior to the next monthly due date under this Agreement, the Parties shall issue the appropriate statements to reflect the actual proceeds received and true-up any difference.
(d) Proceeds from Private Business Sales.
(i) For any Base Product specified for any Hour of any Day in a Monthly Remarketing Notice that is not remarketed in a Qualified Sale or Non-Private Business Sale, Seller shall pay to Buyer the positive result determined by the following formula with respect to each Delivery Point to which such Monthly Remarketing Notice applied, provided that the aggregate amount paid by Seller under this clause (i) for any Month shall not be less than the aggregate quantity so remarketed during such Month multiplied by the Net Participant Price:
P = Q x (DAMP – RF)
Where:
P = The amount payable by Seller under this Section 5(d)(i) for such Day and Delivery Point
Q = The quantity of such Base Product for such Day purchased by Seller with respect to such Delivery Point
DAMP = The Day-Ahead Market Price for such Delivery Point and Hour RF = The Remarketing Fee
(ii) For any Base Product specified for any Hour or portion thereof in a Daily Remarketing Notice that is not remarketed in a Qualified Sale or Non-Private Business Sale, Seller shall pay to Buyer the positive result determined by the following Attachment Staff Report Item 17C
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formula with respect to each Delivery Point to which such Daily Remarketing Notice applied:
P = Q x (RTMP – RF)
Where:
P = The amount payable by Seller under this Section 5(d)(ii) for such Hour or portion and Delivery Point
Q = The quantity of such Base Product for such Hour or portion remarketed with respect to such Delivery Point
RTMP = The Real-Time Market Price for such Delivery Point and Hour or portion
RF = The Remarketing Fee
(e) Deposits to Remarketing Reserve Fund. Any proceeds received by Buyer under this Section 5 for Base Product remarketed in sales other than Qualified Sales that exceed the amount Buyer would have received for the same quantity of Base Product at the Net Participant Price shall be deposited in the Remarketing Reserve Fund.
Section 6. Deemed Remarketing. For any Base Product specified or deemed to be specified for any Hour in a Deemed Remarketing Notice, Seller shall pay to Buyer the positive result determined by the following formula with respect to each Delivery Point to which such Deemed Remarketing Notice applied:
P = Q x (SP – RF– AF)
Where:
P = The amount payable by Seller under this Section 6 for such Delivery Point and Hour
Q = The quantity of such Base Product remarketed with respect to such Delivery Point and Hour
SP = The price at which the Delivering Entity, acting in a Commercially Reasonable manner, resells for delivery in such Hour at such Delivery Point any Base Product not then and there received by Buyer, deducting from such proceeds any (i) costs reasonably incurred by the Delivering Entity in reselling such Base Product and (ii) additional transmission charges, if any, reasonably incurred by the Delivering Entity in delivering such Base Product to the third party purchasers, or at the Delivering Entity’s option, the market price for such Hour at the Delivery Point for such Product not received as determined by the Delivering Entity in a Commercially Reasonable manner; provided, Attachment Staff Report Item 17C
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however, in no event shall such price include any penalties, ratcheted demand or similar charges, nor shall the Delivering Entity be required to utilize or change its utilization of its owned or controlled assets, including contractual assets, or market positions to minimize Buyer’s liability. For purposes of the foregoing, the Delivering Entity shall be considered to have resold such Base Product to the extent the Delivering Entity shall have entered into one or more arrangements in a Commercially Reasonable manner whereby the Delivering Entity repurchases its obligation to purchase and receive the Base Product from another party in such Hour at such Delivery Point
RF = The Remarketing Fee
AF = Either (i) to the extent such Deemed Remarketing Notice results from Buyer’s failure to Schedule pursuant to Section 4.2 of the Agreement, the Administrative Fee, or (ii) zero.
Section 7. Tracking Remarketing Proceeds.
(a) Ledgers. The Delivering Entity shall maintain four separate ledgers related to remarketing proceeds as described below:
(i) One ledger (the “Non-Private Business Sales Ledger”), to which Seller shall credit, (A) as dollar credits, the Non-Private Business Remarketing Proceeds, and (B) as MWh credits, the MWhs of Base Product purchased or remarketed to produce such Non-Private Business Remarketing Proceeds.
(ii) Another ledger (the “Private Business Sales Ledger”), to which Seller shall credit, (A) as dollar credits, Private Business Remarketing Proceeds, and (B) as MWh credits, the MWhs of Base Product purchased or remarketed to produce such Private Business Remarketing Proceeds.
(iii) The other two ledgers shall be maintained, credited, and debited as described in Section 9(a) of this Exhibit C.
(b) Date of Ledger Entries. The credits to be recorded in the ledgers described in Section 7(a)(i) and Section 7(a)(ii) of this Exhibit C (collectively, the “Ledger Entries”) shall be dated as of the first Day of the Month prior to the Month in which Buyer or the Project Participant receives the proceeds corresponding to such Ledger Entries. (c) Aggregation of Ledgers. The four ledgers described in Sections 7(a) and 9(a) of this Exhibit C and all debits and credits to such ledgers shall be kept on an aggregate basis for purposes of this Exhibit C.
(d) Disqualified Sales. Buyer shall provide to the Delivering Entity all reports provided by the Project Participant pursuant to Section 7.5 of the Clean Energy Purchase Contract.
To the extent set forth in Section 7.6(a) of the Clean Energy Purchase Contract, the Delivering Entity will add “Disqualified Sale Proceeds” to the appropriate ledgers described above. Buyer Attachment Staff Report Item 17C
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agrees to cause any payment made by the Project Participant pursuant to Section 7.6(c) of a Clean Energy Purchase Contract to be deposited into the Debt Service Account (as defined in the Trust Indenture).
(e) Remarketing of and Remediation with Storage Products. For any remarketing proceeds relating to Assigned Products measured in kW-month, the Parties acknowledge and agree that such proceeds shall be recorded in the applicable ledgers on a MWh basis calculated as the result of (i) the total dollar proceeds of any such remarketing divided by (ii) (x) $[____] for Assigned Products during the Initial Assignment Periods and (y) $[____]4for Assigned Products outside of the Initial Assignment Periods. Any Remarketing Fee relating thereto shall be calculated on a per MWh basis consistent with the result of the conversion to MWhs pursuant to the preceding sentence.
Section 8. Remediation Remarketing.
(a) Remarketing. At any time that the Ledger Entry balance of either the Non-Private Business Sales Ledger or the Private Business Sales Ledger is greater than zero:
(i) Buyer shall exercise or shall cause the Project Participant to exercise Commercially Reasonable Efforts to utilize the proceeds represented by the dollar balances of such Ledger Entries to purchase Product for resale in Qualified Sales and shall promptly notify the Delivering Entity following such purchase and sale. Additionally, Seller and Buyer acknowledge and agree that any purchases of Assigned PAYGO Products by the Project Participant shall be applied to the reduction of any such Ledger Entries. (ii) The Delivering Entity shall exercise Commercially Reasonable Efforts to locate opportunities for Buyer to purchase Product to sell in Qualified Sales to remediate the proceeds represented by the dollar balances of the Ledger Entries. In this regard, if the Delivering Entity locates a Remediation Remarketing opportunity, then (A) the Delivering Entity shall notify Buyer of such opportunity; (B) Buyer shall, upon receipt of such notice, purchase Product from the Delivering Entity at a price determined by the Delivering Entity in a Commercially Reasonable manner based upon applicable market prices at the location where the remarketing opportunity sale will occur (the “Remediation Remarketing Purchase Price”);
(C) the Delivering Entity shall remarket such Product on Buyer’s behalf in a Qualified Sale;
(D) Seller shall remit to Buyer the proceeds collected by the Delivering Entity from such Qualified Sale, but in no event shall Seller remit less than the Minimum Remarketing Sales Price for the remarketing transaction; provided, however, that to the extent Seller does not receive the Remediation Remarketing Purchase Price from Buyer prior to the Remediation Remarketing 4 NTD: To list the applicable Fixed Prices under the Buyer Swap as determined at pricing.
Attachment Staff Report Item 17C
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described herein, Seller shall credit the proceeds collected by the Delivering Entity from such remarketing sale against the Remediation Remarketing Purchase Price owed to Seller, and Seller shall be reimbursed from the Remarketing Reserve Fund to the extent necessary to make the Delivering Entity whole for such Qualified Sale; and
(E) the Delivering Entity shall issue to Buyer a confirmation notice (including the dollar price and MWhs) of each purchase of Product by or on behalf of Buyer, and each sale of Product on Buyer’s behalf, under this Section 8(a)(ii), and amounts due from or to Buyer shall be separately stated on the Billing Statement for the Month in which such remarketing transactions occur.
For the avoidance of doubt, the Delivering Entity shall not sell, nor shall it be required to sell, Product to Buyer for a Remediation Remarketing if such Product is to be remarketed by the Delivering Entity on behalf of Buyer for less than the Minimum Remarketing Sales Price. (b) Indemnification of Buyer. Unless the terms of a Remediation Remarketing undertaken by the Delivering Entity on Buyer’s behalf are specifically assumed by Buyer, Seller shall indemnify Buyer for any costs or liabilities associated with such Remediation Remarketing (other than costs related to the price at which such Product is sold and the risk of collecting the sale proceeds from the remarketing buyer), including, without limitation, any cover or replacement costs; termination payments; fees, penalties, costs or charges (in cash or in kind) assessed by any Transmission Provider for failure to satisfy its balance or nomination requirements; Claims for breach of warranty; taxes, fees, levies, penalties, licenses or charges imposed by any Government Agency; and Claims from personal injury or property damages. (c) Electric Energy Remediation Debits. The total purchase price of any Product purchased by Buyer or the Delivering Entity pursuant to Section 8(a) of this Exhibit C will be entered by the Delivering Entity as a dollar debit on (i) first, the Private Business Sales Ledger, if and to the extent such ledger has a positive balance and such Product is remarketed in a Qualified Sale and (ii) second, on the Non-Private Business Sales Ledger, if and to the extent such ledger has a positive balance, the Private Business Sales Ledger has a zero balance, and such Product is remarketed in a Qualified Sale, with such debit in the case of (i) or (ii) dated as of the last day of the Month in which such Product was purchased. Each dollar debit shall offset and reverse an equal amount of the dollar credits to such ledger (that have not previously been transferred to the Expired Non-Private Business Sales Ledger or the Expired Private Business Sales Ledger) in the order in which they were made (beginning with the oldest credit not previously offset and reversed by any prior debit). Whenever a debit is made to the dollar balance of the Ledger Entries of either such ledger, the Delivering Entity shall also debit the Product balance of the Ledger Entries of such ledger based on (i) such dollar debit divided by (ii) an average Product price calculated from the net Ledger Entry then present on the relevant ledger being debited. For the avoidance of doubt, neither the Non-Private Business Sales Ledger nor the Private Business Sales Ledger shall ever have a negative balance, and the same purchase transaction shall not result in a debit to more than one ledger except to the extent that a debit for the transaction causes one ledger to have a zero balance and the remaining portion of the permitted debit is made to the other ledger. To the extent any Product sold in a remediation sale is measured in kW-mo, such sales Attachment Staff Report Item 17C
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shall be converted to MWh for the purpose of entering credits to the applicable ledger consistent with the formula set forth in Section 7(e) above.
(d) Natural Gas Remediation. In addition to the ability of the Delivering Entity or Buyer to engage in Remediation Remarketing to reduce the balances of any Ledger Entries through Qualified Sales of Product, the proceeds represented by the dollar balances of such Ledger Entries may also be remediated through the purchase of natural gas that will be remarketed in Qualified Sales. If the Delivering Entity locates an opportunity for Buyer to purchase natural gas for a Remediation Remarketing, the provisions of Section 8(a)(ii) of this Exhibit C shall apply to such opportunity with the following modifications: (i) every occurrence of the term “Product” shall be replaced with “natural gas” and (ii) the definition of Minimum Remarketing Sales Price shall be revised to replace every occurrence of “MWh of Product” with “MMBtu of natural gas.” For the purposes of entering MWh debits to the Ledger Entries in accordance with Section 8(c) of this Exhibit C for any Remediation Remarketing of natural gas, a quantity of MMBtus will be debited based on (i) the total proceeds paid for such natural gas divided by (ii) an average Product price calculated from the net Ledger Entry then present on the relevant ledger being debited. (e) Other Remediation Debits. In the event that (i) the Project Participant remediates the proceeds represented by the dollar balances of the Ledger Entries pursuant to Section 7.5 of the Clean Energy Purchase Contract or (ii) Bonds are redeemed pursuant to the provisions of Section 7.6(c) of the Clean Energy Purchase Contract and Section 4.01(b) of the Trust Indenture, the corresponding Ledger Entries then present on any ledger shall be debited.
Section 9. Ledger Event.
(a) Expired Entry Ledgers. In addition to the Non-Private Business Sales Ledger and the Private Business Sales Ledger described in Sections 7(a)(i) and 7(a)(ii) of this Exhibit C, above, Seller shall also maintain an “Expired Non-Private Business Sales Ledger” and an “Expired Private Business Sales Ledger”. Whenever a credit to the dollar balance of the Ledger Entries of the Non-Private Business Sales Ledger has not been reversed in full within two years of the date of such credit by an offsetting dollar debit in accordance with such Section 8(c) or Section 8(d) of this Exhibit C, then Seller shall (i) debit the remaining portion of such dollar credit and the Product balance of the Ledger Entries in the manner described in the penultimate sentence of Section 8(c) and (ii) record such debits as credits to the Expired Non-Private Business Sales Ledger. Similarly, whenever a credit to the dollar balance of the Ledger Entries of the Private Business Sales Ledger has not been reversed in full within two years of the date of such credit by an offsetting dollar debit in accordance with Section 8(c) or Section 8(d) of this Exhibit C, then Seller shall (i) debit the remaining portion of such dollar credit and the Product balance of the Ledger Entries in the manner described in the penultimate sentence of such Section 8(c) and (ii) record such debits as credits to the Expired Private Business Sales Ledger. (b) Reports to Buyer.
(i) No later than the tenth day of each Month, the Delivering Entity shall provide to Buyer copies of the Non-Private Business Sales Ledger, the Private Business Sales Ledger, the Expired Non-Private Business Sales Ledger and the Expired Private Business Sales Ledger showing all credits and debits to each such ledger since the Attachment Staff Report Item 17C
C-12
Execution Date, in each case if a credit has been recorded in such ledger since the Execution Date.
(ii) Additionally, if at any time (i) the credits to the dollar balance of the Ledger Entries of a Non-Private Business Sales Ledger or a Private Business Sales Ledger have not been reversed within twenty-two (22) Months of being recorded and (ii) the continued failure to reverse such credits within two years of being recorded would result in a Ledger Event (under Section 9(c) below), then Seller no later than the tenth (10th) day of the 22nd Month following the entry of such credits shall provide notice to Buyer of the potential for the occurrence of a Ledger Event and request that Buyer consult with Special Tax Counsel regarding (A) a partial redemption of the Bonds as a remedial action with respect to such potential Ledger Event and (B) the possibility of delivery of a Tax Opinion if such a Ledger Event occurs.
(c) Ledger Event. A “Ledger Event” shall occur if, at any time, either (i) (A) the sum of all MWh credits on an Expired Non-Private Business Sales Ledger and the corresponding Expired Private Business Sales Ledger exceeds (B) the Non-Qualifying Remarketing Limit, or (ii) (A) the sum of all MWh credits on an Expired Private Business Sales Ledger exceeds (B) the Private Business Remarketing Limit, unless Buyer has obtained a Tax Opinion with respect to either (I) such event or (II) any remedial action that may have been taken with respect to the Bonds.
(d) Sole Remedies. The occurrence of a Ledger Event and any remedies associated therewith in Article XVII of the Agreement shall be Buyer’s sole and exclusive remedies with respect to any inability by the Delivering Entity to purchase and remarket Product for Buyer pursuant to, or any breach by the Delivering Entity of its obligations under, this Exhibit C.
Section 10. Third Party Remarketing Agent. To the extent that the net Ledger Entry balance of either the Non-Private Business Sales Ledger or the Private Business Sales Ledger is greater than zero (0) for a period of twelve (12) Months or longer, Seller may appoint a third party remarketing agent to remediate the outstanding Ledger Entries instead of the Delivering Entity; provided that such third party remarketing agent must agree to (a) remediate such Ledger Entries consistent with the terms of this Exhibit C and (b) exercise Commercially Reasonable Efforts to enter into remarketing sales to the extent that Buyer, the Delivering Entity or J. Aron locate opportunities for remarketing sales after such third party remarketing agent’s appointment.
Section 11. Buyer Right to Request to Purchase Remarketed Product. Notwithstanding any other provision of this Exhibit C, Buyer may request in a Remarketing Notice delivered to Seller that Buyer be the remarketing buyer of the quantities of Product described in such Remarketing Notice, in which case Seller will sell such remarketed Product to Buyer at a price, at Delivery Point(s) and on date(s) to be mutually agreed (but the price shall in no event be less than the Net Participant Price) by the Parties, provided that Seller shall be obligated to remarket such Product to Buyer only if all of the following conditions are satisfied:
(i) Buyer is not in default under any Transaction Document; Attachment Staff Report Item 17C
C-13
(ii) Buyer has certified to Seller in the Remarketing Notice that the condition in clause (a) above is true;
(iii) Buyer has provided such adequate assurances of Buyer’s performance, if any, as may have been reasonably requested by Seller; (iv) there is a master agreement in effect between Buyer and Seller that will govern the remarketing transaction between Buyer and Seller; and (v) Buyer covenants to resell the Product only in Qualified Sales.
Section 12. Remarketing of Assigned Product.
(a) Notwithstanding anything to the contrary herein but subject to clause (b) of this Section 12, if (i) a quantity of Assigned Product less than the Assigned Prepay Quantity is delivered hereunder in any Month during an Assignment Period for any reason other than Force Majeure (including under the circumstances specified in Section 14.1(b)(ii)) or (ii) an Assigned PPA FM Remarketing Event (as defined in Exhibit F) is in effect with respect to an Assigned PPA, then (A) Buyer will be deemed to have requested Seller to remarket the Assigned Product not delivered (regardless of whether a Remarketing Notice was delivered) and (B) Seller shall sell such Product or cause such Product to be sold in a Private Business Sale at the APC Contract Price minus the applicable Remarketing Fee. Seller shall pay Buyer for any such Month the product of (I) the Assigned Prepay Quantity, less the amount of Assigned Product actually delivered, multiplied by (II) the APC Contract Price minus the applicable Remarketing Fee – and all such sales shall constitute a Private Business Sale and shall be reflected on the Private Business Sales Ledger.
(b) In the event that (i) Assigned Product is remarketed consistent with clause (a) above and (ii) Assigned PAYGO Product is delivered under any Assigned PPA in the Month in which such remarketing occurs, then (A) the purchase by the Project Participant of such Assigned PAYGO Product for the Month in which such remarketing occurs shall be deemed without duplication to remediate the remarketing proceeds associated with the other Assigned Product remarketed for such Month in the amount of the Project Participant’s payment(s) for Assigned PAYGO Products for such Month pursuant to the PPA Custodial Agreement, (B) no Ledger Entries shall be entered and no Remarketing Fee shall apply to the extent such remarketing proceeds are remediated pursuant to clause (A) and (C) any remarketing proceeds remediated pursuant to this clause (b) shall be excluded from the calculation of Assigned Prepay Quantity shortfalls under clauses (i) and (ii) of the definition of Remarketing Fee in Exhibit F. Seller acknowledges and agrees that the Project Participant’s payment for other Assigned PAYGO Products shall be applied to remediation of remarketing proceeds hereunder in accordance with the Project Participant’s written instructions provided pursuant to the PPA Custodial Agreement.
Attachment Staff Report Item 17C
D-1
EXHIBIT D-1
TERMINATION PAYMENT SCHEDULE
Month of Early
Termination Payment
Date
Early Termination Payment
Date (If Not a Business Day,
Preceding Business Day)
Termination Payment
($)
(To be attached.)
Attachment Staff Report Item 17C
D-2
EXHIBIT D-2
TERMINATION PAYMENT ADJUSTMENT SCHEDULE
[To come for subsequent periods.]
Attachment Staff Report Item 17C
D-3
EXHIBIT D-3
POST-TERMINATION PAYMENT SCHEDULE
[To be attached.]
Attachment Staff Report Item 17C
E-1
EXHIBIT E
RECEIVABLES PURCHASE EXHIBIT
[To be attached.]
Attachment Staff Report Item 17C
F-1
EXHIBIT F
PRICING AND OTHER TERMS
Prepayment: $[____]
Prepayment Outside Date: [____]
Delivery Period: shall commence on [____] and shall continue in effect until the end of the day on [____] or earlier upon the Product Delivery Termination Date.
Remarketing Fee: $0.50/MWh, provided that:
(i) to the extent that (x) less than 95% of the aggregate Assigned Prepay Quantities are actually delivered under an Assigned PPA in four consecutive Months and (y) such under-deliveries are not a result of Force Majeure, the Remarketing Fee applicable to the remarketing of Assigned Product under such Assigned PPA commencing with Seller’s remarketing payment for the fourth consecutive Month of under-deliveries shall be $2.00/MWh until such Assigned PPA has delivered 95% or more of the aggregate Assigned Prepay Quantities for three consecutive Months; (ii) to the extent that none of the Assigned Prepay Quantities are actually delivered under an Assigned PPA for six consecutive Months due to Force Majeure, then (x) an “Assigned PPA FM Remarketing Event” shall be in effect until such Assigned PPA has delivered 95% or more of the aggregate Assigned Prepay Quantities for three consecutive Months and (y) the Remarketing Fee applicable to the remarketing of Assigned Product under such Assigned PPA commencing with Seller’s remarketing payment for the sixth consecutive Month of non-deliveries shall be $2.00/MWh while such Assigned PPA FM Remarketing Event is continuing and in effect; and
(iii) the Remarketing Fee shall be zero with respect to any Product remarketed to Buyer in accordance with Section 10 of Exhibit C;
provided that, for the purpose of determining under clauses (i) and (ii) above whether 95% of the aggregate Assigned Prepay Quantities are delivered in any Month under an Assigned PPA that includes separate Assigned Prepay Quantities for Energy and storage Products, the Assigned Prepay Quantities for storage Products shall be converted to MWhs consistent with the formula set forth in Section 7(e) of Exhibit C in order to aggregate such Assigned Prepay Quantities for storage Products with the Assigned Prepay Quantities for Energy under such Assigned PPA.
Discount Rate Spread: [____] basis points per annum
Specified Fixed Price: $[____]/MWh
Administrative Fee: $0.50/MWh
Additional Termination Payment Applies to the Following Product Delivery Termination Events:
Not applicable
Attachment Staff Report Item 17C
G-1
EXHIBIT G
COMMUNICATIONS PROTOCOL FOR BASE QUANTITIES
This Exhibit G (“Communications Protocol”) addresses the Scheduling of Base Quantities to be delivered and received at the Base Delivery Point. It is intended to be attached to both the Master Power Supply Agreement and the Clean Energy Purchase Contract, each as defined below.
1. ADDITIONAL DEFINED TERMS
In addition to the terms defined in Article I of this Agreement, the following terms used in this Communications Protocol shall have the following meanings:
“Agreement” means (i) when this Communications Protocol is attached to the Master Power Supply Agreement, the Master Power Supply Agreement and (ii) when this Communications Protocol is attached to the Clean Energy Purchase Contract, the Clean Energy Purchase Contract.
“Clean Energy Purchase Contract” means that certain Clean Energy Purchase Contract dated as of [_____], 2025 by and between Issuer and Project Participant. “Delivery Scheduling Entity” means the Delivering Entity or a Person designated by the Delivering Entity, as set forth in Attachment 4 hereto or in a subsequent written notice to Issuer and the Project Participant.
“Issuer” means California Community Choice Financing Authority, a joint powers authority and a public entity of the State of California established pursuant to the provisions of the Joint Exercise of Powers Act (Article 1, Chapter 5, Division 7, Title 1, Section 6500 et seq. of the California Government Code, as amended).
“Master Power Supply Agreement” means that certain Master Power Supply Agreement dated as of [_____], 2025 by and between Prepay LLC and Issuer that is specified as relating to the Clean Energy Purchase Contract with Project Participant. “Operational Nomination” has the meaning specified in Section 4.1.1. “Prepay LLC” means Aron Energy Prepay [__] LLC, a Delaware limited liability company. “Project Participant” means Ava Community Energy, a joint powers authority and a community choice aggregator organized under the Laws of the State of California. “Receipt Scheduling Entity” for any Delivery Point means the Project Participant, unless the Clean Energy Purchase Contract has been suspended or terminated, in which case the Receipt Scheduling Entity will be Issuer or a Person designated by Issuer for such Delivery Point in accordance with this Communications Protocol. “Relevant Contract” means the Master Power Supply Agreement and the Clean Energy Purchase Contract.
Attachment Staff Report Item 17C
G-2
“Relevant Party” means Issuer, Prepay LLC or the Project Participant. “Relevant Third Party” means any Person that is (i) a Transmission Provider that will or is intended to transport Product to be delivered or received under the Agreement, (ii) an independent system operator or control area that coordinates the Scheduling of Product at the Base Delivery Point, (iii) Scheduling receipt of Product by Issuer or for the account of Issuer to the extent such Product has been delivered to Issuer or for the account of Issuer under the Master Power Supply Agreement, and (iv) delivering Product to Issuer or for the account of Issuer to the extent such Product is intended to be re-delivered ultimately to the Project Participant or for the account of the Project Participant under the Clean Energy Purchase Contract.
“Scheduling Entities” means the Receipt Scheduling Entity and the Delivery Scheduling Entity.
2. AGREEMENTS OF RELEVANT PARTIES
Each Relevant Party that is a party to Relevant Contract to which this Communications Protocol is attached acknowledges that this Communications Protocol sets forth certain obligations that may be delegated to other Relevant Parties that are not parties to such Relevant Contracts. In connection therewith:
2.1 Reliance on Scheduling Entity. Each Relevant Party shall be entitled to rely exclusively on any communications or directions given by a Delivery Scheduling Entity or Receipt Scheduling Entity, in each case to the extent such communications are permitted hereunder.
2.2 Performance of Communications Protocol. Each Relevant Party to a Relevant Contract shall cause its counterparty to each other Relevant Contract to comply with the provisions of this Communications Protocol as the provisions apply to the such counterparty to the extent required to perform the obligations of the Relevant Party under the Relevant Contract.
2.3 Third Party Beneficiaries. To the extent this Communications Protocol purports to give any Relevant Party (a “Beneficiary”) rights vis-à-vis any other Relevant Party (a “Burdened Party”) with whom such Beneficiary does not have privity under a Relevant Contract, such Beneficiary shall be deemed to be a third party beneficiary of each Relevant Contract to which the Burdened Party is a party to the extent necessary or convenient to enforce the obligations of the Burdened Party under this Communications Protocol.
2.4 Amendment of Relevant Contracts. No Relevant Party shall amend, waive or otherwise modify any provision of any Relevant Contract to which it is a party without the consent of each other Relevant Party whose rights or obligations would be materially and adversely affected by such amendment, waiver or modification as it relates to this Communications Protocol.
Attachment Staff Report Item 17C
G-3
2.5 Amendment of Communications Protocol. No Relevant Party shall amend any provision of this Communications Protocol in a Relevant Contract without the consent of each other Relevant Party.
2.6 Waiver of Communications Protocol. No Relevant Party shall waive any provision of this Communications Protocol in a Relevant Contract without the consent of each other Relevant Party whose rights or obligations would be materially and adversely affected by such waiver.
3 DESIGNATION AND REPLACEMENT OF SCHEDULING ENTITIES
3.1 Designation of Delivery Scheduling Entity. The Delivering Entity may designate a new Delivery Scheduling Entity upon thirty (30) days written notice to Issuer substantially in the form of Attachment 4. Any Scheduling Entity designated in accordance with this Section 3.1 shall commence service at the beginning of a Month, unless mutually agreed in writing between the Delivering Entity and Issuer.
3.2 Assumption by Receipt Scheduling Entity. If any Delivery Scheduling Entity (other than the Delivering Entity) persistently fails to perform its obligations as contemplated under this Communications Protocol, the Receipt Scheduling Entity may, by notice to the Delivering Entity, require that the Delivering Entity deal directly with the Receipt Scheduling Entity until a new Delivery Scheduling Entity is designated in accordance with this Section 3.1.
3.3 Scheduling Coordinator. Project Participant shall designate a scheduling coordinator for the purposes of accepting Base Product delivery at the Base Delivery Point through the scheduling of ISTs.
4 INFORMATION EXCHANGE AND COMMUNICATION BETWEEN ISSUER AND
THE DELIVERING ENTITY
4.1 Communication of Operational Nomination Details.
4.1.1 Not later than three Days prior to each Day during which Base Product is required to be delivered under the Agreement, the Receipt Scheduling Entity for such Delivery Point may deliver an operational nomination in writing (the “Operational Nomination”) indicating any inability of the Project Participant to receive all of its Base Quantities during such Day, which Operational Nomination shall be without prejudice to any party’s rights under the Relevant Contracts for failure to receive Base Quantities.
If no changes to Base Quantities are so submitted, the Operational Nomination shall be deemed to nominate the full Base Quantities required to be delivered on a Day.
4.1.2 Not later than three Days prior to each Day during which Base Product is required to be delivered under the Agreement, the Delivery Scheduling Attachment Staff Report Item 17C
G-4
Entity for such Delivery Point may revise the Operational Nomination to indicate any inability of Prepay LLC to deliver all Base Quantities during such Day, which revised Operational Nomination shall be without prejudice to any party’s rights under the Relevant Contracts for failure to deliver Base Quantities.
4.2 Event-specific Communications.
4.2.1 Remarketing Notices issued by Issuer under the Master Power Supply Agreement shall be substantially in the form of Attachment 2 hereto. Any such notices to remarket must be delivered directly to Prepay LLC and the Delivery Scheduling Entity.
4.2.2 Each Scheduling Entity shall notify Prepay LLC, Issuer and the Project Participant as soon as practicable in the event of: (i) any deficiencies in Scheduling related to such Scheduling Entity; (ii) any deficiencies in Scheduling related to the other such Scheduling Entity; and (iii) any issues with Relevant Third Parties that that would reasonably be expected to create issues related to Product Scheduling under the Relevant Contract. 5 ACCESS AND INFORMATION
5.1 Verification of Product Scheduled. In addition to the delivery of and access to the records and data required pursuant to the Agreement, each Relevant Party agrees to provide relevant records from itself and other Relevant Third Parties necessary to document and verify Product Scheduled within and after the Month as needed to facilitate the Relevant Contracts.
5.2 View Rights. To the extent requested by a Delivery Scheduling Entity or the Delivering Entity the Receipt Scheduling Entities will use Commercially Reasonable Efforts to cooperate with the Delivery Scheduling Entity and the Delivering Entity to ensure that Delivery Scheduling Entity and Prepay LLC have sufficient agency view rights from each such Scheduling Entity to allow Prepay LLC to view Base Product Scheduling at the Base Delivery Point. 6 NOTICES
Any notice, demand, request or other communication required or authorized by this Communications Protocol to be given by one Relevant Party to another Relevant Party shall be in writing, except as otherwise expressly provided herein. It shall either be sent by facsimile (with receipt confirmed by telephone and electronic transmittal receipt), courier, or personally delivered (including overnight delivery service) to the representative of the other Relevant Party designated in Attachment 1 hereto. Any such notice, demand, or request shall be deemed to be given (i) when sent by facsimile confirmed by telephone and electronic transmittal receipt or (ii) when actually received if delivered by courier or personal delivery (including overnight delivery service). Each Relevant Party shall have the right, upon written notice to the Attachment Staff Report Item 17C
G-5
other Relevant Parties, to change its address at any time, and to designate that copies of all such notices be directed to another Person at another address. 7 NO IMPACT ON CONTRACTUAL OBLIGATIONS
Except as expressly set forth herein or in an applicable Relevant Contract, nothing in this Communications Protocol nor any Relevant Party’s actions or inactions hereunder shall have any impact on any Relevant Party’s rights or obligations under the Relevant Contracts.
8 ATTACHMENTS
Attachment 1 - Key Personnel
Attachment 2 - Remarketing Notice Form
Attachment 3 - Designation of Alternate Base Delivery Points Form Attachment 4 - Designation of Scheduling Entities Form
Attachment Staff Report Item 17C
G-6
Attachment 1
Key Personnel
Delivering Entity Marketing Personnel:
Timothy Capuano
Sales and Trading
Telephone: (212) 357-2542
[email protected]
Delivering Entity Scheduling Personnel:
Scheduling Team
Email: [email protected]
Direct Phone: (212) 902-8148
Fax: 212.493.9847
Matt Speltz
ICE Chat: mspeltz5
Email: [email protected]
Direct Phone: (212) 357-5429
Fax: (212) 493-9847
Other Delivering Entity Personnel:
Francois Gignac
Telephone: (212) 855-0880
[email protected]
Andres E. Aguila
Telephone: (212) 855-6008
Fax: (212) 291-2124
[email protected]
Issuer Personnel:
[email protected] and [email protected]
Project Participant Personnel:
[____]
Attachment Staff Report Item 17C
G-7
Attachment 2
Remarketing Notice Form
Date: [_____________]
To: Delivering Entity Scheduling
From: Project Participant Scheduling
This notice is being delivered pursuant to that certain Master Power Supply Agreement (the “Prepaid Agreement”) dated as of [_____], 2025 by and between Aron Energy Prepay [__] LLC (“Prepay LLC”) and California Community Choice Financing Authority (“Issuer”) and relates to the Clean Energy Purchase Contract (the “Clean Energy Purchase Contract”) dated as of [_____], 2025 by and between Issuer and Ava Community Energy (“Project Participant”). Capitalized terms not defined herein are defined in the Prepaid Agreement.
Check the box to indicate type of Remarketing Notice (The numbers of the Primary (“P”) and Alternate (“A”) Delivery Points below correspond to those same Primary and Alternate Delivery Points set forth in Exhibit A-1 of the Agreement, or as may be designated by the Parties from time to time):
Monthly Remarketing Notice:
Month(s) for which remarketing is requested: _____________________, 20__ through _______________________, 20__.
Pursuant to Section 3(b) of Exhibit C of the Clean Energy Purchase Contract, Project Participant requests that the Delivering Entity remarket in such Month(s) the following Base Quantities of Product required to be delivered at the following Delivery Points:
Delivery Point (P/A, #) MWh/ Hour for each Hour in the Month Daily Remarketing Notice:
Hours for which remarketing is requested: _____________________, 20__ through _______________________, 20__.
Attachment Staff Report Item 17C
G-8
Pursuant to Section 3(c) of Exhibit C of the Clean Energy Purchase Contract, Project Participant requests that the Delivering Entity remarket for such Hours the following Base Quantities of Product required to be delivered at the following Delivery Point:
Delivery Point (P/A, #) MWh/Hour
Submitted by Project Participant:
AVA COMMUNITY ENERGY
By: ________________________
Name:
Title:
Attachment Staff Report Item 17C
G-9
Attachment 3
Designation of Alternate Delivery Points Form
This designation is delivered pursuant to that certain Master Power Supply Agreement (the “Master Power Supply Agreement”) dated as of [_____], 2025 by and between Aron Energy Prepay [__] LLC (“Prepay LLC”) and California Community Choice Financing Authority (“Issuer”) and the Clean Energy Purchase Contract (the “Clean Energy Purchase Contract”) dated as of [_____], 2025 by and between Issuer and Ava Community Energy (“Project Participant”). Capitalized terms not defined herein are defined in the Master Power Supply Agreement and the Clean Energy Purchase Contract. [Project Participant and/or Issuer] hereby proposes the following Alternate Delivery Points for deliveries of Energy that would otherwise be made at the specified Primary Delivery Point:
ALTERNATE
DELIVERY POINT
PRIMARY
DELIVERY POINT
AFFECTED
COMMODITY
REFERENCE PRICE
PRICING POINT
ADDITIONAL
RESTRICTIONS
1 [e.g.
2 Vol. Limit:____
3 Time Limit:]___
(etc.)
Unless otherwise agreed among the Delivering Entity, Issuer and Project Participant, an Alternate Delivery Point shall utilize the same Commodity Reference Price as the Primary Delivery Point it replaces or otherwise affects. Project Participant is not required to agree or accept this designation (or any change to the Commodity Reference Price) if it is being submitted by Issuer pursuant to the Master Power Supply Agreement only.
AGREED AND
ACCEPTED BY DELIVERING
ENTITY:
(if required)
AGREED TO AND ACCEPTED
BY PROJECT PARTICIPANT:
(if required)
AGREED TO AND ACCEPTED
BY ISSUER:
By:
Name:
Title:
By:
Name:
Title:
By:
Name:
Title:
Attachment Staff Report Item 17C
G-10
Attachment 4
Designation of Scheduling Entities Form
This designation is being delivered pursuant to that certain Master Power Supply Agreement (the “Master Power Supply Agreement”) dated as of [_____], 2025 by and between Aron Energy Prepay [__] LLC (“Prepay LLC”) and California Community Choice Financing Authority (“Issuer”) and relates to the Clean Energy Purchase Contract (the “Clean Energy Purchase Contract”) dated as of [_____], 2025 by and between Issuer and Ava Community Energy (“Project Participant”). Capitalized terms not defined herein are defined in the Master Power Supply Agreement and Clean Energy Purchase Contract.
[If delivered by Project Participant:
Receipt Scheduling Entity:
Delivery Point: ________________________
Effective Date(s) of Service of Receipt Scheduling Entity (full Months only):
________________, ______ to ________________, ______, if applicable Notice Information for Receipt Scheduling Entity:
Name: ______________________________
Attention: ______________________________
Address: ______________________________
______________________________
Telephone: ______________________________
Fax: ______________________________]
[If delivered by the Delivering Entity:
Delivery Scheduling Entity:
Delivery Point: ________________________
Effective Date(s) of Service of Delivery Scheduling Entity (full Months only):
________________, ______ to ________________, ______, if applicable Notice Information for Delivery Scheduling Entity:
Name: ______________________________
Attention: ______________________________
Address: ______________________________
Attachment Staff Report Item 17C
G-11
______________________________
Telephone: ______________________________
Fax: ______________________________
Submitted by:
[Project Participant or the Delivering Entity]
By: _____________________________
Name: _____________________________
Title: _____________________________
Attachment Staff Report Item 17C
SM Draft 5 May 2025
PREPAID ENERGY SALES AGREEMENT
between
ENERGY PREPAY [__], LLC
and
CALIFORNIA COMMUNITY CHOICE FINANCING AUTHORITY
Dated as of [____], 2025
Attachment Staff Report Item 17D
TABLE OF CONTENTS
(continued)
Page
-i-Article I. Definitions..................................................................................................................... 1 Section 1.1 Defined Terms ..................................................................................... 1 Section 1.2 Definitions; Interpretation.................................................................. 11 Article II. Execution Date and Delivery Period ...................................................................... 11 Section 2.1 Execution Date; Delivery Period ....................................................... 11 Section 2.2 Termination by Seller Prior to Prepayment ....................................... 12 Article III. Sale And Purchase.................................................................................................. 12 Section 3.1 Sale and Purchase of Energy.............................................................. 12 Section 3.2 Prepayment ........................................................................................ 12 Section 3.3 Other Amounts Payable with Respect to Assigned Products ............ 13 Section 3.4 No Obligation to Take Base Energy .................................................. 13 Section 3.5 Reduction of Contract Quantity......................................................... 13 Article IV. Failure to Deliver or Take Energy ........................................................................ 13 Section 4.1 Assigned Product ............................................................................... 13 Section 4.2 Failure to Deliver or Take Due to Force Majeure.............................. 14 Article V. Transmission and Delivery; Communications ...................................................... 14 Section 5.1 Delivery of Energy............................................................................. 14 Section 5.2 Scheduling.......................................................................................... 15 Section 5.3 Title and Risk of Loss........................................................................ 15 Section 5.4 PCC1 Product, Long-Term PCC1 Product ........................................ 15 Section 5.5 Deliveries within CAISO or Another Balancing Authority............... 18 Section 5.6 Assigned Products.............................................................................. 18 Article VI. Partial Assignments of PPAs ................................................................................. 18 Section 6.1 Future PPA Assignments................................................................... 19 Section 6.2 Updates to Exhibits A-1 and A-2....................................................... 19 Article VII. Energy Remarketing............................................................................................. 19 Section 7.1 Energy Remarketing .......................................................................... 19 Section 7.2 Delegation of Authority ..................................................................... 19 Article VIII. Representations and Warranties........................................................................ 19 Section 8.1 Representations and Warranties......................................................... 19 Attachment Staff Report Item 17D
TABLE OF CONTENTS
(continued)
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-ii-Section 8.2 Additional Representations and Warranties of Buyer ....................... 21 Section 8.3 Warranty of Title................................................................................ 22 Section 8.4 Funding Agreement. .......................................................................... 22 Section 8.5 Notice of PSC Remarketing Election. ............................................... 23 Article IX. Taxes ........................................................................................................................ 23 Article X. Dispute Resolution.................................................................................................... 23 Section 10.1 Arbitration.......................................................................................... 23 Section 10.2 Dispute Resolution............................................................................. 24 Article XI. Force Majeure......................................................................................................... 26 Section 11.1 Applicability of Force Majeure.......................................................... 26 Section 11.2 Settlement of Labor Disputes............................................................. 26 Article XII. Governmental Rules and Regulations................................................................. 26 Section 12.1 Compliance with Laws ...................................................................... 26 Section 12.2 Contests.............................................................................................. 26 Section 12.3 Defense of Agreement ....................................................................... 26 Article XIII. Assignment ........................................................................................................... 27 Article XIV. Payments............................................................................................................... 28 Section 14.1 Monthly Statements........................................................................... 28 Section 14.2 Payment.............................................................................................. 28 Section 14.3 Payment of Disputed Amounts.......................................................... 29 Section 14.4 Late Payment ..................................................................................... 29 Section 14.5 Audit; Adjustments............................................................................ 29 Section 14.6 Netting................................................................................................ 30 Article XV. Receivables Purchases........................................................................................... 30 Article XVI. Notices................................................................................................................... 30 Article XVII. Acceleration; Termination; Remedies.............................................................. 30 Section 17.1 Acceleration Event............................................................................. 30 Section 17.2 Energy Delivery Termination Events. ............................................... 31 Section 17.3 Payments Following a Ledger Event. ................................................ 32 Section 17.4 Remedies and Termination. ............................................................... 32 Attachment Staff Report Item 17D
TABLE OF CONTENTS
(continued)
Page
-iii-Section 17.5 Replacement of Swaps....................................................................... 33 Section 17.6 Limitation on Damages...................................................................... 34 Section 17.7 Option to Purchase Bonds.................................................................. 35 Section 17.8 Termination Payment Adjustment Schedule ..................................... 35 Article XVIII. Miscellaneous .................................................................................................... 36 Section 18.1 Indemnification Procedure................................................................. 36 Section 18.2 Deliveries........................................................................................... 36 Section 18.3 Entirety; Amendments....................................................................... 36 Section 18.4 Governing Law .................................................................................. 37 Section 18.5 Non-Waiver........................................................................................ 37 Section 18.6 Severability ........................................................................................ 37 Section 18.7 Exhibits.............................................................................................. 37 Section 18.8 Winding Up Arrangements................................................................ 37 Section 18.9 Relationships of Parties...................................................................... 37 Section 18.10 Immunity............................................................................................ 38 Section 18.11 Rates and Indices ............................................................................... 38 Section 18.12 Limitation of Liability........................................................................ 39 Section 18.13 Counterparts....................................................................................... 39 Section 18.14 Rights of Trustee................................................................................ 39 Section 18.15 Waiver of Defenses............................................................................ 40 Section 18.16 U.S. Resolution Stay.......................................................................... 40 Section 18.17 Rate Changes ..................................................................................... 40 Exhibit A-1 - Base Energy Hourly Quantities
Exhibit A-2 - EPS Energy Period Monthly Projected Quantity Exhibit A-3 - Annual Quantity
Exhibit B - Notices
Exhibit C - Energy Remarketing
Exhibit D-1 - Termination Payment Schedule
Exhibit D-2 - Termination Payment Adjustment Schedule
Exhibit D-3 - Post Termination Payment Schedule
Exhibit E - Reserved
Exhibit F - Pricing and Other Terms
Exhibit G - Receivables Purchases
Attachment Staff Report Item 17D
1 PREPAID ENERGY SALES AGREEMENT
This Prepaid Energy Sales Agreement (hereinafter, this “Agreement”) is made and entered into as of [____], 2025 (the “Execution Date”), by and between Energy Prepay [__], LLC, a Delaware limited liability company (“Seller”), and California Community Choice Financing Authority, a joint powers authority and a public entity of the State of California established pursuant to the provisions of the Joint Exercise of Powers Act (Article 1, Chapter 5, Division 7, Title 1, Section 6500 et seq. of the California Government Code, as amended) (“Buyer”).
W I T N E S S E T H:
WHEREAS, Seller desires to sell Energy to Buyer, and Buyer desires to purchase Energy from Seller, upon the terms and conditions hereinafter set forth; and WHEREAS, in connection with the execution of this Agreement, Seller shall enter into that certain Energy Management Agreement, dated as of the date hereof (the “Energy Management Agreement”), with Morgan Stanley Capital Group Inc., a Delaware corporation (“MSCG”), pursuant to which Seller shall acquire Energy for delivery under this Agreement; and WHEREAS, in connection with Buyer’s execution of the Power Supply Contract (as defined below), the Project Participant (as defined below) under such Power Supply Contract will assign to MSCG pursuant to the Initial Assignment Agreement certain Assigned Rights and Obligations, including the right to receive Assigned Product, which Assigned Product will be resold by MSCG to Seller under the Energy Management Agreement, then resold by Seller to Buyer hereunder and then resold to the Project Participant under the Power Supply Contract.
NOW, THEREFORE, in consideration of the premises above and the mutual covenants and agreements herein set forth, Buyer and Seller (the “Parties” hereto; each is a “Party”) agree as follows:
ARTICLE I.
DEFINITIONS
Section 1.1 Defined Terms. The following terms, when used in this Agreement and identified by the capitalization of the first letter thereof, have the respective meanings set forth below, unless the context otherwise requires:
“Acceleration Event” has the meaning specified in Section 17.1. “Affiliate” means, with respect to either Party, any entity which is a direct or indirect parent or subsidiary of such Party or which directly or indirectly (i) owns or controls such Party, (ii) is owned or controlled by such Party, or (iii) is under common ownership or control with such Party. For purposes of this definition, “control” of an entity means the power, directly or indirectly, either to (a) vote 50% or more of the securities having ordinary voting power for the election of directors or Persons performing similar functions or (b) direct or cause the direction of the management and policies, whether by contract or otherwise.
Attachment Staff Report Item 17D
2 “Agreement” has the meaning specified in the preamble and shall include exhibits, recitals and attachments referenced herein and attached hereto and all amendments, supplements and modifications hereto and thereto.
“Annual Quantity” means, with respect to each Contract Year of the Delivery Period, the quantity (in MWh) of Assigned Product for such Contract Year as set forth on Exhibit A-3; provided that the Annual Quantity for any Contract Year shall be reduced by the aggregate amount of any quantities of Base Energy required to be remarketed under this Agreement for any given Contract Year.
“Assigned Delivery Point” has the meaning specified in the applicable Assignment Agreement.
“Assigned Energy” has the meaning specified in the applicable Assignment Agreement; provided that any Assigned Energy shall be EPS Compliant Energy as set forth in the Assignment Letter Agreement.
“Assigned Paygo Quantity” means any Assigned Products delivered under this Agreement in excess of the Annual Quantity for any Contract Year. “Assigned PPA” has the meaning specified in the Participant Custodial Agreement. “Assigned PPA Index Adder” means the amount (in $/MWh) specified in Exhibit A-2 for each Month of the Delivery Period.
“Assigned Product” means, as applicable, PCC1 Product, Long-Term PCC1 Product, PCC2 Product, Assigned Energy, Assigned RECs and any other product included in an Assignment Agreement.
“Assigned RECs” means any RECs to be delivered to MSCG or Seller pursuant to any Assigned Rights and Obligations.
“Assigned Rights and Obligations” means a portion of the Project Participant’s rights and obligations under a power purchase agreement assigned pursuant to an Assignment Agreement.
“Assignment Agreement” means the Initial Assignment Agreement and any subsequent assignment agreement entered into consistent with the Assignment Letter Agreement. “Assignment Letter Agreement” means that certain Letter Agreement, dated as of the date hereof, by and among MSCG, Seller, Buyer and Project Participant. “Assignment Period” has the meaning specified in the applicable Assignment Agreement.
“Available Discount” has the meaning specified in the Re-Pricing Agreement. “Balancing Authority” has the meaning specified in the CAISO Tariff.
Attachment Staff Report Item 17D
3 “Base Energy” means Firm (LD) Energy to be delivered to an Energy Delivery Point.
“Billing Date” has the meaning specified in Section 14.1(b). “Billing Statement” has the meaning specified in Section 14.1(b). “Bond Closing Date” means the first date on which the Bonds are issued pursuant to the Bond Indenture.
“Bond Documents” means this Agreement, the Power Supply Contract, the Bond Indenture and all other documents, agreements and instruments entered into or delivered by Buyer in connection with any of the foregoing or the transactions thereunder. “Bond Indenture” means (i) the Trust Indenture to be entered into prior to the commencement of the Delivery Period between Buyer and the Trustee, as supplemented and amended from time to time in accordance with its terms, and (ii) any trust indenture entered into in connection with the commencement of any Interest Rate Period after the initial Interest Rate Period between Buyer and the Trustee containing substantially the same terms as the Trust Indenture described in clause (i) and which is intended to replace the Trust Indenture described in clause (i) as of the commencement of such Interest Rate Period which follows. “Bonds” means the bonds issued pursuant to the Bond Indenture. “Business Day” means any day other than (i) a Saturday or Sunday, (ii) a Federal Reserve Bank Holiday, (iii) any other day on which commercial banks in either New York, New York or the State of California are authorized or required by Law to close, or (iv) any other day excluded pursuant to the Bond Indenture.
“Buyer” has the meaning specified in the preamble.
“Buyer Custodial Agreement” means that certain Custodial Agreement, dated as of the Bond Closing Date, by and among Swap Counterparty, Buyer, the Trustee and U.S. Bank Trust Company, National Association, as custodian as the same may be amended, modified or supplemented from time to time.
“Buyer Swap” means (i) the transaction confirmation entered into under the ISDA Master Agreement, dated as of the date hereof, between Buyer and the Swap Counterparty, and (ii) each replacement Buyer Swap entered into pursuant to Section 17.5. “Buyer’s Statement” has the meaning specified in Section 14.1(a). “CAISO” means California Independent System Operator or its successor. “CAISO Tariff” means CAISO’s FERC-approved tariff, as modified, amended or supplemented from time to time.
Attachment Staff Report Item 17D
4 “California Long-Term Contracting Requirements” means the long-term contracting requirement set forth in the Clean Energy and Pollution Reduction Act of 2015 (SB 350), California Public Utilities Code section 399.13(b), and CPUC Decision 17-06-026 and CPUC Decision 18-05-026, as may be modified by subsequent decision of the California Public Utilities Commission or by other Law.
“Call Option Notice” has the meaning specified in Exhibit G. “Claiming Party” has the meaning specified in Section 11.1. “Claims” means all claims or actions, threatened or filed, that directly or indirectly relate to the indemnities provided herein, and the resulting losses, damages, expenses, attorneys’ fees, experts’ fees, and court costs, whether incurred by settlement or otherwise, and whether such claims or actions are threatened or filed prior to or after the termination of this Agreement. “Clean Energy Project” has the meaning specified in the Bond Indenture. “Commercially Reasonable” or “Commercially Reasonable Efforts” means, with respect to any purchase or sale or other action required to be made, attempted or taken by a Party under this Agreement, such efforts as a reasonably prudent Person would undertake for the protection of its own interest under the conditions affecting such purchase or sale or other action, including without limitation, the amount of notice of the need to take such action, the duration and type of the purchase or sale or other action, the competitive environment in which such purchase or sale or other action occurs, and the risk to the Party required to take such action. “Contract Index Price” means the index price specified on Exhibit A-1 with respect to the Hourly Quantity of Energy (which index prices may be Day-Ahead Market Price or Real-Time Market Price). “Contract Quantity” means (i) with respect to Assigned Energy, the Annual Quantity of Assigned Energy for each Contract Year of the Delivery Period; and (ii) with respect to Base Energy, the Hourly Quantity of Base Energy set forth in Exhibit A-1 for any Month, as such Exhibits A-1 and A-2 shall be updated from time to time in accordance with Section 6.2. “Contract Year” means each period of 12 Months from January 1 until December 31 during the Delivery Period.
“Custodial Agreements” means the Buyer Custodial Agreement and the Seller Custodial Agreement.
“Daily Basis Differential” has the meaning specified in Section 18.11(a)(ii). “Daily Commodity Reference Price” means (A) the Day-Ahead Market Price, (B) the Day-Ahead Average Price or (C) the Real-Time Market Price. “Daily Replacement Index” has the meaning specified in Section 18.11(a)(ii).
Attachment Staff Report Item 17D
5 “Day-Ahead Average Price” means, for any Assigned Energy in any EPS Energy Period1, the result of (i) (x) the sum of the Day-Ahead Market Prices for each Pricing Interval in a Month divided by (y) the number of Pricing Intervals in such Month plus (ii) the Assigned PPA Index Adder for the relevant Month. As used in this definition, “Pricing Interval” means each unit of time for which CAISO establishes a separate price.
“Day-Ahead Market Price” means the Day Ahead Market or Locational Marginal Price for the Energy Delivery Point for each applicable hour as published by CAISO, or as such price may be corrected or revised from time to time by such independent system operator or other entity in accordance with its rules.
“Default Rate” means, as of any date of determination, the lesser of (a) the sum of (i) the rate of interest per annum quoted in The Wall Street Journal (Eastern Edition) under the “Money Rates” section as the “Prime Rate” for such date of determination, plus (ii) one percent per annum, or (b) if a lower maximum rate is imposed by applicable Law, such maximum lawful rate.
“Delivery Hours” means each Hour commencing at 00:00 (PPT) on the first day of the Delivery Period, and each Hour thereafter during the Delivery Period. “Delivery Period” has the meaning specified in Exhibit F. “Delivery Point” means (i) the applicable Assigned Delivery Point(s) for Assigned Energy and (ii) the applicable Energy Delivery Point for Base Energy (as set forth in Exhibits A-1 and A-2). “Early Termination Payment Date” means the last Business Day of the first Month that commences after an Acceleration Event; provided that, in the case of an Acceleration Event due to a Failed Remarketing, the Early Termination Payment Date shall be the last Business Day of the then-current Interest Rate Period.
“Energy” means three-phase, 60-cycle alternating current electric energy, expressed in MWhs.
“Energy Delivery Point” has the meaning specified in Exhibit A-1. “Energy Delivery Termination Date” means a date that occurs pursuant to Section
17.4(a) upon which the Delivery Period will end and Buyer’s and Seller’s respective obligations to receive and deliver Energy under this Agreement will terminate. “Energy Delivery Termination Event” has the meaning specified in Section 17.2. “Energy Management Agreement” has the meaning specified in the recitals. 1 NTD: Parties to confirm pricing for the Initial Assignment Agreement.
Attachment Staff Report Item 17D
6 “EPS” means California’s Emissions Performance Standards, as set forth in Sections 8340 and 8341 of the California Public Utilities Code, as implemented and amended from time to time, and any successor Law.
“EPS Compliant Energy” means Energy that the Project Participant can contract for and purchase in compliance with EPS requirements that are applicable to such Project Participant.
“EPS Energy Period” means the Initial EPS Energy Period and any subsequent Assignment Period established by future assignments of power purchase agreements consistent with the Assignment Letter Agreement.
“Execution Date” has the meaning specified in the preamble. “Failed Remarketing” has the meaning specified in the Bond Indenture. “FERC” means the Federal Energy Regulatory Commission and any successor thereto.
“Firm (LD)” means, with respect to the obligation to deliver Energy, that either Party shall be relieved of its obligations to sell and deliver or purchase and receive without liability only to the extent that, and for the period during which, such performance is prevented by Force Majeure. In the absence of Force Majeure, the Party to which performance is owed shall be entitled to receive from the Party which failed to deliver/receive an amount determined pursuant to Article IV.
“Force Majeure” means an event or circumstance which prevents one Party from performing its obligations under this Agreement, which event or circumstance was not anticipated as of the Execution Date, which is not within the reasonable control of, or the result of the negligence of, the Claiming Party, and which, by the exercise of due diligence, the Claiming Party is unable to overcome or avoid or cause to be avoided. Force Majeure shall not be based on (i) the loss of Buyer’s markets; (ii) Buyer’s inability economically to use or resell any Energy purchased hereunder; (iii) the loss or failure of Seller’s supply except if such loss or failure results from curtailment by a Transmission Provider; or (iv) Seller’s ability to sell the Energy at a higher price.
Neither Party may raise a claim of Force Majeure based in whole or in part on curtailment by a Transmission Provider unless (a) such Party (or an upstream supplier with respect to Seller or the Project Participant with respect to Buyer) has contracted for firm transmission with such Transmission Provider for the Energy to be delivered to or received at the Energy Delivery Point and (b) such curtailment is due to “force majeure” or “uncontrollable force” or a similar term as defined under the Transmission Provider’s tariff; provided, however, that existence of the foregoing factors shall not be sufficient to conclusively or presumptively prove the existence of Force Majeure absent a showing of other facts and circumstances which in the aggregate with such factors establish that Force Majeure as defined in the first sentence hereof has occurred.
Notwithstanding the foregoing or anything to the contrary herein, (I) to the extent that (x) a PPA Supplier fails to deliver any Assigned Energy and claims force majeure with respect to such failure to deliver or (y) a PPA Supplier otherwise is unable to deliver any portion of the Annual Quantity due to an event that would be considered Force Majeure under this Agreement if it affected Seller Attachment Staff Report Item 17D
7 directly, then such event shall be deemed to constitute Force Majeure in respect of Seller hereunder; and (II) to the extent that an Assignment Agreement is terminated early, such termination shall constitute Force Majeure with respect to Seller until the earlier of (A) the commencement of an Assignment Period under a replacement Assignment Agreement, (B) the commencement of the delivery of EPS Compliant Energy procured by MSCG consistent with the Assignment Letter Agreement or (C) the end of the second Month following the Month in which such early termination occurs.
“Funding Agreement” means initially that certain [____], dated as of [____], by and between Seller and the Funding Recipient and any replacement funding agreement entered into for a subsequent Reset Period.
“Funding Recipient” means initially, [____], or its successors to or permitted assignees under the Funding Agreement, and any other Person that becomes counterparty to Seller under a funding agreement for a subsequent Reset Period. “Government Agency” means the United States of America, any state thereof, any municipality, or any local jurisdiction, or any political subdivision of any of the foregoing, including, but not limited to, courts, administrative bodies, departments, commissions, boards, bureaus, agencies, or instrumentalities.
“Hour” means each 60-minute period commencing at 00:00 (PPT) on the first day of the Delivery Period. The term “Hourly” shall be construed accordingly. “Hourly Quantity” means, with respect to each Delivery Hour during the Delivery Period, the quantity (in MWh) of Base Energy set forth on Exhibit A-1 for the Month in which such Delivery Hour occurs (as such Exhibit A-1 may be updated from time to time in accordance with Section 6.2).
“Initial Assignment Agreement” means that certain Limited Assignment Agreement, dated on or around the Bond Closing Date, by and among the Project Participant, Initial PPA Supplier, Seller and Buyer.
“Initial EPS Energy Period” means the “Assignment Period” as defined in the Initial Assignment Agreement.
“Initial PPA Supplier” means MSCG.
“Interest Rate Period” has the meaning specified in the Bond Indenture, provided that if the Bonds are outstanding in two or more series with separate, concurrent and co-terminus Interest Rate Periods, “Interest Rate Period” shall mean all such Interest Rate Periods collectively. “Law” means any statute, law, rule or regulation or any judicial or administrative interpretation thereof having the effect of the foregoing enacted, promulgated, or issued by a Government Agency whether in effect as of the Execution Date or at any time in the future. “Ledger Event” has the meaning specified in Exhibit C.
Attachment Staff Report Item 17D
8 “Long-Term PCC1 Product” means bundled renewable energy and RECs meeting the requirements of Portfolio Content Category 1, and the California Long-Term Contracting Requirements, to be delivered to MSCG, Seller or any successors thereto pursuant to any Assigned Rights and Obligations.
“Mandatory Purchase Date” has the meaning specified in the Bond Indenture. “Master Custodial Agreement” means that certain Master Custodial Agreement, dated as of the date hereof, by and among Seller, MSCG, Buyer and the Master Custodian, as the same may be amended, modified or supplemented from time to time. “Master Custodian” means The Bank of New York Mellon, a New York banking corporation, as custodian under the Master Custodial Agreement, and its successors as Master Custodian under the Master Custodial Agreement.
“Minimum Discount” has the meaning specified in the Power Supply Contract. “Month” means a calendar month. The term “Monthly” shall be construed accordingly.
“Monthly Excess Quantity” means, for any Month, the amount, if any, by which the total quantity (in MWh) of Assigned Product delivered under an Assigned PPA in such Month exceeds the Monthly Projected Quantity for such Assigned PPA such Month. “Monthly Projected Quantity” means, with respect to each Assigned PPA and each Month of the Assignment Period for each Assigned PPA, the quantity (in MWh) of Assigned Product for such Month as set forth on Exhibit A-2 for such Assigned PPA (as such Exhibit A-2 may be updated from time to time in accordance with Section 6.2). “Morgan Stanley” means Morgan Stanley, a Delaware corporation. “MSCG” has the meaning specified in the recitals.
“MWh” means megawatt-hour.
“Participant Custodial Agreement” means that certain [Second Consolidated, Amended and Restated Custodial Agreement], dated as of the Bond Closing Date, by and among the Project Participant, Buyer, Morgan Stanley Energy Structuring, L.L.C., MSCG and the Participant Custodian.
“Participant Custodian” means U.S. Bank Trust Company, National Association, a national banking association.
“Party” has the meaning specified in the recitals.
“PCC1 Product” means bundled renewable energy and RECs meeting the requirements of Portfolio Content Category 1 to be delivered to MSCG, Seller or any successors thereto pursuant to any Assigned Rights and Obligations.
Attachment Staff Report Item 17D
9 “PCC2 Product” means bundled renewable energy and RECs meeting the requirements of Portfolio Content Category 2 to be delivered to MSCG, Seller or any successors thereto pursuant to any Assigned Rights and Obligations. “Person” means any individual, limited liability company, corporation, partnership, joint venture, trust, unincorporated organization or Government Agency. “Portfolio Content Category 1” means any Renewable Energy Credit associated with the generation of electricity from an “Eligible Renewable Energy Resource” consisting of the portfolio content set forth in California Public Utilities Code Section 399.16(b)(1), as may be amended from time to time or as further defined or supplemented by Law. “Portfolio Content Category 2” means any Renewable Energy Credit associated with the generation of electricity from an Eligible Renewable Energy Resource consisting of the portfolio content set forth in California Public Utilities Code Section 399.16(b)(2), as may be amended from time to time or as further defined or supplemented by Law. “Power Supply Contract” has the meaning specified in the Bond Indenture. “PPA Supplier” means the Initial PPA Supplier and any subsequent supplier who enters into an Assignment Agreement consistent with the Assignment Letter Agreement. “PPT” means Pacific Prevailing Time.
“Prepayment” means the amount specified in Exhibit F.
“Prepayment Outside Date” means the date specified in Exhibit F. “Project Participant” means Ava Community Energy, a joint powers authority and a community choice aggregator organized under the Laws of the State of California. “Provisional Payment” has the meaning specified in the Exhibit C. “PSC Remarketing Election” means, with respect to the Power Supply Contract, that the Project Participant delivered a Remarketing Election Notice (as defined thereunder) for any Reset Period.
“Put Option Notice” has the meaning specified in Exhibit G. “Rating Confirmation” has the meaning specified in the Bond Indenture. “Re-Pricing Agreement” means the Re-Pricing Agreement, dated as of the Bond Closing Date, by and between Buyer and Seller.
“Real-Time Market Price” means The Five Minute Market (FMM) Locational Marginal Price for the Energy Delivery Point for each applicable interval as published by CAISO, or as such price may be corrected or revised from time to time by such independent system operator or other entity in accordance with its rules.
Attachment Staff Report Item 17D
10 “Remarketing Notice” has the meaning specified in Exhibit C. “Renewable Energy Credit” or “REC” has the meaning specified for “Renewable Energy Credit” in California Public Utilities Code Section 399.12(h), as may be amended from time to time or as further defined or supplemented by Law. “Repurchase Offer” has the meaning specified in Exhibit G. “Reset Period” means each “Reset Period” under the Re-Pricing Agreement. “RPS” means the renewable energy program and policies established by California State Senate Bills 1038 (2002), 1078 (2002), 107 (2008), X-1 2 (2011), 350 (2015), and 100 (2018) as codified in, inter alia, California Public Utilities Code Sections 399.11 through 399.31 and California Public Resources Code Sections 25740 through 25751, as such provisions are amended or supplemented from time to time.
“Schedule”, “Scheduled” or “Scheduling” means the actions of Seller, Buyer and/or their designated representatives, including each Party’s Transmission Providers, if applicable, of notifying, requesting and confirming to each other the quantity of Energy to be delivered during any given portion of the Delivery Period at a specified Delivery Point. “Seller” has the meaning specified in the preamble.
“Seller Custodial Agreement” means that certain Custodial Agreement, dated as of the Bond Closing Date, by and among Swap Counterparty, Seller, the Trustee and U.S. Bank Trust Company, National Association, as custodian, as the same may be amended, modified or supplemented from time to time.
“Seller Swap” means (i) the transaction confirmation entered into under the ISDA Master Agreement, dated as of the date hereof, by Seller and the Swap Counterparty, and (ii) each replacement Seller Swap entered into pursuant to Section 17.5. “Specified Discount” means the amount specified in Exhibit F. “Specified Fixed Price” means the amount specified in Exhibit F. “Specified Investment Agreement” means a guaranteed investment contract between the Trustee and a provider concerning the investment of funds in the Debt Service Account (as defined in the Bond Indenture).
“Swap Counterparty” means (i) [____], a [____], and (ii) any other Person that becomes counterparty to Buyer under a Buyer Swap or to Seller under a Seller Swap, in each case pursuant to Section 17.5.
“Swap Replacement Period” has the meaning specified in Section 17.5(a). “Terminating Party” means any Party that has the right to terminate this Agreement pursuant to Article XVII.
Attachment Staff Report Item 17D
11 “Termination Payment” means, with respect to any Early Termination Payment Date, the amount specified on Exhibit D-1 for the calendar month in which such Early Termination Payment Date occurs (as adjusted by any applicable Termination Payment Adjustment Amount specified on Exhibit D-2) without any set-off or netting of amounts then due from Buyer. “Termination Payment Adjustment Amount” means, with respect to any Early Termination Payment Date, the amount specified on Exhibit D-2 for the calendar month in which such Early Termination Payment Date occurs. For the avoidance of doubt, the Termination Payment Adjustment Amount for the period commencing on the Execution Date is zero (0). “Termination Payment Adjustment Schedule” means the schedule of Termination Payment Adjustment Amounts set forth in Exhibit D-2, as such exhibit may be populated and amended from time to time in accordance with Section 17.8. “Transaction Documents” has the meaning specified in Article XIII. “Transmission Provider(s)” means any entity or entities transmitting or transporting Energy on behalf of Seller or Buyer to or from an Energy Delivery Point. “Trustee” means U.S. Bank Trust Company, National Association, a national banking association and its successors as Trustee under the Bond Indenture. “WREGIS” means the Western Renewable Energy Generation Information System or its successor.
Section 1.2 Definitions; Interpretation. References to “Articles,” “Sections,” “Schedules” and “Exhibits” shall be to Articles, Sections, Schedules and Exhibits, as the case may be, of this Agreement unless otherwise specifically provided. Section headings in this Agreement are included herein for convenience of reference only and shall not constitute a part of this Agreement for any other purpose or be given any substantive effect. Any of the terms defined herein may, unless the context otherwise requires, be used in the singular or the plural, depending on the reference. The use herein of the word “include” or “including”, when following any general statement, term or matter, shall not be construed to limit such statement, term or matter to the specific items or matters set forth immediately following such word or to similar items or matters, whether or not non-limiting language (such as “without limitation” or “but not limited to” or words of similar import) is used with reference thereto, but rather shall be deemed to refer to all other items or matters that fall within the scope of such general statement, term or matter. Any reference herein to any agreement or document includes all amendments, supplements or restatements to and of such agreement or document as may occur from time to time, and any reference to a party to any such agreement includes all successors and assigns of such party thereunder permitted by the terms hereof and thereof.
ARTICLE II.
EXECUTION DATE AND DELIVERY PERIOD
Section 2.1 Execution Date; Delivery Period. This Agreement shall become effective upon the Execution Date and, unless this Agreement is terminated early pursuant to Section 2.2, all of Seller’s and Buyer’s obligations under this Agreement shall be deemed to have Attachment Staff Report Item 17D
12 been incurred upon the Execution Date. Unless this Agreement is terminated pursuant to Section
2.2, then, upon receipt of the Prepayment, the delivery of Energy under this Agreement shall commence and continue for the Delivery Period.
Section 2.2 Termination by Seller Prior to Prepayment. Seller shall have no obligation to perform under this Agreement unless and until it has received the Prepayment from Buyer pursuant to Section 3.2. In the event Seller has not received the Prepayment prior to noon local time in New York, New York on the Prepayment Outside Date, Seller shall have the right, until such Prepayment has been paid, to terminate this Agreement without any further obligation or liability of either Party; provided that, for the avoidance of doubt, in the event Seller so terminates, such termination shall be effective upon the Prepayment Outside Date regardless of whether Buyer tenders the Prepayment after Seller’s notice of termination but prior to the Prepayment Outside Date. For the avoidance of doubt, no Termination Payment shall be payable by Seller under any circumstances if this Agreement terminates pursuant to this Section 2.2.
ARTICLE III.
SALE AND PURCHASE
Section 3.1 Sale and Purchase of Energy.
(a) Seller agrees to sell and deliver or cause to be delivered to Buyer, and Buyer agrees to take or cause to be taken from Seller, in each case, on a Firm (LD) basis, the Contract Quantity pursuant to the terms and conditions set forth in this Agreement. Energy delivered to Buyer under this Agreement shall be re-delivered to the Project Participant on a floating price basis throughout the Delivery Period. The Parties acknowledge and agree that Seller’s delivery obligation for (i) Assigned Products will be measured on an annual basis and (ii) Base Energy will be measured on an Hourly basis, as reflected in the definition of Contract Quantity and further set forth in the terms of this Agreement.
(b) In recognition that Seller will have increased floating price payment obligations to the Swap Counterparty under the Seller Swap with respect to negatively priced Energy and the Swap Counterparty will have increased floating price payment obligations to Buyer under the Buyer Swap with respect to negatively priced Energy, the Parties acknowledge and agree that Seller shall have no payment obligations to Buyer with respect to negatively priced Energy.
Furthermore, with respect to any negatively priced Energy remarketed pursuant to this Agreement, Seller’s payment obligations under Exhibit C shall be reduced to the extent that such Energy is negatively priced.
Section 3.2 Prepayment. Prior to the commencement of the Delivery Period, Buyer shall pay Seller for all Energy to be delivered during the Delivery Period in an amount equal to the Prepayment, and Seller shall accept the Prepayment as payment in full for all Energy to be delivered hereunder. Buyer shall pay the Prepayment in a single lump sum payment by wire transfer of immediately available funds to an account designated by Seller. In no event shall Buyer be entitled to any rebate or refund of the Prepayment, but nothing in this Section 3.2 shall limit Buyer’s rights under (i) Article IV for Seller’s failure to deliver Energy (whether or not excused), (ii) Article XVII upon early termination of this Agreement or (iii) Exhibit C with respect to remarketing of Energy in accordance therewith. In no event shall Buyer be required to pay the Attachment Staff Report Item 17D
13 Prepayment unless and until the Bonds are issued in exchange for a purchase price sufficient to pay costs of issuance, to fund required reserves under the Bond Indenture (or purchase surety bonds or enter into any similar arrangements in lieu of funding such reserves), and to pay the Prepayment.
Section 3.3 Other Amounts Payable with Respect to Assigned Products. (a) With respect to Monthly Excess Quantities and Assigned Paygo Quantities delivered hereunder, Buyer shall pay Seller an amount equal to the quantity of such Monthly Excess Quantities and Assigned Paygo Quantities, as applicable, multiplied by the price specified for Assigned Product under the applicable Assignment Agreement(s); provided that the Parties acknowledge and agree that the Project Participant’s payment of the Retained Payment Amount (as defined in the Participant Custodial Agreement) shall be deemed to satisfy Buyer’s payment obligation hereunder with respect to any such Monthly Excess Quantities and Assigned Paygo Quantities. To the extent the Project Participant fails to pay any amounts when due under the Participant Custodial Agreement with respect to Monthly Excess Quantities or Assigned Paygo Quantities, Buyer shall promptly transfer the resulting Excess Receivables (as defined in Exhibit G) to Seller, and the transfer of such Excess Receivables shall satisfy Buyer’s payment obligation with respect thereto.
(b) After the Annual Quantity has been delivered for any Contract Year, Seller shall pay Buyer the Day-Ahead Average Price with respect to any remaining Monthly Projected Quantities for any such Contract Year.
Section 3.4 No Obligation to Take Base Energy. Notwithstanding anything to the contrary in this Agreement, Buyer shall not be required to purchase and receive any Base Energy hereunder, and Seller shall remarket any portion of the Contract Quantity that is Base Energy pursuant to the provisions of Exhibit C.
Section 3.5 Reduction of Contract Quantity. The Parties recognize and agree that the Contract Quantity may be reduced in a Reset Period pursuant to the re-pricing methodology described in the Re-Pricing Agreement if necessary to achieve a successful remarketing of the Bonds. The Parties agree further that if, pursuant to the Re-Pricing Agreement, Buyer and the Calculation Agent (as defined in the Bond Indenture) determine in connection with the establishment of any new Reset Period that: (i) such Reset Period will be the final Reset Period and (ii) such Reset Period will end prior to the end of the original Delivery Period, then (A) the Delivery Period will be deemed to be modified so that it ends at the end of such Reset Period, and (B) the Contract Quantity for the last Month in such Reset Period may be reduced as provided in the Re-Pricing Agreement.
ARTICLE IV.
FAILURE TO DELIVER OR TAKE ENERGY
Section 4.1 Assigned Product. Notwithstanding anything herein to the contrary, neither Seller nor Buyer shall have any liability or other obligation to one another under this Agreement for any failure to Schedule, take, or deliver Assigned Product other than as set forth in Section 5(a) of Exhibit C for any failure to Schedule, take or deliver Assigned Energy.
Attachment Staff Report Item 17D
14 Section 4.2 Failure to Deliver or Take Due to Force Majeure. If with respect to all or any portion of the Contract Quantity of Base Energy:
(a) Buyer fails to take or Seller fails to deliver all or any portion of the Contract Quantity at any Delivery Point pursuant to the terms of this Agreement; and (b) such failure is due to Force Majeure claimed by either Party, then Seller shall pay to Buyer the result determined by the following formula with respect to each such Delivery Point:
P = Q x IP
Where:
P = The amount payable by Seller under this Section 4.2; Q = The quantity of Energy described in the lead-in to this Section 4.2; and
IP = With respect to Base Energy, the Contract Index Price applicable to such Delivery Hour and Energy Delivery Point for Base Energy.
The Parties acknowledge and agree that any failure to deliver the Annual Quantity of Assigned Energy, whether or not due to Force Majeure, is subject to the terms of Section 5(a) of Exhibit C.
ARTICLE V.
TRANSMISSION AND DELIVERY; COMMUNICATIONS
Section 5.1 Delivery of Energy.
(a) Assigned Product. All Assigned Energy delivered under this Agreement shall be Scheduled at the applicable Assigned Delivery Point and in accordance with the terms of the applicable Assignment Agreement. All other Assigned Product shall be delivered consistent with the terms of the applicable Assignment Agreement. Except as set forth in the two foregoing sentences, Buyer and Seller shall have no liability or obligations under this Article V with respect to Assigned Product.
(b) Updates to Exhibits. Buyer and Seller may, upon mutual agreement, update Exhibit A-1 to modify the Delivery Points thereunder, provided that the Parties shall promptly notify the Swap Counterparty of any such updates and furthermore shall update the corresponding exhibits to the Buyer Swap and the Seller Swap in accordance with the terms thereof. Furthermore, following the Initial EPS Energy Period and thereafter in connection with the establishment, expiration or termination of any subsequent EPS Energy Period, the Parties shall update (i) the exhibits hereto in accordance with Section 6.2 and (ii) the exhibits to the Buyer Swap and the Seller Swap in accordance with the terms thereof. For the avoidance doubt, such updates will reflect that deliveries will be made to (A) the Energy Delivery Point at the Day-Ahead Market Attachment Staff Report Item 17D
15 Price for any Base Energy and (B) an Assigned Delivery Point at the Day-Ahead Average Price for any Assigned Energy.
Section 5.2 Scheduling. Scheduling of Assigned Energy shall be in accordance with the applicable Assignment Agreement.
Section 5.3 Title and Risk of Loss. The transfer of title and risk of loss for all Assigned Product other than Assigned Energy shall be in accordance with the applicable Assignment Agreement; provided that all Assignment Agreements shall provide for the transfer of Renewable Energy Credits in accordance with WREGIS.
Section 5.4 PCC1 Product, Long-Term PCC1 Product, and PCC2 Product. To the extent that any Assigned Product is PCC1 Product, Long-Term PCC1 Product or PCC2 Product, the following provisions apply:
(a) Eligibility. Seller, and, if applicable, its successors, represents and warrants that throughout the Delivery Term of this Agreement that: (i) the Clean Energy Project qualifies and is certified by the CEC as an Eligible Renewable Energy Resource as such term is defined in Public Utilities Code Section 399.12 or Section 399.16; and (ii) the Clean Energy Project’s output delivered to Buyer qualifies under the requirements of the California Renewables Portfolio Standard. To the extent a change in law occurs after execution of this Agreement that causes this representation and warranty to be materially false or misleading, it shall not be an Event of Default if Seller has used commercially reasonable efforts to comply with such change in law. [STC 6, Non-Modifiable. (Source: D.07-11-025, Attachment A.) D.08-04-009]. As used above, any capitalized terms not otherwise defined herein shall have the meaning specified in the Assignment Agreement.
(b) Transfer of Renewable Energy Credits. Seller and, if applicable, its successors, represents and warrants that throughout the Delivery Term of this Agreement the renewable energy credits transferred to Buyer conform to the definition and attributes required for compliance with the California Renewables Portfolio Standard, as set forth in California Public Utilities Commission Decision 08-08-028, and as may be modified by subsequent decision of the California Public Utilities Commission or by subsequent legislation. To the extent a change in law occurs after execution of this Agreement that causes this representation and warranty to be materially false or misleading, it shall not be an Event of Default if Seller has used commercially reasonable efforts to comply with such change in law. [STC REC-1, Non-modifiable. D.11-01- 025]. As used above, any capitalized terms not otherwise defined herein shall have the meaning specified in the Assignment Agreement.
(c) Tracking of RECs in WREGIS. Seller warrants that all necessary steps to allow the Renewable Energy Credits transferred to Buyer to be tracked in the Western Renewable Energy Generation Information System will be taken prior to the first delivery under the contract. [STC REC-2, Non-modifiable. D.11-01-025]. As used above, any capitalized terms not otherwise defined herein shall have the meaning specified in the Assignment Agreement. (d) Governing Law. This Agreement and the rights and duties of the Parties hereunder shall be governed by and construed, enforced and performed in accordance with the Attachment Staff Report Item 17D
16 Laws of the State of California, without regard to principles of conflicts of law. To the extent enforceable at such time, each Party waives its respective right to any jury trial with respect to any litigation arising under or in connection with this Agreement. [STC 17, Non-Modifiable. (Source:
D.07-11-025, Attachment A) D.08-04-009]
(e) Seller Representations and Warranties.
Seller represents and warrants:
(i) Seller has the right to sell the Assigned Product from the Applicable Project;
(ii) Seller has not sold the Assigned Product or any REC or other attributes of the Assigned Product to be transferred to Buyer to any other person or entity;
(iii) the Energy component of the Assigned Product produced by the Applicable Project for PCC2 Product and purchased by Seller for resale to Buyer hereunder is not being sold by Seller back to the Applicable Project or PPA Supplier;
(iv) Assigned Energy and Assigned RECs to be purchased and sold pursuant to this Agreement are not committed to another party; (v) the Assigned Product is free and clear of all liens or other encumbrances;
(vi) Seller will deliver to Buyer all Assigned Energy and associated RECs generated by the Applicable Project for PCC1 Product in compliance with the requirements set forth in California Public Utilities Code Section 399.16(b)(1) and the California RPS compliance requirements for Portfolio Content Category 1 as set forth in CPUC Decision 11-12-052, if applicable;
(vii) Seller will deliver to Buyer all Assigned Energy and associated RECs generated by the Applicable Project for PCC2 Product in compliance with the requirements set forth in California Public Utilities Code 399.16(b)(2) and the California RPS compliance requirements for Portfolio Content Category 2 as set forth in CPUC Decision 11-12-052, if applicable;
(viii) Seller will deliver to Buyer all Assigned Energy and associated RECs generated by the Applicable Project for Long-Term PCC1 Product in compliance with the California Long-Term Contracting Requirements, if applicable;
(ix) the Assigned Product supplied to Buyer under this Agreement that is Long-Term PCC1 Product will be sourced solely from Applicable Projects that have an Assignment Period of ten years or more in length, or otherwise in compliance with the California Long Term Contracting Requirements; and
Attachment Staff Report Item 17D
17 (x) Seller will cooperate and work with Buyer, the CEC, and/or the CPUC to provide any documentation required by the CPUC or CEC to support the Product’s classification as Portfolio Content Category 1 or Portfolio Content Category 2, as applicable, as set forth in California Public Utilities Code Sections 399.16(b)(1) or 399.16(b)(2), as applicable, and compliance with the California Long-Term Contracting Requirements, if applicable.
Seller further represents and warrants to Buyer that, to the extent that the PCC1 Product sold by Seller is a resale of part or all of a contract between Seller and one or more third parties, Seller represents, warrants and covenants that the resale complies with the following conditions in (i) through (iv) below during the Assignment Period and throughout the generation period:
(i) the original upstream third-party contract(s) meets the criteria of California Public Utilities Code Section 399.16(b)(1);
(ii) this Agreement transfers only electricity and RECs that have not yet been generated prior to the Assignment Period;
(iii) the electricity transferred by this Agreement is transferred to Buyer in real time; and
(iv) if the Applicable Project has an agreement to dynamically transfer electricity to a California balancing authority, the transactions implemented under this Agreement are not contrary to any condition imposed by a balancing authority participating in the dynamic transfer arrangement.
Seller further represents and warrants to Buyer that, to the extent that the PCC2 Product sold by Seller is a resale of part or all of a contract between Seller and one or more third parties, Seller represents, warrants and covenants that the resale complies with the following conditions in (i) through (v) below during the Assignment Period and throughout the generation period:
(i) the original upstream third-party contract(s) meets the criteria of California Public Utilities Code Section 399.16(b)(2);
(ii) this Agreement transfers only electricity and RECs that have not yet been generated prior to the Assignment Period;
(iii) this Agreement transfers the original arrangement for substitute electricity (e.g., source and quantity);
(iv) this Agreement retains the scheduling of the substitute electricity into a California balancing authority as set out in the original firming and shaping transaction; and
Attachment Staff Report Item 17D
18 (v) this Agreement continues to provide incremental electricity scheduled into a California balancing authority.
(f) Subsequent Changes in Law. In the event that the qualifications or requirements of the RPS program, PCC1 Product, PCC2 Product, or the California Long-Term Contracting Requirements change, Seller shall take commercially reasonable actions to meet the amended qualifications or requirements of the RPS Law, PCC1 Product, PCC2 Product or the California Long-Term Contracting Requirements but will not be required to incur any unreimbursed costs to comply with the RPS Law, PCC1, PCC2 or the California Long- Term Contracting Requirements, collectively.
(g) Limitations. Notwithstanding anything to the contrary in this Agreement, the Parties acknowledge and agree as follows:
(i) Seller has relied exclusively upon the representations and warranties of each respective seller set forth in the Assignment Agreements in making the representations and warranties set forth in this Section
5.4 and has not performed any independent investigation with respect thereto;
(ii) Seller agrees that it will terminate or cause MSCG to terminate the applicable Assignment Period in the event that any representation or warranty in this Section 5.4 proves to be incorrect in any respect; (iii) Buyer agrees that its sole recourse for any breach of the provisions of this Section 5.4 shall be the termination of the applicable Assignment Period and Buyer shall have no other recourse against Seller or remedies under this Agreement; and
(iv) Section 5.4(d) shall only apply to the provisions of this Section 5.4 and all other provisions of this Agreement shall remain subject to and interpreted in accordance with Section 18.4.
Section 5.5 Deliveries within CAISO or Another Balancing Authority. The Parties acknowledge that Energy delivered by Seller at a Delivery Point within CAISO or another Balancing Authority will be delivered in accordance with the CAISO Tariff and rules of the Balancing Authority as applicable. Scheduling such Energy in accordance with the requirements of the applicable Balancing Authority shall constitute delivery of such Energy to Buyer; provided that, any Assigned Products associated with such Energy are also delivered to Buyer hereunder.
Section 5.6 Assigned Products. Notwithstanding anything to the contrary herein, the Parties shall have no liability under this Article V with respect to any Assigned Products.
ARTICLE VI.
PARTIAL ASSIGNMENTS OF PPAS
Attachment Staff Report Item 17D
19 Section 6.1 Future PPA Assignments. Subsequent to the Initial EPS Energy Period, the Project Participant, Seller, Buyer and MSCG shall cooperate to obtain EPS Compliant Energy for delivery hereunder in accordance with the Assignment Letter Agreement.
Section 6.2 Updates to Exhibits A-1 and A-2.
(a) To the extent that an EPS Energy Period terminates or expires, the Parties shall update (i) Exhibit A-1 to reflect an increase in the Hourly Quantities of Base Energy and (ii) Exhibit A-2 to reflect a decrease in the Monthly Projected Quantities associated with the relevant Assigned PPA, in each case, in an amount equal to the Assigned Energy associated with the EPS Energy Period that terminated or expired. For the avoidance of doubt, any updates to Exhibits A-1 and A-2 due to an early termination of an EPS Energy Period shall be effective as of the earlier of (A) the commencement of an “Assignment Period” under a replacement Assignment Agreement or (B) the start of the third Month following the Month in which such early termination occurs. (b) In connection with the execution of any subsequent Assignment Agreement, the Parties shall update Exhibits A-1 and A-2 to reflect (i) appropriate decreases in the Hourly Quantities of Base Energy and increases in the Monthly Projected Quantities of Assigned Energy and (ii) any other changes in connection therewith.
ARTICLE VII.
ENERGY REMARKETING
Section 7.1 Energy Remarketing. If (a) the Project Participant is in default under the Power Supply Contract or does not require or is unable to receive all or any portion of the Energy purchased by Buyer under this Agreement as a result of (i) the Project Participant’s decreased Energy requirements, (ii) decreased demand by the Project Participant’s retail customers and its request that such Energy be remarketed or (iii) EPS Compliant Energy not being available for delivery hereunder; or (b) a quantity of Assigned Energy less than the Annual Quantity is delivered hereunder in any Contract Year for any reason other than Force Majeure, then Buyer shall request (and pursuant to Exhibit C may be deemed to request) remarketing services from Seller pursuant to the provisions of Exhibit C.
Section 7.2 Delegation of Authority. Buyer hereby acknowledges and agrees that Seller shall delegate its rights and obligations under Exhibit C to MSCG pursuant to the Energy Management Agreement.
ARTICLE VIII.
REPRESENTATIONS AND WARRANTIES
Section 8.1 Representations and Warranties. As a material inducement to entering into this Agreement, each Party, with respect to itself, hereby represents and warrants to the other Party as of the Execution Date as follows:
(a) it is duly organized and validly existing under the Laws of the state in which it is organized;
Attachment Staff Report Item 17D
20 (b) it has all requisite power and authority to conduct its business, to own its properties and to execute, deliver and perform its obligations under this Agreement; (c) there is no litigation, action, suit, proceeding or investigation pending or, to the best of such Party’s knowledge, threatened, before or by any Government Agency, which could reasonably be expected to materially and adversely affect the performance by such Party of its obligations under this Agreement or that questions the validity, binding effect or enforceability hereof, any action taken or to be taken by such Party pursuant hereto, or any of the transactions contemplated hereby;
(d) the execution, delivery and performance of this Agreement by such Party has been duly authorized by all necessary action on the part of such Party and does not require any approval or consent of any security holder of such Party or any holder (or any trustee for any holder) of any indebtedness or other obligation of such Party; (e) this Agreement has been duly executed and delivered on behalf of such Party by an appropriate officer or authorized Person of such Party and constitutes the legal, valid and binding obligation of such Party, enforceable against it in accordance with its terms, as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium and similar Laws affecting creditors’ rights generally and by general principles of equity; (f) the execution, delivery and performance of this Agreement by such Party shall not violate any provision of any Law, decree or other legal or regulatory determination applicable to it;
(g) the execution, delivery and performance by such Party of this Agreement, and the consummation of the transactions contemplated hereby, including the incurrence by such Party of its financial obligations under this Agreement, shall not result in any violation of any term of any material contract or agreement applicable to it, or any of its charter or bylaws or of any license, permit, franchise, judgment, writ, injunction or regulation, decree, order, charter, Law or ordinance applicable to it or any of its properties or to any obligations incurred by it or by which it or any of its properties or obligations are bound or affected, or of any determination or award of any arbitrator applicable to it, and shall not conflict with, or cause a breach of, or default under, any such term or result in the creation of any lien upon any of its properties or assets, except with respect to Buyer, the lien of the Bond Indenture;
(h) to the best of the knowledge and belief of such Party, no consent, approval, order or authorization of, or registration, declaration or filing with, or giving of notice to, obtaining of any license or permit from, or taking of any other action with respect to, any Government Agency is required in connection with the valid authorization, execution, delivery and performance by such Party of this Agreement or the consummation of any of the transactions contemplated hereby other than those that have been obtained; and
(i) it enters this Agreement as a bona-fide, arm’s-length transaction involving the mutual exchange of consideration and, once executed by both Parties, considers this Agreement a legally enforceable contract.
Attachment Staff Report Item 17D
21 Section 8.2 Additional Representations and Warranties of Buyer. As a material inducement to entering into this Agreement, Buyer hereby represents and warrants to Seller as of the Execution Date as follows:
(a) Buyer is entering into this Agreement for the purpose of acquiring Energy for sale to the Project Participant pursuant to the Power Supply Contract; (b) any amounts payable by Buyer under this Agreement shall (i) other than the Prepayment, be payable as an item of Operating Expense under (and as defined in) the Bond Indenture, and (ii) not constitute an indebtedness or liability of Buyer within the meaning of any constitutional or statutory limitation or restriction applicable to Buyer; (c) Buyer will promptly alert Seller of any notice received by Buyer alleging a breach under the Bond Indenture or of any covenant of Buyer in the agreements entered into by Buyer in connection with the Clean Energy Project;
(d) Buyer shall not (i) enter into any Bond Documents (excluding any contracts applicable to Energy being resold by Buyer or the Project Participant (or a related joint powers authority selling Energy to the Project Participant)), (ii) consent to, waive or agree to or permit any material amendment to or rescission of any such Bond Documents or (iii) consent to, waive or agree to permit any amendment (whether or not material) to or rescission of the Bond Indenture, in each case, without the prior written consent of Seller; (e) Buyer shall collect and forthwith cause to be deposited in the relevant funds pursuant to the Bond Indenture all amounts payable to it pursuant to the Power Supply Contract. Buyer shall enforce the provisions of the Power Supply Contract, as well as any other contract or contracts entered into relating to the Clean Energy Project, and duly perform its covenants and agreements thereunder. Buyer shall not consent or agree to or permit any termination or rescission of or amendment to or otherwise take any action under or in connection with the Power Supply Contract which will impair the ability of Buyer to pay all of its debts and obligations as they come due; provided that this provision shall not prevent Buyer from otherwise taking any action under or in connection with the Power Supply Contract which is expressly permitted pursuant to the provisions thereof. A copy of the Power Supply Contract and any amendment thereto certified by an authorized officer of Buyer shall be provided to Seller. Buyer shall not enter into any new Power Supply Contract following the Bond Closing Date without the prior written consent of Seller;
(f) Buyer shall keep or cause to be kept with respect to the Clean Energy Project, proper books of record and account (separate from all other records and accounts) in accordance with generally accepted accounting principles, as such may be modified by the provisions of the Bond Indenture, in which complete and correct entries shall be made of its transactions relating to the Clean Energy Project, the amount of revenues and the application thereof and each fund and account established under the Bond Indenture and relating to its costs and charges under the Power Supply Contract and any other contracts for the sale or purchase of Energy, and which, together with all contracts and all other books and papers of Buyer relating to the Clean Energy Project, shall, subject to the terms thereof, at all times during regular business hours be subject to the inspection of Seller;
Attachment Staff Report Item 17D
22 (g) Buyer shall from time to time duly pay and discharge, or cause to be paid and discharged, all taxes, assessments and other governmental charges, or required payments in lieu thereof, lawfully imposed upon the properties of Buyer or upon the rights, revenues, income, receipts, and other moneys, securities and funds of Buyer when the same shall become due, and all lawful claims for labor and material and supplies, except those taxes, assessments, charges or claims which Buyer shall in good faith contest by proper legal proceedings if Buyer shall in all such cases have set aside on its books reserves deemed adequate by Buyer with respect thereto; (h) Buyer shall at all times maintain its existence and shall do and perform or cause to be done and performed all acts and things required to maintain its existence; and (i) Buyer shall not consolidate or amalgamate with, or merge with or into, or transfer all or substantially all its assets to, or reorganize, reincorporate or reconstitute into or as, another entity unless (i) prior to such event, Buyer receives confirmation from Seller that such event does not trigger a termination event under this Agreement or the Buyer Swap and (ii) at the time of such consolidation, amalgamation, merger, transfer, reorganization, reincorporation or reconstitution, the resulting, surviving or transferee entity assumes all the obligations of Buyer under this Agreement and the Buyer Swap.
Section 8.3 Warranty of Title. Seller warrants that it will have the right to convey and will transfer good and merchantable title to all Energy sold under this Agreement and delivered by it to Buyer, free and clear of all liens, encumbrances, and claims. EXCEPT FOR
THE WARRANTIES EXPRESSLY MADE BY SELLER IN THIS ARTICLE VIII, SELLER
HEREBY DISCLAIMS ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING
ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
Section 8.4 Funding Agreement.
(a) Except (i) to cure any ambiguity, supply any omission, or cure or correct any defect or inconsistent provision in the Funding Agreement, (ii) to insert such provisions clarifying matters or questions arising under the Funding Agreement as are necessary or desirable and are not contrary to or inconsistent therewith, (iii) to convert or supplement any provision in a manner consistent with the intent of the Funding Agreement and the other Transaction Documents or (d) for any transfer of the Funding Agreement to MSCG pursuant to [Section 17.6(a)] of the Energy Management Agreement, Seller agrees that it shall not agree to any amendment, alteration, modification, assignment, sale or transfer of the Funding Agreement without receipt of (A) a Rating Confirmation and (B) the prior written consent of Buyer; provided that, for the avoidance of doubt, no such consent of Buyer shall be required in connection with the replacement, refinancing or re-pricing of the Funding Agreement at the end of any Interest Rate Period in accordance with the terms of the Funding Agreement.
(b) Upon the occurrence of an [Event of Default as defined in the Funding Agreement], Seller shall (i) exercise any right it has pursuant to [___] of the Funding Agreement to designate an early termination thereof and (ii) exercise Commercially Reasonable Efforts to recover amounts due thereunder. Additionally, Seller agrees that it shall not withdraw the Early [Repayment Amount] under and as defined in the Funding Agreement pursuant to the provision Attachment Staff Report Item 17D
23 of [Exhibit A to the Funding Agreement titled “Early Repayment Date and Early Repayment Amount”] unless such Early Repayment Amount plus other available funds are sufficient for the early redemption of the Bonds.
Section 8.5 Notice of PSC Remarketing Election. Seller covenants and agrees that it shall provide prompt notice to MSCG if the Project Participant makes a PSC Remarketing Election for any Reset Period.
ARTICLE IX.
TAXES
Seller shall (i) be responsible for all ad valorem, excise and other taxes assessed with respect to Energy delivered pursuant to this Agreement upstream of the Delivery Points, and (ii) indemnify Buyer and its Affiliates for any such taxes paid by Buyer or its Affiliates. Buyer shall (x) be responsible for all such taxes assessed at or downstream of the Delivery Points, and (y) indemnify Seller and its Affiliates for any such taxes paid by Seller or its Affiliates.
ARTICLE X.
DISPUTE RESOLUTION
Section 10.1 Arbitration. Any dispute, claim or controversy arising out of or relating to this Agreement or the breach, termination, enforcement, interpretation or validity thereof, including the determination of the scope of this agreement to arbitrate, shall be determined by final, non-appealable binding arbitration in San Francisco, California before three (3) arbitrators. The arbitration shall be administered by Judicial Arbitration and Mediation Services, Inc. (“JAMS”) pursuant to its Comprehensive Arbitration Rules and Procedures. Within 15 days after the commencement of arbitration, each of the Parties shall select one person to act as arbitrator, and the two so-selected arbitrators shall select a third arbitrator (the “chairperson”) within 30 days of the commencement of the arbitration. If either Party is unable or fails to select one person to act as arbitrator, such arbitrator shall be appointed by JAMS. If the Party-selected arbitrators are unable or fail to agree upon a chairperson, the chairperson shall be appointed by JAMS. The chairperson shall be a person who has experience in renewable energy-related transactions, and none of the arbitrators shall have been previously employed by either Party or have any direct pecuniary interest in either Party or the subject matter of the arbitration, unless such conflict is expressly acknowledged and waived in writing by each of the Parties. The Parties shall maintain the confidential nature of the arbitration proceeding and any award, including any hearing(s), except as may be necessary to prepare for or conduct the arbitration hearing on the merits, or except as necessary in connection with a court application for a preliminary remedy, a judicial challenge to an award or its enforcement, or unless otherwise required by law or judicial decision. Any arbitration proceedings, decision or award rendered hereunder and the validity, effect and interpretation of this arbitration provision shall be governed by the Federal Arbitration Act. The arbitrator(s) shall have no authority to award consequential, treble, exemplary, or punitive damages of any type or kind regardless of whether such damages may be available under any law or right, with the Parties hereby affirmatively waiving their rights, if any, to recover or claim such damages. In any arbitration arising out of or related to this Agreement, the arbitrators shall award to the prevailing Party, if any, the costs and attorneys’ fees reasonably incurred in seeking to enforce the application of this Section 10.1 and by the prevailing party in connection Attachment Staff Report Item 17D
24 with the arbitration. Notwithstanding the foregoing provisions of this Section 10.1, any costs incurred by a Party in seeking judicial enforcement of any written decision of the arbitrators shall be chargeable to and borne exclusively by the Party against whom such court order is obtained.
The award shall be final and binding on the Parties and judgment upon any award may be entered in any court of competent jurisdiction.
Section 10.2 Dispute Resolution.
(a) Judicial Reference. Without limiting the provisions in Section 10.1, if Section 10.1 is ineffective or unenforceable, any dispute between the Parties arising out of or in connection with this Agreement or its performance, breach, or termination (including the existence, validity and interpretation of this Agreement and the applicability of any statute of limitation period) (each, a “Dispute”) shall be resolved by a reference proceeding in California in accordance with the provisions of Sections 638 et seq. of the California Code of Civil Procedure (“CCP”), or their successor sections (a “Reference Proceeding”), which shall constitute the exclusive remedy for the resolution of any Dispute. As a condition precedent to initiating a Reference Proceeding with respect to any Dispute, the Parties shall comply with the provisions of Section 10.2(b).
(b) Notice of Dispute. Prior to initiating the Reference Proceeding, a Party (the “Disputing Party”) shall provide the other Party (the “Responding Party”) with a written notice of each issue in dispute, a proposed means for resolving each such issue, and support for such position (the “Notice of Dispute”). Within 10 days after receiving the Notice of Dispute, the Responding Party shall provide the Disputing Party with a written notice of each additional issue (if any) with respect to the dispute raised by the Notice of Dispute, a proposed means for resolving every issue in dispute, and support for such position (the “Dispute Response”). Thereafter, the Parties shall meet to discuss the matter and attempt in good faith to reach a negotiated resolution of the dispute.
If the Parties do not resolve the dispute by mutual agreement within 60 days after receipt of the Dispute Response, (the “Negotiation Period”), then either Party may provide to the other Party written notice of intent for judicial reference (the “Impasse Notice”) in accordance with the further provisions of this Section 10.2.
(c) Applicability; Selection of Referees.
(i) The Party that provides the Impasse Notice shall nominate one referee at the same time it provides the Impasse Notice. The other Party shall nominate one referee within 10 days of receiving the Impasse Notice. The two referees (the “Party-Appointed Referees”) shall appoint a third referee (the “Third Referee”, together with the Party-Appointed Referees, the “Referees”). The Party-Appointed Referees shall be competent and experienced in matters involving the electric energy business in the United States, with at least 10 years of electric industry experience as a practicing attorney. The Third Referee shall be an active or retired California state or federal judge. Each of the Party-Appointed Referees and the Third Referee shall be impartial and independent of either Party and of the other referees and not employed by any of the Parties in any prior matter.
Attachment Staff Report Item 17D
25 (ii) If the Party-Appointed Referees are unable to agree on the Third Referee within 45 days from delivery of the Impasse Notice, then the Third Referee shall be appointed pursuant to CCP Section 640(b) in an action filed in the Superior Court of California, County of San Francisco (the “Court”), and with due regard given to the selection criteria above. A request for appointment of a referee may be heard on an ex parte or expedited basis, and the Parties agree that irreparable harm would result if ex parte relief is not granted. Pursuant to CCP Section 170.6, each Party shall have one (1) peremptory challenge to the referee selected by the Court. (d) Discovery; Proceedings.
(i) The Parties agree that time is of the essence in conducting the Reference Proceeding. Accordingly, the referees shall be requested, subject to change in the time periods specified herein for good cause shown, to (i) set the matter for a status and trial-setting conference within 20 days after the date of selection of the Third Referee, (ii) if practicable, try all issues of law or fact within 180 days after the date of the conference, and (iii) report a statement of decision within 20 days after the matter has been submitted for decision.
(ii) Discovery and other pre-hearing procedures shall be conducted as agreed to by the Parties, or if they cannot agree, as determined by the Third Referee after discussion with the Parties regarding the need for discovery and other pre-hearing procedures.
(iii) Except as expressly set forth herein, the Third Referee shall determine the manner in which the Reference Proceeding is conducted, including the time and place of hearings, the order of presentation of evidence, and all other questions that arise with respect to the course of the Reference Proceeding. The Reference Proceeding, including the trial, shall be conducted at a neutral location selected by the Parties, or if not agreed by the Parties, by the Third Referee, in San Francisco, California. (iv) All proceedings and hearings conducted before the referees, except for trial, shall be conducted without a court reporter, except that when any Party so requests, a court reporter will be used at any hearing conducted before the referees, and the referees will be provided a courtesy copy of the transcript. The Party making such a request shall have the obligation to arrange for and pay the court reporter. (e) Decision. The referees shall render a written statement of decision setting forth findings of fact and conclusions of law. The decision shall be entered as a judgment in the court in accordance with the provisions of CCP Sections 644 and 645. The decision shall be appealable to the same extent and in the same manner that such decision would be appealable if rendered by a judge of the Court. The Parties intend this general reference agreement to be specifically enforceable in accordance with the CCP.
(f) Expenses. Each Party shall bear the compensation and expenses of its respective Party-Appointed Referee, own counsel, witnesses, consultants and employees. All other expenses of judicial reference shall be split equally between the Parties.
Attachment Staff Report Item 17D
26 ARTICLE XI.
FORCE MAJEURE
Section 11.1 Applicability of Force Majeure. To the extent either Party is prevented by Force Majeure from carrying out, in whole or part, its obligations under this Agreement and such Party (the “Claiming Party”) gives notice and details of the Force Majeure to the other Party as soon as practicable, then the Claiming Party shall be excused from the performance of its obligations with respect to this Agreement (other than the obligation to make payments then due or becoming due with respect to performance prior to the Force Majeure). The Claiming Party shall mitigate the Force Majeure with all reasonable dispatch. For the duration of the Claiming Party’s non-performance (and only for such period), the non-Claiming Party shall not be required to perform or resume performance of its obligations to the Claiming Party corresponding to the obligations of the Claiming Party excused by Force Majeure.
Section 11.2 Settlement of Labor Disputes. Notwithstanding anything to the contrary herein, the Parties agree that the settlement of strikes, lockouts or other industrial disturbances shall be within the sole discretion of the Party experiencing such disturbance, and the failure of a Party to settle such strikes, lockouts or other industrial disturbances shall not prevent the existence of Force Majeure or of reasonable dispatch to remedy the same.
ARTICLE XII.
GOVERNMENTAL RULES AND REGULATIONS
Section 12.1 Compliance with Laws. This Agreement shall be subject to all present and future Laws of any Government Agency having jurisdiction, and neither Party has knowingly undertaken or will knowingly undertake or knowingly cause to be undertaken any activity that would conflict with such Laws; provided, however, that nothing herein shall be construed to restrict or limit either Party’s right to object to or contest any such Law, or its application to this Agreement or the transactions undertaken hereunder, and neither acquiescence therein or compliance therewith for any period of time shall be construed as a waiver of such right.
Section 12.2 Contests. Excluding all matters involving a contractual dispute between the Parties, no Party shall contest, cause to be contested or in any way actively support the contest of the equity, fairness, reasonableness or lawfulness of any terms or conditions set forth or established pursuant to this Agreement, as those terms or conditions may be at issue before any Government Agency in any proceeding, if the successful result of such contest would be to preclude or excuse the performance of this Agreement by either Party.
Section 12.3 Defense of Agreement. Excluding all matters involving a contractual dispute between the Parties, each Party shall hereafter defend and support this Agreement before any Government Agency in any proceeding, if the substance, validity or enforceability of all or any part of this Agreement is hereafter directly challenged or if any proposed changes in regulatory practices or procedures would have the effect of making this Agreement invalid or unenforceable or would otherwise materially affect the rights or obligations of the Parties under this Agreement.
Attachment Staff Report Item 17D
27 ARTICLE XIII.
ASSIGNMENT
Neither Party shall assign this Agreement or any of its rights or obligations under this Agreement without the prior written consent of the other Party; provided, however, that:
(a) pursuant to the Bond Indenture, Buyer may, without the consent of Seller, transfer, sell, pledge, encumber or assign this Agreement to the Trustee in connection with any financing or other financial arrangements; provided that Buyer shall not assign this Agreement unless, contemporaneously with the effectiveness of such assignment, Buyer also assigns the Buyer Swap (and the Buyer Custodial Agreement) to the same assignee; (b) upon written notice to Buyer, Seller may, without Buyer’s consent, assign this Agreement to an Affiliate of Seller which assignment shall constitute a novation; provided that, Seller shall not assign this Agreement unless (i) Seller delivers a Rating Confirmation to Buyer with respect to such assignment, (ii) contemporaneously with the effectiveness of such assignment, Seller also assigns the Seller Swap, the Seller Custodial Agreement and the Master Custodial Agreement to the same assignee and either (A) Seller assigns the Funding Agreement and Energy Management Agreement to the same assignee or (B) the assignee provides to Buyer a guarantee of its obligations by Morgan Stanley, and (iii) the assignee is a special purpose entity approved by Buyer or its obligations under this Agreement are guaranteed or otherwise supported by (A) Morgan Stanley or (B) a Funding Recipient to the satisfaction of Buyer; and (c) if either (A) Seller notifies Buyer that the Funding Agreement will not be replaced, refinanced or re-priced as of the end of any Interest Rate Period, (B) Seller is unable to provide, under the Re-Pricing Agreement, an Estimated Available Discount (as defined in the Re-Pricing Agreement) that is equal to or greater than the Minimum Discount under the Power Supply Contract, or (C) both (1) Seller has agreed under the Re-Pricing Agreement to provide an Available Discount equal to or greater than the Minimum Discount but for a Reset Period shorter than the entire remaining term to maturity of this Agreement and (2) Buyer has identified a potential assignee that has agreed to provide an Available Discount equal to or greater than the Minimum Discount for a Reset Period equal to the entire remaining term to maturity of this Agreement then, at the request of Buyer, Seller will reasonably cooperate with Buyer to cause Seller’s (or Seller’s Affiliate’s, if applicable) right, title and interest in this Agreement, the Re-Pricing Agreement, the Seller Swap, the Seller Custodial Agreement and any Specified Investment Agreement with a term that extends past the then-current Interest Rate Period to which Seller or any Affiliate is a party and all agreements related to any of the foregoing (the “Transaction Documents”) to be novated to a replacement seller; provided that (x) a Rating Confirmation is obtained for any Bonds required to be redeemed on the first Mandatory Purchase Date following the effective date of such novation, (y) the Swap Counterparty shall have provided its prior written consent to such assignment in accordance with the terms of the Seller Swap, and (z) after giving effect to such novation, Seller will not have any obligations (contingent or otherwise, including any obligation to make or repeat any representations or warranties other than basic representations on authority and the right to transfer its rights, title and interests under this Agreement without encumbrances) or be required to make any payment under any Transaction Document or otherwise in connection with or following such novation other than any obligations that would have existed or payments that would Attachment Staff Report Item 17D
28 have been required had this Agreement terminated as of the end of the last Reset Period that commenced prior to such novation.
ARTICLE XIV.
PAYMENTS
Section 14.1 Monthly Statements.
(a) No later than the 5th day of each Month during the Delivery Period (excluding the first Month of the Delivery Period) and the first Month following the end of the Delivery Period, Buyer shall deliver to Seller a statement (a “Buyer’s Statement”) listing any other amounts due to Buyer in connection with this Agreement with respect to the prior Month(s). (b) No later than the 10th day of each Month during the Delivery Period (excluding the first Month of the Delivery Period) and the first Month following the end of the Delivery Period (the “Billing Date”), Seller shall deliver a statement (a “Billing Statement”) to Buyer and each of the Parties to the Participant Custodial Agreement indicating (i) the total amount due to Buyer, if any, under Article IV, Article V, Article VII and Exhibit C with respect to the prior Month(s), (ii) any amounts due to Seller in connection with this Agreement with respect to the prior Month(s), and (iii) the net amount due to Buyer or Seller; provided that invoicing for Monthly Excess Quantities and Assigned Paygo Quantities shall occur under the Participant Custodial Agreement. If a Participant Monthly Statement (as defined in the Participant Custodial Agreement) for an Assigned PPA has not been delivered by the 10th day of the Month following deliveries2, Seller shall provisionally prepare or cause to be prepared a Billing Statement for this Agreement that assumes all of the Monthly Projected Quantities were delivered under the applicable Assigned PPA for such Month, and any subsequent resettlements required with respect thereto shall occur under the Participant Custodial Agreement. As set forth in Section 5(a) of Exhibit C, in any Billing Statement that Seller delivers that reflects a Provisional Payment due, Seller shall indicate (x) the total amount of any Provisional Payment due for such Month and (y) the portion of such Provisional Payment that reflects the Net Participant Price that would otherwise be payable with respect thereto. The Parties acknowledge and agree that all amounts owed to and from Seller in connection with the Clean Energy Project shall be paid pursuant to the Master Custodial Agreement, and the Billing Statement may be provided by MSCG, as Seller’s agent, in the form of a consolidated statement regarding all amounts owed to and from Seller in connection with the Clean Energy Project for each Month, including payments to be made under this Agreement, the Funding Agreement, the Energy Management Agreement and the Seller Swap. (c) Upon request by either Party, the other Party shall deliver such supporting documentation of the foregoing as such requesting Party may reasonably request.
Section 14.2 Payment.
(a) If the Billing Statement indicates an amount due from Buyer, then Buyer shall remit such amount to Seller by wire transfer (pursuant to Seller’s instructions), in immediately available funds, on or before the later of (i) the 25th day of the Month following the most recent Month to which such Billing Statement relates, or (ii) the 10th day following Buyer’s 2 NTD: Parties to discuss PPA invoice timing.
Attachment Staff Report Item 17D
29 receipt of Seller’s Billing Statement, or if either such day is not a Business Day, the following Business Day. If the Billing Statement indicates an amount due from Seller, then Seller shall remit such amount to Buyer by wire transfer (pursuant to the Trustee’s instructions for payments due under this Agreement, provided that amounts due from Seller under Section 5(a) of Exhibit C shall be paid to the Provisional Payments Account under and as defined in the Participant Custodial Agreement), in immediately available funds, on or before the later of (i) the 24 th day of the Month
following the most recent Month to which such Billing Statement relates, or (ii) the 10th day following Seller’s receipt of Buyer’s Statement, or if either such day is not a Business Day, the preceding Business Day.
(b) If Buyer fails to issue a Buyer’s Statement with respect to any Month, Seller shall not be required to estimate any amounts due to Buyer for such Month, provided that Buyer may include any such amount on subsequent Buyer’s Statements issued within the next sixty (60) days. The sixty (60)-day deadline in this subsection (b) replaces the two (2)-year deadline in Section 14.5 with respect to any claim by any non-delivering Party of inaccuracy in any estimated invoice issued or payment made pursuant to this subsection (b).
Section 14.3 Payment of Disputed Amounts. If Seller disputes any amounts included in the Buyer’s Statement, Seller shall (a) (except in the case of manifest error) nonetheless calculate the Billing Statement based on the amounts included in Buyer’s Statement and (b) pay any amount required by the Billing Statement in accordance with Section 14.2 without regard to any right of set-off, counterclaim, recoupment or other defenses to payment that Seller may have; provided, however, that Seller shall have the right, after payment, to dispute any amounts included in a Buyer’s Statement or otherwise used to calculate payments due under this Agreement pursuant to Section 14.5(b). If Buyer disputes any amounts included in the Billing Statement, Buyer may withhold payment to the extent of the disputed amount; provided, however, that interest shall be due at the Default Rate for any withheld amount later found to have been properly due.
Section 14.4 Late Payment. If a Party owing a net payment under Section 14.2 fails to remit the full amount payable when due, interest on the unpaid portion shall accrue from the date due until the date of payment at the Default Rate.
Section 14.5 Audit; Adjustments.
(a) A Party shall have the right, at its own expense, upon reasonable notice to the other Party and at reasonable times, to examine and audit and to obtain copies of the relevant portion of the books, records, and telephone recordings of the other Party to the extent reasonably necessary, but only to such extent, to verify the accuracy of any statement, charge, payment, or computation made under this Agreement. This right to examine, audit, and obtain copies shall not be available with respect to proprietary information not directly relevant to transactions under this Agreement.
(b) Each Buyer’s Statement and each Billing Statement shall be conclusively presumed final and accurate and all associated claims for under- or overpayments shall be deemed waived unless such Buyer’s Statement or Billing Statement is objected to in writing, with adequate explanation and/or documentation, within two (2) years after the applicable Month of Energy delivery.
Attachment Staff Report Item 17D
30 (c) All retroactive adjustments shall be paid in full by the Party owing payment within 30 days of notice and substantiation of such inaccuracy. If the Parties are unable to agree upon any retroactive adjustments requested by either Party within the time period specified in Section 14.5(b), then either Party may pursue any remedies available with respect to such adjustments at law or in equity. Retroactive adjustments for payments made based on incorrect Buyer’s Statements or Billing Statements shall bear interest at the Default Rate from the date such payment was made. Buyer shall cause the Project Participant to comply with the provisions of Section 14.5(a) to the extent necessary to allow Seller to verify any amounts due under this Agreement.
Section 14.6 Netting. The Parties shall net all amounts due and owing, including any past due amounts (which, for the avoidance of doubt, shall include any accrued interest), arising under this Agreement such that the Party owing the greater amount shall make a single payment of the net amount to the other Party in accordance with this Article XIV. Notwithstanding the foregoing, Seller shall not be entitled to net (i) any amounts that are in dispute or (ii) any payments due to Seller against (A) the Termination Payment if it becomes due, or (B) any payments due from Seller pursuant to Article IV, Article V or Exhibit C.
ARTICLE XV.
RECEIVABLES PURCHASES
In accordance with the provisions of Exhibit G, Buyer shall put and Seller shall purchase certain Put Receivables (as defined in Exhibit G) from Buyer relating to payment defaults by the Specified Project Participant (as defined in Exhibit G).
ARTICLE XVI.
NOTICES
Any notice, demand, or request required or authorized by this Agreement to be given by one Party to another Party shall be in writing and shall either be sent by electronic means, courier, or personally delivered (including overnight delivery service) to each of the notice recipients and addresses specified in Exhibit B for the receiving Party. Any such notice, demand, or request shall be deemed to be given (i) on the date it is delivered by electronic means, or (ii) when actually received if delivered by courier or personal delivery (including overnight delivery service). Each Party shall have the right, upon 10 days’ prior written notice to the other Party, to change its list of notice recipients and addresses in Exhibit B. The Parties may mutually agree in writing at any time to deliver notices, demands or requests through alternate or additional methods.
Notwithstanding the foregoing, a Party may at any time notify the other Party that any notice, demand, statement or request to it must be provided by email transmission for a specified period of time or until further notice, and any communications delivered by means other than email transmission during the specified period of time shall be ineffective.
ARTICLE XVII.
ACCELERATION; TERMINATION; REMEDIES
Section 17.1 Acceleration Event. Each of the following events shall constitute an “Acceleration Event” under this Agreement:
Attachment Staff Report Item 17D
31 (a) The acceleration of the Funding Recipient’s payment obligations under the Funding Agreement pursuant to Section [__] of the Funding Agreement due to an [Event of Default (as defined in the Funding Agreement)];
(b) Seller is unable to replace, refinance or re-price the Funding Agreement for any Reset Period by the date that is one week prior to the beginning of the first Month following a Reset Period;
(c) MSCG designates an “Early Termination Date” under the Energy Management Agreement due to the Project Participant making a PSC Remarketing Election for a Reset Period;
(d) MSCG purchases the Funding Agreement from Seller pursuant to [Section
17.6(a)] of the Energy Management Agreement following the occurrence of a Ledger Event; or (e) a Failed Remarketing occurs.
Section 17.2 Energy Delivery Termination Events. Each of the following events shall constitute an “Energy Delivery Termination Event” under this Agreement:
Termination
Related to:
Energy Delivery
Termination Event:
(a) Ledger Event The occurrence of a Ledger Event.
(b) Termination
of Energy
Management
Agreement and
Failure to
Replace MSCG
Both (A) an “Early Termination Date” occurs under the Energy Management Agreement, and (B) Seller is unable to enter into a replacement Energy Management Agreement by the date that is 120 days following such Early Termination Date under the Energy Management Agreement (provided that, for the avoidance of doubt, Seller may only enter into such a replacement Energy Management Agreement if Seller delivers a Rating Confirmation to Buyer with respect to its entry into such replacement Energy Management Agreement).
(c) Termination
of a Buyer Swap
Both (A) an Early Termination Date (as defined in the Buyer Swap) is designated pursuant to the terms of the Buyer Swap for any reason or occurs automatically pursuant to the terms of the Buyer Swap based on an Event of Default or Termination Event (as each term is defined in the Buyer Swap), and (B) either the Seller Swap or the Buyer Swap is not replaced within the Swap Replacement Period.
Attachment Staff Report Item 17D
32 Termination
Related to:
Energy Delivery
Termination Event:
(d) Termination
of a Seller Swap
Both (A) an Early Termination Date (as defined in the Seller Swap) is designated pursuant to the terms of the Seller Swap for any reason or occurs automatically pursuant to the terms of the Seller Swap based on an Event of Default or Termination Event (as each term is defined in the Seller Swap), and (B) either such Seller Swap or the Buyer Swap is not replaced within the Swap Replacement Period.
Section 17.3 Payments Following a Ledger Event. If a Ledger Event occurs and MSCG has not purchased the Funding Agreement pursuant to [Section 17.6(a)] of the Energy Management Agreement, then Seller shall pay to Buyer any amounts paid by MSCG to Seller pursuant to [Section 17.6(b)] of the Energy Management Agreement, which amounts will accrue from the first day of the Month following the Month during which a Ledger Event occurs until (but not including) the earlier of (a) an Early Termination Payment Date or (b) the Initial Mandatory Purchase Date (as defined in the Bond Indenture); provided that the Parties acknowledge and agree that such amounts shall not accrue for any Month in which an Early Termination Payment Date has been designated as a result of MSCG’s purchase of the Funding Agreement pursuant to [Section 17.6(a)] of the Energy Management Agreement.
Section 17.4 Remedies and Termination.
(a) Acceleration Event and Delivery Period Termination. An Energy Delivery Termination Date shall occur automatically upon the date of the occurrence of an Acceleration Event or an Energy Delivery Termination Event. As of the Energy Delivery Termination Date, (i) the Delivery Period shall end, (ii) the obligation of Seller to make any further deliveries of Energy to Buyer under this Agreement shall terminate and shall be replaced with a continuing obligation to make payment of the amounts set forth in Exhibit D-3 to Buyer until the earlier of (A) the Month in which an Early Termination Payment Date occurs and (B) the last due date for such payments under Exhibit D-3, and (iii) the obligation of Buyer to receive deliveries of Energy from Seller under this Agreement shall terminate. For the avoidance of doubt, (i) except as set forth in this Section 17.4(a), this Agreement will continue past an Energy Delivery Termination Date, and (ii) an Acceleration Event may arise contemporaneously with an Energy Delivery Termination Date or at any time thereafter and the occurrence of an Energy Delivery Termination Date shall not prevent the occurrence of an Acceleration Event. (b) Early Termination Payment Date. Following an Acceleration Event, Seller shall (i) promptly notify the Master Custodian of the Early Termination Payment Date and (ii) pay the Termination Payment to the Trustee on the Early Termination Payment Date pursuant to payment instructions issued by Buyer or, in the absence of such instructions, by wire transfer.
Such amounts shall be paid together with interest thereon (before as well as after judgment) from (and including) the Early Termination Payment Date to (but excluding) the date such amount is paid, at the Default Rate. The Parties acknowledge that it is impractical and difficult to assess actual damages as a result of a termination of the Delivery Period under this Agreement, and the Parties therefore agree that the payment of the Termination Payment or the continued payment of Attachment Staff Report Item 17D
33 amounts specified in Exhibit D-3, as applicable, is a fair and reasonable pre-estimate of the actual damages that would be incurred by Buyer as a result of termination of the Delivery Period under this Agreement for any reason and is not a penalty. The obligation of Seller to pay the Termination Payment on the Early Termination Payment Date is unconditional, irrespective of the validity or enforceability of this Agreement or any other agreement contemplated hereby, any waiver or consent by Buyer or any other circumstances that might otherwise constitute a legal or equitable discharge of Seller or a defense of Seller to pay the Termination Payment. Seller waives all rights to set-off, counterclaim, recoupment and any other defenses that might otherwise be available to Seller with regard to Seller’s obligation to pay the Termination Payment on the Early Termination Payment Date.
(c) Exclusive Termination Rights. Neither this Agreement nor the Delivery Period may be terminated for any reason except as specified in this Article XVII and in Section
2.2. Except with respect to amounts due for periods prior to termination, the payment of the Termination Payment and, if applicable, any amounts specified in Exhibit D-3 shall be the sole and exclusive remedy for each Party upon the termination of the Delivery Period and this Agreement for any reason, including as a result of rejection of this Agreement by either Party in any bankruptcy proceedings.
Section 17.5 Replacement of Swaps.
(a) In the event that (i) any Buyer Swap or any Seller Swap terminates, (ii) any notice of termination is delivered by any party to a Buyer Swap or a Seller Swap, or (iii) any Buyer Swap or Seller Swap is otherwise reasonably anticipated to become subject to immediate termination, in each case for any reason other than a Seller Specified Termination or insolvency of either Buyer or Seller, then each Party whose swap is affected shall notify the other Party and the Parties shall cooperate in good faith for a period of 120 days (commencing no later than the date on which any notice of termination (or anticipated termination) is delivered by any party to a Buyer Swap or a Seller Swap) (such period, the “Swap Replacement Period”) to (x) cause the same Swap Counterparty whose Buyer Swap or Seller Swap has been terminated (or is anticipated to terminate) to terminate its unaffected Seller Swap or Buyer Swap, as applicable, and (y) locate replacement agreements with an alternate Swap Counterparty, to be mutually agreed upon by Buyer and Seller, to replace both the affected swap and the unaffected swap; provided, however, that neither Party shall be required to breach any obligation under the unaffected swap or to expend any amounts to cause the unaffected swap to be replaced or to cause an alternate counterparty to replace both swaps. Neither Party shall terminate this Agreement as a result of the termination of any Seller Swap or any Buyer Swap without first complying with this Section 17.5.
As used in this Section 17.5, the term “Seller Specified Termination” means a termination or potential termination of the Seller Swap due to (i) an Event of Default (as such term is defined in the Seller Swap) with respect to Seller pursuant to Section 5(a)(iii) of the Seller Swap, in either case other than where (A) any such failure to pay or transfer was caused solely by error or omission of an administrative or operational nature; (B) funds were available to enable Seller to make such payment or transfer when due; and (C) such payment or transfer is made within two (2) Business Days of Seller’s receipt of written notice of its failure to pay or transfer, or (ii) an Event of Default (as such term is defined in the Seller Swap) with respect to Seller under Section 5(a)(vii) of the Seller Swap.
Attachment Staff Report Item 17D
34 (b) In the event of a termination (or anticipated termination) of the Seller Swap, if Seller (i) presents to Buyer a proposed alternate Swap Counterparty, (ii) requests in writing that Buyer enter into a replacement swap with such alternate Swap Counterparty, and (iii) agrees to pay Buyer’s reasonable expenses in connection therewith, Buyer shall (y) enter into a master agreement with such alternate Swap Counterparty and (z) either (A) terminate the Buyer Swap when permitted thereby and enter into a replacement transaction under such new master agreement to the same effect as the terminated Buyer Swap or (B) cause such Buyer Swap to be novated to such replacement Swap Counterparty, provided that, in each instance, such replacement Swap Counterparty, replacement master agreement and replacement transaction meet the requirements specified for such under the Bond Indenture. Buyer shall not replace a Buyer Swap without Seller’s consent.
(c) Each of Buyer and Seller agree that it will not enter into a replacement Buyer Swap or Seller Swap, as applicable, unless the other Party is replacing its Buyer Swap or Seller Swap, as applicable, with the same replacement Swap Counterparty. (d) In the event that the Seller Swap terminates or is no longer in effect and the Prepay LLC Payments Period (as defined in the Seller Custodial Agreement) is in effect, then, during such Prepay LLC Payments Period, Seller shall comply with the terms of the Seller Custodial Agreement and make all payments as and when required under Section 3(e) of the Seller Custodial Agreement. In the event that the Buyer Swap terminates or is no longer in effect and the Issuer Payments Period (as defined in the Buyer Custodial Agreement) is in effect, then, during such Issuer Payments Period, Buyer shall comply with the terms of the Buyer Custodial Agreement and make all payments as and when required under Section 3(e) of the Buyer Custodial Agreement. The Parties agree that during any Prepay LLC Payments Period (as defined in the Seller Custodial Agreement) and during any Issuer Payments Period (as defined in the Buyer Custodial Agreement), Seller shall act as calculation agent under the Seller Custodial Agreement or the Buyer Custodial Agreement, as applicable. Seller agrees not to permit any amendment or other modification to the Seller Custodial Agreement that could adversely affect the right of Buyer to receive payments pursuant to Section 3(e) of the Seller Custodial Agreement. Buyer agrees not to permit any amendment or other modification to the Buyer Custodial Agreement that could adversely affect the right of Seller to receive payments pursuant to Section 3(e) of the Buyer Custodial Agreement.
Section 17.6 Limitation on Damages. THE PARTIES CONFIRM THAT THE
EXPRESS REMEDIES AND MEASURES OF DAMAGES PROVIDED IN THIS AGREEMENT SATISFY THE ESSENTIAL PURPOSES HEREOF. FOR BREACH OF ANY
PROVISION FOR WHICH AN EXPRESS REMEDY OR MEASURE OF DAMAGES IS
HEREIN PROVIDED, SUCH EXPRESS REMEDY OR MEASURE OF DAMAGES SHALL BE THE SOLE AND EXCLUSIVE REMEDY, THE OBLIGOR’S LIABILITY SHALL BE
LIMITED AS SET FORTH IN SUCH PROVISION, AND ALL OTHER REMEDIES OR DAMAGES AT LAW OR IN EQUITY ARE WAIVED. NEITHER PARTY SHALL BE
LIABLE FOR CONSEQUENTIAL, INCIDENTAL, PUNITIVE, EXEMPLARY, OR INDIRECT
DAMAGES, LOST PROFITS OR OTHER BUSINESS INTERRUPTION DAMAGES, BY
STATUTE, IN TORT OR CONTRACT, UNDER ANY INDEMNITY PROVISION, OR OTHERWISE. IT IS THE INTENT OF THE PARTIES THAT THE LIMITATIONS HEREIN
IMPOSED ON REMEDIES AND THE MEASURE OF DAMAGES BE WITHOUT REGARD Attachment Staff Report Item 17D
35 TO THE CAUSE OR CAUSES RELATED THERETO, INCLUDING WITHOUT LIMITATION
THE NEGLIGENCE OF EITHER PARTY, WHETHER SUCH NEGLIGENCE BE SOLE, JOINT OR CONCURRENT, OR ACTIVE OR PASSIVE. TO THE EXTENT ANY DAMAGES
REQUIRED TO BE PAID UNDER THIS AGREEMENT ARE LIQUIDATED, THE PARTIES
ACKNOWLEDGE THAT THE DAMAGES ARE DIFFICULT OR IMPOSSIBLE TO
DETERMINE, OTHERWISE OBTAINING AN ADEQUATE REMEDY IS INCONVENIENT,
AND THE LIQUIDATED DAMAGES CONSTITUTE A REASONABLE APPROXIMATION OF THE HARM OR LOSS. IN DETERMINING THE APPROPRIATE MEASURE OF
DAMAGES THAT WOULD MAKE THE PARTIES WHOLE, THE PARTIES HAVE
THOROUGHLY CONSIDERED, INTER ALIA, THE UNCERTAINTY OF FLUCTUATIONS
IN COMMODITY PRICES, THE ABILITY AND INTENTION OF THE PARTIES TO HEDGE
SUCH FLUCTUATIONS, THE BARGAINED-FOR ALLOCATION OF RISK, THE
KNOWLEDGE, SOPHISTICATION AND EQUAL BARGAINING POWER OF THE
PARTIES, THE ARMS-LENGTH NATURE OF THE NEGOTIATIONS, THE SPECIAL
CIRCUMSTANCES OF THIS TRANSACTION, THE ACCOUNTING AND TAX
TREATMENT OF THE TRANSACTION BY THE PARTIES, AND THE ENTERING INTO OF
OTHER TRANSACTIONS IN RELIANCE ON THE ENFORCEABILITY OF THE LIQUIDATED DAMAGES PROVISIONS CONTAINED HEREIN. THE PARTIES ACKNOWLEDGE THAT THIS IS A SALE OF GOODS SUBJECT TO ARTICLE 2 OF THE NEW YORK UNIFORM COMMERCIAL CODE, INCLUDING WITHOUT LIMITATION, §§ 2-706(6), 2-711, 2-718, AND 2-719.
Section 17.7 Option to Purchase Bonds. In connection with any new Interest Rate Period established under the Bond Indenture after the initial Interest Rate Period, Seller shall have the option to purchase Bonds to be remarketed on the relevant Mandatory Purchase Date by delivering notice to Buyer and the Trustee no later than the last Business Day of the Reset Period that Seller will purchase a quantity of Bonds necessary to avoid the occurrence of a Failed Remarketing. In the event that Seller exercises such option, (x) Seller will be obligated to pay the purchase price of such Bonds in immediately available funds on the Mandatory Purchase Date, and (y) to the extent a PSC Remarketing Election is in effect with respect to the Reset Period commencing immediately prior to such Interest Rate Period, then Seller shall be required to remarket the Contract Quantities associated with the PSC Remarketing Election, provided that:
(a) Seller shall be entitled to purchase such Energy for its own account, (b) for all such Energy, regardless of how it is remarketed, Seller will pay Buyer the amount determined pursuant to Section 5(b)(iv) of Exhibit C, and (c) to the extent that it is determined that interest on the Bonds purchased by Seller is not excluded from gross income for federal income tax purposes, Section 7 through Section 9 of Exhibit C shall not apply to any such remarketing.
Section 17.8 Termination Payment Adjustment Schedule. Seller shall prepare revisions to the then-current Exhibit D-2 (Termination Payment Adjustment Schedule) in connection with each successive Interest Rate Period pursuant to the terms of the Re-Pricing Agreement by delivering a revised Exhibit D-2 to Buyer no later than the last day of the applicable Attachment Staff Report Item 17D
36 Reset Period, in which case such amendments will be effective as of the first day of the next Interest Rate Period.
ARTICLE XVIII.
MISCELLANEOUS
Section 18.1 Indemnification Procedure. With respect to each indemnification included in this Agreement, the indemnity is given to the fullest extent permitted by applicable Law and the following provisions shall be applicable. The indemnified Party shall promptly notify the indemnifying Party in writing of any Claim and the indemnifying Party shall have the right to assume its investigation and defense, including employment of counsel, and shall be obligated to pay related court costs, attorneys’ fees and experts’ fees and to post any appeals bonds; provided, however, that the indemnified Party shall have the right to employ at its expense separate counsel and participate in the defense of any Claim. The indemnifying Party shall not be liable for any settlement of a Claim without its express written consent thereto. In order to prevent double recovery, the indemnified Party shall reimburse the indemnifying Party for payments or costs incurred in respect of an indemnity with the proceeds of any judgment, insurance, bond, surety or other recovery made by the indemnified Party with respect to a covered event.
Section 18.2 Deliveries. No later than delivery of the Prepayment, Buyer will deliver to Seller a copy of the Bond Indenture. The following documents shall be delivered by the Parties contemporaneously with this Agreement (unless otherwise specified):
(a) by Seller no later than the date of issuance of the Bonds, an executed copy of the Funding Agreement;
(b) by Buyer, a certificate of the Secretary or Assistant Secretary of Buyer setting forth (i) the resolutions of its governing body with respect to the authorization of Buyer to execute and deliver this Agreement, the Bond Indenture and the Power Supply Contract, (ii) the appropriate individuals who are authorized to sign such agreements, (iii) specimen signatures of such authorized individuals, and (iv) the organization documents of Buyer, certified as being true and complete;
(c) by Seller, evidence reasonably satisfactory to Buyer of (i) Seller’s authority to execute and deliver this Agreement and (ii) the appropriate individuals who are authorized to sign this Agreement; and
(d) at Seller’s request at any time, Buyer shall provide Seller with a valid sales tax exemption certificate and any other required exemption or resale certificate in jurisdictions where sales of Energy occur under this Agreement to the extent such a certificate can be obtained and is necessary for exemption from any relevant state taxes that may be levied against the Parties in relation to the transactions under, or pursuant, to this Agreement.
Section 18.3 Entirety; Amendments. This Agreement and the Re-Pricing Agreement, including the exhibits and attachments hereto and thereto, constitute the entire agreement between the Parties and supersedes all prior discussions and agreements between the Parties with respect to the subject matter hereof and thereof. There are no prior or contemporaneous agreements or representations affecting the same subject matter other than those Attachment Staff Report Item 17D
37 expressed herein and in the Re-Pricing Agreement. Except for any matters that, in accordance with the express provisions of this Agreement, may be resolved by oral agreement between the Parties, no amendment, modification or change herein shall be enforceable unless reduced to writing and executed by both Parties.
Section 18.4 Governing Law. THIS AGREEMENT AND THE RIGHTS AND
DUTIES OF THE PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED, ENFORCED AND PERFORMED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW YORK, WITHOUT REGARD TO ANY CONFLICTS OF LAW PRINCIPLE THAT WOULD DIRECT THE APPLICATION OF ANOTHER JURISDICTION’S LAW; PROVIDED, HOWEVER, THAT THE AUTHORITY OF BUYER TO ENTER INTO
AND PERFORM ITS OBLIGATIONS UNDER THIS AGREEMENT SHALL BE DETERMINED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA.
Section 18.5 Non-Waiver. No waiver of any breach of any of the terms of this Agreement shall be effective unless such waiver is in writing and signed by the Party granting such waiver. No waiver of any breach shall be deemed a waiver of any other subsequent breach.
Section 18.6 Severability. If any provision of this Agreement, or the application thereof, shall for any reason be invalid or unenforceable, then to the extent of such invalidity or unenforceability, the remainder of this Agreement and the application of such provision to other Persons or circumstances shall not be affected thereby, but rather shall be enforced to the maximum extent permissible under applicable Law, so long as the economic and legal substance of the transactions contemplated hereby is not affected in any materially adverse manner as to either Party.
Section 18.7 Exhibits. Any and all Exhibits referenced in this Agreement are hereby incorporated herein by reference and shall be deemed to be an integral part hereof.
Section 18.8 Winding Up Arrangements. All indemnity and confidentiality obligations, audit rights, and other provisions specifically providing for survival shall survive the expiration or termination of this Agreement. The expiration or termination of this Agreement shall not relieve either Party of (a) any unfulfilled obligation or undischarged liability of such Party on the date of such termination or (b) the consequences of any breach or default of any warranty or covenant contained in this Agreement. All obligations and liabilities described in the preceding sentence of this Section 18.8, and applicable provisions of this Agreement creating or relating to such obligations and liabilities, shall survive such expiration or termination.
Section 18.9 Relationships of Parties. The Parties shall not be deemed to be in a relationship of partners or joint venturers by virtue of this Agreement, nor shall either Party be an agent, representative, trustee or fiduciary of the other, except that Seller shall act on behalf of Buyer in remarketing Energy pursuant to Exhibit C. Neither Party shall have any authority to bind the other to any agreement. This Agreement is intended to secure and provide for the services of each Party as an independent contractor.
Attachment Staff Report Item 17D
38 Section 18.10 Immunity. Buyer represents and covenants to and agrees with Seller that it is not entitled to and shall not assert the defense of sovereign immunity with respect to its obligations or any Claims under this Agreement.
Section 18.11 Rates and Indices.
(a) Commodity Reference Prices.
(i) Price Replacement Process for Energy. If a Daily Commodity Reference Price for Energy is not available for any Hour but such Daily Commodity Reference Price has not permanently ceased to be published, then the Parties shall promptly endeavor to agree on an alternative source for determination of such Daily Commodity Reference Price for the applicable Hours. If such agreement is not reached by the Parties within three (3) Business Days, the Parties shall request quotations for the applicable Daily Commodity Reference Price from four (4) recognized dealers in the applicable commodity (two (2) selected by each Party) for the period that such Daily Commodity Reference Price is expected to be unavailable. If four (4) quotations are provided as requested, the applicable Daily Commodity Reference Price for the applicable Hours shall be the arithmetic mean of the quotations provided by each recognized dealer after disregarding the quotations having the highest and lowest values; provided that, if more than one (1) quotation has the same value, then one (1) of such quotations shall be disregarded. If exactly three (3) quotations are provided, the applicable Daily Commodity Reference Price for the applicable Hours shall be the quotation provided by the relevant dealer that remains after disregarding the quotations having the highest and lowest values; provided that, if more than one (1) quotation has the same value, then the value of the two (2) quotations with the same value shall control. If fewer than three (3) quotations are provided, the Parties shall seek additional quotations until at least three (3) have been received. (ii) Price Replacement Process for Non-Published Index. If a Daily Commodity Reference Price is not available because it has permanently ceased to be published, then the Parties shall promptly endeavor to agree on an alternative source for determination of such Daily Commodity Reference Price, which may include agreeing upon a published index or a basket of published indices (“Daily Replacement Index”) from which to seek quotes for basis differentials as the replacement for the applicable Daily Commodity Reference Price. If such agreement is not reached by the Parties within three (3) Business Days, then the Daily Replacement Index shall be selected by Seller, acting reasonably. The Parties shall request quotations from four (4) recognized dealers in the applicable commodity (two (2) selected by each Party) for a basis differential (“Daily Basis Differential”) between the Daily Replacement Index and physical prices at the relevant Delivery Point for the remaining term of this Agreement. If four (4) quotations are provided as requested, the Daily Basis Differential will be the arithmetic mean of the quotations provided by each recognized dealer, after disregarding the quotations having the highest and lowest values; provided that, if more than one (1) quotation has the same value, then one (1) of such quotations shall be disregarded. If exactly three (3) quotations are provided, the Daily Basis Differential shall be the quotation provided by the relevant dealer that remains after disregarding the quotations having the highest and lowest values; provided that, if more than one (1) quotation has the same value, then the value of the two Attachment Staff Report Item 17D
39 (2) quotations with the same value shall control. If fewer than three (3) quotations are provided, the Parties shall seek additional quotations until at least three (3) have been received. The applicable Daily Commodity Reference Price shall be the Daily Replacement Index plus the Daily Basis Differential calculated in accordance with the provisions of this clause (iii).
(b) Corrections. If a value published for any rate or index used or to be used in this Agreement is subsequently corrected and the correction is published or announced by the Person responsible for that publication or announcement within thirty (30) days after the original publication or announcement, either Party may notify the other Party of (i) that correction and (ii) the amount (if any) that is payable as a result of that correction. If, not later than thirty (30) days after publication or announcement of that correction, a Party gives notice that an amount is so payable, the Party that originally either received or retained such amount shall, not later than three (3) Business Days after the effectiveness of that notice, pay, subject to any other applicable provisions of this Agreement, to the other Party that amount, together with interest on that amount at the Default Rate for the period from and including the day on which a payment originally was (or was not) made to but excluding the day of payment of the refund or payment resulting from that correction.
Section 18.12 Limitation of Liability. Notwithstanding anything to the contrary herein, all obligations of Buyer under this Agreement, including without limitation all obligations to make payments of any kind whatsoever, are special, limited obligations of Buyer payable solely from Trust Estate (as such term is defined in the Bond Indenture) as and to the extent provided in the Bond Indenture, including with respect to Operating Expenses (as such term is defined in the Bond Indenture). Buyer shall not be required to advance any moneys derived from any source other than the Revenues (as such term is defined in the Bond Indenture) and other assets pledged under the Bond Indenture for any of the purposes in this Agreement mentioned. Neither the faith and credit of Buyer nor the taxing power of the State of California or any political subdivision thereof is pledged to payments pursuant to this Agreement. Buyer shall not be directly, indirectly, contingently or otherwise liable for any costs, expenses, losses, damages, claims or actions, of any conceivable kind on any conceivable theory, under or by reasons of or in connection with this Agreement, except solely to the extent Revenues (as such term is defined in the Bond Indenture) are received for the payment thereof and may be applied therefor pursuant to the terms of the Bond Indenture.
Section 18.13 Counterparts. This Agreement may be executed and acknowledged in multiple counterparts and by the Parties in separate counterparts, each of which shall be an original and all of which shall be and constitute one and the same instrument.
Section 18.14 Rights of Trustee. Pursuant to the terms of the Bond Indenture, Buyer has irrevocably appointed the Trustee as its agent to issue notices (including Remarketing Notices, Call Option Notices, Put Option Notices and Repurchase Offers) and, as directed under the Bond Indenture, to take any other actions that Buyer is required or permitted to take under this Agreement. Seller may rely on notices or other actions taken by Buyer or the Trustee and Seller has the right to exclusively rely on any notices delivered by the Trustee that the Trustee is authorized to deliver under the Bond Indenture, regardless of any conflicting notices that it may receive from Buyer.
Attachment Staff Report Item 17D
40 Section 18.15 Waiver of Defenses. Seller waives all rights to set-off, counterclaim, recoupment and any other defenses that might otherwise be available to Seller with regard to Seller’s obligations pursuant to the terms of this Agreement.
Section 18.16 U.S. Resolution Stay. The Parties agree that (i) to the extent that prior to the date hereof the Parties hereto have adhered to the 2018 ISDA U.S. Resolution Stay Protocol (the “Protocol”), the terms of the Protocol are incorporated into and form a part of this Agreement, and for such purposes this Agreement shall be deemed a Protocol Covered Agreement and each Party shall be deemed to have the same status as Regulated Entity or Adhering Party as applicable to it under the Protocol; (ii) to the extent that prior to the date hereof the Parties have executed a separate agreement the effect of which is to amend the qualified financial contracts between them to conform with the requirements of the QFC Stay Rules (the “Bilateral Agreement”), the terms of the Bilateral Agreement are incorporated into and form a part of this Agreement and for such purposes each Party shall be deemed to have the same status as “Covered Entity”, “Counterparty Entity” or “Client Entity” (or other similar term) as applicable to it under the Bilateral Agreement; or (iii) if clause (i) and clause (ii) do not apply, the terms of Section 1 and Section 2 and the related defined terms (together, the “Bilateral Terms”) of the form of bilateral template entitled “Full-Length Omnibus (for use between U.S. G-SIBs and Corporate Groups)” or the “Agency Version of Omnibus Agreement (for use with U.S. G-SIBs)”, as applicable, published by ISDA on November 2, 2018 (currently available on the 2018 ISDA U.S. Resolution Stay Protocol page at www.isda.org), the effect of which is to amend the qualified financial contracts between the Parties thereto to conform with the requirements of the QFC Stay Rules, are hereby incorporated into and form a part of this Agreement, and for such purposes this Agreement shall be deemed a “Covered Agreement,” Seller shall be deemed a “Covered Entity” and Buyer shall be deemed a “Counterparty Entity” (or “Client Entity” for the Agency version, as applicable). In the event that, after the date of this Agreement, the Parties hereto become adhering Parties to the Protocol, the terms of the Protocol will replace the terms of this section. In the event of any inconsistencies between this Agreement and the terms of the Protocol, the Bilateral Agreement or the Bilateral Terms (each, the “QFC Stay Terms”), as applicable, the QFC Stay Terms will govern.
Terms used in this paragraph without definition shall have the meanings assigned to them under the QFC Stay Rules. For purposes of this paragraph, references to “this Agreement” include any related credit enhancements entered into between the Parties, directly or indirectly through an agent, or provided by one to the other. In addition, the Parties agree that the terms of this paragraph shall be incorporated into any related covered affiliate credit enhancements, as applicable, with all references to Seller replaced by references to the covered affiliate support provider. “QFC Stay Rules” means the regulations codified at 12 C.F.R. 252.2, 252.81–8, 12 C.F.R. 382.1- 7 and 12 C.F.R. 47.1-8, which, subject to limited exceptions, require an express recognition of the stay-and-transfer powers of the FDIC under the Federal Deposit Insurance Act and the Orderly Liquidation Authority under Title II of the Dodd Frank Wall Street Reform and Consumer Protection Act and the override of default rights related directly or indirectly to the entry of an affiliate into certain insolvency proceedings and any restrictions on the transfer of any covered affiliate credit enhancements.
Section 18.17 Rate Changes.
Attachment Staff Report Item 17D
41 (a) Absent the agreement of the Parties to the proposed change, the standard of review for changes to any rate, charge, classification, term or condition of this Agreement, whether proposed by a Party (to the extent that any waiver in Section 18.17(b) below is unenforceable or ineffective as to such Party), a non-party or FERC acting sua sponte, shall solely be the “public interest” application of the “just and reasonable” standard of review set forth in United Gas Pipe Line Co. v. Mobile Gas Service Corp., 350 U.S. 332 (1956) and Federal Power Commission v.
Sierra Pacific Power Co., 350 U.S. 348 (1956) and clarified by Morgan Stanley Capital Group Inc. v. Public Util. Dist. No. 1 of Snohomish, 554 U.S. 527 (2008) and further refined in NRG Power Marketing v. Maine Public utilities Commission, 558 U.S. 165 (2010). (b) In addition, and notwithstanding Section 18.17(a), to the fullest extent permitted by applicable Law, each Party, for itself and its successors and assigns, hereby expressly and irrevocably waives any rights it can or may have, now or in the future, whether under Section 205 and/or 206 of the Federal Power Act or otherwise, to seek to obtain from FERC by any means, directly or indirectly (through complaint, investigation or otherwise), and each hereby covenants and agrees not at any time to seek to so obtain, an order from FERC changing any section of this Agreement specifying the rate, charge, classification, or other term or condition agreed to by the Parties, it being the express intent of the Parties that, to the fullest extent permitted by applicable Law, neither Party shall unilaterally seek to obtain from FERC any relief changing the rate, charge, classification, or other term or condition of this Agreement, notwithstanding any subsequent changes in applicable Law or market conditions that may occur. In the event it were to be determined that applicable Law precludes the Parties from waiving their rights to seek changes from FERC to their market-based power sales contracts (including entering into covenants not to do so) then this Section 18.17(b) shall not apply, provided that, consistent with Section 18.17(a), neither Party shall seek any such changes except solely under the “public interest” application of the “just and reasonable” standard of review and otherwise as set forth in Section 18.17(a).
IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed and delivered by their respective officers thereunto duly authorized as of the date first above written.
[Separate Signature Page(s) Attached]
Attachment Staff Report Item 17D
[Signature Page to Prepaid Agreement]
ENERGY PREPAY [__], LLC
By: Morgan Stanley Capital Group Inc. its Manager
By: _____________________________
Name: _____________________________
Title: _____________________________
Attachment Staff Report Item 17D
[Signature Page to Prepaid Agreement]
CALIFORNIA COMMUNITY CHOICE FINANCING AUTHORITY
By: _____________________________
Name: _____________________________
Title: _____________________________
Attachment Staff Report Item 17D
A-1
EXHIBIT A-1
BASE ENERGY HOURLY QUANTITIES
[To be attached.]
Attachment Staff Report Item 17D
A-2
EXHIBIT A-2
EPS ENERGY PERIOD MONTHLY PROJECTED QUANTITIES
[To be attached.]
Attachment Staff Report Item 17D
A-3
EXHIBIT A-3
ANNUAL QUANTITY
[To be attached.]
Attachment Staff Report Item 17D
B
EXHIBIT B
NOTICES
IF TO SELLER: Energy Prepay [__], LLC
c/o Morgan Stanley & Co.
Attention: Commodities Sales & Trading
[1585 Broadway
New York, NY 10036-8293]
With a mandatory copy to:
Email: [email protected]
General Notices: Attn: Miscellaneous Notices
Phone 24/7: 914-225-1500
Email: [email protected]
and [____]
Power Scheduling: Attn: Power Scheduling
Phone 24/7: 914-225-1500
Email: [email protected]
Payments/Invoicing/
Statements:
Attn: Ops Manager, Power and Natural Gas Attn: Man
Phone: 212-762-3723 or 212-762-1049 Phone: 44
Email: [email protected] Email: phy
IF TO BUYER:
General Notices: California Community Choice Financing Authority 1125 Tamalpais Avenue
San Rafael, CA 94901
Email: [____]
Invoicing/Payments: Email: [____]
Attachment Staff Report Item 17D
C-1
EXHIBIT C
ENERGY REMARKETING
Section 1. Defined Terms. Capitalized terms used but not otherwise defined in this Exhibit shall have the meanings given to such terms in this Agreement, unless otherwise indicated.
The following terms, when used in this Exhibit C and identified by the capitalization of the first letter thereof, have the respective meanings set forth below, unless the context otherwise requires.
In the event that any of the provisions of the Code or the Treasury Regulations referenced in this Section 1 (the “Original Code Provisions”) (x) cease to be effective or no longer apply to remarketing and remediation under this Agreement and (y) upon or following such change to the Original Code Provisions, other Code provisions, Treasury Regulations or Laws apply to remarketing and remediation under this Agreement (the “New Code Provisions”), then the references herein to any such Original Code Provisions shall be deemed to refer to the applicable New Code Provisions.
“Code” means the Internal Revenue Code of 1986, as amended. “Energy Remarketing Reserve Fund” means an account established under the Bond Indenture into which Buyer shall deposit the amounts specified in Section 5(b) of this Exhibit C. “Expired Non-Private Business Sales Ledger” has the meaning specified in Section 9(a) of this Exhibit C.
“Expired Private Business Sales Ledger” has the meaning specified in Section 9(a) of this Exhibit C.
“Ledger Entry” has the meaning specified in Section 7(d) of this Exhibit C. “Ledger Event” has the meaning specified in Section 9(c) of this Exhibit C. “Minimum Remarketing Sales Price” is an amount determined for Energy by the following formula:
MRSP = RRPP - (RRPP x (RRF/CLB))
Where:
MRSP = The Minimum Remarketing Sales Price for one MWh
RRPP = The Remediation Remarketing Purchase Price for one MWh RRF = The balance of the Energy Remarketing Reserve Fund CLB = The combined cash balance of the Non-Private Business Sales Ledger and the Private Business Sales Ledger
“Monthly Discount” has the meaning specified in the Power Supply Contract.
Attachment Staff Report Item 17D
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“Monthly Remarketing Notice” has the meaning specified in Section 3(b) of this Exhibit C. “Municipal Utility” means any Person that (a)(i) is a “governmental person” as defined in Treasury Regulation Section 1.141-1(b) and (ii) owns an electric distribution utility (or provides Energy at wholesale to entities described in clause (i) that own such utilities), or (b) is a community choice aggregator organized under the Laws of the State of California. Buyer shall from time to time to the extent necessary revise the definition of “Municipal Utility” to conform to the applicable provisions of the Code or Treasury Regulations by delivery of written notice to Seller setting forth the revised definition together with a Tax Opinion. “Net Participant Price” means, with respect to the Project Participant, the Contract Index Price less the Monthly Discount.
“Non-Private Business Remarketing Proceeds” means all proceeds received by Buyer under Section 5 of this Exhibit C from Seller’s remarketing of Energy in any Non-Private Business Sale.
“Non-Private Business Sale” means a sale (other than a Qualified Sale) of Energy to a “governmental person” as defined in Treasury Regulation Section 1.141-1(b) that in each case agrees in writing to not use any part of such Energy for a Private Business Use. “Non-Private Business Sales Ledger” has the meaning specified in Section 7(a) of this Exhibit C.
“Non-Qualifying Remarketing Limit” means a quantity of Energy, in MWhs, equal to 10% of the total quantity of Energy, in MWhs, to be delivered hereunder, as such Non-Qualifying Remarketing Limit may be increased from time to time upon receipt by Buyer and Seller of a Tax Opinion setting forth a higher Non-Qualifying Remarketing Limit “Private Business Remarketing Limit” means a quantity of Energy in MWhs equal to (a) $15,000,000, divided by (b) the Specified Fixed Price, as such Private Business Remarketing Limit may be increased from time to time upon receipt by Buyer and Seller of a Tax Opinion setting forth a higher Private Business Remarketing Limit.
“Private Business Remarketing Proceeds” means all proceeds received by Buyer under Section 5 of this Exhibit C from Seller’s remarketing of Energy in any Private Business Sale (including the purchase of such Energy by Seller for its own account). “Private Business Sale” means any sale of Energy other than in a Non-Private Business Sale or a Qualified Sale.
“Private Business Sales Ledger” has the meaning specified in Section 7(b) of this Exhibit C.
“Private Business Use” has the meaning ascribed to such term in Section 141 of the Code. “Provisional Payment” has the meaning specified in Section 5(a) of this Exhibit C.
Attachment Staff Report Item 17D
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“Qualified Sale” means the sale of Energy to a Municipal Utility that agrees in writing (i) to use all of such Energy for a Qualifying Use that is not a Private Business Use and (ii) not to count any purchase of such Energy towards any remediation obligations such Municipal Utility may have with respect to proceeds received from the sale of property purchased with tax-exempt financing proceeds. Buyer shall from time to time to the extent necessary revise the definition of “Qualified Sale” to conform to the applicable provisions of the Code or Treasury Regulations by delivery of written notice to Seller setting forth the revised definition together with a Tax Opinion. “Qualifying Use” with respect to Energy has the meaning ascribed to such term in Treasury Regulations Section 1.148-1(e)(2)(iii)(A)(2) or (B)(2), as applicable. “Remarketing Fee” means the amount specified in Exhibit F of this Agreement. “Remarketing Notice” means a Monthly Remarketing Notice. “Remediation Remarketing” means the remarketing of Energy in Qualified Sales by Seller pursuant to Section 8 of this Exhibit C in an effort to reduce to zero (0) any Ledger Entry balances in either the Non-Private Business Sales Ledger or the Private Business Sales Ledger. “Remediation Remarketing Purchase Price” has the meaning specified in Section 8(b)(ii) of this Exhibit C.
“Tax Opinion” means an [Opinion of Bond Counsel or Special Tax Counsel (as defined in the Bond Indenture)] to the effect that an action proposed to be taken or an event will not, in and of itself, cause interest on the applicable Bonds to be included in gross income for purposes of federal income taxation.
“Treasury Regulations” means the U.S. Treasury Regulations under the Code.
Section 2. Buyer’s Right and Obligation to Request Remarketing. Buyer may, and, if required to do so under the Bond Indenture or the terms of this Agreement shall, request Seller to remarket, pursuant to this Exhibit C, all or a specified part of the Contract Quantities for any Delivery Point.
Section 3. Remarketing Notice.
(a) Generally. To request remarketing under this Exhibit C, Buyer must issue a Remarketing Notice, which Remarketing Notice must state as applicable (i) the portion of the Contract Quantity to be remarketed from each relevant Delivery Point, and (ii) the Delivery Hours in which such portion of the Contract Quantity is to be remarketed. (b) Monthly Remarketing Notice. Buyer may designate a Remarketing Notice as a “Monthly Remarketing Notice” if the Remarketing Notice is delivered to Seller not later than three (3) Business Days prior to the start of the first Month in which it applies and applies to a period of one (1) Month or more; provided furthermore that, in the event Seller is obligated to remarket Base Energy under Section 3.4 of the Agreement, Buyer shall be deemed to have delivered a Monthly Remarketing Notice with respect thereto.
Attachment Staff Report Item 17D
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Section 4. Seller’s Remarketing Obligations Generally.
(a) All Energy remarketed by Seller pursuant to this Exhibit C shall be for the benefit of Buyer, meaning all remarketed Energy shall first be sold by Seller to Buyer and then resold by or for the account of Buyer pursuant to the terms and provisions of this Exhibit C. (b) Seller may act directly as principal to the remarketing buyer or may cause a supplier to Seller to act directly as principal to the remarketing buyer. Neither Seller nor any Person acting on Seller’s behalf shall owe any fiduciary duties to Buyer with respect to the remarketing of any Energy. Buyer acknowledges and agrees that Seller or a Person acting on Seller’s behalf in remarketing Energy may have other supplies of Energy available to sell to potential remarketing buyers, and Energy designated for remarketing shall not be entitled to any preference over any such other supplies of Energy.
(c) Seller shall prepare, maintain and provide Monthly to Buyer accurate and complete records showing (i) the identity of each purchaser in a Qualified Sale, a Non-Private Business Sale, or a Private Business Sale undertaken by Seller on Buyer’s behalf, (ii) the aggregate amount of Energy remarketed under this Agreement in Qualified Sales, (iii) the aggregate amount of Energy remarketed under this Agreement in Non-Private Business Sales, and (iv) the aggregate amount of Energy remarketed under this Agreement in Private Business Sales. Notwithstanding the foregoing or anything to the contrary herein, in the event that either Party reasonably determines that interest on the Bonds is not excluded from gross income for federal income tax purposes due to a change in Law and notifies the other Party of such determination, then (x) the terms of this Exhibit C regarding the remediation obligations of the Parties shall cease to apply and shall be of no further force and effect, and (y) Seller shall no longer maintain the records described in the immediately preceding sentence and shall not record Ledger Entries or otherwise maintain the ledgers described in Section 7 and Section 9(a) of this Exhibit C. (d) Any amounts due to Buyer for Energy remarketed by Seller or purchased by Seller under this Exhibit C shall be remitted to Buyer pursuant to Section 14.2 of this Agreement in the Month following the Month in which such Energy is remarketed or purchased, as applicable.
Additionally, the Parties acknowledge and agree that Seller’s payment obligations under this Exhibit C shall be reduced to the extent that any Energy remarketed hereunder is negatively priced.
Section 5. Remarketing.
(a) Provisional Payments for and Remarketing of Assigned Product.
Notwithstanding anything to the contrary herein, the following terms shall apply to under-deliveries of Assigned Product. (i) To the extent that (A) the Annual Quantity has not been delivered for the then-current Contract Year as of the end of a Month and (B) the quantity of Assigned Product delivered under an Assigned PPA in any such Month is less than the Monthly Projected Quantity, then Seller shall pay Buyer for any such Month the product of (I) the Monthly Projected Quantity for the relevant Assigned PPA(s), minus the quantity of Assigned Product actually delivered under such Assigned PPA(s), multiplied by (II) the result of the Day-Ahead Average Price minus any applicable Provisional Payment Fee (any Attachment Staff Report Item 17D
C-5
such payment, a “Provisional Payment”). Any Provisional Payments due from Seller to Buyer under this Section 5(a)(i) shall be paid to the Provisional Payments Account established under and defined in the Participant Custodial Agreement, and Seller shall have fully satisfied any Provisional Payment obligation upon payment of such amount in accordance with the Participant Custodial Agreement, regardless of whether the Participant Custodian complies with its obligations thereunder. In any Billing Statement that Seller delivers under Section 14.2(b) that reflects a Provisional Payment due, Seller shall indicate (x) the total amount of any Provisional Payment due for such Month and (y) the portion of such Provisional Payment that reflects the Net Participant Price that would otherwise be payable with respect thereto.
(ii) To the extent that a quantity of Assigned Products equal to or greater than the Annual Quantity are delivered for any Contract Year, any Provisional Payments made during such Contract Year shall not result in Ledger Entries under this Exhibit C. (iii) To the extent that less than the Annual Quantity of Assigned Product is delivered for any Contract Year, then (A) Buyer shall be deemed to have requested for Seller to remarket a quantity of Assigned Product equal to the Annual Quantity minus the quantity of Assigned Products actually delivered during such Contract Year (such quantities, the “Remarketed Quantities”), provided that (x) the Remarketed Quantities shall be reduced by any Assigned Products not delivered due to Force Majeure and (y) any Provisional Payment attributable to Assigned Products not delivered due to Force Majeure shall be excluded from the calculations described below, and (B) Seller shall be deemed to have purchased such Remarketed Quantities for its own account at a price equal to the Average Provisional Price (as defined in Section 5(a)(iv) below). Any purchase by Seller of the Remarketed Quantities for its own account pursuant to this Section 5(a) shall constitute a Private Business Sale and shall be reflected on the Private Business Sales Ledger effective as of the first day of the Ledger Month (as defined below). Buyer shall notify Seller if and to the extent the proceeds from any such Private Business Sales are applied to amounts owed by the Project Participant pursuant to Section 7.5 of the Power Supply Contract, and, to the extent so applied, such proceeds shall remediate such Private Business Sales and be entered as debits on the Private Business Sales Ledger. (iv) The following terms have the meaning specified below for the purpose of this Section 5(a).
“Average Provisional Price” means the sum of all Provisional Payment Allocation Amounts for such Contract Year.
“Ledger Month” means, for any Contract Year, the Month
immediately following the last Month for which the Pro-Rated Monthly Quantity was fully delivered for such Contract Year. For example, if (x) a Contract Year is from January 1 to December 31, (y) the Annual Quantity is 120 MWhs and (z) 110 MWhs are delivered in a given Contract Year, then the resulting Ledger Entries would be entered on December 1 for such Contract Year. For another example, if (x) a Contract Year is from January 1 to December 31, (y) the Annual Quantity is 120 MWhs and (z) 85 MWhs Attachment Staff Report Item 17D
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are delivered in a given Contract Year, then the resulting Ledger Entries would be entered on September 1 for such Contract Year. “Pro-Rated Monthly Quantity” means, for each Contract Year, the quantity attributable to each Month of such Contract Year if the Annual Quantity is divided into twelfths. For example, if the Annual Quantity is 120 MWhs, the Pro-Rated Monthly Quantity for each Month in a Contract Year is 10 MWhs – and, in such case, if (x) 110 MWhs are delivered in a given Contract Year, the Pro-Rated Monthly Quantity would be fully delivered for 11 of the 12 Months in such Contract Year; and (y) if 85 MWhs are delivered in a given Contract Year, the Pro-Rate Monthly Quantity would be fully delivered for 8 of the 12 Months in such Contract Year.
“Provisional Payment Allocation Amount” means, for each Provisional Payment in a Contract Year, an amount (in $/MWh) determined by multiplying the Weight for such Provisional Payment by the price used to calculate such Provisional Payment.
“Provisional Payment Fee” means $[1.50]/MWh, which fee shall apply with respect to Provisional Payments under this Section 5(a) in the following circumstances:
(a) to the extent that both (i) less than 95% of the Monthly Projected Quantities in aggregate under an Assigned PPA are delivered in a Contract Year and (ii) less than 95% of the Monthly Projected Quantities under the same Assigned PPA are delivered in the four consecutive Months preceding the end of such Contract Year (provided that, for the purpose of clauses (i) and (ii), any Monthly Projected Quantities not delivered due to Force Majeure shall be disregarded), the Provisional Payment Fee shall be applicable to Provisional Payments for Assigned Products under such Assigned PPA commencing with Seller’s Provisional Payment for the last Month of such Contract Year and such Provisional Payment Fee shall continue to apply with respect to such Assigned PPA until such Assigned PPA has delivered 95% or more of the Monthly Projected Quantities for such Assigned PPA for three consecutive Months; or
(b) to the extent that none of the Monthly Projected Quantities are actually delivered under an Assigned PPA for six consecutive Months due to Force Majeure, then (i) an “Assigned PPA FM Provisional Payment Event” shall be in effect until such Assigned PPA has delivered 95% or more of the Monthly Projected Quantities for such Assigned PPA for three consecutive Months and (ii) the Provisional Payment Fee shall be applicable to Provisional Payments for Assigned Products under such Assigned PPA commencing with Seller’s Provisional Payment for the sixth consecutive Attachment Staff Report Item 17D
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Month of non-deliveries until such Assigned PPA FM Provisional Payment Event is no longer in effect.
“Weight” means an amount (in $/MWh) determined for each Provisional Payment in a Contract Year by dividing the amount of each such Provisional Payment by the sum of all Provisional Payments for such Contract Year.
(b) Remarketing of Base Energy. The following provisions shall apply to the remarketing of Base Energy by Seller:
(i) Seller shall use Commercially Reasonable Efforts to remarket or cause to be remarketed all Base Energy specified for remarketing. In exercising such Commercially Reasonable Efforts, Seller shall first attempt to remarket or cause to be remarketed all Energy specified in a Remarketing Notice in Qualified Sales and then, if Seller is unable to so remarket all of such Energy for such purposes, in Non-Private Business Sales. If Seller is unable to remarket all or any portion of the Energy designated in a Remarketing Notice, then Seller shall purchase such Energy for its own account at the prices set forth in Section 5(b)(v) of this Exhibit C as if such Energy had been remarketed to it.
(ii) Seller shall not be required to remarket any Base Energy at a net price to Seller (after deducting all transportation and transmission costs and all other costs) that is anticipated to be less than the Day-Ahead Market Price applicable to such Energy in the case of a Monthly Remarketing Notice.
(iii) Notwithstanding the foregoing or anything to the contrary herein, provided that (A) the Project Participant is not in default under its Power Supply Contract and (B) Seller is remarketing such Project Participant’s portion of the Contract Quantity because an EPS Energy Period is not in effect, then:
A. Seller shall purchase Energy for its own account and shall pay Buyer the product of (A) the quantity of such Energy purchased for its own account multiplied by (B) the result of (I) the applicable Day-Ahead Market Price minus (II) the Remarketing Fee;
B. Proceeds received by Buyer under this Section 5(b)(iii) that exceed the amount Buyer would have received for the same quantity of Energy at the Net Participant Price shall be deposited in the Participant Rebate Account (as defined in the Bond Indenture) of the Energy Remarketing Reserve Fund; C. the Project Participant shall be required under Section 7.5 of the Power Supply Contract to exercise Commercially Reasonable Efforts to purchase Energy for a Qualifying Use to remediate any Ledger Entry resulting from Seller’s purchase of Energy; and
D. if any Ledger Entry has not been reversed within twelve Months of the date of any such Ledger Entry, Seller thereafter shall exercise Attachment Staff Report Item 17D
C-8
Commercially Reasonable Efforts to remediate any such Ledger Entry by making a Qualified Sale to the Project Participant or any other Municipal Utility. (iv) Proceeds from Qualified Sales and Non-Private Business Sales.
A. For any Energy specified in a Monthly Remarketing Notice that Seller remarkets in a Qualified Sale or Non-Private Business Sale, Seller shall deliver to Buyer the actual proceeds less the Remarketing Fee per MWh sold, provided that the aggregate amount delivered by Seller under this clause (A) for any Month shall not be less than the aggregate quantity so remarketed during such Month multiplied by the Net Participant Price.
B. Reserved.
C. In the event the payment due date under a Qualified Sale or Non-Private Business Sale has not yet occurred prior to the date upon which payment is due under this Agreement for the applicable Month, the Parties shall nonetheless issue statements as if the full amount from such Qualified Sale or Non-Private Business Sale had been paid and, if such full payment is not received prior to the next Monthly due date under this Agreement, the Parties shall issue the appropriate statements to reflect the actual proceeds received and true-up any difference.
(v) Proceeds from Private Business Sales.
A. For any Energy specified in a Monthly Remarketing Notice that is not remarketed in a Qualified Sale or Non-Private Business Sale, Seller shall pay to Buyer the positive result determined by the following formula with respect to each Delivery Point to which such Monthly Remarketing Notice applied, provided that the aggregate amount delivered by Seller under this clause (A) for any Month shall not be less than the aggregate quantity so remarketed during such Month multiplied by the Net Participant Price:
P = Q x (IP - RF)
Where:
P = The amount payable by Seller under this Section 5(b)(v)(A) Q = The quantity of such Energy remarketed with respect to such Delivery Point
IP = The Contract Index Price for such Delivery Point
RF = The Remarketing Fee
B. Reserved.
Attachment Staff Report Item 17D
C-9
(vi) Energy Remarketing Reserve Fund. Any proceeds received by Buyer under this Section 5 for Energy remarketed in sales other than Qualified Sales that exceed the amount Buyer would have received for the same quantity of Energy at the Net Participant Price shall be deposited in the Energy Remarketing Reserve Fund.
Section 6. Reserved.
Section 7. Tracking Remarketing Proceeds. Seller shall maintain four (4) separate ledgers related to remarketing proceeds as described below:
(a) One (1) ledger (the “Non-Private Business Sales Ledger”) shall include, (A) as dollar credits, the Non-Private Business Remarketing Proceeds, and (B) as a MWh credit, the MWhs corresponding to such Non-Private Business Remarketing Proceeds. (b) Another ledger (the “Private Business Sales Ledger”) shall include, (A) as dollar credits, Private Business Remarketing Proceeds, and (B) as a MWh credit, the MWhs corresponding to such Private Business Remarketing Proceeds. (c) The other two (2) ledgers shall be maintained as described in Section 9(a) of this Exhibit C.
(d) The credits to be recorded in the ledgers described in Section 7(a) and (b) of this Exhibit C (collectively, the “Ledger Entries”) shall be dated as of the first day of the Month prior to the Month in which Buyer or Project Participant receives the proceeds corresponding to such Ledger Entries.
(e) The four (4) ledgers described in this Section 7 of this Exhibit C and all debits and credits to such ledgers shall be kept on an aggregate basis for purposes of this Exhibit C.
Section 8. Remediation Remarketing and Bond Redemptions. At any time that the net Ledger Entry balance of either the Non-Private Business Sales Ledger or the Private Business Sales Ledger is greater than zero (0):
(a) Buyer shall exercise Commercially Reasonable Efforts to utilize the proceeds represented by the dollar balances of such Ledger Entries to purchase Energy for resale in Qualified Sales and shall promptly notify Seller following such purchase and sale. (b) Seller shall exercise Commercially Reasonable Efforts to locate opportunities for Buyer to purchase Energy to sell in Qualified Sales to remediate the proceeds represented by the dollar balances of the Ledger Entries. In this regard, if Seller locates a Remediation Remarketing opportunity, then
(i) Seller shall notify Buyer of such opportunity;
(ii) Buyer shall, upon receipt of such notice, purchase Energy from Seller at a price determined by Seller in a Commercially Reasonable manner based upon Attachment Staff Report Item 17D
C-10
applicable market prices at the location where the remarketing opportunity sale will occur (the “Remediation Remarketing Purchase Price”);
(iii) Seller shall remarket such Energy on Buyer’s behalf in a Qualified Sale;
(iv) Seller shall remit to Buyer the proceeds collected from such Qualified Sale, but in no event shall Seller remit less than the Minimum Remarketing Sales Price for the remarketing transaction; provided, however, that to the extent Seller does not receive the Remediation Remarketing Purchase Price from Buyer prior to the Remediation Remarketing described herein, Seller shall credit the proceeds collected from such remarketing sale against the Remediation Remarketing Purchase Price owed to Seller, and Seller shall be reimbursed from the Energy Remarketing Reserve Fund to the extent necessary to make Seller whole for such Qualified Sale; and (v) Seller shall issue to Buyer a confirmation notice (including the dollar price and MWhs) of each purchase of Energy by or on behalf of Buyer, and each sale of Energy on Buyer’s behalf, under this Section 8, and amounts due from or to Buyer shall be separately stated on the Billing Statement for the Month in which such remarketing transactions occur.
For the avoidance of doubt, Seller shall not sell, nor be required to sell, Energy to Buyer for a Remediation Remarketing if such Energy is to be remarketed by Seller on behalf of Buyer for less than the Minimum Remarketing Sales Price.
(c) Unless the terms of a Remediation Remarketing undertaken by Seller on Buyer’s behalf are specifically assumed by Buyer, Seller shall indemnify Buyer for any costs or liabilities associated with such Remediation Remarketing (other than costs related to the price at which such Energy is sold and the risk of collecting the sale proceeds from the remarketing buyer), including, without limitation, any cover or replacement costs; termination payments; fees, penalties, costs or charges (in cash or in kind) assessed by any Transmission Provider for failure to satisfy its balance or nomination requirements; Claims for breach of warranty; taxes, fees, levies, penalties, licenses or charges imposed by any Government Agency; and Claims from personal injury or property damages.
(d) The total purchase price of any Energy purchased by Buyer or Seller pursuant to Section 8(b) of this Exhibit C will be entered by Seller as a dollar debit on (i) first, the Private Business Sales Ledger, if and to the extent such ledger has a positive balance and such Energy is remarketed in a Qualified Sale and (ii) second, on the Non-Private Business Sales Ledger, if and to the extent such ledger has a positive balance, the Private Business Sales Ledger has a zero (0) balance, and such Energy is remarketed in a Qualified Sale, with such debit in the case of (i) or (ii) dated as of the last day of the Month in which such Energy was purchased. Each dollar debit shall offset and reverse an equal amount of the dollar credits to such ledger (that have not previously been transferred to the Expired Non-Private Business Sales Ledger or the Expired Private Business Sales Ledger) in the order in which they were made (beginning with the oldest credit not previously offset and reversed by any prior debit). Whenever a debit is made to the dollar balance of the Ledger Entries of either such ledger, Seller shall also debit the Energy balance Attachment Staff Report Item 17D
C-11
of the Ledger Entries of such ledger based on (i) such dollar debit divided by (ii) an average Energy price calculated from the net Ledger Entry then present on the relevant ledger being debited. For the avoidance of doubt, neither the Non-Private Business Sales Ledger nor the Private Business Sales Ledger shall ever have a negative balance, and the same purchase transaction shall not result in a debit to more than one ledger except to the extent that a debit for the transaction causes one (1) ledger to have a zero (0) balance and the remaining portion of the permitted debit is made to the other ledger.
(e) In addition to the ability of Seller or Buyer to engage in Remediation Remarketing to reduce the balances of any Ledger Entries through Qualified Sales of Energy, the proceeds represented by the dollar balances of such Ledger Entries may also be remediated through the purchase of natural gas that will be remarketed in Qualified Sales. For the purposes of entering MMBtu debits for natural gas to the Ledger Entries in accordance with Section 8(d) of this Exhibit C for any Remediation Remarketing of natural gas, a quantity of MWhs will be debited based on (i) the total proceeds paid for such natural gas divided by (ii) an average Energy price calculated from the net Ledger Entry then present on the relevant ledger being debited.
Section 9. Ledger Event.
(a) In addition to the Non-Private Business Sales Ledger and the Private Business Sales Ledger described in Section 7(a) and (b) of this Exhibit C, above, Seller shall also maintain an “Expired Non-Private Business Sales Ledger” and an “Expired Private Business Sales Ledger.” Whenever a credit to the dollar balance of the Ledger Entries of the Non-Private Business Sales Ledger has not been reversed in full within two (2) years of such credit by an offsetting dollar debit in accordance with Section 8(d) or (e) of this Exhibit C, then Seller shall (i) debit the remaining portion of such dollar credit and the MWh balance of the Ledger Entries in the manner described in the penultimate sentence of Section 8(d) and (ii) record such debits as credits to the Expired Non-Private Business Sales Ledger. Similarly, whenever a credit to the dollar balance of the Ledger Entries of the Private Business Sales Ledger has not been reversed in full within two (2) years of such credit by an offsetting dollar debit in accordance with Section 8(d) or (e) of this Exhibit C, then Seller shall (i) debit the remaining portion of such dollar credit and the MWh balance of the Ledger Entries in the manner described in the penultimate sentence of Section 8(d) and (ii) record such debits as credits to the Expired Private Business Sales Ledger. (b) No later than the tenth (10th) day of each Month, Seller shall provide to Buyer copies of the Non-Private Business Sales Ledger, the Private Business Sales Ledger, the Expired Non-Private Business Sales Ledger and the Expired Private Business Sales Ledger showing all credits and debits to each such ledger since the Execution Date. (c) A “Ledger Event” shall occur if, upon delivery of a ledger statement under Section 9(b) above, either (i) (A) the sum of all Btu credits on the Expired Non-Private Business Sales Ledger and the Expired Private Business Sales Ledger exceeds (B) the Non-Qualifying Remarketing Limit, or (ii) (A) the sum of all Btu credits on the Expired Private Business Sales Ledger exceeds (B) the Private Business Remarketing Limit, unless Buyer has obtained a Tax Opinion with respect to such event or any remedial action that may have been taken with respect to the Bonds.
Attachment Staff Report Item 17D
C-12
(d) The occurrence of a Ledger Event and any remedies associated therewith in Article XVII of this Agreement shall be Buyer’s sole and exclusive remedies with respect to any inability by Seller to purchase and remarket Energy for Buyer pursuant to, or any breach by Seller of its obligations under, this Exhibit C.
Section 10. Buyer Right to Request to Purchase Remarketed Energy. Notwithstanding any other provision of this Exhibit C, Buyer may request in a Remarketing Notice delivered to Seller that Buyer be the remarketing buyer of the quantities of Energy described in such Remarketing Notice, in which case Seller will sell such remarketed Energy to Buyer at a price, at Delivery Point(s) and on date(s) to be mutually agreed (but the price, with respect to Energy remarketed pursuant to a Monthly Remarketing Notice, shall in no event be less than the Net Participant Price) by the Parties, provided that Seller shall be obligated to remarket such Energy to Buyer only if all of the following conditions are satisfied:
(a) Buyer is not in default under any Transaction Document; (b) Buyer has certified to Seller in the Remarketing Notice that the condition in (a) above is true;
(c) Buyer has provided such adequate assurances of Buyer’s performance, if any, as may have been reasonably requested by Seller;
(d) there is a master agreement in effect between Buyer and Seller that will govern the remarketing transaction between Buyer and Seller; and (e) Buyer covenants to resell the Energy only in Qualified Sales.
Attachment Staff Report Item 17D
D-1-1
EXHIBIT D-1
TERMINATION PAYMENT SCHEDULE
The Termination Payment for any Early Termination Payment Date will be the amount set forth on the attached table in the column corresponding to the month in which the Early Termination Date occurs, plus the product of (a) the Monthly Projected Quantity for such Month and the Hourly Quantities for such Month, as applicable, minus the quantity of Energy delivered in such Month prior to the effectiveness of such Early Termination Date, multiplied by (b) the result of (i) the applicable Fixed Price for Energy (as defined in the Buyer Swap), minus (ii) the Specified Discount then in effect.
[To be attached.]
Attachment Staff Report Item 17D
D-2-1
EXHIBIT D-2
TERMINATION PAYMENT ADJUSTMENT SCHEDULE
(To be attached pursuant to Section 17.8 as required.)
Attachment Staff Report Item 17D
D-3-1
EXHIBIT D-3
POST TERMINATION PAYMENT SCHEDULE
[To be attached.]
Attachment Staff Report Item 17D
E-1-1
EXHIBIT E
RESERVED
Attachment Staff Report Item 17D
F-2
EXHIBIT F
PRICING AND OTHER TERMS
Delivery Period: The period beginning on [____], 2025 and ending on [____], 20[__] or earlier upon the Early Termination Date
Minimum Discount: $[____]/MWh for each Reset Period after the Initial Reset Period (as defined in the Re-Pricing Agreement)
Monthly Discount: $[____]/MWh from [____] through and including [____] and $[____]/MWh from [____] through and including [____], and for each Month of a Reset Period thereafter, the Monthly Discount portion of the Available Discount for such Reset Period determined by the Calculation Agent (as defined in the Bond Indenture) pursuant to the Re-Pricing Agreement
Prepayment: $[____]
Prepayment Outside Date: [____], 2025
Remarketing Fee: $[0.50]/MWh, provided that:
(i) the Remarketing Fee shall be $[1.50] for
any remarketing pursuant to [Section 5(b)(iii)] of Exhibit C; and
(ii) the Remarketing Fee shall be zero with
respect to any Product remarketed to Buyer in accordance with Section 10 of Exhibit C.
Specified Fixed Price: $[____]/MWh
Specified Discount: (a) From [____] through and including [____]: $[____]/MWh; and
(b) From [____] until the end of the Delivery Period:
$[____]MWh.
ESR Fee: $[____]/MWh
Swap Fee: $[____]/MWh
Attachment Staff Report Item 17D
Exhibit G
EXHIBIT G
RECEIVABLES PURCHASES
[To be attached.]
Attachment Staff Report Item 17D
SM Draft 29 May 2025
LETTER AGREEMENT
[____], 2025
Ava Community Energy
1999 Harrison Street, Suite 800
Oakland, CA 94612
Re: Prepay Limited Assignment Agreements
Ladies and Gentlemen:
This Letter Agreement (this “Letter Agreement”) confirms our mutual agreement with respect to the matters set forth below and relates to those certain Limited Assignment Agreements listed on Exhibit A (the “Assignment Agreements”, which definitions shall include any new Assignment Agreements identified by J. Aron’s delivery of an updated Exhibit A consistent with Section 2), with each of the PPA Sellers identified in Exhibit A (each, individually, a “PPA Seller” and collectively the “PPA Sellers”, and which definitions shall include any new PPA Seller identified by J. Aron’s delivery of an updated Exhibit A consistent with Section 2). Any capitalized term used in this Letter Agreement and not otherwise defined herein shall have the meaning assigned to such term in the Clean Energy Purchase Contract. In consideration of each party’s execution of the Assignment Agreements, as well as the premises above and the mutual covenants and agreements set forth herein, J. Aron & Company LLC (“J. Aron”) and Ava Community Energy (“Ava” and together with J. Aron, collectively the “Parties”) agree as follows:
1. Assignment Early Termination. Each of the Parties agrees that it shall only exercise its right to deliver a written notice of termination of an Assignment Period under an Assignment Agreement consistent with the following:
(a) Either Party may deliver a notice of termination in the event of (i) the suspension, expiration, or termination of performance of a PPA by either Ava or the applicable PPA Seller; or (ii) the termination or suspension of deliveries for any reason other than force majeure under (A) that certain Clean Energy Purchase Contract (the “Clean Energy Purchase Contract”), dated as of [____], 2025 by and between Ava and California Community Choice Financing Authority (including, for the avoidance of doubt, due to a “Remarketing Election” by Ava under the Clean Energy Purchase Contract) or (B) that certain Electricity Purchase, Sale and Service Agreement, dated as of [____], 2025 by and between J. Aron and Aron Energy Prepay [__] LLC (the “Electricity Sale and Service Agreement”);
(b) Ava shall deliver a notice of termination contemporaneous with any assignment by Ava of its interest in the Clean Energy Purchase Contract, provided that J. Aron in any event shall be entitled to deliver a notice of termination to the extent Ava fails to do so in connection with the assignment of Ava’s interest under the Clean Energy Purchase Contract; (c) J. Aron may deliver a notice of termination if (i) PPA Seller delivers less than the Assigned Prepay Quantity for any five months in the aggregate during a twelve month period, (ii) any event or circumstance occurs that would give either Ava or a PPA Seller the right to terminate Attachment Staff Report Item 17E
2 or suspend performance under a PPA (regardless of whether Ava or the applicable PPA Seller exercises such right) or (iii) Ava requests remarketing of the Assigned Quantities under an Assigned PPA pursuant to the terms [Section 7.3(c)] of the Clean Energy Purchase Contract; (d) either Party may deliver a notice of termination to the extent that the Parties have mutually agreed upon an assignment of Replacement Assigned Rights and Obligations (as defined in the Clean Energy Purchase Contract) that will replace the Assigned Rights and Obligations under the applicable Assignment Agreement immediately following the termination thereof; and (e) either Party may deliver a notice of termination under the applicable Assignment Agreement to the extent that:
(i) any of the representations and warranties set forth in [Sections 5.4] of the Electricity Sale and Service Agreement and the Clean Energy Purchase Contract, respectively, ceases to be true with respect to an Assigned PPA; (ii) the Assigned Energy being delivered pursuant to an Assignment Agreement ceases to be EPS Compliant Energy; or
(iii) any Assigned Product that constituted PCC1 Product or Long-Term PCC1 Product while being delivered directly to Ava under an Assigned PPA ceases to qualify as PCC1 Product or Long-Term PCC1 Product when being redelivered through the Electricity Sale and Service Agreement, Master Power Supply Agreement and Clean Energy Purchase Contract.
For the avoidance of doubt, each of the Parties agrees that it shall not terminate an Assignment Agreement pursuant to the at will termination provision thereof except in the circumstances set forth immediately above. The at will termination provision referenced in the immediately preceding sentence (x) is set forth in Section 2(a)(1) of the form of Assignment Agreement attached to the Clean Energy Purchase Contract (y) shall refer to any such provision forth in an Assignment Agreement entered into by the Parties consistent with the terms of the Clean Energy Purchase Contract and the Electricity Sale and Service Agreement.
2. Exhibit A. Promptly following execution of the Assignment Agreements with respect to the Initial Assigned Rights and Obligations, J. Aron shall deliver an Exhibit A that lists such Assignment Agreements. J. Aron shall deliver an updated Exhibit A to this Agreement to reflect any changes to the information set forth therein in connection with the termination, expiration or replacement of an Assignment Agreement consistent with the terms of the Clean Energy Purchase Contract.
3. Representations, Warranties and Covenants.
(a) Ava agrees that it shall provide a true, complete, and correct copy to J. Aron of any PPA to be assigned pursuant to an Assignment Agreement. (b) Each Party represents to the other:
Attachment Staff Report Item 17E
3 (i) Status. It is duly organized and validly existing under the laws of the jurisdiction of its organization or incorporation and, if relevant under such laws, in good standing.
(ii) Powers. It has the power to execute, deliver and perform its obligations under this Letter Agreement and any other documentation to which it is a party relating to this Letter Agreement, and it has taken all necessary action to authorize such execution, delivery and performance.
(iii)No Violation or Conflict. Such execution, delivery and performance of this Letter Agreement and the consummation of the transactions contemplated hereby and thereby, including the incurrence by such Party of its obligations under this Letter Agreement, will not result in any violation of, or conflict with; (i) any term of any material contract or agreement applicable to it; (ii) any of its charter, bylaws, or other constitutional documents; (iii) any determination or award of any arbitrator applicable to it or (iv) any license, permit, franchise, judgment, writ, injunction or regulation, decree, order, charter, law, ordinance, rule or regulation of any government agency, applicable to it or any of its assets or properties or to any obligations incurred by it or by which it or any of its assets or properties or obligations are bound or affected, and shall not cause a breach of, or default under, any such term or result in the creation of any lien upon any of its properties or assets.
(iv)Consents. All consents, approvals, orders or authorizations of; registrations, declarations, filings or giving of notice to; obtaining of any licenses or permits from; or taking of any other action with respect to, any Person or Government Agency, that are required to have been obtained or made by such Party with respect to this Letter Agreement and the transactions contemplated hereby, including the due authorization of such Party and its governing body and any approval or consent of any security holder of such Party or any holder (or any trustee for any holder) of any indebtedness or other obligation of such Party, have been obtained and are in full force and effect and all conditions of any such consents have been complied with.
(v) Obligations Binding. Its obligations under this Agreement constitute its legal, valid and binding obligations, enforceable in accordance with their respective terms (subject to applicable bankruptcy, reorganization, insolvency, moratorium or similar laws affecting creditors’ rights generally and subject, as to enforceability, to equitable principles of general application (regardless of whether enforcement is sought in a proceeding in equity or at law)).
(vi)Non-Reliance. It is acting for its own account, and it has made its own independent decisions to enter into this Agreement and as to whether this Agreement is appropriate or proper for it based upon its own judgment and upon advice from such advisers as it has deemed necessary. It is not relying on any communication (written or oral) of the other Parties as investment advice or as a recommendation Attachment Staff Report Item 17E
4 to enter into this Agreement; it being understood that information and explanations related to the terms and conditions of this Agreement shall not be considered investment advice or a recommendation to enter into this Agreement. It is entering into this Agreement as a bona-fide, arm’s-length transaction involving the mutual exchange of consideration and, once executed by the applicable parties, considers this Agreement to be legally enforceable contracts. No communication (written or oral) received from any of the other Parties shall be deemed to be an assurance or guarantee as to the expected results of this Agreement. (vii) Assessment and Understanding. It is capable of assessing the merits of and understanding (on its own behalf or through independent professional advice), and understands and accepts, the terms, conditions and risks of this Agreement and the Assignment Agreement. It is also capable of assuming, and assumes, the risks of this Agreement.
(viii) Status of Parties. Neither of Parties is acting as a fiduciary for or an adviser to the other in respect of this Agreement.
4. Governing Law, Jurisdiction, Waiver of Jury Trial
(a) Governing Law. This Letter Agreement and the rights and duties of the parties under this Letter Agreement will be governed by and construed, enforced and performed in accordance with the laws of the State of New York, without reference to any conflicts of laws provisions that would direct the application of another jurisdiction’s laws; provided, however, that the authority of Ava to enter into and perform its obligations under this Letter Agreement shall be determined in accordance with the laws of the State of California. (b) Jurisdiction. Each party submits to the exclusive jurisdiction of the federal courts of the United States of America for the Northern District of California sitting in the city and county of San Francisco.
(c) Waiver of Right to Trial by Jury. Each party waives, to the fullest extent permitted by applicable law, any right it may have to a trial by jury in respect of any suit, action or proceeding relating to this Letter Agreement.
[Signature Pages to Follow]
Attachment Staff Report Item 17E
Signature Page to Letter Agreement
Very truly yours,
J. ARON
J. ARON & COMPANY LLC
By:
Name:
Title:
ACKNOWLEDGED, ACCEPTED AND AGREED TO as of the date first set forth above:
AVA
AVA COMMUNITY ENERGY
By:
Name:
Title:
Attachment Staff Report Item 17E
Exhibit A
Assignment Agreements
[To come.]
Attachment Staff Report Item 17E
1 Chapman Draft 06.--.25
PREPAID ENERGY PROJECT ADMINISTRATION AGREEMENT
This Prepaid Energy Project Administration Agreement (this “Agreement”) is made and entered into as of [_______ __], 2025, by and between California Community Choice Financing Authority (“CCCFA”) and Ava Community Energy Authority (“Ava”), with respect to the Prepaid Energy Project (defined below). CCCFA and Ava may be referred to individually herein as a “Party” and collectively as the “Parties”. Capitalized terms used herein (including in the following Recitals) have the meanings given to such terms in Section 1.
W I T N E S S E T H:
WHEREAS, Ava is a “community choice aggregator” under the Public Utilities Code; and WHEREAS, Ava and certain other community choice aggregators have created CCCFA as a joint exercise of powers authority under and pursuant to the Act and the Joint Powers Agreement; and WHEREAS, CCCFA’s purpose is to assist its Members (as defined in the Joint Powers Agreement), including Ava, by undertaking the financing or refinancing of energy prepayments that can be financed with tax advantaged bonds and other obligations on behalf of one or more of the Members by, among other things, issuing or incurring Bonds (as such term is defined in the Joint Powers Agreement) and entering into related contracts with Members; and
WHEREAS, CCCFA and Ava are entering into a Power Supply Contract pursuant to which CCCFA has agreed to supply Energy to Ava under the terms set forth therein; and WHEREAS, in order to provide such Energy to Ava under the Power Supply Contract, CCCFA is entering into the Prepaid Agreement with Energy Prepay [__], LLC (the “Energy Supplier”), under which it will make a prepayment to the Energy Supplier for the purchase and delivery of such Energy; and WHEREAS, CCCFA will finance the prepayment under the Prepaid Agreement and related costs by issuing the Bonds pursuant to the Indenture; and
NOW, THEREFORE, in consideration of the premises and mutual covenants set forth in this Agreement and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:
Section 1. Defined Terms. Capitalized terms used herein shall have the meanings set forth below:
“Act” means Chapter 5 of Division 7 of Title 1 of the California Government Code, being Section 6500 and following, as amended.
“Annual Refund” means the annual refund, if any, to be provided to Ava pursuant to Section 3.2(c) of the Power Supply Contract.
Attachment Staff Report Item 17F
2 “Assigned Delivery Point” has the meaning specified in the Assignment Agreement. “Assigned Energy” has the meaning specified in the Assignment Agreement. “Assigned Product” means Assigned Energy and associated renewable energy credits, green energy attributes and any other product included in the Assignment Agreement. “Assignment Agreement” means the Initial Assignment Agreement and any subsequent assignment agreement entered into consistent with the Assignment Letter Agreement. “Assignment Letter Agreement” has the meaning specified in the Power Supply Contract. “Base Energy” means Energy to be delivered to an Energy Delivery Point. “Bonds” means the bonds issued by CCCFA pursuant to the Indenture on or about the date of this Agreement in order to finance the prepayment required to be made to the Energy Supplier under the Prepaid Agreement and related costs of the Prepaid Energy Project, and any bonds issued to refund such bonds.
“CCCFA” means California Community Choice Financing Authority, a joint exercise of powers authority created under and pursuant to the Act and the Joint Powers Agreement. “CCCFA Commodity Swap” means the ISDA Master Agreement, Schedule and transaction Confirmation entered into by CCCFA and the swap counterparty named therein, and any replacement swap entered into pursuant to the Prepaid Agreement. “Contract Quantity” means the quantity of Base Energy or Assigned Energy, as applicable, specified in Exhibits A-1 and A-2 of the Power Supply Contract, as such Exhibits A-1 and A-2 may be updated from time to time in accordance with the terms of the Power Supply Contract. “Ava” means Ava Community Energy Authority, a community choice aggregator as defined in Section 331.1 of the Public Utilities Code.
“Energy” means three-phase, 60-cycle alternating current electric energy, expressed in megawatt-hours.
“Energy Delivery Point” means the delivery point for delivery of Ava’s Contract Quantity as specified in the Power Supply Contract, and shall include, if applicable, any Assigned Delivery Point and any alternate Delivery Point for Ava.
“Energy Supplier” means Energy Prepay [__], LLC, a Delaware limited liability company. “Indenture” means the Trust Indenture, dated as of [_______] 1, 2025, between CCCFA and the Trustee, as amended, restated, supplemented or otherwise modified from time to time. “Initial Assignment Agreement” with respect to Ava, the initial assignment agreement or agreements specified in the Power Supply Contract.
“Joint Powers Agreement” means the Joint Powers Agreement by and among the Members of CCCFA named therein, including Ava, providing for the creation, purposes and powers of Attachment Staff Report Item 17F
3 CCCFA, as the same may be amended or supplemented from time to time in accordance with its terms.
“Power Supply Contract” means the Power Supply Contract, dated [_______ __], 2025, between CCCFA and Ava relating to the purchase by Ava of Energy acquired by CCCFA pursuant to the Prepaid Agreement, as amended, restated, supplemented or otherwise modified from time to time.
“Prepaid Agreement” means the Prepaid Energy Sales Agreement, dated [_______ __], 2025, between CCCFA, as buyer, and the Energy Supplier, as seller, as amended, restated, supplemented or otherwise modified from time to time.
“Prepaid Energy Project” means the issuance of the Bonds by CCCFA pursuant to the Indenture, the acquisition of Energy and related undertakings of CCCFA under the Prepaid Agreement and the Indenture, and the sale to Ava of such Energy and related undertakings of CCCFA under the Power Supply Contract.
“Public Utilities Code” means the Public Utilities Code of the State of California, as amended.
“Qualifying Use Requirements” has the meaning set forth in Section 1.1 of the Power Supply Contract.
“Re-Pricing Agreement” means the Re-Pricing Agreement, dated as of the date of issuance of the Bonds, by and between CCCFA and the Energy Supplier. “Schedule”, “Scheduled” or “Scheduling” means the actions of a Party and/or its designated representatives, including each Party’s Transmission Providers, if applicable, of notifying, requesting and confirming to each other the quantity of Energy to be delivered during any given portion of the Delivery Period at a specified Delivery Point. “Tax Certificate and Agreement” means the Tax Certificate and Agreement executed and delivered by CCCFA in connection with the issuance of the Bonds relating to certain federal income tax compliance requirements relating to the Prepaid Energy Project. “Transmission Provider(s)” means any entity or entities transmitting or transporting Energy on behalf of a Party to or from an Energy Delivery Point. “Trustee” means The Bank of New York Mellon Trust Company, N.A., and its successors as Trustee under the Indenture.
Section 2. Assignment Agreements. With respect to any Assignment Agreement, the Parties acknowledge and agree as follows:
(a) as of the date of this Agreement, Ava has entered into the Initial Assignment Agreement specified in the Power Supply Contract with respect to its entire Contract Quantity; (b) subject to the terms of the applicable Assignment Letter Agreement, Ava may from time to time enter into additional Assignment Agreements with respect to all or a portion of its Contract Quantity; and
Attachment Staff Report Item 17F
4 (c) Ava shall determine, independent of CCCFA, when and if any Assignment Agreement is entered into or terminated and the underlying agreement and portion of its Contract Quantity to which such Assignment Agreement relates.
Section 3. Scheduling and Delivery of Assigned Energy. Assigned Energy and any other Assigned Product delivered to CCCFA under the Prepaid Agreement that is attributable to an Assignment Agreement(s) entered into by Ava shall be attributable to Ava under the Power Supply Contract, and CCCFA shall have no responsibility for (a) any Scheduling or other operational requirements necessary for the delivery of Assigned Energy to Ava’s Assigned Delivery Point and the transfer of other Assigned Product to Ava, or (b) any accounting for under-deliveries or over-deliveries or other record-keeping requirements with respect to any Assigned Energy and other Assigned Product, all of which shall be the sole responsibility of Ava pursuant to the related Assignment Agreement(s).
Section 4. Qualified Use; Remarketing of Base Energy. As provided in the Power Supply Contract, any portion of Ava’s Contract Quantity that is not delivered as Assigned Energy is required to be delivered as Base Energy and simultaneously remarketed by the Energy Supplier pursuant to the Prepaid Agreement. Ava shall be responsible for accounting for any portion of Ava’s Contract Quantity deemed delivered as Base Energy and subsequently remarketed, including accounting for any remediation of any such remarketing sales as may be required pursuant to the Qualifying Use Requirements. Ava agrees to provide to CCCFA any information reasonably requested by it in order to comply with any reporting or record-keeping requirements related to such deemed deliveries and remarketing of Base Energy, including such information relating to compliance with the Qualifying Use Requirements, as may be required pursuant to the Prepaid Agreement, the Indenture or the Tax Certificate and Agreement.
Section 5. CCCFA Commodity Swap. CCCFA shall not take any action to terminate or designate the early termination of the CCCFA Commodity Swap except in accordance with written instructions of Ava or unless otherwise required under the terms of the Prepaid Agreement or the Indenture.
Section 6. Directions, Consents and Waivers. CCCFA may be requested or required from time to time to provide certain directions, consents, or waivers under the terms of the Prepaid Agreement, the Indenture and the Re-pricing Agreement. Provided no event of default has occurred and is continuing with respect to Ava under the Power Supply Contract, such direction, consent or waiver shall only be provided by CCCFA in accordance with written instructions provided by Ava.
Section 7. Re-pricing Information. CCCFA shall provide, or cause the Energy Supplier to provide, to Ava such information as is required to be provided by the Energy Supplier to CCCFA in accordance the Re-pricing Agreement at such times as are required under the Re-pricing Agreement.
Section 9. Project Administration Fee; Reimbursement and Refund of Operating Expenses. (a) Under Section 3.2(b) of the Power Supply Contract, Ava is required to include in its payment to CCCFA in January of each year, commencing January 2026, an annual Project Administration Fee in the amount specified therein, determined by CCCFA based on the budgeted Operating Expenses of CCCFA for the next succeeding annual period. CCCFA agrees to allocate amounts received in respect of the Project Administration Fee to pay Operating Expenses (as defined in the Indenture) as the same become due and payable during such annual period. In the event amounts paid in respect of the Project Administration Fee are not sufficient to pay such Operating Expenses when due, Ava agrees to pay such additional amounts as are necessary to pay such Operating Expenses upon receipt of notice of the amount due from the Trustee or CCCFA.
Attachment Staff Report Item 17F
5 (b) As soon as practicable following the end of each annual period referred to in paragraph (a), CCCFA agrees that the amounts received in respect of the Project Administrative Fee for such annual period shall be reconciled with the Operating Expenses paid or accrued for such period. In the event that, following each such reconciliation, it is determined that the amounts received in respect of the Project Administration Fee during the applicable annual period exceed Operating Expenses paid or accrued for such period, Ava will be provided written notice thereof and the amount of such excess will be included in its Annual Refund under the Power Supply Contract.
Section 10. Notices. Notices and other information to be provided by a Party to any other Party under this Agreement shall be provided in accordance with Article XVI of the Power Supply Contract.
Section 11. Governing Law. This Agreement and the obligations of the Parties hereunder shall be governed by and determined in accordance with the laws of the State of California.
Section 12. Counterparts. This Agreement may be executed and acknowledged in multiple counterparts and by the Parties in separate counterparts, each of which shall be an original and all of which shall be and constitute one and the same instrument.
Attachment Staff Report Item 17F
6 IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed and delivered by their respective officers thereunto duly authorized as of the date first above written.
CALIFORNIA COMMUNITY CHOICE FINANCING
AUTHORITY
By: ________________________________
Name: Garth Salisbury
Title: Treasurer/Controller
AVA COMMUNITY ENERGY AUTHORITY
By: ________________________________
Name: ______________________________
Title: _______________________________
[Signature Page to the Prepaid Energy Project Administration Agreement] Attachment Staff Report Item 17F
1 Chapman Draft 06.09.25
CLEAN ENERGY PROJECT OPERATIONAL SERVICES AGREEMENT
This Clean Energy Project Operational Services Agreement (this “Agreement”) is made and entered into as of [_______ __], 2025, by and between California Community Choice Financing Authority (“CCCFA”) and Ava Community Energy Authority (“Ava”) with respect to the Clean Energy Project (defined below). CCCFA and Ava may be referred to individually herein as a “Party” and collectively as the “Parties”.
W I T N E S S E T H:
WHEREAS, Ava is a “community choice aggregator” under the Public Utilities Code of the State of California, as amended; and
WHEREAS, Ava and certain other community choice aggregators have created CCCFA as a joint exercise of powers authority under and pursuant to the Joint Exercise of Powers Act, constituted as Chapter 5 of Division 7 of Title 1 of the California Government Code, being Section 6500 and following, as amended, and a Joint Powers Agreement by and among the Members of CCCFA named therein, including Ava (as the same may be amended or supplemented from time to time in accordance with its terms, the “Joint Powers Agreement”); and
WHEREAS, CCCFA’s purpose is to assist its Members, including Ava, by undertaking the financing or refinancing of energy prepayments that can be financed with tax advantaged bonds and other obligations on behalf of one or more of the Members by, among other things, issuing or incurring bonds and entering into related contracts with Members; and
WHEREAS, CCCFA and Ava are entering into a Clean Energy Purchase Contract, dated [_______ __], 2025 (as amended, restated, supplemented or otherwise modified from time to time, the “Clean Energy Purchase Contract”), pursuant to which CCCFA has agreed to supply Energy to Ava under the terms set forth therein; and
WHEREAS, in order to provide such Energy to Ava under the Clean Energy Purchase Contract, CCCFA is entering into a Master Power Supply Agreement, dated [_______ __], 2025 (as amended, restated, supplemented or otherwise modified from time to time, the “Master Power Supply Agreement”), between CCCFA, as buyer, and Aron Energy Prepay [__] LLC, a Delaware limited liability company, as seller (the “Prepaid Seller”), under which it will make a prepayment to the Prepaid Seller for the purchase and delivery of such Energy; and
WHEREAS, the Issuer in order to meet its obligations under the Master Power Supply Agreement, Prepaid Seller will enter into an Electricity Purchase, Sale and Service Agreement, dated as of [_______ __], 2025 (as amended, restated, supplemented or otherwise modified from time to time, the “ESSA”) with J. Aron & Company LLC, a New York limited liability company (“J. Aron”); and WHEREAS, the Issuer will finance the prepayment under the Master Power Supply Agreement and related costs by issuing its Clean Energy Project Revenue Bonds, Series 2025[_] (the “Bonds”) pursuant to a Trust Indenture, dated as of [_______] 1, 2025 (as amended, restated, supplemented or otherwise modified from time to time, the “Indenture”), between CCCFA and U.S. Bank Trust Company, National Association, as trustee (together with any successor or replacement trustee under the Indenture, the “Trustee”); and
Attachment Staff Report Item 17G
2 WHEREAS, the issuance of the Bonds by CCCFA and related undertakings of CCCFA under the Indenture, the acquisition and sale of Energy and related undertakings of CCCFA under the Master Power Supply Agreement and the Clean Energy Purchase Contract, and the sale to Ava of such Energy and related undertakings of Ava under the Clean Energy Purchase Contract are referred to herein as the “Clean Energy Project”; and
WHEREAS, the Parties are entering into this Agreement in order to provide for the administration of certain operational matters relating to the Clean Energy Project; NOW, THEREFORE, in consideration of the premises and mutual covenants set forth in this Agreement and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:
Section 1. Defined Terms. Capitalized terms used herein and not otherwise defined shall have the meanings set forth in the Indenture, the Clean Energy Purchase Contract or the Master Power Supply Agreement, as applicable.
Section 2. Assignment Agreements. As contemplated by the ESSA, the Master Power Supply Agreement and the Clean Energy Purchase Contract, Ava will enter into the Initial Assignment Agreements and may from time to time enter into additional Assignment Agreements to provide for the assignment of Assigned Product for delivery to CCCFA under the Master Power Supply Agreement and to Ava under the Clean Energy Purchase Contract. With respect to any Assignment Agreement, the Parties acknowledge and agree as follows:
(a) as of the date of this Agreement, Ava has entered into the Initial Assignment Agreements specified in the Clean Energy Purchase Contract with respect to its entire Contract Quantity;
(b) subject to the terms of the applicable Assignment Letter Agreement, Ava may from time to time enter into additional Assignment Agreements with respect to all or a portion of its Contract Quantity; and
(c) Ava shall determine in its sole discretion when and if any Assignment Agreement is entered into (subject to the consent requirements under the Clean Energy Purchase Contract) or terminated (subject to the terms of the Assignment Letter Agreement) and the underlying power purchase agreement and portion of its Contract Quantity to which such Assignment Agreement relates.
Section 3. Scheduling and Delivery of Assigned Energy. Assigned Energy and any other Assigned Product delivered to CCCFA under the Master Power Supply Agreement shall be Scheduled by Ava for delivery to CCCFA under the Master Power Supply Agreement and for delivery to Ava under the Clean Energy Purchase Contract, and CCCFA shall have no responsibility for (a) any Scheduling or other operational requirements necessary for the delivery of Assigned Energy to Ava’s Assigned Delivery Point and the transfer of other Assigned Product to Ava, or (b) any accounting for under-deliveries or over-deliveries or other record-keeping requirements with respect to any Assigned Energy and other Assigned Product, all of which shall be the sole responsibility of Ava.
Section 4. Qualified Use; Remarketing of Base Energy. Any Base Quantities required to be delivered by the Prepaid Seller are required to be remarketed by the Prepaid Seller pursuant to the Master Power Supply Agreement except in the circumstances specified in Section 3.2 of the Master Power Supply Attachment Staff Report Item 17G
3 Agreement. Ava shall be responsible for any notices or other communications required from CCCFA in connection with such remarketing, as well communications required for the Scheduling and delivery of Base Quantities under the communications protocol set forth in Exhibit G to the Master Power Supply Agreement and any other operational requirements related to the delivery and remarketing of Base Quantities under the Master Power Supply Agreement. Ava will account for any Base Quantities and subsequently remarketed, including accounting for any remediation of any such remarketing sales as may be required pursuant to the Qualifying Use Requirements and the terms of the Clean Energy Purchase Contract. Ava agrees to provide to CCCFA any information reasonably requested by it in order to comply with any reporting or record-keeping requirements related to such delivery and remarketing of Base Quantities, including such information relating to compliance with the Qualifying Use Requirements, as may be required pursuant to the Master Power Supply Agreement or the Indenture.
Section 5. Directions, Consents and Waivers. CCCFA may be requested or required from time to time to provide certain directions, consents, or waivers under the terms of the Master Power Supply Agreement, the Indenture and the Re-pricing Agreement. Provided no event of default has occurred and is continuing with respect to Ava under the Clean Energy Purchase Contract, such direction, consent or waiver shall only be provided by CCCFA in accordance with written instructions provided by Ava.
Section 6. Re-pricing Information. CCCFA shall provide, or cause Prepaid Seller to provide, to Ava such information as is required to be provided by Prepaid Seller to CCCFA in accordance the Re-pricing Agreement at such times as are required under the Re-pricing Agreement. Provided no event of default has occurred and is continuing with respect to Ava under the Clean Energy Purchase Contract, any direction, consent or waiver requested or required to be provided by CCCFA under the Re-pricing Agreement shall only be provided by CCCFA in accordance with written instructions provided by Ava.
Section 7. Administrative Fee; Reimbursement and Refund of Operating Expenses. (a) Under the Indenture, Operating Expenses relating to the Clean Energy Project are to be paid from amounts deposited annually into the Administrative Fee Fund, which amount shall be equal to $[_______] in the aggregate for each annual period ending on [_______] 1 of each year (the “Administrative Fee”). If at any time the amount on deposit in the Administrative Fee Fund is not sufficient to pay all such Operating Expenses as the same become due, Ava agrees to pay to the Trustee for deposit into the Administrative Fee Fund such amounts as are necessary to pay such Operating Expenses upon receipt of notice of the amount due from the Trustee or CCCFA. (b) As soon as practicable following the end of each annual period referred to in paragraph (a), CCCFA agrees that the amounts received in respect of the Administrative Fee for such annual period shall be reconciled with the Operating Expenses paid or accrued for such period. In the event that, following each such reconciliation, it is determined that the amounts received in respect of the Administrative Fee during the applicable annual period exceed Operating Expenses paid or accrued for such period, Ava will be provided written notice thereof and the amount of such excess will be included in its Annual Refund under the Clean Energy Purchase Contract.
Section 8. Notices. Notices and other information to be provided by a Party to the other Party under this Agreement shall be provided in accordance with Article XVI of the Clean Energy Purchase Contract.
Section 9. Governing Law. This Agreement and the obligations of the Parties hereunder shall be governed by and determined in accordance with the laws of the State of California.
Attachment Staff Report Item 17G
4 Section 10. Counterparts. This Agreement may be executed and acknowledged in multiple counterparts and by the Parties in separate counterparts, each of which shall be an original and all of which shall be and constitute one and the same instrument.
[Signatures appear on the following page]
Attachment Staff Report Item 17G
5 IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed and delivered by their respective officers thereunto duly authorized as of the date first above written.
CALIFORNIA COMMUNITY CHOICE FINANCING
AUTHORITY
By: ________________________________
Name: ______________________________
Title: _______________________________
AVA COMMUNITY ENERGY AUTHORITY
By: ________________________________
Name: ______________________________
Title: _______________________________
[Clean Energy Project Operational Services Agreement]
Attachment Staff Report Item 17G
SM Draft 30 May 2025
PPA CUSTODIAL AGREEMENT
This PPA Custodial Agreement (this “Agreement”) is made and entered into as of [____], 2025, by and among Ava Community Energy, a joint powers authority and a community choice aggregator organized under the Laws of the State of California (“Ava”), J. Aron & Company LLC, a New York limited liability company (“J. Aron”), California Community Choice Financing Authority, a joint powers authority and a public entity of the State of California established pursuant to the provisions of the Joint Exercise of Powers Act (Article 1, Chapter 5, Division 7, Title 1, Section 6500 et seq. of the California Government Code, as amended) (defined below) (the “Issuer”) and [____], a [____] (the “Custodian” and together with Ava, J. Aron and Issuer, the “Parties”).
RECITALS:
WHEREAS, in connection with the issuance of one or more series of bonds by Issuer, J.
Aron, Issuer and Ava will enter into Assignment Agreements (the “Assignment Agreements”, which definition shall include any new Assignment Agreement identified by J. Aron’s delivery of an updated Exhibit A consistent with Section 3(b)) with the sellers under certain power purchase agreements (each, individually, a “PPA Seller” and collectively the “PPA Sellers”, which definitions shall include any new PPA Seller identified by J. Aron’s delivery of an updated Exhibit A consistent with Section 3(b)), pursuant to which Ava will partially assign its rights and obligations under its Power Supply Agreements (“Assigned PPAs”) to J. Aron for redelivery under the Prepay Contract Chains; and
WHEREAS, the Parties propose to enter into this Agreement in order to administer payments to be received by the sellers under the Assigned PPAs (each, individually, a “PPA Seller” and collectively the “PPA Sellers”, and which definitions shall include any new PPA Seller identified by J. Aron’s delivery of an updated Exhibit A consistent with Section 3(b) of this Agreement) for each of the Prepay Contract Chains identified in Exhibit C as updated from time to time in accordance with Section 3(b) of this Agreement.
NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereto agree as follows:
Section 1. Defined Terms; Interpretation.
(a) Any capitalized term used herein and not otherwise defined herein (including in the recitals) shall have the meaning assigned to such term in the Clean Energy Purchase Contracts.
The following additional terms, when used in this Agreement (including the preamble or recitals to this Agreement) and identified by the capitalization of the first letter thereof, have the respective meanings set forth below, unless the context otherwise requires:
“Affiliate” means, with respect to any person, any entity which is a direct or indirect parent or subsidiary of such person or which directly or indirectly (i) owns or controls such person, (ii) is owned or controlled by such person, or (iii) is under common ownership or control with such person. For purposes of this definition, “control” of an entity means the power, directly or indirectly, either to (a) vote 50% or more of the securities having ordinary voting power for the Attachment Staff Report Item 17H
2 election of directors or persons performing similar functions or (b) direct or cause the direction of the management and policies, whether by contract or otherwise. “Assigned PAYGO Allocation” means the allocation of the Assigned PAYGO Amount under an Assigned PPA for any Month as set forth in the Monthly Statement delivered by Ava for such Month pursuant to Section 3(a) to the remediation of Assigned Prepay Shortfall Amounts that occurred either in the Month in which such Assigned PAYGO Amount occurred or in prior Months.
“Assigned PAYGO Amount” means, with respect to an Assigned PPA for any Month, the greater of (a) zero and (b) an amount equal to the positive difference, if any, between (i)(A) the Assigned Quantities actually delivered during such Month under such Assigned PPA, minus (B) the Assigned Prepay Quantities under such Assigned PPA for such Month, multiplied by (ii) the Assigned Product Price under such Assigned PPA. “Assigned Prepay Shortfall Amount” means, with respect to an Assigned PPA for any Month, the greater of (a) zero and (b) an amount equal to the positive difference, if any, between (i)(A) the Assigned Prepay Quantities for such Month under such Assigned PPA, minus (B) the Assigned Quantities actually delivered during such Month under such Assigned PPA, multiplied by (ii) the Assigned Product Price under such Assigned PPA; provided, however, that the amount determined pursuant to the foregoing clause (b)(i)(B) shall be increased by any Assigned Quantities not delivered as a result of Force Majeure. “Assigned Product Price” has the meaning specified in Exhibit A, as may be updated from time to time consistent with the terms hereof. “Ava Gross Payment” means, in respect of any Monthly PPA Invoice, an amount determined by Ava as the positive result, if any, of (a) all amounts owed to the relevant PPA Seller in respect of such Monthly PPA Invoice (determined without respect to the PPA Seller Payment Obligation), less (b) the J. Aron Prepay Payment(s); provided, for clarity, that the Ava Gross Payment (i) shall be deemed to be paid to the relevant PPA Seller on behalf of J. Aron to the extent it relates to any Assigned PAYGO Product, and (ii) otherwise shall be deemed to be paid to the relevant PPA Seller on behalf of Ava.
“Ava Net Payment” means, in respect of any Monthly PPA Invoice, an amount determined by Ava as the positive result, if any, of (a) the Ava Gross Payment, less (b) the PPA Seller Payment Obligation.
“Ava Reimbursement Amount” means, in respect of any Monthly PPA Invoice that reflects that a quantity of Product less than the Assigned Prepay Quantity was delivered in such Month under the relevant Assigned PPA, an amount equal to (i) the product of (x) the portion of the Assigned Prepay Quantity actually delivered under the relevant Assigned PPA, multiplied by (y) the result of the applicable Assigned Product Price, minus (ii) any Remarketing Fee Amount. “Clean Energy Purchase Contracts” means each of the Clean Energy Purchase Contracts by and between Ava and Issuer as set forth in Exhibit C to this Agreement, which Exhibit C may be updated from time to time in accordance with Section 3(b).
Attachment Staff Report Item 17H
3 “Electricity Sale and Service Agreements” means each of the Electricity Purchase, Sale and Service Agreements by and between J. Aron and the buyer thereunder as set forth in Exhibit C to this Agreement, which Exhibit C may be updated from time to time in accordance with Section 3(b).
“Issuer Negative Pricing Payment Amount” means the positive difference, if any, for any Month of an Assignment Period between (a) amounts due from Issuer to Ava under Section
3.2(a) of a Clean Energy Purchase Contract with respect to negatively priced Assigned Products and (b) amounts due from Ava to Issuer under Section 3.2(a) of a Clean Energy Purchase Contract with respect to positively priced Assigned Products.
“J. Aron Fixed Payment” means, in respect of each Assigned PPA and each Month in an Assignment Period thereunder, the amount set forth for such Assigned PPA and Month on Exhibit B hereto; provided that there shall be two J. Aron Fixed Payments for each Month of the Assignment Period with respect to any Assigned PPA that includes separate Assigned Prepay Quantities for Energy and storage Products. Notwithstanding the foregoing, there shall be no J.
Aron Fixed Payment for an Assignment Agreement that provides for payment by J. Aron to the relevant PPA Seller of a floating price for Assigned Products delivered during the Assignment Period.
“J. Aron Prepay Payment” means, in respect of each Monthly PPA Invoice, an amount determined by Ava as (a) with respect to any Assigned PPA that has a J. Aron Fixed Payment, the J. Aron Fixed Payment for the relevant Month and Assigned PPA and (b) with respect to any Assigned PPA that does not have a J. Aron Fixed Payment, the Assigned Prepay Quantity for the relevant Assigned PPA for the relevant Month multiplied by the Assigned Product Price; provided that the J. Aron Prepay Payment shall be reduced by (i) the face amount of any Receivable (as defined in the Electricity Sale and Service Agreement) that is delivered by J. Aron to the Custodian pursuant to Section 4(f) and (ii) any Remarketing Fee Amount; provided further that (x) the J. Aron Prepay Payment will be determined without regard to any PPA Seller Payment Obligation and (y) there shall be two J. Aron Prepay Payments for each Month of the Assignment Period with respect to any Assigned PPA that includes separate Assigned Prepay Quantities for Energy and storage Products.
“Master Power Supply Agreements” means each of the Master Power Supply Agreements by and between Issuer and the seller thereunder, as set forth in Exhibit C to this Agreement, which Exhibit C may be updated from time to time in accordance with Section 3(b). “Monthly PPA Payment” means, in respect of any Monthly PPA Invoice, an amount determined by Ava as the total amount to be withdrawn from the Assigned PPA Payments Account by the Custodian and paid to the relevant PPA Seller in respect of such Monthly PPA Invoice, which shall equal the total net amount due to such PPA Seller in respect of such Monthly PPA Invoice and shall consist of the following components:
(a) The J. Aron Prepay Payment(s), which shall be deemed to be paid to the relevant PPA Seller on behalf of J. Aron in respect of Assigned Products; and (b) the Ava Net Payment.
Attachment Staff Report Item 17H
4 “PPA Seller Payment Obligation” means, in respect of any Monthly PPA Invoice, an amount determined by Ava as the total amount owed by the relevant PPA Seller as reflected in such Monthly PPA Invoice, including any amounts that have been netted or set-off against amounts owed to such PPA Seller; provided, for clarity, that the PPA Seller Payment Obligation shall be deemed to be paid to Ava and credited against the Ava Gross Payment thereby resulting in the Ava Net Payment required to be made by Ava hereunder.
“PPA Shortfall Lookback Summary” means, in respect of any Monthly PPA Invoice, a list that sets forth the following:
(i) which Months, if any, the relevant PPA Seller delivered less than the Assigned Prepay Quantity in the preceding 12 Months (any such Month, a “Lookback Shortfall Month”) under the applicable Assigned PPA and whether such under-deliveries were a result of Force Majeure (as defined in the relevant Assigned PPA); (ii) the percentage of the Assigned Prepay Quantity actually delivered under the applicable Assigned PPA for each such Lookback Shortfall Month; and (iii) an indication of whether an increased Remarketing Fee (as defined in the relevant Master Power Supply Agreement) is in effect consistent with the terms of Exhibits C and F of the relevant Master Power Supply Agreement. “Prepay Contract Chain” means, with respect to each bond issuance by Issuer detailed in Exhibit C, the Master Power Supply Agreement, Electricity Sale and Service Agreement and Clean Energy Purchase Contract relating thereto. As used herein, Prepay Contract Chains shall be limited to contract chains entered into in connection with bond issuances by Issuer for a prepayment to an Affiliate of J. Aron pursuant to a Master Power Supply Agreement between Issuer and an Affiliate of J. Aron.
“Remarketing Fee” has the meaning specified in each of the Master Power Supply Agreements.
“Remarketing Fee Amount” means, in respect of any Assigned Prepay Quantity remarketed in any Month under the remarketing provisions of the relevant Master Power Supply Agreement, an amount equal to the product of (a) the Assigned Prepay Quantity so remarketed in such Month, multiplied by (b) any Remarketing Fee applicable under relevant Master Power Supply Agreement.
(b) Except where expressly provided otherwise, any reference herein to any agreement or document includes all amendments, supplements or restatements to and of such agreement or document as may occur from time to time in accordance with its terms and the terms hereof, and any reference to a party to any such agreement includes all successors and assigns of such party thereunder permitted by the terms hereof and thereof.
Section 2. Appointment of Custodian. Ava, J. Aron and Issuer hereby appoint [____] as Custodian under this Agreement, with such rights and obligations as are specifically set forth herein. The Custodian hereby accepts such appointment under the terms and conditions set forth herein.
Attachment Staff Report Item 17H
5 Section 3. Payment Instructions to Custodian; Assigned PPA Exhibits. (a) Monthly Statements. No later than five Business Days following receipt of an invoice from a PPA Seller in respect of any Month in an Assignment Period (a “Monthly PPA Invoice”), Ava shall deliver a statement (the “Monthly Statement”) showing each of the following (based on the information provided by the relevant PPA Seller in the Monthly PPA Invoice) to each of the Parties hereto and the seller under the Master Power Supply Agreement for the Prepay Contract Chain to which such Assigned PPA is assigned:
(i) the J. Aron Prepay Payment(s);
(ii) the Ava Reimbursement Amount;
(iii) the Ava Gross Payment;
(iv) the PPA Seller Payment Obligation;
(v) the Ava Net Payment;
(vi) the Monthly PPA Payment;
(vii) the Remarketing Fee Amount;
(viii) the “Monthly PPA Invoice Payment Date”, which shall be the last Business Day on which payment on such Monthly PPA Invoice may be made before any incremental interest arises thereon or any default or breach arises under the relevant Assigned PPA; (ix) the “Custodial Agreement Payment Date,” which shall be one Business Day preceding the Monthly PPA Invoice Payment Date;
(x) the PPA Shortfall Lookback Summary;
(xi) the Issuer Negative Payment Amount, if any;
(xii) the Assigned PAYGO Amount, if any;
(xiii) the Assigned Shortfall Amount, if any, and the Assigned PAYGO Allocation, if any, to be made to such Assigned Shortfall Amount from any other Assigned PPA; provided that any such Assigned PAYGO Allocation shall be made first to any Assigned Shortfall Amount attributable to any Assigned Shortfall Amount attributable to the current Month;
provided furthermore that Ava shall deliver an updated Monthly Statement within seven days following agreement by Ava and any PPA Seller to an adjustment to a Monthly PPA Invoice to the extent that such adjustment is agreed upon prior to the date that is 10 days prior to the Monthly PPA Invoice Date. In addition to the foregoing, the Parties acknowledge and agree that any adjustments agreed upon with respect to a Monthly PPA Invoice after the date specified in the foregoing provision shall be resolved solely between Ava and the relevant PPA Seller as provided Attachment Staff Report Item 17H
6 in the Assignment Agreements. The Parties agree to exercise commercially reasonable efforts to implement a test billing period for a period of at least two Months prior to the effectiveness of any Assignment Agreement.
(b) Monthly Statement Verification. J. Aron shall notify Ava and each other Party promptly, but in no event more than three (3) Business Days, following Ava’s delivery of a Monthly Statement if J. Aron believes any information included on such Monthly Statement is incorrect. Following receipt and verification of the information included in any such notice from J. Aron, Ava shall, to the extent appropriate and in consultation with J. Aron, issue a corrected Monthly Statement to all Parties. J. Aron and each other Party hereto acknowledges and agrees that (i) Ava is calculating the Monthly Statement only for convenience of the Parties, (ii) the purpose of this Agreement is solely to determine amounts to be paid by Ava and J. Aron under separate contracts, and (iii) none of Ava, J. Aron nor any other Party hereto will have any liability whatsoever with respect to any action taken or omitted by it under this Agreement (but without prejudice to an express payment obligation arising under another contract), including as a result of any failure by Ava to timely or properly calculate any amount to be included in a Monthly Statement. Without limiting the foregoing, J. Aron acknowledges that it will have an opportunity to review and comment on each calculation and date included in a Monthly Statement (and shall be aware if such Monthly Statement has not been timely delivered) and Ava will not be responsible in any way for any damages, costs, liabilities, loss of use or any other claims related to an insufficient or late payment under an Assigned PPA as a result of any deficiencies in any Monthly Statement.
(c) Exhibits.
(i) Exhibit A to this Agreement sets forth certain information regarding the Assigned PPAs as of the date hereof, including the Assignment Periods for each Assigned PPA, the Assigned Prepay Quantities, the PPA Sellers thereunder and the payment instructions for payments to the PPA Sellers. Exhibit B to this Agreement sets forth the J.
Aron Fixed Payments with respect to each of the Assigned PPAs. J. Aron shall deliver an updated Exhibit A or Exhibit B, as applicable, to each of the other Parties hereto to reflect any changes to the information set forth therein, including in connection with the execution of a new Prepay Contract Chain in connection with a bond issuance by Issuer. (ii) Exhibit C to this Agreement sets forth certain information regarding the Prepay Contract Chains in effect as of the date hereof. J. Aron shall deliver an updated Exhibit C to each of the other Parties hereto to reflect any changes to the information set forth therein, including due to the execution of a new Prepay Contract Chain in connection with a bond issuance by Issuer.
(d) Remediation of Remarketing Proceeds with Ava’s Purchases of Assigned PAYGO Products. The Parties acknowledge and agree that Ava’s purchase of Assigned PAYGO Products shall be applied to the remediation of remarketing proceeds, if any, under the Master Power Supply Agreements in accordance with the terms thereof, provided that for the avoidance of doubt Assigned PAYGO Products may only be applied to Assigned Prepay Shortfall Amounts that arose either in or prior to the Month in which such Assigned PAYGO Products were purchased.
Attachment Staff Report Item 17H
7 Section 4. Assigned PPA Payments Account.
(a) Payments. With respect to certain payments required to be made by J. Aron and Ava to the PPA Sellers under the Assigned PPAs, there is hereby established the custodial account detailed below (the “Assigned PPA Payments Account”), and all payments made by J. Aron and Ava hereunder shall be wired to such Assigned PPA Payments Account:
[____]
[____]
[____]
[____]
(b) J. Aron Payments. J. Aron shall pay the J. Aron Prepay Payment(s) into the Assigned PPA Payments Account, in respect of each Monthly Statement on the relevant Custodial Agreement Payment Date set forth in such statement. To the extent that (i) a Ava Reimbursement Amount is due with respect to an Assigned PPA and (ii) J. Aron pays some portion of the J. Aron Prepay Payment(s) for such Assigned PPA but less than the total amount of the J. Aron Prepay Payment(s) due, J. Aron’s partial payment shall be applied first to the J. Aron Prepay Payment(s).
In addition, the Custodian agrees to promptly notify Ava if it does not receive the J. Aron Prepay Payment from J. Aron on the Custodial Agreement Payment Date, and in such case Ava may elect in its sole discretion to make the J. Aron Prepay Payment to the Custodian for the purpose of satisfying the Monthly PPA Payment (in which case Ava will have a reimbursement claim against Issuer under Section 6.4 of the applicable Clean Energy Purchase Contract). (c) Ava Payments. Ava shall pay the Ava Net Payment into the Assigned PPA Payments Account in respect of each Monthly Statement on the relevant Custodial Agreement Payment Date set forth in such statement. For each Month, if any, of an Assignment Period for which there is an Issuer Negative Pricing Payment Amount, Ava shall make payment of such amount into the Assigned PPA Payments Account on the Custodial Agreement Payment Date; provided that, notwithstanding the foregoing, Ava shall have no payment obligation hereunder with respect to an Issuer Negative Pricing Payment Amount to the extent that J. Aron receives such amount from the PPA Seller pursuant to the terms of the applicable Assignment Agreement. (d) Application of Payments. The Custodian shall withdraw and apply amounts received under this Section 4 as follows:
(i) any J. Aron Prepay Payment received from J. Aron (including any payment by Ava on J. Aron’s behalf pursuant to the last sentence of Section 4(b)) and any Ava Net Payment received from Ava shall be applied to the payment of the Monthly PPA Payment to each PPA Seller in respect of each Monthly Statement on the relevant Monthly PPA Invoice Payment Date pursuant to the payment instructions set forth on Exhibit A; provided that if amounts on deposit in the Assigned PPA Payment Account are insufficient to pay the entire Monthly PPA Payment on such date, the Custodian shall (i) withdraw and pay to such PPA Seller the entire remaining balance of the Assigned PPA Payment Accounts, as determined and directed by Ava, and (ii) notify such PPA Seller of the amounts received for such Month from each of J. Aron and Ava consistent with such PPA Seller’s contact information provided in Exhibit A; provided furthermore that, if the J. Aron Prepay Attachment Staff Report Item 17H
8 Payment for any Month exceeds the Monthly PPA Payment, then the excess of the J. Aron Prepay Payment over the Monthly PPA Payment shall be remitted to Ava on the relevant Monthly PPA Invoice Payment Date pursuant to Ava’s payment instructions set forth on Exhibit C;
(ii) any Ava Reimbursement Amount received from J. Aron shall be remitted to Ava on the relevant Monthly PPA Invoice Payment Date pursuant to Ava’s payment instructions set forth on Exhibit C; and
(iii) for any Month in an Assignment Period for which an Issuer Negative Pricing Payment Amount is due from Ava, the Custodian shall, after application of amounts on deposit in the Assigned PPA Payments Account pursuant to clause (i) or (ii) above, as applicable, withdraw amounts on deposit in the Assigned PPA Payments Account to make payment of the Issuer Negative Pricing Payment Amount to J. Aron. (e) Amounts Held in Trust. Amounts deposited in the Assigned PPA Payments Account shall be held in trust for the benefit of Ava until applied as set forth in Section 4(d) and Section 12, as applicable, and there is hereby granted to Ava a lien on and security interest in the Assigned PPA Payments Account pending such application. The Custodian shall not be required to comply with any orders, demands, or other instructions from Ava with respect to the Assigned PPA Payments Account, including, without limitation, items presented for payment, or any order or instruction directing the disposition of funds or other assets held in or credited to the Assigned PPA Payments Account, and Ava agrees that prior to the termination of this Agreement in accordance with the terms hereof, it shall have no right to direct the disposition of funds or other assets held in or credited to the Assigned PPA Payments Account, or to withdraw or otherwise obtain funds or other assets held in or credited to the Assigned PPA Payments Account, whether by order or instruction to the Custodian or otherwise.
(f) Transfer of Receivables. With respect to each Monthly Statement, to the extent J.
Aron has purchased Receivables (as defined in the Electricity Sale and Service Agreement) for amounts owed by Ava for the Month to which such Monthly Statement relates, J. Aron may, at its option, (i) notify the Custodian that it intends to transfer all or any portion of such Receivables to the applicable PPA Seller, and (ii) reduce the J. Aron Prepay Payment by the face amount of such Receivables to be transferred. To the extent J. Aron has notified the Custodian of its intent to transfer any such Receivables, J. Aron shall cause such Receivables to be transferred to the relevant PPA Seller not later than the relevant Custodial Agreement Payment Date.
Section 5. Custodian; Fees.
(a) Limitation on Liability. The Custodian shall have (i) no liability under any agreement other than this Agreement and (ii) no duty to inquire as to the provisions of any agreement other than this Agreement and the Assigned PPAs. The Custodian may rely upon and shall not be liable for acting or refraining from acting upon any written notice, document, instruction or request furnished to it hereunder in accordance with the terms hereof and believed by it to be genuine and to have been signed or presented by the proper Party or Parties. The Custodian shall be under no duty to inquire into or investigate the validity, accuracy or content of any such document, notice, instruction or request. The Custodian shall have no duty to solicit or Attachment Staff Report Item 17H
9 compel any payments which may be due to it, or to take any action to compel J. Aron or Ava to make the deposits required under Section 4. The Custodian shall not be liable for any action taken or omitted by it in good faith, or for the application of funds by or other actions or omissions of other persons, except to the extent that a court of competent jurisdiction determines that the Custodian’s gross negligence or willful misconduct was the primary cause of any loss to any other Party hereto. In connection with the execution of any of its powers or the performance of any of its duties hereunder, the Custodian may consult with counsel, accountants and other skilled persons selected and retained by it. The Custodian shall not be liable for anything done, suffered or omitted in good faith by it in accordance with the advice or opinion of any such counsel, accountants or other skilled persons, provided the Custodian exercised due care and good faith in the selection of such person. The permissive rights and powers of the Custodian to take actions enumerated under this Agreement shall not be construed as duties. In the event that the Custodian shall be uncertain as to its duties or rights hereunder or shall receive instructions, claims or demands from any Party hereto which, in its opinion, conflict with any of the provisions of this Agreement, it shall be entitled to refrain from taking any action and its sole obligation shall be to keep safely all property held in escrow until it shall be directed otherwise in writing by all of the other Parties hereto or by a final order or judgment of a court of competent jurisdiction. The Custodian may interplead all of the assets held hereunder into a court of competent jurisdiction or may seek a declaratory judgment with respect to certain circumstances, and thereafter be fully relieved from any and all liability or obligation with respect to such interpleaded assets or any action or non-action based on such declaratory judgment. Anything in this Agreement to the contrary notwithstanding, in no event shall the Custodian be liable for special, indirect, incidental, punitive, or consequential damages, losses or penalties of any kind whatsoever (including but not limited to lost profits), regardless of the form of action. The Custodian may engage and act through agents and attorneys and shall not be liable for the misconduct or negligence of any such agent or attorney appointed with due care. The Custodian shall be responsible only for funds actually received by it for deposit into the Assigned PPA Payments Account, and the Custodian shall not be obliged to advance or risk its own funds to make any payments required hereunder. The Custodian shall have only those duties expressly set forth in this Agreement and no implied duties shall be read into this Agreement against the Custodian. The Parties hereto acknowledge and agree that the Custodian is not a fiduciary by virtue of accepting and carrying out its obligations under this Agreement and has not accepted any fiduciary duties, responsibilities or liabilities with respect to its services hereunder.
The Custodian shall not be responsible for the perfection of any security interest granted hereunder.
The Custodian shall not be obliged to invest or pay interest on funds held hereunder. (b) Custodian Fee. The Issuer agrees to (i) pay the Custodian reasonable compensation for the services to be rendered hereunder, which compensation shall be $[____] per bond series for each year that this Agreement is in effect, and (ii) pay or reimburse the Custodian upon request for all expenses, disbursements and advances, including reasonable attorney’s fees and expenses, incurred or made by it in connection with the preparation, execution, performance, delivery, modification and termination of this Agreement. The parties hereto acknowledge that this provision shall survive the resignation or removal of the Custodian or the termination of this Agreement.
Section 6. Succession. The Custodian may resign and be discharged from its duties or obligations hereunder by giving not less than 45 days’ advance notice in writing of such resignation to the other Parties hereto specifying a date when such resignation shall take effect; and such Attachment Staff Report Item 17H
10 resignation shall take effect upon the day specified in such notice unless a successor shall not have been appointed by the other Parties hereto on such date, in which event such resignation shall not take effect until a successor is appointed. The other Parties hereto shall use their commercially reasonable efforts to make such appointment in a timely fashion, provided that any custodian appointed in succession to the Custodian shall be a bank or trust company organized under the laws of any state or a national banking association and shall have capital stock, surplus and undivided earnings aggregating at least $50,000,000 and shall be a bank with trust powers or trust company willing and able to accept the office on reasonable and customary terms and authorized by law to perform all the duties imposed upon it by this Agreement. Any corporation or association into which the Custodian may be merged or converted or with which it may be consolidated, or any corporation or association to which all or substantially all of the Custodian’s corporate trust line of business may be transferred, shall be the Custodian under this Agreement without further act. Notwithstanding the foregoing, if no appointment of a successor Custodian shall be made pursuant to the foregoing provisions of this Section 6 within 45 days after the Custodian has given written notice to the other Parties of its resignation as provided in this Section 6, the Custodian may, in its sole discretion, apply to any court of competent jurisdiction to appoint a successor Custodian. Said court may thereupon, after such notice, if any, as such court may deem proper, appoint a successor Custodian.
Section 7. Reimbursement. J. Aron and Ava agree, jointly and severally (subject to the second proviso of this Section 7), to reimburse the Custodian and its directors, officers, agents and employees for any and all loss, liability or expense (including the fees and expenses of in-house or outside counsel and experts and their staffs and all expense of document location, duplication and shipment) arising out of or in connection with (a) its acting as the Custodian under this Agreement, except to the extent that such loss, liability or expense is finally adjudicated to have been caused primarily by the gross negligence or willful misconduct of the Custodian or such director, officer, agent or employee seeking reimbursement, or (b) its following any instructions or other directions from J. Aron or Ava, except to the extent that its following any such instruction or direction is expressly forbidden by the terms hereof; provided, however, that any amounts due under this Section 7 shall not duplicate any other amounts due under this Agreement, including without limitation amounts due under Section 13 hereof; provided further, however, that, notwithstanding the joint and several nature of the obligations under this Section 7, any amounts due under clause (b) of this sentence resulting from instructions or directions that are not expressly provided for in this Agreement and are given to the Custodian by only one Party shall be the sole obligation of such Party. The Parties hereto acknowledge that this provision shall survive the resignation or removal of the Custodian or the termination of this Agreement.
Section 8. Taxpayer Identification Numbers; Tax Matters. J. Aron and Ava represent that that their correct taxpayer identification numbers assigned by the Internal Revenue Service or any other taxing authority is set forth on the signature page hereof. Any tax returns or reports required to be prepared and filed in connection with the Assigned PPA Payments Account will be prepared and filed by Ava, and the Custodian shall have no responsibility for the preparation and/or filing of any tax return with respect to any income earned on the Assigned PPA Payments Account.
In addition, any tax or other payments required to be made pursuant to such tax return or filing shall be paid by Ava. The Custodian shall have no responsibility for making such payment unless directed to do so by the appropriate authorized Party and fully indemnified to the Custodian’s satisfaction.
Attachment Staff Report Item 17H
11 Section 9. Notices. Any notice, demand, statement or request required or authorized by this Agreement to be given by one Party to another Party shall be in writing and shall either be sent by email transmission or other Electronic Means (defined below), courier, or personal delivery (including overnight delivery service) to each of the notice recipients and addresses specified in Exhibit C for the receiving Party. Any such notice, demand, or request shall be deemed to be given (i) when delivered by email transmission or other Electronic Means (defined below), or (ii) when actually received if delivered by courier or personal delivery (including overnight delivery service). Each Party shall have the right, upon 10 days’ prior written notice to the other Party, to change its list of notice recipients and addresses in Exhibit C. The Parties may mutually agree in writing at any time to deliver notices, demands or requests through alternate or additional methods, such as electronic mail. Notwithstanding the foregoing, a Party may at any time notify the others that any notice, demand, statement or request to it must be provided by email transmission for a specified period of time or until further notice, and any communications delivered by means other than email transmission during the specified period of time shall be ineffective.
The Custodian shall have the right to accept and act upon directions given pursuant to this Agreement, or any other document reasonably relating to the bonds and delivered using Electronic Means (defined below); provided, however, that each party giving directions to the Custodian hereunder shall provide to the Trustee under the Trust Indenture an incumbency certificate listing persons with the authority to provide such directions (each an “Authorized Officer”) and containing specimen signatures of such Authorized Officers, which incumbency certificate shall be amended whenever a person is to be added or deleted from the listing. If a party elects to give the Custodian directions using Electronic Means and the Custodian in its discretion elects to act upon such directions, the Custodian’s understanding of such directions shall be deemed controlling. The parties understand and agree that the Custodian cannot determine the identity of the actual sender of such directions and that the Custodian shall conclusively presume that directions that purport to have been sent by an Authorized Officer listed on the incumbency certificate provided by a party to the Custodian have been sent by such Authorized Officer. Each party shall be responsible for ensuring that only Authorized Officers transmit such directions to the Custodian and that all Authorized Officers treat applicable user and authorization codes, passwords and/or authentication keys issued by the Custodian as confidential and with extreme care. The Custodian shall not be liable for any losses, costs or expenses arising directly or indirectly from the Custodian’s reliance upon and compliance with such directions notwithstanding that such directions conflict or are inconsistent with a subsequent written direction. Each party agrees: (i) to assume all risks arising out of the use of Electronic Means to submit directions to the Custodian, including without limitation the risk of the Custodian acting on unauthorized directions, and the risk of interception and misuse by third parties; (ii) that it is fully informed of the protections and risks associated with the various methods of transmitting directions to the Custodian and that there may be more secure methods of transmitting directions; (iii) that the security procedures (if any) to be followed in connection with its transmission of directions provide to it a commercially reasonable degree of protection in light of its particular needs and circumstances; and (iv) to notify the Custodian immediately upon learning of any compromise or unauthorized use of the security procedures.
As used herein, “Electronic Means” shall mean e-mail transmission or other similar electronic means of communication providing evidence of transmission, S.W.I.F.T, secure electronic transmission containing applicable authorization codes, passwords and/or authentication keys, Attachment Staff Report Item 17H
12 facsimile transmission, including a telephone communication confirmed by any other method set forth in this definition, or another method or system specified by a Responsible Officer of the Custodian as available for use in connection with the Custodian’s services hereunder.
Section 10. Miscellaneous.
(a) Amendments. The provisions of this Agreement may be waived, altered, amended or supplemented, in whole or in part, only by a writing signed by all of the Parties hereto. (b) Assignments. Neither this Agreement nor any right or interest hereunder may be assigned in whole or in part by any Party, except as provided in Section 6, without the prior written consent of the other Parties.
(c) Governing Law. This Agreement and the rights and duties of the Parties hereunder shall be governed by and construed, enforced, and performed in accordance with the laws of the State of New York, without regard to any conflicts of law principle that would direct the application of the laws another jurisdiction; provided that the authority of each of the Issuer and Ava to enter into and perform its obligations under this Agreement shall be determined in accordance with the laws of the State of California.
(d) Jurisdiction. Each Party hereto irrevocably waives any objection on the grounds of venue, forum non-conveniens or any similar grounds and irrevocably consents to service of process by mail or in any other manner permitted by applicable law and consents to the exclusive jurisdiction of (A) the courts of the State of New York located in the Borough of Manhattan, (B) the federal courts of the United States of America for the Southern District of New York or (C) the federal courts of the United States of America in any other state. The Parties further hereby waive any right to a trial by jury with respect to any lawsuit or judicial proceeding arising or relating to this Agreement.
(e) Force Majeure. No Party to this Agreement shall be liable to any other Party hereto for losses due to, or if it is unable to perform its obligations under the terms of this Agreement because of, acts of God, fire, war, terrorism, epidemic, pandemic, floods, strikes, electrical outages, equipment or transmission failure, or other causes reasonably beyond its control; provided that a party affected by any such event shall exercise commercially reasonable efforts to resume performance as quickly as possible.
(f) Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. All signatures of the Parties to this Agreement may be transmitted by facsimile or by digital pdf transmission, and such facsimile or pdf will, for all purposes, be deemed to be the original signature of such Party whose signature it reproduces, and will be binding upon such Party.
The Parties agree that the electronic signature of a Party to this Agreement, including all acknowledgements, authorizations, directions, waivers and consents thereto (or any amendment or supplement thereto) shall be as valid as an original signature of such Party and shall be effective to bind such Party to this Agreement. The Parties agree that any electronically signed document (including this Agreement) shall be deemed (i) to be written” or “in writing,” (ii) to have been signed, and (iii) to constitute a record established and maintained in the ordinary course of business Attachment Staff Report Item 17H
13 and an original written record when printed from electronic files. For purposes hereof, “electronic signature” means a manually signed original signature that is then transmitted by electronic means; “transmitted by electronic means” means sent in the form of a facsimile or sent via the Internet as a pdf (portable document format) or other replicating image attached to an e-mail message; and, “electronically signed document” means a document transmitted by electronic means and containing, or to which there is affixed, an electronic signature. Paper copies or “printouts”, if introduced as evidence in any judicial, arbitral, mediation or administrative proceeding, will be admissible as between the Parties to the same extent and under the same conditions as other original business records created and maintained in documentary form. Neither Party shall contest the admissibility of true and accurate copies of electronically signed documents on the basis of the best evidence rule or as not satisfying the business records exception to the hearsay rule. (g) No Obligation to Invest. The Custodian shall not be under any obligation to invest or pay interest on amounts held in the Assigned PPA Payments Account from time to time. (h) Limited Duties. Issuer shall have only such duties under this Agreement as are expressly set forth herein as duties on its part to be performed, and no implied duties shall be read into this Agreement against Issuer.
(i) Allocation of Payments. Nothing in this Agreement is intended to create any liabilities between the Issuer, J. Aron and Ava. This Agreement is intended solely to allocate payments that are actually made by J. Aron and Ava in respect of amounts owed for physically settled energy under the Assigned PPAs and the Clean Energy Purchase Contracts.
Section 11. Compliance with Court Orders. In the event that any amount held by the Custodian hereunder shall be attached, garnished or levied upon by any court order, or the delivery thereof shall be stayed or enjoined by an order of a court, or any order, judgment or decree shall be made or entered by any court affecting the property deposited under this Agreement, the Custodian is hereby expressly authorized, in its sole discretion, to obey and comply with all writs, orders or decrees so entered or issued, which it is advised by legal counsel of its own choosing are binding upon it, whether with or without jurisdiction, and in the event that the Custodian obeys or complies with any such writ, order or decree it shall not be liable to any of the Parties hereto or to any other person, firm or corporation, by reason of such compliance notwithstanding that such writ, order or decree may be subsequently reversed, modified, annulled, set aside or vacated.
Section 12. Term; Winding Up. This Agreement will expire concurrently with the receipt of written notice from Ava, with a copy to the other Parties, that the Clean Energy Purchase Contracts have terminated in accordance with their terms. Following the Custodian’s payment of any Monthly PPA Payments due in respect of the final month of commodity deliveries prior to such a termination, any remaining balance in the Assigned PPA Payments Account shall be paid to Ava.
Section 13. Indemnification. J. Aron and Ava, jointly and severally, agree to protect, indemnify, defend and hold harmless, the Custodian, and affiliates, and each person who controls the Custodian (and each of their respective directors, officers, agents and employees) from and against all claims, losses, liabilities, actions, suits, costs, judgments and expenses (including court costs and reasonable attorneys’ fees) arising from its acting as Custodian hereunder (including, for Attachment Staff Report Item 17H
14 the avoidance of doubt, any costs, expenses and reasonable attorneys’ fees incurred in enforcing any payment obligation of an indemnifying Party), except for any claim, damage or loss resulting from the gross negligence or willful misconduct of the Custodian; provided, however, that any amounts due under this Section 13 shall not duplicate any other amounts due under this Agreement, including without limitation amounts due under Section 7 hereof. The obligations of this Section 13 shall survive any resignation or removal of the Custodian and the termination of this Agreement.
In addition, notwithstanding anything herein to the contrary, the Custodian and Issuer shall have all of the rights (including the indemnification rights), benefits, privileges and immunities under this Agreement as are granted to Issuer and the Trustee under the Trust Indenture, all of which are incorporated, mutatis mutandis, into this Agreement.
Section 14. Limitation of Liability. Notwithstanding anything to the contrary herein, all obligations of the Issuer under this Agreement, including without limitation all obligations to make payments of any kind whatsoever, are special, limited obligations of the Issuer, payable solely from the Trust Estate (as such term is defined in the Trust Indenture) as and to the extent provided in the Trust Indenture, including with respect to Operating Expenses (as such term is defined in the Trust Indenture). The Issuer shall not be required to advance any moneys derived from any source other than the Revenues (as such term is defined in the Trust Indenture) and other assets pledged under the Trust Indenture for any of the purposes in this Agreement mentioned.
Neither the faith and credit of the Issuer nor the taxing power of the State of California or any political subdivision thereof is pledged to payments pursuant to this Agreement. The Issuer shall not be directly, indirectly, contingently or otherwise liable for any costs, expenses, losses, damages, claims or actions, of any conceivable kind on any conceivable theory, under or by reasons of or in connection with this Agreement, except solely to the extent Revenues (as such term is defined in the Trust Indenture) are received for the payment thereof and may be applied therefor pursuant to the terms of the Trust Indenture.
Section 15. Patriot Act. J. Aron and Ava acknowledge that the Custodian is subject to federal laws, including the Customer Identification Program (“CIP”) requirements under the USA PATRIOT Act and its implementing regulations, pursuant to which the Custodian must obtain, verify and record information that allows the Custodian to identify J. Aron and Ava. Accordingly, prior to opening the Assigned PPA Payments Account described in Section 4 of this Agreement, the Custodian will ask J. Aron and Ava to provide certain information including but not limited to name, physical address, tax identification number and other information that will help the Custodian identify and verify J. Aron’s and Ava’s identities, such as organizational documents, certificate of good standing, license to do business, or other pertinent identifying information. J.
Aron and Ava agree that the Custodian cannot open any account hereunder unless and until the Custodian verifies J. Aron’s and Ava’s identities in accordance with its CIP. [Signature Pages Follow]
Attachment Staff Report Item 17H
Signature Page to PPA Custodial Agreement
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be duly executed and delivered by their respective duly authorized officers as of the date first written above.
AVA COMMUNITY ENERGY
By:___________________________________
Name: _____________________________
Title: ______________________________
Taxpayer ID Number:_________________
J. ARON & COMPANY LLC
By:___________________________________
Name: _____________________________
Title: ______________________________
Taxpayer ID Number: _________________
[CUSTODIAN]
By:___________________________________
Name: _____________________________
Title: ______________________________
CALIFORNIA COMMUNITY CHOICE
FINANCING AUTHORITY
By:___________________________________
Name: _____________________________
Title: ______________________________
Attachment Staff Report Item 17H
EXHIBIT A
ASSIGNED PPAS
[To come.]
Attachment Staff Report Item 17H
EXHIBIT B
J. ARON FIXED PAYMENTS
[To be attached.]
Attachment Staff Report Item 17H
EXHIBIT C
PREPAY CONTRACT CHAINS AND RELATED NOTICE AND PAYMENT
INFORMATION
[To come.]
Attachment Staff Report Item 17H
OHS DRAFT 5/8/25
4149-3766-6643.8
TRUST INDENTURE
between
CALIFORNIA COMMUNITY CHOICE FINANCING AUTHORITY
and
THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A.,
as Trustee
$__________
Clean Energy Project Revenue Bonds
Series 2025_ (Term Rate)
Dated as of __________ 1, 2025
Attachment Staff Report Item 17I
-i-4149-3766-6643.8
TABLE OF CONTENTS
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ARTICLE I. DEFINITIONS AND GOVERNING LAW...................................................................3 Section 1.01. Definitions ......................................................................................................3 Section 1.02. Captions........................................................................................................31 Section 1.03. Rules of Construction ...................................................................................31 Section 1.04. Governing Law .............................................................................................31 Section 1.05. Consents........................................................................................................31 ARTICLE II. AUTHORIZATION AND ISSUANCE OF BONDS......................................................31 Section 2.01. Authorization of Bonds and Refunding Bonds; Application of Proceeds....31 Section 2.02. Terms of Series 2025_ Bonds; Payment.......................................................32 Section 2.03. Conditions for Issuance of Bonds.................................................................34 Section 2.04. Initial Interest Rate Periods; Subsequent Interest Rate Periods....................36 Section 2.05. Daily Interest Rate Period.............................................................................36 Section 2.06. Weekly Interest Rate Period .........................................................................37 Section 2.07. Term Rate Period..........................................................................................39 Section 2.08. Commercial Paper Interest Rate Periods......................................................41 Section 2.09. Index Rate Periods........................................................................................43 Section 2.10. Notice of Conversion....................................................................................46 Section 2.11. Liquidity Facility ..........................................................................................47 Section 2.12. Provisions Regarding Commodity Swap......................................................48 Section 2.13. Provisions Regarding Interest Rate Swap.....................................................49 Section 2.14. CPI Index Rate Periods.................................................................................50 ARTICLE III. GENERAL TERMS AND PROVISIONS OF BONDS............................................54 Section 3.01. Medium of Payment; Form and Date; Letters and Numbers........................54 Section 3.02. Legends.........................................................................................................54 Section 3.03. Execution and Authentication.......................................................................54 Section 3.04. Exchange, Transfer and Registry..................................................................55 Section 3.05. Regulations With Respect to Exchanges and Registration of Transfers ......56 Section 3.06. Bonds Mutilated, Destroyed, Stolen or Lost.................................................56 Section 3.07. Temporary Bonds .........................................................................................57 Section 3.08. Payment of Interest on Bonds; Interest Rights Preserved.............................57 Section 3.09. Book Entry System; Appointment of Securities Depository ........................58 Section 3.10. Subsidy Payments.........................................................................................60 Section 3.11. Limitation of Liability of the Issuer..............................................................60 ARTICLE IV. REDEMPTION OF BONDS AND TENDER PROVISIONS ..........................................60 Section 4.01. Extraordinary Redemption............................................................................60 Section 4.02. Sinking Fund Redemption ............................................................................61 Section 4.03. Optional Redemption....................................................................................62 Section 4.04. Redemption Notice .......................................................................................63 Attachment Staff Report Item 17I
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Section 4.05. Bonds Redeemed in Part...............................................................................65 Section 4.06. Redemption at the Election or Direction of Issuer .......................................65 Section 4.07. Redemption Other Than at Issuer’s Election or Direction ...........................65 Section 4.08. Selection of Bonds To Be Redeemed ...........................................................65 Section 4.09. Payment of Redeemed Bonds.......................................................................66 Section 4.10. Cancellation and Destruction of Bonds........................................................66 Section 4.11. Optional Tender During Daily or Weekly Interest Rate Periods..................66 Section 4.12. Mandatory Tender for Purchase on Day Next Succeeding the Last Day of Each CP Interest Term..................................................................................67 Section 4.13. Mandatory Tender for Purchase on the Mandatory Purchase Date, Index Rate Tender Date or Fixed Rate Tender Date...............................................67 Section 4.14. Mandatory Tender for Purchase on Conversion of Interest Rate Period......68 Section 4.15. General Provisions Relating to Tenders .......................................................68 Section 4.16. Notice of Mandatory Tender for Purchase ...................................................71 Section 4.17. Irrevocable Notice Deemed to Be Tender of Bond; Undelivered Bonds Deemed Purchased on Mandatory Purchase Date ........................................72 Section 4.18. Remarketing of Bonds; Notice of Interest Rates..........................................72 Section 4.19. The Remarketing Agent................................................................................73 Section 4.20. Qualifications of Remarketing Agent; Resignation; Removal .....................73 Section 4.21. Successor Remarketing Agents ....................................................................74 Section 4.22. Tender Agent ................................................................................................74 ARTICLE V. ESTABLISHMENT OF FUNDS AND APPLICATION THEREOF .................................74 Section 5.01. Pledge Effected by This Indenture................................................................74 Section 5.02. Establishment of Funds and Accounts..........................................................75 Section 5.03. Project Fund..................................................................................................76 Section 5.04. Revenues and Revenue Fund; Other Amounts.............................................77 Section 5.05. Payments from Revenue Fund......................................................................78 Section 5.06. Operating Fund .............................................................................................79 Section 5.07. Debt Service Fund—Debt Service Account .................................................79 Section 5.08. Debt Service Fund–Redemption Account ....................................................82 Section 5.09. Commodity Swap Payment Fund .................................................................82 Section 5.10. General Fund.................................................................................................82 Section 5.11. Energy Remarketing Reserve Fund ..............................................................83 Section 5.12. Assignment Payment Fund ...........................................................................84 Section 5.13. Purchases of Bonds.......................................................................................84 Section 5.14. Administrative Fee Fund ..............................................................................84 ARTICLE VI. DEPOSITORIES OF MONEYS, SECURITY FOR DEPOSITS AND INVESTMENT OF FUNDS.........................................................................................................85 Section 6.01. Depositories..................................................................................................85 Section 6.02. Deposits ........................................................................................................85 Section 6.03. Investment of Certain Funds.........................................................................86 Section 6.04. Valuation and Sale of Investments ...............................................................87 Attachment Staff Report Item 17I
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ARTICLE VII. PARTICULAR COVENANTS OF ISSUER................................................................88 Section 7.01. Payment of Bonds.........................................................................................88 Section 7.02. Extension of Payment of Bonds ...................................................................88 Section 7.03. Offices for Servicing Bonds .........................................................................89 Section 7.04. Further Assurance .........................................................................................89 Section 7.05. Power To Issue Bonds and Pledge the Trust Estate......................................89 Section 7.06. Power To Fix and Collect Fees and Charges for the Sale of Energy............89 Section 7.07. Creation of Liens ..........................................................................................90 Section 7.08. Reserved........................................................................................................90 Section 7.09. Limitations on Operating Expenses and Other Costs. ..................................90 Section 7.10. Amendments to Energy Supply Contracts....................................................90 Section 7.11. Power Supply Contract; Energy Remarketing..............................................91 Section 7.12. Energy Purchase Agreement; Energy Supplier Documents.........................92 Section 7.13. Reserved........................................................................................................93 Section 7.14. Commodity Swap .........................................................................................93 Section 7.15. Interest Rate Swap ........................................................................................93 Section 7.16. Accounts and Reports...................................................................................93 Section 7.17. Payment of Taxes and Charges.....................................................................94 Section 7.18. Tax Covenants ..............................................................................................94 Section 7.19. General..........................................................................................................95 Section 7.20. Bankruptcy....................................................................................................96 Section 7.21. Reserved........................................................................................................96 Section 7.22. Reserved........................................................................................................96 Section 7.23. Avoidance of Failed Remarketing ................................................................96 ARTICLE VIII. EVENTS OF DEFAULT AND REMEDIES ...............................................................96 Section 8.01. Events of Default ..........................................................................................96 Section 8.02. Accounting and Examination of Records After Default...............................97 Section 8.03. Enforcement of Agreements; Application of Moneys after Default.............98 Section 8.04. Appointment of Receiver..............................................................................99 Section 8.05. Proceedings Brought by Trustee...................................................................99 Section 8.06. Restriction on Bondholder’s Action ...........................................................100 Section 8.07. Remedies Not Exclusive.............................................................................101 Section 8.08. Effect of Waiver and Other Circumstances. ...............................................101 Section 8.09. Notice of Default ........................................................................................101 ARTICLE IX. CONCERNING THE FIDUCIARIES ......................................................................101 Section 9.01. Acceptance by Trustee of Duties................................................................101 Section 9.02. Paying Agents; Appointment and Acceptance of Duties............................101 Section 9.03. Responsibilities of Fiduciaries....................................................................102 Section 9.04. Evidence on Which Fiduciaries May Act...................................................103 Section 9.05. Compensation .............................................................................................104 Section 9.06. Certain Permitted Acts................................................................................104 Section 9.07. Resignation of Trustee ................................................................................104 Section 9.08. Removal of the Trustee...............................................................................105 Attachment Staff Report Item 17I
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Section 9.09. Appointment of Successor Trustee .............................................................105 Section 9.10. Transfer of Rights and Property to Successor Trustee ...............................105 Section 9.11. Merger or Consolidation.............................................................................106 Section 9.12. Adoption of Authentication ........................................................................106 Section 9.13. Resignation or Removal of Paying Agent and Appointment of Successor. ...................................................................................................106 Section 9.14. Trustee’s Reliance.......................................................................................106 Section 9.15. Trustee’s Liability.......................................................................................107 Section 9.16. Trustee’s Agents or Attorneys....................................................................108 Section 9.17. Notice of Lien Filings.................................................................................108 ARTICLE X. SUPPLEMENTAL INDENTURES .........................................................................109 Section 10.01. Supplemental Indentures Not Requiring Consent of Bondholders.............109 Section 10.02. Supplemental Indentures Effective With Consent of Bondholders............111 Section 10.03. General Provisions......................................................................................111 ARTICLE XI. AMENDMENTS.................................................................................................112 Section 11.01. Mailing........................................................................................................112 Section 11.02. Powers of Amendment................................................................................112 Section 11.03. Consent of Bondholders..............................................................................113 Section 11.04. Notifications by Unanimous Consent.........................................................114 Section 11.05. Exclusion of Bonds.....................................................................................114 Section 11.06. Notation on Bonds......................................................................................114 ARTICLE XII. MISCELLANEOUS ............................................................................................115 Section 12.01. Defeasance ..................................................................................................115 Section 12.02. Evidence of Signatures of Bondholders and Ownership of Bonds.............118 Section 12.03. Moneys Held for Particular Bonds .............................................................119 Section 12.04. Preservation and Inspection of Documents ................................................119 Section 12.05. Parties Interested Herein.............................................................................119 Section 12.06. No Recourse on the Bonds; Non -Liability of the Issuer............................119 Section 12.07. Publication of Notice; Suspension of Publication ......................................119 Section 12.08. Publication of Notice; Suspension of Publication ......................................120 Section 12.09. Severability of Invalid Provisions...............................................................120 Section 12.10. Holidays......................................................................................................120 Section 12.11. Notices........................................................................................................120 Section 12.12. Notices to Rating Agencies.........................................................................121 Section 12.13. Counterparts................................................................................................122 Section 12.14. Waiver of Jury Trial....................................................................................122 Section 12.15. Electronic Signatures..................................................................................122 Attachment Staff Report Item 17I
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Exhibit A — Form of Bonds
Exhibit B — Form of Index Rate Determination Certificate Exhibit C — [Reserved]
Exhibit D — [Reserved]
Exhibit E — [Reserved]
Schedule I — Project Participant
Schedule II — Scheduled Debt Service Deposits
Schedule III — Terms of Commodity Swaps
Schedule IV — Amortized Value of Series 2025_ Bonds
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TRUST INDENTURE
THIS TRUST INDENTURE, dated as of __________ 1, 2025 (this “Indenture”), is by and between California Community Choice Financing Authority, a joint powers authority and public entity of the State of California (the “Issuer”) and The Bank of New York Mellon Trust Company, N.A., a national banking association organized and existing under the laws of the United States and authorized to accept and execute trusts of the character herein, as trustee (the “Trustee”).
W I T N E S S E T H:
WHEREAS, pursuant to the provisions of the Act (capitalized terms used herein and not otherwise defined shall have the meanings given such terms in Section 1.01 hereof), Central Coast Community Energy, East Bay Community Energy Authority (now Ava Community Energy), Marin Clean Energy, and Silicon Valley Clean Energy Authority entered into a joint powers agreement pursuant to which the Issuer was organized and established for the purpose, among other things, of entering into contracts for electricity and energy services and agreements for services to facilitate the sale and purchase of electricity and other related services, and for issuing bonds to assist the Members (as defined herein) in financing such contracts, agreements, purchases, sales and services; and
WHEREAS, the Issuer is authorized under the Act to acquire electricity and energy services and enter into agreements for services to facilitate the sale and purchase of electricity and other related services, and to issue revenue bonds to finance the cost of acquisition of such electricity and energy services and other agreements, and is vested with all powers necessary to accomplish the purposes for which it was created; and
WHEREAS, the Issuer has determined to finance the Cost of Acquisition of the Clean Energy Project through the issuance of Bonds pursuant to this Indenture; and WHEREAS, the execution and delivery of this Indenture has been in all respects duly and validly authorized and approved by resolution of the Board of the Issuer; and WHEREAS, the Trustee is willing to accept the trusts provided for in this Indenture.
NOW, THEREFORE, THIS INDENTURE WITNESSETH, and the Issuer and the Trustee agree as follows for the benefit of the other, for the benefit of the Holders of the Bonds issued pursuant hereto and the other parties secured hereby:
GRANTING CLAUSES
FOR AND IN CONSIDERATION OF the premises, the mutual covenants of the Issuer and the Trustee herein, the purchase of the Bonds by the Holders thereof and the obligations of the Interest Rate Swap Counterparty under the Interest Rate Swap, and in order to secure:
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(i) the payment of the principal of and premium, if any, and interest on the Bonds and the payment of the Interest Rate Swap Payments, in each case according to the tenor and effect of the Bonds and the Interest Rate Swap, and (ii) the performance and observance by the Issuer of all the covenants expressed or implied in this Indenture and in the Bonds,
the Issuer does hereby grant to the Trustee a lien on and a security interest in the Trust Estate and convey, assign and pledge unto the Trustee and its successors in trust, all right, title and interest of the Issuer in and to the Trust Estate, subject to conveyance, assignment and pledge of the Commodity Swap Payment Fund in favor of the Commodity Swap Counterparty as set forth below, and further subject to the provisions of this Indenture permitting the application thereof for the purposes and on the terms and conditions set forth in this Indenture, and all other rights hereinafter granted for the further securing of the Bonds;
FOR AND IN CONSIDERATION OF the obligations of the Commodity Swap Counterparty under the Commodity Swap and the mutual covenants of the Issuer and the Commodity Swap Counterparty thereunder, and in order to secure the payment of the Commodity Swap Payments, the Issuer does hereby convey, assign and pledge unto the Trustee and its successors in trust, all right, title and interest of the Issuer in the Commodity Swap Payment Fund and the amounts on deposit therein, subject to the provisions of this Indenture permitting the application thereof for the purposes and on the terms and conditions set forth in this Indenture, which conveyance, assignment and pledge shall have priority over the foregoing conveyance, assignment and pledge of the Commodity Swap Payment Fund and the amounts and investments on deposit therein in favor of the Bonds and the Interest Rate Swap Payments; TO HAVE AND TO HOLD all the same with all privileges and appurtenances hereby and hereafter conveyed and assigned, or agreed or intended so to be, to the Trustee and its respective successors in said trust and assigns forever;
IN TRUST NEVERTHELESS, upon the terms and trusts herein set forth for the equal and proportionate benefit, security and protection of (i) all Holders of the Bonds without privilege, priority or distinction as to the lien or otherwise of any Bond over any other Bond or the payment of interest with respect to any Bond over the payment of interest with respect to any other Bond, except as otherwise provided herein, and (ii) the Interest Rate Swap Counterparty; and PROVIDED, HOWEVER, that if the Issuer, its successors or assigns shall well and truly pay, or cause to be paid, the principal or Redemption Price, if any, on the Bonds and the interest due or to become due thereon, the Commodity Swap Payments and the Interest Rate Swap Payments, at the times and in the manner provided in the Bonds, the Commodity Swap and the Interest Rate Swap, respectively, according to the true intent and meaning thereof, and shall cause the payments to be made into the Funds as required hereunder, or shall provide, as permitted hereby, for the payment thereof as provided in Section 12.01, and shall well and truly keep and perform and observe all the covenants and conditions of this Indenture to be kept, performed and observed by it, and shall pay or cause to be paid to the Trustee all sums of money due or to become due to it in accordance with the terms and provisions hereof, then upon such final payments or provisions for Attachment Staff Report Item 17I
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such payments by the Issuer, the Bonds, the Commodity Swap and the Interest Rate Swap shall cease to be entitled to any lien, benefit or security under this Indenture, and all covenants, agreements and obligations of the Issuer to the Holders of the Bonds shall thereupon cease, terminate and be discharged and satisfied; otherwise this Indenture shall remain in full force and effect.
The terms and conditions upon which the Bonds are to be issued, authenticated, delivered, secured and accepted by all Persons who from time to time shall be or become the Holders thereof, and the trusts and conditions upon which the Revenues, moneys, securities and funds held or set aside under this Indenture, subject to the provisions of this Indenture permitting the application thereof for the purposes and on the terms and conditions set forth in this Indenture, are to be held and disposed of, which said trusts and conditions the Trustee hereby accepts, and the respective parties hereto covenant and agree, are as follows:
ARTICLE I
DEFINITIONS AND GOVERNING LAW
Section 1.01. Definitions. The following terms shall, for all purposes of this Indenture, have the following meanings:
“Account” or “Accounts” means, as the case may be, each or all of the Accounts established in Sections 4.15 and 5.02.
“Accountant’s Certificate” means a certificate signed by an independent certified public accountant or a firm of independent certified public accountants, selected by the Issuer, who may be the accountant or firm of accountants who regularly audit the books of the Issuer and must be identified upon selection in writing to the Trustee.
“ACE” means Ava Community Energy, a public agency formed under the provisions of the Joint Exercise of Powers Act of the State of California, Government Code Section 6500 et seq. “Act” means the Joint Exercise of Powers Act constituting Chapter 5 of Division 7 of Title 1 (commencing with Section 6500) of the California Government Code, as amended or supplemented from time to time.
“Administrative Fee Fund” means the Administrative Fee Fund established in Section 5.02. “Advance” means the amounts paid to the Trustee, on behalf of the Issuer, pursuant to the Custodial Agreements.
“Alternate Liquidity Facility” means a Liquidity Facility for a Series of Bonds delivered to the Trustee in substitution for a Liquidity Facility then in effect with respect to such Bonds.
Attachment Staff Report Item 17I
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“Amortized Value” means, with respect to any Bond to be redeemed when a Term Rate Period is in effect with respect to such Bond, the principal amount of such Bond multiplied by the price of such Bond expressed as a percentage, calculated by a major market maker in municipal securities, as the quotation agent, selected by the Issuer, based on the industry standard method of calculating bond prices (as such industry standard prevailed on the date such Bond began to bear interest at its current Term Rate), with a delivery date equal to the date of redemption of such Bond, a maturity date equal to the earlier of (a) the stated maturity date of such Bond or (b) the Term Rate Tender Date of such Bond and a yield equal to such Bond’s original reoffering yield on the date such Bond began to bear interest at its current Term Rate, which, in the case of the initial Term Rate Period for the Series 2025_ Bonds and certain dates, produces the amounts for all of the Series 2025_ Bonds set forth in Schedule IV. “Applicable Factor” means (a) with respect to the initial issuance of a Series of Bonds bearing interest at a SOFR Index Rate, the percentage or factor of the SOFR Index determined by the Underwriter and specified in the Index Rate Determination Certificate for such Series of Bonds, or (b) with respect to a Series of Bonds for which the Interest Rate Period is being converted to a SOFR Index Rate Period (including a change in such Interest Rate Period from one SOFR Index Rate Period to another SOFR Index Rate Period), the percentage or factor of the SOFR Index determined by the Remarketing Agent and specified in the applicable Index Rate Determination Certificate or Index Rate Continuation Notice, provided in each case that the Issuer delivers to the Trustee a Favorable Opinion of Bond Counsel addressing the selection of such percentage or factor. The Applicable Factor shall be determined by the Underwriter or the Remarketing Agent, as applicable, in accordance with Section 2.09(a) and included in the applicable Index Rate Determination Certificate, and once determined shall remain constant for the duration of the applicable SOFR Index Rate Period.
“Applicable Spread” means, with respect to a Series of Bonds for which the Initial Interest Rate Period is an Index Rate Period, or for any Series of Bonds for which the Interest Rate Period is converted to an Index Rate Period, the margin or spread, which may be positive or negative, determined by the Underwriter or the Remarketing Agent, as applicable, in accordance with Section 2.09(a), on or prior to the Issue Date or Conversion Date for such Bonds, as applicable, and specified in the applicable Supplemental Indenture or Index Rate Determination Certificate or Index Rate Continuation Notice, as applicable, which shall be added to the applicable Index (or the product of the Applicable Factor and the applicable Index, as the case may be) to determine the Index Rate. Once so determined, Applicable Spread shall remain constant for the duration of the applicable Index Rate Period.
“Applicable Tax-Exempt Municipal Bond Rate” means, for the Bonds of any maturity, the “Comparable AAA General Obligations” yield curve rate for the year of such maturity or Mandatory Purchase Date, as applicable, as published by Refinitiv Global Markets, Inc. at least one Business Day and not more than 15 Business Days prior to the date that notice of redemption is required to be given pursuant to Section 4.04. If no such yield curve rate is established for the applicable year, the “Comparable AAA General Obligations” yield curve rate for the two published maturities most closely corresponding to the applicable year shall be determined, and the Applicable Tax-Exempt Municipal Bond Rate will be interpolated or extrapolated from those yield curve rates on a straight line basis. This rate is made available daily by Refinitiv Global Attachment Staff Report Item 17I
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Markets, Inc. and is available to its subscribers through the internet address: www.tm3.com. In calculating the Applicable Tax-Exempt Municipal Bond Rate, should Refinitiv Global Markets, Inc. no longer publish the “Comparable AAA General Obligations” yield curve rate, then the Applicable Tax-Exempt Municipal Bond Rate shall equal the Consensus Scale yield curve rate for the applicable year. The Consensus Scale yield curve rate is made available daily by Municipal Market Analytics and is available to its subscribers through its internet address: www.mma research.com. In the further event Municipal Market Analytics no longer publishes the Consensus Scale, the Applicable Tax-Exempt Municipal Bond Rate shall be determined by a major market maker in municipal securities, as the quotation agent, based upon the rate per annum equal to the annual yield to maturity, calculated using semi-annual compounding, of those Tax-Exempt general obligation bonds rated in the highest Rating Category by Moody’s and S&P with a maturity date equal to the stated maturity date or Mandatory Purchase Date, as applicable, of such Bonds having characteristics (other than the ratings) most comparable to those of such Bonds in the judgment of the quotation agent. The quotation agent’s determination of the Applicable Tax-Exempt Municipal Bond Rate shall be final and binding on all parties in the absence of manifest error and may be conclusively relied upon in good faith by the Trustee.
“Assignment Payment” means any payment received from the Energy Supplier, or the Master Custodian on its behalf, in connection with an assignment of the Energy Management Agreement to a replacement Seller, as such term is defined in the Energy Management Agreement.
All references herein to payments made by or received from the Energy Supplier shall be deemed to include payments made by or received from the Master Custodian for and on behalf of the Energy Supplier.
“Assignment Payment Fund” means the Assignment Payment Fund established in Section 5.02.
“Attesting Party” means an individual authorized by a resolution of the Board to attest the signatures of Authorized Officers.
“Authorized Denominations” means with respect to any (a) Term Rate Period or Index Rate Period, $5,000 and any integral multiple thereof, and (b) Commercial Paper Interest Rate Period, Daily Interest Rate Period or Weekly Interest Rate Period, $100,000 and any integral multiple of $1,000 in excess of $100,000.
“Authorized Newspaper” means The Wall Street Journal or The Bond Buyer or any other newspaper or journal printed in the English language and customarily published on each Business Day devoted to financial news and selected by the Issuer, with prior written notice to and approval of the Trustee, whose decision shall be final.
“Authorized Officer” means (a) the Treasurer/Controller of the Issuer, and (b) any other person or persons designated by the Board by resolution to act on behalf of the Issuer under this Indenture. The designation of such person or persons shall be evidenced by a Written Certificate of the Issuer delivered to a Responsible Officer of the Trustee containing the specimen signature of such person or persons and signed on behalf of the Issuer by its Treasurer/Controller, which incumbency certificate shall be amended by the Issuer, with notice to a Responsible Officer of the Attachment Staff Report Item 17I
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Trustee and the Custodian, whenever a person is to be added or deleted from the listing. Such designation as an Authorized Officer shall remain in effect until a Responsible Officer of the Trustee receives actual written notice from the Issuer to the contrary, accompanied by a new certificate.
“Beneficial Owner” means, with respect to Bonds registered in the Book Entry System, any Person who acquires a beneficial ownership interest in a Bond held by the Securities Depository, and the term “Beneficial Ownership” shall be interpreted accordingly. “BLS” means the Bureau of Labor Statistics of the U.S. Department of Labor. “Board” means the Board of Directors of the Issuer, or if said Board is abolished, the board, body, commission or agency succeeding to the principal functions thereof or to whom the power and duties granted or imposed by this Indenture are given by law, and which shall be identified in a Written Notice of the Issuer delivered to the Trustee. “Bond” or “Bonds” means any of the Bonds and Refunding Bonds authorized by Section 2.01 of, and at any time Outstanding pursuant to, this Indenture. “Bond Counsel” means Orrick, Herrington & Sutcliffe LLP or any other counsel of nationally recognized standing in matters pertaining to the Tax-Exempt status of interest on obligations issued by states and their political subdivisions and instrumentalities, duly admitted to the practice of law before the highest court of any state of the United States, and selected by the Issuer.
“Bond Payment Date” means each date on which (a) interest on the Bonds is due and payable, (b) an Interest Rate Swap Payment is due, or (c) principal of the Bonds is payable at maturity or pursuant to Sinking Fund Installments.
“Bond Purchase Fund” means the fund by that name established pursuant to Section 4.15(a), including the Remarketing Proceeds Account and the Issuer Purchase Account therein.
“Bond Registrar” means the Trustee and any other bank or trust company organized under the laws of any state of the United States of America or national banking association appointed by the Issuer to perform the duties of Bond Registrar under this Indenture. “Bondholder” or “Holder of Bonds” or “Holder” or “Owner” means any Person who shall be the registered owner of any Bond or Bonds.
“Book Entry System” means the system maintained by the Securities Depository and described in Section 3.09.
“Business Day” means any day other than (a) a Saturday or Sunday, (b) a day on which commercial banks in New York, New York or the cities in which are located the designated corporate trust offices of the Trustee, the Custodian or the Calculation Agent are authorized by Attachment Staff Report Item 17I
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law or executive order to close, (c) a day on which the New York Stock Exchange, Inc. is closed, (d) a day on which the payment system of the Federal Reserve System is not operational, and (e) for purposes of determining the SIFMA Index Rate and the SOFR Index Rate, any day that SIFMA recommends that the fixed income departments of its members be closed for the purposes of trading fixed-income securities.
“Calculation Agent” means, with respect to any Series of Bonds bearing interest at an Index Rate, the Calculation Agent with respect to such Bonds appointed by the Issuer in a Written Instrument to the Trustee, pursuant to the applicable Calculation Agent Agreement and the Indenture.
“Calculation Agent Agreement” means, with respect to any Series of Bonds bearing interest at an Index Rate, such agreement as is entered into by the applicable Calculation Agent and the Issuer with respect to such Series of Bonds providing for the determination of the applicable Index Rate in accordance with Section 2.09 or Section 2.14, as originally executed or as it may from time to time be supplemented or modified pursuant to the terms thereof and this Indenture, as applicable.
“Cede” means Cede & Co., the nominee of DTC, and any successor nominee of DTC with respect to the Bonds pursuant to Section 3.09.
“Clean Energy Project” means the Issuer’s purchase of Energy pursuant to the Energy Purchase Agreement and related contractual arrangements and agreements, and the purchase of any Energy to replace Energy not delivered as required pursuant to the Energy Purchase Agreement.
“Commercial Paper Interest Rate Period” means, with respect to a Series of Bonds, each period comprised of CP Interest Terms for the Bonds of such Series, during which CP Interest Term Rates are in effect for the Bonds of such Series.
“Commodity Swap” means the ISDA Master Agreement, Schedule and Confirmation between the Issuer and the Commodity Swap Counterparty, or any replacement agreement permitted by Section 2.12(b), pursuant to which the Issuer will pay to the Commodity Swap Counterparty an index based floating price and the Commodity Swap Counterparty will pay to the Issuer a fixed price in relation to the quantities of Energy to be delivered under the Energy Purchase Agreement.
“Commodity Swap Counterparty” means __________ and its successors and assigns and the counterparty to any replacement Commodity Swap that meets the requirements of Section 2.12(b).
“Commodity Swap Mandatory Termination Event” has the meaning set forth in Section 2.12(c)(iii).
“Commodity Swap Payment Fund” means the Commodity Swap Payment Fund established in Section 5.02.
Attachment Staff Report Item 17I
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“Commodity Swap Payments” means, as of each scheduled payment date specified in a Commodity Swap, the amount, if any, payable to the Commodity Swap Counterparty by the Issuer (including any such amount paid to the Custodian pursuant to Section 3 of the Issuer Custodial Agreement).
“Commodity Swap Receipts” means, as of each scheduled payment date specified in a Commodity Swap, the amount, if any, payable to the Issuer by the Commodity Swap Counterparty. “Continuing Disclosure Undertaking” means the Continuing Disclosure Undertaking, dated the date hereof, between the Issuer and the Dissemination Agent, as the same may be amended from time to time.
“Contract Price” has the meaning assigned to such term in the Power Supply Contract. “Conversion” means (a) a conversion of a Series of Bonds from one Interest Rate Period to another Interest Rate Period, (b) with respect to a Series of Bonds bearing interest at an Index Rate, the establishment of a new Index, a new Index Rate and/or a new Index Rate Period and (c) with respect to a Series of Bonds bearing interest in a Term Rate Period, the establishment of a new Term Rate and/or a new Term Rate Period. A Conversion may occur only on a Mandatory Purchase Date.
“Conversion Date” means the effective date of a Conversion of a Series of Bonds and shall occur only on a Mandatory Purchase Date.
“Cost of Acquisition” means all costs of planning, financing, refinancing, acquiring, transmitting, storing and implementing the Clean Energy Project, including:
(a) the amount of the prepayment required to be made by the Issuer under the Energy Purchase Agreement;
(b) the amount for deposit into the Debt Service Account for capitalized interest on the Bonds, with such interest being calculated in accordance with the definition of “Debt Service;”
(c) the costs and expenses incurred in the issuance and sale of the Bonds, including, without limitation, legal, financial advisory, accounting, engineering, consulting, municipal advisory, financing, technical, fiscal agent and underwriting costs, fees and expenses, bond discount, rating agency fees, and all other costs and expenses incurred in connection with the authorization, sale and issuance of the Bonds and preparation of this Indenture;
(d) all other costs incurred in connection with and properly chargeable to, the acquisition or implementation of the Clean Energy Project; Attachment Staff Report Item 17I
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(e) the allowance for working capital requirements of the Issuer with respect to the Clean Energy Project in such amounts as shall be deemed reasonably necessary by the Issuer; and
(f) with respect to any Series of Refunding Bonds, the amounts necessary to purchase, redeem and discharge Bonds being refunded, including the payment of the Purchase Price or the Redemption Price of such Bonds, any necessary deposits to the Debt Service Account, and all other costs and expenses incurred in connection with such Series of Refunding Bonds, including the costs and expenses described in (e) and (f) above. “CP Interest Term” means, with respect to a Commercial Paper Interest Rate Period for a Series of Bonds, each period established in accordance with Section 2.08 during which a CP Interest Term Rate is in effect for the Bonds of such Series. “CP Interest Term Rate” means, with respect to any Bond of a Series of Bonds in the Commercial Paper Interest Rate Period, an interest rate established periodically for each CP Interest Term in accordance with Section 2.08.
“CP Mandatory Purchase Date” means (i) each Mandatory Purchase Date and (ii) the day next succeeding the last day of each CP Interest Term.
“CPI” means, the non-seasonally adjusted U.S. City Average All Items Consumer Price Index for All Urban Consumers (“CPI”), published monthly by the Bureau of Labor Statistics of the U.S. Department of Labor (“BLS”) and reported on Bloomberg CPURNSA or any successor service (“Bloomberg CPURNSA”). If such index is not then reported by such source but the CPI has otherwise been reported by the BLS, the Calculation Agent will determine the CPI as published by the BLS for such Month using a source it deems to be accurate and appropriate. “CPI Index Rate Formula” means (i) the total of CPI for the applicable Reference Month less CPI for the twelfth month prior to the applicable Reference Month, divided by (ii) CPI for the twelfth month prior to the applicable Reference Month, which formula would be expressed mathematically as ((CPIt — CPIt-12) / CPIt-12), where:
CPIt = CPI for the applicable Reference Month; and
CPIt-12 = CPI for the twelfth month prior to the applicable Reference Month.
All values used in the CPI Index Rate Formula will be truncated to six decimal places and rounded to the nearest fifth decimal place (one hundred thousandth of a percentage point), rounding upwards if the sixth decimal place is five or greater (e.g., 9.876555% (or .09876555) would be rounded up to 9.87656% (or .0987656) and 9.876554% (or .09876554) would be rounded down to 9.87655% (or .0987655)). All percentages resulting from any calculation of the interest rate will be truncated to four decimal places and rounded to the nearest third decimal place (one thousandth of a percentage point), rounding upwards if the fourth decimal place is five or greater (e.g., 9.8765% (or .098765) would be rounded up to 9.877% (or .09877) and 9.8764% (or .098764) would be rounded down to 9.876% (or .09876)). All dollar amounts used in or resulting from such Attachment Staff Report Item 17I
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calculation on Bonds bearing interest at the CPI Index Rate will be rounded to the nearest cent (with one-half cent being rounded upward).
If the sum of (i) the CPI Index Rate Formula and (ii) the Applicable Spread on any CPI Index Rate Reset Date yields a number equal to or less than zero, the interest rate on such CPI Index Rate Bonds shall be 0.00% (zero percent) for the applicable month. “CPI Index Rate” means the interest rate per annum determined by the Calculation Agent equal to the sum of (a) the result of the CPI Interest Rate Formula, plus (b) the Applicable Spread, as set forth in Section 2.14.
“CPI Index Rate Period” means, with respect to a Series of Bonds, each period during which a CPI Index Rate is in effect for such Bonds.
“CPI Index Rate Reset Date” means, the first Business Day of each calendar month. “CPI Interest Period” means the period from and including a CPI Index Rate Reset Date, to but excluding the next following CPI Index Rate Reset Date. “Custodial Agreements” means, collectively, the Energy Supplier Custodial Agreement and the Issuer Custodial Agreement.
“Custodian” means The Bank of New York Mellon Trust Company, N.A., as Custodian under the Custodial Agreements and its successors and assigns. “Daily Interest Rate” means, with respect to a Series of Bonds, the final daily interest rate for such Bonds determined by the Remarketing Agent by 11:00 a.m. New York City time pursuant to Section 2.05.
“Daily Interest Rate Period” means, with respect to a Series of Bonds, each period during which a Daily Interest Rate is in effect for such Bonds. “Debt Service” means with respect to any Outstanding Bonds, for any particular period of time, an amount equal to the sum of:
(a) all interest payable during such period on such Bonds, but excluding any interest that is to be paid from Bond proceeds on deposit in the Debt Service Account, plus (b) the Principal Installments payable during such period on such Bonds, calculated on the assumption that, on the day of calculation, such Bonds cease to be Outstanding by reason of, but only by reason of, payment either upon maturity or application of any Sinking Fund Installments required by this Indenture; provided that (i) the interest on any Bonds with a related Interest Rate Swap shall be calculated on the basis of the fixed interest rate payable by the Issuer under the Interest Rate Swap, and Attachment Staff Report Item 17I
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(ii) principal and interest due on the first day of a Fiscal Year shall be deemed to have been payable and paid on the last day of the immediately preceding Fiscal Year. “Debt Service Account” means the Debt Service Account in the Debt Service Fund established in Section 5.02.
“Debt Service Fund” means the Debt Service Fund established in Section 5.02. “Debt Service Fund Agreement” means any debt service fund agreement, that is a Qualified Investment, among the Trustee, the Issuer and a provider, or between the Issuer and a provider and assigned to the Trustee, relating to amounts deposited in the Debt Service Account of the Debt Service Fund. The initial Debt Service Fund Agreement shall be the Debt Service Account Investment Agreement between the Issuer and [Provider], dated __________, 2025. “Debt Service Fund Agreement Guaranty” means any unconditional guaranty, in favor of the Issuer and the Trustee, guarantying the obligations of the provider under any Debt Service Fund Agreement.
“Defaulted Interest” has the meaning given to such term in Section 3.08. “Defeasance Securities” means (a) Government Obligations and (b) to the extent that such deposits or certificates of deposit are Qualified Investments, deposits in interest‑bearing time deposits or certificates of deposit which shall not be subject to redemption or repayment prior to their maturity or due date other than at the option of the depositor or holder thereof or as to which an irrevocable notice of redemption or repayment, or irrevocable instructions have been given to call for redemption or repayment, of such time deposits or certificates of deposit on a specified redemption or repayment date has been given and such time deposits or certificates of deposit are not otherwise subject to redemption or repayment prior to such specified date other than at the option of the depositor or holder thereof, and which are fully secured by Government Obligations to the extent not insured by the Federal Deposit Insurance Corporation. “Depository” means any bank, trust company, national banking association, savings and loan association, savings bank or other banking association selected by the Issuer as a depository of moneys and securities held under the provisions of this Indenture, and may include the Trustee. “Dissemination Agent” means that certain dissemination agent appointed by the Issuer, pursuant to the Continuing Disclosure Undertaking, and any successor Dissemination Agent appointed by the Issuer in accordance with the Continuing Disclosure Undertaking. “DTC” means The Depository Trust Company, New York, New York, and its successors and assigns.
“Early Termination Payment Date” has the meaning given to such term in Section 17.4(d) of the Energy Purchase Agreement.
Attachment Staff Report Item 17I
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“Electronic Means” means the following communication methods: e‑mail, facsimile transmission, secure electronic transmission containing applicable authorization codes, passwords and/or authentication keys issued by the Trustee, or another method or system specified by a Responsible Officer of the Trustee as available for use in connection with its services hereunder. “Eligible Bonds” means any Bonds other than Bonds which a Responsible Officer of the Trustee actually knows to be owned by, for the account of, or on behalf of the Issuer or a Project Participant.
“EMMA” means the Electronic Municipal Market Access system, the website currently maintained by the Municipal Securities Rulemaking Board and any successor municipal securities disclosure website approved by the Securities and Exchange Commission. “Energy” has the meaning given to such term in the Power Supply Contract. “Energy Management Agreement” means the Energy Management Agreement, dated as of __________, 2025, between the Energy Supplier and Morgan Stanley Capital Group Inc. “Energy Purchase Agreement” means the Prepaid Energy Sales Agreement, dated as of __________, 2025, between the Issuer and the Energy Supplier. “Energy Remarketing Reserve Fund” means the Energy Remarketing Reserve Fund in established in Section 5.02.
“Energy Supplier” means Energy Prepay ___, LLC, a Delaware limited liability company. “Energy Supplier Custodial Agreement” means the Custodial Agreement dated as of the Initial Issue Date among the Commodity Swap Counterparty, the Energy Supplier, the Trustee and the Custodian.
“Energy Supplier Documents” means (i) the Energy Purchase Agreement, (ii) the Energy Management Agreement, (iii) the Funding Agreement, (iv) the Master Custodial Agreement, (v) the Energy Supplier LLCA, and (vi) the Seller Swap (as defined in the Energy Purchase Agreement).
“Energy Supplier LLCA” means the Amended and Restated Limited Liability Company Agreement of the Energy Supplier, dated as of [November 5, 2024]. “Event of Default” has the meaning given to such term in Section 8.01. “Extraordinary Expenses” means extraordinary and nonrecurring expenses. Termination payments under the Commodity Swap shall not be considered an Extraordinary Expense. “Failed Remarketing” means, (a) with respect to the Bonds on any Mandatory Purchase Date, a failure to either (i) pay the Purchase Price of the Bonds required to be purchased on such date or (ii) redeem such Bonds in whole on such date (including from any funds required from an Attachment Staff Report Item 17I
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Assignment Payment to the Assignment Payment Fund) or (b) with respect to the Bonds (i) if, on the last day of the current Reset Period prior to a Mandatory Purchase Date, the Issuer has not entered into a bond purchase agreement, firm remarketing agreement or similar agreement with respect to the remarketing or refunding of such existing Bonds, or (ii) if the conditions of (b)(i) above are satisfied, but the Purchase Price of the Bonds required to be purchased on the Mandatory Purchase Date is not delivered to the Trustee by noon New York City time on the fifth Business Day preceding such Mandatory Purchase Date.
“Favorable Opinion of Bond Counsel” means an Opinion of Bond Counsel to the effect that an action proposed to be taken is not prohibited by this Indenture and will not, in and of itself, cause interest on the applicable Bonds to be included in gross income for purposes of federal income taxation.
“Fiduciary” or “Fiduciaries” means the Trustee, the Paying Agents, the Bond Registrar, the Calculation Agents, the Custodian, the tender agent or any or all of them, as may be appropriate.
“Final Fixed Rate Conversion Date” means, with respect to a Series of Bonds, the date on which such Bonds begin to bear interest for a Term Rate Period which extends to the Final Maturity Date for such Series of Bonds.
“Final Maturity Date” means (a) with respect to the Series 2025_ Bonds, _________ 1, 205_ and (b) with respect to any other Series of Bonds, the final Maturity Date set forth in the related Supplemental Indenture.
“Fiscal Year” means (a) the twelve-month period beginning on January 1 of each year and ending on and including the next December 31, or (b) such other twelve-month period established by the Issuer from time to time, upon Written Notice to the Trustee, as its fiscal year. “Fitch” means Fitch Ratings, Inc., its successors and assigns, and, if such corporation shall no longer perform the functions of a securities rating agency, “Fitch” shall be deemed to refer to any other nationally recognized securities rating agency designated by the Issuer in a Written Notice delivered to the Trustee.
“Fund” or “Funds” means, as the case may be, each or all of the Funds established in Section 5.02 and Section 4.15.
“Funding Agreement” has the meaning given to such term in the Energy Purchase Agreement.
“Funding Recipient” has the meaning given to such term in the Energy Purchase Agreement.
“General Reserve Fund” means the General Reserve Fund established in Section 5.02.
Attachment Staff Report Item 17I
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“Government Obligations” means:
(a) Direct obligations of (including obligations issued or held in book entry form on the books of) the Department of the Treasury of the United States of America, obligations unconditionally guaranteed as to principal and interest by the United States of America, and evidences of ownership interests in such direct or unconditionally guaranteed obligations; or
(b) Any bonds or other obligations of any state of the United States of America or of any agency, instrumentality or local governmental unit of any such state which: (i) are not callable at the option of the obligor prior to maturity or as to which irrevocable notice has been given by the obligor to call such bonds or obligations on the date specified in the notice; (ii) are rated in the two highest Rating Categories of S&P and Moody’s; and (iii) are fully secured as to principal and interest and redemption premium, if any, by a fund consisting only of cash or obligations described in clause (a) above, which fund may be applied only to the payment of interest when due, principal of and redemption premium, if any, on such bonds or other obligations on the maturity date or dates thereof or the specified redemption date or dates pursuant to such irrevocable notice, as appropriate; or (c) Any other bonds, notes or obligations of the United States of America or any agency or instrumentality thereof which, if deposited with the Trustee for the purpose described in Section 12.01(c), will result in a rating on the Bonds which are deemed to have been paid pursuant to Section 12.01(c) that is in the same Rating Category of the obligations listed in subsection (a) above.
The determination as to whether any bond, note or other obligation constitutes a Government Obligation shall be made solely at the time of initial investment or purchase; provided that, the Trustee shall have no responsibility for monitoring any ratings or determining whether any bond, note or other obligation is or continues to be a Government Obligation. “Increased Interest Rate” means (a) during the Initial Interest Rate Period, 8% per annum, and (b) during any subsequent Interest Rate Period, the rate (if any) set forth in a Supplemental Indenture or Written Direction of the Issuer with respect to such Interest Rate Period; provided that the Increased Interest Rate shall be payable for the Increased Interest Rate Period only to the extent Issuer receives Ledger Event Payments.
“Increased Interest Rate Period” means the period from and including the date on which a Ledger Event occurs to but not including the earliest of: (a) the date on which an Early Termination Payment Date occurs and (b) the Initial Mandatory Purchase Date or any prior redemption date, and (c) the Interest Payment Date immediately succeeding the last date on which the Energy Supplier paid a Ledger Event Payment.
“Indenture” means this Trust Indenture as from time to time amended or supplemented by Supplemental Indentures in accordance with the terms hereof. “Index” means the SIFMA Index, the SOFR Index or CPI, as applicable.
Attachment Staff Report Item 17I
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“Index Rate” means a SIFMA Index Rate, SOFR Index Rate or a CPI Index Rate, as applicable.
“Index Rate Continuation Notice” means a Written Notice delivered by the Issuer in the form of Exhibit B attached hereto.
“Index Rate Determination Certificate” means a Written Certificate delivered by the Issuer in the form of Exhibit B hereto pursuant to Section 2.09(b)(i) or Section 2.14(b)(i). “Index Rate Period” means, with respect to a Series of Bonds, an Interest Rate Period during which the Bonds of such Series bear interest at an Index Rate. “Index Rate Reset Date” means, with respect to any Series of Bonds bearing interest at an Index Rate, each date on which the applicable Index Rate is determined by the Calculation Agent based on the change in the applicable Index as of such date, which shall be the date or dates so specified in the applicable Index Rate Determination Certificate or Index Rate Continuation Notice with respect to such Index Rate Period (including, by way of example and not limitation, Thursday of each week, the first Business Day of each calendar month or the first Business Day of a calendar quarter).
“Index Rate Tender Date” means, with respect to any Index Rate Period for a Series of Bonds, the date so specified in the applicable Index Rate Determination Certificate or Index Rate Continuation Notice with respect to such Index Rate, which date shall be the next-occurring Mandatory Purchase Date, which shall be a date not later than the Final Maturity Date. The Index Rate Tender Date shall always be a Business Day, unless such date is the Final Maturity Date. If a date (other than the Final Maturity Date) that is not a Business Day is specified as an Index Rate Tender Date, then the Index Rate Tender Date shall be the Business Day immediately following such specified date.
“Initial Interest Rate Period” means, with respect to the Series 2025_ Bonds, the period from the Initial Issue Date to and including __________, 203_; provided that in the event that all of the Series 2025_ Bonds are redeemed (or purchased in lieu of redemption) pursuant to Section 4.03, the Initial Interest Rate Period shall end on and as of the day of such redemption or purchase.
“Initial Issue Date” means the date of initial issuance and delivery of the Series 2025_ Bonds.
“Initial Mandatory Purchase Date” means __________ 1, 203_, which is the day following the last day of the Initial Interest Rate Period for the Series 2025_ Bonds. “Interest Accrual Date” means, with respect to any Bond (a) during any Daily Interest Rate Period or Weekly Interest Rate Period for such Bond, the first day thereof and, thereafter, each Interest Payment Date in respect thereof other than the last such Interest Payment Date during that Daily Interest Rate Period or Weekly Interest Rate Period, as applicable, (b) during any Index Rate Period for such Bond, the first day thereof and, thereafter each Interest Payment Date in respect Attachment Staff Report Item 17I
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thereof other than the last such Interest Payment Date during that Index Rate Period, except as otherwise provided in the Supplemental Indenture for such Bond, (c) during any Term Rate Period for such Bond, the first day thereof and, thereafter, each Interest Payment Date in respect thereof other than the last such Interest Payment Date during that Term Rate Period, and (d) for each CP Interest Term for such Bond within a Commercial Paper Interest Rate Period, the first day thereof. “Interest Payment Date” means, with respect to any Bond (a) during any Daily Interest Rate Period or Weekly Interest Rate Period for such Bond, the first Business Day of each Month, (b) during any Index Rate Period for such Bond, the first Business Day of each Month, except as otherwise provided by Supplemental Indenture for such Bond, (c) during any Term Rate Period for such Bond, each __________ 1 and __________ 1, provided that the first Interest Payment Date for any Term Rate Period shall be at least ninety (90) days from the first day of such period, (d) during any Commercial Paper Interest Rate Period for such Bond, the day next succeeding the last day of each CP Interest Term for such Bond, (d) any redemption date for such Bond, (e) any Mandatory Purchase Date for such Bond, and (f) the Maturity Date of such Bond. “Interest Rate Determination Certificate” means a certificate of the Issuer delivered to the Trustee no later than 30 days prior to the effective date of the new Interest Rate Period, setting forth the applicable Interest Rate Period and, during such Interest Rate Period, the next occurring Mandatory Purchase Date, and (i) for Bonds bearing interest at a Term Rate, the interest rate(s) for such Bonds during such Interest Rate Period and (ii) for Bonds bearing interest at an Index Rate, the Index, the Index Rate Reset Date, the Applicable Spread, the Applicable Factor and the CPI and the CPI Interest Period, if applicable, for such Bonds during such Interest Rate Period. “Interest Rate Period” means a Daily Interest Rate Period, a Weekly Interest Rate Period, a Commercial Paper Interest Rate Period, a Term Rate Period or an Index Rate Period.
Notwithstanding anything contained herein to the contrary, all Bonds of a Series shall at all times bear interest in the same Interest Rate Period. All Interest Rate Periods for all Series of Bonds shall terminate on the first to occur of the day prior to (a) the next occurring Mandatory Purchase Date or (b) the Final Maturity Date.
“Interest Rate Swap” means (a) the ISDA Master Agreement, the Schedule thereto and each Confirmation thereunder between the Issuer and the Interest Rate Swap Counterparty, pursuant to which the Issuer agrees to make payments to the Interest Rate Swap Counterparty at a fixed rate of interest and the Interest Rate Swap Counterparty agrees to make payments to the Issuer at a floating rate equal to the rate of interest borne by a related Series of Variable Rate Bonds, in each case with a notional amount equal to the Outstanding principal amount of such Series of Bonds, and (b) any replacement interest rate swap agreement permitted by Section 2.13(b), in each case as originally executed or as it may from time to time be supplemented, modified or amended pursuant to the terms thereof and this Indenture, as applicable; provided that, as long as no Interest Rate Swap has been entered into by the Issuer, all references herein to the Interest Rate Swap, Interest Rate Swap Counterparty, Interest Rate Swap Receipts and Interest Rate Swap Payments (including, without limitation, Section 7.15) shall be disregarded.
Attachment Staff Report Item 17I
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“Interest Rate Swap Counterparty” means the counterparty to the Interest Rate Swap or replacement Interest Rate Swap, and any successor and assign thereof, that meets the requirements of Section 2.13(b).
“Interest Rate Swap Payments” means, as of each scheduled payment date specified in the Interest Rate Swap, the amount, if any, payable to the Interest Rate Swap Counterparty by the Issuer.
“Interest Rate Swap Receipts” means, as of each scheduled payment date specified in the Interest Rate Swap, the amount, if any, payable to the Issuer by the Interest Rate Swap Counterparty.
“Internal Revenue Code” means the Internal Revenue Code of 1986, as amended.
References herein to sections of the Internal Revenue Code include the applicable U.S. Treasury Regulations promulgated thereunder.
“Issue Date” means (a) with respect to the Series 2025_ Bonds, the Initial Issue Date, and (b) with respect to any other Series of Bonds, the date of initial issuance and delivery of such Series.
“Issuer” means California Community Choice Financing Authority, a joint powers authority organized pursuant to the laws of the State of California, including without limitation, the Act.
“Issuer Custodial Agreement” means the Custodial Agreement dated as of the Initial Issue Date among the Commodity Swap Counterparty, the Issuer, the Trustee and the Custodian. “Issuer Purchase Account” means the Account by that name in the Bond Purchase Fund. “Ledger Event” has the meaning given to such term in the Energy Purchase Agreement. “Ledger Event Payment” means a payment made from the Energy Supplier, as required by Section 17.3 of the Energy Purchase Agreement, at the Increased Interest Rate, directly into the Debt Service Account and which relates to a Ledger Event. “Liquidity Facility” means, with respect to a Series of Bonds, a standby bond purchase agreement, letter of credit or similar facility providing liquidity support for such Series of Bonds and any Alternate Liquidity Facility provided in substitution of the foregoing. “Liquidity Facility Provider” means, with respect to a Liquidity Facility for a Series of Bonds, the commercial bank or other financial institution providing the same and any other commercial bank or other financial institution issuing or providing (or having primary obligation for, or acting as agent for the financial institutions obligated under) an Alternate Liquidity Facility.
Attachment Staff Report Item 17I
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“Mandatory Purchase Date” means (i) the Initial Mandatory Purchase Date, and (ii) any subsequent date on which Bonds are required to be purchased pursuant to Section 4.13 or Section 4.14, respectively.
“Master Custodial Agreement” means that certain Master Custodial Agreement, dated as of the date hereof, by and among Seller, Morgan Stanley Capital Group Inc., the Issuer and the Master Custodian, as the same may be amended, modified or supplemented from time to time. “Master Custodian” means The Bank of New York Mellon Trust Company, N.A., as custodian under the Master Custodial Agreement, and its successors as Master Custodian under the Master Custodial Agreement.
“Maturity Date” means, with respect to a Series of Bonds, each date upon which principal of such Bonds is due, as set forth in (a) Section 2.02(b) with respect to the Series 2025_ Bonds, and (b) the related Supplemental Indenture with respect to any other Series of Bonds. “Maximum Lawful Rate” means the maximum interest rate permitted by applicable law. “Maximum Rate” means the lesser of 12% per annum and the Maximum Lawful Rate. “Member” means each of means each of Central Coast Community Energy, ACE, Marin Clean Energy, Pioneer Community Energy, Silicon Valley Clean Energy, Clean Power Alliance of Southern California, City of San José, Peninsula Clean Energy Authority and San Diego Community Power.
“Minimum Daily Interest Rate” means, with respect to a Series of Bonds bearing interest at a Daily Rate, the minimum rate determined by the Remarketing Agent by 10:00 a.m. New York City time pursuant to Section 2.05.
“Minimum Rating” means the credit rating equal to at least “A1” from Moody’s. “Month” means a calendar month.
“Moody’s” means Moody’s Investors Service, Inc., its successors and assigns, and, if such corporation shall no longer perform the functions of a securities rating agency, “Moody’s” shall be deemed to refer to any other nationally recognized securities rating agency designated by the Issuer in a Written Notice delivered to the Trustee.
“MWh” means a megawatt-hour.
“Net Participant Shortfall Amount” means, for any Month in which the Project Participant fails to pay the full amount due under the Power Supply Contract in time for such amount to be credited to the Revenue Fund for application pursuant to Section 5.05(a) and the full amount due by the Project Participant is not otherwise paid by the Energy Supplier pursuant to the Receivables Purchase Provisions, an amount equal to the positive result (if any) of (i) the Project Participant’s Payment Deficiency Index Baseline for such Month minus (ii) the greater of (a) the Project Attachment Staff Report Item 17I
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Participant’s Payment Deficiency Fixed Baseline for such Month, and (b) the actual amount paid by the Project Participant for such Month, provided that if the foregoing does not result in a positive number, then no Net Participant Shortfall Amount will exist for the Project Participant for such Month.
“Operating Expenses” means, to the extent properly allocable to the Clean Energy Project, (a) the Issuer’s expenses for operation of the Clean Energy Project, including all Rebate Payments, costs, collateral deposits and other amounts (other than Commodity Swap Payments) necessary to maintain any Commodity Swap; and payments required under the Energy Purchase Agreement (which may, under certain circumstances, include imbalance charges and other miscellaneous payments) or required to be incurred under or in connection with the performance of the Issuer’s obligations under the Power Supply Contract; (b) any other current expenses or obligations required to be paid by the Issuer under the provisions of this Indenture (other than Debt Service on the Bonds and deposits to the General Reserve Fund and the Energy Remarketing Reserve Fund, or any Cost of Acquisition) or by law or required to be incurred under or in connection with the performance of the Issuer’s obligations under the Power Supply Contract; (c) fees payable by the Issuer with respect to any Remarketing Agreement; (d) the fees and expenses of the Fiduciaries; (e) reasonable accounting, legal and other professional fees and expenses, and all other reasonable administrative and operating expenses of the Issuer, which are incurred by the Issuer with respect to the Bonds, this Indenture, or the Clean Energy Project, including but not limited to those relating to the administration of the Trust Estate and compliance by the Issuer with its continuing disclosure obligations, if any, with respect to the Bonds; and (f) the costs of any insurance premiums incurred by the Issuer, including, without limitation, directors and officers liability insurance allocable to the Clean Energy Project; provided that, for purposes of Section 5.05(ii), Operating Expenses shall not include any of the foregoing administrative expenses, fees or other costs described in the foregoing clauses (a) through (f) that are paid from funds on deposit in the Administrative Fee Fund. Commodity Swap Payments, litigation judgments and settlements and indemnification payments in connection with the payment of any litigation judgment or settlement, and Extraordinary Expenses are not Operating Expenses.
“Operating Fund” means the Operating Fund established in Section 5.02. “Opinion of Bond Counsel” means a written opinion of either Bond Counsel or Special Tax Counsel (or written opinions of both of them) addressed to the Issuer and delivered to the Trustee.
“Opinion of Counsel” means an opinion signed by an attorney or firm of attorneys (who may be counsel to the Issuer) selected by the Issuer.
“Optional Purchase Date” means any date on which Bonds are to be purchased pursuant to Section 4.11.
Attachment Staff Report Item 17I
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“Outstanding” when used with reference to Bonds, means as of any date, Bonds theretofore or thereupon being authenticated and delivered under this Indenture except:
(a) Bonds cancelled (or portions thereof deemed to have been cancelled) by the Trustee at or prior to such date;
(b) Bonds (or portions of Bonds) for the payment or redemption of which moneys, equal to the principal amount or Redemption Price thereof, as the case may be, with interest to the date of maturity or redemption date, shall be held in trust under this Indenture and set aside for such payment or redemption (whether at or prior to the maturity or redemption date), provided that if such Bonds (or portions of Bonds) are to be redeemed, notice of such redemption shall have been given or provision satisfactory to the Trustee shall have been made for the giving of such notice as provided in Article IV; (c) Bonds in lieu of or in substitution for which other Bonds shall have been authenticated and delivered pursuant to Article III or Section 4.06 or Section 11.06; (d) Bonds paid or deemed to have been paid as provided in Section 12.01; and (e) Bonds (or portions thereof) deemed to have been purchased pursuant to the provisions of any Supplemental Indenture in lieu of which other Bonds have been authenticated and delivered as provided in such Supplemental Indenture. “Outstanding Sold Receivables” means, in respect of any Project Participant, Put Receivables that have been sold to the Energy Supplier pursuant to the Receivables Purchase Provisions, together with any interest accrued thereon pursuant to the Receivables Purchase Provisions, less any such Put Receivables and interest thereon that has been previously paid or repurchased from the Energy Supplier pursuant to the Receivables Purchase Provisions. “Participants” means those broker dealers, banks and other financial institutions from time to time for which DTC holds Bonds as Securities Depository. “Paying Agent” means the Trustee, its successors and assigns, and any other bank or trust company organized under the laws of any state of the United States of America or any national banking association designated as paying agent for the Bonds, and its successor or successors hereafter appointed in the manner provided in this Indenture. “Payment Deficiency Fixed Baseline” means, for any Month, the amount the Project Participant would have been required to pay for such Month under the Power Supply Contract if the Contract Price for such Month had been determined using an Index Price (as defined under the Power Supply Contract) for such Month equal to the Fixed Price (as defined under the Commodity Swap) for such Month.
“Payment Deficiency Index Baseline” means, for any Month, the amount required to be paid by the Project Participant for such Month under the Power Supply Contract.
Attachment Staff Report Item 17I
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“Person” means any and all natural persons, firms, associations, corporations and public bodies.
“Pledged Funds” means (a) the Project Fund, (b) the Revenue Fund, (c) the Debt Service Fund, (d) the General Reserve Fund, (e) the Assignment Payment Fund and (f) the Commodity Swap Payment Fund, in each case including the Accounts in each of such Funds and in the case of the Commodity Swap Payment Fund, subject to the prior pledge thereof in favor of the Commodity Swap Counterparty.
“Power Supply Contract” means (a) each of the contracts for the sale by the Issuer of Energy from or attributable to the Clean Energy Project to a Project Participant identified on Schedule I, as such contracts may be amended from time to time in accordance with the terms thereof and this Indenture, and (b) any other contract for the sale by the Issuer of Energy from or attributable to the Clean Energy Project entered into by a Person that becomes a Project Participant in accordance with the assignment and novation requirements set forth in Section 7.10(iv), as such contract may be amended from time to time in accordance with the terms thereof and this Indenture.
“Prepaid Clean Energy Project Administration Agreement” means the Prepaid Clean Energy Project Administration Agreement, dated as of [pricing date], 2025, between the Issuer and ACE, as the same may be amended from time to time.
“Prevailing Market Conditions” means, without limitation, the following factors: existing short term market rates for securities, the interest on which is excluded from gross income for federal income tax purposes or, as applicable, qualifies the issuer thereof to receive Subsidy Payments or similar benefit; indexes of such short term rates; the existing market supply and demand and the existing yield curves for short term and long term securities for obligations of credit quality comparable to the Bonds, the interest on which is excluded from gross income for federal income tax purposes; general economic conditions and financial conditions that may affect or be relevant to the Bonds; and such other facts, circumstances and conditions as the Remarketing Agent, in its sole discretion, shall determine to be relevant to the remarketing of the Bonds at the Purchase Price thereof.
“Principal Installment” means, as of any date of calculation, (a) the principal amount of Bonds due on a certain future date for which no Sinking Fund Installments have been established, or (b) the unsatisfied balance (determined as provided in Section 5.10(c)) of any Sinking Fund Installments due on a certain future date in a principal amount equal to said unsatisfied balance of such Sinking Fund Installments.
“Project Administration Fee” has the meaning assigned to such term in the Prepaid Clean Energy Project Administration Agreement.
“Project Fund” means the Project Fund established in Section 5.02. “Project Participant” means (a) the Public Agency that is an Energy purchaser under the Power Supply Contract and identified as the “Project Participant” in Schedule I and (b) any other Attachment Staff Report Item 17I
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Person that enters into the Power Supply Contract with the Issuer in accordance with the assignment and novation requirements set forth in Section 7.10(iv). “Public Agency” means a state, a governmental or political subdivision of a state and a corporate instrumentality or public corporation of a state or a subdivision of a state, including without limitation any of their departments or agencies, counties, county boards of education, county superintendents of schools, cities, public corporations, public districts, public commissions or joint powers authorities.
“Purchase Date” means an Optional Purchase Date or a Mandatory Purchase Date, as the case may be.
“Purchase Price” means (a) with respect to any Purchased Bond to be purchased on an Optional Purchase Date, an amount equal to the principal amount of such Bond Outstanding on such date plus accrued and unpaid interest thereon, unless such Optional Purchase Date is an Interest Payment Date for such Bond, in which case interest on such Bond shall not be included in the Purchase Price of such Bond but shall be paid to the Owner of such Bond in accordance with the interest payment provisions of this Indenture, (b) except as provided in clause (c) below, with respect to any Purchased Bond to be purchased on a Mandatory Purchase Date, an amount equal to the principal amount of such Bond Outstanding on such date, and (c) in the case of a purchase of a Bond bearing interest at a Term Rate pursuant to Section 4.14 with respect to which the new Interest Rate Period commences prior to the day originally established as the last day of the preceding Term Rate Period, the optional redemption price for such Bond set forth in Section 4.03(b) or in an applicable Supplemental Indenture which would have been applicable to such Bond if the preceding Term Rate Period had continued to the day originally established as its last day. Accrued interest due on any Bonds to be purchased on a Mandatory Purchase Date shall be paid from amounts on deposit in the Debt Service Account of the Debt Service Fund on such date in accordance with Section 5.07.
“Purchased Bonds” means any Bonds required to be purchased on a Purchase Date. “Put Option Notice” has the meaning set forth in Section 2.1(a) of the Receivables Purchase Provisions.
“Put Receivable” has the meaning set forth in Section 1.1 of the Receivables Purchase Provisions.
“Qualified Investments” means any of the following investments, if and to the extent that the same are rated (or whose financial obligations to the Issuer receive credit support from an entity rated) (i) at least the Minimum Rating or (ii) at such a rating that will allow the Bonds to be rated the same as the credit rating or financial strength rating assigned to the Funding Recipient (except for (c) below), and are at the time authorized for such purpose by law:
(a) Direct obligations of the United States government or any of its agencies; Attachment Staff Report Item 17I
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(b) Obligations guaranteed as to principal and interest by the United States government or any of its agencies;
(c) Certificates of deposit, including those placed by a third party pursuant to an agreement between the Trustee and the Issuer, and other evidences of deposit at state and federally chartered banks, savings and loan institutions or savings banks, including the Trustee or any of its affiliates (each having the highest short term rating by each Rating Agency then rating the Bonds) deposited and collateralized as required by law; (d) Repurchase agreements entered into with the United States or its agencies or with any bank, broker dealer or other such entity, including the Trustee and its affiliates, so long as the obligation of the obligated party is secured by a perfected pledge of obligations that meet the conditions set forth in the preamble to this definition of Qualified Investments;
(e) Guaranteed investment contracts, forward delivery agreements, interest rate exchange agreements or similar agreements providing for a specified rate of return over a specified time period; provided, however, that guaranteed investment contracts, forward delivery agreements or similar agreements shall meet the conditions set forth in the preamble to this definition of Qualified Investments;
(f) Direct general obligations of a state of the United States, or a political subdivision or instrumentality thereof, having general taxing powers; (g) Obligations of any state of the United States or a political subdivision or instrumentality thereof, secured solely by revenues received by or on behalf of the state or political subdivision or instrumentality thereof irrevocably pledged to the payment of principal of and interest on such obligations and that meet the conditions set forth in the preamble to this definition of Qualified Investments;
(h) Money market funds registered under the federal Investment Company Act of 1940, whose shares are registered under the federal Securities Act of 1933, and having a rating in the highest Rating Category by each Rating Agency, including money market funds of the Trustee and funds for which the Trustee or its affiliates (i) provide investment or other management services and (ii) serve as investment manager, administrator, shareholder, servicing agent and/or custodian or sub-custodian, notwithstanding that (A) the Trustee or its affiliate receives or collects fees from such funds for services rendered, and (B) services performed by the Trustee pursuant to this Indenture may at times duplicate those provided to such funds by the Trustee or its affiliate; or (i) Any other investments permitted by applicable law for the investment of the funds of the Issuer and that meet the conditions set forth in the preamble to this definition of Qualified Investments;
provided, that the Issuer shall monitor, or shall cause to be monitored, ratings and shall determine whether any investment made is or continues to be a Qualified Investment, and the Trustee shall Attachment Staff Report Item 17I
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have no responsibility whatsoever for monitoring ratings or determining whether any investment is or continues to be a Qualified Investment.
“Rating Agency” means Fitch, Moody’s or S&P, or any other rating agency so designated in a Supplemental Indenture that, at the time, rates the Bonds. “Rating Category” means one or more of the generic rating categories of a Rating Agency, without regard to any refinement or gradation of such rating category or categories by a numerical modifier, a plus or minus, or otherwise.
“Rating Confirmation” means evidence satisfactory to the Issuer, so designated in a Written Statement of the Issuer delivered to the Trustee, that upon the effectiveness of any proposed action, all Outstanding Bonds will continue to be assigned at least the same or equivalent ratings (including the same or equivalent numerical, plus or minus, or other modifiers within a Rating Category) by each Rating Agency then rating such Outstanding Bonds. “Rebate Payments” means those portions of moneys or securities held in any Fund or Account that are required to be paid to the United States Treasury Department under the requirements of Section 148(f) of the Internal Revenue Code. “Receivables Purchase Provisions” means (i) initially, the provisions set forth in Exhibit G to the Energy Purchase Agreement, and (ii) any successor provisions for the purchase and sale of receivables in respect of amounts due and unpaid under the Power Supply Contract and provided in a Written Notice of the Issuer to the Trustee. “Redemption Account” means the Redemption Account in the Debt Service Fund established in Section 5.02.
“Redemption Price” means, with respect to any Bond, the amount payable upon redemption thereof pursuant to such Bond or this Indenture. “Reference Month” means, with respect to each CPI Index Rate Reset Date, the third calendar month preceding such CPI Index Rate Reset Date. “Refunding Bonds” means a Series of Bonds authorized to be issued pursuant to Section 2.01(c) for the sole purposes of refunding or defeasing (in accordance with Article XII) in whole a Series of Bonds then Outstanding, and paying the Cost of Acquisition with respect to such Refunding Bonds.
“Regular Record Date” means (i) with respect to any Interest Payment Date in respect of any Daily Interest Rate Period, Weekly Interest Rate Period, Index Rate Period, Commercial Paper Interest Rate Period, the Business Day immediately preceding such Interest Payment Date, and (ii) with respect to any Interest Payment Date in respect of any Term Rate Period, the 15th day of the Month (whether or not such day is a Business Day) immediately preceding the Month in which such Interest Payment Date falls.