17.3. “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.
“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. “Prepay LLC” has the meaning specified in the preamble. “Prepay LLC Default” has the meaning specified in Section 17.2. “Price” means, with respect to each Delivery Point, the price differential, if any, identified separately from the Contract Index on Exhibit A; provided that the Price for Assigned Product shall be zero.
“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, capacity 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 Documents” has the meaning specified in Section 7.1(d). “Project Participant” 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 Prepay LLC and the Issuer. “Real-Time Market Price” has the meaning specified on Exhibit A-1 for each Delivery Point.
9 “Remarketing Fee” has the meaning specified in the Master Power Supply Agreement.
“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, the price at which the Issuer or the 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 the Issuer or the Project Participant, as applicable, in purchasing Replacement Product, and (ii) additional transmission charges, if any, reasonably incurred by the Issuer or the Project Participant, as applicable, to the applicable Delivery Point or, at the option of the Buyer or the Project Participant, as applicable, the market price at the Delivery Point for such Product not delivered as determined in a Commercially Reasonable manner. The Replacement Price for any Shortfall Quantity shall not include any administrative or other internal costs incurred by the Issuer 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 the Buyer or the Project Participant be required to utilize or change its utilization of its owned or controlled assets or market positions to minimize J. Aron’s liability. “Replacement Product” means any Energy purchased by the Issuer or the Project Participant, as applicable, 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 J. Aron, Prepay LLC 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 Swaps” has the meaning specified in the Master Power Supply Agreement. “Shortfall Quantity” has the meaning specified in Section 4.1(a). “SPE Master Custodial Agreement” means that certain SPE Master Custodial Agreement, dated as of the Bond Closing Date, by and among the J. Aron, Prepay LLC, the Issuer, 10 the Trustee and the SPE Master Custodian, as the same may be amended, modified or supplemented from time to time.
“SPE Master Custodian” means initially The Bank of New York Mellon, a New York banking corporation, as custodian under the SPE Master Custodial Agreement, as the same may be amended, modified or supplemented from time to time. “Structuring Fee” means $[____].
“Terminating Party” means any Party that has the right to terminate this Agreement pursuant to Article XVII.
“Transmission Provider” means any entity or entities transmitting or transporting the Product on behalf of J. Aron or Prepay LLC to or from the applicable Delivery Point. “Trustee” means [____] and its successors as trustee under the Bond 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.
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 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
Execution Date; Delivery Period. This Agreement shall become effective upon the Execution Date and all of J. Aron’s and Prepay LLC’s obligations under this 11 Agreement shall be deemed to have been incurred upon the Execution Date. The delivery of Product under this Agreement shall commence and continue for the Delivery Period.
Termination by J. Aron Prior to Payment of Structuring Fee. J. Aron shall have no obligation to perform under this Agreement unless and until it has received the Structuring Fee from Prepay LLC pursuant to Section 3.3. In the event J. Aron has not received the Structuring Fee prior to 24:00 LPT on the Prepayment Outside Date (as defined in the Master Power Supply Agreement), J. Aron shall have the right, until the Structuring Fee 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 J. Aron so terminates, such termination shall be effective as of Hour ending 24:00 LPT on the Prepayment Outside Date, regardless of whether Prepay LLC tenders the Structuring Fee after J. Aron’s notice of termination but prior to the Prepayment Outside Date. For the avoidance of doubt, neither Party shall have any further obligations hereunder if this Agreement terminates pursuant to this Section 2.1.
ARTICLE III.
SALE AND PURCHASE
Sale and Purchase of Product. J. Aron shall sell and deliver, or cause to be delivered, to Prepay LLC, and Prepay LLC shall purchase and receive, or cause to be received, from J. Aron, the applicable Product in the quantities, 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 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. All such sales shall be made pursuant to and in accordance with the J.
Aron Tariff.
Payments.
(a) Prepay LLC shall pay J. Aron for each MWh of Energy to be delivered by J. Aron during the Delivery Period (i) with respect to the Base Quantity, the Day-Ahead Market Price, plus the Price, plus the product of the J. Aron Product Fee multiplied by the Fixed Price, and (ii) with respect to Assigned Product other than Assigned PAYGO Product, the APC Contract Price, plus the Price, plus the product of J. Aron Product Fee multiplied by the APC Contract Price, plus any Remarketing Fee applicable to such Assigned Product under Exhibit C to the Master Power Supply Agreement. Prepay LLC shall be obligated to make such payments regardless of whether or not such Energy is delivered; provided that, to the extent J. Aron fails to deliver or Prepay LLC fails to take all or any portion of the Base Quantity, J. Aron shall pay the amounts set forth in Article IV to Prepay LLC.
(b) With respect to Assigned PAYGO Product, Prepay LLC shall pay J. Aron an amount equal to the quantity of such Assigned PAYGO Product multiplied by the applicable contract price(s) then in effect with respect to Energy under the applicable Assigned PPA(s); provided that the Parties acknowledge and agree that the portion of any CCCE Gross Payment paid pursuant to the CCCE Custodial Agreement and attributable to such Assigned PAYGO Product 12 shall be deemed to satisfy Prepay LLC’s payment obligation hereunder with respect to such Assigned PAYGO Product.
(c) With respect to any Guaranteed Energy Payment, J. Aron shall pay Prepay LLC an amount equal to any Guaranteed Energy Payment that is paid by an APC Party to J. Aron; provided that the Parties acknowledge and agree that the payment by an APC Party of such amount into the custodial account established under the CCCE Custodial Agreement shall be deemed to satisfy J. Aron’s payment obligation hereunder with respect to such Guaranteed Energy Payment.
Structuring Fee. Prior to the commencement of the Delivery Period and subject to the Issuer’s issuance of the Bonds, Prepay LLC shall pay J. Aron an amount equal to the Structuring Fee as compensation for J. Aron’s services in connection with the arrangement, establishment and execution the Clean Energy Project. Prepay LLC shall pay the Structuring Fee by wire transfer in a single lump sum of immediately available funds to an account designated by J. Aron. In no event shall Prepay LLC be entitled to any rebate or refund of the Structuring Fee.
ARTICLE IV.
FAILURE TO SCHEDULE PRODUCT
J. Aron’s Failure to Schedule or Deliver Base Quantity (Not Due to Force Majeure).
(a) Unless due to a failure described in Section 4.3, if, for any Delivery Hour during the Delivery Period, J. Aron breaches its obligation to Schedule or deliver all or any portion of the Base Quantity at the Base Delivery Point pursuant to the terms of this Agreement, then the portion of the Base Quantity that J. Aron failed to Schedule or deliver shall be a “Shortfall Quantity.”
(b) J. Aron shall pay to Prepay LLC for each Shortfall Quantity the result determined by the following formula:
P = Q x (HP + AF)
Where:
P = The amount payable by J. Aron under this Section 4.1(b); Q = Such Shortfall Quantity;
HP = The higher of (i) the Replacement Price for such Shortfall Quantity 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.
13 (c) Prepay LLC shall cause Issuer to comply with its obligations under Section
4.1(c) of the Master Power Supply Agreement to mitigate damages paid by J. Aron hereunder.
Prepay LLC’s Failure to Schedule or Take Base Quantities (Not Due to Force Majeure). If, for any Delivery Hour during the Delivery Period, Prepay LLC breaches its obligation to Schedule or receive, or cause to be Scheduled or received, all or any portion of the Base Quantity at the Base Delivery Point pursuant to the terms of this Agreement, then, unless such failure is described in Section 4.3, J. Aron shall pay to Prepay LLC the positive result determined by the following formula:
P = Q x (SP – RF – AF)
Where:
P = The amount payable by J. Aron under this Section 4.2 for such Delivery Hour and Delivery Point.
Q = The quantity of such Base Product remarketed with respect to such Delivery Point and Delivery Hour.
SP = The price at which J. Aron, acting in a Commercially Reasonable manner, resells for delivery in such Delivery Hour at such Delivery Point any Base Product not then and there received by Prepay LLC, deducting from such proceeds any (i) costs reasonably incurred by J.
Aron in reselling such Base Product and (ii) additional transmission charges, if any, reasonably incurred by J. Aron in delivering such Base Product to the third party purchasers, or at J. Aron’s option, the market price for such Delivery Hour at the Delivery Point for such Product not received as determined by J. Aron in a Commercially Reasonable manner; provided, however, in no event shall such price include any penalties, ratcheted demand or similar charges, nor shall J. Aron be required to utilize or change its utilization of its owned or controlled assets, including contractual assets, or market positions to minimize Prepay LLC’s liability. For purposes of the foregoing, J. Aron shall be considered to have resold such Base Product to the extent J. Aron shall have entered into one or more arrangements in a Commercially Reasonable manner whereby J. Aron repurchases its obligation to purchase and receive the Base Product from another party in such Delivery Hour at such Delivery Point
RF = The Remarketing Fee
AF = The Administrative Fee
Failure to Schedule or Take Due to Force Majeure. If with respect to all or any portion of Base Quantities or Assigned Prepay Quantities:
14 (a) Prepay LLC fails to Schedule or receive, or cause to be Scheduled and received, or J. Aron 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 by either Party, then J. Aron shall pay to Prepay LLC the result determined by the following formula with respect to each such Delivery Point:
P = Q x IP
Where:
P = The amount payable by J. Aron under this Section 4.3 for such failure;
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 with respect to any such Base Quantities and (ii) the applicable APC Contract Price with respect any such Assigned Prepay Quantities.
Assigned Product. Notwithstanding anything herein to the contrary, neither Prepay LLC nor J. Aron shall have any liability or other obligation to one another for any failure to Schedule, receive, or deliver Assigned Product, except as expressly set forth in Section 4.3.
Sole Remedies. Except with respect to (i) termination of this Agreement pursuant to Section 17.4, (ii) the obligations set forth in Article VI and (iii) the obligations set forth in Exhibit C of the Master Power Supply Agreement, 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
Delivery Points.
(a) 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 Prepay LLC and J. Aron (the Primary Delivery Point or, any Alternate Delivery Point, if specified, being the “Base Delivery Point”). Delivery of Energy to Prepay LLC at the Primary Delivery Point shall be facilitated through submission of Inter-SC Trades, as defined 15 in the CAISO Tariff (“ISTs”). J. Aron shall designate a scheduling coordinator in the CAISO market for this purpose as specified in Exhibit G.
(b) 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, 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 delivered 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) The Parties agree that they shall only amend Exhibit A-1 hereto if a corresponding amendment is agreed to with respect to Exhibit A-1 of the Master Power Supply Agreement, and Prepay LLC agrees for the avoidance of doubt that it shall not permit any amendment to Exhibit A-1 of the Master Power Supply Agreement unless J. Aron agrees to a corresponding amendment to Exhibit A-1 hereto.
Transmission and Scheduling. J. Aron shall Schedule or arrange for Scheduling services with CASIO in accordance with the CAISO Tariff, to deliver the Base Product to the Base Delivery Point. Prepay LLC shall Schedule or arrange for Scheduling services with CAISO, in accordance with CAISO Tariff to receive the Base Product at the Base Delivery Point. If the Issuer or the Project Participant Schedules or arranges for Scheduling services to receive the Base Product at the Base Delivery Point, then Prepay LLC’s obligations under this Section shall be relieved pro tanto. Scheduling of Assigned Energy shall be in accordance with the applicable Assignment Schedule.
Title and Risk of Loss. Title to and risk of loss of the Energy delivered under this Agreement shall pass from J. Aron to Prepay LLC 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. J. Aron warrants that it will deliver to Prepay LLC 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; provided that, notwithstanding the foregoing, (a) J. Aron shall have no obligations to indemnify, defend or hold harmless Prepay LLC 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 Prepay LLC’s failure to deliver any Product to the Project Participant or other Person through no fault of J. Aron and (b) no obligation to indemnify, defend or hold harmless shall supplant or control the provisions of this Agreement relating to Force Majeure.
16 PCC1 Product and Long-Term PCC1 Product. 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, “Seller” means “J. Aron”, Buyer means “Prepay LLC”, and any other 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 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, “Seller” means “J.
Aron”, Buyer means “Prepay LLC”, and any other 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, “Seller” means “J. Aron”, Buyer means “Prepay LLC”, and any other 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].
17 (e) J. Aron Representations and Warranties.
J. Aron represents and warrants:
(i) J. Aron has the right to sell the Assigned Product from the Applicable Project;
(ii) J. Aron has not sold the Assigned Product or any REC or other attributes of the Assigned Product to be transferred to Prepay LLC to any other person or entity;
(iii) The Energy component of the Assigned Product produced by the Applicable Project and purchased by J. Aron for resale to Prepay LLC hereunder is not being sold by J. Aron 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) J. Aron will deliver to Prepay LLC 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
(vii) The Assigned Product supplied to Prepay LLC 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) J. Aron will cooperate and work with Prepay LLC, 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.
J. Aron further represents and warrants to Prepay LLC that, to the extent that the Product sold by J. Aron is a resale of part or all of a contract between J. Aron and one or more third parties, J. Aron 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 18 Prepay LLC 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, J. Aron 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) J. Aron 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; (ii) J. Aron agrees to terminate the applicable Assignment Period in the event that any representation or warranty in this Section 5.4 proves to be in any respect;
(iii)Prepay LLC 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 by J. Aron pursuant to the foregoing clause (ii) and Prepay LLC shall have no other recourse against J. Aron 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 18.3.
Communications Protocol. With respect to the Scheduling and delivery of Base Quantities, Prepay LLC and J. Aron shall comply with the communications protocol set forth in Exhibit G to the Master Power Supply Agreement. 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, Prepay LLC and the Issuer.
Deliveries within CAISO or another Balancing Authority. The Parties acknowledge that Energy delivered by J. Aron at a Delivery Point within CAISO or another Balancing Authority (including a Balancing Authority operating within the Western EIM) will be 19 delivered in accordance with the CAISO Tariff and rules of the Balancing Authority, as applicable.
Scheduling such Energy in accordance with the requirements for the applicable Product into the applicable Balancing Authority shall constitute delivery of such Product to Prepay LLC hereunder, provided that any associated Renewable Energy Credits and other Product associated with the Energy are also delivered to Prepay LLC.
Assigned Products. Notwithstanding anything to the contrary herein, except as provided in Section 6.3 and Section 17.5 J. Aron shall have no liability under this Article V with respect to any Assigned Products. Nothing in this Section shall relieve J. Aron of any obligation assumed by it under any Assignment Agreement.
ARTICLE VI.
ASSIGNMENT OF POWER PURCHASE AGREEMENTS
Assignment Generally.
(a) Initial Assigned Rights and Obligations. The Project Participant has agreed under the Clean Energy Purchase Contract to exercise Commercially Reasonable Efforts to assign the Initial Assigned Rights and Obligations to J. Aron prior to the commencement of the Delivery Period.
(b) Assignments of Replacement Assigned Rights and Obligations.
Commencing (i) one year prior to the expiration of any EPS Energy Period or (ii) otherwise immediately upon the early termination or anticipated early termination of a EPS Energy Period or 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 a portion of its rights and obligations (the “Assigned Rights and Obligations”) under one or more power purchase agreements (each such agreement, an “Assignable Power Contract”) pursuant to which the Project Participant is purchasing EPS Compliant Energy, RECs and other products that may be assigned pursuant to Exhibit F of the Clean Energy Purchase Contract. If the Project Participant does so, and to the extent such assignment is accepted by J. Aron in accordance with Exhibit F to the Clean Energy Purchase Contract, J. Aron agrees to comply with Article VI of the Clean Energy Purchase Contract. J.
Aron shall act in good faith in considering proposed assignments that meet the criteria set forth in Exhibit F to the Clean Energy Purchase Contract.
(c) J. Aron Procurement of EPS Compliant Energy. To the extent that (i) the Project Participant, Issuer and J. Aron have not agreed upon an assignment of Replacement Assigned Rights and Obligations by the date that is 75 days prior to the end of any EPS Energy Period or (ii) a termination of an Assignment Period has occurred and the Project Participant, Issuer and J. Aron have not agreed upon the assignment of Replacement Assigned Rights and Obligations, then J. Aron shall exercise Commercially Reasonable Efforts to obtain EPS Compliant Energy for ultimate redelivery to the Project Participant, provided that:
(i) J. Aron’s procurement of any such EPS Compliant Energy for ultimate redelivery to the Project Participant shall be subject to the 20 Project Participant’s prior written consent, with such consent not to be unreasonably withheld, provided, for the avoidance of doubt, that it shall be reasonable for the Project Participant to withhold its consent based on the requirements of the EPS or other regulatory requirements; (ii) J. Aron and Prepay LLC shall act in good faith and in a Commercially Reasonable manner to negotiate appropriate amendments to this Agreement to facilitate the delivery of such EPS Compliant Energy, including with respect to the Delivery Point, consequences of failing to deliver or receive and scheduling matters;
(iii) the period of delivery for any such EPS Compliant Energy (any such period, a “J. Aron EPS Energy Period”) shall not exceed the length, as applicable, of (A) the then-current Reset Period if such EPS Compliant Energy is obtained for delivery for the remainder of a Reset Period and (B) the length of the next succeeding Reset Period if such EPS Compliant Energy is obtained for delivery commencing in a subsequent Reset Period; and
(iv) during a J. Aron EPS Energy Period, if requested by J. Aron, the Project Participant is obligated under the Clean Energy Purchase Contract to continue to exercise Commercially Reasonable Efforts and cooperate with J. Aron in good faith to assign Assigned Rights and Obligations to J. Aron under an Assignable Power Contract. (d) References to 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 and as modified, amended, supplemented or waived with the consent of J. Aron in its sole discretion but not otherwise.
(e) Procurement of EPS Compliant Energy Following a CEPC Remarketing Election. For a Reset Period immediately following a Reset Period for which the Project Participant issued a CEPC Remarketing Election, unless the Project Participant delivers a CEPC Remarketing Election for such subsequent Reset Period, the Project Participant and J. Aron will cooperate in good faith and exercise Commercially Reasonable Efforts to procure EPS Compliant Energy for ultimate redelivery to the Project Participant.
Failure to Obtain EPS Compliant Energy. If an EPS Energy Period terminates or expires and the Project Participant and J. Aron have been unable to obtain specified source Energy for delivery hereunder pursuant to the provisions of Section 6.1, then Issuer shall request remarketing services from Prepay LLC under the Master Power Supply Agreement until EPS Compliant Energy is obtained for delivery hereunder, provided that the Project Participant’s and J. Aron’s obligations set forth in Section 6.1 shall continue to apply during any such remarketing.
21 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 same methodology that would apply to determine such Base Quantity Reductions in connection with the assignment of any Replacement Assigned Rights and Obligations as provided by Article VI and Exhibit F of the Clean Energy Purchase Contract.
Effective on the first day of the Month following the termination or expiration of an EPS Energy Period for any reason, J. Aron shall revise the Base Quantity Reductions in Exhibit A-1 (i) as provided by Article VI and Exhibit F to the Clean Energy Purchase Contract if a subsequent EPS Energy Period will commence immediately following such termination or expiration or (ii) to reverse such Base Quantity Reductions associated with the EPS Energy Period that terminated or expired for all remaining Delivery Hours in the Delivery Period to the extent a replacement EPS Energy Period will not commence immediately following such termination or expiration. In connection with the commencement of any subsequent EPS Energy Period, J. Aron shall revise the Base Quantity Reductions in Exhibit A-1 as provided by Article VI and Exhibit F of the Clean Energy Purchase Contract.
APC Party Make-Whole. J. Aron shall reimburse Prepay LLC for any amounts owed by Prepay LLC to Issuer pursuant to Section 6.5 of the Master Power Supply Agreement due to J. Aron’s failure to pay when due any J. Aron Prepay Payment under the CCCE Custodial Agreement.
ARTICLE VII.
J. ARON AS AGENT; DELEGATION OF AUTHORITY
J. Aron as Agent. Subject to Section 7.5, Prepay LLC hereby appoints and directs J. Aron as its agent and J. Aron agrees to issue notices, billing statements and other communications and to take any other actions, that Prepay LLC is required or permitted to take under:
(a) the Master Power Supply Agreement (including Scheduling Product pursuant to the communications protocol provisions of Exhibit G thereto); (b) the Re-Pricing Agreement (provided that its actions thereunder shall be consistent with the related re-pricing terms agreed to by Prepay LLC and the Funding Recipient (as defined in the Master Power Supply Agreement));
(c) the Seller Swaps (including, for the avoidance of doubt, performing Prepay LLC’s role as “Calculation Agent” thereunder); and
(d) this Agreement (provided that its agency role hereunder shall be limited to ordinary course actions required in connection with the Clean Energy Project and, for the avoidance of doubt, J. Aron shall have no right to waive, modify or amend the terms hereof on Prepay LLC’s behalf or to act on Prepay LLC’s behalf with respect to any dispute hereunder) (the agreements included in clauses (a) - (c), the “Product Documents”).
In exercising this agency power and subject to the terms set forth above, J. Aron shall have the authority to take any such actions as it deems necessary under the Product Documents. 22 Delegation of Authority. Prepay LLC hereby delegates to J. Aron and J. Aron hereby agrees to assume Prepay LLC’s remarketing obligations under Exhibit C to the Master Power Supply Agreement, and J. Aron agrees to comply with the terms of Exhibit C to the Master Power Supply Agreement. Additionally, notwithstanding anything to the contrary herein, the Parties acknowledge and agree that (a) Prepay LLC’s payment obligations under Section 3.2 of this Agreement shall be reduced by the amount of any remarketing payment obligation due from Prepay LLC under [Section 12] of Exhibit C to the Master Power Supply Agreement and (b) J.
Aron will have no payment obligations to Prepay LLC with respect to any remarketing under [Section 12] of Exhibit C to the Master Power Supply Agreement.
Standard of Performance. Notwithstanding anything to the contrary herein, with respect to J. Aron’s conduct and performance of its agency role, J. Aron shall conduct itself consistent with and observe the same standard of care as it has in similar transactions in which J. Aron has acted as the seller under prepaid commodities agreements, and Prepay LLC acknowledges and agrees that J. Aron shall have no obligation to observe a standard of care greater than it has in such similar transactions or to take any actions or measures beyond those it typically takes in connection with such transactions, except as expressly provided herein or in the Product Documents. Without prejudice to any express remedies set forth herein, J. Aron shall not be liable for any action taken or omitted by it in acting as agent on behalf of Prepay LLC.
Right to Direct to Board. In acting as agent, J. Aron, in its sole discretion, may direct any action, decision or determination to be made by Prepay LLC to Prepay LLC’s board.
Performance Obligations; Limitations on Agency Authority.
Prepay LLC shall retain its performance obligations and J. Aron shall assume no performance obligations under the Product Documents other than as expressly provided herein or therein.
Notwithstanding anything in this Article to the contrary, J. Aron shall have no authority to take any action on behalf of Prepay LLC that requires approval or authorization of the Directors of Prepay LLC, or any of them, pursuant to the Amended and Restated Limited Liability Company Agreement of Prepay LLC, unless and until such action is so approved or authorized.
ARTICLE VIII.
REPRESENTATIONS AND WARRANTIES
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;
(b) it has all requisite power and authority, corporate or otherwise, to own its properties, to carry on its business as now being conducted, to enter into, deliver and perform its obligations under this Agreement and to carry out the terms and conditions hereof and the transactions contemplated hereby;
23 (c) 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 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 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; (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, order, writ, judgment, 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; (h) 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
(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.
Additional Representations and Warranties of Prepay LLC. As a material inducement to entering into this Agreement, Prepay LLC hereby represents and warrants to J. Aron as of the Execution Date that Prepay LLC is entering into this Agreement for the purpose of acquiring Product for sale to Issuer pursuant to the Master Power Sales Agreement. 24 Warranty of Title. J. Aron warrants that it will deliver to Prepay LLC (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 J.
Aron’s actions.
Disclaimer of Warranties. EXCEPT FOR THE WARRANTIES
EXPRESSLY MADE BY J. ARON IN THIS Article VIII, J. ARON HEREBY DISCLAIMS ALL
WARRANTIES, EXPRESS OR IMPLIED, INCLUDING ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
ARTICLE IX.
TAXES
As between J. Aron and Prepay LLC, J. Aron shall (i) be responsible for all ad valorem, excise, severance, production and other taxes assessed with respect to Product (other than any Assigned Product) delivered pursuant to this Agreement upstream of the applicable Delivery Point, and (ii) indemnify Prepay LLC and its Affiliates for any such taxes paid by Prepay LLC or its Affiliates. As between Prepay LLC and J. Aron, Prepay LLC shall (i) be responsible for all ad valorem, excise, severance, production and other taxes with respect to Product received pursuant to this Agreement assessed at or downstream of the applicable Delivery Point, and (ii) indemnify J. Aron and its Affiliates for any such taxes paid by J. Aron or its Affiliates.
ARTICLE X.
JURISDICTION; WAIVER OF JURY TRIAL
Consent to Jurisdiction. ALL JUDICIAL PROCEEDINGS
BROUGHT AGAINST EITHER PARTY ARISING OUT OF OR RELATING HERETO SHALL
BE BROUGHT EXCLUSIVELY IN (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. 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.
Waiver of Jury Trial. 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 25 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.
ARTICLE XI.
FORCE MAJEURE
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). 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.
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
Compliance with Laws. This Agreement shall be subject to all present and future Laws of any Government Agency having jurisdiction over this Agreement or 26 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.
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.
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 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 upon written notice to Prepay LLC, J. Aron may, without Prepay LLC’s consent, assign this Agreement to an Affiliate of J. Aron; provided that the assignee assumes the obligations of J. Aron hereunder and either (i) the GSG Guaranty continues to apply to the obligations of such assignee hereunder or (ii) the assignee provides to Prepay LLC a replacement GSG Guaranty and a Rating Confirmation (as defined in the Bond Indenture), which assignment shall constitute a novation.
ARTICLE XIV.
PAYMENTS
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, Prepay LLC shall deliver or cause to be delivered to J. Aron a statement (a “Buyer’s Statement”) listing (i) in respect of the prior Month, if Base Quantities were required to be delivered in such Month and there is a Shortfall Quantity for such Month, the Replacement 27 Price applicable to such Shortfall Quantity, and (ii) any other amounts due to Prepay LLC in connection with this Agreement with respect to the prior Month. (b) Billing Statements.
(i) No later than the [___] 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”), J. Aron shall deliver a statement (a “Billing Statement”) to Prepay LLC indicating (i) the total amount due to Prepay LLC, if any, under Article IV, Article V, Article VI and Article VII of this Agreement or pursuant to the obligations assumed by J. Aron under Exhibit C of the Master Power Supply Agreement with respect to the prior Month(s), (ii) any amounts due to J. Aron in connection with this Agreement with respect to the prior Month(s), and (iii) the gross amounts due to Prepay LLC and J. Aron under this Agreement; provided that, notwithstanding the foregoing, invoicing for all Assigned PAYGO Products shall occur under the CCCE Custodial Agreement. (ii) If a Monthly Statement (as defined in the CCCE Custodial Agreement) for an Assigned PPA has not been delivered by the [___] day of the Month following deliveries, J. Aron shall provisionally prepare a Billing Statement for this Agreement that assumes all of the Assigned Prepay Quantities were delivered under the applicable Assigned PPA for such Month. In such case, to the extent that a Monthly Statement subsequently delivered under the CCCE 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) Prepay LLC shall be deemed under the remarketing provisions of the Master Power Supply Agreement to remarket and purchase such undelivered portion of the Assigned Prepay Quantities for its own account resulting in a Ledger Entry (as defined in the Master Power Supply Agreement) and (C) J. Aron shall owe a resettlement payment to Prepay LLC in an amount equal to the product of (x) the applicable APC Contract Price multiplied by (y) the portion of the Assigned Prepay Quantities (in MWhs) not delivered in such Month. The Parties acknowledge and agree that J. Aron’s payment of the [J. Aron Resettlement Payment] as defined in and pursuant to the CCCE Custodial Agreement shall satisfy J. Aron’s resettlement payment obligation under clause (C) of the preceding sentence.
(c) 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.
Payment.
(a) If the Billing Statement indicates an amount due from Prepay LLC, then Prepay LLC shall remit such amount to J. Aron by wire transfer (pursuant to J. Aron’s instructions), in immediately available funds, on or before the 26th day of the Month following 28 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 J. Aron, then J. Aron shall remit such amount to Prepay LLC by wire transfer (pursuant to the instructions set forth in the SPE Master Custodial Agreement), in immediately available funds, on or before the 23rd 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; provided that, with respect to any Swap Deficiency Call Receivables or Elective Call Receivables (as such terms are defined in Exhibit E of the Master Power Supply Agreement) that J. Aron agrees to purchase pursuant to Exhibit C, J. Aron shall pay the Purchase Price (as defined in Exhibit C) to Prepay LLC not later than the applicable Purchase Date (as defined in Exhibit C) by wire transfer of immediately available funds. Notwithstanding the foregoing, payments due from Prepay LLC for Assigned PAYGO Product shall be due upon the second Business Day preceding the payment date specified in the PPA (as defined in the applicable Assignment Agreement); provided that, as set forth in Section 3.2(b), such payment obligation will be satisfied to the extent such amounts are paid by the Project Participant pursuant to the CCCE Custodial Agreement. (b) If Prepay LLC fails to issue a Buyer’s Statement with respect to any Month, J. Aron shall not be required to estimate any amounts due to Prepay LLC for such Month, provided that Prepay LLC may include any such amount on subsequent Buyer’s Statements issued within the next 60 days. The 60-day deadline in this subsection (b) replaces the two 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).
Payment of Disputed Amounts. If J. Aron disputes any amounts included in a Buyer’s Statement, J. Aron 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 J. Aron may have; provided, however, that J. Aron 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 Prepay LLC disputes any amounts included in the Billing Statement, Prepay LLC 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.
Late Payment. If a Party owing a 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.
Audit; Adjustments.
(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 29 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 years after the applicable Month of Product delivery.
(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, 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 J. Aron to verify any amounts due under this Agreement, Prepay LLC shall cause Issuer to comply with the provisions of Section 14.5(a) of the Master Power Supply Agreement. To the extent necessary to allow J. Aron to verify any amounts due under this Agreement, Prepay LLC shall cause the Issuer to comply with the provisions of Section 14.5(a) of the Master Power Supply Agreement.
Netting. J. Aron shall not be entitled to net any amounts due and owing by it hereunder, but Prepay LLC shall be entitled to net any outstanding amounts due and owing by J. Aron against Prepay LLC’s monthly payments.
ARTICLE XV.
RECEIVABLES PURCHASES
Subject to the terms of Exhibit C hereto (including but not limited to J. Aron’s right to direct Prepay LLC in its sole discretion on whether or not to exercise its right to purchase Swap Deficiency Call Receivables or Elective Call Receivables (as such terms are defined in Exhibit E of the Master Power Supply Agreement), J. Aron agrees to accept the transfer of any Swap Deficiency Call Receivables or Elective Call Receivables as a credit against amounts owed by Prepay LLC hereunder.
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 a third party) shall be in writing and shall either be sent by email transmission, courier, or personally 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 30 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, 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
J. Aron Default. Each of the following events shall constitute a “J.
Aron Default” under this Agreement:
(a) J. Aron fails to pay when due any amounts owed to Prepay LLC pursuant to this Agreement and such failure continues for five days after receipt by J. Aron of notice thereof, unless GSG has made such payment under the GSG Guaranty; (b) if (i) an involuntary case or other proceeding shall be commenced against J.
Aron 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 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) J. Aron 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 J. Aron 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; or
(c) the GSG Guaranty ceases to be in full force and effect or is declared to be null and void, or GSG contests the validity or enforceability of the GSG Guaranty; provided that no such event will occur as a consequence of GSG becoming subject to a receivership, insolvency, liquidation, resolution or similar proceeding.
Prepay LLC Default. Each of the following events shall constitute a “Prepay LLC Default” under this Agreement:
31 (a) Prepay LLC fails to pay when due any amounts owed to J. Aron pursuant to this Agreement and such failure continues for 30 Business Days after receipt by Prepay LLC of notice thereof; or
(b) if (i) an involuntary case or other proceeding shall be commenced against Prepay LLC 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 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) Prepay LLC 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 Prepay LLC 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.
Optional Non-Default Termination Event.The following event shall constitute an “Optional Non-Default Termination Event” under this Agreement:
Termination
Related to:
Optional Non-Default
Termination Event:
Potential
Terminating
Party:
CEPC
Remarketing
Elections
Prepay LLC provides notice to J. Aron
that the Project Participant has made a
CEPC Remarketing Election for such
Reset Period
J. Aron
32 Automatic Non-Default Termination Event. An “Automatic Non-Default Termination Event” shall occur upon the occurrence of a “Product Delivery Termination Date” as defined under the Master Power Supply Agreement.
Remedies and Termination.
(a) Default and Optional Non-Default Termination. If at any time a J. Aron Default or a Prepay LLC Default has occurred and is continuing or an Optional Non-Default Termination Event has occurred and is continuing, then the Terminating Party, by notice to the other Party specifying the relevant J. Aron Default, Prepay LLC Default or Optional Non-Default Termination Event, may designate a day not earlier than the day such notice is deemed given under Article XVI as the Early Termination Date; provided, however, that:
(i) J. Aron must deliver such notice within two Business Days of the occurrence of an Optional Non-Default Termination Event in order to designate an Early Termination, and J. Aron shall no longer have the right to designate an Early Termination Date with respect to such CEPC Remarketing Election if it fails to deliver such notice within two Business Days;
(ii) an Early Termination Date shall occur as of the time immediately preceding the institution of the relevant proceeding or the presentation of the relevant petition upon the occurrence of (A) a J. Aron Default specified in Section 17.1(b) or (B) a Prepay LLC Default specified in Section 17.2(b);
(b) Automatic Non-Default Termination. The Early Termination Date shall occur automatically upon the occurrence of any Automatic Non-Default Termination Event. (c) Effect of Early Termination. As of the Early Termination Date, (i) the Delivery Period shall end, (ii) the obligation of J. Aron to Schedule or make any further deliveries of Product to Prepay LLC under this Agreement shall terminate, (iii) the obligation of J. Aron to perform any further remarketing of Product or, subject to the proviso of this sentence, make any further purchases of Receivables shall terminate, (iv) the obligation of Prepay LLC to receive deliveries of Product from J. Aron under this Agreement will terminate and (v) J. Aron will exercise its right to terminate any Assignment Agreement then in effect; provided that, notwithstanding the foregoing, J. Aron’s obligations relating to the purchase of Receivables under Exhibit C shall continue until the end of the then-current Interest Rate Period (as defined in the Bond Indenture).
(d) Exclusive Termination Rights. Neither this Agreement nor the Delivery Period may be terminated for any reason except as specified in this Article XVII. The payment of amounts due for periods prior to termination 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.
Payments Following a Ledger Event. Following the occurrence of a Ledger Event during the initial Interest Rate Period (as defined in the Bond Indenture), J. Aron 33 shall pay to Prepay LLC, on the Business Day preceding each Interest Payment Date for a Fixed Rate Period (as each such term is defined in the Bond Indenture) thereafter until the earlier of (x) the occurrence of an Early Termination Payment Date or (y) the end of the initial Interest Rate Period, the amounts specified in Exhibit D for the Month in which a Ledger Event occurs and each Month thereafter until a Termination Payment Event occurs, with such amounts to be pro rated on the basis of a 360-day year consisting of twelve 30-day Months from the date of a Ledger Event until (but not including) the earlier of (i) the date on which a Termination Payment Event (as defined in the Master Power Supply Agreement) occurs or (ii) the [Series 2023 Mandatory Purchase Date] (as defined in the Bond Indenture); provided that, to the extent amounts have accrued under this Section 17.6 and an Early Termination Payment Date occurs before J. Aron has paid such accrued amounts on the Business Day preceding an applicable Interest Payment Date, then J. Aron shall pay such accrued amounts to Prepay LLC on the Early Termination Payment Date. The amount, if any, of such payments shall be re-determined for each subsequent Reset Period (as defined in the Master Power Supply Agreement) by J. Aron in its sole and absolute discretion.
Adequate Assurance. If reasonable grounds for insecurity of payments due from Prepay LLC under this Agreement arise, J. Aron may demand, and Prepay LLC shall provide within three Business Days if demanded, adequate assurance of performance.
Reasonable grounds include but are not limited to the termination of the Funding Agreement (as defined in the Master Power Supply Agreement) and/or such facts and circumstances which would constitute reasonable grounds for insecurity under the New York Uniform Commercial Code, Section 2-609. Adequate assurance shall mean sufficient security in the form and for a term reasonably specified by J. Aron, including but not limited to a standby irrevocable letter of credit, a prepayment, a deposit to an escrow account or a performance bond. The Parties agree that in the event Prepay LLC fails to provide such adequate assurance as demanded within three Business Days of such demand, J. Aron shall have the right to suspend further deliveries of Product to Prepay LLC under this Agreement and shall not be obligated to restore such deliveries until the first day of the Month after such demand has been satisfied.
Limitation on Damages. THE PARTIES CONFIRM THAT THE
EXPRESS REMEDIES AND MEASURES OF DAMAGES PROVIDED IN THIS AGREEMENT SATISFY THE ESSENTIAL PURPOSES HEREOF. EXCEPT WHERE
EXPRESSLY PROVIDED OTHERWISE, 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 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 34 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 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.
ARTICLE XVIII.
MISCELLANEOUS
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.
Entirety; Amendments. This Agreement, including the exhibits and attachments hereto and the J. Aron Tariff, constitutes the entire agreement between the Parties and supersedes 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 attachments hereto and J.
Aron Tariff). 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.
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 35 PRINCIPLE THAT WOULD DIRECT THE APPLICATION OF ANOTHER JURISDICTION’S LAW.
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.
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.
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.
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 18.7, and applicable provisions of this Agreement creating or relating to such obligations and liabilities, shall survive such expiration or termination.
Relationships of Parties. The Parties shall not be deemed to be in a relationship of partners or joint venturers by virtue of this Agreement. This Agreement is intended to secure and provide for the services of each Party as an independent contractor, except as provided in Article VII.
Rates and Indices. If the source of any publication used to determine a Commodity Reference Price used hereunder should cease to publish the relevant prices or should cease to be published entirely, an alternative index or other price will be used based on the determinations made under Section 18.11 of the Master Power Supply Agreement.
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.
Waiver of Defenses. J. Aron waives all rights to set-off, counterclaim, recoupment and any other defenses that might otherwise be available to J. Aron with regard to J. Aron’s obligations pursuant to the terms of this Agreement.
U.S. Resolution Stay Provisions. J. Aron and Prepay LLC have previously adhered to the ISDA 2018 U.S. Resolution Stay Protocol as published by the 36 International Swaps and Derivatives Association, Inc. as of July 31, 2018 (the “ISDA U.S.
Protocol”), and the terms of such protocol shall be incorporated into and form a part of this Agreement. For purposes of incorporating the ISDA U.S. Protocol, J. Aron and Prepay LLC shall each be deemed to be Regulated Entities, and this Agreement shall be deemed to be a Protocol Covered Agreement. Capitalized terms used but not defined in this paragraph shall have the meanings given to them in the ISDA U.S. Protocol.
Rate Changes.
(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 18.13(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). (b) In addition, and notwithstanding Section 18.13(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 18.13(b) shall not apply, provided that, consistent with Section 18.13(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 18.13(a). [Signature Page(s) Follow]
Signature Page to Electricity Purchase, Sale and Service Agreement 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.
J. ARON & COMPANY LLC
By:____________________________________
Name: ______________________________
Title: _______________________________
ARON ENERGY PREPAY 16 LLC
By: J. Aron & Company LLC,
its Manager
By:____________________________________
Name: ______________________________
Title: _______________________________
A-1
EXHIBIT A-1
BASE QUANTITIES; BASE DELIVERY POINTS; COMMODITY REFERENCE PRICES
[To be attached.]
A-2
EXHIBIT A-2
INITIAL ASSIGNED RIGHTS AND OBLIGATIONS
[To be attached.]
B-1
EXHIBIT B
NOTICES
IF TO J. ARON: J. Aron & Company LLC
200 West Street
New York, NY 10282
Email: [email protected]
Trading: Kenan Arkan
Telephone: (212) 357-2542
[email protected]
Scheduling: Email: [email protected] Direct Phone: (212) 902-8148
Fax: (212) 493–9847
Carly Norlander
ICE Chat: cnorlander1
Email: [email protected]
Direct Phone: (403) 233-9299
Fax: (212) 493-9847
Payments/Invoicing: Lindsey McInally
Telephone: (212) 855-0880
[email protected]
Patricia Hazel
Telephone: (212) 855-0880
[email protected]
General Notices: Andres E. Aguila
Telephone: (212) 855-6008
Fax: (212) 291-2124
[email protected]
IF TO PREPAY LLC: Aron Energy Prepay 16 LLC
200 West Street
New York, NY 10282
Email: [email protected]
Trading: Kenan Arkan
Telephone: (212) 357-2542
[email protected]
B-2
Scheduling: Email: [email protected] Direct Phone: (212) 902-8148
Fax: (212) 493–9847
Carly Norlander
ICE Chat: cnorlander1
Email: [email protected]
Direct Phone: (403) 233-9299
Fax: (212) 493-9847
Payments/Invoicing: Lindsey McInally
Telephone: (212) 855-0880
[email protected]
Patricia Hazel
Telephone: (212) 855-0880
[email protected]
General Notices: Andres E. Aguila
Telephone: (212) 855-6008
Fax: (212) 291-2124
[email protected]
C-1
EXHIBIT C
RECEIVABLES PURCHASE EXHIBIT
[To be attached.]
D-1
EXHIBIT D
LEDGER EVENT PAYMENT SCHEDULE
[To be attached.]
AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
ARON ENERGY PREPAY 16 LLC
This Amended and Restated Limited Liability Company Agreement (together with the schedules attached hereto, this “Agreement”) of Aron Energy Prepay 16 LLC (the “Company”) is entered into as of [_____], 2023 by J. Aron & Company LLC, a New York limited liability company (“J. Aron”), as the sole equity member of the Company (the “Member”), and Orlando C.
Figueroa, as the Independent Director (as defined in Schedule A hereto). Capitalized terms used and not otherwise defined herein have the meanings set forth on Schedule A hereto.
WHEREAS, the Member and the Manager entered into the Limited Liability Company Agreement, dated as of [____], [2022] (the “Original LLC Agreement”); The Member, by execution of this Agreement, hereby continues the Company as a limited liability company pursuant to and in accordance with the Delaware Limited Liability Company Act (6 Del. C. § 18-101 et seq.), as amended from time to time (the “Act”), and the Member and the Independent Director hereby agree to amend and restate the Original LLC Agreement as follows:
Section 1. Name.
The name of the limited liability company continued hereby is Aron Energy Prepay 16 LLC.
Section 2. Principal Business Office.
The principal business office of the Company shall be located at 200 West Street, New York, New York 10282 or such other location as may hereafter be determined by the Member.
Section 3. Registered Office.
The address of the registered office of the Company in the State of Delaware is c/o The Corporation Trust Company, Corporation Trust Center, 1209 Orange Street, Wilmington, New Castle County, Delaware 19801.
Section 4. Registered Agent.
The name and address of the registered agent of the Company for service of process on the Company in the State of Delaware is The Corporation Trust Company, Corporation Trust Center, 1209 Orange Street, Wilmington, New Castle County, Delaware 19801. 2 Section 5. Members.
(a) The mailing address of the Member is set forth on Schedule B attached hereto. The Member was admitted to the Company as a member of the Company upon its execution of a counterpart signature page to the Original LLC Agreement and hereby continues as the sole Member of the Company.
(b) Subject to Section 9(i), the Member may act by written consent. (c) Upon the occurrence of any event that causes the Member to cease to be a member of the Company (other than (i) upon an assignment by the Member of all of its limited liability company interest in the Company and the admission of the transferee pursuant to Section 18 and Section 20, or (ii) the resignation of the Member and the admission of an additional member of the Company pursuant to Section 19 and Section 21), the Person acting as an Independent Director pursuant to Section 10 shall, without any action of any Person and simultaneously with the Member ceasing to be a member of the Company, automatically be admitted to the Company as a Special Member and shall continue the Company without dissolution. No Special Member may resign from the Company or transfer its rights as Special Member unless (i) a successor Special Member has been admitted to the Company as Special Member by executing a counterpart to this Agreement, and (ii) such successor has also accepted its appointment as an Independent Director pursuant to Section 10; provided, however, the Special Member shall automatically cease to be a member of the Company upon the admission to the Company of a substitute Member. The Special Member shall be a member of the Company that has no interest in the profits, losses and capital of the Company and has no right to receive any distributions of Company assets. Pursuant to Section 18-301 of the Act, the Special Member shall not be required to make any capital contributions to the Company and shall not receive a limited liability company interest in the Company. The Special Member, in its capacity as Special Member, may not bind the Company. Except as required by any mandatory provision of the Act, the Special Member, in its capacity as Special Member, shall have no right to vote on, approve or otherwise consent to any action by, or matter relating to, the Company, including, without limitation, the merger, consolidation, division or conversion of the Company. In order to implement the admission to the Company of the Special Member, the Person acting as the Independent Director pursuant to Section 10 shall execute a counterpart to this Agreement. Prior to its admission to the Company as the Special Member, the Person acting as the Independent Director pursuant to Section 10 shall not be a member of the Company.
Section 6. Certificates.
Michelle P. Quinn is hereby designated as an “authorized person” within the meaning of the Act, and has executed, delivered and filed the Certificate of Formation of the Company with the Secretary of State of the State of Delaware. Upon the filing of the Certificate of Formation with the Secretary of State of the State of Delaware, her powers as an “authorized person” ceased, and the Member thereupon became the designated “authorized person” and shall continue as the designated “authorized person” within the meaning of the Act. The Member or the Manager shall execute, deliver and file any other certificates (and any amendments and/or restatements thereof) necessary for the Company to qualify to do business in New York and in any other jurisdiction in which the Company may wish to conduct business.
3 The existence of the Company as a separate legal entity shall continue until cancellation of the Certificate of Formation as provided in the Act.
Section 7. Purposes. Subject to the limitations set forth in Section 9(i)(iv), the purpose to be conducted or promoted by the Company is solely to engage in the following activities:
(a)
(i) (i) to enter into a Master Power Supply Agreement (the “Master Power Supply Agreement”) with California Community Choice Financing Authority (the “Municipal Issuer”), 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), in connection with its issuance of its [Series 2023 Clean Energy Project Bonds] (the “Bonds”) pursuant to that certain Trust Indenture between the Municipal Issuer and [____], as trustee (the “Bond Indenture”);
(ii) to enter into a Re-Pricing Agreement with the Municipal Issuer (the “Re-Pricing Agreement”) in connection with the execution of the Master Power Supply Agreement;
(iii) to enter into an Electricity Purchase, Sale and Service Agreement (the “Electricity Sale and Service Agreement”) with J. Aron in connection with the execution of the Master Power Supply Agreement;
(iv) to enter into one or more Subordinated Term Loan Agreements (each a “Subordinated Loan Agreement”) with the Member;
(v) to enter into an investment agreement, term loan agreement or other similar agreement with a Funding Recipient (as may be amended, supplemented, modified or otherwise replaced, the “Funding Agreement”);
(vi) to enter into (A) one or more fixed-to-floating commodity price swap agreements consistent with the terms of the Master Power Supply Agreement, pursuant to which the Company receives an index-based floating price and will pay a fixed price in relation to the quantities of commodities to be delivered under the Master Power Supply Agreement, (B) any related protocols or regulatory documentation as may be necessary or advisable with respect to such swap agreements and (C) custodial agreements relating to payments to be received and made under such agreements; (vii) to enter into an SPE Master Custodial Agreement (the “SPE Master Custodial Agreement”) with the Member, the Municipal Issuer and The Bank of New York Mellon, as custodian;
(viii) to deliver a tax certificate to the Municipal Issuer relating to its entry into the Master Power Supply Agreement;
4 (ix) to enter remarketing agreements consistent with [Section 10] of Exhibit C to the Master Power Supply Agreement;
(x) to enter into any other agreements as may be necessary or advisable in connection with the Clean Energy Project (as defined in the Bond Indenture) (together with the agreements described in clauses (i) - (x), the “Prepaid Transaction Documents”) and deliver any documents and certificates contemplated by the Prepaid Transaction Documents; and
(xi) to engage in any lawful act or activity and to exercise any powers permitted to limited liability companies organized under the laws of the State of Delaware solely as related or incidental to and necessary, convenient or advisable for the accomplishment of the above-mentioned purposes (including the entering into of referral, management, servicing and administration agreements) and to perform its obligations and exercise its rights under the Prepaid Transaction Documents; provided that the Company shall not in any case enter into any contracts, transactions or other arrangements for the acquisition or sale of electricity other than as contemplated under the Prepaid Transaction Documents. (b) To the extent of their powers set forth in this Agreement and subject to Section 9(d) and Section 9(i), the Manager on behalf of the Company, may enter into and perform the Basic Documents and all documents, agreements, certificates, or financing statements contemplated thereby or related thereto, all without any further act, vote or approval of any Member, Director or other Person notwithstanding any other provision of this Agreement, the Act or applicable law, rule or regulation. For the avoidance of doubt, no Director or any Person other than the Member and the Manager may enter into, execute or deliver any documents, agreements, certificates, or financing statements on behalf of the Company, and the Member and the Manager may only enter into, execute or deliver any documents, agreements, certificates, or financing statements as specifically authorized in this Agreement or by action of the Board.
Section 8. Powers.
Subject to Section 9(d) and Section 9(i), the Company, and the Board and the Manager of the Company on behalf of the Company, (i) shall have and exercise all powers necessary, convenient or incidental to accomplish its purposes as set forth in Section 7 and (ii) shall have and exercise all of the powers and rights conferred upon limited liability companies formed pursuant to the Act necessary, convenient or incidental to accomplish its purposes as set forth in Section 7.
Section 9. Management.
(a) Board of Directors. Subject to (d) and (i), the business and affairs of the Company shall be managed by or under the direction of a Board of one or more Directors. The number of Directors shall be three, one of which shall be an Independent Director pursuant to Section 10.
Each of the Municipal Issuer and the Member shall have the right to appoint one Director. At all times the Board shall have at least one Independent Director. Each Director elected, designated or appointed shall hold office until a successor is elected and qualified or until such Director’s earlier death, resignation, expulsion or removal. Each Director shall execute and deliver the Management 5 Agreement. Directors need not be a Member. The initial Directors designated by the Member and the Municipal Issuer, as applicable, are listed on Schedule D hereto. (b) Powers. Subject to (d) and (i), the Board shall have the power to do any and all acts necessary, convenient or incidental to or for the furtherance of the purposes described herein, including all powers, statutory or otherwise. Subject to Section 7, (d) and (i), the Board has the authority to bind the Company.
(c) Meetings of the Board of Directors. The Board may hold meetings, both regular and special, within or outside the State of Delaware. Regular meetings of the Board may be held without notice at such time and at such place as shall from time to time be determined by the Board. Special meetings of the Board may be called by any Director other than the Independent Director on not less than one day’s notice to each Director by telephone, facsimile, mail, email, telegram or any other means of communication.
(d) Quorum: Acts of the Board. At all meetings of the Board, a majority of the Directors shall constitute a quorum for the transaction of business and, except as otherwise provided in any other provision of this Agreement, the act of a majority of the Directors present at any meeting at which there is a quorum shall be the act of the Board. If a quorum is not present at any meeting of the Board, the Directors present at such meeting may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum is present. Any action required or permitted to be taken at any meeting of the Board may be taken without a meeting if all members of the Board entitled to vote on such action consent thereto in writing, and the writing or writings are filed with the minutes of proceedings of the Board. (i) Notwithstanding any other provision of this Agreement, the Director appointed by the Member shall not participate in any vote of the Board relating to the following, and the Director appointed by the Municipal Issuer shall be entitled to act by written consent with respect to the following and any such act of the Director appointed by the Municipal Issuer shall be the act of the Board:
(A) the designation by the Company of an “Early Termination Date” under the Electricity Sale and Service Agreement;
(B) the designation by the Company of a Product Delivery Termination Date under the Master Power Supply Agreement due to the occurrence of a Ledger Event; provided that, unless the Director appointed by the Municipal Issuer takes action or otherwise provides notice to the contrary within twenty-four hours of the Municipal Issuer’s receipt of notice from the Company of a Ledger Event, the Director appointed by the Municipal Issuer shall be deemed to have irrevocably voted to designate a Product Delivery Termination Date and no further action by the Board shall be required for the designation of a Product Delivery Termination Date by the Company;
6 (C) with respect to a Funding Agreement entered into with an Affiliate Funding Recipient, the election by the Company under the Funding Agreement to grant the Funding Recipient the right to prepay all outstanding amounts under the Funding Agreement following the designation of a Product Delivery Termination Date under the Master Power Supply Agreement due to the occurrence of a Ledger Event; provided that, unless the Director appointed by the Municipal Issuer takes action or otherwise provides notice to the contrary within twenty-four hours of the Municipal Issuer’s receipt of notice from the Company of the designation of a Product Delivery Termination Date due to the occurrence of a Ledger Event, the Director appointed by the Municipal Issuer shall be deemed to have irrevocably voted to have elected to grant the Funding Recipient the right to prepay such amounts and no further action by the Board shall be required for the granting of such right by the Company; (D) the enforcement of the Funding Agreement, subject to Section 9(d)(ii)(B);
(E) the removal and replacement of J. Aron as Manager hereunder and “Agent” under the Master Power Supply Agreement if the
Electricity Sale and Service Agreement between J. Aron and the Company has been terminated due to a J. Aron Default (as defined in such agreement);
(F) the appointment of a third party remarketing agent under [Section 10] of Exhibit C to the Master Power Supply Agreement, provided that (A) any such remarketing agent or its guarantor must have an outstanding long-term senior, unsecured, unenhanced debt rating equivalent to or higher than the ratings assigned to the Bonds, (B) any such agent or its guarantor must have capital stock, surplus and undivided earnings aggregating at least $100,000,000 and (C) any such agent must be able to satisfy the Member’s internal requirements as they relate to “know your customer” rules, policies and procedures, anti-money laundering rules and regulations, Dodd-Frank Act, Commodity Exchange Act, PATRIOT Act and similar rules and regulations, unless such requirements are waived by the Member;
(G) the removal and replacement of The Bank of New York Mellon, a New York banking corporation, as “SPE Custodian” under the SPE Master Custodial Agreement, provided that any replacement custodian must (A) have an outstanding long-term senior, unsecured, unenhanced debt rating equivalent to or higher than the ratings assigned to the Bonds, (B) have capital stock, surplus and undivided earnings aggregating at least $50,000,000 and (C) be able to satisfy the Member’s internal requirements as they relate to 7 “know your customer” rules, policies and procedures, anti-money laundering rules and regulations, Dodd-Frank Act, Commodity Exchange Act, PATRIOT Act and similar rules, regulations, unless such requirements are waived by the Member;
(H) if a Qualified Funding Recipient provides one or more Qualified Firm Offers during the Funding Shopping First Period for any Reset Period, then the Director appointed by the Municipal Issuer may direct the Company to execute, prior to the end of such Funding Shopping First Period, a Funding Agreement for such Reset Period with any Qualified Funding Recipient that provides a Qualified Firm Offer; provided that if the Director appointed by the Municipal Issuer does not make such election in a timely manner to achieve closing on a Bond Pricing Date promptly following receipt of such Qualified Firm Offer from a Qualified Funding Recipient, it will be deemed to have directed the Company to accept the Qualified Firm Offer from a Qualified Funding Recipient that would result in the highest Available Discount for such Reset Period;
(I) if a Qualified Funding Recipient provides one or more Qualified Firm Offers during the Funding Shopping Second Period for any Reset Period, then the Director appointed by the Municipal Issuer shall direct the Company to execute, prior to the end of such Funding Shopping Second Period, a Funding Agreement for such Reset Period with any Qualified Funding Recipient that provides a Qualified Firm Offer; provided that if the Director appointed by the Municipal Issuer does not make such election in a timely manner to achieve closing on a Bond Pricing Date promptly following receipt of such Qualified Firm Offer from a Qualified Funding Recipient, it will be deemed to have directed the Company to accept the Qualified Firm Offer from a Qualified Funding Recipient that would result in the highest Available Discount for such Reset Period; and (J) if an Affiliate Funding Recipient provides one or more Qualified Firm Offers during the Funding Exclusivity Period for any Reset Period, then the Director appointed by the Municipal Issuer shall direct the Company to execute, prior to the end of such Funding Exclusivity Period, a Funding Agreement for such Reset Period with any Affiliate Funding Recipient that provides a Qualified Firm Offer ; provided that if such Director fails to make an election above in a timely manner to achieve closing on a Bond Pricing Date, it will be deemed to have directed the Company to accept the Qualified Firm Offer from an Affiliate Funding Recipient that would result in the highest Available Discount for such Reset Period.
(ii) Notwithstanding any other provision of this Agreement, the Director appointed by the Municipal Issuer shall not participate in any vote of the Board relating to 8 the following, and the Director appointed by the Member shall be entitled to act by written consent with respect to the following and any such act of the Director appointed by the Member shall be the act of the Board:
(A) the designation by the Company of a Product Delivery Termination Date under the Master Power Supply Agreement due to a
termination of a Buyer Swap (as defined therein);
(B) with respect to a Funding Agreement entered into with a Third Party Funding Recipient, the election by the Company to designate an acceleration of the Funding Agreement following the occurrence of a Product Delivery Termination Date due to a Ledger Event under the Master Power Supply Agreement;
(C) the termination or replacement of a Seller Swap (as defined in the Master Power Supply Agreement); and
(D) without limiting the restrictions on the Company set forth in Section 7(a), the entry into any contracts, transactions or other arrangements for the acquisition or sale of electricity by the Company, including agreement by the Company on the terms thereof including but not limited to pricing.
(iii) Notwithstanding any other provision of this Agreement, the Independent Director shall only be entitled to participate in a vote of the Board relating to a Material Action.
(e) Electronic Communications. Members of the Board may participate in meetings of the Board by means of telephone conference or similar communications equipment that allows all Persons participating in the meeting to hear each other, and such participation in a meeting shall constitute presence in Person at the meeting. If all the participants are participating by telephone conference or similar communications equipment, the meeting shall be deemed to be held at the principal place of business of the Company.
(f) Compensation of Directors; Expenses. The Member shall have the authority to fix the compensation of Directors. The Directors may be paid their expenses, if any, of attendance at meetings of the Board, which may be a fixed sum for attendance at each meeting of the Board or a fixed amount as Director. No such payment shall preclude any Director from serving the Company in any other capacity and receiving compensation therefor. (g) Removal of Directors. Unless otherwise restricted by law, any Director or the entire Board of Directors may be removed or expelled, with or without cause, at any time by the Person who appointed such Director, and, subject to Section 10, any vacancy caused by any such removal or expulsion may be filled in the same manner.
(h) Directors as Agents. To the extent of their powers set forth in this Agreement and subject to Section 7, Section 9(d) and (i), the Directors are agents of the Company for the purpose of the Company’s business, and the actions of the Directors taken in accordance with such powers 9 set forth in this Agreement shall bind the Company; provided that, except as provided in this Agreement or in a resolution of the Directors, a Director may not bind the Company notwithstanding the last sentence of Section 18-402 of the Act. (i) Limitations on the Company’s Activities.
(i) This (i) is being adopted in order to comply with certain provisions required in order to qualify the Company as a “special purpose” entity. (ii) The Member shall not, so long as any Obligation is outstanding, amend, alter, change or repeal the definition of “Independent Director” or Section 5(c), Section 7, Section 8, Section 9, Section 10, Section 15, Section 17, Section 18, Section 19, Section 20, Section 21, Section 22, Section 23, Section 26, Section 28 or Schedule A of this Agreement without the unanimous written consent of the Board (including the Independent Director). Subject to this (i), the Member reserves the right to amend, alter, change or repeal any provisions contained in this Agreement in accordance with Section 28. (iii) Notwithstanding any other provision of this Agreement and any provision of law that otherwise so empowers the Company, neither the Member nor the Board nor the Manager nor any other Person shall be authorized or empowered, nor shall they permit the Company, without the prior unanimous written consent of the Member and the Board (including the Independent Director), to take any Material Action, provided, however, that the Board may not vote on, or authorize the taking of, any Material Action, unless there is at least one Independent Director then serving in such capacity. (iv) The Board and the Manager shall cause the Company to do or cause to be done all things necessary to preserve and keep in full force and effect its existence, rights (charter and statutory) and franchises; provided, however, that the Company shall not be required to preserve any such right or franchise if: (1) the Board determines that the preservation thereof is no longer desirable for the conduct of its business and that the loss thereof is not disadvantageous in any material respect to the Company and (2) the Rating Agency Condition is satisfied. The Board and the Manager also shall cause the Company to:
(A) maintain all of its accounts, financial statements and bank accounts separate from those of its Affiliates and any other Person in accordance with the SPE Master Custodial Agreement; provided, however, that the Company’s assets may be included in a consolidated financial statement of its Affiliates provided that (1) appropriate notation shall be made on such consolidated financial statements to indicate the separateness of the Company and such Affiliates and to indicate that the Company’s assets and credit are not available to satisfy the debts and other obligations of such Affiliates or any other Person and (2) such assets shall be listed on the Company’s own separate balance sheet;
(B) at all times hold itself out to the public and all other Persons as a 10 legal entity separate from the Member and any other Person; (C) have a Board of Directors separate from that of the Member and any other Person;
(D) file its own tax returns, if any, as may be required under applicable law, to the extent (1) not part of a consolidated group filing a consolidated return or returns or (2) not treated as a division for tax purposes of another taxpayer, and pay any taxes so required to be paid under applicable law;
(E) except as contemplated by the Basic Documents, not commingle its assets with assets of any other Person;
(F) comply with all organizational formalities to maintain its separate existence;
(G) pay its own liabilities only out of its own funds;
(H) only engage with its Affiliates and the Member upon terms and conditions that are commercially reasonable and substantially similar to those that would be available on an arms-length basis with unaffiliated third parties;
(I) pay the salaries of its own employees, if any;
(J) not hold out its credit or assets as being available to satisfy the obligations of the Member or its Affiliates;
(K) allocate fairly and reasonably any overhead for shared office space, if any;
(L) use separate invoices and checks, if any, except as contemplated by the consolidated billing statement contemplated under the SPE Master Custodial Agreement;
(M) except as contemplated by the Basic Documents, not pledge its assets for the benefit of any other Person;
(N) correct any known misunderstanding regarding its separate identity; (O) maintain adequate capital in light of its contemplated business purpose, transactions and liabilities; provided, however, the foregoing shall not require the Member or any Affiliate to make any additional capital contributions to the Company;
(P) keep minutes of any Board or Member meetings and actions and observe all other Delaware limited liability company formalities; 11 and
(Q) not acquire any securities of the Member.
Failure of the Company, or any Person on behalf of the Company, to comply with any of the foregoing covenants or any other covenants contained in this Agreement shall not affect the status of the Company as a separate legal entity or the limited liability of the Member, the Manager or the Directors. (v) So long as any Obligation is outstanding, the Board shall not cause or permit the Company to:
(A) except as contemplated by the Basic Documents, guarantee any obligation of any Person, including any Affiliate;
(B) engage, directly or indirectly, in any business other than the actions required or permitted to be performed under Section 7, the Basic Documents or this (i);
(C) incur, create or assume any indebtedness other than as expressly permitted under the Basic Documents;
(D) make or permit to remain outstanding any loan or advance to, or own or acquire any stock or securities of, any Person, except that the Company may invest in those investments permitted under the Basic Documents and may make any advance or loan required or expressly permitted or contemplated to be made pursuant to any provisions of the Basic Documents and permit the same to remain outstanding in accordance with such provisions;
(E) to the fullest extent permitted by law, engage in any dissolution, liquidation, consolidation, division, merger, asset sale or transfer of ownership interests other than such activities as are expressly permitted pursuant to any provision of the Basic Documents; or (F) form, acquire or hold any subsidiary (whether corporation, partnership, limited liability company or other).
(j) Manager.
(i) Designation of Manager. The Board shall designate a Manager of the Company. The Manager shall be responsible for the general and active management of the day-to-day business of the Company and shall see that all orders, acts and resolutions of the Board are carried into effect. Subject to Section 9(c)][(d)?] of this Agreement, the Manager may be removed or replaced by the vote of a majority of the Board. The initial Manager of the Company shall continue to be J. Aron.
12 (ii) Manager as Agent. The Manager, solely to the extent of its powers set forth in this Agreement or otherwise vested in it by action of the Board not inconsistent with this Agreement, is an agent of the Company for the purpose of the Company’s business and, subject to the limitations set forth in Section 7, (d) and (i), the actions of the Manager taken in accordance with such powers shall bind the Company.
Section 10. Independent Director. As long as any Obligation is outstanding, the Member shall cause the Company at all times to have at least one Independent Director who will be appointed by the Member. To the fullest extent permitted by applicable law, including Section 18-1101(c) of the Act, and notwithstanding any duty otherwise existing at law or in equity, the Independent Director shall consider only the interests of the Company (including the Company’s creditors) in acting or otherwise voting on the matters referred to in Section 9(i)(iii) (which duties to the Member and the Company (including the Company’s creditors), in each case, shall be deemed to apply solely to the extent of their respective economic interests in the Company exclusive of (x) all other interests (including, without limitation, all other interests of the Member, (y) the interests of other Affiliates of the Member and the Company and (z) the interests of any group of Affiliates of which the Member or the Company is a part)). Other than as provided in the immediately preceding sentence, the Independent Director shall not have any fiduciary duties to any Member, any Manager or any other Person; provided, however, the foregoing shall not eliminate the implied contractual covenant of good faith and fair dealing under applicable law. No resignation or removal of an Independent Director, and no appointment of a successor Independent Director, shall be effective until such successor (i) has accepted his or her appointment as an Independent Director by a written instrument, which may be a counterpart signature page to the Management Agreement, and (ii) has executed a counterpart to this Agreement as required by Section 5(a). In the event of a vacancy in the position of Independent Director, the Member shall, as soon as practicable, appoint a successor Independent Director. Notwithstanding anything to the contrary contained in this Agreement, no Independent Director shall be removed or replaced without Cause and unless the Company provides the Member with no less than three business days’ prior written notice of (a) any proposed removal of such Independent Director, and (b) the identity of the proposed replacement Independent Director, together with a certification that such replacement satisfies the requirements for an Independent Director set forth in this Agreement. All right, power and authority of the Independent Director shall be limited to the extent necessary to exercise those rights and perform those duties specifically set forth in this Agreement. No Independent Director shall at any time serve as trustee in bankruptcy for any Affiliate of the Company.
Section 11. Limited Liability.
Except as otherwise expressly provided by the Act, the debts, obligations and liabilities of the Company, whether arising in contract, tort or otherwise, shall be the debts, obligations and liabilities solely of the Company, and neither the Member nor the Special Member nor any Director nor the Manager shall be obligated personally for any such debt, obligation or liability of the Company solely by reason of being a Member, Special Member, Director or Manager of the Company.
13 Section 12. Capital Contributions and Subordinated Loan Agreement. 1 The Member agrees to deliver an updated Schedule B hereto on the date of the Initial Bond Pricing Date, which, in addition to the items currently listed therein, will list (a) the amount of the capital to be contributed by the Member to the Company promptly following the Initial Bond Pricing Date and (b) the amount of a loan to be made by the Member to the Company pursuant to the Subordinated Loan Agreement upon the initial issuance of the Bonds; provided that the Member shall not be required to make any capital contribution or loan to the Company unless the Initial Bond Pricing Date occurs. In accordance with Section 5(c), the Special Member shall not be required to make any capital contributions to the Company.
Section 13. Additional Contributions.
Except as provided in Section 12, the Member is not required to make any additional capital contribution to the Company. However, the Member may make additional capital contributions to the Company at any time in its discretion. To the extent that the Member makes an additional capital contribution to the Company, the Member shall revise Schedule B of this Agreement accordingly. The provisions of this Agreement, including this Section 13, are intended to benefit the Member and the Special Member and, to the fullest extent permitted by law, shall not be construed as conferring any benefit upon any creditor of the Company (and no such creditor of the Company shall be a third-party beneficiary of this Agreement) and the Member and the Special Member shall not have any duty or obligation to any creditor of the Company to make any contribution to the Company or to issue any call for capital pursuant to this Agreement.
Section 14. Allocation of Profits and Losses.
The Company’s profits and losses shall be allocated to the Member.
Section 15. Distributions.
Subject to the limitations set forth in the SPE Master Custodial Agreement, distributions shall be made to the Member at the times and in the aggregate amounts determined by the Manager.
Notwithstanding any provision to the contrary contained in this Agreement, the Company shall not be required to make a distribution to the Member on account of its interest in the Company if such distribution would violate Section 18-607 of the Act or any other applicable law or any Basic Document.
Section 16. Other Business.
The Member, the Special Member and any Affiliate of the Member or the Special Member may engage in or possess an interest in other business ventures (unconnected with the Company) of every kind and description, independently or with others. The Company shall not have any rights in or to such independent ventures or the income or profits therefrom by virtue of this Agreement.
1 SM NTD: To be finalized consistent with final capitalization structure for LLC. 14 Section 17. Duties, Exculpation, Indemnification.
(a) To the fullest extent permitted by law, including Section 18-1101(c) of the Act, and notwithstanding any other provision of this Agreement or in any agreement contemplated herein or applicable provisions of law or equity or otherwise, the parties hereto hereby agree that none of the Member, the Special Member nor any non-Independent Director, Manager, employee or agent of the Company nor any employee, representative, agent or Affiliate of the Member or the Special Member (collectively, the “Covered Persons”) shall owe any fiduciary duty to any Member or the Company; provided, however, that the foregoing shall not eliminate the duty to comply with the implied contractual covenant of good faith and fair dealing. (b) The Covered Persons shall not be liable to the Company or any other Person who has an interest in or claim against the Company for any loss, damage or claim incurred by reason of any act or omission performed or omitted by such Covered Person in good faith on behalf of the Company and in a manner reasonably believed to be within the scope of the authority conferred on such Covered Person by this Agreement.
(c) To the fullest extent permitted by applicable law, a Covered Person shall be entitled to indemnification from the Company for any loss, damage or claim incurred by such Covered Person by reason of any act or omission performed or omitted by such Covered Person in good faith on behalf of the Company and in a manner reasonably believed to be within the scope of the authority conferred on such Covered Person by this Agreement; provided, however, that any indemnity under this Section 17 by the Company shall be provided out of and to the extent of Company assets only, and the Member and the Special Member shall not have personal liability on account thereof; and provided further, that so long as any Obligation is outstanding, no indemnity payment from funds of the Company (as distinct from funds from other sources, such as insurance) of any indemnity under this Section 17 shall be payable from amounts allocable to any other Person pursuant to the Basic Documents.
(d) To the fullest extent permitted by applicable law, expenses (including legal fees) incurred by a Covered Person defending any claim, demand, action, suit or proceeding shall, from time to time, be advanced by the Company prior to the final disposition of such claim, demand, action, suit or proceeding upon receipt by the Company of an undertaking by or on behalf of the Covered Person to repay such amount if it shall be determined that the Covered Person is not entitled to be indemnified as authorized in this Section 17; provided, however, that any reimbursement under this Section 17 by the Company shall be provided out of and to the extent of Company assets only, and the Member and the Special Member shall not have personal liability on account thereof; and provided further, that so long as any Obligation is outstanding, no reimbursement payment from funds of the Company (as distinct from funds from other sources, such as insurance) under this Section 17 shall be payable from amounts allocable to any other Person pursuant to the Basic Documents.
(e) A Covered Person shall be fully protected in relying in good faith upon the records of the Company and upon such information, opinions, reports or statements presented to the Company by any Person as to matters the Covered Person reasonably believes are within such other Person’s professional or expert competence and who has been selected with reasonable care by or on behalf of the Company, including information, opinions, reports or statements as to the 15 value and amount of the assets, liabilities, or any other facts pertinent to the existence and amount of assets from which distributions to the Member might properly be paid. (f) To the extent that, at law or in equity, a Covered Person has duties (including fiduciary duties) and liabilities relating thereto to the Company or to any other Covered Person, a Covered Person acting in good faith on behalf of the Company and in a manner reasonably believed to be within the scope of the authority conferred on such Covered Person by this Agreement shall not be liable to the Company or to any other Covered Person for its good faith reliance on the provisions of this Agreement or any approval or authorization granted by the Company or any other Covered Person. The provisions of this Agreement, to the extent that they restrict the duties and liabilities of a Covered Person otherwise existing at law or in equity, are agreed by the Member and the Independent Director to replace such other duties and liabilities of such Covered Person. (g) The foregoing provisions of this Section 17 shall survive any termination of this Agreement.
Section 18. Assignments.
The Member may assign in whole or in part its limited liability company interest in the Company, and, if the Member transfers all of its limited liability company interest in the Company pursuant to this Section 18, the transferee shall be admitted to the Company as a member of the Company upon its execution of an instrument signifying its agreement to be bound by the terms and conditions of this Agreement, which instrument may be a counterpart signature page to this Agreement. Such admission shall be deemed effective immediately prior to the transfer and, immediately following such admission, the transferor Member shall cease to be a member of the Company. Notwithstanding anything in this Agreement to the contrary, any successor to the Member by merger or consolidation or otherwise in compliance with the Basic Documents shall, without further act, be the Member under this Agreement, and such occurrence shall not constitute an assignment for purposes of this Agreement and the Company shall continue without dissolution.
Section 19. Resignation.
So long as any Obligation is outstanding, the Member may not resign, unless a Person has agreed to become a member of the Company pursuant to this Section 19 upon the Member’s resignation. If the Member is permitted to resign pursuant to this Section 19, an additional member of the Company shall be admitted to the Company, subject to Section 20, upon its execution of an instrument signifying its agreement to be bound by the terms and conditions of this Agreement, which instrument may be a counterpart signature page to this Agreement. Such admission shall be deemed effective immediately prior to the resignation and, immediately following such admission, the resigning Member shall cease to be a member of the Company.
Section 20. Admission of Additional Members.
One or more additional members of the Company may be admitted to the Company with the written consent of the Member.
Section 21. Dissolution.
16 (a) Subject to Section 9(i), the Company shall be dissolved, and its affairs shall be wound up upon the first to occur of the following: (i) the termination of the legal existence of the last remaining member of the Company or the occurrence of any other event which terminates the continued membership of the last remaining member of the Company unless the Company is continued without dissolution in a manner permitted by this Agreement or the Act, (ii) the entry of a decree of judicial dissolution under Section 18-802 of the Act or (iii) written consent of the Member following the termination of the other Basic Documents and the satisfaction of the Obligations incurred in connection therewith. Upon the occurrence of any event that causes the last remaining member of the Company to cease to be a member of the Company or that causes the Member to cease to be a member of the Company (other than (i) upon an assignment by the Member of all of its limited liability company interest in the Company and the admission of the transferee pursuant to Section 18 and Section 20, or (ii) the resignation of the Member and the admission of an additional member of the Company pursuant to Section 19 and Section 21), to the fullest extent permitted by law, the personal representative of such member is hereby authorized to, and shall, within 90 days after the occurrence of the event that terminated the continued membership of such member in the Company, agree in writing (i) to continue the Company and (ii) to the admission of the personal representative or its nominee or designee, as the case may be, as a substitute member of the Company, effective as of the occurrence of the event that terminated the continued membership of the last remaining member of the Company or the Member in the Company.
(b) Notwithstanding any other provision of this Agreement, the Bankruptcy of the Member or a Special Member shall not cause the Member or Special Member, respectively, to cease to be a member of the Company and upon the occurrence of such an event, the Company shall continue without dissolution.
(c) Notwithstanding any other provision of this Agreement, each of the Member and the Special Member waives any right it might have to agree in writing to dissolve the Company upon the Bankruptcy of the Member or a Special Member, or the occurrence of an event that causes the Member or a Special Member to cease to be a member of the Company. (d) In the event of dissolution, the Company shall conduct only such activities as are necessary to wind up its affairs (including the sale of the assets of the Company in an orderly manner), and the assets of the Company shall be applied in the manner, and in the order of priority, set forth in Section 18-804 of the Act.
(e) The Company shall terminate when (i) the Manager determines that all of the assets of the Company, after payment of or due provision for all debts, liabilities and obligations of the Company, have been distributed to the Member in the manner provided for in this Agreement and (ii) the Certificate of Formation has been canceled in the manner required by the Act.
Section 22. Waiver of Partition; Nature of Interest.
Except as otherwise expressly provided in this Agreement, to the fullest extent permitted by law, each of the Member and the Special Member hereby irrevocably waives any right or power that such Person might have to cause the Company or any of its assets to be partitioned, to cause the appointment of a receiver for all or any portion of the assets of the Company, to compel any 17 sale of all or any portion of the assets of the Company pursuant to any applicable law or to file a complaint or to institute any proceeding at law or in equity to cause the dissolution, liquidation, winding up or termination of the Company. The Member shall not have any interest in any specific assets of the Company, and the Member shall not have the status of a creditor with respect to any distribution pursuant to Section 15 hereof. The interest of the Member in the Company is personal property.
Section 23. Benefits of Agreement; No Third-Party Rights.
None of the provisions of this Agreement shall be for the benefit of or enforceable by any creditor of the Company or by any creditor of the Member or a Special Member. Nothing in this Agreement shall be deemed to create any right in any Person (other than Covered Persons) not a party hereto, and this Agreement shall not be construed in any respect to be a contract in whole or in part for the benefit of any third Person (except as provided in Section 26 and with respect to Covered Persons).
Section 24. Severability of Provisions.
Each provision of this Agreement shall be considered severable and, if for any reason any provision or provisions herein are determined to be invalid, unenforceable or illegal under any existing or future law, such invalidity, unenforceability or illegality shall not impair the operation of or affect those portions of this Agreement which are valid, enforceable and legal.
Section 25. Entire Agreement.
This Agreement constitutes the entire agreement of the parties with respect to the subject matter hereof.
Section 26. Binding Agreement.
Notwithstanding any other provision of this Agreement, the Member agrees that this Agreement, including, without limitation, Section 7, Section 8, Section 9, Section 10, Section 17, Section 18, Section 19, Section 20, Section 21, Section 23, Section 26 and Section 28, constitutes a legal, valid and binding agreement of the Member, and is enforceable against the Member by the Independent Director, the Director appointed by the Municipal Issuer, and the Municipal Issuer in accordance with its terms. In addition, the Director appointed by the Municipal Issuer and the Municipal Issuer are intended beneficiaries of this Agreement.
Section 27. Governing Law.
This Agreement shall be governed by and construed under the laws of the State of Delaware (without regard to conflict of laws principles), all rights and remedies being governed by said laws.
Section 28. Amendments.
Subject to Section 9(i), this Agreement may be modified, altered, supplemented or amended pursuant to a written agreement executed and delivered by the Member; provided that (a) this Agreement may not be modified, altered, supplemented or amended in any way that limits 18 the rights and responsibilities of the Director appointed by the Municipal Issuer without such Director’s prior written consent and (b) so long as any Obligation is outstanding, this Agreement may not be modified, altered, supplemented or amended unless the Rating Agency Condition is satisfied except: (i) to cure any ambiguity, supply any omission, or cure or correct any defect or inconsistent provision in this Agreement, (ii) to insert such provisions clarifying matters or questions arising under this Agreement as are necessary or desirable and are not contrary to or inconsistent with this Agreement or (iii) to correct or supplement any provision in a manner consistent with the intent of this Agreement and the other Basic Documents (provided that, notwithstanding the foregoing clauses (i) – (iii), so long as any Obligation is outstanding Section 7, Section 9 and Section 10 of this Agreement may not be modified, altered, supplemented or amended in any way unless the Rating Agency Condition is satisfied).
Section 29. Counterparts.
This Agreement may be executed in any number of counterparts, each of which shall be deemed an original of this Agreement and all of which together shall constitute one and the same instrument.
Section 30. Notices.
Any notices required to be delivered hereunder shall be in writing and personally delivered, mailed or sent by telecopy, electronic mail or other similar form of rapid transmission, and shall be deemed to have been duly given upon receipt (a) in the case of the Company, to the Company at its address in Section 2, (b) in the case of the Member, to the Member at its address as listed on Schedule B attached hereto, (c) in the case of the Independent Director and the Director appointed by the Municipal Issuer, to their addresses as listed in the Management Agreement and (d) in the case of any of the foregoing, at such other address as may be designated by written notice to the other parties. Notwithstanding the foregoing, a 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 such time shall be ineffective.
Section 31. Schedules.
Any and all Schedules referenced in this Agreement are hereby incorporated herein by reference and shall be deemed to be an integral part hereof. [SIGNATURE PAGE FOLLOWS]
19 IN WITNESS WHEREOF, the undersigned, intending to be legally bound hereby, has duly executed this Amended and Restated Limited Liability Company Agreement as of the date first written above.
MEMBER:
J. ARON & COMPANY LLC, a New York limited
liability company
By: ______________________________
Name:
Title:
INDEPENDENT DIRECTOR:
By: ______________________________
Name: Orlando C. Figueroa
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SCHEDULE A
Definitions
A. Definitions
When used in this Agreement, the following terms not otherwise defined herein have the following meanings:
“Act” has the meaning set forth in the preamble to this Agreement. “Affiliate” means, with respect to any Person, any other Person directly or indirectly Controlling or Controlled by or under direct or indirect common Control with such Person. “Affiliate Funding Recipient” means (i) The Goldman Sachs Group, Inc. and (ii) any other Affiliate of the Member that proposes to enter into a Funding Agreement with the Company. “Agreement” means this Amended and Restated Limited Liability Company Agreement of the Company, together with the schedules attached hereto, as amended, restated or supplemented or otherwise modified from time to time.
“Available Discount” has the meaning set forth in the Re-Pricing Agreement. “Bankruptcy” means, with respect to any Person, if (i) an involuntary case or other proceeding shall be commenced against such Person 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 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) such Person 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 such Person 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. The foregoing definition of “Bankruptcy” is intended to replace and shall supersede and replace the definition of “Bankruptcy” set forth in Sections 18- 101(1) and 18-304 of the Act.
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“Basic Documents” means this Agreement, the Management Agreement, the Prepaid Transaction Documents and all documents and certificates contemplated thereby or delivered in connection therewith.
“Board” or “Board of Directors” means the Board of Directors of the Company. “Bond Indenture” has the meaning set forth in Section 7(a)(i). “Bond Pricing Date” has the meaning set forth in the Re-Pricing Agreement. “Bonds” has the meaning set forth in Section 7(a)(i).
“Cause” means, with respect to an Independent Director, (i) acts or omissions by such Independent Director that constitute willful disregard of, or gross negligence with respect to, such Independent Director’s duties, (ii) such Independent Director has engaged in or has been charged with or has been indicted for or convicted of any crime or crimes of fraud or other acts constituting a crime under any law applicable to such Independent Director, (iii) such Independent Director has breached its implied contractual covenant of good faith and fair dealing, (iv) there is a material increase in the fees charged by such Independent Director, or a material change to such Independent Director’s terms of service, (v) such Independent Director is unable to perform his or her duties as Independent Director due to death, disability or incapacity, or (vi) such Independent Director no longer meets the definition of Independent Director. “Certificate of Formation” means the Certificate of Formation of the Company filed with the Secretary of State of the State of Delaware on [____], 2023, as amended or amended and restated from time to time.
“Company” means Aron Energy Prepay 16 LLC, a Delaware limited liability company. “Control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ownership of voting securities or general partnership or managing member interests, by contract or otherwise. “Controlling” and “Controlled” shall have correlative meanings. Without limiting the generality of the foregoing, a Person shall be deemed to Control any other Person in which it owns, directly or indirectly, a majority of the ownership interests.
“Covered Persons” has the meaning set forth in Section 17(a). “Directors” means the Persons appointed to the Board of Directors from time to time as provided in Section 9(a), including the Independent Director, in their capacity as directors of the Company. A Director is hereby designated as a “manager” of the Company within the meaning of Section 18-101(10) of the Act.
“Electricity Sale and Service Agreement” has the meaning set forth in Section 7(a)(iii). “Funding Agreement” has the meaning set forth in Section 7(a)(v).
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“Funding Exclusivity Period” means, for any new Reset Period, the period of time, if any, commencing on the first day after the end of the Funding Shopping Second Period and ending at the end of such Re-pricing Period.
“Funding Recipient” has the meaning set forth in the Master Power Supply Agreement. “Funding Shopping First Period” means, for any new Reset Period, the period of time commencing as of the beginning of the Re-pricing Period for such Reset Period and ending 121 days prior to the end of such Re-pricing Period.
“Funding Shopping Second Period” means, for any new Reset Period, the period of time, if any, commencing on the day after the end of the Funding Shopping First Period and ending 61 days prior to the end of the Re-pricing Period.
“Independent Director” means a natural person selected by the Company (a) with prior experience as an independent director, independent manager or independent member, (b) with at least three (3) years of employment experience, (c) who is provided by a Nationally Recognized Service Company, and (d) who is duly appointed as an Independent Director and is not, will not be while serving as Independent Director (except pursuant to an express provision in this Agreement providing for the appointment of such Independent Director to become a Special Member), and shall not have been at any time during the preceding five years, any of the following:
(i) a stockholder, director (other than an independent director), officer, employee, partner, attorney or counsel of the Company, any Affiliate of the Company or any direct or indirect parent of the Company;
(ii) a customer, supplier or other Person who derives any of its purchases or revenues from its activities with the Company or any Affiliate of the Company; (iii) a Person or other entity Controlling or under common Control with any such stockholder, partner, customer, supplier or other Person described in clause (i) or clause (ii) above; or
(iv) a member of the immediate family of any such stockholder, director, officer, employee, partner, customer, supplier or other Person described in clause (i) or clause (ii) above.
A natural person who otherwise satisfies the foregoing definition and satisfies subparagraph (i) by reason of being an independent director of a “special purpose entity” affiliated with the Company shall be qualified to serve as an independent director of the Company, provided that the fees that such individual earns from serving as Independent Director of Affiliates of the Company in any given year constitute in the aggregate less than 5% of such individual’s annual income for that year.
A natural person who satisfies the foregoing definition other than clause (ii) shall not be disqualified from serving as an Independent Director of the Company if such individual is an independent director, independent manager or special manager provided by a Nationally Recognized Service Company that provides professional independent directors, independent A-4
managers and special managers and also provides other corporate services in the ordinary course of its business.
“Initial Funding Recipient” means [____].
“J. Aron” means J. Aron & Company LLC, a New York limited liability company. “Ledger Event” has the meaning set forth in the Master Power Supply Agreement. “Management Agreement” means the agreement of the Directors in the form attached hereto as Schedule C. The Management Agreement shall be deemed incorporated into, and a part of, this Agreement.
“Manager” shall mean the Person elected by the Board of Directors pursuant to Section 9(j) of this Agreement.
“Master Power Supply Agreement” has the meaning set forth in Section 7(a)(i). “Material Action” means to consolidate or merge the Company with or into any Person, or sell all or substantially all of the assets of the Company, or to institute proceedings to have the Company be adjudicated bankrupt or insolvent, or consent to the institution of bankruptcy or insolvency proceedings against the Company or file, or consent to, a petition seeking reorganization or relief with respect to the Company under any applicable federal or state law relating to bankruptcy, or consent to the appointment of a receiver, liquidator, assignee, trustee, sequestrator (or other similar official) of the Company or a substantial part of its property, or make any assignment for the benefit of creditors of the Company, or admit in writing the Company’s inability to pay its debts generally as they become due, or take action in furtherance of any such action, or, to the fullest extent permitted by law, dissolve or liquidate the Company. “Member” means J. Aron, as the initial member of the Company, and includes any Person admitted as an additional member of the Company or a substitute member of the Company pursuant to the provisions of this Agreement, each in its capacity as a member of the Company; provided, however, the term “Member” shall not include the Special Member. “Municipal Issuer” has the meaning set forth in Section 7(a)(i). “Nationally Recognized Service Company” means any of Citadel SPV (USA) LLC, CT Corporation, Corporation Service Company, National Registered Agents, Inc., Wilmington Trust Company, Stewart Management Services, United Corporate Services, Inc., Independent Member Services LLC or such other nationally recognized company that provides independent director, independent manager or independent member services, in each case that is not an Affiliate of the Company and that provides professional independent directors and other corporate services in the ordinary course of its business.
“Obligations” means the liabilities and obligations of the Company under or in connection with this Agreement, the other Basic Documents or any related document in effect as of any date of determination.
A-5
“Person” means any individual, corporation, partnership, joint venture, limited liability company, limited liability partnership, association, joint stock company, trust, unincorporated organization, or other organization, whether or not a legal entity, and any governmental authority. “Prepaid Transaction Documents” has the meaning set forth in Section 7(a)(x). “Product Delivery Termination Date” has the meaning set forth in the Master Power Supply Agreement.
“Qualified Firm Offer” has the meaning set forth in the Re-Pricing Agreement. “Qualified Funding Recipient” means, for any Reset Period for which a Funding Agreement will be executed or extended, (a) any Affiliate Funding Recipient, (b) the Initial Funding Recipient and (c) any other Person that (i) has a rating (or a guarantor with a rating) of at least “A3” by Moody’s Investors Service, Inc. and “A-” by Fitch Ratings, Inc., (ii) has capital stock, surplus and undivided earnings aggregating at least $1,000,000,000 or a guarantor with capital stock, surplus and undivided earnings aggregating at least $1,000,000,000, (iii) is able to satisfy the Member’s internal requirements as they relate to “know your customer” rules, policies and procedures, anti-money laundering rules and regulations, Dodd-Frank Act, Commodity Exchange Act, PATRIOT Act and similar rules, regulations, requirements and corresponding policies, (iv) agrees to deliver an unqualified opinion of counsel in a form acceptable to the Member that the proposed Funding Agreement is not a security, and (v) agrees to enter into a Funding Agreement that provides no less favorable terms than the Funding Agreement with the Initial Funding Recipient and which Funding Agreement must require the Funding Recipient (A) to pay liquidated damages to the Member reflecting any lost value (I) of the Member’s equity or (II) on any Subordinated Loan Agreement caused by any event of default, acceleration event or similar circumstances affecting the Funding Recipient under the Funding Agreement, and (B) to collateralize its obligations to pay such liquidated damages upon a credit downgrade upon terms and in an amount that are acceptable to the Member in its sole discretion, unless such requirements are waived by the Member in its sole discretion.
“Qualified Potential Offer” has the meaning set forth in the Re-Pricing Agreement. “Rating Agency” has the meaning assigned to that term in the Basic Documents. “Rating Agency Condition” means that the Member has delivered a Rating Confirmation (as defined in the Bond Indenture) to the Municipal Issuer. “Re-Pricing Agreement” has the meaning set forth in Section 7(a)(ii). “Re-pricing Period” has the meaning set forth in the Re-Pricing Agreement. “Reset Period” has the meaning set forth in the Re-Pricing Agreement. “Special Member” means, upon such Person’s admission to the Company as a member of the Company pursuant to Section 5(c), a Person acting as Independent Director, in such Person’s capacity as a member of the Company. A Special Member shall only have the rights and duties expressly set forth in this Agreement.
A-6
“Subordinated Loan Agreement” has the meaning set forth in Section 7(a)(iv). “Third Party Funding Recipient” means any Qualified Funding Recipient that proposes to enter into a Funding Agreement with the Company other than an Affiliate Funding Recipient.
B. Rules of Construction
Definitions in this Agreement apply equally to both the singular and plural forms of the defined terms. The words “include” and “including” shall be deemed to be followed by the phrase “without limitation.” The terms “herein,” “hereof’ and “hereunder” and other words of similar import refer to this Agreement as a whole and not to any particular Section, paragraph or subdivision. The Section titles appear as a matter of convenience only and shall not affect the interpretation of this Agreement. All Section, paragraph, clause, Exhibit or Schedule references not attributed to a particular document shall be references to such parts of this Agreement.
B-1
SCHEDULE B
Member
Name Mailing Address
Agreed Value of
Capital
Contribution
Membership
Interest
J. Aron &
Company LLC
200 West Street
New York, NY
10282
$[____] 100%
C-1
SCHEDULE C
MANAGEMENT AGREEMENT
[_____], 2023
J. Aron & Company LLC
200 West Street
New York, NY 10282
Email: [email protected]
Citadel SPV
85 Broad Street, 18th Floor
New York, NY 10004
Attention: Orlando C. Figueroa
Email: [email protected] and [email protected] California Community Choice Financing Authority
[____]
[____]
Re: Management Agreement -- Aron Energy Prepay 16 LLC
Ladies and Gentlemen:
For good and valuable consideration, each of the undersigned Persons, who have been designated as directors of Aron Energy Prepay 16 LLC, a Delaware limited liability company (the “Company”), in accordance with the Amended and Restated Limited Liability Company Agreement of the Company, dated as of [_____], 2023, as it may be amended or restated from time to time (the “LLC Agreement”), hereby agree as follows:
1. Each of the undersigned accepts such Person’s rights and authority as a Director under the LLC Agreement and agrees to perform and discharge such Person’s duties and obligations as a Director under the LLC Agreement, and further agrees that such rights, authorities, duties and obligations under the LLC Agreement shall continue until such Person’s successor as a Director is designated or until such Person’s resignation or removal as a Director in accordance with the LLC Agreement. Each of the undersigned agrees and acknowledges that it has been designated as a “manager” of the Company within the meaning of the Delaware Limited Liability Company Act.
2. So long as any Obligation is outstanding, each of the undersigned agrees, solely in its capacity as a creditor of the Company on account of any indemnification or other payment owing to the undersigned by the Company, not to acquiesce, petition or otherwise invoke or cause the Company to invoke the process of any court or governmental authority for the purpose of commencing or sustaining a case against the Company under any federal or state bankruptcy, insolvency or similar law or appointing a receiver, liquidator, assignee, trustee, custodian, C-2
sequestrator or other similar official of the Company or any substantial part of the property of the Company, or ordering the winding up or liquidation of the affairs of the Company.
3. J. Aron is the Manager of the Company and shall be responsible for the general and active management of the day-to-day business of the Company and shall see that all orders, acts and resolutions of the Board are carried into effect. J. Aron as Manager pursuant to the Agreement is authorized to execute and deliver on behalf of the Company the Basic Documents.
4. THIS MANAGEMENT AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE,
AND ALL RIGHTS AND REMEDIES SHALL BE GOVERNED BY SUCH LAWS WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS.
Initially capitalized terms used and not otherwise defined herein have the meanings set forth in the LLC Agreement.
This Management Agreement may be executed in any number of counterparts, each of which shall be deemed an original of this Management Agreement and all of which together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the undersigned have executed this Management Agreement as of the day and year first above written.
__________________________________
Name: Kenan Arkan, Director Appointed by the
Member
__________________________________
Name: Orlando C. Figueroa, Independent Director
__________________________________
Name: [____], Director Appointed by the Municipal
Issuer
D-1
SCHEDULE D
DIRECTORS
1. Kenan Arkan, as appointed by J. Aron
2. Orlando C. Figueroa, as the Independent Director
3. [____], as appointed by the Municipal Issuer
SPE MASTER CUSTODIAL AGREEMENT
This SPE Master Custodial Agreement (this “Custodial Agreement”) is made and entered into as of [____], 2022, by and among Aron Energy Prepay [__] LLC, a Delaware limited liability company (“Prepay LLC”), 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) (“Issuer”), and The Bank of New York Mellon, a New York banking corporation, in its capacity as custodian hereunder (in such capacity, the “SPE Custodian”).
RECITALS:
WHEREAS, Issuer is issuing its [Clean Energy Project Revenue Bonds, Series 2022] (the “Bonds”) pursuant to the Trust Indenture, dated as of [____], 2022 (the “Bond Indenture”) between Issuer and [____], in its capacity as trustee under the Bond Indenture (the “Trustee”); and
WHEREAS, Prepay LLC and Issuer are entering into a Master Power Supply Agreement, dated as of [____], 2022 (the “Master Power Supply Agreement”); and WHEREAS, in connection with the execution of the Master Power Supply Agreement, Prepay LLC and J. Aron are entering into an Electricity Purchase, Sale and Service Agreement, dated as of the date hereof (the “Electricity Sale and Service Agreement”); and WHEREAS, in connection with the execution of the Master Power Supply Agreement, Prepay LLC and [____] (along with its successors and permitted assignees, “Funding Recipient”), are entering into a [____], dated as of the date on which the Bonds are initially issued (as may be amended, supplements, modified or otherwise replaced, the “Funding Agreement”) pursuant to which Funding Recipient is the borrower and Prepay LLC is the lender; and
WHEREAS, [_____], a [_____] (“Counterparty 1”), and Prepay LLC are entering into a commodity price swap transaction pursuant to an ISDA Master Agreement, dated as of [____], 2022, together with the Schedule, Credit Support Annex and a Confirmation, dated as of [____], 2022 (the “Counterparty 1 Back-End Commodity Swap”); and WHEREAS, [_____], a [_____] (“Counterparty 2” and together with Counterparty 1, the “Counterparties”), and Prepay LLC are entering into a commodity price swap transaction pursuant to an ISDA Master Agreement, dated as of [____], 2022, together with the Schedule, Credit Support Annex and a Confirmation, dated as of [____], 2022 (and together with the Counterparty 1 Back-End Commodity Swap, the “Back-End Commodity Swaps”, and each a “Back-End Commodity Swap”); and
WHEREAS, in connection with the execution of the Back-End Commodity Swaps, Prepay LLC and the Trustee are entering into separate Custodial Agreements with each of 2 Counterparty 1 and Counterparty 2, each dated as of [____], 2022, pursuant to which the parties will establish custodial accounts for payment of amounts due by Prepay LLC to the Counterparties under the Back-End Commodity Swaps (the “Swap Payments Accounts”); and WHEREAS, to enable Prepay LLC to perform certain of its obligations in connection with the Clean Energy Project, Prepay LLC and J. Aron are entering into a Subordinated Term Loan Agreement, dated as of [____], 2022 (the “J. Aron Subordinated Loan”), pursuant to which J. Aron is the lender and Prepay LLC is the borrower; and WHEREAS, Prepay LLC, J. Aron, the Issuer and the SPE Custodian propose to enter into this Custodial Agreement in order to administer payments to be (a) received by Prepay LLC under (i) the Funding Agreement, (ii) the Electricity Sale and Service Agreement, (iii) the Master Power Supply Agreement, (iv) the Back-End Commodity Swaps consistent with the terms of the [Seller Swap Custodial Agreements] (as defined in the Master Power Supply Agreement) and (v) the J. Aron Subordinated Loan and (b) paid by Prepay LLC under (i) the Master Power Supply Agreement, (ii) the Electricity Sale and Service Agreement, (iii) the Back-End Commodity Swaps consistent with the terms of the Seller Swap Custodial Agreements and (iv) the J. Aron Subordinated Loan.
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. Any capitalized term used herein and not otherwise defined herein (including in the recitals) shall have the meaning assigned to such term in the Bond Indenture. 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 SPE Custodian. Prepay LLC, J. Aron and Issuer hereby appoint The Bank of New York Mellon as SPE Custodian under this Custodial Agreement, with such rights and obligations as are specifically set forth herein. The SPE Custodian hereby accepts such appointment under the terms and conditions set forth herein.
Section 3. Payment Instructions to Custodian; Exposure Calculations. (a) Payment Instructions. No later than the 9th day of each Month, Prepay LLC shall deliver written payment instructions to the SPE Custodian detailing the amounts owed to and to be paid by Prepay LLC under the Back-End Commodity Swap, the Master Power Supply Agreement, the Electricity Sale and Service Agreement and the J. Aron Subordinated Loan for such Month and the SPE Custodian shall make any payments owed by Prepay LLC by wire transfer to the applicable accounts specified in Exhibit A hereto; provided that, if Prepay LLC fails to deliver such instructions, the SPE Custodian may request and rely upon instructions from Issuer. The parties hereto acknowledge and agree that such instructions may be provided by J.
Aron as Prepay LLC’s agent in the form of a consolidated statement, setting forth (i) the Buyer’s 3 Statement (as defined in the Master Power Supply Agreement) delivered by Issuer under the Master Power Supply Agreement, (ii) the Buyer’s Statement (as defined in the Electricity Sale and Service Agreement), (iii) the Billing Statement (as defined in the Master Power Supply Agreement) delivered by Prepay LLC under the Master Power Supply Agreement, (iv) the Billing Statement (as defined in the Electricity Sale and Service Agreement) delivered by J. Aron under the Electricity Sale and Service Agreement, (v) Prepay LLC’s settlement calculations under the Back-End Commodity Swap, (vi) Prepay LLC’s principal and interest payment obligations under the J. Aron Subordinated Loan and (vii) the Funding Recipient’s scheduled payment obligations under the Funding Agreement; provided that, for the avoidance of doubt, Issuer shall still have the obligation to deliver its Buyer’s Statement under the Master Power Supply Agreement and J. Aron as Prepay LLC’s agent then will reflect such amounts in a consolidated statement delivered hereunder.
(b) Exposure Calculations. Prepay LLC has appointed the SPE Custodian as the Valuation Agent under and as defined in the Credit Support Annexes to the Back-End Commodity Swaps. The SPE Custodian hereby accepts such appointment under the terms and conditions set forth herein, and Prepay LLC agrees that it shall on a daily basis provide exposure calculations to the SPE Custodian to enable it to perform the calculations as Valuation Agent under and as defined in the Back-End Commodity Swaps and subject to the terms set forth on Schedule I, which is attached hereto and made a part hereof Section 4. Prepay LLC Revenue Accounts.
(a) Deposits to Revenue Account. With respect to payments required to be made to Prepay LLC under the Funding Agreement, the Electricity Sale and Service Agreement, the Master Power Supply Agreement and the Back-End Commodity Swaps, there is hereby established with the SPE Custodian at its offices located at 240 Greenwich Street, New York, NY 10286, a payments account designated as the “[____]”, bearing SPE Custodian’s Account No. [____] (the “Prepay LLC Revenue Account”); and (A) any and all payments payable by Funding Recipient to Prepay LLC pursuant to the Funding Agreement, (B) any and all payments payable by J. Aron to Prepay LLC pursuant to the Electricity Sale and Service Agreement, (C) any and all net payments payable by Issuer to Prepay LLC pursuant to the Master Power Supply Agreement; and (D) any and all net payments payable by the Counterparties to Prepay LLC pursuant to the Back-End Commodity Swaps shall be paid by wire transfer to and deposited in the Prepay LLC Revenue Account.
THE BANK OF NEW YORK MELLON
ABA# [_____]
Account Number: [____]
Account Name: AEP[___] REVENUE ACCOUNT
(b) Revenue Account Held in Trust. Amounts deposited in the Prepay LLC Revenue Account shall be held in trust for the benefit of Prepay LLC until applied as set forth in Section 4(c) and Section 4(d) below. The SPE Custodian shall not be required to comply with any orders, demands, or other instructions from Issuer (or the Trustee on behalf of Issuer), J. Aron or the Counterparties with respect to the Prepay LLC Revenue Account, including, without limitation, items presented for payment, or any order or instruction directing the disposition of 4 funds or other assets held in or credited to the Prepay LLC Revenue Account, and each of the parties hereto agree that prior to the termination of this Custodial Agreement in accordance with the terms hereof, they shall have no right to direct the disposition of funds or other assets held in or credited to the Prepay LLC Revenue Account, or to withdraw or otherwise obtain funds or other assets held in or credited to the Prepay LLC Revenue Account, whether by order or instruction to the SPE Custodian or otherwise, except to the extent that amounts on deposit in the Prepay LLC Revenue Account are payable (i) to the Swap Payments Accounts in accordance with the terms hereof, the Back-End Custodial Agreements and the Back-End Commodity Swaps, (ii) to Issuer in accordance with the terms hereof and of the Master Power Supply Agreement and (iii) to J. Aron in accordance with the terms hereof and of the Electricity Sale and Service Agreement.
(c) Application of Revenue Account. Subject to Section 4(d) below, the SPE Custodian shall withdraw amounts on deposit in the Prepay LLC Revenue Account on behalf of Prepay LLC and apply such amounts as follows:
(i) First: To the extent amounts are then available in the Prepay LLC Revenue Account, to each of the respective Swap Payments Accounts on the 24th of each Month, but if such day is not a Business Day (as defined in the Back-End Commodity Swaps), the immediately preceding Business Day, in satisfaction of any net amounts owed by Prepay LLC to the Counterparties under the Back-End Commodity Swaps as set forth in the instructions delivered under Section 3(a). (ii) Second: To the extent of any remaining funds then available in the Prepay LLC Revenue Account following application of funds pursuant to the foregoing clause (i) in the applicable Month, to Issuer on the 24th of each Month, in satisfaction of any amounts owed by Prepay LLC to Issuer under the Master Power Supply Agreement as set forth in the instructions delivered under Section 3(a). (iii) Third: To the extent of any remaining funds then available in the Prepay LLC Revenue Account following application of funds pursuant to the foregoing clauses (i) and (ii) in the applicable Month, to J. Aron on or after the 26th of each Month, in satisfaction of any amounts owed by Prepay LLC to J. Aron under the Electricity Sale and Service Agreement as set forth in the instructions delivered under Section 3(a). (iv) Fourth: To the extent of any remaining funds then available in the Prepay LLC Revenue Account following the application of funds pursuant to the foregoing clauses (i) - (iii) in any Month, to the Prepay LLC Capital Account. (d) Non-Recurring Deposits and Applications. Notwithstanding the foregoing, the parties acknowledge and agree as follows:
(i) the [Prepayment] (as defined in the Master Power Supply Agreement) shall be paid by Issuer to Prepay LLC pursuant to the Master Power Supply Agreement on the Initial Issue Date and such amount shall be (A) paid by wire transfer to the Prepay LLC Revenue Account and (B) (I) the portion of the Prepayment attributable to the [Structuring Fee] (as defined in the Electricity Sale and Service Agreement and identified 5 in a closing memorandum delivered by J. Aron to the SPE Custodian prior to the Initial Issue Date) shall be transferred promptly by the SPE Custodian to J. Aron on behalf of Prepay LLC pursuant to Prepay LLC’s written instructions (which may include standing instructions) in accordance with the Electricity Sale and Service Agreement and (II) the remaining balance of the Prepayment (as identified in a closing memorandum delivered by J. Aron to the SPE Custodian prior to the Initial Issue Date) shall be transferred promptly by the SPE Custodian to Funding Recipient on behalf of Prepay LLC pursuant to Prepay LLC’s written instructions (which may include standing instructions) in accordance with the Funding Agreement;
(ii) any payment by Funding Recipient to Prepay LLC pursuant to [Section __ (Early Termination)] of the Funding Agreement shall be (A) paid by wire transfer to the Prepay LLC Revenue Account and (B) as directed by Prepay LLC in writing the SPE Custodian shall either:
(1) transfer such amount promptly to an account specified by the Trustee for payment of Prepay LLC’s Termination Payment obligation under the Master Power Supply Agreement; or
(2) transfer such amount promptly to a separate account established by the SPE Custodian at such time, with such amount only to be applied upon receipt of and consistent with subsequent written instructions from Prepay LLC (I) indicating the date on which Prepay LLC owes a Termination Payment under the Master Power Supply Agreement and (II) providing the account specified by the Trustee for payment of Prepay LLC’s Termination Payment obligation under the Master Power Supply Agreement;
(iii) any payment by J. Aron to Prepay LLC with respect to a Ledger Event pursuant to [Section 17.6] of the Electricity Sale and Service Agreement shall be (A) paid by wire transfer to the Prepay LLC Revenue Account and (B) transferred promptly by the SPE Custodian pursuant to Prepay LLC’s written instructions (which may include standing instructions) to an account specified by the Trustee in satisfaction of Prepay LLC’s corresponding obligation to the Issuer under [Section 17.2] of the Master Power Supply Agreement; and
(iv) any payment by J. Aron to Prepay LLC with respect to [Receivables] (as defined in the Electricity Sale and Service Agreement) pursuant to Exhibit C to the Electricity Sale and Service Agreement shall be (A) paid by wire transfer to the Prepay LLC Revenue Account and (B) transferred promptly by the SPE Custodian pursuant to Prepay LLC’s written instructions (which may include standing instructions) to an account specified by the Trustee in satisfaction of Prepay LLC’s corresponding obligation to Issuer under Exhibit E to the Master Power Supply Agreement.
Section 5. Prepay LLC Capital Account.
(a) Deposits to Capital Account. With respect to (i) any capital contributions to Prepay LLC pursuant to its Amended and Restated Limited Liability Company Agreement, dated 6 as of the date hereof, (ii) any loan by J. Aron to Prepay LLC pursuant to the J. Aron Subordinated Loan, and (iii) certain other amounts that may be paid to Prepay LLC, there is hereby established with the SPE Custodian at its office located at 240 Greenwich Street, New York, NY 10286, a deposit account designated as the “[_____]”, bearing SPE Custodian’s Account No. [____] (the “Prepay LLC Capital Account”).
THE BANK OF NEW YORK MELLON
ABA# [_____]
Account Number: [_____]
Account Name: AEP[___] CAPITAL ACCOUNT
(b) Capital Account Held in Trust. Amounts deposited in the Prepay LLC Capital Account shall be held in trust for the benefit of Prepay LLC until (i) applied as set forth in Section 5(c) or Section 5(d) below or (ii) withdrawn by Prepay LLC as set forth in Section 5(e) below at Prepay LLC’s written request; provided, however, that the SPE Custodian shall have a lien on, security interest in and right of set-off against the Prepay LLC Capital Account. The SPE Custodian shall not be required to comply with any orders, demands, or other instructions from any Person other than Prepay LLC (or J. Aron as Prepay LLC’s agent), 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 Prepay LLC Capital Account. (c) Applications for Collateral. To the extent the SPE Custodian determines that Prepay LLC is obligated to post collateral based on the SPE Custodian’s calculations as Valuation Agent under and as defined in the Credit Support Annexes to the Back-End Commodity Swaps, the SPE Custodian shall withdraw the required amounts from the Prepay LLC Capital Account and pay them by wire transfer to the respective accounts designated by the Counterparties pursuant to the Back-End Commodity Swaps. (d) Applications to Cure Revenue Account Shortfalls. Following the application of any amounts pursuant to the foregoing Section 5(c), To the extent funds on deposit in the Prepay LLC Revenue Account are insufficient for Prepay LLC to make the payments specified in Section 4(c) for any given Month, the SPE Custodian shall promptly provide notice of the deficiency via e-mail to the Trustee, the Counterparties and each of the parties hereto and Prepay LLC hereby directs the SPE Custodian to (and the SPE Custodian shall) withdraw the required amounts from the Prepay LLC Capital Account and deposit such amounts in the Prepay LLC Revenue Account.
(e) Application to Pay Subordinate Loan. To the extent that the amounts on deposit in the Prepay LLC Capital Account exceed the greater of (i) 3% of the amount specified in Exhibit B hereto for the then-current calendar month and (ii) $4,000,000 after the payments specified in Section 4(c) and Section 5(d), as applicable, each Month, Prepay LLC directs the SPE Custodian to withdraw amounts on deposit in the Prepay LLC Capital Account to be applied to the principal and interest amounts owed by Prepay LLC to J. Aron under the J. Aron Subordinated Loan; provided that the SPE Custodian shall not be required to transfer any amount from the Prepay LLC Capital Account for the monthly payment of principal and interest on the J.
Aron Subordinated Loan if the remaining balance in the Prepay LLC Capital Account following 7 such transfer will be less than $4,000,000. Notwithstanding the foregoing, Prepay LLC hereby directs the SPE Custodian to pay the Final Payment Amount (as defined in the J. Aron Subordinated Loan and as such amount is specified in the written payment instructions delivered by J. Aron pursuant to Section 3(a)) to J. Aron on the earlier of (i) the first Business Day of the Month following an Early Termination Payment Date and (ii) the Maturity Date (as defined in the J. Aron Subordinated Loan) to the extent amounts are then available in the Prepay LLC Capital Account. Upon receipt of the Final Payment Amount, Prepay LLC will provide the SPE Custodian with written notice, in accordance with the terms of Section 14, that the J. Aron Subordinated Loan has been repaid in accordance with its terms and this Custodial Agreement shall terminate as provided in Section 14.
(f) Investment of Capital Account. Amounts deposited in the Prepay LLC Capital Account shall, at Prepay LLC’s written request and direction, be invested by the SPE Custodian in Cash Equivalents (as defined below) as specifically directed (which may include standing instructions), subject to any investment cut-offs of any Cash Equivalent investments directed by Prepay LLC. The SPE Custodian shall have no duty to determine whether any investment or reinvestment of monies in the Prepay LLC Capital Account satisfies the criteria set out in the definition of “Cash Equivalents.” The SPE Custodian shall not be liable for any loss resulting from any investment in any Cash Equivalents or the sale, disposition, redemption or liquidation of such investment or by reason of the fact that the proceeds realized in respect of such sale, disposition, redemption or liquidation were less than the amounts which might otherwise have been obtained.
(g) Liquidation of Investments. In the event that any Cash Equivalents are required to be liquidated in order to make any transfer, disbursement or withdrawal in accordance with this Custodial Agreement, the SPE Custodian shall cause such Cash Equivalents to be sold or otherwise liquidated into cash (without regard to maturity) as and to the extent necessary in order to make such transfers, disbursements or withdrawals required pursuant to this Custodial Agreement. The SPE Custodian shall comply with any written instruction from Prepay LLC with respect to the liquidation of such Cash Equivalents. In the event any such investments are redeemed prior to the maturity thereof, the SPE Custodian shall not be liable for any loss or penalties relating thereto.
As used herein, “Cash Equivalents” means, at any time:
(i) any direct obligation of (or any obligation that is unconditionally guaranteed by) the United States (or any agency or political subdivision thereof, to the extent such obligations are supported by the full faith and credit of the United States) maturing not more than two years from the date of acquisition thereof;
(ii) any certificate of deposit, time deposit, or banker’s acceptance, maturing not more than one year after its date of acquisition, or any demand deposit account which, in any case, is issued by or established at any bank or trust company organized under the laws of the United States (or any state thereof) and any country that is a member of the Organization for Economic Cooperation and Development or any political subdivision thereof, and which:
8 (A) has: (I) a long term debt credit rating of A2 or higher from Moody’s or A or higher from S&P (or, if at any time neither S&P nor Moody’s is rating such obligations, an equivalent rating from another nationally recognized rating service); or (II) a combined capital and surplus greater than $250,000,000; or (B) is the SPE Custodian;
(iii) money market funds that: (A) comply with the criteria set forth in Rule 2a-7 under the Investment Company Act of 1940; (B) are rated A or higher by S&P and A2 or higher by Moody’s; or (C) have a combined capital and surplus of at least $500,000,000;
(iv) demand deposits, including interest bearing money market accounts, time deposits, overnight bank deposits, interest-bearing deposits, and certificates of deposit or banker’s acceptances of depository institutions rated in the AA/Aa2 long-term ratings category or higher by S&P or Moody’s or which are fully FDIC-insured; or
(v) cash.
Section 6. SPE Custodian.
(a) Limited Duties and Liability. The SPE Custodian shall have (i) no liability under any agreement other than this Custodial Agreement and (ii) no duty to inquire as to the provisions of any agreement other than this Custodial Agreement, the Funding Agreement, the Master Power Supply Agreement, the Electricity Sale and Service Agreement, the J. Aron Subordinated Loan and the Back-End Commodity Swaps. The SPE 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 and believed by it to be genuine and to have been signed or presented by the proper party or parties. The SPE 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 SPE Custodian shall have no duty to solicit any payments which may be due it. The SPE Custodian (in its capacity as SPE Custodian and Valuation Agent) shall not be liable for any action taken or omitted by it in good faith except to the extent that a court of competent jurisdiction determines that the SPE Custodian’s gross negligence or willful misconduct was the primary cause of any loss to any party hereto. In connection with the execution of any of its powers or the performance of any of its duties hereunder, the SPE Custodian may consult with counsel, accountants and other skilled Persons selected and retained by it. The SPE 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 SPE Custodian exercised due care and good faith in the selection of such Person. The permissive rights of the SPE Custodian to take actions enumerated under this Custodial Agreement shall not be construed as duties. Notwithstanding anything to the contrary in this Custodial Agreement, the Funding Agreement, the Master Power Supply Agreement, the Electricity Sale and Service Agreement, the J. Aron Subordinated Loan and the Back-End Commodity Swaps, the SPE Custodian shall not be required to exercise any rights or remedies under this Custodial Agreement or otherwise take any action or refrain from taking any action unless it shall have been directed to do so in a writing by Prepay LLC, Issuer or the Trustee 9 which is authorized or permitted to be given under this Custodial Agreement. So long as the SPE Custodian has requested instructions from one or more of Prepay LLC, Issuer or the Trustee in a timely manner regarding a matter or determination for which such party has the right provide instructions hereunder, the SPE Custodian shall not be liable for any delay in acting that is attributable to a delay or failure by Prepay LLC, Issuer or the Trustee in providing such instructions to the SPE Custodian, and the SPE Custodian shall be fully protected, and shall incur no liability whatsoever to Prepay LLC, Issuer, the Trustee, the Counterparties or any other Person in connection with, in acting (or failing to act) pursuant to such instructions, provided that such instructions (i) are reasonably believed to have been given by an Authorized Officer and (ii) are authorized or permitted to be given under this Custodial Agreement. In the event that the SPE 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 Custodial 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 SPE 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 Custodial Agreement to the contrary notwithstanding, in no event shall the SPE Custodian be liable for special, indirect, incidental or consequential damages, losses or penalties of any kind whatsoever (including but not limited to lost profits), regardless of the form of action.
(b) SPE Custodian Not a Fiduciary. The parties hereto acknowledge and agree that the SPE Custodian is not a fiduciary by virtue of accepting and carrying out its obligations under this Custodial Agreement and has not accepted any fiduciary duties, responsibilities or liabilities with respect to its services hereunder. The SPE Custodian shall not be required to risk or expend its own funds in performing its obligations under this Custodial Agreement. If and to the extent that Prepay LLC instructs the SPE Custodian to settle transactions in the Prepay LLC Revenue Account, Prepay LLC (i) shall cause all such transactions to be fully funded by depositing with the SPE Custodian sufficient immediately available funds (provided that this requirement shall be satisfied if sufficient funds are available in the Prepay LLC Capital Account for transfer to the Prepay LLC Revenue Account consistent with Section 5(d) of this Custodial Agreement), (ii) shall not rely on the SPE Custodian to extend credit in order to settle any such transaction, and (iii) acknowledges that any transactions not fully funded by Prepay LLC may fail to settle.
Subject to the requirements of Section 5(d) of this Custodial Agreement, if the SPE Custodian, in its sole discretion, permits an overdraft in the Prepay LLC Revenue Account or if Prepay LLC is for any other reason indebted to the SPE Custodian, Prepay LLC shall immediately deliver for credit to the Prepay LLC Revenue Account sufficient cash to eliminate such debit balance, plus accrued interest at a rate then charged by the SPE Custodian to its institutional custody clients in the relevant currency, which rate shall be supplied by the SPE Custodian to Prepay LLC from time to time.
Section 7. Removal, Resignation and Succession.
10 (a) Removal. The SPE Custodian may be removed with 30 days’ prior written notice by Prepay LLC, with a copy to each of the other parties hereto. Notwithstanding the foregoing, any such removal of the SPE Custodian shall not be effective until a successor SPE Custodian has been appointed pursuant to this Section 7. The SPE Custodian’s rights under this Custodial Agreement to indemnity and any amounts due and payable to the SPE Custodian shall survive any such removal.
(b) Resignation. The SPE Custodian may resign and be discharged from its duties or obligations hereunder by giving not less than 30 days’ advance notice in writing of such resignation to the other parties hereto specifying a date when such resignation shall take effect; and such resignation shall take effect upon the day specified in such notice unless a successor shall not have been appointed by the other parties to this Custodial Agreement on such date, in which event such resignation shall not take effect until a successor is appointed. (c) Appointment of Successor. In case at any time the SPE Custodian shall resign or shall be removed or shall become incapable of acting, or shall be adjudged bankrupt or insolvent, or if a receiver, liquidator or conservator of the SPE Custodian, or of its property, shall be appointed, or if any public officer shall take charge or control of the SPE Custodian, or of its property or affairs, Prepay LLC, Issuer and J. Aron shall use their commercially reasonable efforts to appoint a successor custodian in a timely fashion, provided that any custodian appointed in succession to the SPE 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 a 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 Custodial Agreement. Any corporation or association into which the SPE 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 SPE Custodian’s corporate trust line of business may be transferred, shall be the SPE Custodian under this Custodial Agreement without further act. Notwithstanding the foregoing, if no appointment of a successor SPE Custodian shall be made pursuant to the foregoing provisions of this Section 7 within 30 days after (i) Prepay LLC has given notice to the SPE Custodian and the other parties hereto of the SPE Custodian’s removal as provided in this Section 7 or (ii) the SPE Custodian has given to the other parties hereto written notice of its resignation as provided in this Section 7, the SPE Custodian may apply to any court of competent jurisdiction to appoint a successor SPE Custodian. Said court may thereupon, after such notice, if any, as such court may deem proper, appoint a successor SPE Custodian.
Section 8. Fees. J. Aron, as the sole member of Prepay LLC, agrees to (a) pay the SPE Custodian reasonable compensation for the services to be rendered hereunder, which compensation shall be $[___] for each year that this Custodial Agreement is in effect, and (b) pay or reimburse the SPE 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 Custodial Agreement.
Section 9. Reimbursement. Prepay LLC agrees to reimburse the SPE Custodian and its directors, officers, agents and employees for any and all loss, liability or expense (including 11 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 SPE Custodian under this Custodial 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 SPE Custodian or such director, officer, agent or employee seeking reimbursement, or (b) its following any instructions or other directions from Prepay LLC, except to the extent that such instruction or direction is not authorized or permitted to be given under this Custodial Agreement; provided, however, that any amounts due under this Section 9 shall not duplicate any other amounts due under this Custodial Agreement, including without limitation amounts due under Section 16 hereof. The parties hereto acknowledge that this provision shall survive the resignation or removal of the SPE Custodian or the termination of this Custodial Agreement.
Section 10. Taxpayer Identification Numbers; Tax Matters. Prepay LLC represents that its correct taxpayer identification number 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 Prepay LLC Revenue Account and the Prepay LLC Capital Account will be prepared and filed by Prepay LLC and the SPE Custodian shall have no responsibility for the preparation and/or filing of any tax return with respect to any income earned on the Prepay LLC Revenue Account and the Prepay LLC Capital Account. In addition, any tax or other payments required to be made pursuant to such tax return or filing shall be paid by Prepay LLC. The SPE Custodian shall have no responsibility for making such payment unless directed to do so by the appropriate authorized party.
Section 11. Notices. All communications hereunder shall be in writing and shall be deemed to be duly given and received (a) upon delivery if delivered personally or upon confirmed transmittal if by facsimile; (b) on the next Business Day if sent by overnight courier; or (c) four Business Days after mailing if mailed by prepaid registered mail, return receipt requested, to the appropriate notice address for each of the parties set forth in Exhibit A.
Any party may provide a new or different address for such notices or its wire instructions set forth in Exhibit A if furnished to the other parties in writing by registered mail, return receipt requested. Notwithstanding the above provisions of this Section 11, in the case of communications delivered to the SPE Custodian pursuant to clause (b) or clause (c) of this Section 11 above, such communications shall be deemed to have been given on the date received by the SPE Custodian. In the event that the SPE Custodian, in its sole discretion, shall determine that an emergency exists, the SPE Custodian may use such other means of communication as the SPE Custodian deems appropriate.
Notwithstanding anything else in this Custodial Agreement to the contrary, the SPE Custodian shall have the right to accept and act upon instructions or directions provided by a party pursuant to this Custodial Agreement, or any other document reasonably relating to the Bonds, if delivered using Electronic Means (as defined below); provided, however, that the applicable party shall provide to a Responsible Officer of the SPE Custodian an incumbency certificate listing designated individuals with the authority to provide such instructions (each an “Authorized Officer”) and containing specimen signatures of such Authorized Officers, which incumbency certificate shall be amended, with written notice to a Responsible Officer of the SPE 12 Custodian, whenever an individual is to be added or deleted from the listing. If a party elects to give the SPE Custodian directions or instructions using Electronic Means and the SPE Custodian in its discretion elects to act upon such directions, the SPE Custodian’s understanding of such directions shall be deemed controlling. The party giving such instructions to the SPE Custodian understands and agrees that the SPE Custodian cannot determine the identity of the actual sender of such directions and that the SPE Custodian may conclusively presume that directions that purport to have been sent by an Authorized Officer listed on the incumbency certificate provided to a Responsible Officer of the SPE Custodian have been sent by such Authorized Officer. The party giving such instructions shall be solely responsible for ensuring that only Authorized Officers of such party transmit such directions to the SPE Custodian and that the party and all Authorized Officers treat applicable user and authorization codes, passwords and/or authentication keys as confidential and with extreme care. The SPE Custodian shall not be liable for any losses, costs or expenses arising directly or indirectly from its reliance upon and compliance with such instructions notwithstanding that such instructions conflict or are inconsistent with a subsequent written instruction. The party giving such instructions to the SPE Custodian agrees: (i) to assume all risks arising out of the use of Electronic Means (as defined below) to submit directions to the SPE Custodian, including without limitation the risk of the SPE 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 SPE 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, (iv) to notify the SPE Custodian immediately upon learning of any compromise or unauthorized use of the security procedures; and (v) to indemnify and hold harmless the SPE Custodian against any and all claims, losses, damages, liabilities, judgments, costs and expenses (including reasonable attorneys’ fees) incurred or sustained by the SPE Custodian as a result of or in connection with the SPE Custodian's reliance upon and compliance with instructions or directions given by Electronic Means (as defined below), except for any claim, damage or loss resulting from the gross negligence or willful misconduct of the SPE Custodian (provided that, for the avoidance of doubt, any amounts due under clause (v) of this Section 11 above shall not duplicate any other amounts due under this Custodial Agreement, including without limitation amounts due under Section 9 or Section 16 hereof).
As used herein, “Electronic Means” shall mean instructions sent by S.W.I.F.T, e-mail, facsimile and other similar secure electronic transmission platform containing applicable authorization codes, passwords and/or authentication keys issued by the SPE Custodian (“Secure Platform”) or another method or system specified by a Responsible Officer of the SPE Custodian as available for use in connection with the SPE Custodian’s services hereunder. Access to and use the SPE Custodian’s systems shall be subject to the terms and conditions contained in a separate written agreement. Prepay LLC, J. Aron and the Issuer shall be responsible for requesting access to any such system of the SPE Custodian and completing the documentation required for such access and nothing herein shall obligate the SPE Custodian to ensure any such access and the SPE Custodian shall have no responsibility or liability should such parties fail to, or elect not to, avail itself of such access. If the parties elect to use an on-line communications system owned or operated by a third party, the SPE Custodian shall have no responsibility or liability for the reliability or availability of any such service. All funds transfer instructions shall 13 be sent utilizing a Secure Platform unless otherwise agreed by the SPE Custodian. When instructed to credit or pay a party by both name and a unique numeric or alpha-numeric identifier (e.g. ABA number or account number), the SPE Custodian, and any other bank participating in the funds transfer, may rely solely on the unique identifier, even if it identifies a party different than the party named. This applies to beneficiaries as well as any intermediary bank. The parties hereto agree to be bound by the rules of any funds transfer network used in connection with any payment order accepted by the SPE Custodian hereunder.
To the extent that any Cash Equivalents in which cash may be invested pursuant to Section 5(f) affords to the owner thereof the ability to exercise any rights or discretionary actions, the SPE Custodian agrees, as promptly as practicable under the circumstances, to notify Prepay LLC thereof, provided that the SPE Custodian, in its capacity as custodian of such Cash Equivalents, has actually received notice of such right or discretionary action from the relevant issuer, transfer agent or depository. Without actual receipt of such notice by the SPE Custodian, the SPE Custodian shall have no liability for failing to so notify Prepay LLC. Prepay LLC or its designee shall be solely responsible for making any decisions relating thereto and for directing Custodian to act. In order for the SPE Custodian to act, it must receive Prepay LLC’s Corporate Action Instructions (defined below) by such time as the SPE Custodian shall advise Prepay LLC or its designee. If Custodian does not receive such Corporate Action Instructions by such deadline, the SPE Custodian shall not be liable for failure to take any action relating to or to exercise any rights conferred by such Cash Equivalents. For the avoidance of doubt, any instruction given to the SPE Custodian relating to the exercise of rights or discretionary actions pursuant to this paragraph, must be given exclusively by Corporate Action instructions.
As used herein “Corporate Action Instructions” shall mean instructions delivered to SPE Custodian by Electronic Means, other than e-mail. Corporate Action Instructions sent by facsimile shall be sent to the following number 844-299-3627 (which such number may be changed from time to time as the SPE Custodian may designate in writing).
Section 12. Miscellaneous.
(a) Amendments. The provisions of this Custodial 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) Assignment. Neither this Custodial Agreement nor any right or interest hereunder may be assigned in whole or in part by any party, except as provided in Section 7, without the prior consent of the other parties; provided that, notwithstanding the foregoing, the parties acknowledge and agree that Prepay LLC shall assign all of its right, title and interest in, to and under this Custodial Agreement in connection with any assignment by Prepay LLC of its right, title and interest in, to and under the Master Power Supply Agreement to the assignee thereof, which assignment shall constitute a novation and shall not require the consent of the other parties hereto. Notwithstanding the foregoing, any such assignment of this Custodial Agreement by Prepay LLC shall be effective only upon and subject to the satisfactory completion by the SPE Custodian of its customer identification program and anti-money laundering and counter-terrorism protocols. 14 (c) Governing Law. This Custodial 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 of another jurisdiction. (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 Custodial Agreement.
(e) Force Majeure. No party to this Custodial 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 Custodial Agreement because of, strikes, work stoppages, acts of war or terrorism, insurrection, revolution, epidemics, pandemics, nuclear or natural catastrophes or acts of God, or interruptions, loss or malfunctions of utilities, communications or computer (software and hardware) services, 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 Custodial 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 Custodial 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.
(g) Information Requirements. The Bank of New York Mellon Corporation is a global financial organization that operates in and provides services and products to clients through its affiliates and subsidiaries located in multiple jurisdictions (the “BNY Mellon Group”). The BNY Mellon Group may (i) centralize in one or more affiliates and subsidiaries certain activities (the “Centralized Functions”), including audit, accounting, administration, risk management, legal, compliance, sales, product communication, relationship management, and the compilation and analysis of information and data regarding Prepay LLC (which, for purposes of this provision, includes the name and business contact information for Prepay LLC’s employees and representatives) and the accounts established pursuant to this Custodial Agreement (the “Customer Information”) and (ii) use third party service providers to store, maintain and process the Customer Information (“Outsourced Functions”). Notwithstanding anything to the contrary contained elsewhere in this Custodial Agreement and solely in connection with the Centralized Functions and/or Outsourced Functions, Prepay LLC consents to the disclosure of, and authorizes the SPE Custodian to disclose, the Customer Information to (i) other members of the BNY Mellon Group (and their respective officers, directors and employees) and to (ii) third-party service providers (but solely in connection with Outsourced Functions), in each case, who are required to maintain the confidentiality of the Customer 15 Information. In addition, the BNY Mellon Group may aggregate information regarding Prepay LLC and its accounts (“Customer-Related Data”) with other data collected and/or calculated by the BNY Mellon Group (the “Aggregated Data”). The BNY Mellon Group will own all such Aggregated Data, provided that the Aggregated Data shall not identify, in any way, Prepay LLC or any of its assets, financial or trading information, or other proprietary information and the BNY Mellon Group agrees that it shall not distribute the Aggregated Data in a format that identifies Customer-Related Data (whether separately or with Aggregated Data) with Prepay LLC. Prepay LLC represents that it is authorized to consent to the foregoing and that the disclosure of the Customer Information in connection with the Centralized Functions and/or Outsourced Functions does not violate any relevant data protection legislation. Prepay LLC also consents to the disclosure of the Customer Information to the extent required by law. (h) Prepayment Balance. Exhibit B sets forth the prepayment balance for each Month during the initial Interest Rate Period. In connection with the establishment of successive Interest Rate Periods, Prepay LLC shall prepare and deliver to the other parties no later than the last day of the then current Interest Rate Period an updated Exhibit B hereto setting forth the prepayment balance for each Month of such successive Interest Rate Period, in which case such updated Exhibit B will be effective as of the first day of the next Interest Rate Period.
Section 13. Compliance with Court Orders. In the event that any amount held by the SPE Custodian under this Custodial Agreement 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 Custodial Agreement, the SPE 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 SPE 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 14. Term; Winding Up. This Custodial Agreement shall expire concurrently with the receipt of written notice from Prepay LLC, with a copy to the other parties, that the J.
Aron Subordinated Loan has been repaid in accordance with its terms. Any remaining balance in the Prepay LLC Revenue Account or the Prepay LLC Capital Account shall be paid to an account specified by J. Aron as the sole member of Prepay LLC following written confirmation (a) from the Trustee that (i) all required payments to the Swap Counterparty under the Back-End Swap have been paid to the Swap Payments Account and (ii) all required payments to Issuer under the Master Power Supply Agreement, and (b) from J. Aron that all required payments to J.
Aron under the Electricity Sale and Service Agreement have been paid.
Section 15. Third Party Beneficiaries. Each of the Counterparties shall be third party beneficiaries of this Custodial Agreement with the right to enforce the provisions hereof relating to payments to the Swap Payments Accounts. Except as provided in the immediately preceding sentence, it is specifically agreed that there are no other third-party beneficiaries of this Custodial Agreement and that this Custodial Agreement shall not impart any rights enforceable by any other person not a party to this Custodial Agreement.
16 Section 16. Indemnification. Prepay LLC agrees to protect, indemnify, defend and hold harmless the SPE Custodian (in its capacity as SPE Custodian and Valuation Agent) and its affiliates, and each Person who controls the SPE Custodian, 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 SPE Custodian and Valuation Agent hereunder, except for any claim, damage or loss resulting from the gross negligence or willful misconduct of the SPE Custodian; provided, however, that any amounts due under this Section 16 shall not duplicate any other amounts due under this Custodial Agreement, including without limitation amounts due under Section 9 hereof. The obligations of this Section 16 shall survive any resignation or removal of the SPE Custodian and the termination of this Custodial Agreement.
Prepay LLC hereby grants the SPE Custodian a lien, right of set-off, and security interest in the Prepay LLC Capital Account for the payment of any claim by the SPE Custodian for compensation, reimbursement or indemnity under this Custodial Agreement. In this regard, the SPE Custodian shall be entitled to all the rights and remedies of a pledgee and secured creditor under applicable laws, rules or regulations as then in effect.
Section 17. USA Patriot Act. The parties acknowledge that the SPE 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 SPE Custodian must obtain, verify and record information that allows the SPE Custodian to identify Prepay LLC. Accordingly, prior to opening the SPE Revenue Account described in Section 4 of this Custodial Agreement, the SPE Custodian will ask Prepay LLC to provide certain information, including but not limited to name, physical address, tax identification number and other information that will help the SPE Custodian identify and verify Prepay LLC’s identity, such as organizational documents, certificate of good standing, license to do business, or other pertinent identifying information. Prepay LLC agrees that the SPE Custodian cannot open any account under this Custodial Agreement unless and until the SPE Custodian verifies Prepay LLC’s identity in accordance with its CIP.
Section 18. Agents.
(a) Pursuant to the terms of the Bond Indenture, Issuer has irrevocably appointed the Trustee as its agent to issue notices and, as directed under the Bond Indenture, to take any other actions that Issuer is required or permitted to take under this Custodial Agreement. The SPE Custodian may rely on notices or other actions taken by Issuer or the Trustee. (b) Pursuant to the terms of the Electricity Sale and Service Agreement, Prepay LLC has irrevocably appointed J. Aron as its agent to issue notices and to take any other actions that Prepay LLC is required or permitted to take under this Custodial Agreement. The SPE Custodian may rely on notices or other actions taken by Prepay LLC or J. Aron.
Section 19. Special Resolution Regime.
(a) In the event the SPE Custodian, Prepay LLC or J. Aron (each, a “Covered Entity”) becomes subject to a proceeding under a U.S. special resolution regime, the transfer of this Custodial Agreement (and any interest and obligation in or under, and any property securing, 17 this Custodial Agreement) from such Covered Entity will be effective to the same extent as the transfer would be effective under the U.S. special resolution regime if this Custodial Agreement (and any interest and obligation in or under, and any property securing, this Custodial Agreement) were governed by the laws of the United States or a state of the United States. (b) In the event any Covered Entity or any of its affiliates becomes subject to a proceeding under a U.S. special resolution regime, default rights with respect to this Custodial Agreement that may be exercised against such Covered Entity are permitted to be exercised to no greater extent than the default rights could be exercised under the U.S. special resolution regime if this Custodial Agreement were governed by the laws of the United States or a state of the United States.
(c) For the avoidance of doubt, except as expressly provided above, the foregoing does not in any way modify, affect or amend the duties, rights and obligations of any of the parties under this Custodial Agreement.
Section 20. Sanctions.
(a) Throughout the term of this Custodial Agreement, J. Aron (on behalf of itself and Prepay LLC): (i) will have in place and will implement policies and procedures designed to prevent violations of Sanctions (defined below), including measures to accomplish effective and timely scanning of all relevant data with respect to its clients and with respect to incoming or outgoing assets or transactions relating to this Custodial Agreement; (ii) shall exercise commercially reasonable efforts to ensure that neither it nor any of its affiliates, directors, officers, employees is an individual or entity that is, or is owned or controlled by an individual or entity that is: (A) the target of Sanctions; or (B) located, organized or resident in a country or territory that is, or whose government is, the target of Sanctions. (b) J. Aron and Prepay LLC shall not, directly or indirectly, use the services and/or the Prepay LLC Revenue Account or the Prepay LLC Capital Account in any manner that would result in its violation of Sanctions.
(c) Prepay LLC and J. Aron will promptly provide to the SPE Custodian such information as the SPE Custodian reasonably requests in connection with the matters referenced in this Section, including information regarding Prepay LLC and J. Aron and the Prepay LLC Revenue Account and the Prepay LLC Capital Account and the cash or Cash Equivalents held, therein in relation to which services are to be provided hereunder and the source thereof, and the identity of any individual or entity having or claiming an interest therein. The SPE Custodian may decline to act or provide services in respect of an account, and take such other actions as it, in its reasonable discretion, deems necessary or advisable, in connection with the matters referenced in this Section. If the SPE Custodian declines to act or provide services as provided in the preceding sentence, except as otherwise prohibited by applicable law or official request, the Custodian will inform the other parties hereto as soon as reasonably practicable.
As used herein, “Sanctions” means all economic sanctions laws, rules, regulations, executive orders and requirements administered by any governmental authority of the United 18 States (including the Office of Foreign Assets Control (OFAC) of the U.S. Department of the Treasury) or any other applicable domestic or foreign authority. [Signature Pages Follow]
Signature Page to SPE Master Custodial Agreement
IN WITNESS WHEREOF, the parties hereto have caused this Custodial Agreement to be duly executed and delivered by their respective duly Authorized Officers as of the date first written above.
ARON ENERGY PREPAY [___] LLC
By: J. Aron & Company LLC, its Manager
By: __________________________________
Name: _____________________________
Title: ______________________________
Taxpayer ID Number:_________________
J. ARON & COMPANY LLC
By: __________________________________
Name: _____________________________
Title: ______________________________
CALIFORNIA COMMUNITY CHOICE
FINANCING AUTHORITY
By: __________________________________
Name: _____________________________
Title: ______________________________
THE BANK OF NEW YORK MELLON, as
SPE Custodian
By: _______________________________
Name: _____________________________
Title: ______________________________
EXHIBIT A
NOTICE ADDRESSES AND WIRE INSTRUCTIONS
[To come.]
EXHIBIT B
PREPAYMENT BALANCE
[To be attached.]
SCHEDULE I
Valuation Services Terms and Conditions
1. On each Valuation Date, the Valuation Agent shall determine Delivery Amount and the Return Amount as herein described. Capitalized terms used but not otherwise defined shall have the meanings assigned to such terms in the Credit Support Annex to the Back-End Commodity Swap.
2. On the Business Day prior to each Valuation Date as set forth in the Credit Support Annex to the Back-End Commodity Swap, Prepay LLC shall provide the Exposure under each Back-End Commodity Swap to the Valuation Agent. The Valuation Agent shall calculate the Delivery Amount and the Return Amount consistent with the terms of the Credit Support Annex (i.e., the Exposure minus the Posted Collateral and the rounding and Minimum Transfer Amount specified in the Credit Support Annex). On each Valuation Date prior to the Notification Time specified in the Credit Support Annex to the Back-End Commodity Swap, Valuation Agent shall transmit to Prepay LLC and each Swap Counterparty a report (“Report”) via e-mail of the values and other amounts determined in accordance with the preceding sentence. By electing to use e-mail for this purpose, Prepay LLC acknowledges that such transmissions are not encrypted and therefore are unsecure. Prepay LLC further acknowledges that there are other risks inherent in communicating through the internet such as the possibility of virus contamination and disruptions in service, and agrees that the Valuation Agent shall not be responsible for any loss, damage or expense suffered or incurred by any of the parties hereto or any other person claiming by or through the parties as a result of the use of such method.
3. Reports shall be produced on a basis and in such form and content as shall be mutually agreed between the Valuation Agent and Prepay LLC. Prepay LLC shall examine (or cause to be examined) each Report and notify the Valuation Agent of any error, omission or discrepancy by the close of business on the Business Day immediately following receipt of such Report. The parties hereto acknowledge and agree that unless the Valuation Agent is notified in writing of any error, omission or discrepancy by the close of the Business Day following receipt, each Report shall be deemed to be correct and conclusive in all respects, absent manifest error. In the event of any errors or omissions in any Report, the Valuation Agent’s sole responsibility and liability shall be the preparation of a corrected Report at no additional cost.
4. The Valuation Agent is authorized to utilize any generally recognized pricing or other information service providers reasonably believed by it to be reliable in order to perform its valuation and other responsibilities hereunder. The parties hereto understand and agree that certain pricing information with respect to complex financial instruments (e.g., derivatives) may be based on calculated amounts rather than actual market transactions and may not reflect actual market values, and that the variance between such calculated amounts and actual market values may or may not be material. Where pricing and other information service providers do not provide information for particular securities or other property, Prepay LLC may advise Custodian regarding the fair market value of, or provide other information with respect to, such securities or property as determined by it in good faith. It is acknowledged and agreed that information supplied by such pricing or other information service providers may be incorrect or incomplete and the Valuation Agent shall not be liable for any loss, damage or expense incurred as a result of errors or omissions with respect to any pricing or other information utilized by the Valuation Agent hereunder.
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CUSTODIAL AGREEMENT
This Agreement (this “Agreement”) is made and entered into as of [____], 2023, by and among Central Coast Community Energy, a California joint powers authority (“CCCE”), J. Aron & Company LLC, a New York limited liability company (“J. Aron”), Aron Energy Prepay 16 LLC, a Delaware limited liability company (“Prepay LLC”), 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 CCCE, J. Aron, Prepay LLC and Issuer, the “Parties”).
RECITALS:
WHEREAS, Issuer is issuing its [Clean Energy Project Revenue Bonds, Series 2023] (the “Bonds”) pursuant to the Trust Indenture, dated as of [____], 2023 (the “Bond Indenture”) between Issuer and [U.S Bank Trust Company, National Association], a [____], in its capacity as trustee under the Bond Indenture (the “Trustee”); and
WHEREAS, Prepay LLC and Issuer are entering into that certain Master Power Supply Agreement, dated as of [____], 2023 (the “Master Power Supply Agreement”); and WHEREAS, in connection with the execution of the Master Supply Agreement, Prepay LLC and J. Aron are entering into an Electricity Purchase, Sale and Service Agreement, dated as of [____], 2023 (the “Electricity Sale and Service Agreement”); and WHEREAS, in connection with the execution of the Master Supply Agreement, Issuer and CCCE are entering into a Clean Energy Purchase Contract, dated as of [____], 2023 (the “Clean Energy Purchase Contract” and together with the Master Power Supply Agreement and the Electricity Sale and Service Agreement, the “Clean Energy Prepay Agreements”); and WHEREAS, prior to the commencement of deliveries under the Clean Energy Prepay Agreements, J. Aron, Issuer and CCCE 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”, 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)), pursuant to which CCCE will partially assign its rights and obligations under the Assigned PPAs (as defined in the Clean Energy Purchase Contract) to J. Aron; and
WHEREAS, the Parties propose to enter into this Agreement in order to administer payments to be received by the PPA Sellers under the Assigned PPAs.
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:
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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 Contract. 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:
“Assigned Capacity Products Payment” means, in respect of any Monthly PPA Invoice, the portion of the CCCE Gross Payment, if any, due with respect to Assigned Capacity Products (as defined in that certain Letter Agreement entered into by and among J. Aron, Prepay LLC, CCCE and the Issuer as of [____], 2023).
“CCCE Gross Payment” means, in respect of any Monthly PPA Invoice, an amount determined by CCCE 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; provided, for clarity, that the CCCE 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 Energy and Assigned RECs, and (ii) otherwise shall be deemed to be paid to the relevant PPA Seller on behalf of CCCE. “CCCE Net Payment” means, in respect of any Monthly PPA Invoice, an amount determined by CCCE as the positive result, if any, of (a) the CCCE Gross Payment, less (b) the PPA Seller Payment Obligation.
“Guaranteed Energy Payment” means any gross amounts payable by an APC Party to J. Aron pursuant to the terms of an Assignment Agreement relating to guaranteed Energy production under the applicable Assigned PPA.
“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.
“J. Aron Prepay Payment” means, in respect of each Monthly PPA Invoice, an amount determined by CCCE as the lesser of (a) the J. Aron Fixed Payment for the relevant Month and Assigned PPA, and (b) the actual quantity of Assigned Energy reflected in such Monthly PPA Invoice multiplied by the contract price then in effect with respect to Energy in the relevant Assigned PPA; provided that the J. Aron Prepay Payment shall be reduced by 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); provided further that the J. Aron Prepay Payment will be determined without regard to any PPA Seller Payment Obligation. “J. Aron Resettlement Payment” means, in respect of any Monthly PPA Invoice that (a) is delivered after the delivery of the Billing Statement under the Clean Energy Purchase Contract for such Month and (b) reflects a quantity of Energy less than the Assigned Prepay Quantity was delivered in such Month under the relevant Assigned PPA, an amount equal to the product of (x) the Assigned Prepay Quantity for such Month minus the Assigned Quantity actually delivered under the relevant Assigned PPA, multiplied by (y) the applicable APC Contract Price. 3 4895-9894-5362v2/201010-0001
“Monthly PPA Payment” means, in respect of any Monthly PPA Invoice, an amount determined by CCCE 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, which shall be deemed to be paid to the relevant PPA Seller on behalf of J. Aron in respect of Assigned Energy; and (b) the CCCE Net Payment.
“PPA Seller Payment Obligation” means, in respect of any Monthly PPA Invoice, an amount determined by CCCE 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 CCCE and credited against the CCCE Gross Payment thereby resulting in the CCCE Net Payment required to be made by CCCE 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 Master Power Supply Agreement) is in effect consistent with the terms of Exhibits C and F of the 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. CCCE, J. Aron, Prepay LLC 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.
Section 3. Payment Instructions to Custodian; Assigned PPA Exhibits. (a) Monthly Statements. No later than seven days following receipt of an invoice from a PPA Seller in respect of any Month in an Assignment Period (a “Monthly PPA Invoice”), CCCE 4 4895-9894-5362v2/201010-0001
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:
(i) the J. Aron Prepay Payment;
(ii) the J. Aron Resettlement Payment;
(iii) the CCCE Gross Payment;
(iv) the PPA Seller Payment Obligation;
(v) the CCCE Net Payment;
(vi) the Monthly PPA Payment;
(vii) 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; (viii) the “Custodial Agreement Payment Date,” which shall be one Business Day preceding the Monthly PPA Invoice Payment Date;
(ix) the PPA Shortfall Lookback Summary;
(x) the Assigned Capacity Products Payment, if any; and (xi) the Guaranteed Energy Payment, if any;
provided that CCCE shall deliver an updated Monthly Statement within seven days following agreement by CCCE 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; provided furthermore that 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 CCCE and the relevant PPA Seller as provided in the Assignment Agreements.
[CCCE requests GS team to walk through the billing and payment mechanics] (b) Monthly Statement Verification. J. Aron shall notify CCCE and each other Party promptly, but in no event more than three (3) Business Days, following CCCE’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, CCCE 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) CCCE 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 CCCE and J. Aron under separate contracts, and (iii) none of CCCE, J. Aron nor any other Party hereto will have any 5 4895-9894-5362v2/201010-0001
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 CCCE 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 CCCE 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) Assigned PPAs Exhibit. Promptly following the execution of the initial Assignment Agreements, J. Aron shall deliver Exhibit A to the other Parties hereto, which will set forth certain information regarding the Assigned PPAs as of the date hereof, including the Assignment Periods for each Assigned PPA, the Assigned 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. 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.
Section 4. Assigned PPA Payments Account.
(a) Payments. With respect to certain payments required to be made by J. Aron and CCCE to the PPA Sellers under the Assigned PPAs, there is hereby established with the Custodian the following custodial account: a payments account designated as the “[CCCFA (CCCE Proj) 2023 PPA Cust]”, bearing Custodian’s Account No. [____] (the “Assigned PPA Payments Account”), and all payments made by J. Aron and CCCE hereunder shall be wired to such Assigned PPA Payments Account :
[____]
ABA: [____]
FBO: [____]
Acct: [____]
FFC: [____] – [CCCFA (CCCE Proj) 2023 PPA Cust]
Address: [____]
[____]
(b) J. Aron Payments. J. Aron shall pay the J. Aron Prepay Payment and any J. Aron Resettlement 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, and J.
Aron agrees to direct PPA Sellers to pay any Guaranteed Energy Payment into the Assigned PPA Payments Account on the relevant Monthly PPA Invoice Due Date. To the extent that (i) a J. Aron Prepay Payment and a J. Aron Resettlement Payment are due and (ii) J. Aron pays some portion of such amounts but less than the total amount due, J. Aron’s partial payment shall be applied first to the J. Aron Prepay Payment. In addition, the Custodian agrees to promptly notify CCCE if it does not receive the J. Aron Prepay Payment or any J. Aron Resettlement Payment from J. Aron on the Custodial Agreement Payment Date, and in such case CCCE may elect in its sole discretion to make the J. Aron Prepay Payment to the Custodian for the purpose of satisfying the Monthly 6 4895-9894-5362v2/201010-0001
PPA Payment (in which case CCCE will have a reimbursement claim against Issuer under Section
6.4 of the Clean Energy Purchase Contract).
(c) CCCE Payments. CCCE shall pay the CCCE 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.
(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 made by CCCE on J. Aron’s behalf pursuant to the last sentence of Section 4(b)) and any CCCE Net Payment received from CCCE 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 Account and (ii) notify such PPA Seller of the amounts received for such Month from each of J. Aron and CCCE consistent with such PPA Seller’s contact information provided in Exhibit A; provided furthermore that, if the J. Aron Prepay 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 CCCE on the relevant Monthly PPA Invoice Payment Date pursuant to CCCE’s payment instructions set forth on Exhibit C; (ii) any J. Aron Resettlement Payment received from J. Aron shall be remitted to CCCE on the relevant Monthly PPA Invoice Payment Date pursuant to CCCE’s payment instructions set forth on Exhibit C; and
(iii) any Guaranteed Energy Payment received from a PPA Seller shall be remitted to CCCE on the relevant Monthly PPA Invoice Payment Date pursuant to CCCE’s payment instructions set forth on Exhibit C.
(e) Amounts Held in Trust. Amounts deposited in the Assigned PPA Payments Account shall be held in trust for the benefit of CCCE until applied as set forth in Section 4(d) and Section 12, as applicable, and there is hereby granted to CCCE 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 CCCE 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 CCCE 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. 7 4895-9894-5362v2/201010-0001
(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 CCCE 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 any payments which may be due to it, or to take any action to compel J. Aron or CCCE 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 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 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 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 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 8 4895-9894-5362v2/201010-0001
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. (b) Custodian Fee. The Issuer agrees to pay the Custodian reasonable compensation for the services to be rendered hereunder, which compensation shall be $[____] for each year that this Agreement is in effect. 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 60 days’ advance notice in writing of such resignation to the other Parties hereto specifying a date when such resignation shall take effect; and such 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 60 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 CCCE 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 CCCE, 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. 9 4895-9894-5362v2/201010-0001
Section 8. Taxpayer Identification Numbers; Tax Matters. J. Aron and CCCE 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 CCCE, 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 CCCE. The Custodian shall have no responsibility for making such payment unless directed to do so by the appropriate authorized Party.
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, 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 (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.
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.
(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.
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(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, floods, strikes, electrical outages, equipment or transmission failure, or other causes reasonably beyond its control. (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. (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.
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 CCCE, with a copy to the other Parties, that the Clean Energy Purchase Contract has terminated in accordance with its 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 CCCE.
Section 13. Indemnification. J. Aron and CCCE, 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 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. 11 4895-9894-5362v2/201010-0001
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 under the Bond 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 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). 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 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 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 Bond Indenture) are received for the payment thereof and may be applied therefor pursuant to the terms of the Bond Indenture.
Section 15. Patriot Act. J. Aron and CCCE 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 CCCE.
Accordingly, prior to opening the Assigned PPA Payments Account described in Section 4 of this Agreement, the Custodian will ask J. Aron and CCCE 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 CCCE’s identities, such as organizational documents, certificate of good standing, license to do business, or other pertinent identifying information. J. Aron and CCCE agree that the Custodian cannot open any account hereunder unless and until the Custodian verifies J. Aron’s and CCCE’s identities in accordance with its CIP. [Signature Pages Follow]
4895-9894-5362v2/201010-0001
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.
CENTRAL COAST COMMUNITY ENERGY
By:___________________________________
Name: _____________________________
Title: ______________________________
Taxpayer ID Number:_________________
J. ARON & COMPANY LLC
By:___________________________________
Name: _____________________________
Title: ______________________________
Taxpayer ID Number: _________________
ARON ENERGY PREPAY 16 LLC
By: J. Aron & Company LLC, its
Manager
By:___________________________________
Name: _____________________________
Title: ______________________________
[CUSTODIAN]
By:___________________________________
Name: _____________________________
Title: ______________________________
CALIFORNIA COMMUNITY CHOICE
FINANCING AUTHORITY
By:___________________________________
Name: _____________________________
Title: ______________________________
4895-9894-5362v2/201010-0001
EXHIBIT A
ASSIGNED PPAS
[To come.]
4895-9894-5362v2/201010-0001
EXHIBIT B
J. ARON FIXED PAYMENTS
[To come.]
4895-9894-5362v2/201010-0001
EXHIBIT C
NOTICE INFORMATION
Prepay LLC:
Aron Energy Prepay 16 LLC
c/o J. Aron & Company LLC
200 West Street
New York, NY 10282
Email: [email protected]
J. Aron:
J. Aron & Company LLC
200 West Street
New York, NY 10282
Email: [email protected]
Issuer:
California Community Choice Financing Authority
1125 Tamalpais Avenue
San Rafael, CA 94901
Email: [_____]
CCCE:
Central Coast Community Energy
70 Garden Court, Suite 300
Monterey, CA 93940
Email: [____]
CCCE Wire Instructions:
[____]
[____]
[____]
Custodian:
[____]
[____]
[____]
RE-PRICING AGREEMENT
This RE-PRICING AGREEMENT (this “Agreement”) is made and entered into as of [____], 2023 by and between Aron Energy Prepay 16 LLC, a Delaware limited liability (“Prepay LLC”) 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) (the “Issuer”). Each of Prepay LLC and the Issuer is individually referred to as a “Party” and collectively as the “Parties”. Capitalized terms used herein shall have the meanings set forth in Section 1.
WHEREAS, the Issuer is issuing its Bonds pursuant to the Bond Indenture in order to provide funds to acquire the Power Supply from Prepay LLC pursuant to the Master Power Supply Agreement; and
WHEREAS, in connection with its acquisition of the Power Supply, the Issuer has entered into the Clean Energy Purchase Contract with the Project Participant providing for the sale of the Power Supply by the Issuer to the Project Participant; and WHEREAS, the price payable by the Project Participant for the Power Supply includes a discount to the index or APC Contract Price, as applicable, set forth in the applicable Clean Energy Purchase Contract, which discount has been established for the Initial Reset Period therein and will be re-established for each subsequent Reset Period under the terms and conditions set forth herein; and
WHEREAS, under the terms of the Master Power Supply Agreement and Clean Energy Purchase Contract, prior to each Reset Period after the Initial Reset Period, the Project Participant may elect to have the Power Supply remarketed if the Available Discount Percentage established for any portion of a Reset Period is less than the Minimum Discount Percentage specified therein; NOW, THEREFORE, in consideration of the premises above and the mutual covenants and agreements herein set forth, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:
Section 1. Definitions. For all purposes of this Agreement, except as otherwise expressly provided or unless the context otherwise required, capitalized terms used herein shall have the meanings set forth below, which shall be equally applicable to both the singular and plural forms of such terms.
“Additional Reduction Amount” has the meaning set forth in Exhibit A. “Available Discount Percentage” means, for each Reset Period, the final amount determined by the Calculation Agent as of the applicable Bond Pricing Date pursuant to Exhibit A, expressed as a percentage, which may not be less for any portion of the Reset Period than the lower of (i) the last Estimated Available Discount Percentage provided or updated by the Calculation Agent pursuant to Section 5(a) for such portion of the Reset Period, and (ii) the highest 2 Minimum Discount Percentage applicable to such portion of the Reset Period. The Available Discount Percentage may vary during different periods of time during a Reset Period. “Base Quantity” has the meaning set forth in the Master Power Supply Agreement. “Bond Closing Date” means the date on which the Bonds are issued pursuant to the Bond Indenture.
“Bond Indenture” means the Trust Indenture, dated as of the first day of the month of the Bond Closing Date, between the Issuer and the Trustee, as the same may be amended or supplemented from time to time pursuant to one or more Supplemental Trust Indentures, or any Trust Indenture governing bonds issued as refunding bonds for Bonds issued under such Trust Indenture.
“Bond Pricing Date” means, for any Reset Period, the date of execution of the applicable bond remarketing agreement or bond purchase agreement.
“Bonds” means the [Series 2023 Bonds] issued pursuant to the Bond Indenture. “Business Day” has the meaning set forth in the Bond Indenture. “Calculation Agent” means Prepay LLC.
“Delivery Period” has the meaning set forth in the Master Power Supply Agreement. “Delivery Period Implied Rate” has the meaning set forth in Exhibit A. “Energy” has the meaning set forth in the Master Power Supply Agreement. “Estimated Available Discount Percentage” has the meaning set forth in Section 5(a). “Excess Amount” is the positive difference, if any, of the Prior Remaining Power Value less the New Remaining Delivery Cost.
“Fixed Rate” has the meaning set forth in Exhibit A.
“Funding Agreement” has the meaning set forth in the Master Power Supply Agreement. “Funding Recipient” has the meaning set forth in the Master Power Supply Agreement. “Initial Reset Period” means the period from [____] until [____]. “Interest Rate Period” has the meaning set forth in the Bond Indenture. “Issuer” has the meaning set forth in the preamble.
“LLC Agreement” means the Amended and Restated Limited Liability Company Agreement of Prepay LLC, dated as of [____], 2023.
3 “Master Power Supply Agreement” means the Master Power Supply Agreement, dated as of [____], 2023, between Prepay LLC and Issuer, as the same may be amended or supplemented in accordance with its terms.
“Minimum Discount Percentage” has the meaning set forth in the Clean Energy Purchase Contract.
“Monthly Discount Percentage” has the meaning set forth in Section 6(b). “New Remaining Delivery Cost” has the meaning set forth in Exhibit A. “New Reset Period” has the meaning set forth in Exhibit A. “Old Reset Period” has the meaning set forth in Exhibit A. “Outstanding” has the meaning set forth in the Bond Indenture. “Participant Notification Deadline Day” means, with respect to each Reset Period, the last day on which the Issuer is permitted to provide a notice of the Estimated Available Discount Percentage to the Project Participant under the Clean Energy Purchase Contract. “Power Supply” means with respect to the Master Power Supply Agreement, the aggregate quantity of Energy to be delivered by Issuer under the Master Power Supply Agreement. “Prepay LLC” has the meaning set forth in the preamble. “Prior Remaining Power Value” has the meaning set forth in Exhibit A. “Project Participant” has the meaning set forth in the Bond Indenture. “Qualified Firm Offer” means, for any Reset Period after the Initial Reset Period, a binding offer from a Qualified Funding Recipient on the Bond Pricing Date for such Reset Period to provide a Funding Agreement that reflects (i) a Reset Period Implied Rate that is sufficient to achieve the Minimum Discount Percentage for such Reset Period, and (ii) a Reset Period length that complies with the requirements of Section 3.
“Qualified Funding Recipient” has the meaning set forth in the LLC Agreement. “Qualified Potential Offer” means, for any Reset Period after the Initial Reset Period, indicative pricing from a Qualified Funding Recipient that would constitute a Qualified Firm Offer if made on the Bond Pricing Date for such Reset Period. “Re-pricing Date” means, for any Reset Period, any Business Day not earlier than 90 days prior to the earlier of (i) the date on which the Bonds then Outstanding may be called for optional redemption in accordance with the Bond Indenture, and (ii) the day following the last day of the Reset Period then in effect.
“Re-pricing Period” means, for any Reset Period, the period of time prior to such Reset Period during which a Re-pricing Date could occur for such Reset Period. 4 “Remaining Delivery Cost” has the meaning set forth in Exhibit A. “Remaining Power Value” has the meaning set forth in Exhibit A. “Reset Period” means each period determined pursuant to Section 3. “Reset Period Implied Rate” has the meaning set forth in Exhibit A. “Series” means Bonds designated as a Series and authorized to be issued by the Issuer pursuant to Section 2.01 of the Bond Indenture.
“[Series 2023 Bonds” has the meaning set forth in the Bond Indenture.] “Supplemental Trust Indenture” means any Bond Indenture supplemental to or amendatory of the Bond Indenture executed and delivered by the Issuer and the Trustee in accordance with Article X of the Bond Indenture.
“Termination Payment” has the meaning set forth in the Master Power Supply Agreement. “Termination Payment Adjustment Schedule” has the meaning set forth in the Master Power Supply Agreement.
“Trustee” means the trustee under the Bond Indenture and its successors and assigns.
Section 2. Purpose of Agreement and Intention of Parties. The Parties are entering into this Agreement in connection with the execution and delivery of the Bond Indenture, the Master Power Supply Agreement and the other transaction documents for the purpose of establishing the methodology for determining the Available Discount Percentage for each Reset Period following the Initial Reset Period. Absent Issuer’s consent, the Available Discount Percentage will be the same for all portions of a Reset Period.
Section 3. Reset Periods. Each Reset Period shall commence on the next day that follows the last day of the Initial Reset Period or, subsequently, the immediately prior Reset Period.
The length of each Reset Period shall be the remaining term of the Delivery Period unless the Calculation Agent elects, in its sole discretion, a shorter period, which period may not be shorter than the lesser of (a) three years or (b) the remaining term of the Delivery Period without the Issuer’s consent; provided further that:
(i) The Initial Reset Period and each subsequent Reset Period (other than the final Reset Period) shall end on the last day of the month preceding the month in which the end of the Interest Rate Period applicable to such Reset Period occurs. For example, if the Interest Rate Period ends October 31, the last day of the Reset Period would end September 30, and
(ii) the final Reset Period shall end on the last day of the Delivery Period.
Section 4. Reserved.
5 Section 5. Estimated Available Discount Percentage.
(a) On any Business Day not earlier than the 70th day prior to the earliest potential Re-pricing Date for any Reset Period and not later than 10 Business Days prior to the latest potential Re-pricing Date for any Reset Period, the Issuer may request that the Calculation Agent provide an estimate of the length of such Reset Period, Reset Period Implied Rate and Available Discount Percentage (the “Estimated Available Discount Percentage”) that are anticipated to apply to such Reset Period. In determining the Estimated Available Discount Percentage, the Calculation Agent shall utilize the methodology set forth in Exhibit A. The Calculation Agent may provide initial or updated estimates on its own initiative or upon a subsequent request from the Issuer. (b) The Issuer shall notify the Project Participant of the Estimated Available Discount Percentage and any updates thereto under the relevant provisions of the Clean Energy Purchase Contract. Unless the Calculation Agent and the Issuer otherwise agree, in any notice of Estimated Available Discount Percentage provided to a Project Participant prior to the Participant Notification Deadline Day, the Issuer shall clearly indicate in such notice that the notice is provisional and not intended to trigger a Project Participant’s right to provide a Remarketing Election (as defined in the Clean Energy Purchase Contract). (c) If, at any time during the Re-pricing Period for a Reset Period, a Qualified Funding Recipient provides a Qualified Firm Offer for such Reset Period, Issuer agrees that it will execute a bond purchase or remarketing agreement reflecting a Funding Agreement for such Reset Period between Prepay LLC and the Qualified Funding Recipient selected by Prepay LLC for such Reset Period.
(d) The Issuer agrees to cooperate in good faith with Prepay LLC and to take all steps reasonably within Issuer’s control that are necessary, in each case, to cause a Bond Pricing Date to occur for any Qualified Potential Offer that Prepay LLC elects to pursue, which steps shall include retaining an underwriter or remarketing agent for the Bonds to be priced and participating in the Bond marketing or remarketing process.
Section 6. Determination of Available Discount Percentage and Monthly Discount Percentage.
(a) The Calculation Agent shall determine on the Bond Pricing Date the Available Discount Percentage for such Reset Period in accordance with the methodology set forth in Exhibit A.
(b) For each Reset Period after the Initial Reset Period, the Calculation Agent shall determine the monthly discount portion of the Available Discount Percentage for such Reset Period (the “Monthly Discount Percentage”). The Issuer and the Calculation Agent then shall mutually agree upon the projected Annual Refund (as defined in the Clean Energy Purchase Contract) for such Reset Period, which shall be determined consistent with the Clean Energy Purchase Contract and shall be the remaining portion of the Available Discount Percentage.
Section 7. Termination Payment Adjustment Schedule; Monthly Quantity Changes. 6 (a) For any Reset Period, the Calculation Agent may modify the Termination Payment Adjustment Schedule to reflect changes in the Remaining Power Values set forth on Attachment 1 to Exhibit A and otherwise, provided that such modifications are sufficient to meet the redemption requirements of the Bonds to be sold for such Reset Period. (b) The Issuer and the Calculation Agent agree that the Master Power Supply Agreement will be amended to reflect any reductions to Base Quantities determined pursuant to Exhibit A.
Section 8. Timing. The dates and time intervals stated in this Agreement may be waived or altered by the mutual agreement of the Parties.
Section 9. Termination. This Agreement shall terminate automatically upon termination of the Master Power Supply Agreement for any reason. For the avoidance of doubt, nothing in this Agreement or any other agreement restricts the ability of Funding Recipient to repay or prepay the Funding Agreement as set forth in the Funding Agreement, which election to repay or prepay may be made by Funding Recipient in its sole and absolute discretion in accordance with the terms of the Funding Agreement. Any such termination shall not be considered a failure by the Calculation Agent to act in good faith hereunder, regardless of whether the Parties have previously discussed pricing that may apply to any Reset Period or otherwise taken the steps required under this Agreement.
Section 10. Communications.
(a) All notices, requests and other communications shall be in writing (including facsimile, electronic mail or other electronic means) provided to the address and/or electronic mail address set forth below:
Calculation Agent: As provided in the Master Power Supply Agreement The Issuer: As provided in the Master Power Supply Agreement (b) Each Party may change the address for communications to it pursuant to the terms of the referenced agreement, which notice shall be effected when delivered at the address specified herein.
Section 11. Miscellaneous.
(a) Incorporation by Reference. Article X [Jurisdiction; Waiver of Jury Trial] and Sections 18.3 [Entirety; Amendments], 18.4 [Governing Law], 18.5 [Non-Waiver], 18.6 [Severability], 18.7 [Exhibits], 18.9 [Relationship of Parties; Beneficiaries], 18.12 [Limitation of Liability] and 18.13 [Counterparts] of the Master Power Supply Agreement are incorporated by reference into this Agreement, mutatis mutandis, as if fully set forth herein. (b) Amendments to Clean Energy Purchase Contract and Bond Indenture. The Issuer shall not agree to or consent to any modification, supplement, amendment or waiver of any 7 provision of the Clean Energy Purchase Contract or Bond Indenture that affects the meaning of any defined term herein or the operation of any provision hereof. (Signatures appear on the next page)
Signature Page to Re-Pricing Agreement
IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed and delivered by their respective duly authorized officers as of the date first written above.
ARON ENERGY PREPAY 16 LLC
By: J. Aron & Company LLC,
its Manager
By:____________________________
Name:_________________________
Title:__________________________
CALIFORNIA COMMUNITY CHOICE
FINANCING AUTHORITY
By:____________________________
Name:_________________________
Title:__________________________
Exhibit A – Page 1
Exhibit A
The Calculation Agent will undertake the following steps in determining the Available Discount Percentage for any Reset Period (each, a “New Reset Period”):
Step 1: Determine the “Prior Remaining Power Value”
o The Calculation Agent will determine the Remaining Power Value for the last month of the current Reset Period (the “Old Reset Period”) based on Attachment 1 hereto, as such Attachment initially existed or was last updated at the beginning of the prior Reset Period (the “Prior Remaining Power Value”).
o “Remaining Power Value” means, for any month, the amount set forth on Attachment 1 of the Appendix A as the “Remaining Power Value” for such month, as Attachment 1 may be updated pursuant to this Appendix A in connection with the establishment of any new Reset Period. Step 2: The Calculation Agent will specify the length of the New Reset Period pursuant to Section 3 of the Agreement
Step 3: The Calculation Agent will specify a Reset Period Implied Rate for the New Reset Period and a Delivery Period Implied Rate
o “Reset Period Implied Rate” means, for any Reset Period other than the Initial Reset Period, a fixed rate offered by the Funding Recipient for such Reset Period as of the Bond Pricing Date for such Reset Period, which rate the Parties acknowledge (i) will be determined by Funding Recipient in its sole and absolute discretion based on the rate of Funding Recipient, and (ii) for which the Funding Recipient may consider all relevant factors, including (w) the nature of the source of funding provided by the Funding Agreement, including any applicable regulatory or capital charges, (x) the tenor, (y) market interest for such funding at the time, and (z) any other unique attributes of the Funding Agreement funding relative to other sources available to Funding Recipient.
The Parties acknowledge that, for purposes of providing an Estimated Available Discount Percentage, the Calculation Agent may rely on indicative pricing proposals from a Qualified Funding Recipient.
o “Delivery Period Implied Rate” means, for any remaining portion of the Delivery Period that is not covered by a Reset Period, a fixed rate determined by the Calculation Agent in its sole and absolute discretion as of the Bond Pricing Date for such Reset Period which the Calculation Agent determines (in its sole discretion) that Funding Recipient would be able to acquire, as of the date of determination, funding from other sources comparable to the funding provided by the Funding Agreement as of the date of determination if such Funding Agreement were extended for the entire Delivery Period. In determining such a rate, and the Calculation Agent may consider all relevant factors, including (w) the nature of the source of funding provided by the Funding Agreement, including any applicable regulatory or capital charges, (x) Exhibit A – Page 2
the length of the Delivery Period, (y) market interest for such funding at the time, and (z) any other unique attributes of the Funding Agreement funding relative to other sources available to Funding Recipient. Step 4: Determine the “New Remaining Delivery Cost”
o The Calculation Agent will determine the “Remaining Delivery Cost” for each month of the Delivery Period after the Old Reset Period. The Remaining Delivery Cost for the first month of the New Reset Period is the “New Remaining Delivery Cost”.
o “Remaining Delivery Cost” means, for any determination month, an amount calculated by the Calculation Agent equal to the net present value of a stream of monthly payments equal to the Base Quantities multiplied by the Fixed Price (as defined in the Master Power Supply Agreement) for the remainder of the Delivery Period (including such determination month), discounted at the Reset Period Implied Rate for the New Reset Period and the Delivery Period Implied Rate for the remainder of the Delivery Period after the New Reset Period. Step 5: Additional Reduction Amount or changing Base Quantities o If the Prior Remaining Power Value is less than the New Remaining Delivery Cost:
If the Reset Period will go to the end of the Delivery Period, the Calculation Agent will reduce the Base Quantities to zero in as many months as necessary at the end of the Delivery Period (and, to the extent necessary, reduce the Base Quantities in the last remaining month of the Reset Period to a quantity greater than zero) such that the Prior Remaining Power Value is equal to the New Remaining Delivery Cost. If the Reset Period will end prior to the Delivery Period, the Calculation Agent may reduce the Base Quantities as provided above to the extent such reduction results in a greater Available Discount Percentage for such Reset Period.
o If the Prior Remaining Power Value is greater than the New Remaining Delivery Cost:
Subject to the following bullet, the Calculation Agent will pay to the Issuer the amount, if any, by which (A) the Prior Remaining Power Value exceeds (B) the New Remaining Delivery Cost (the “Additional Reduction Amount”) on the first day of the contemplated Interest Rate Period, which payment shall be applied by the Issuer to the retirement of Bonds.
Notwithstanding the prior bullet, the Calculation Agent shall elect to retain a portion of the Excess Amount to the extent (i) the Reset Period will end prior to the Delivery Period, (ii) such retention results in a greater Available Discount Percentage, and (iii) doing so is consistent with the amortization requirement of the Bonds. If the Calculation Agent elects to retain a portion of such Excess Amount pursuant to the Exhibit A – Page 3
foregoing proviso, the Additional Reduction Amount shall be the portion of such Excess Amount that the Calculation Agent elects to pay. o Any Additional Reduction Amount or changes in Base Quantities will then be included in calculating the New Remaining Delivery Cost. An Additional Reduction Amount will reduce the Prior Remaining Power Value for this purpose.
o The Calculation Agent will amend Attachment 1 hereto effective as of the beginning of the New Reset Period such that the Remaining Power Value for each month in the New Reset Period and the remainder of the Delivery Period is equal to the Remaining Delivery Cost for such month as determined under Step 4 and updated under this Step 5.
Step 6: Determine the Fixed Rate for the Bonds for the term of such contemplated Interest Rate Period
o The remarketing agent or underwriter of the Bonds for such contemplated Interest Rate Period will specify the Fixed Rate.
o “Fixed Rate” means, for any New Reset Period, the fixed rate or rates of interest payable by the Issuer with respect to a Series of Bonds or, in the case of a Series of Variable Rate Bonds (as defined in the Bond Indenture), the fixed rate payable by the Issuer under the related fixed rate swap transaction, which Fixed Rates will be determined on the Bond Pricing Date at a rate sufficient to enable all the Bonds to be sold or remarketed on such Bond Pricing Date in accordance with the Bond Indenture (which sale price may include a premium or discount to par), as determined based on market information then available. Step 7: Determine Monthly Discount Percentage
o The Calculation Agent will determine the Monthly Discount Percentage of the Available Discount Percentage for each portion of the Reset Period based on the expected differences between monthly revenues and monthly debt service and other obligations of the Clean Energy Project.
Step 8: Determine Annual Refund portion of Available Discount Percentage o The Calculation Agent and the Issuer shall mutually agree upon the projected Annual Refund (as defined in the Clean Energy Purchase Agreement) for the Reset Period, which shall be determined consistent with the Clean Energy Purchase Agreement and shall be the remaining portion of the Available Discount Percentage.
Attachment 1 to Exhibit A
Remaining Power Values
(To be attached.)
[____], 2022
Aron Energy Prepay [__] LLC
c/o J. Aron & Company LLC
200 West Street
New York, New York 10282-2198
Attention: Andres Aguila
Ladies and Gentlemen:
For value received, The Goldman Sachs Group, Inc. (the “Guarantor”), a corporation duly organized under the laws of the State of Delaware, hereby unconditionally guarantees the prompt and complete payment when due, whether by acceleration or otherwise, of all obligations and liabilities, whether now in existence or hereafter arising, of J. Aron & Company LLC, a subsidiary of the Guarantor and a limited liability company duly organized under the laws of the State of New York (the “Company”), to Aron Energy Prepay [__] LLC, a limited liability company organized under the laws of the State of Delaware (the “Counterparty”) arising out of or under the Electricity Purchase, Sale and Service Agreement, dated as of [____], 2022, between the Company and the Counterparty. This Guaranty is one of payment and not of collection.
The Guarantor hereby waives notice of acceptance of this Guaranty and notice of any obligation or liability to which it may apply, and waives presentment, demand for payment, protest, notice of dishonor or non-payment of any such obligation or liability, suit or the taking of other action by the Counterparty against, and any other notice to, the Company, the Guarantor or others.
The Counterparty may at any time and from time to time without notice to or consent of the Guarantor and without impairing or releasing the obligations of the Guarantor hereunder: (1) agree with the Company to make any change in the terms of any obligation or liability of the Company to the Counterparty, (2) take or fail to take any action of any kind in respect of any security for any obligation or liability of the Company to the Counterparty, (3) exercise or refrain from exercising any rights against the Company or others, or (4) compromise or subordinate any obligation or liability of the Company to the Counterparty including any security therefor. Any other suretyship defenses are hereby waived by the Guarantor.
This Guaranty shall continue in full force and effect until the opening of business on the fifth business day after the Counterparty receives written notice of termination from the Guarantor. It is understood and agreed, however, that notwithstanding any such termination this Guaranty shall continue in full force and effect with respect to the obligations and liabilities set forth above which shall have been incurred prior to such termination.
The Guarantor may not assign its rights nor delegate its obligations under this Guaranty, in whole or in part, without prior written consent of the Counterparty, and any purported assignment or delegation absent such consent is void, except for (i) an assignment and delegation of all of the Guarantor’s rights and obligations hereunder in whatever form the Guarantor determines may be appropriate to a partnership, corporation, trust or other organization in whatever form that succeeds to all or substantially all of the Guarantor’s assets and business and that assumes such obligations by contract, operation of law or otherwise, or (ii) a transfer of this Guarantee or any interest or obligation of the Guarantor in or under this Guarantee, or any property securing this Guarantee, to another entity as transferee as part of the resolution, restructuring or reorganization of the Guarantor upon or following the Guarantor becoming subject to a receivership, insolvency, liquidation, resolution or similar proceeding.
Upon any such delegation and assumption or transfer of obligations, the Guarantor shall be relieved of and fully discharged from all obligations hereunder, whether such obligations arose before or after such delegation and assumption or transfer.
THIS GUARANTY SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAW.
GUARANTOR AGREES TO THE EXCLUSIVE JURISDICTION OF COURTS
LOCATED IN THE STATE OF NEW YORK, UNITED STATES OF AMERICA, OVER ANY DISPUTES ARISING UNDER OR RELATING TO THIS GUARANTY.
In the event the Guarantor becomes subject to a proceeding under the Federal Deposit Insurance Act or Title II of the Dodd-Frank Wall Street Reform and Consumer Protection Act (together, the “U.S. Special Resolution Regimes”), the transfer of this Guaranty, and any interest and obligation in or under, and any property securing, this Guaranty, from the Guarantor will be effective to the same extent as the transfer would be effective under such U.S. Special Resolution Regime if this Guaranty, and any interest and obligation in or under this Guaranty, were governed by the laws of the United States or a state of the United States. In the event the Company or the Guarantor, or any of their affiliates, becomes subject to a U.S. Special Resolution Regime, default rights against the Company or the Guarantor with respect to this Guaranty are permitted to be exercised to no greater extent than such default rights could be exercised under such U.S. Special Resolution Regime if this Guaranty was governed by the laws of the United States or a state of the United States.
Very truly yours,
THE GOLDMAN SACHS GROUP, INC.
By:
Authorized Officer
[____], 2022
Aron Energy Prepay [__] LLC
c/o J. Aron & Company LLC
200 West Street
New York, New York 10282-2198
Attention: Andres Aguila
RE: Side Letter related to GSG Guaranty
Ladies and Gentlemen:
Reference is made to that certain Guaranty (the “GSG Guaranty”), dated as of [____], 2022, by The Goldman Sachs Group, Inc. (the “Guarantor”), pursuant to which the Guarantor guarantees the obligations (the “Obligations”) of J. Aron & Company LLC, a New York limited liability company (the “Company”), under that certain Electricity Purchase, Sale and Service Agreement, dated as of [____], 2022 (the “Agreement”), by and between the Company and Aron Energy Prepay [__] LLC, a limited liability company organized under the laws of the State of Delaware.
The Guarantor waives all suretyship defenses and any setoff, counterclaim, recoupment or other defenses that might otherwise be available to Guarantor under the GSG Guaranty, other than any such defense arising as a result of full payment or performance of the Company or the Guarantor. For the avoidance of doubt, notwithstanding anything to the contrary in this side letter, except for defenses based on lack of authorization of the Agreement on the part of the Company, or on disability, bankruptcy or insolvency of the Company, Guarantor may, with respect to its obligations under the GSG Guaranty, assert any right of setoff, counterclaim, recoupment or defense available to the Company with respect to performance of its Obligations.
If at any time any payment of any of the Obligations is rescinded or must be otherwise restored or returned upon the insolvency, bankruptcy or reorganization of the Company, the Guarantor’s obligations under the GSG Guaranty with respect to such payment shall be reinstated at such time as though such payment had not been made.
It is understood and agreed that notwithstanding any termination of the GSG Guaranty, the GSG Guaranty shall continue in full force and effect with respect to the Obligations.
This letter agreement shall supplement and form part of the GSG Guaranty.
This letter agreement shall be governed by and construed in accordance with the internal laws of the State of New York, without regard to conflict of laws principles. [Signature Page to Guaranty Side Letter]
Very truly yours,
THE GOLDMAN SACHS GROUP, INC.
By:
Name:
Title: Authorized Officer
SCHEDULE
to the
2002 ISDA MASTER AGREEMENT
dated as of
[_____], 2022 (the “Effective Date”)
between
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), (“Issuer”)
and
[_____],
a [____]
(“Counterparty”).
Part 1. Termination Provisions
(a) “Specified Entity”
(i) means, in relation to Issuer, none; and
(ii) means, in relation to Counterparty, none.
(b) Events of Default. Subject to the limitations set forth in Part 1(f), the following provisions shall apply with respect to Events of Default under Section 5(a):
(i) Section 5(a)(i) [Failure to Pay or Deliver] shall be deleted in its entirety and replaced with the words below and shall apply to Issuer and Counterparty:
“Failure by the party to make any delivery under Section 2(a)(i) or 9(h)(i)(2) or (4) required to be made by it if such failure is not remedied on or before the first (1st) Local Delivery Day in the case of any such delivery after, in each case, notice of such failure is given to the party;”.
(ii) Section 5(a)(ii) [Breach of Agreement; Repudiation of Agreement] shall apply to Issuer and to Counterparty.
(iii) Section 5(a)(iii) [Credit Support Default] shall not apply to Issuer but shall apply to Counterparty.
(iv) Section 5(a)(iv) [Misrepresentation] shall apply to Issuer and Counterparty. (v) Section 5(a)(v) [Default Under Specified Transaction] is deleted in its entirety and replaced with the words “INTENTIONALLY OMITTED”.
2 (vi) Section 5(a)(vi) [Cross-Default] is deleted in its entirety and replaced with the words “INTENTIONALLY OMITTED”.
(vii) Section 5(a)(vii) [Bankruptcy] shall apply to Issuer and Counterparty.
Clause (6) of Section 5(a)(vii) of this Agreement is hereby amended to read in its entirety as follows:
“(6)(A) seeks or becomes subject to the appointment of an administrator, provisional liquidator, conservator, receiver, trustee, custodian or other similar official for it or for all or substantially all its assets, or (B) in the case of Issuer, (I) there shall be appointed or designated with respect to it, an organization, board, commission, authority, agency, body or similar entity to monitor, review, oversee, recommend or declare a financial emergency or similar state of financial distress with respect to Issuer or with respect to any of the property, rights or interests pledged as part of the [Trust Estate (as defined in the Trust Indenture], dated as of [_____], 2022 (as the same may be amended or supplemented from time to time pursuant to one or more Supplemental Trust Indentures, or any Trust Indenture governing bonds issued as refunding bonds for bonds issued under such Trust Indenture, the “Bond Indenture”), between Issuer and [_____], as trustee thereunder (in such capacity, the “Trustee”)), or (II) the existence of a state of financial emergency or similar state of financial distress in respect of Issuer or any of such property, rights or interests shall be declared by any legislative or regulatory body with competent jurisdiction over Issuer or any of such property, rights and interests;”. (viii) Section 5(a)(viii) [Merger Without Assumption] is deleted in its entirety and replaced with the words “INTENTIONALLY OMITTED”.
(c) Termination Events. Subject to the limitations set forth in Part 1(f), the following provisions shall apply with respect to Termination Events under Section 5(b):
(i) Section 5(b)(i) [Illegality] shall apply to Issuer and Counterparty. (ii) Section 5(b)(ii) [Force Majeure Event] shall be deleted in its entirety, with the subsequent provisions reformatted and renumbered accordingly and all references to such renumbered sections revised accordingly throughout the Agreement. (iii) Section 5(b)(iii) [Tax Event] shall be renumbered as Section 5(b)(ii) and it shall apply to Issuer and Counterparty, provided that the following language is added to the end of Section 5(b)(ii) prior to the semi-colon: “, unless the other party agrees to waive the payment of such additional amount in respect of an Indemnifiable Tax, in the case of clause (1) above, or indemnify the Affected Party for any Tax deducted or withheld from a payment described in clause (2), other than (x) a Tax in respect of interest under Section 9(h), or (y) an Indemnifiable Tax”. (iv) Section 5(b)(iv) [Tax Event Upon Merger] shall be renumbered as Section 5(b)(iii) and it shall apply to Issuer and Counterparty, provided that the following language is added to the end of Section 5(b)(iii) prior to the semi-colon: “, unless the other party agrees to waive the payment of such additional amount in respect of an Indemnifiable Tax, in the case of clause (1) above, or indemnify the Burdened Party for any Tax deducted or withheld from a payment described in clause (2), other than an Indemnifiable Tax”.
3 (v) Section 5(b)(v) [Credit Event Upon Merger] shall be renumbered as Section 5(b)(iv) and it shall apply to Issuer and Counterparty. (d) Additional Termination Events. It will constitute an Additional Termination Event hereunder upon the occurrence of any of the following events:
(i) The occurrence of a “Product Delivery Termination Date” under the Master Power Supply Agreement, dated as of the date hereof, between Aron Energy Prepay [__] LLC (“Prepay LLC”) and Issuer (as such agreement may be amended, restated, supplemented, replaced or otherwise modified from time to time, the “Master Power Supply Agreement”) for any reason (regardless of whether such Product Delivery Termination Date is designated automatically or at the election of either party to the Master Power Supply Agreement, and regardless of whether any rights or remedies of a party to the Master Power Supply Agreement in connection with or resulting from such Product Delivery Termination Date are stayed, enjoined or otherwise prevented or limited for any reason) in which case an Early Termination Date hereunder shall occur automatically on such date.
(ii) Counterparty’s Credit Rating is downgraded below “Baa3” by Moody’s, “BBB- ” by S&P, or “BBB-” by Fitch. As used in this Schedule:
“Counterparty’s Credit Rating” means the credit rating assigned by the applicable Rating Agency to (i)(A) Counterparty’s senior, unsecured long-term debt obligations (not supported by third party credit enhancements), or (B) if there is no rating for Counterparty’s senior, unsecured long-term debt, then Counterparty’s issuer rating, or (ii) if there is no rating under each of clauses (i)(A) and (B) above, then (A) the senior, unsecured long-term debt obligations (not supported by third party credit enhancements) of Counterparty Parent, or (B) if there is no rating for Counterparty Parent’s senior, unsecured long-term debt, then Counterparty Parent’s issuer rating.
“Counterparty Parent” means [_____].
“Fitch” means Fitch Ratings, Inc., or any successor entity. “Moody’s” means Moody’s Investors Service, Inc. or any successor entity.
“Rating Agency” means Moody’s, S&P or Fitch, as applicable. “S&P” means S&P Global Ratings, a division of S&P Global Inc., or any successor entity.
(iii) If the Bond Indenture is amended or otherwise modified in violation of Counterparty’s consent rights under [Section 10.03(e)] thereof, and said amendment or modification is not rescinded or otherwise cured within ten (10) days of notification of such amendment or modification by Counterparty to Issuer.
4 (iv) If a party fails to make, when due, any payment under this Agreement if such failure is not remedied on or before the third (3rd) Local Business Day after notice of such failure is given to such party in which case an Early Termination Date hereunder shall occur automatically on such date. (v) Any provisions of [ Article 17 of the Master Power Supply Agreement], or the definition of any term used in such [Article 17], is modified or amended without the prior written consent of Counterparty and Counterparty notifies Issuer within thirty (30) days after receiving notice of such modification or amendment and copies thereof that, if not rescinded, in the reasonable opinion of Counterparty determined in good faith, such modification or amendment would (I) change the circumstances under which the Master Power Supply Agreement is or may be terminated or assigned by either party thereto, or the timing of any such termination or assignment, or (II) increase the likelihood or the time period that (x) any Transaction under this Agreement may remain in effect following the early termination of any Transaction under and as defined in the ISDA Master Agreement between Prepay LLC and Counterparty of even date herewith (the “Seller Swap”) or (y) the Seller Swap may remain in effect following the early termination of any Transaction under this Agreement. (vi) Issuer fails to promptly exercise its right to suspend all Product (as defined in the Clean Energy Purchase Contract) deliveries under the Clean Energy Purchase Contract to the [Project Participant] (as each such term is defined in the Bond Indenture) that fails to pay when due any amounts owed to Issuer thereunder. (vii) Delivery of the notice described in [Section 17.5(b)(ii) of the Master Power Supply Agreement] with respect to the [Seller Swap] (as defined in the Master Power Supply Agreement] between Prepay LLC and Counterparty, in which case an Early Termination Date shall occur automatically on the effective date of such notice.
(viii) Delivery by Issuer to Counterparty on or before the date that is 120 days prior to the end of the then-current [Reset Period (as defined in the Master Power Supply Agreement)] of notice (a “Reset Termination Exercise Notice”) designating an Early Termination Date that is the last day of the then-current Reset Period, which Early Termination Date shall (a) be conditioned on the termination of the Seller Swap occurring effective as of the same date and (b) occur automatically on the last day of the then-current Reset Period if the condition set forth in clause (a) has been satisfied. Issuer may deliver a Reset Termination Exercise Notice as determined in its sole discretion. For the avoidance of doubt, delivery of a Reset Termination Exercise Notice shall not prevent the designation or occurrence of an Early Termination Date that is earlier than the last day of the then-current Reset Period if an Event of Default or a Termination Event occurs that is subject to a shorter notice period. (ix) At any time after the initial [Reset Period] (as defined in the Master Power Supply Agreement), delivery by Issuer to Counterparty of notice (an “Optional Termination Notice”) designating an Early Termination Date that is 120 days after the delivery of such Optional Termination Notice (provided that if such date is not a Local Business Day, the Early Termination Date shall be designated as the immediately following Local Business Day), which early Termination Date shall (a) be conditioned on the termination of the [Seller Swap] (as defined in the Master Power Supply Agreement) between Prepay LLC and Counterparty occurring effective as of the same date and (b) occur automatically on the date 5 specified above. For the avoidance of doubt, delivery of an Optional Termination Notice shall not prevent the designation or occurrence of an Early Termination Date that is earlier than the last day of the then-current Reset Period if an Event of Default or a Termination Event occurs that is subject to a shorter notice period.
For purposes of this Part 1(d), the Affected Parties are identified below:
Additional Termination
Event
Affected Party/Parties
Part 1(d)(ii) Counterparty
Part 1(d)(iii) Issuer
Part 1(d)(iv) The party failing to make a
payment
Part 1(d)(v) Issuer
Part 1(d)(vi) Issuer
For the avoidance of doubt, the identification of Affected Parties for any Additional Termination Event is made solely for the purpose of determining the party entitled to designate an Early Termination Date under Section 6(a) or Section 6(b) of the Agreement. Part 1(d)(i), Part 1(d)(vii), Part 1(d)(viii) and Part 1(d)(ix) are not listed above because the Early Termination Date will be established automatically upon the occurrence of the events therein described.
(e) Early Termination. The following shall apply with respect to early termination under Section 6:
(i) Section 6(a) is hereby amended by deleting the reference to “20 days” in the third line thereof and replacing it with “60 days”.
(ii) The “Automatic Early Termination” provision of Section 6(a) will not apply to Issuer and will not apply to Counterparty.
(iii) Transfer to Avoid Termination Event. Section 6(b)(ii) of the Agreement is amended by deleting the following words from the final paragraph:
“which consent will not be withheld if such other party’s policies in effect at such time would permit it to enter into transactions with the transferee on the terms proposed”.
(iv) Section 6(b)(iv) is further amended by deleting the references to “20 days” in the tenth and fifteenth lines thereof and replacing them with “60 days”. (v) Section 6(c)(ii) shall be deleted in its entirety and replaced with the following:
“Upon the occurrence of an Early Termination Date, neither party shall have any obligation to make any further payments hereunder (other than Unpaid 6 Amounts) if and to the extent that the scheduled due date for such payments is any day on or after such Early Termination Date, without prejudice to Section 6(e) of this Agreement.”
(vi) Payments on Early Termination. Section 6(e) of the Agreement is deleted and replaced in its entirety with the following:
“(e) Payments on Early Termination. If an Early Termination Date occurs, each party will pay to the other party any Unpaid Amounts due to such other party (subject to any netting pursuant to Section 2(c)) (the “Early Termination Amount”), and NO OTHER AMOUNTS SHALL BE PAYABLE BY
EITHER PARTY.
WITHOUT PREJUDICE TO PAYMENTS WHICH HAVE ALREADY BEEN
MADE BY EITHER PARTY OR HAVE FALLEN DUE IN RESPECT OF
A TRANSACTION GOVERNED BY THIS AGREEMENT PRIOR TO THE
OCCURRENCE OF AN EARLY TERMINATION DATE AND WITHOUT
PREJUDICE TO THE FIRST PARAGRAPH OF THIS SECTION 6(e) WITH
RESPECT TO THE OBLIGATIONS TO PAY UNPAID AMOUNTS, THE
PARTIES AGREE AND ACKNOWLEDGE THAT:
(i) THEIR OBLIGATIONS TO MAKE ANY PAYMENT ARE
CONDITIONAL UPON SUCH EARLY TERMINATION DATE NOT
HAVING OCCURRED ON OR BEFORE THE DATE SPECIFIED FOR
THAT PAYMENT PURSUANT TO THE CONFIRMATION AND NEITHER
PARTY SHALL HAVE ANY OBLIGATION TO MAKE THAT PAYMENT
IF, ON OR BEFORE THE DATE SPECIFIED FOR THAT PAYMENT, SUCH
EARLY TERMINATION DATE HAS OCCURRED IN ACCORDANCE
WITH SECTION 2(A)(III);
(ii) EACH PARTY’S RIGHT TO RECEIVE ANY PAYMENTS
IS INDEPENDENT OF ITS RIGHT TO RECEIVE ANY PAYMENTS
WHICH HAVE PREVIOUSLY BEEN MADE, OR WHICH HAVE FALLEN
DUE, BEFORE THE OCCURRENCE OF SUCH EARLY TERMINATION
DATE AND A PARTY’S ENTITLEMENT TO RECEIVE SUBSEQUENT
PAYMENTS IS NOT UNCONDITIONALLY EARNED BY THE MAKING
OF ANY PREVIOUS PAYMENTS PRIOR TO THE OCCURRENCE OF
SUCH EARLY TERMINATION DATE;
(iii) IT SHALL BE THE RESPONSIBILITY OF BOTH PARTIES
TO ENSURE THAT ITS ACCOUNTING, REGULATORY AND ALL
OTHER TREATMENTS OF THE TRANSACTIONS ARE CONSISTENT
WITH THE CONDITIONAL NATURE OF ITS ENTITLEMENT TO
RECEIVE ANY PAYMENT; AND
(iv) THE TRANSACTIONS HAVE BEEN EXECUTED UNDER
MATERIALLY DIFFERENT TERMS (INCLUDING, WITHOUT
LIMITATION, PRICING) FROM THAT WHICH WOULD BE AVAILABLE
FOR A TRANSACTION WHERE THE PAYMENT OBLIGATIONS OF THE
PARTIES WERE NOT SUBJECT TO THE EARLY TERMINATION
PROVISIONS (AS SET FORTH HEREIN).
The parties agree and acknowledge that they are party to other agreements 7 containing provisions, when analyzed together with the provisions in this Agreement regarding the consequences of the occurrence of such Early Termination Date (the “Early Termination Provisions”), provide a commercial incentive to agree to those Early Termination Provisions.” (vii) “Termination Currency” means United States Dollars. (viii) The definition of “Unpaid Amounts” shall be amended and restated as follows:
“Unpaid Amounts” owing to any party means, with respect to an Early Termination Date, the aggregate of (a) in respect of all Terminated Transactions, the amounts that became payable (or that would have become payable but for Section 2(a)(iii)) to such party under Section 2(a)(i) on or prior to such Early Termination Date and which remain unpaid as of such Early Termination Date, and (b) in respect of each Terminated Transaction, (i) for any [ Determination Period (as defined in the Confirmation for such Terminated Transaction)] under such Terminated Transaction (A) that has ended prior to such day and (B) for which the Scheduled Settlement Date for such Terminated Transaction has not yet occurred, the amount that would be payable with respect to such Determination Period on the Scheduled Settlement Date therefor, and (ii) for the Determination Period in which the Early Termination Date occurs, a prorated portion of the payment that would be payable on the Scheduled Settlement Date for such Determination Period based on the number of days that have elapsed during such Determination Period prior to and including such day relative to the total number of days in such Determination Period.
(f) Limitation on Termination Rights. Notwithstanding anything in Section 6 of this Agreement to the contrary, Issuer and Counterparty shall have no right to designate, and shall not designate, an Early Termination Date for any Termination Events or Events of Default other than those specified in Section 5(a)(iii) [Credit Support Default], Section 5(a)(vii) [Bankruptcy] and Part 1(d) [Additional Termination Events], provided that Issuer and Counterparty as applicable may pursue any equitable remedies available to them in the case of any other Events of Default or Termination Events. (g) Assignment of Right to Any Termination Payment Other than Unpaid Amounts. (i) The parties acknowledge that the terms of the Seller Swap and the ISDA Agreement (as defined below) governing such Seller Swap do not entitle Counterparty to any payments in respect of any termination of the Seller Swap other than for [“Unpaid Amounts” (as defined in such ISDA Agreement)].
Nonetheless, Counterparty hereby presently transfers and assigns to Issuer all of Counterparty’s right, title and interest to any payments and rights to receive payments that Counterparty receives or becomes entitled to receive in the future arising as a result of or otherwise in respect of any early termination of the Seller Swap, excluding only any right for Counterparty to receive Unpaid Amounts thereunder.
(ii) The parties further acknowledge that (A) the terms of the Seller Swap and the ISDA Agreement (as defined below) governing such Seller Swap do not entitle Prepay LLC to any payments in respect of any termination of the Seller Swap other than for [Unpaid Amounts (as defined in such ISDA Agreement)] and (B) pursuant to the terms of the Master Power Supply Agreement, Prepay LLC has 8 assigned to Issuer all rights to any payments and rights to receive payments that Prepay LLC receives or becomes entitled to receive in the future arising as a result of or otherwise in respect of any early termination of the Seller Swap excluding only any right for Prepay LLC to receive [Unpaid Amounts (as defined in such ISDA Agreement)] (any such payment under clause (B), excluding any such Unpaid Amounts, a “Seller Swap MTM Payment”). As additional consideration hereunder, Issuer hereby transfers and assigns to Counterparty all of Issuer’s right, title, and interest to all payments and rights to receive payments, if any, that Issuer receives or becomes entitled to receive in the future arising as a result of or otherwise in respect of any Seller Swap MTM Payment. Issuer agrees that it will not take any steps to enforce any right to receive any payments that it has assigned to Counterparty pursuant to this Part 1(g).
Part 2. Tax Representations
(a) Payer Tax Representations. For the purposes of Section 3(e), Issuer and Counterparty make the following representation:
It is not required by any applicable law, as modified by the practice of any relevant governmental revenue authority, of any Relevant Jurisdiction to make any deduction or withholding for or on account of any Tax from any payment (other than interest under Section 9(h) of this Agreement) to be made by it to the other party under this Agreement. In making this representation, it may rely on (i) the accuracy of any representations made by the other party pursuant to Section 3(f) of this Agreement, (ii) the satisfaction of the agreement contained in Section 4(a)(i) or 4(a)(iii) of this Agreement, and the accuracy and effectiveness of any document provided by the other party pursuant to Section 4(a)(i) or 4(a)(iii) of this Agreement, and (iii) the satisfaction of the agreement of the other party contained in Section 4(d) of this Agreement, provided that it shall not be a breach of this representation where reliance is placed on clause (ii) and the other party does not deliver a form or document under Section 4(a)(iii) by reason of material prejudice to its legal or commercial position. (b) Payee Tax Representations. For the purpose of Section 3(f), Issuer and Counterparty make the following representations:
(i) Issuer represents that (i) it is 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), and (ii) it is a “U.S. person” (as that term is used in Section 1.1441- 4(a)(3)(ii) of the United States Treasury Regulations) for United States federal income tax purposes.
(ii) Counterparty represents that it is [____]1.
Part 3. Agreement to Deliver Documents
(a) For the purpose of Section 4(a), Tax forms, documents, or certificates to be delivered are:
Party required to
deliver document Forms/Documents/Certificates Date by which to be delivered
1 NTD: Counterparty to provide appropriate tax representation. 9 Issuer and
Counterparty
United States Internal Revenue
Service Form W-9, or any successor
to such form, completed accurately
and in a manner reasonably
acceptable to Counterparty
(i) Upon execution of this Agreement,
(ii) promptly upon reasonable demand
by the other party, and (iii) promptly
upon learning that the information on
any such previously delivered form is
inaccurate or incorrect
Issuer and
Counterparty
Any other forms or documents,
accurately completed and in a
manner reasonably satisfactory to
the other party, that may be
required or reasonably requested in
order to allow the other party to
make a payment under this
Agreement, without any deduction
or withholding for or on account of
any Tax or with such deduction at
a reduced rate
Promptly upon the reasonable demand
of such other party
(b) Other documents to be delivered are:
Party required
to deliver Form/Document/Certificate
Date by which to be
delivered
Covered by
Section 3(d)
Representation
Issuer and
Counterparty
Evidence of authority of signatories Upon the Effective Date Yes 10 Issuer and
Counterparty
Most recent annual audited financial
statements of Issuer and
Counterparty, as applicable
With respect to Issuer,
not later than the 180th
day following the end
of each of its fiscal
years (or as soon
thereafter as practicable
in the event preparation
is delayed). With
respect to Counterparty,
within 120 days of the
last business day of its
fiscal year end (or as
soon thereafter as
practicable in the event
preparation is delayed);
provided, however, that
Counterparty shall be
deemed to have
satisfied such delivery
requirement by making
such report available on
the U.S. Securities and
Exchange Commission
EDGAR information
retrieval system.
Yes
Issuer Certified resolutions of its board of
directors or other governing body
approving (i) this Agreement and the
arrangements contemplated herein,
and (ii) the Master Power Supply
Agreement and the Bond Indenture
Upon the Effective Date Yes
Issuer An up to date certified copy of its
constituting documents
Upon the Effective Date Yes
Issuer Executed copy of the Bond Indenture
and the Master Power Supply
Agreement and executed copies of
any amendments or modifications to
the Bond Indenture or the Master
Power Supply Agreement
Upon the execution of
the Bond Indenture and
the Master Power
Supply Agreement,
respectively, and with
respect to any
amendment or
modification to the
Bond Indenture or the
Master Power Supply
Agreement,
immediately upon
entering into such
amendment or
modification
Yes
11 Issuer and
Counterparty
Executed copy of the Custodial
Agreement (as defined in Part 5(p)
of this Schedule)
On or prior to the date
of initial issuance of the
[Bonds (as defined in
the Bond Indenture)]
No
Issuer Executed copy of the Clean Energy
Purchase Contract
On or prior to the date
of initial issuance of the
[Bonds (as defined in
the Bond Indenture)]
Yes
Issuer Legal opinion of counsel to Issuer
addressed to Counterparty (or a letter
or other document making
Counterparty an addressee of an
existing legal opinion and
reaffirming such legal opinion)
substantially in the form attached to
the Bond Purchase Contract between
Goldman, Sachs & Co. LLC and
Issuer related to the purchase of the
[Bonds (as defined in the Bond
Indenture)]
On or prior to the date
of initial issuance of the
[Bonds (as defined in
the Bond Indenture)]
No
Issuer Copies of legal opinions of counsel to
the [Project Participant (as defined in
the Bond Indenture)] delivered to
Trustee pursuant to [ Section 2.03(f)
of the Bond Indenture]
On or prior to the date
of initial issuance of the
[Bonds (as defined in
the Bond Indenture)]
No
Issuer A notice indicating the balance of the
[Commodity Swap Reserve Account
(as defined in the Bond Indenture)]
Monthly, within ten
(10) days of receipt of
this information by
Issuer from the Trustee
under the Bond
Indenture, utilizing a
delivery method
designated by Issuer to
Counterparty from time
to time
No
Issuer Each document required to be
delivered to the Trustee pursuant to
[ Section 7.16 of the Bond Indenture]
When required to be
delivered to the Trustee
under the Bond
Indenture
No
12 Issuer (1) A copy of any notice received by
Issuer of any withdrawal, suspension
or reduction of the rating assigned by
Moody’s or Fitch to the Bonds issued
under the Bond Indenture; and (2)
notice of the occurrence of any of the
following known to Issuer: an “Event
of Default” under the Bond Indenture,
any “Product Delivery Termination
Event” or “Termination Payment
Event” under the Master Power
Supply Agreement
When required to be
delivered to the Trustee
under the Bond
Indenture and promptly
after Issuer receives the
same or notice thereof
No
Part 4. Miscellaneous
(a) Addresses for Notices. For the purpose of Section 12(a):
(i) Address for notices or communications to Issuer:
Address: [______]
[______]
[______]
Attention: [______]
Telephone: [______]
Facsimile: [______]
(ii) Address for notices or communications to Counterparty:
Address: [______]
[______]
[______]
Attention: [______]
Telephone: [______]
Facsimile: [______]2
2 NTD: Counterparty to provide.
13 Wire Payment Instructions:
To the custodian’s account indicated in [Section 3(a) of the Custodial Agreement]. (b) Process Agent. For the purpose of Section 13(c):
Issuer appoints as its Process Agent: not applicable.
Counterparty appoints as its Process Agent: [______]3.
(c) Offices. The provisions of Section 10(a) will apply to this Agreement. (d) Multibranch Party. For the purpose of Section 10(b) and 10(c):
(e) Issuer is not a Multibranch Party.
Counterparty is not a Multibranch Party.
(f) Calculation Agent. The Calculation Agent is Issuer subject to the requirements of Part 6 of this Schedule. Whenever the Calculation Agent is required to act, it will do so reasonably and in good faith, and its determinations and calculations shall be binding in the absence of manifest error. For the avoidance of doubt, if the Calculation Agent’s method of determination of a particular calculation differs from the corresponding method of determination of a calculation performed by Prepay LLC in its role as Calculation Agent under the ISDA Agreement relating to the Seller Swap, such difference shall be considered manifest error. Notwithstanding the foregoing, if the Seller Swap has terminated or been replaced or Prepay LLC is subject to an Event of Default thereunder, all determinations and calculations by the Calculation Agent shall be subject to agreement by Counterparty. If the Calculation Agent and Counterparty are unable to agree within one Local Business Day, each party hereto agrees to be bound by the determination of an independent dealer selected by agreement between the parties (the “Substitute Calculation Agent”), whose fees and expenses, if any, shall be met equally by them both. If the parties hereto are unable to agree on a Substitute Calculation Agent within one Local Business Day, they shall each select an independent dealer and such independent dealers shall agree on a third party, who shall be deemed to be the Substitute Calculation Agent. Subject to the foregoing, all determinations and calculations by the Calculation Agent or Substitute Calculation Agent will be binding and conclusive in the absence of manifest error. (g) Credit Support Document.
With respect to Issuer, not applicable.
With respect to Counterparty, not applicable.
(h) Credit Support Provider.
Credit Support Provider means in relation to Issuer, none.
Credit Support Provider means in relation to Counterparty, none. (i) Governing Law. This Agreement, and each Transaction entered into hereunder will be
3 NTD: Counterparty to provide.
14 governed by, and construed, and enforced in accordance with the laws of the State of New York without regard to any conflicts of law principles that would direct the application of another jurisdiction’s laws.
(j) Jurisdiction. Section 13(b) is hereby amended by (i) deleting in the second line of subparagraphs (i)(1) and (i)(2) thereof the word “non-”.
(k) Netting of Payments. Subparagraph (ii) of Section 2(c) will not apply to Transactions. (l) Waiver of 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 Agreement. Each party acknowledges that it and the other party have been induced to enter into this Agreement by, among other things, the mutual waivers and certifications in this paragraph.
Part 5. Other Provisions
(a) Conditions. Section 2(a)(iii) is hereby deleted in its entirety and replaced with the following text:
“(iii) Each obligation of each party under Section 2(a)(i) is subject to the condition precedent that no Early Termination Date in respect of the relevant Transaction has occurred.” (b) Accuracy of Specified Information. Section 3(d) is hereby amended by adding in the third line thereof after the word “respect” and before the period, the phrase “and, in the case of audited or unaudited financial statements, a fair presentation of the financial condition of the relevant person.”
(c) Additional Representations. The parties agree to amend Section 3 by adding new Sections 3(h), (i), (j) and (k) as follows:
“(h) Eligible Contract Participant. It is an “eligible contract participant,” as defined in the U.S. Commodity Exchange Act.
(i) Non-Reliance. It is acting for its own account, and it has made its own independent decisions to enter into this Agreement, including each Transaction, and as to whether each Transaction 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 party (or any Affiliate thereof) as investment advice or as a recommendation to enter into any Transaction; it being understood that information and explanations related to the terms and conditions of any Transaction shall not be considered investment advice or a recommendation to enter into that Transaction.
No communication (written or oral) received from the other party (or any Affiliate thereof) shall be deemed to be an assurance or guarantee as to the expected results of any Transaction.
(j) 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, including each Transaction. It is also capable of assuming, and assumes, the risks of this Agreement, including each Transaction.
(k) Status of Parties. The other party is not acting as a fiduciary for or an adviser to it 15 in respect of this Agreement, including each Transaction. (d) Transfer. The following amendments are hereby made to Section 7:
(i) In the third line, insert the words “which consent will not be arbitrarily withheld or delayed,” immediately before the word “except”.
(ii) In clause (a), insert the words “or reorganization, incorporation, reincorporation, or reconstitution into or as,” immediately before the word “another”. (iii) The following shall be inserted as Section 7(c): “Issuer has the right, at any time and at Issuer’s sole cost and expense, to novate this Agreement or the Transactions hereunder to a new swap counterparty designated by Issuer, provided that, no later than the effective date of such novation both (A) Issuer has paid all amounts that have fallen due and payable to Counterparty as of such novation, and (B) either (i) the Seller Swap has been terminated, or (ii) the Seller Swap is subject to termination (notwithstanding whether notice designating an early termination date in respect of such Seller Swap has been given) and Counterparty’s interest in such Seller Swap is also novated to the same new swap counterparty pursuant to Section 7(c) thereof, with such novation having the same effective date as the effective date of the novation hereunder.”
(e) Consent to Recording. Each party consents to the recording of telephone conversations between the trading, marketing and other relevant personnel of the parties and their Affiliates, with or without the use of a warning tone, in connection with this Agreement or any potential Transaction, provided however, that it shall be the responsibility of each party to satisfy any notice and/or consent requirements imposed by applicable law or regulation with respect to the recording that it conducts.
(f) Definitions. This Agreement, each Confirmation and each Transaction is subject to the 2005 ISDA Commodity Definitions as published by ISDA (the “Definitions”), and will be governed in all respects by the Definitions. The Definitions are incorporated by reference in, and made part of, this Agreement and each Confirmation as if set forth in full in this Agreement and such Confirmations. In the event of any inconsistency between the provisions of this Agreement and the Definitions, this Agreement will prevail. Subject to Section 1(b), in the event of any inconsistency between the provisions of any Confirmation, this Agreement, and the Definitions, such Confirmation will prevail for the purpose of the relevant Transaction. (g) LIMITATION OF LIABILITY. NO PARTY SHALL BE REQUIRED TO PAY OR BE
LIABLE FOR PUNITIVE, EXEMPLARY OR CONSEQUENTIAL DAMAGES (WHETHER
OR NOT ARISING FROM ITS NEGLIGENCE OR STRICT LIABILITY) TO ANY OTHER PARTY; PROVIDED, HOWEVER, THAT NOTHING IN THIS PROVISION SHALL AFFECT THE ENFORCEABILITY OF SECTION 6(e) OF THIS AGREEMENT AS AMENDED HEREIN.
(h) U.S. Resolution Stay Provisions. The parties acknowledge and agree that (i) to the extent that prior to the date hereof both parties have adhered to the 2018 ISDA U.S. Resolution Stay Protocol (the “Protocol”), the terms of the Protocol are incorporated into and for a part of this Agreement, and for such purposes this Agreement shall be deemed a Protocol Covered Agreement, the [Regulated Entity] entity that is a party to this Agreement (“[_____]”) shall be deemed a Regulated Entity and the other entity that is a party to this Agreement (“Counterparty”) shall be deemed an Adhering Party; (ii) to the extent that prior to the date hereof the parties have executed a separate 16 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 this Agreement shall be deemed a Covered Agreement, [Regulated Entity] shall be deemed a Covered Entity and Counterparty shall be deemed a Counterparty Entity; 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)” published by ISDA on November 2, 2018 (currently available on the 2018 ISDA U.S. Resolution Stay Protocol page at www.isda.org, and a copy of which is available upon request), 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 and form a part of this Agreement, and for such purposes this Agreement shall be deemed a “Covered Agreement,” [Regulated Entity] shall be deemed a “Covered Entity” and Counterparty shall be deemed a “Counterparty Entity.” In the event that, after the date of this Agreement, both parties hereto become adhering parties to the Protocol, the terms of the Protocol will replace the terms of this paragraph. 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, reference to “this Agreement” include any related credit enhancements entered into between the parties 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, with all references to [Regulated Entity] 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 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.
(i) Reserved.
(j) No Immunity. Counterparty is not entitled to and shall not assert the defense of sovereign immunity with respect to its obligations or any claims under this Agreement. (k) No Other Transactions. The following shall be inserted at the end of Section 2(a)(i):
“The parties agree that the only Transactions that will be governed by this Agreement shall be the Transactions evidenced by the Confirmation executed by the parties dated as of the date of the Master Power Supply Agreement.”
(l) Market Disruption Events. The provisions of Section 7.4(d)(i) of the Definitions are hereby specifically incorporated by reference.
(m) Liability of Issuer Limited to Trust Estate. Notwithstanding anything to the contrary in this Agreement, the liabilities of Issuer hereunder shall be limited in all respects to the [Trust Estate (as defined in the Bond Indenture)] and shall be subject to the priority of payment and other provisions set forth in the Bond Indenture.
17 (n) Bankruptcy Code. Without limiting the applicability if any, of any other provision of the U.S.
Bankruptcy Code as amended (the “Bankruptcy Code”) (including without limitation Sections 362, 546, 556, and 560 thereof and the applicable definitions in Section 101 thereof), the parties acknowledge and agree that all Transactions entered into hereunder will constitute “forward contracts” or “swap agreements” as defined in Section 101 of the Bankruptcy Code or “commodity contracts” as defined in Section 761 of the Bankruptcy Code, that the rights of the parties under Section 6 of this Agreement will constitute contractual rights to liquidate Transactions, that any margin or collateral provided under any margin, collateral, security, pledge, or similar agreement related hereto will constitute a “margin payment” as defined in Section 101 of the Bankruptcy Code, and that the parties are entities entitled to the rights under, and protections afforded by, Sections 362, 546, 556, and 560 of the Bankruptcy Code. (o) ISDA Dodd Frank Protocols. The parties agree that, notwithstanding anything to the contrary in the ISDA August 2012 Dodd-Frank Protocol (as published by the International Swaps and Derivatives Association, Inc. on August 13, 2012) entered into by the parties (the “August DF Protocol Agreement”) and the March 2013 Dodd-Frank Protocol Agreement (as published by the International Swaps and Derivatives Association, Inc. on March 22, 2013) entered into by the parties (the “March DF Protocol Agreement”) (together, the “Protocol Agreements”), this Agreement shall constitute a “Protocol Covered Agreement” for all purposes under the Protocol Agreements.
(p) Custodial Agreement. The parties acknowledge that all payments due by Issuer in respect of Transactions hereunder will be made in accordance with that certain Custodial Agreement, dated as of the date of the initial issuance of the [Bonds (as defined in the Bond Indenture)] (as the same may be amended, restated, supplemented, replaced or otherwise modified from time to time, the “Custodial Agreement”) by and among Issuer, Counterparty, [Counterparty 2], the Trustee and [_________], in its capacity as custodian thereto (the “Custodian”), provided, however, that Issuer will be deemed to have satisfied a payment obligation if it has paid the amount due in respect thereof in accordance with the Custodial Agreement, regardless of whether the Custodian complies with its obligations under the Custodial Agreement. For the avoidance of doubt, Counterparty shall not be entitled to any payment under this Agreement that is duplicative of any payment made by Issuer under [Section 3(e) of the Custodial Agreement]. (q) Additional Definitions.
“Clean Energy Purchase Contract” means the [Clean Energy Purchase Contract (as defined in the Bond Indenture)], as may be amended, restated, supplemented, replaced or otherwise modified from time to time.
Part 6. Disruption Fallbacks
The “Disruption Fallback” of “Calculation Agent Determination” specified in Section 7.5(c) of the Definitions shall apply to all Transactions, as if references in the Definitions to “Relevant Price” and “Pricing Date” were references to “Floating Price (as specified in the relevant Confirmation)” and “the first Local Business Day of each Determination Period (as specified in the relevant Confirmation)”, respectively; provided that if a Disruption Fallback affects a Relevant Price under this Agreement and the same Relevant Price under the Seller Swap, Issuer shall be required to use the same calculation as is used by Prepay LLC under the Seller Swap.
[SEPARATE SIGNATURE PAGE(S) ATTACHED]
[SIGNATURE PAGE TO THE ISSUER/COUNTERPARTY COMMODITY PRICE SWAP SCHEDULE] Sig. Pg. 1 of 2
IN WITNESS WHEREOF, each of the parties has executed this document in counterpart on the respective dates specified below with effect from the date specified on the first page of this document.
CALIFORNIA COMMUNITY CHOICE
FINANCING AUTHORITY
Name:__________________________________
Title:___________________________________
Date:___________________________________
[SIGNATURE PAGE TO THE ISSUER/COUNTERPARTY COMMODITY PRICE SWAP SCHEDULE] Sig. Pg. 2 of 2
[COUNTERPARTY]
Name:__________________________________
Title:___________________________________
Date:___________________________________
Staff Report Item 4
TO: 3CE Operations Board of Directors
FROM: Robert M. Shaw, Chief Executive Officer
SUBJECT: Receive an Update of the Fiscal Year 2022-23 Mid-Year Budget Re-forecast and Support Seeking Policy Board Approval to Increase Appropriations.
DATE: 5/10/2023
RECOMMENDATION:
It is recommended the Operations Board: a). Receive a Mid-Year Budget Estimate; and b.) Support seeking Policy Board approval to increase Fiscal Year (FY) 2022-23 adopted appropriations and revenue by $19,638,825 for a revised operating budget of $437,380,808.
BACKGROUND:
At its September 22, 2022, regular meeting the Policy Board approved 3CE’s FY 2022-23 Operating Budget which estimated adjustments to the electric generation rates in the Pacific Gas & Electric (“PG&E”) service area. That final electric generation rate adjustment was effective January 1, 2023 and resulted in an overall reduction of 1.3 c/kWh.
At its April 26, 2023 meeting, the Audit and Finance Committee received the Mid-Year Budget Re-forecast and supported staff’s recommended appropriations increase.
DISCUSSION/ANALYSIS:
The original adopted FY 2022-23 Operating Budget (“Adopted Budget”) approved appropriations of $425.7 million financed by $435.2 million in revenue with positive change in net position of $17.0 million for FY 2022-23. The requested increase is net of a $408,078 reduction from non-energy operations and exclusion of $7.5 million in appropriated provisions for bad debt which do not require appropriations.
Since adoption, increased regulatory compliance, a highly volatile energy market, and an unusually cold winter have resulted in a significant increase in 3CE’s cost of energy (“COE”) of $19.6 million. The Adopted Budget was built on an expected reduction in the c/kWh rate of 2.3 c/kWh beginning in January; however, the final Policy Board approved reduction was a 1.3 c/kWh reduction. The lower than budgeted reduction and increases to SCE rates is estimated to result in higher than budgeted revenues of $26.6 million, which provides adequate financing to cover the increased COE of $19.6 million. The net result of increases in COE and revenue is estimated to add an additional $7.4 million to net position, barring additional sustained hot weather events or other unanticipated costs.
The additional positive change in net position will provide 3CE with additional flexibility to withstand potential weather or other market events that could deteriorate expected year-end results. Attachment 2 provides a graphical depiction of the financial impacts prior weather events have caused and the potential reductions to net position that may occur this year. As the attachment reveals, a weather event lasting over one week (or several smaller events) could consume the expected FY 2022-23 income possibly requiring use of reserves.
In addition to the increased net position estimated between COE and energy revenues is the inclusion of interest earnings of $6.2 million. With the Federal Reserve increasing interest rates, investment income is providing substantial financing sources which were not included in the Adopted Budget. Staff has included investment earnings in both the budget column and the forecast column in order to present the committee with a Mid-Year estimate isolating the main operational impact of COE, Energy Revenue, and the rate reduction variance from September 2022 to January 2023. While additional energy and investment revenue is estimated as available, this report only seeks approval of increasing appropriations by $19.6 million to sufficiently provide expenditure authority for the increased COE.
FISCAL IMPACT:
End of year results estimate increased revenue by $26.6 million or 6.1%, a corresponding increase of expense by $19.6 million or 5.2%, resulting in a net positive bottom-line increase of $7.4 million. It is estimated that for the fiscal year end the agency will have positive change in net position of $24.4 million, however it must be cautioned that regulatory and energy market volatility could have a negative fiscal impact, especially in the summer months.
CONCLUSION:
Supporting the Policy Board’s approval of an additional appropriation of $19.6 million (anticipated to be funded from additional revenues) enables 3CE to cover additional costs associated with increased energy costs. Given the unpredictability of the energy market and increased regulatory risk, 3CE is preparing to complete and analysis of the current PG&E Cost of Service (COS) structure and the design of Southern California Edison (SCE) COS rates to ensure the fiscal stability of 3CE beyond the current fiscal year.
ATTACHMENT(S):
1. FY 2022-23 Mid-Year Budget Re-Forecast Recap
2. Energy Market Volatility Impact Scenario
Attachment 2:
*Note: Graph is for illustrative purposes with unhedged energy purposes. $40,260,372 $37,202,980
$3,057,392
$41,561,756
$66,464,965
$(24,903,209)
$(40,000,000)
$(20,000,000)
$-
$20,000,000
$40,000,000
$60,000,000
$80,000,000
Revenue w/
No Heat
Waves
COE w/ No
Heat Waves
Variance w/
No Heat
Waves
Revenue w/
Three Heat
Waves
COE w/
Three Heat
Waves
Variance w/
Three Heat
Waves
Impact of Heat Waves