For the avoidance of doubt, Seller shall not sell, nor shall it be required to sell, Product to Buyer for a Remediation Remarketing if such Product is to be remarketed by Seller on behalf of Buyer for less than the Minimum Remarketing Sales Price.
(b) Indemnification of Buyer. Unless the terms of a Remediation Remarketing undertaken by Seller on Buyer’s behalf are specifically assumed by Buyer, Seller shall indemnify Buyer for any costs or liabilities associated with such Remediation Remarketing (other than costs related to the price at which such Product is sold and the risk of collecting the sale proceeds from the remarketing buyer), including, without limitation, any cover or replacement costs; termination payments; fees, penalties, costs or charges (in cash or in kind) assessed by any Transmission Provider for failure to satisfy its balance or nomination requirements; Claims for breach of warranty; taxes, fees, levies, penalties, licenses or charges imposed by any Government Agency; and Claims from personal injury or property damages.
(c) Electric Energy Remediation Debits. The total purchase price of any Product purchased by Buyer or Seller pursuant to Section 8(a) of this Exhibit C will be entered by Seller as a dollar debit on (i) first, the Private Business Sales Ledger, if and to the extent such ledger has a positive balance and such Product is remarketed in a Qualified Sale and (ii) second, on the Non-Private Business Sales Ledger, if and to the extent such ledger has a positive balance, the Private Business Sales Ledger has a zero balance, and such Product is remarketed in a Qualified Sale, with such debit in the case of (i) or (ii) dated as of the last day of the Month in which such Product was purchased. Each dollar debit shall offset and reverse an equal amount of the dollar credits to such ledger (that have not previously been transferred to the Expired Non-Private Business Sales Ledger or the Expired Private Business Sales Ledger) in the order in which they were made (beginning with the oldest credit not previously offset and reversed by any prior debit).
Whenever a debit is made to the dollar balance of the Ledger Entries of either such ledger, Seller shall also debit the Product balance of the Ledger Entries of such ledger based on (i) such dollar debit divided by (ii) an average Product price calculated from the net Ledger Entry then present on the relevant ledger being debited. For the avoidance of doubt, neither the Non-Private Business Sales Ledger nor the Private Business Sales Ledger shall ever have a negative balance, and the same purchase transaction shall not result in a debit to more than one ledger except to the extent that a debit for the transaction causes one ledger to have a zero balance and the remaining portion of the permitted debit is made to the other ledger. To the extent any Product sold in a remediation C-10
sale is measured in kW-mo, such sales shall be converted to MWh for the purpose of entering credits to the applicable ledger consistent with the formula set forth in Section 7(e) above. (d) Natural Gas Remediation. In addition to the ability of Seller or Buyer to engage in Remediation Remarketing to reduce the balances of any Ledger Entries through Qualified Sales of Product, the proceeds represented by the dollar balances of such Ledger Entries may also be remediated through the purchase of natural gas that will be remarketed in Qualified Sales. If Seller locates an opportunity for Buyer to purchase natural gas for a Remediation Remarketing, the provisions of Section 8(a)(ii) of this Exhibit C shall apply to such opportunity with the following modifications: (i) every occurrence of the term “Product” shall be replaced with “natural gas” and (ii) the definition of Minimum Remarketing Sales Price shall be revised to replace every occurrence of “MWh of Product” with “MMBtu of natural gas.” For the purposes of entering MWh debits to the Ledger Entries in accordance with Section 8(c) of this Exhibit C for any Remediation Remarketing of natural gas, a quantity of MMBtus will be debited based on (i) the total proceeds paid for such natural gas divided by (ii) an average Product price calculated from the net Ledger Entry then present on the relevant ledger being debited. (e) Other Remediation Debits. In the event that (i) the Project Participant remediates the proceeds represented by the dollar balances of the Ledger Entries pursuant to Section 7.5 of the Clean Energy Purchase Contract or (ii) Bonds are redeemed pursuant to the provisions of Section 7.6(c) of the Clean Energy Purchase Contract and Section 4.01(b) of the Bond Indenture, the corresponding Ledger Entries then present on any ledger shall be debited.
Section 9. Ledger Event.
(a) Expired Entry Ledgers. In addition to the Non-Private Business Sales Ledger and the Private Business Sales Ledger described in Sections 7(a)(i) and 7(a)(ii) of this Exhibit C, above, Seller shall also maintain an “Expired Non-Private Business Sales Ledger” and an “Expired Private Business Sales Ledger”. Whenever a credit to the dollar balance of the Ledger Entries of the Non-Private Business Sales Ledger has not been reversed in full within two years of the date of such credit by an offsetting dollar debit in accordance with such Section 8(c) or Section 8(d) of this Exhibit C, then Seller shall (i) debit the remaining portion of such dollar credit and the Product balance of the Ledger Entries in the manner described in the penultimate sentence of Section 8(c) and (ii) record such debits as credits to the Expired Non-Private Business Sales Ledger. Similarly, whenever a credit to the dollar balance of the Ledger Entries of the Private Business Sales Ledger has not been reversed in full within two years of the date of such credit by an offsetting dollar debit in accordance with Section 8(c) or Section 8(d) of this Exhibit C, then Seller shall (i) debit the remaining portion of such dollar credit and the Product balance of the Ledger Entries in the manner described in the penultimate sentence of such Section 8(c) and (ii) record such debits as credits to the Expired Private Business Sales Ledger. (b) Reports to Buyer.
(i) No later than the tenth day of each Month, Seller shall provide to Buyer copies of the Non-Private Business Sales Ledger, the Private Business Sales Ledger, the Expired Non-Private Business Sales Ledger and the Expired Private Business Sales C-11
Ledger showing all credits and debits to each such ledger since the Execution Date, in each case if a credit has been recorded in such ledger since the Execution Date. (ii) Additionally, if at any time (i) the credits to the dollar balance of the Ledger Entries of a Non-Private Business Sales Ledger or a Private Business Sales Ledger have not been reversed within twenty-two (22) Months of being recorded and (ii) the continued failure to reverse such credits within two years of being recorded would result in a Ledger Event (under Section 9(c) below), then Seller no later than the tenth (10 th) day
of the 22nd Month following the entry of such credits shall provide notice to Buyer of the potential for the occurrence of a Ledger Event and request that Buyer consult with Special Tax Counsel regarding (A) a partial redemption of the Bonds as a remedial action with respect to such potential Ledger Event and (B) the possibility of delivery of a Tax Opinion if such a Ledger Event occurs.
(c) Ledger Event. A “Ledger Event” shall occur if, at any time, either (i) (A) the sum of all MWh credits on an Expired Non-Private Business Sales Ledger and the corresponding Expired Private Business Sales Ledger exceeds (B) the Non-Qualifying Remarketing Limit, or (ii) (A) the sum of all MWh credits on an Expired Private Business Sales Ledger exceeds (B) the Private Business Remarketing Limit, unless Buyer has obtained a Tax Opinion with respect to either (I) such event or (II) any remedial action that may have been taken with respect to the Bonds.
(d) Sole Remedies. The occurrence of a Ledger Event and any remedies associated therewith in Article XVII of the Agreement shall be Buyer’s sole and exclusive remedies with respect to any inability by Seller to purchase and remarket Product for Buyer pursuant to, or any breach by Seller of its obligations under, this Exhibit C.
Section 10. Third Party Remarketing Agent. To the extent that the net Ledger Entry balance of either the Non-Private Business Sales Ledger or the Private Business Sales Ledger is greater than zero (0) for a period of twelve (12) Months or longer, Seller may appoint a third party remarketing agent to remediate the outstanding Ledger Entries instead of J. Aron; provided that such third party remarketing agent must agree to (a) remediate such Ledger Entries consistent with the terms of this Exhibit C and (b) exercise Commercially Reasonable Efforts to enter into remarketing sales to the extent that Buyer, Seller or J. Aron locate opportunities for remarketing sales after such third party remarketing agent’s appointment.
Section 11. Buyer Right to Request to Purchase Remarketed Product. Notwithstanding any other provision of this Exhibit C, Buyer may request in a Remarketing Notice delivered to Seller that Buyer be the remarketing buyer of the quantities of Product described in such Remarketing Notice, in which case Seller will sell such remarketed Product to Buyer at a price, at Delivery Point(s) and on date(s) to be mutually agreed (but the price shall in no event be less than the Net Participant Price) by the Parties, provided that Seller shall be obligated to remarket such Product to Buyer only if all of the following conditions are satisfied:
(i) Buyer is not in default under any Transaction Document; C-12
(ii) Buyer has certified to Seller in the Remarketing Notice that the condition in clause (a) above is true;
(iii) Buyer has provided such adequate assurances of Buyer’s performance, if any, as may have been reasonably requested by Seller; (iv) there is a master agreement in effect between Buyer and Seller that will govern the remarketing transaction between Buyer and Seller; and (v) Buyer covenants to resell the Product only in Qualified Sales.
Section 12. Remarketing of Assigned Product. Notwithstanding anything to the contrary herein, if (a) a quantity of Assigned Product less than the Assigned Prepay Quantity is delivered hereunder in any Month during an Assignment Period for any reason other than Force Majeure or (b) an Assigned PPA FM Remarketing Event (as defined in Exhibit F) is in effect with respect to an Assigned PPA, then (i) Buyer will be deemed to have requested Seller to remarket a quantity of Product equal to the quantity of Assigned Product not delivered (regardless of whether a Remarketing Notice was delivered) and (ii) Seller shall sell such Product or cause such Product to be sold in a Private Business Sale at the APC Contract Price minus the applicable Remarketing Fee. Seller shall pay Buyer for any such Month the product of (I) the Assigned Prepay Quantity, less the amount of Assigned Product actually delivered, multiplied by (II) the APC Contract Price minus the applicable Remarketing Fee. All such sales shall constitute a Private Business Sale and shall be reflected on the Private Business Sales Ledger.
D-1
EXHIBIT D-1
TERMINATION PAYMENT SCHEDULE
Month of Early
Termination Payment
Date
Early Termination Payment
Date (If Not a Business Day,
Preceding Business Day)
Termination Payment
($)
(To be attached.)
D-2
EXHIBIT D-2
TERMINATION PAYMENT ADJUSTMENT SCHEDULE
[To come for subsequent periods.]
D-3
EXHIBIT D-3
POST-TERMINATION PAYMENT SCHEDULE
[To be attached.]
E-1
EXHIBIT E
RECEIVABLES PURCHASE EXHIBIT
[To be attached.]
F-1
EXHIBIT F
PRICING AND OTHER TERMS
Prepayment: $[____]
Prepayment Outside Date: [____], 2023
Delivery Period: shall commence on [____], 2023 and shall continue in effect until the end of the day on [____], 20[__] or earlier upon the Product Delivery Termination Date.
Remarketing Fee: $[0.__]/MWh, provided that:
(i) to the extent that (x) less than 95% of the Assigned Prepay Quantity is actually delivered under an Assigned PPA in four consecutive Months and (y) such under-deliveries are not a result of Force Majeure, the Remarketing Fee applicable to the remarketing of Assigned Energy under such Assigned PPA commencing with Seller’s remarketing payment for the fourth consecutive Month of under-deliveries shall be $[___] until such Assigned PPA has delivered 95% or more of the Assigned Prepay Quantity for three consecutive Months;
(ii) to the extent that none of the Assigned Prepay Quantity is actually delivered under an Assigned PPA for six consecutive Months due to Force Majeure, then (x) an “Assigned PPA FM Remarketing Event” shall be in effect until such Assigned PPA has delivered 95% or more of the Assigned Prepay Quantity for three consecutive Months and (y) the Remarketing Fee applicable to the remarketing of Assigned Energy under such Assigned PPA commencing with Seller’s remarketing payment for the sixth consecutive Month of non-deliveries shall be $[___] while such Assigned PPA FM Remarketing Event is continuing and in effect; and
(iii) the Remarketing Fee shall be zero with respect to any Product remarketed to Buyer in accordance with Section 11 of Exhibit C.
Discount Rate Spread: [____] basis points per annum
Specified Fixed Price: $[____]/MWh
Administrative Fee: $[____]/MWh
Additional Termination Payment Applies to the Following Product Delivery Termination Events:
[____]
G-1
EXHIBIT G
COMMUNICATIONS PROTOCOL FOR BASE QUANTITIES
This Exhibit G (“Communications Protocol”) addresses the Scheduling of Base Quantities to be delivered and received at the Base Delivery Point. It is intended to be attached to both the Master Power Supply Agreement and the Clean Energy Purchase Contract, each as defined below.
1. ADDITIONAL DEFINED TERMS
In addition to the terms defined in Article I of this Agreement, the following terms used in this Communications Protocol shall have the following meanings:
“Agreement” means (i) when this Communications Protocol is attached to the Master Power Supply Agreement, the Master Power Supply Agreement and (ii) when this Communications Protocol is attached to the Clean Energy Purchase Contract, the Clean Energy Purchase Contract.
“Clean Energy Purchase Contract” means that certain Clean Energy Purchase Contract dated as of [____], 2023 by and between Issuer and Project Participant. “Delivery Scheduling Entity” means Prepay LLC or a Person designated by Prepay LLC, as set forth in Attachment 4 hereto or in a subsequent written notice to Issuer and the Project Participant.
“Issuer” means California Community Choice Financing Authority, a joint powers authority and a public entity of the State of California established pursuant to the provisions of the Joint Exercise of Powers Act (Article 1, Chapter 5, Division 7, Title 1, Section 6500 et seq. of the California Government Code, as amended).
“Master Power Supply Agreement” means that certain Master Power Supply Agreement dated as of [____], 2023 by and between Prepay LLC and Issuer that is specified as relating to the Clean Energy Purchase Contract with Project Participant. “Operational Nomination” has the meaning specified in Section 4.1.1. “Prepay LLC” means Aron Energy Prepay 22 LLC, a Delaware limited liability company. “Project Participant” means Central Coast Community Energy, a public agency formed under the provisions of the Joint Exercise of Powers Act of the State of California, Government Code Section 6500 et seq.
“Receipt Scheduling Entity” for any Delivery Point means the Project Participant, unless the Clean Energy Purchase Contract has been suspended or terminated, in which case the Receipt Scheduling Entity will be Issuer or a Person designated by Issuer for such Delivery Point in accordance with this Communications Protocol.
G-2
“Relevant Contract” means the Master Power Supply Agreement and the Clean Energy Purchase Contract.
“Relevant Party” means Issuer, Prepay LLC or the Project Participant. “Relevant Third Party” means any Person that is (i) a Transmission Provider that will or is intended to transport Product to be delivered or received under the Agreement, (ii) an independent system operator or control area that coordinates the Scheduling of Product at the Base Delivery Point, (iii) Scheduling receipt of Product by Issuer or for the account of Issuer to the extent such Product has been delivered to Issuer or for the account of Issuer under the Master Power Supply Agreement, and (iv) delivering Product to Issuer or for the account of Issuer to the extent such Product is intended to be re-delivered ultimately to the Project Participant or for the account of the Project Participant under the Clean Energy Purchase Contract.
“Scheduling Entities” means the Receipt Scheduling Entity and the Delivery Scheduling Entity.
2. AGREEMENTS OF RELEVANT PARTIES
Each Relevant Party that is a party to Relevant Contract to which this Communications Protocol is attached acknowledges that this Communications Protocol sets forth certain obligations that may be delegated to other Relevant Parties that are not parties to such Relevant Contracts. In connection therewith:
2.1 Reliance on Scheduling Entity. Each Relevant Party shall be entitled to rely exclusively on any communications or directions given by a Delivery Scheduling Entity or Receipt Scheduling Entity, in each case to the extent such communications are permitted hereunder.
2.2 Performance of Communications Protocol. Each Relevant Party to a Relevant Contract shall cause its counterparty to each other Relevant Contract to comply with the provisions of this Communications Protocol as the provisions apply to the such counterparty to the extent required to perform the obligations of the Relevant Party under the Relevant Contract.
2.3 Third Party Beneficiaries. To the extent this Communications Protocol purports to give any Relevant Party (a “Beneficiary”) rights vis-à-vis any other Relevant Party (a “Burdened Party”) with whom such Beneficiary does not have privity under a Relevant Contract, such Beneficiary shall be deemed to be a third party beneficiary of each Relevant Contract to which the Burdened Party is a party to the extent necessary or convenient to enforce the obligations of the Burdened Party under this Communications Protocol.
2.4 Amendment of Relevant Contracts. No Relevant Party shall amend, waive or otherwise modify any provision of any Relevant Contract to which it is a party without the consent of each other Relevant Party whose rights or obligations would G-3
be materially and adversely affected by such amendment, waiver or modification as it relates to this Communications Protocol.
2.5 Amendment of Communications Protocol. No Relevant Party shall amend any provision of this Communications Protocol in a Relevant Contract without the consent of each other Relevant Party.
2.6 Waiver of Communications Protocol. No Relevant Party shall waive any provision of this Communications Protocol in a Relevant Contract without the consent of each other Relevant Party whose rights or obligations would be materially and adversely affected by such waiver.
3 DESIGNATION AND REPLACEMENT OF SCHEDULING ENTITIES
3.1 Designation of Delivery Scheduling Entity. Prepay LLC may designate a new Delivery Scheduling Entity upon thirty (30) days written notice to Issuer substantially in the form of Attachment 4. Any Scheduling Entity designated in accordance with this Section 3.1 shall commence service at the beginning of a Month, unless mutually agreed in writing between Prepay LLC and Issuer.
3.2 Assumption by Receipt Scheduling Entity. If any Delivery Scheduling Entity (other than Prepay LLC) persistently fails to perform its obligations as contemplated under this Communications Protocol, the Receipt Scheduling Entity may, by notice to Prepay LLC, require that Prepay LLC deal directly with the Receipt Scheduling Entity until a new Delivery Scheduling Entity is designated in accordance with this Section 3.1.
3.3 Scheduling Coordinator. Project Participant shall designate a scheduling coordinator for the purposes of accepting Base Product delivery at the Base Delivery Point through the scheduling of ISTs.
4 INFORMATION EXCHANGE AND COMMUNICATION BETWEEN ISSUER AND
PREPAY LLC
4.1 Communication of Operational Nomination Details.
4.1.1 Not later than three Days prior to each Day during which Base Product is required to be delivered under the Agreement, the Receipt Scheduling Entity for such Delivery Point may deliver an operational nomination in writing (the “Operational Nomination”) indicating any inability of the Project Participant to receive all of its Base Quantities during such Day, which Operational Nomination shall be without prejudice to any party’s rights under the Relevant Contracts for failure to receive Base Quantities.
If no changes to Base Quantities are so submitted, the Operational Nomination shall be deemed to nominate the full Base Quantities required to be delivered on a Day.
G-4
4.1.2 Not later than three Days prior to each Day during which Base Product is required to be delivered under the Agreement, the Delivery Scheduling Entity for such Delivery Point may revise the Operational Nomination to indicate any inability of Prepay LLC to deliver all Base Quantities during such Day, which revised Operational Nomination shall be without prejudice to any party’s rights under the Relevant Contracts for failure to deliver Base Quantities.
4.2 Event-specific Communications.
4.2.1 Remarketing Notices issued by Issuer under the Master Power Supply Agreement shall be substantially in the form of Attachment 2 hereto. Any such notices to remarket must be delivered directly to Prepay LLC and the Delivery Scheduling Entity.
4.2.2 Each Scheduling Entity shall notify Prepay LLC, Issuer and the Project Participant as soon as practicable in the event of: (i) any deficiencies in Scheduling related to such Scheduling Entity; (ii) any deficiencies in Scheduling related to the other such Scheduling Entity; and (iii) any issues with Relevant Third Parties that that would reasonably be expected to create issues related to Product Scheduling under the Relevant Contract. 5 ACCESS AND INFORMATION
5.1 Verification of Product Scheduled. In addition to the delivery of and access to the records and data required pursuant to the Agreement, each Relevant Party agrees to provide relevant records from itself and other Relevant Third Parties necessary to document and verify Product Scheduled within and after the Month as needed to facilitate the Relevant Contracts.
5.2 View Rights. To the extent requested by a Delivery Scheduling Entity or Prepay LLC, the Receipt Scheduling Entities will use Commercially Reasonable Efforts to cooperate with the Delivery Scheduling Entity and Prepay LLC to ensure that Delivery Scheduling Entity and Prepay LLC has sufficient agency view rights from each such Scheduling Entity to allow Prepay LLC to view Base Product Scheduling at the Base Delivery Point.
6 NOTICES
Any notice, demand, request or other communication required or authorized by this Communications Protocol to be given by one Relevant Party to another Relevant Party shall be in writing, except as otherwise expressly provided herein. It shall either be sent by facsimile (with receipt confirmed by telephone and electronic transmittal receipt), courier, or personally delivered (including overnight delivery service) to the representative of the other Relevant Party designated in Attachment 1 hereto. Any such notice, demand, or request shall be deemed to be given (i) when sent by facsimile confirmed by telephone and electronic transmittal receipt or (ii) when actually received if delivered by courier or G-5
personal delivery (including overnight delivery service). Each Relevant Party shall have the right, upon written notice to the other Relevant Parties, to change its address at any time, and to designate that copies of all such notices be directed to another Person at another address.
7 NO IMPACT ON CONTRACTUAL OBLIGATIONS
Except as expressly set forth herein or in an applicable Relevant Contract, nothing in this Communications Protocol nor any Relevant Party’s actions or inactions hereunder shall have any impact on any Relevant Party’s rights or obligations under the Relevant Contracts. 8 ATTACHMENTS
Attachment 1 - Key Personnel
Attachment 2 - Remarketing Notice Form
Attachment 3 - Designation of Alternate Base Delivery Points Form Attachment 4 - Designation of Scheduling Entities Form
G-6
Attachment 1
Key Personnel
Prepay LLC Marketing Personnel:
Kenan Arkan
Sales and Trading
Telephone: (212) 357-2542
[email protected]
Prepay LLC Scheduling Personnel:
Scheduling Team
Email: [email protected]
Direct Phone: (212) 902-8148
Fax: 212.493.9847
Matt Speltz
ICE Chat: mspeltz5
Email: [email protected]
Direct Phone: (212) 357-5429
Fax: (212) 493-9847
Other Prepay LLC Personnel:
Francois Gignac
Telephone: (212) 855-0880
[email protected]
Andres E. Aguila
Telephone: (212) 855-6008
Fax: (212) 291-2124
[email protected]
Issuer Personnel:
[____]
Project Participant Personnel:
[____]
G-7
Attachment 2
Remarketing Notice Form
Date: [_____________]
To: Prepay LLC Scheduling
From: Project Participant Scheduling
This notice is being delivered pursuant to that certain Master Power Supply Agreement (the “Prepaid Agreement”) dated as of [____], 2023 by and between Aron Energy Prepay 22 LLC (“Prepay LLC”) and California Community Choice Financing Authority (“Issuer”) and relates to the Clean Energy Purchase Contract (the “Clean Energy Purchase Contract”) dated as of [____], 2023 by and between Issuer and Central Coast Community Energy (“Project Participant”). Capitalized terms not defined herein are defined in the Prepaid Agreement.
Check the box to indicate type of Remarketing Notice (The numbers of the Primary (“P”) and Alternate (“A”) Delivery Points below correspond to those same Primary and Alternate Delivery Points set forth in Exhibit A-1 of the Agreement, or as may be designated by the Parties from time to time):
Monthly Remarketing Notice:
Month(s) for which remarketing is requested: _____________________, 20__ through _______________________, 20__.
Pursuant to Section 3(b) of Exhibit C of the Master Power Supply Agreement, Project Participant requests that Prepay LLC remarket in such Month(s) the following Base Quantities of Product required to be delivered at the following Delivery Points:
Delivery Point (P/A, #) MWh/ Hour for each Hour in the Month Daily Remarketing Notice:
Hours for which remarketing is requested: _____________________, 20__ through _______________________, 20__.
Pursuant to Section 3(c) of Exhibit C of the Master Power Supply Agreement, Project Participant requests that Prepay LLC remarket for such Hours the following Base Quantities of Product required to be delivered at the following Delivery Point:
G-8
Delivery Point (P/A, #) MWh/Hour
Submitted by Project Participant:
CENTRAL COAST COMMUNITY ENERGY
By: ________________________
Name:
Title:
G-9
Attachment 3
Designation of Alternate Delivery Points Form
This designation is delivered pursuant to that certain Master Power Supply Agreement (the “Master Power Supply Agreement”) dated as of [____], 2023 by and between Aron Energy Prepay 22 LLC (“Prepay LLC”) and California Community Choice Financing Authority (“Issuer”) and the Clean Energy Purchase Contract (the “Clean Energy Purchase Contract”) dated as of [____], 2023 by and between Issuer and Central Coast Community Energy (“Project Participant”). Capitalized terms not defined herein are defined in the Master Power Supply Agreement and the Clean Energy Purchase Contract. [Project Participant and/or Issuer] hereby proposes the following Alternate Delivery Points for deliveries of Energy that would otherwise be made at the specified Primary Delivery Point:
ALTERNATE
DELIVERY POINT
PRIMARY
DELIVERY POINT
AFFECTED
COMMODITY
REFERENCE PRICE
PRICING POINT
ADDITIONAL
RESTRICTIONS
1 [e.g.
2 Vol. Limit:____
3 Time Limit:]___
(etc.)
Unless otherwise agreed among Prepay LLC, Issuer and Project Participant, an Alternate Delivery Point shall utilize the same Commodity Reference Price as the Primary Delivery Point it replaces or otherwise affects. Project Participant is not required to agree or accept this designation (or any change to the Commodity Reference Price) if it is being submitted by Issuer pursuant to the Master Power Supply Agreement only.
AGREED AND
ACCEPTED BY PREPAY LLC:
(if required)
AGREED TO AND ACCEPTED
BY PROJECT PARTICIPANT:
(if required)
AGREED TO AND ACCEPTED
BY ISSUER:
By:
Name:
Title:
By:
Name:
Title:
By:
Name:
Title:
G-10
Attachment 4
Designation of Scheduling Entities Form
This designation is being delivered pursuant to that certain Master Power Supply Agreement (the “Master Power Supply Agreement”) dated as of [____], 2023 by and between Aron Energy Prepay 22 LLC (“Prepay LLC”) and California Community Choice Financing Authority (“Issuer”) and relates to the Clean Energy Purchase Contract (the “Clean Energy Purchase Contract”) dated as of [____], 2023 by and between Issuer and Central Coast Community Energy (“Project Participant”). Capitalized terms not defined herein are defined in the Master Power Supply Agreement and Clean Energy Purchase Contract. [If delivered by Project Participant:
Receipt Scheduling Entity:
Delivery Point: ________________________
Effective Date(s) of Service of Receipt Scheduling Entity (full Months only):
________________, ______ to ________________, ______, if applicable Notice Information for Receipt Scheduling Entity:
Name: ______________________________
Attention: ______________________________
Address: ______________________________
______________________________
Telephone: ______________________________
Fax: ______________________________]
[If delivered by Prepay LLC:
Delivery Scheduling Entity:
Delivery Point: ________________________
Effective Date(s) of Service of Delivery Scheduling Entity (full Months only):
________________, ______ to ________________, ______, if applicable Notice Information for Delivery Scheduling Entity:
Name: ______________________________
Attention: ______________________________
Address: ______________________________
______________________________
G-11
Telephone: ______________________________
Fax: ______________________________
Submitted by:
[Project Participant or Prepay LLC]
By: _____________________________
Name: _____________________________
Title: _____________________________
Relates to Clean Energy Purchase Contract with Central Coast Community Energy
ELECTRICITY PURCHASE, SALE, AND SERVICE AGREEMENT
between
J. ARON & COMPANY LLC
and
ARON ENERGY PREPAY 16 LLC
Dated as of [____], 2023
i
TABLE OF CONTENTS
Page
ARTICLE I. DEFINITIONS ....................................................................................................... 1 Defined Terms ........................................................................................... 1 Definitions; Interpretation ..................................................................... 10 ARTICLE II. EXECUTION DATE AND DELIVERY PERIOD.......................................... 10 ARTICLE III. SALE AND PURCHASE.................................................................................. 11 Sale and Purchase of Product ................................................................ 11 Payments.................................................................................................. 11 Structuring Fee........................................................................................ 12 ARTICLE IV. FAILURE TO SCHEDULE PRODUCT ........................................................ 12 J. Aron’s Failure to Schedule or Deliver Base Quantity (Not Due to Force Majeure)........................................................................................ 12 Prepay LLC’s Failure to Schedule or Take Base Quantities (Not Due to Force Majeure) ................................................................................... 13 Failure to Schedule or Take Due to Force Majeure............................. 13 Assigned Product..................................................................................... 14 Sole Remedies. ......................................................................................... 14 ARTICLE V. DELIVERY POINTS; SCHEDULING ............................................................ 14 Delivery Points......................................................................................... 14 Transmission and Scheduling ................................................................ 15 Title and Risk of Loss ............................................................................. 15 PCC1 Product and Long-Term PCC1 Product.................................... 16 Communications Protocol ...................................................................... 18 Deliveries within CAISO or another Balancing Authority ................. 18 Assigned Products................................................................................... 19 ARTICLE VI. ASSIGNMENT OF POWER PURCHASE AGREEMENTS....................... 19 Assignment Generally............................................................................. 19 Failure to Obtain EPS Compliant Energy ............................................ 20 Adjustments to Base Quantities............................................................. 21 APC Party Make-Whole......................................................................... 21 ARTICLE VII. J. ARON AS AGENT; DELEGATION OF AUTHORITY ........................ 21 J. Aron as Agent ...................................................................................... 21 ii
Delegation of Authority .......................................................................... 22 Standard of Performance ....................................................................... 22 Right to Direct to Board ......................................................................... 22 Performance Obligations; Limitations on Agency Authority ............. 22 ARTICLE VIII. REPRESENTATIONS AND WARRANTIES ............................................ 22 Representations and Warranties ........................................................... 22 Additional Representations and Warranties of Prepay LLC ............. 23 Warranty of Title .................................................................................... 24 Disclaimer of Warranties........................................................................ 24 ARTICLE IX. TAXES................................................................................................................ 24 ARTICLE X. JURISDICTION; WAIVER OF JURY TRIAL .............................................. 24 Consent to Jurisdiction ........................................................................... 24 Waiver of Jury Trial ............................................................................... 24 ARTICLE XI. FORCE MAJEURE.......................................................................................... 25 Applicability of Force Majeure.............................................................. 25 Settlement of Labor Disputes................................................................. 25 ARTICLE XII. GOVERNMENTAL RULES AND REGULATIONS.................................. 25 Compliance with Laws............................................................................ 25 Contests.................................................................................................... 26 Defense of Agreement ............................................................................. 26 ARTICLE XIII. ASSIGNMENT............................................................................................... 26 ARTICLE XIV. PAYMENTS.................................................................................................... 26 Monthly Statements ................................................................................ 26 Payment.................................................................................................... 27 Payment of Disputed Amounts .............................................................. 28 Late Payment........................................................................................... 28 Audit; Adjustments................................................................................. 28 Netting ...................................................................................................... 29 ARTICLE XV. RECEIVABLES PURCHASES...................................................................... 29 ARTICLE XVI. NOTICES........................................................................................................ 29 ARTICLE XVII. DEFAULT; REMEDIES; TERMINATION.............................................. 30 J. Aron Default ........................................................................................ 30 Prepay LLC Default................................................................................ 30 Optional Non-Default Termination Event............................................ 31 iii
Automatic Non-Default Termination .................................................... 32 Remedies and Termination .................................................................... 32 Payments Following a Ledger Event..................................................... 32 Adequate Assurance................................................................................ 33 Limitation on Damages........................................................................... 33 ARTICLE XVIII. MISCELLANEOUS.................................................................................... 34 Indemnification Procedure..................................................................... 34 Entirety; Amendments............................................................................ 34 Governing Law........................................................................................ 34 Non-Waiver.............................................................................................. 35 Severability .............................................................................................. 35 Exhibits..................................................................................................... 35 Winding Up Arrangements.................................................................... 35 Relationships of Parties .......................................................................... 35 Rates and Indices..................................................................................... 35 Counterparts............................................................................................ 35 Waiver of Defenses.................................................................................. 35 U.S. Resolution Stay Provisions............................................................. 35 Rate Changes........................................................................................... 36 Exhibit A-1 — Base Quantities; Base Delivery Point; Commodity Reference Prices Exhibit A-2 — Initial Assigned Rights and Obligations
Exhibit B — Notices
Exhibit C — Receivables Purchase Exhibit
Exhibit D — Ledger Event Payment Schedule
1 ELECTRICITY PURCHASE, SALE AND SERVICE AGREEMENT
This Electricity Purchase, Sale and Service Agreement (hereinafter, this “Agreement”) is made and entered into as of [____], 2023 (the “Execution Date”), by and between J. Aron & Company LLC, a New York limited liability company (“J. Aron”) and Aron Energy Prepay 16 LLC, a Delaware limited liability company (“Prepay LLC”). Each of J. Aron and Prepay LLC is sometimes individually referred to herein as a “Party”, and collectively as the “Parties”.
W I T N E S S E T H:
WHEREAS, J. Aron desires to sell Product to Prepay LLC, and Prepay LLC desires to purchase Product from J. Aron, upon the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises above and the mutual covenants and agreements herein set forth, the Parties agree as follows:
ARTICLE I.
DEFINITIONS
Defined Terms. The following terms, when used in this Agreement (including the preamble or recitals to this Agreement) and identified by the capitalization of the first letter thereof, have the respective meanings set forth below, unless the context otherwise requires:
“Administrative Fee” has the meaning specified in the Master Power Supply Agreement.
“Affiliate” means, with respect to either Party, any entity which is a direct or indirect parent or subsidiary of such Party or which directly or indirectly (i) owns or controls such Party, (ii) is owned or controlled by such Party, or (iii) is under common ownership or control with such Party. For purposes of this definition, “control” of an entity means the power, directly or indirectly, either to (a) vote 50% or more of the securities having ordinary voting power for the election of directors or Persons performing similar functions or (b) direct or cause the direction of the management and policies, whether by contract or otherwise. “Agreement” has the meaning specified in the preamble and shall include exhibits, recitals and attachments referenced herein and attached hereto. “Alternate Delivery Point” has the meaning specified in Section 5.1(a). “APC Contract Price” has the meaning specified in the Clean Energy Purchase Contract.
“APC Party” means the seller under an Assignable Power Contract (as defined in the Clean Energy Purchase Contract).
2 “Applicable Project” has the meaning specified in the Clean Energy Purchase Contract.
“Assigned Delivery Point” means, with respect to any Assigned Energy, the Assigned Delivery Point as set forth in the applicable Assignment Schedule for such Assigned Energy.
“Assigned Energy” means any Energy, including Energy associated with PCC1 Product and Long-Term PCC1 Product, to be delivered to J. Aron pursuant to any Assigned Rights and Obligations.
“Assigned PAYGO Product” has the meaning specified in the Clean Energy Purchase Contract.
“Assigned Prepay Quantity” has the meaning specified in the Clean Energy Purchase Contract.
“Assigned Product” means, as applicable, PCC1 Product, Long-Term PCC1 Product, Assigned Energy, Assigned RECs and any other products included on an Assignment Schedule, subject to the limitations for such other Product set forth in Exhibit F of the Clean Energy Purchase Contract.
“Assigned Quantity” has the meaning specified in the Clean Energy Purchase Contract.
“Assigned RECs” means any RECs associated with PCC1 Product or Long-Term PCC1 Product to be delivered to J. Aron pursuant to any Assigned Rights and Obligations. “Assigned Rights and Obligations” has the meaning specified in Section 6.1(b). “Assignment Agreement” has the meaning specified in the Clean Energy Purchase Contract.
“Assignment Period” has the meaning specified in the Clean Energy Purchase Contract.
“Assignment Schedule” has the meaning specified in Exhibit F of the Clean Energy Purchase Contract.
“Automatic Non-Default Termination Event” has the meaning specified in Section
17.4. “Balancing Authority” has the meaning specified in the CAISO Tariff. “Base Delivery Point” has the meaning specified in Section 5.1(a). “Base Product” means Firm (LD) Energy delivered to the Base Delivery Point. 3 “Base Quantity” means, with respect to each Delivery Hour during the Delivery Period, the Based Unadjusted Quantity for such Delivery Hour less the Base Quantity Reduction for such Delivery Hour, each as set forth on Exhibit A-1, as Exhibit A-1 may be revised pursuant to Article VI.
“Base Quantity Reduction” means, with respect to each Delivery Hour during the Delivery Period, the “Base Quantity Reduction” of Base Product (in MWh) set forth for such Delivery Hour on Exhibit A-1, as Exhibit A-1 may be revised pursuant to Article VI. “Base Unadjusted Quantity” means, with respect to each Delivery Hour during the Delivery Period, the “Base Unadjusted Quantity” of Base Product (in MWh) set forth for such Delivery Hour on Exhibit A-1.
“Billing Statement” has the meaning specified in Section 14.1(b). “Bond Closing Date” means the date on which Bonds are first issued pursuant to the Bond Indenture.
“Bond Indenture” means (i) the Trust Indenture to be entered into prior to the commencement of the Delivery Period between the Issuer and the Trustee, as supplemented and amended from time to time in accordance with its terms, and (ii) any trust indenture entered into in connection with the commencement of any Interest Rate Period after the initial Interest Rate Period between the Issuer and the Trustee containing substantially the same terms as the indenture described in clause (i) and which is intended to replace the indenture described in clause (i) as of the commencement of such Interest Rate Period.
“Bonds” means the bonds issued pursuant to the Bond Indenture. “Business Day” means any day other than (i) a Saturday or Sunday, (ii) a Federal Reserve Bank Holiday, (iii) any other day on which commercial banks in either New York, New York or the State of California generally are authorized or required by Law to close, or (iv) any day excluded from a “Business Day,” as therein defined, pursuant to the Bond Indenture. “Buyer’s Statement” has the meaning specified in Section 14.1(a). “CAISO” means California Independent System Operator or its successor. “CAISO Tariff” means CAISO’s FERC-approved tariff, as modified, amended or supplemented from time to time.
“California Long-Term Contracting Requirements” means the long-term contracting requirement set forth in the Clean Energy and Pollution Reduction Act of 2015 (SB 350), California Public Utilities Code section 399.13(b), and CPUC Decision 17-06-026 and CPUC Decision 18-05-026, as may be modified by subsequent decision of the California Public Utilities Commission or by other Law.
“CEC” means California’s State Energy Resources Conservation and Development Commission, also known as the California Energy Commission, and any successor agency thereto. 4 “CEPC Remarketing Election” means, for any Reset Period, issuance of a Remarketing Election Notice other than a Voided Remarketing Election Notice (each as defined under the Clean Energy Purchase Contract) under the Clean Energy Purchase Contract. “Claiming Party” has the meaning specified in Section 11.1. “Claims” means all third party claims or actions, threatened or filed and, whether groundless, false, fraudulent, or otherwise, that directly or indirectly relate to the subject matter of the indemnities provided herein, and the resulting losses, damages, expenses, attorneys’ fees, experts’ fees, and court costs, whether incurred by settlement or otherwise, and whether such claims or actions are threatened or filed prior to or after the termination of this Agreement. “Clean Energy Project” has the meaning specified in the Bond Indenture. “Clean Energy Purchase Contract” means that certain Clean Energy Purchase Contract between the Issuer and the Project Participant to be entered into in connection with the Clean Energy Project.
“Commercially Reasonable” or “Commercially Reasonable Efforts” means, with respect to any purchase or sale or other action required to be made, attempted or taken by a Party under this Agreement, such efforts as a reasonably prudent Person would undertake for the protection of its own interest under the conditions affecting such purchase or sale or other action, including without limitation, the amount of notice of the need to take such action, the duration and type of the purchase or sale or other action, the competitive environment in which such purchase or sale or other action occurs, and the risk to the Party required to take such action. “Commodity Reference Price” means either (i) the Day-Ahead Market Price, or (ii) the Real-Time Market Price, as applicable.
“CCCE Custodial Agreement” means that certain Custodial Agreement, dated as of the date hereof, by and among the Project Participant, Issuer, J. Aron, Prepay LLC and the CCCE Custodian.
“CCCE Custodian” means [____].
“CCCE Gross Payment” has the meaning specified in the CCCE Custodial Agreement.
“Day” means each period of 24 consecutive Hours commencing at the Hour ending at 01:00 (LPT) through the Hour ending at 24:00 (LPT).
“Day-Ahead Market Price” has the meaning specified on Exhibit A-1 for each Delivery Point.
“Default Rate” means, as of any date of determination, the lesser of (a) the sum of (i) the rate of interest per annum quoted in The Wall Street Journal (Eastern Edition) under the “Money Rates” section as the “Prime Rate” for such date of determination, plus (ii) one percent 5 per annum, or (b) if a lower maximum rate is imposed by applicable Law, such maximum lawful rate.
“Delivery Hour” has the meaning specified in Exhibit A-1. “Delivery Period” means the period commencing at the beginning of the Day on [____], 20[__] and shall continue in effect until the end of the Day on [____], 20[__] or earlier upon the occurrence of an Early Termination Date.
“Delivery Point” means the Base Delivery Point or an Assigned Delivery Point, as applicable.
“Early Termination Date” means a date designated pursuant to Article XVII upon which the Delivery Period will end and Prepay LLC’s and J. Aron’s respective obligations to receive and deliver Product under this Agreement will terminate. “Early Termination Payment Date” has the meaning specified in the Master Power Supply Agreement.
“Eligible Renewable Energy Resource” has the meaning set forth in California Public Utilities Code Section 399.12(e) and California Public Resources Code Section 25741(a), as either code provision is amended or supplemented from time to time. “Energy” means three-phase, 60-cycle alternating current electric energy, expressed in megawatt hours.
“EPS” means California’s Emissions Performance Standards, as set forth in Sections 8340 and 8341 of the California Public Utilities Code, as implemented and amended from time to time, and any successor Law.
“EPS Compliant Energy” has the meaning specified in the Clean Energy Purchase Contract.
“EPS Energy Period” has the meaning specified in the Clean Energy Purchase Contract.
“Execution Date” has the meaning specified in the preamble. “FERC” means the Federal Energy Regulatory Commission or any successor thereto.
“Firm (LD)” means, with respect to a Party’s obligation to sell and deliver or purchase and receive, that such Party’s liability for the failure to meet such obligation shall only be excused to the extent that, and for the period during which, such performance is prevented by Force Majeure, and that in the absence of Force Majeure, the Party to which performance of such obligation is owed shall be entitled to receive from the Party which failed to deliver/receive an amount determined pursuant to Section 4.1 or Section 4.2. 6 “Fixed Price” means $[____]/MWh, which is the fixed price under the Buyer Swap (as defined in the Master Power Supply Agreement).
“Force Majeure” means an event or circumstance which prevents one Party from performing its obligations under this Agreement, which event or circumstance was not anticipated as of the Execution Date, which is not within the reasonable control of, or the result of the negligence of, the Claiming Party, and which, by the exercise of due diligence, the Claiming Party is unable to overcome or avoid or cause to be avoided. Force Majeure shall include, provided the criteria in the first sentence are met, riot, insurrection, war, labor dispute, natural disaster, vandalism, terrorism, and sabotage. Force Majeure shall not be based on (i) the loss of Prepay LLC’s markets; (ii) Prepay LLC’s inability economically to use or resell the Product purchased hereunder; (iii) the delay, loss or failure of J. Aron’s supply; or (iv) J. Aron’s ability to sell the Product at a higher price. Neither Party may raise a claim of Force Majeure based in whole or in part on curtailment by a Transmission Provider unless (x) such Party has contracted for firm transmission with such Transmission Provider for the Product to be delivered to or received at the applicable Delivery Point and (y) such curtailment is due to “force majeure” or “uncontrollable force” or a similar term as defined under the Transmission Provider’s tariff; provided, however, that existence of the foregoing factors shall not be sufficient to conclusively or presumptively prove the existence of Force Majeure absent a showing of other facts and circumstances which in the aggregate with such factors establish that Force Majeure as defined in the first sentence hereof has occurred. For the avoidance of doubt, and notwithstanding anything herein to the contrary, (I) the declaration of “Force Majeure” by an APC Party under a PPA (as defined in an Assignment Agreement) or the declaration of “Force Majeure” by the Issuer under the Master Power Supply Agreement or the Project Participant under the Clean Energy Purchase Contract shall each constitute Force Majeure hereunder, and (II) to the extent that an Assignment Agreement is terminated early, such termination shall constitute Force Majeure with respect to J. Aron hereunder until the earlier of (A) the commencement of an “Assignment Period” under a replacement Assignment Agreement, (B) the commencement of a J. Aron EPS Energy Period or (C) the end of the first Month following the Month in which such early termination occurs. “Government Agency” means the United States of America, any state thereof, any municipality, or any local jurisdiction, or any political subdivision of any of the foregoing, including, but not limited to, courts, administrative bodies, departments, commissions, boards, bureaus, agencies, or instrumentalities.
“GSG” means The Goldman Sachs Group, Inc. or its successors to or permitted assignees of the GSG Guaranty.
“GSG Guaranty” means a guaranty of J. Aron’s obligations hereunder issued by GSG in favor of Prepay LLC.
“Guaranteed Energy Payment” means any amounts paid by an APC Party to J. Aron pursuant to the terms of an Assignment Agreement relating to guaranteed Energy production. “Hour” means the 60-minute period commencing at 00:00 (LPT) on the first Day of the Delivery Period and ending at 01:00 (LPT) on the first Day of the Delivery Period, and each 60-minute interval thereafter.
7 “Initial Assigned Rights and Obligations” means the Assigned Rights and Obligations as set forth in Exhibit A-2 hereto as of the date hereof. “Interest Rate Period” has the meaning specified in the Bond Indenture. “Issuer” means California Community Choice Financing Authority, a joint powers authority and a public entity of the State of California established pursuant to the provisions of the Joint Exercise of Powers Act (Article 1, Chapter 5, Division 7, Title 1, Section 6500 et seq. of the California Government Code, as amended).
“ISTs” has the meaning specified in Section 5.1(a).
“J. Aron” has the meaning specified in the preamble.
“J. Aron Default” has the meaning specified in Section 17.1. “J. Aron EPS Energy Period” has the meaning specified in Section 6.1(c)(iii). “J. Aron Fixed Payment” has the meaning specified in the CCCE Custodial Agreement.
“J. Aron Prepay Payment” has the meaning specified in the CCCE Custodial Agreement.
“J. Aron Product Fee” means [___]% during the Initial Reset Period (as defined in the Re-Pricing Agreement) and thereafter [____]%.
“J. Aron Tariff” means J. Aron’s FERC Rate Schedule No. 1, Dated: December 31, 2001, Docket Number: ER02-237-000.
“Law” means any statute, law, rule or regulation or any written judicial or administrative decision, ruling or interpretation with respect thereto or thereof having the effect of the foregoing enacted, promulgated, or issued by a Government Agency whether in effect as of the Execution Date or at any time during the term of this Agreement. “Ledger Event” has the meaning specified in the Master Power Supply Agreement. “Long-Term PCC1 Product” means bundled renewable energy and RECs meeting the requirements of Portfolio Content Category 1, and the California Long-Term Contracting Requirements, to be delivered to J. Aron or any successor thereto pursuant to any Assigned Rights and Obligations.
“LPT” means the local prevailing time then in effect in the State of California. “Master Power Supply Agreement” means that certain Master Power Supply Agreement, dated as of [____], 2023, between the Issuer and Prepay LLC. 8 “Month” means the period beginning on the first day of the calendar month and ending immediately prior to the commencement of the first day of the next calendar month. The term “Monthly” shall be construed accordingly.
“MWh” means megawatt-hour.
“Optional Non-Default Termination Event” has the meaning specified in Section
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.
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“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.
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“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.
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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%
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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
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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.
SM Draft 17 April 2023
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 22 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 national banking association, 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:
2 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, Assigned RECs and the Assigned Capacity Products Payment, 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.
“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. “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 3 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 shall deliver a statement (the “Monthly Statement”) showing each of the following (based on the 4 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; and
(x) the Assigned Capacity Products 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.
1 (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 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
1 SM NTD: Parties to discuss billing and payment mechanics. 5 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 PPA Payment (in which case CCCE will have a reimbursement claim against Issuer under Section
6.4 of the Clean Energy Purchase Contract).
6 (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; and
(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.
(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. (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 7 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 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. 8 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.
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 9 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.
(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 10 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.
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 11 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]
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 22 LLC
By: J. Aron & Company LLC, its
Manager
By:___________________________________
Name: _____________________________
Title: ______________________________
[CUSTODIAN]
By:___________________________________
Name: _____________________________
Title: ______________________________
CALIFORNIA COMMUNITY CHOICE
FINANCING AUTHORITY
By:___________________________________
Name: _____________________________
Title: ______________________________
EXHIBIT A
ASSIGNED PPAS
[To come.]
EXHIBIT B
J. ARON FIXED PAYMENTS
[To come.]
EXHIBIT C
NOTICE INFORMATION
Prepay LLC:
Aron Energy Prepay 22 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:___________________________________
4877-9956-3567.4
DRAFT 5/30/23
TRUST INDENTURE
between
CALIFORNIA COMMUNITY CHOICE FINANCING AUTHORITY
and
U.S. BANK TRUST COMPANY, NATIONAL ASSOCIATION,
as TRUSTEE
$[PAR]
CLEAN ENERGY PROJECT REVENUE BONDS
SERIES 2023_
Dated as of [CLOSING MONTH] 1, 2023
4877-9956-3567.4
i
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS AND GOVERNING LAW................................................................7 Section 1.1 Definitions.................................................................................................7 Section 1.2 Captions ..................................................................................................32 Section 1.3 Rules of Construction .............................................................................32 Section 1.4 Governing Law .......................................................................................32 Section 1.5 Consents..................................................................................................32 ARTICLE II AUTHORIZATION AND ISSUANCE OF BONDS ..............................................33 Section 2.1 Authorization of Bonds and Refunding Bonds; Application of Proceeds..................................................................................................33 Section 2.2 Terms of Bonds; Payment.......................................................................34 Section 2.3 Conditions for Issuance of Bonds...........................................................36 Section 2.4 Initial Interest Rate Periods; Subsequent Interest Rate Periods..............37 Section 2.5 Daily Interest Rate Period.......................................................................38 Section 2.6 Weekly Interest Rate Period ...................................................................39 Section 2.7 Term Rate Period ....................................................................................40 Section 2.8 Commercial Paper Interest Rate Periods ................................................43 Section 2.9 Index Rate Periods..................................................................................45 Section 2.10 Notice of Conversion ..............................................................................47 Section 2.11 Liquidity Facility ....................................................................................48 Section 2.12 Provisions Regarding Commodity Swaps ..............................................48 Section 2.13 Provisions Regarding Interest Rate Swap...............................................50 ARTICLE III GENERAL TERMS AND PROVISIONS OF BONDS.........................................52 Section 3.1 Medium of Payment; Form and Date; Letters and Numbers..................52 Section 3.2 Legends...................................................................................................52 Section 3.3 Execution and Authentication.................................................................52 Section 3.4 Exchange, Transfer and Registry............................................................53 Section 3.5 Regulations with Respect to Exchanges and Registration of Transfers .53 Section 3.6 Bonds Mutilated, Destroyed, Stolen or Lost...........................................54 Section 3.7 Temporary Bonds....................................................................................54 Section 3.8 Payment of Interest on Bonds; Interest Rights Preserved.......................55 Section 3.9 Book Entry System; Appointment of Securities Depository ..................55 Section 3.10 Subsidy Payments...................................................................................57 Section 3.11 Limitation of Liability of Issuer..............................................................57 ARTICLE IV REDEMPTION OF BONDS AND TENDER PROVISIONS...............................57 Section 4.1 Extraordinary Redemption......................................................................57 Section 4.2 Sinking Fund Redemption ......................................................................58 Section 4.3 Optional Redemption..............................................................................58 Section 4.4 Redemption Notice .................................................................................60 Section 4.5 Bonds Redeemed in Part.........................................................................61 Section 4.6 Redemption at the Election or Direction of the Issuer............................61 4877-9956-3567.4
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Section 4.7 Redemption Other than at the Issuer’s Election or Direction .................62 Section 4.8 Selection of Bonds to Be Redeemed.......................................................62 Section 4.9 Payment of Redeemed Bonds.................................................................62 Section 4.10 Cancellation and Destruction of Bonds ..................................................63 Section 4.11 Optional Tender During Daily or Weekly Interest Rate Periods............63 Section 4.12 Mandatory Tender for Purchase on Day Next Succeeding the Last Day of Each CP Interest Term........................................................................64 Section 4.13 Mandatory Tender for Purchase on the Index Rate Tender Date or Term Rate Tender Date ....................................................................................64 Section 4.14 Mandatory Tender for Purchase on Conversion of Interest Rate Period 64 Section 4.15 General Provisions Relating to Tenders .................................................65 Section 4.16 Notice of Mandatory Tender for Purchase..............................................67 Section 4.17 Irrevocable Notice Deemed to Be Tender of Bond; Undelivered Bonds ......................................................................................................68 Section 4.18 Remarketing of Bonds; Notice of Interest Rates ....................................69 Section 4.19 The Remarketing Agent..........................................................................69 Section 4.20 Qualifications of Remarketing Agent; Resignation; Removal ...............70 Section 4.21 Successor Remarketing Agents...............................................................70 Section 4.22 Tender Agent ..........................................................................................70 ARTICLE V ESTABLISHMENT OF FUNDS AND APPLICATION THEREOF.....................71 Section 5.1 The Pledge Effected by This Indenture ..................................................71 Section 5.2 Establishment of Funds and Accounts....................................................72 Section 5.3 Project Fund............................................................................................72 Section 5.4 Revenues and Revenue Fund..................................................................75 Section 5.5 Payments from Revenue Fund ................................................................75 Section 5.6 Operating Fund .......................................................................................76 Section 5.7 Debt Service Fund – Debt Service Account ...........................................77 Section 5.8 Debt Service Fund – Redemption Account ............................................80 Section 5.9 Debt Service Fund – Debt Service Reserve Account .............................81 Section 5.10 Swap Termination Account ....................................................................82 Section 5.11 [Reserved]...............................................................................................82 Section 5.12 General Reserve Fund.............................................................................82 Section 5.13 Remarketing Reserve Fund.....................................................................83 Section 5.14 Assignment Payment Fund .....................................................................84 Section 5.15 Purchases of Bonds.................................................................................84 Section 5.16 Administrative Fee Fund.........................................................................84
ARTICLE VI DEPOSIT OF MONEYS, SECURITY FOR DEPOSITS AND INVESTMENT OF FUNDS ..........................................................................................................................................84 Section 6.1 Deposits...................................................................................................84 Section 6.2 Investment of Certain Funds...................................................................84 Section 6.3 Valuation and Sale of Investments .........................................................86 ARTICLE VII PARTICULAR COVENANTS OF THE ISSUER...............................................87 Section 7.1 Payment of Bonds...................................................................................87 4877-9956-3567.4
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Section 7.2 Extension of Payment of Bonds..............................................................87 Section 7.3 Offices for Servicing Bonds....................................................................87 Section 7.4 Further Assurance ...................................................................................87 Section 7.5 Power to Issue Bonds and Pledge the Trust Estate .................................87 Section 7.6 Power to Fix and Collect Fees and Charges for the Sale of Product ......88 Section 7.7 Restriction on Additional Obligations....................................................88 Section 7.8 Limitations on Operation and Maintenance and Other Costs.................88 Section 7.9 Fees and Charges ....................................................................................88 Section 7.10 Clean Energy Purchase Contract; Product Remarketing ........................89 Section 7.11 Master Power Supply Agreement; Product Supplier Documents...........90 Section 7.12 [Reserved.]..............................................................................................91 Section 7.13 Commodity Swaps..................................................................................91 Section 7.14 Interest Rate Swap ..................................................................................91 Section 7.15 Accounts and Reports.............................................................................91 Section 7.16 Payment of Taxes and Charges...............................................................92 Section 7.17 Tax Covenants ........................................................................................92 Section 7.18 General....................................................................................................93 Section 7.19 Bankruptcy..............................................................................................94 Section 7.20 Avoidance of Failed Remarketing ..........................................................94 ARTICLE VIII EVENTS OF DEFAULT AND REMEDIES ......................................................94 Section 8.1 Events of Default; Remedies ..................................................................94 Section 8.2 Accounting and Examination of Records after Default..........................96 Section 8.3 Enforcement of Agreements; Application of Moneys after Default.......96 Section 8.4 Appointment of Receiver........................................................................98 Section 8.5 Proceedings Brought by Trustee.............................................................98 Section 8.6 Restriction on Bondholder’s Action .......................................................99 Section 8.7 Remedies Not Exclusive .......................................................................100 Section 8.8 Effect of Waiver and Other Circumstances..........................................100 Section 8.9 Notice of Default...................................................................................100 ARTICLE IX CONCERNING THE FIDUCIARIES..................................................................100 Section 9.1 Acceptance by Trustee of Duties..........................................................100 Section 9.2 Paying Agent; Appointment and Acceptance of Duties.......................100 Section 9.3 Responsibilities of Fiduciaries..............................................................101 Section 9.4 Evidence on Which Fiduciaries May Act .............................................102 Section 9.5 Compensation .......................................................................................103 Section 9.6 Certain Permitted Acts..........................................................................104 Section 9.7 Resignation of Trustee ..........................................................................104 Section 9.8 Removal of the Trustee.........................................................................104 Section 9.9 Appointment of Successor Trustee .......................................................104 Section 9.10 Transfer of Rights and Property to Successor Trustee..........................105 Section 9.11 Merger or Consolidation.......................................................................105 Section 9.12 Adoption of Authentication ..................................................................105 Section 9.13 Resignation or Removal of Paying Agent and Appointment of Successor...............................................................................................106 4877-9956-3567.4
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Section 9.14 Trustee’s Reliance.................................................................................106 Section 9.15 Trustee’s Liability.................................................................................106 Section 9.16 Trustee’s Agents or Attorneys..............................................................108 Section 9.17 Lien Filings...........................................................................................108
ARTICLE X MODIFICATION, AMENDMENT OR SUPPLEMENT OF THE
INDENTURE...............................................................................................................................108 Section 10.1 Amendments Permitted.........................................................................108 Section 10.2 General Provisions................................................................................110 Section 10.3 Effect of Supplemental Indenture .........................................................111 Section 10.4 Endorsement of Bonds; Preparation of New Bonds.............................112 Section 10.5 Amendment of Particular Bonds...........................................................112 ARTICLE XI DEFEASANCE ....................................................................................................112 Section 11.1 Discharge of Indenture..........................................................................112 Section 11.2 Discharge of Liability on Bonds...........................................................113 Section 11.3 Deposit of Money or Securities with Trustee .......................................113 Section 11.4 Payment of Bonds After Discharge of Indenture..................................114 ARTICLE XII MISCELLANEOUS............................................................................................114 Section 12.1 Disqualified Bonds................................................................................114 Section 12.2 Evidence of Signatures of Bondholders and Ownership of Bonds.......115 Section 12.3 Moneys Held for Particular Bonds .......................................................116 Section 12.4 Preservation and Inspection of Documents...........................................116 Section 12.5 Parties Interested Herein .......................................................................116 Section 12.6 No Recourse on the Bonds; Non-Liability of Issuer.............................116 Section 12.7 Waiver of Personal Liability.................................................................116 Section 12.8 Severability of Invalid Provisions.........................................................117 Section 12.9 Holidays................................................................................................117 Section 12.10 Notices ..................................................................................................117 Section 12.11 Notices to Rating Agencies...................................................................118 Section 12.12 Counterparts..........................................................................................118 Section 12.13 Waiver of Jury Trial..............................................................................118 Section 12.14 Electronic Signatures............................................................................118
EXHIBIT A - FORM OF BOND
SCHEDULE I - SCHEDULED DEBT SERVICE DEPOSITS
SCHEDULE II - TERMS OF COMMODITY SWAP
SCHEDULE III - AMORTIZED VALUE OF THE SERIES 2023_ BONDS 4877-9956-3567.4
THIS TRUST INDENTURE, dated as of [CLOSING MONTH] 1, 2023 (this “Indenture”), between California Community Choice Financing Authority, a joint powers authority and public entity of the State of California (the “Issuer”) and U.S. Bank Trust Company, National Association, a national banking association duly organized and existing under the laws of the United States of America, authorized by law to accept and execute trusts of the character set out in this Indenture, as trustee (the “Trustee”).
WITNESSETH:
WHEREAS, pursuant to the provisions of the Act (capitalized terms used herein and not otherwise defined shall have the meanings given such terms in Section 1.1 hereof), Central Coast Community Energy, Marin Clean Energy, Clean Power Alliance of Southern California, East Bay Community Energy Authority, Silicon Valley Clean Energy Authority, and Pioneer Community Energy (each a “Member” and, collectively, the “Members”) entered into a joint powers agreement pursuant to which the Issuer was organized and established for the purpose, among other things, of entering into contracts for electricity and energy services and agreements for services to facilitate the sale and purchase of electricity and other related services, and for issuing bonds to assist the Members in financing such contracts, agreements, purchases, sales and services; and WHEREAS, the Issuer is authorized under the Act to acquire electricity and energy services and enter into agreements for services to facilitate the sale and purchase of electricity and other related services, and to issue revenue bonds to finance the cost of acquisition of such electricity and energy services and other agreements, and is vested with all powers necessary to accomplish the purposes for which it was created; and
WHEREAS, the Issuer has determined to finance the Cost of Acquisition of the Clean Energy Project through the issuance of Bonds pursuant to this Indenture; and WHEREAS, the execution and delivery of this Indenture has been in all respects duly and validly authorized and approved by resolution of the Board of the Issuer; and WHEREAS, the Trustee is willing to accept the trusts provided for in this Indenture.
NOW, THEREFORE, THIS INDENTURE WITNESSETH, and the Issuer and the Trustee agree as follows for the benefit of the other, for the benefit of the Holders of the Bonds issued pursuant hereto and for the benefit of the Interest Rate Swap Counterparties:
GRANTING CLAUSES
FOR AND IN CONSIDERATION of the premises, the mutual covenants of the Issuer and the Trustee herein, the purchase of the Bonds by the Holders thereof and the obligations of the Interest Rate Swap Counterparty under the Interest Rate Swap, and in order to secure:
(i) the payment of the principal of and premium, if any, and interest on the Bonds and the payment of the Interest Rate Swap Payments, in each case according to the tenor and effect of the Bonds and the Interest Rate Swap, and
4877-9956-3567.4
6 (ii) the performance and observance by the Issuer of all the covenants expressed or implied in this Indenture and in the Bonds, the Issuer does hereby convey, assign and pledge unto the Trustee and its successors in trust, all right, title and interest of the Issuer in and to the Trust Estate, subject to conveyance, assignment and pledge of the Commodity Reserve Account in favor of the Commodity Swap Counterparty and Project Participant as set forth below, and further subject to the provisions of this Indenture permitting the application thereof for the purposes and on the terms and conditions set forth in this Indenture, and all other rights hereinafter granted for the further securing of the Bonds and the Interest Rate Swap Payments; FOR AND IN CONSIDERATION of the obligations of the Commodity Swap Counterparty under the Commodity Swap and the mutual covenants of the Issuer and the Commodity Swap Counterparty thereunder, and of the obligations of the Project Participant under the Clean Energy Purchase Contract and the mutual covenants of the Issuer and the Project Participant thereunder, and in order to secure the payment of the Commodity Swap Payments and Operating Expenses payable to Project Participant, the Issuer does hereby convey, assign and pledge unto the Commodity Swap Counterparty and the Project Participant, and its respective successors in trust, all right, title and interest of the Issuer in the Commodity Reserve Account and the amounts and investments on deposit therein, subject to the provisions of this Indenture permitting the application thereof for the purposes and on the terms and conditions set forth in this Indenture, which conveyance, assignment and pledge shall have priority over the foregoing conveyance, assignment and pledge of the Commodity Reserve Account and the amounts and investments on deposit therein in favor of the Bonds and the Interest Rate Swap Payments; TO HAVE AND TO HOLD all the same with all privileges and appurtenances hereby and hereafter conveyed and assigned, or agreed or intended so to be, to the Trustee and its respective successors in said trust and assigns forever;
IN TRUST NEVERTHELESS, upon the terms and trusts herein set forth for the equal and proportionate benefit, security and protection of (i) all Holders of the Bonds without privilege, priority or distinction as to the lien or otherwise of any Bond over any other Bond or the payment of interest with respect to any Bond over the payment of interest with respect to any other Bond, except as otherwise provided herein, and (ii) the Interest Rate Swap Counterparty; and PROVIDED, HOWEVER, that if the Issuer, its successors or assigns shall well and truly pay, or cause to be paid, the principal or Redemption Price, if any, on the Bonds and the interest due or to become due thereon, the Commodity Swap Payments and the Interest Rate Swap Payments, at the times and in the manner provided in the Bonds, the Commodity Swap and the Interest Rate Swap, respectively, according to the true intent and meaning thereof, and shall cause the payments to be made into the Funds as required hereunder, or shall provide, as permitted hereby, for the payment thereof as provided in Section 7.1, and shall well and truly keep and perform and observe all the covenants and conditions of this Indenture to be kept, performed and observed by it, and shall pay or cause to be paid to the Trustee all sums of money due or to become due to it in accordance with the terms and provisions hereof, then upon such final payments or provisions for such payments by the Issuer, the Bonds, the Commodity Swap and the Interest Rate Swap shall cease to be entitled to any lien, benefit or security under this Indenture, and all covenants, agreements and obligations of the Issuer to the Holders of the Bonds shall thereupon 4877-9956-3567.4
7 cease, terminate and be discharged and satisfied; otherwise this Indenture shall remain in full force and effect.
The terms and conditions upon which the Bonds are to be issued, authenticated, delivered, secured and accepted by all Persons who from time to time shall be or become the Holders thereof, and the trusts and conditions upon which the Revenues, moneys, securities and funds held or set aside under this Indenture, subject to the provisions of this Indenture permitting the application thereof for the purposes and on the terms and conditions set forth in this Indenture, are to be held and disposed of, which said trusts and conditions the Trustee hereby accepts, and the respective parties hereto covenant and agree, are as follows:
ARTICLE I
DEFINITIONS AND GOVERNING LAW
Section 1.1 Definitions.
The following terms shall, for all purposes of this Indenture, have the following meanings:
“Account” or “Accounts” means, as the case may be, each or all of the Accounts established in Section 5.2 or Section 4.15(a).
“Accountant’s Certificate” means a certificate signed by an independent certified public accountant or a firm of independent certified public accountants, selected by the Issuer, who may be the accountant or firm of accountants who regularly audit the books of the Issuer and must be identified upon selection in writing to the Trustee.
“Acquisition Account” means the Acquisition Account in the Project Fund established pursuant to Section 5.2.
“Act” means the Joint Exercise of Powers Act constituting Chapter 5 of Division 7 of Title 1 (commencing with Section 6500), as amended or supplemented from time to time. “Additional Termination Payment” has the meaning given to such term in the Master Power Supply Agreement.
“Administrative Fee” has the meaning assigned to such term in the Clean Energy Purchase Contract.
“Administrative Fee Fund” means the Administrative Fee Fund established in Section 5.2. “Alternate Liquidity Facility” means a Liquidity Facility for a Series of Bonds delivered to the Trustee in substitution for a Liquidity Facility then in effect with respect to such Bonds. “Amortized Value” means, with respect to any Bond to be redeemed when a Term Rate Period is in effect with respect to such Bond, the principal amount of such Bond multiplied by the price of such Bond expressed as a percentage, calculated by a major market maker in municipal securities, as the quotation agent, selected by the Issuer, based on the industry standard method of 4877-9956-3567.4
8 calculating bond prices (as such industry standard prevailed on the date such Bond began to bear interest at its current Term Rate), with a delivery date equal to the date of redemption of such Bond, a maturity date equal to the earlier of (a) the stated maturity date of such Bond or (b) the Term Rate Tender Date of such Bond and a yield equal to such Bond’s original reoffering yield on the date such Bond began to bear interest at its current Term Rate, which, in the case of the initial Term Rate Period for the Series 2023_ Bonds and certain dates, produces the amounts for all of the Series 2023_ Bonds set forth in Schedule III. “APC Party” has the meaning given to such term in the Master Power Supply Agreement. “Applicable Factor” means (a) with respect to the initial issuance of a Series of Bonds bearing interest at a SOFR Index Rate, the percentage or factor of the SOFR Index determined by the Underwriter and specified in the Index Rate Determination Certificate for such Series of Bonds, or (b) with respect to a Series of Bonds for which the Interest Rate Period is being converted to a SOFR Index Rate Period (including a change in such Interest Rate Period from one SOFR Index Rate Period to another SOFR Index Rate Period), the percentage or factor of the SOFR Index determined by the Remarketing Agent and specified in the applicable Index Rate Determination Certificate or Index Rate Continuation Notice, provided in each case that the Issuer delivers to the Trustee a Favorable Opinion of Bond Counsel addressing the selection of such percentage or factor. The Applicable Factor shall be determined by the Underwriter or the Remarketing Agent, as applicable, in accordance with Section 2.9(a) and included in the applicable Index Rate Determination Certificate, and once determined shall remain constant for the duration of the applicable SOFR Index Rate Period.
“Applicable Spread” means, with respect to a Series of Bonds for which the Initial Interest Rate Period is an Index Rate Period, or for any Series of Bonds for which the Interest Rate Period is converted to an Index Rate Period, the margin or spread, which may be positive or negative, determined by the Underwriter or the Remarketing Agent in accordance with Section 2.9(a) on or prior to the Issue Date or Conversion Date for such Series of Bonds, as applicable, and specified in the applicable Supplemental Indenture or Index Rate Determination Certificate, as applicable, which shall be added to the applicable Index to determine the Index Rate. The Applicable Spread shall remain constant for the duration of the applicable Index Rate Period. “Applicable Tax-Exempt Municipal Bond Rate” means, for the Series 2023 Bonds of any maturity, the “Comparable AAA General Obligations” yield curve rate for the year of such maturity or Mandatory Purchase Date, as applicable, as published by Refinitiv Global Markets, Inc. five Business Days prior to the redemption date. If no such yield curve rate is established for the applicable year, the “Comparable AAA General Obligations” yield curve rate for the two published maturities most closely corresponding to the applicable year shall be determined, and the Applicable Tax-Exempt Municipal Bond Rate will be interpolated or extrapolated from those yield curve rates on a straight-line basis. This rate is made available daily by Refinitiv Global Markets, Inc. and is available to its subscribers through its internet address: www.tm3.com. In calculating the Applicable Tax-Exempt Municipal Bond Rate, should Refinitiv Global Markets, Inc. no longer publish the “Comparable AAA General Obligations” yield curve rate, then the Applicable Tax-Exempt Municipal Bond Rate shall equal the Consensus Scale yield curve rate for the applicable year. The Consensus Scale yield curve rate is made available daily by Municipal Market Analytics, Inc. and is available to its subscribers through its internet address: www.mma 4877-9956-3567.4
9 research.com. In the further event Municipal Market Analytics, Inc. no longer publishes the Consensus Scale, the Applicable Tax Exempt Municipal Bond Rate shall be determined by a major market maker in municipal securities, as the quotation agent, based upon the rate per annum equal to the annual yield to maturity, calculated using semi-annual compounding, of those tax exempt general obligation bonds rated in the highest Rating Category by Moody’s and S&P with a maturity date equal to the stated maturity date or Mandatory Purchase Date, as applicable, of such Bonds having characteristics (other than the ratings) most comparable to those of such Bonds in the judgment of the quotation agent. The quotation agent’s determination of the Applicable Tax-Exempt Municipal Bond Rate shall be final and binding in the absence of manifest error on all parties and may be conclusively relied upon in good faith by the Trustee. “Assigned PAYGO Product” has the meaning given to such term in the Clean Energy Purchase Contract.
“Assignment Payment” means any payment received from the Product Supplier in connection with an assignment of the Master Power Supply Agreement to a replacement product supplier.
“Assignment Payment Fund” means the Assignment Payment Fund established in Section 5.2.
“Assigned Product Reimbursement Payment” means a payment due and payable to the Project Participant pursuant to Section 6.4 of the Clean Energy Purchase Contract. “Authorized Denominations” means with respect to any (a) Term Rate Period or Index Rate Period, $5,000 and any integral multiple thereof, and (b) Commercial Paper Interest Rate Period, Daily Interest Rate Period or Weekly Interest Rate Period, $100,000 and any integral multiple of $5,000 in excess of $100,000.
“Authorized Officer” means (a) the Treasurer/Controller of the Issuer, and (b) any other person or persons designated by the Board by resolution to act on behalf of the Issuer under this Indenture. The designation of such person or persons shall be evidenced by a Written Certificate of the Issuer delivered to a Responsible Officer of the Trustee containing the specimen signature of such person or persons and signed on behalf of the Issuer by its Treasurer/Controller. Such designation as an Authorized Officer shall remain in effect until a Responsible Officer of the Trustee receives actual written notice from the Issuer to the contrary, accompanied by a new certificate.
“Beneficial Owner” means, with respect to Bonds registered in the Book-Entry System, any Person who acquires a beneficial ownership interest in a Bond held by the Securities Depository, and the term “Beneficial Ownership” shall be interpreted accordingly. “Board” means the Board of Directors of the Issuer, or if said Board shall be abolished, the board, body, commission or agency succeeding to the principal functions thereof or to whom the power and duties granted or imposed by this Indenture shall be given by law. Any entity succeeding to the functions, powers or duties of the Board shall be identified in a Written Notice of the Issuer delivered to the Trustee.
4877-9956-3567.4
10 “Bond” or “Bonds” means any of the Series 2023_ Bonds and any Refunding Bonds authorized by Section 2.1, and at any time Outstanding pursuant to, this Indenture. “Bond Counsel” means Nixon Peabody LLP or any other counsel of nationally recognized standing in matters pertaining to the tax-exempt status of interest on obligations issued by states and their political subdivisions and instrumentalities, duly admitted to the practice of law before the highest court of any state of the United States, and selected by the Issuer. “Bond Payment Date” means each date on which (a) interest on the Bonds is due and payable or (b) principal of the Bonds is payable at maturity or pursuant to Sinking Fund Installments.
“Bond Purchase Fund” means the fund by that name established pursuant to Section 4.15(a), including the Remarketing Proceeds Account and the Issuer Purchase Account therein.
“Bond Registrar” means the Trustee and any other bank or trust company organized under the laws of any state of the United States of America or national banking association appointed by the Issuer to perform the duties of Bond Registrar under this Indenture. “Bondholder” or “Holder of Bonds” or “Holder” or “Owner” means any Person who shall be the registered owner of any Bond or Bonds.
“Book-Entry System” means the system maintained by the Securities Depository and described in Section 3.9.
“Business Day” means any day other than (a) a Saturday or Sunday, (b) a day on which commercial banks in New York, New York or the cities in which are located the designated corporate trust offices of the Trustee, the Custodian or the Calculation Agent or the designated operational office of the Issuer are authorized by law or executive order to close, (c) a day on which the New York Stock Exchange, Inc. is closed, (d) a day on which the payment system of the Federal Reserve System is not operational, and (e) for purposes of determining the SIFMA Index Rate and the SOFR Index Rate, any day that SIFMA recommends that the fixed income departments of its members be closed for purposes of trading in United States government securities.
“Calculation Agent” means, with respect to any Series of Bonds bearing interest at an Index Rate, the Calculation Agent with respect to such Series of Bonds appointed by the Issuer, with written notice to the Trustee, pursuant to the applicable Calculation Agent Agreement and the Indenture. The initial Calculation Agent shall be U.S. Bank Trust Company, National Association. “Calculation Agent Agreement” means, with respect to any Series of Bonds bearing interest at an Index Rate, such agreement as is entered into by the applicable Calculation Agent and the Issuer with respect to such Series of Bonds providing for the determination of the applicable Index Rate in accordance with Section 2.9 and Section 2.10, as originally executed or as it may from time to time be supplemented, modified or amended pursuant to the terms thereof and this Indenture, as applicable.
4877-9956-3567.4
11 “Call Receivable” means the aggregate of any Elective Call Receivable and Swap Deficiency Call Receivable.
“3CE” means Central Coast Community Energy, a joint powers authority and a community choice aggregator duly organized and existing under the laws of the State of California. “3CE Custodial Agreement” means that certain Custodial Agreement, dated as of [CLOSING DATE], by and among Issuer, 3CE, J. Aron, Aron Energy Prepay 22 LLC, and 3CE Custodian.
“3CE Custodian” means U.S. Bank Trust Company, National Association, in its capacity as custodian under the 3CE Custodial Agreement, and any successor thereto pursuant to the terms of the 3CE Custodial Agreement.
“Cede” means Cede & Co., the nominee of DTC, and any successor nominee of DTC with respect to the Bonds pursuant to Section 3.9.
“Clean Energy Project” means the Issuer’s purchase of Product pursuant to the Master Power Supply Agreement and related contractual arrangements and agreements, and the purchase of any Product to replace Product not delivered as required pursuant to the Master Power Supply Agreement.
“Clean Energy Project Operational Services Agreement” means that certain Clean Energy Project Operational Services Agreement, dated as of [CLOSING DATE], between the Issuer and 3CE, as the same may be amended from time to time.
“Clean Energy Purchase Contract” means that certain Clean Energy Purchase Contract, dated as of [CLOSING MONTH] 1, 2023, between the Issuer and 3CE, entered into in connection with the Clean Energy Project.
“Commercial Paper Interest Rate Period” means, with respect to a Series of Bonds, each period comprised of CP Interest Terms for the Bonds of such Series, during which CP Interest Term Rates are in effect for the Bonds of such Series.
“Commodity Reserve Account” means the Commodity Reserve Account in the Project Fund established in Section 5.2.
“Commodity Reserve Account Investment Agreement” means any commodity reserve account investment agreement, that is a Qualified Investment, between the Trustee and a provider, among the Trustee, the Issuer and a provider, or between the Issuer and a provider and assigned to the Trustee, relating to amounts deposited in the Commodity Reserve Account of the Project Fund.
The initial Commodity Reserve Account Investment Agreement is the Investment Agreement, [between][among] the [Issuer,] [Trustee] and [______________________], as provider, dated as of [CLOSING DATE].
“Commodity Swap Counterparty” means, with respect to the initial Commodity Swap, (a) [_____________], and (b) any of their successors and assigns, including any counterparty to a replacement Commodity Swap that meets the requirements of Section 2.12(b). 4877-9956-3567.4
12 “Commodity Swap Mandatory Termination Event” has the meaning set forth in Section 2.12(c)(iii).
“Commodity Swap Payments” means, as of each scheduled payment date specified in the Commodity Swap, the amounts, if any, payable to the Commodity Swap Counterparty by the Issuer (including any amounts paid by the Custodian pursuant to Section 3(d) of the Issuer Custodial Agreement); provided that, for the avoidance of doubt, upon an early termination of the Commodity Swap, Commodity Swap Payments shall not include any amounts other than Unpaid Amounts due to the Commodity Swap Counterparty.
“Commodity Swap Receipts” means, as of each scheduled payment date specified in a Commodity Swap, the amount, if any, payable to the Issuer by the Commodity Swap Counterparty (including any amounts paid to the Trustee pursuant to Section 3(d) of the Product Supplier Custodial Agreement).
“Commodity Swap” means the ISDA Master Agreement, Schedule and Confirmation between the Issuer and the Commodity Swap Counterparty, or any replacement agreement permitted by Section 2.12(b), pursuant to which the Issuer will pay to the Commodity Swap Counterparty an index-based floating price and the Commodity Swap Counterparty will pay to the Issuer a fixed price in relation to the daily quantities of Product to be delivered under the Master Power Supply Agreement.
“Continuing Disclosure Undertaking” means the Continuing Disclosure Undertaking entered into by the Issuer, as the same may be amended from time to time, with a Written Instrument of the Issuer delivered to the Trustee.
“Conversion” means (a) a conversion of a Series of Bonds from one Interest Rate Period to another Interest Rate Period, and (b) with respect to a Series of Bonds bearing interest at an Index Rate, the establishment of a new Index, a new Index Rate and/or a new Index Rate Period. “Conversion Date” means the effective date of a Conversion of a Series of Bonds. “Cost of Acquisition” means all costs of planning, financing, refinancing, acquiring, transmitting, storing and implementing the Clean Energy Project, including:
(a) the amount of the prepayment required to be made by the Issuer under the Master Power Supply Agreement;
(b) the amount for deposit into the Debt Service Account for capitalized interest on the Bonds, with such interest being calculated in accordance with the definition of “Debt Service”;
(c) the amounts for deposit into the Debt Service Reserve Account and the Commodity Reserve Account to meet the Debt Service Reserve Requirement and the Minimum Amount, respectively;
(d) all other costs incurred in connection with and properly chargeable to, the acquisition or implementation of the Clean Energy Project; 4877-9956-3567.4
13 (e) the costs and expenses incurred in the issuance and sale of the Bonds, including, without limitation, legal, financial advisory, accounting, engineering, consulting, financing, technical, fiscal agent and underwriting costs, fees and expenses, bond discount, rating agency fees, and all other costs and expenses incurred in connection with the authorization, sale and issuance of the Bonds and preparation of this Indenture; and
(f) with respect to any Series of Refunding Bonds, the amounts necessary to purchase, redeem and discharge the Bonds being refunded, including the payment of the Purchase Price or the Redemption Price of such Bonds, any necessary deposits to the Debt Service Account, the Debt Service Reserve Account and the Commodity Reserve Account, and all other costs and expenses incurred in connection with such Series of Refunding Bonds, including the costs and expenses described in (d) and (e) above. “CP Interest Term” means, with respect to any Bond of a Series of Bonds in the Commercial Paper Interest Rate Period, each period established in accordance with Section 2.8 during which such Bond bears interest at a CP Interest Term Rate. “CP Interest Term Rate” means, with respect to any Bond of a Series of Bonds in the Commercial Paper Interest Rate Period, the interest rate established periodically for each CP Interest Term in accordance with Section 2.8.
“Custodial Agreements” means, together, the Product Supplier Custodial Agreement and the Issuer Custodial Agreement.
“Custodian” means U.S. Bank Trust Company, National Association, in its capacity as custodian under each of the Custodial Agreements and its successors and assigns. “Daily Interest Rate” means, with respect to a Series of Bonds, the final daily interest rate for such Bonds determined by the Remarketing Agent by 11:00 a.m. New York City time pursuant to Section 2.5.
“Daily Interest Rate Period” means, with respect to a Series of Bonds, each period during which a Daily Interest Rate is in effect for such Bonds. “Debt Service” means with respect to any Outstanding Bonds, for any particular period of time, an amount equal to the sum of:
(a) all interest payable during such period on such Bonds, but excluding any interest that is to be paid from Bond proceeds on deposit in the Debt Service Account, plus (b) the Principal Installments payable during such period on such Bonds, calculated on the assumption that, on the day of calculation, such Bonds cease to be Outstanding by reason of, but only by reason of, payment either upon maturity or application of any Sinking Fund Installments required by this Indenture; provided that (i) the interest on any Bonds with a related Interest Rate Swap shall be calculated on the basis of the fixed interest rate payable by the Issuer under the Interest Rate Swap, 4877-9956-3567.4
14 and (ii) principal and interest due on the first day of a Fiscal Year shall be deemed to have been payable and paid on the last day of the immediately preceding Fiscal Year. “Debt Service Account” means the Debt Service Account in the Debt Service Fund established in Section 5.2.
“Debt Service Account Investment Agreement” means any debt service account investment agreement, that is a Qualified Investment, between the Trustee and a provider, among the Trustee, the Issuer and a provider, or between the Issuer and a provider and assigned to the Trustee, relating to amounts deposited in the Debt Service Account of the Debt Service Fund. The initial Debt Service Account Investment Agreement is the Investment Agreement, by and [between][among] the [Trustee,] [the Issuer] and [_________], as provider, dated as of [CLOSING DATE]. “Debt Service Fund” means the Debt Service Fund established in Section 5.2. “Debt Service Reserve Account” means the Debt Service Reserve Account in the Debt Service Fund established in Section 5.2.
“Debt Service Reserve Account Investment Agreement” means any debt service reserve account investment agreement, that is a Qualified Investment, between the Trustee and a provider, among the Trustee, the Issuer and a provider, or between the Issuer and a provider and assigned to the Trustee, relating to amounts deposited in the Debt Service Reserve Account of the Debt Service Fund. The initial Debt Service Reserve Account Investment Agreement is the Investment Agreement, [among][between] the [Trustee,] [the Issuer] and [____________________], as provider, dated as of [CLOSING DATE].
“Debt Service Reserve Requirement” means $[___________]. “Defaulted Interest” has the meaning set forth in Section 3.8. “Defeasance Securities” means (a) Government Obligations, and (b) deposits in interest-bearing time deposits or certificates of deposit which shall not be subject to redemption or repayment prior to their maturity or due date other than at the option of the depositor or holder thereof or as to which an irrevocable notice of redemption or repayment, or irrevocable instructions have been given to call for redemption or repayment, of such time deposits or certificates of deposit on a specified redemption or repayment date has been given and such time deposits or certificates of deposit are not otherwise subject to redemption or repayment prior to such specified date other than at the option of the depositor or holder thereof, and which are fully secured by Government Obligations to the extent not insured by the Federal Deposit Insurance Corporation. “Delivery Point” has the meaning given to such term in the Clean Energy Purchase Contract.
“Dissemination Agent” means that certain dissemination agent appointed by the Issuer, pursuant to the Continuing Disclosure Undertaking, and any successor Dissemination Agent appointed by the Issuer, with Written Notice to the Trustee, in accordance with the Continuing Disclosure Undertaking.
4877-9956-3567.4
15 “DTC” means The Depository Trust Company, New York, New York, and its successors and assigns.
“Early Termination Payment Date” has the meaning given to such term in the Master Power Supply Agreement.
“Elective Call Option Notice” has the meaning given to such term in the Receivables Purchase Exhibit.
“Elective Call Receivable” has the meaning given to such term in the Receivables Purchase Exhibit.
“Elective Call Receivables Offer” has the meaning given to such term in the Receivables Purchase Exhibit.
“Electronic Means” means email transmission or other similar electronic means of communication providing evidence of transmission, S.W.I.F.T, secure electronic transmission containing applicable authorization codes, passwords and/or authentication keys, facsimile transmission, including a telephone communication confirmed by any other method set forth in this definition, or another method or system specified by a Responsible Officer of the Trustee as available for use in connection with its services hereunder. “Electronic Signature” means a manually executed original signature that is then transmitted by Electronic Means.
“Electronically Signed” or “Electronically Signed Document” means a document containing, or which there is affixed, an Electronic Signature. “Eligible Bonds” means any Bonds other than Bonds which a Responsible Officer of the Trustee actually knows to be owned by, for the account of, or on behalf of the Issuer or the Project Participant.
“EMMA” means the Electronic Municipal Market Access system, the website currently maintained by the Municipal Securities Rulemaking Board and any successor municipal securities disclosure website approved by the Securities and Exchange Commission. “Event of Default” has the meaning set forth in Section 8.1. “Extraordinary Expenses” means extraordinary and nonrecurring expenses. Any amounts, other than Unpaid Amounts, payable by the Issuer upon an early termination of a Commodity Swap shall constitute an Extraordinary Expense.
“Failed Remarketing” means the failure (i) of the Trustee to receive the Purchase Price, or to have on deposit in the Bond Purchase Fund amounts sufficient and available to pay the Purchase Price, of any Bond required to be purchased on a Mandatory Purchase Date by 12:00 noon New York City time on the fifth Business Day preceding such Mandatory Purchase Date or (ii) to purchase or redeem such Bond in whole by such Mandatory Purchase Date (including from any funds on deposit in the Assignment Payment Fund and required to be used for such redemption). 4877-9956-3567.4
16 “Favorable Opinion of Bond Counsel” means an Opinion of Bond Counsel to the effect that an action proposed to be taken is not prohibited by this Indenture and will not, in and of itself, cause interest on the applicable Bonds to be included in gross income for purposes of federal income taxation.
“Fiduciary” or “Fiduciaries” means the Trustee, the Paying Agent, the Bond Registrar, the Custodian, the Calculation Agent or any or all of them, as may be appropriate. “Final Fixed Rate Conversion Date” means, with respect to a Series of Bonds, the date on which such Bonds begin to bear interest for a Term Rate Period which extends to the Final Maturity Date for such Series of Bonds.
“Final Maturity Date” means (a) with respect to the Series 2023_ Bonds, [_______, 20__], and (b) with respect to any other Series of Bonds, the final Maturity Date set forth in the related Supplemental Indenture.
“Fiscal Year” means (a) the twelve-month period beginning on January 1 of each year and ending on and including the next December 31, or (b) such other twelve-month period established by the Issuer from time to time, upon Written Notice to the Trustee, as its fiscal year. “Fitch” means Fitch Ratings, Inc., its successors and assigns, and, if such corporation shall no longer perform the functions of a securities rating agency, “Fitch” shall be deemed to refer to any other nationally recognized securities rating agency designated by the Issuer, in a Written Instrument of the Issuer delivered to the Trustee.
“Fund” or “Funds” means, as the case may be, each or all of the Funds established in Section 5.2 and Section 4.15.
“Funding Agreement” has the meaning given to such term in the Master Power Supply Agreement.
“Funding Recipient” has the meaning given to such term in the Master Power Supply Agreement.
“General Reserve Fund” means the General Reserve Fund established in Section 5.2. “Government Obligations” means:
(a) Direct obligations of (including obligations issued or held in book-entry form on the books of) the Department of the Treasury of the United States of America, obligations unconditionally guaranteed as to principal and interest by the United States of America, and evidences of ownership interests in such direct or unconditionally guaranteed obligations;
(b) Any bonds or other obligations of any state of the United States of America or of any agency, instrumentality or local governmental unit of any such state which: (i) are not callable at the option of the obligor prior to maturity or as to which irrevocable notice has been given by the obligor to call such bonds or obligations on the date specified in the 4877-9956-3567.4
17 notice; (ii) are rated in the two highest Rating Categories of S&P and Moody’s; and (iii) are fully secured as to principal and interest and redemption premium, if any, by a fund consisting only of cash or obligations described in clause (a) above, which fund may be applied only to the payment of interest when due, principal of and redemption premium, if any, on such bonds or other obligations on the maturity date or dates thereof or the specified redemption date or dates pursuant to such irrevocable notice, as appropriate; or (c) Any other bonds, notes or obligations of the United States of America or any agency or instrumentality thereof which, if deposited with the Trustee for the purpose described in Section 11.1(c), will result in a rating on the Bonds which are deemed to have been paid pursuant to Section 11.1(c) that is in the same Rating Category of the obligations listed in subsection (a) above.
The determination as to whether any bond, note or other obligation constitutes a Government Obligation shall be made solely at the time of initial investment or purchase; provided that, the Trustee shall have no responsibility for monitoring any ratings or determining whether any bond, note or other obligation is or continues to be a Government Obligation. “Increased Interest Rate” means (a) during the Initial Interest Rate Period with respect to Bonds in the Term Rate Period, an interest rate equal to 8% per annum, and (b) during any subsequent Interest Rate Period, the rate (if any) set forth in a Supplemental Indenture or Written Direction of the Issuer to the Trustee with respect to such Interest Rate Period, which rate shall not exceed the maximum rate of interest permitted by applicable law; provided that the Increased Interest Rate shall be payable only to the extent the Issuer receives payments from the Product Supplier pursuant to Section 17.2 of the Master Power Supply Agreement. “Increased Interest Rate Period” means, with respect to any Series of Bonds, the period from and including the date on which a Ledger Event occurs to but not including the earlier of (a) the date on which a Termination Payment Event occurs, (b) the Mandatory Purchase Date or any prior redemption date with respect to a Series of Bonds and (c) the Interest Payment Date with respect to such Series of Bonds immediately succeeding the last date on which J. Aron paid the Ledger Event Payments.
“Indenture” means this Trust Indenture as from time to time amended or supplemented by Supplemental Indentures in accordance with the terms hereof. “Index” means the SOFR Index or the SIFMA Index, as applicable. “Index Rate” means a SOFR Index Rate or a SIFMA Index Rate, as applicable. “Index Rate Determination Certificate” means a written notice delivered by the Issuer pursuant to Section 2.9(b).
“Index Rate Period” means, with respect to a Series of Bonds, an Interest Rate Period during which the Bonds of such Series bear interest at an Index Rate. “Index Rate Reset Date” means, with respect to a Series of Bonds bearing interest at an Index Rate, each date on which the applicable Index Rate is determined by the Calculation Agent 4877-9956-3567.4
18 based on the change in the applicable Index as of such date, which shall be the date or dates so specified in the applicable Index Rate Determination Certificate with respect to such Index Rate Period (including, by way of example and not limitation, Wednesday of each week, the first Business Day of each calendar month or the first Business Day of a calendar quarter). “Index Rate Tender Date” means, with respect to any Index Rate Period for a Series of Bonds, the date so specified in the applicable Index Rate Determination Certificate with respect to such Index Rate, which date shall be a Mandatory Purchase Date pursuant to Section 4.13 and shall not be later than the Final Maturity Date. The Index Rate Tender Date shall always be a Business Day, unless such date is the Final Maturity Date. If a date (other than the Final Maturity Date) that is not a Business Day is specified as an Index Rate Tender Date, then the Index Rate Tender Date shall be the Business Day immediately following such specified date. “Initial Interest Rate Period” means, with respect to the Series 2023_ Bonds, the period from the Initial Issue Date to and including the last day of the Month preceding the Series 2023_ Mandatory Purchase Date; provided that in the event that all of the Series 2023_ Bonds are redeemed (or purchased in lieu of redemption) pursuant to Section 4.3, the Initial Interest Rate Period shall end on and as of the day of such redemption or purchase. “Initial Issue Date” means the date of initial issuance and delivery of the Series 2023_ Bonds.
“Interest Accrual Date” means, with respect to any Bond (a) during any Daily Interest Rate Period or Weekly Interest Rate Period for such Bond, the first day thereof and, thereafter, each Interest Payment Date in respect thereof other than the last such Interest Payment Date during that Daily Interest Rate Period or Weekly Interest Rate Period, as applicable, (b) during any Index Rate Period for such Bond, the first day thereof and, thereafter each Interest Payment Date in respect thereof other than the last such Interest Payment Date during that Index Rate Period, except as otherwise provided in the Supplemental Indenture for such Bond, (c) during any Term Rate Period for such Bond, the first day thereof and, thereafter, each Interest Payment Date in respect thereof other than the last such Interest Payment Date during that Term Rate Period, and (d) for each CP Interest Term for such Bond within a Commercial Paper Interest Rate Period, the first day thereof. “Interest Payment Date” means, with respect to any Bond (a) during any Daily Interest Rate Period or Weekly Interest Rate Period for such Bond, the first Business Day of each Month, (b) during any Index Rate Period for such Bond, the first Business Day of each Month, except as otherwise provided by the Supplemental Indenture for such Bond, (c) during any Term Rate Period for such Bond, each [June 1 and December 1], provided that the first Interest Payment Date for any Term Rate Period shall be at least ninety (90) days from the first day of such period, (d) during any Commercial Paper Interest Rate Period for such Bond, the day next succeeding the last day of each CP Interest Term for such Bond, (e) any redemption date for such Bond, (f) any Mandatory Purchase Date for such Bond, and (g) the Maturity Date of such Bond. “Interest Rate Period” means a Daily Interest Rate Period, a Weekly Interest Rate Period, a Commercial Paper Interest Rate Period, a Term Rate Period or an Index Rate Period.
Notwithstanding anything contained herein to the contrary, all Bonds of a Series shall at all times bear interest in the same Interest Rate Period.
4877-9956-3567.4
19 “Interest Rate Swap” means (a) an ISDA Master Agreement, Schedule and each Confirmation thereunder between the Issuer and the Interest Rate Swap Counterparty, pursuant to which the Issuer agrees to make payments to the Interest Rate Swap Counterparty at a fixed rate of interest and the Interest Rate Swap Counterparty agrees to make payments to the Issuer at a floating rate equal to the rate of interest borne by a related Series of Bonds, in each case with a notional amount equal to the Outstanding principal amount of such Series of Bonds, and (b) any replacement interest rate swap agreement permitted by Section 2.13(b), in each case as originally executed or as it may from time to time be supplemented, modified or amended pursuant to the terms thereof and this Indenture, as applicable; provided that, as long as no Interest Rate Swap has been entered into by the Issuer, all references herein to the Interest Rate Swap, Interest Rate Swap Counterparty, Interest Rate Swap Receipts and Interest Rate Swap Payments (including, without limitation, Section 7.14) shall be disregarded.
“Interest Rate Swap Counterparty” means the counterparty to an Interest Rate Swap or replacement Interest Rate Swap, and any successor and assign thereof, that meets the requirements of Section 2.13(b).
“Interest Rate Swap Payments” means, as of each scheduled payment date specified in the Interest Rate Swap, the amount, if any, payable to the Interest Rate Swap Counterparty by the Issuer.
“Interest Rate Swap Receipts” means, as of each scheduled payment date specified in the Interest Rate Swap, the amount, if any, payable to the Issuer by the Interest Rate Swap Counterparty.
“Internal Revenue Code” means the Internal Revenue Code of 1986, as amended.
References herein to sections of the Internal Revenue Code include the applicable U.S. Treasury Regulations promulgated thereunder.
“Issue Date” means (a) with respect to the Series 2023_ Bonds, the Initial Issue Date, and (b) with respect to any other Series of Bonds, the date of initial issuance and delivery of such Series.
“Issuer” means California Community Choice Financing Authority, a joint powers authority organized pursuant to the laws of the State of California, including without limitation, the Act.
“Issuer Custodial Agreement” means the Custodial Agreement, dated as of the Initial Issue Date among the Issuer, the Custodian and the Commodity Swap Counterparty. “Issuer Purchase Account” means the Account by that name in the Bond Purchase Fund. “J. Aron” means J. Aron & Company LLC, a New York limited liability company. “Ledger Event” has the meaning given to such term in the Master Power Supply Agreement.
4877-9956-3567.4
20 “Ledger Event Payments” means amounts required to be paid by J. Aron pursuant to Section 17.6 of the Product Sale and Service Agreement. “Liquidity Facility” means, with respect to a Series of Bonds, a standby bond purchase agreement, letter of credit or similar facility, which secures or guarantees the payment of principal of a Series of Bonds, and any Alternate Liquidity Facility provided in substitution of the foregoing. “Liquidity Facility Provider” means, with respect to a Liquidity Facility for a Series of Bonds, the commercial bank or other financial institution providing the same and any other commercial bank or other financial institution issuing or providing (or having primary obligation for, or acting as agent for the financial institutions obligated under) an Alternate Liquidity Facility. “Mandatory Purchase Date” means (i) the Series 2023_ Mandatory Purchase Date, and (ii) any date on which Bonds are required to be purchased pursuant to Section 4.12, Section 4.13 or Section 4.14, respectively.
“Master Power Supply Agreement” means the Master Power Supply Agreement, dated as of [CLOSING MONTH], 1 2023 between the Issuer and the Product Supplier. “Maturity Date” means, with respect to a Series of Bonds, each date upon which principal of such Bonds is due, as set forth in (a) Section 2.2(b) with respect to the Series 2023_ Bonds, (b) the related Supplemental Indenture with respect to any other Series of Bonds; or (c) in a Written Notice to the Trustee relating to the Conversion of a Series of Bonds to a Term Rate Period delivered by the Issuer pursuant to Section 2.7(a) of this Indenture. “Maximum Rate” means twelve percent (12%) per annum.
“Member” has the meaning given to such term in the recitals to this Indenture. “Minimum Amount” means the amount of $[___________] to be maintained on deposit in the Commodity Reserve Account, subject to application as provided in Section 5.3(b). “Minimum Daily Interest Rate” means, with respect to a Series of Bonds bearing interest at a Daily Rate, the minimum rate determined by the Remarketing Agent by 10:00 a.m. New York City time pursuant to Section 2.5.
“Minimum Rating” means the credit rating of the Funding Recipient (or the Funding Recipient Guarantor (as defined in the Master Power Supply Agreement), if applicable). “Month” means a calendar month.
“Moody’s” means Moody’s Investors Service, Inc., its successors and assigns, and, if such corporation shall no longer perform the functions of a securities rating agency, “Moody’s” shall be deemed to refer to any other nationally recognized securities rating agency designated by the Issuer, in a Written Instrument of the Issuer delivered to the Trustee. “Operating Expenses” means, to the extent properly allocable to the Clean Energy Project, (a) the Issuer’s expenses for operation of the Clean Energy Project, including all Rebate Payments, 4877-9956-3567.4
21 Commodity Swap Payments, costs, collateral deposits and other amounts (other than Commodity Swap Payments) necessary to maintain any Commodity Swap, and payments required under the Master Power Supply Agreement (which may, under certain circumstances, include imbalance charges and other miscellaneous payments) or required to be incurred under or in connection with the performance of the Issuer’s obligations under the Clean Energy Purchase Contract including any Assigned Product Reimbursement Payment; (b) any other current expenses or obligations required to be paid by the Issuer under the provisions of this Indenture (other than Debt Service on the Bonds, deposits to the Commodity Reserve Account or the Debt Service Reserve Account, any Cost of Acquisition, and any amounts for the repurchase of Call Receivables or Put Receivables) or by law or required to be incurred under or in connection with the performance of the Issuer’s obligations under the Clean Energy Purchase Contract; (c) fees payable by the Issuer with respect to any Remarketing Agreement; (d) the fees and expenses of the Fiduciaries; (e) reasonable accounting, legal and other professional fees and expenses, and all other reasonable administrative and operating expenses of the Issuer, which are incurred by the Issuer with respect to the Bonds, this Indenture, or the Clean Energy Project, including but not limited to those relating to the administration of the Trust Estate and compliance by the Issuer with its continuing disclosure obligations, if any, with respect to the Bonds; and (f) the costs of any insurance premiums incurred by the Issuer, including, without limitation, directors and officers liability insurance allocable to the Clean Energy Project; provided that, for purposes of Section 5.5(a)(i), Operating Expenses shall not include any of the foregoing administrative expenses, fees or other costs described in the foregoing clauses (a) through (f) that are paid from funds on deposit in the Administrative Fee Fund. Litigation judgments and settlements and indemnification payments in connection with the payment of any litigation judgment or settlement and Extraordinary Expenses are not Operating Expenses.
“Operating Fund” means the Operating Fund established in Section 5.2. “Opinion of Bond Counsel” means a written opinion of either Bond Counsel or Special Tax Counsel (or written opinions of both of them) addressed to the Issuer and delivered to the Trustee. “Opinion of Counsel” means an opinion signed by an attorney or firm of attorneys (who may be counsel to the Issuer) selected by the Issuer.
“Optional Purchase Date” means any date on which Bonds are to be purchased pursuant to Section 4.11.
“Outstanding” when used with reference to Bonds, means as of any date, Bonds theretofore or thereupon being authenticated and delivered under this Indenture except:
(a) Bonds cancelled (or portions thereof deemed to have been cancelled) by the Trustee at or prior to such date;
(b) Bonds paid or deemed to have been paid in accordance with Article XI; (c) Bonds in lieu of or in substitution for which other Bonds shall have been authenticated and delivered pursuant to this Indenture; and 4877-9956-3567.4
22 (d) Bonds (or portions thereof) deemed to have been purchased pursuant to the provisions of any Supplemental Indenture in lieu of which other Bonds have been authenticated and delivered as provided in such Supplemental Indenture. “Participants” means those broker-dealers, banks and other financial institutions from time to time for which DTC holds Bonds as Securities Depository. “Paying Agent” means the Trustee, its successors and assigns, and any other bank or trust company organized under the laws of any state of the United States of America or any national banking association designated as paying agent for the Bonds, and its successor or successors hereafter appointed in the manner provided in this Indenture. “Person” means any and all natural persons, firms, associations, corporations and public bodies.
“Pledged Funds” means (a) the Project Fund, (b) the Revenue Fund, (c) the Debt Service Fund, (d) the General Reserve Fund and (e) the Assignment Payment Fund, in each case including the Accounts in each of such Funds, and in the case of the Commodity Reserve Account, subject to the prior pledge thereof in favor of the Commodity Swap Counterparty and the Project Participant.
“Prevailing Market Conditions” means, without limitation, the following factors: existing short-term market rates for securities, the interest on which is excluded from gross income for federal income tax purposes or, as applicable, qualifies the issuer thereof to receive Subsidy Payments or similar benefit; indexes of such short-term rates; the existing market supply and demand and the existing yield curves for short-term and long-term securities for obligations of credit quality comparable to the Bonds, the interest on which is excluded from gross income for federal income tax purposes; general economic conditions and financial conditions that may affect or be relevant to the Bonds; and such other facts, circumstances and conditions as the Remarketing Agent, in its sole discretion, shall determine to be relevant to the remarketing of the Bonds at the Purchase Price thereof.
“Principal Installment” means, as of any date of calculation, (a) the principal amount of Bonds due on a certain future date for which no Sinking Fund Installments have been established, or (b) the unsatisfied balance (determined as provided in Section 5.12(c)) of any Sinking Fund Installments due on a certain future date in a principal amount equal to said unsatisfied balance of such Sinking Fund Installments.
“Product” has the meaning given to such term in the Clean Energy Purchase Contract. “Product Sale and Service Agreement” means the Electricity Sale and Service Agreement as defined in the Master Power Supply Agreement.
“Product Supplier” means Aron Energy Prepay 22 LLC, a Delaware limited liability company.
“Product Supplier Commodity Swap” means the ISDA Master Agreement, Schedule and Confirmation between the Product Supplier and the Commodity Swap Counterparty, or any 4877-9956-3567.4
23 replacement agreement entered into consistent with the terms of the Master Power Supply Agreement, pursuant to which the Commodity Swap Counterparty will pay to the Product Supplier an index-based floating price and the Product Supplier will pay to the Commodity Swap Counterparty a fixed price in relation to the daily quantities of Product to be delivered under the Master Power Supply Agreement.
“Product Supplier Custodial Agreement” means the Custodial Agreement, dated as of the Initial Issue Date among the Product Supplier, the Custodian and the Commodity Swap Counterparty.
“Product Supplier Documents” means (i) the Master Power Supply Agreement, (ii) the Product Sale and Service Agreement and the related guaranty of The Goldman Sachs Group, Inc., and any agreement entered into by the Product Supplier in replacement thereof, (iii) the Funding Agreement (as defined in the Master Power Supply Agreement), (iv) the SPE Master Custodial Agreement (as defined in the Master Power Supply Agreement), (v) the Product Supplier LLCA, and (vi) the Product Supplier Commodity Swap.
“Product Supplier LLCA” means the Amended and Restated Limited Liability Company Agreement of the Product Supplier, dated as of [_________], 2023. “Project Fund” means the Project Fund established in Section 5.2. “Project Participant” means (a) 3CE and (b) any other Person that enters into a Clean Energy Purchase Contract with the Issuer in accordance with the assignment and novation requirements set forth in Section 7.10(d)(iv).
“Public Agency” means any state or commonwealth and their respective authorities, agencies and governmental or political subdivisions, including without limitation any of their departments or agencies, counties, county boards of education, county superintendents of schools, cites, public corporations, public districts, public commissions or joint powers authorities. “Purchase Date” means an Optional Purchase Date or a Mandatory Purchase Date, as the case may be.
“Purchase Price” means (a) with respect to any Purchased Bond to be purchased on an Optional Purchase Date, an amount equal to the principal amount of such Bond Outstanding on such date plus accrued and unpaid interest thereon unless such Optional Purchase Date is an Interest Payment Date for such Bond, in which case interest on such Bond shall not be included in the Purchase Price of such Bond but shall be paid to the Owner of such Bond in accordance with the interest payment provisions of this Indenture, (b) except as provided in clause (c) below, with respect to any Purchased Bond to be purchased on a Mandatory Purchase Date, an amount equal to the principal amount of such Bond Outstanding on such date, and (c) in the case of a purchase of a Bond bearing interest at a Term Rate pursuant to Section 4.14 with respect to which the new Interest Rate Period commences prior to the day originally established as the last day of the preceding Term Rate Period, the optional redemption price for such Bond set forth in Section 4.3(b) or an applicable Supplemental Indenture which would have been applicable to such Bond if the preceding Term Rate Period had continued to the day originally established as its last day. Accrued interest due on any Bonds to be purchased on a Mandatory Purchase Date shall be 4877-9956-3567.4
24 paid from amounts on deposit in the Debt Service Account of the Debt Service Fund on such date in accordance with Section 5.7.
“Purchased Bonds” means any Bonds required to be purchased on a Purchase Date. “Purchaser Default” has the meaning given to such term in the Clean Energy Purchase Contract.
“Put Receivable” has the meaning set forth in Section 1.1 of the Receivables Purchase Exhibit.
“Qualified Investments” means any of the following investments, if and to the extent that the same are rated (or whose financial obligations to the Issuer receive credit support from an entity rated) at least at the Minimum Rating (except for (c) below) and, at the time of investment, are legal investments of the Issuer’s funds:
(a) Direct obligations of the United States government or any of its agencies; (b) Obligations guaranteed as to principal and interest by the United States government or any of its agencies;
(c) Certificates of deposit and other evidences of deposit at state and federally chartered banks, savings and loan institutions or savings banks, including the Trustee and its affiliates (each having the highest short-term rating by each Rating Agency then rating the Bonds) deposited and collateralized as required by law; (d) Repurchase agreements entered into with the United States or its agencies or with any bank, broker-dealer or other such entity, including the Trustee and its affiliates, so long as the obligation of the obligated party is secured by a perfected pledge of obligations, that meet the conditions set forth in the preamble to this definition of Qualified Investments;
(e) Guaranteed investment contracts, forward delivery agreements or similar agreements providing for a specified rate of return over a specified time period; provided, however, that guaranteed investment contracts, forward delivery agreements or similar agreements shall meet the conditions set forth in the preamble to this definition of Qualified Investments;
(f) Direct general obligations of a state of the United States, or a political subdivision or instrumentality thereof, having general taxing powers; (g) Obligations of any state of the United States or a political subdivision or instrumentality thereof, secured solely by revenues received by or on behalf of the state or political subdivision or instrumentality thereof irrevocably pledged to the payment of principal of and interest on such obligations;
(h) money market funds registered under the federal Investment Company Act of 1940, whose shares are registered under the federal Securities Act of 1933, and having 4877-9956-3567.4
25 a rating in the highest Rating Category by each Rating Agency, including money market funds of the Trustee or its affiliates or funds for which the Trustee or its affiliates (i) provide investment or other management services and (ii) serve as investment manager, administrator, shareholder, servicing agent and/or custodian or subcustodian, notwithstanding that (A) the Trustee or its affiliate receives or collects fees from such funds for services rendered, and (B) services performed by the Trustee pursuant to this Indenture may at times duplicate those provided to such funds by the Trustee or its affiliate; or (i) Any other investments permitted by applicable law for the investment of the funds of the Issuer;
provided, that the Issuer shall monitor, or cause to be monitored, ratings and shall determine whether any investment made is or continues to be a Qualified Investment and the Trustee shall have no responsibility whatsoever for monitoring ratings or determining whether any investment made is or continues to be a Qualified Investment. “Rating Agency” means Fitch, Moody’s or S&P, or any other rating agency so designated in a Supplemental Indenture that, at the time, rates the Bonds. “Rating Category” means one or more of the generic rating categories of a Rating Agency, without regard to any refinement or gradation of such rating category or categories by a numerical modifier, plus or minus, or otherwise.
“Rating Confirmation” means evidence satisfactory to the Issuer, so designated in writing to the Trustee, that, upon the effectiveness of any proposed action, all Outstanding Bonds will continue to be assigned at least the same or equivalent ratings (including the same or equivalent numerical, plus or minus, or other modifiers within a Rating Category) by each Rating Agency then rating such Outstanding Bonds.
“Rebate Payments” means those portions of moneys or securities held in any Fund or Account that are required to be paid to the United States Treasury Department under the requirements of Section 148(f) of the Internal Revenue Code. “Receivables Purchase Exhibit” or “Receivables Purchase Provisions” means the provisions set forth in Exhibit E to the Master Power Supply Agreement. “Redemption Account” means the Redemption Account in the Debt Service Fund established in Section 5.2.
“Redemption Price” means, with respect to any Bond, the amount payable upon redemption thereof pursuant to such Bond or this Indenture. “Refunding Bonds” means a Series of Bonds authorized to be issued pursuant to Section 2.1(c) for the sole purposes of refunding or defeasing (in accordance with Article XI) in whole a Series of Bonds then Outstanding, and paying the Cost of Acquisition with respect to such Refunding Bonds.
4877-9956-3567.4
26 “Regular Record Date” means (i) with respect to any Interest Payment Date in respect of any Daily Interest Rate Period, Weekly Interest Rate Period, Index Rate Period, Commercial Paper Interest Rate Period, the Business Day immediately preceding such Interest Payment Date, and (ii) with respect to any Interest Payment Date in respect of any Term Rate Period, the 15th day of the Month (whether or not such day is a Business Day) immediately preceding the Month in which such Interest Payment Date falls.
“Remarketing Agent” means, with respect to any Series of Bonds, the entity appointed as the remarketing agent for such Series pursuant to the related Remarketing Agreement and, if applicable, the related Supplemental Indenture.
“Remarketing Agreement” means, with respect to any Series of Bonds, the remarketing agreement, if any, entered into between the Issuer and the Remarketing Agent for such Series of Bonds.
“Remarketing Exhibit” means Exhibit C of the Master Power Supply Agreement. “Remarketing Proceeds Account” means the Account by that name within the Bond Purchase Fund.
“Remarketing Reserve Fund” means the Remarketing Reserve Fund established in Section 5.2.
“Remediation Remarketing Purchase Price” has the meaning given to such term in the Remarketing Exhibit.
“Responsible Officer” means, when used with respect to the Trustee, the Custodian or the Calculation Agent, as applicable, any officer within the corporate trust department at the corporate trust office of the Trustee, the Custodian or the Calculation Agent, respectively, specified in Section 12.10 (or any successor office thereto), including any vice president, assistant vice president, assistant secretary, assistant treasurer or trust officer or any other officer who customarily performs functions similar to those performed by such individuals who at the time are such officers, respectively, or to whom any corporate trust matter is referred at such office because of such person’s knowledge of and familiarity with the particular subject of this Indenture and who in each case shall have direct responsibility for the administration of this Indenture. “Revenue Fund” means the Revenue Fund established in Section 5.2. “Revenues” means:
(a) all revenues, income, rents, user fees or charges, and receipts derived or to be derived by the Issuer from or attributable or relating to the ownership and operation of the Clean Energy Project, including all revenues attributable or relating to the Clean Energy Project or to the payment of the costs thereof received or to be received by the Issuer under the Clean Energy Purchase Contract and the Master Power Supply Agreement or otherwise payable to the Trustee for the account of the Issuer for the sale and/or transmission of Product or otherwise with respect to the Clean Energy Project; 4877-9956-3567.4
27 (b) interest received or to be received on any moneys or securities (other than moneys or securities held in the Acquisition Account, moneys or securities held in the Redemption Account in the Debt Service Fund or that portion of moneys in the Operating Fund required for Rebate Payments) held pursuant to this Indenture and paid or required to be paid into the Revenue Fund;
(c) any Commodity Swap Receipts received by the Trustee, on behalf of the Issuer; and
(d) any Subsidy Payments received by the Trustee, on behalf of the Issuer, in accordance with Section 3.10 of this Indenture.
provided that, the term “Revenues” shall not include: (i) any amounts received under a Clean Energy Purchase Contract with respect to Assigned PAYGO Product; (ii) any Termination Payment, including the Additional Termination Payment paid pursuant to the Master Power Supply Agreement; (iii) any amounts received from the Product Supplier that are required to be deposited into the Remarketing Reserve Fund pursuant to Section 5.13 and into the Debt Service Account pursuant to Section 2.2; (iv) any Assignment Payment received from the Product Supplier; (v) Interest Rate Swap Receipts; (vi) any amounts paid by the Project Participant in respect of the Administrative Fee; (vii) payments received from the Product Supplier pursuant to the Receivables Purchase Exhibit; (viii) payments received under the Clean Energy Project Operational Services Agreement and (ix) any Seller Swap MTM Payment payable to the Issuer. “S&P” means S&P Global Ratings, a division of S&P Global Inc., its successors and assigns, and, if such entity shall no longer perform the functions of a securities rating agency, “S&P” shall be deemed to refer to any other nationally recognized securities rating agency designated by the Issuer, in a Written Instrument of the Issuer delivered to the Trustee. “Scheduled Debt Service Deposits” means the required monthly deposits to the Debt Service Account in the Debt Service Fund and the required cumulative deposits to the Debt Service Account in the Debt Service Fund in respect of the Debt Service coming due on the Bonds on each Bond Payment Date as set forth on Schedule I hereto. Scheduled Debt Service Deposits shall not be increased in the event that any Series of Bonds bears interest at the Increased Interest Rate.
Schedule I shall be revised (a) by Written Notice of the Issuer delivered at the time of its designation of each subsequent Interest Rate Period, and (b) by each Supplemental Indenture authorizing the issuance of Refunding Bonds.
“Securities Depository” means DTC, or its nominee, and its successors and assigns. “Seller Swap MTM Payment” has the meaning given to such term in Section 17.6 of the Master Power Supply Agreement.
“Series” when used with respect to the Bonds, means all Bonds designated as being of the same series, including without limitation the Series 2023_ Bonds, and authorized to be issued hereunder pursuant to Section 2.1.
“Series 2023_ Bonds” means the Clean Energy Project Revenue Bonds, Series 2023_ (Term Rate), authorized to be issued under Section 2.1(a). 4877-9956-3567.4
28 “Series 2023_ Mandatory Purchase Date” means [________, 20__], which is the day following the last day of the Initial Interest Rate Period for the Series 2023_ Bonds. “SIFMA Index” means the SIFMA Municipal Swap Index, which, for purposes of an Index Rate Reset Date for a Series of Bonds bearing interest at a SIFMA Index Rate, will be the level of such index which is issued weekly and which is compiled from the weekly interest rate resets of tax exempt variable rate issues included in a database maintained by Refinitiv Global Markets, Inc. which meet specific criteria established from time to time by SIFMA and issued on Wednesday of each week, or if any Wednesday is not a Business Day, the next succeeding Business Day, such date being the same day the SIFMA Swap Index is expected to be published or otherwise made available to the Calculation Agent. If the SIFMA Index is not available as of any Index Rate Reset Date, the interest rate for such Index Rate Reset Date will be determined using a comparable substitute or replacement index for such Index Rate Reset Date selected and designated by the Issuer in compliance with Section 2.9(b)(iv). “SIFMA Index Rate” means a per annum rate of interest equal to the sum of (a) the SIFMA Index then in effect, plus (b) the Applicable Spread.
“SIFMA Index Rate Period” means, with respect to a Series of Bonds, an Index Rate Period during which such Bonds bear interest at the SIFMA Index Rate. “Sinking Fund Installment” means, for the Series 2023_ Bonds, the amounts so designated in Section 4.2, and with respect to any other Series of Bonds, each amount, if any, so designated in the applicable Supplemental Indenture.
“SOFR Accrual Period” means the number of actual days from (and including) (a) the Initial Issue Date or the preceding Interest Payment Date, whichever is most recent, to (but not including) (b) the next succeeding Interest Payment Date, regardless of the actual number of calendar days in any Month.
“SOFR Effective Date” shall mean each Business Day. Each SOFR Effective Date is an Index Rate Reset Date for all purposes of the Indenture unless the context clearly requires otherwise.
“SOFR Effective Period” means the number of actual days from a SOFR Effective Date to the next SOFR Effective Date.
“SOFR Index” means the Secured Overnight Financing Rate reported on the NY Federal Reserve’s Website, or reported by any successor to the Federal Reserve Bank of New York as administrator of such Secured Overnight Financing Rate, as of 3:00 p.m. on each SOFR Publish Date representing the SOFR Index as of the SOFR Lookback Date, which will be used to calculate interest for the SOFR Effective Period beginning on the SOFR Effective Date. If the SOFR Index is not available as of any Index Rate Reset Date, the interest rate for such Index Rate Reset Date will be determined using a comparable substitute or replacement index for such Index Rate Reset Date designated by the Issuer in writing (with notice to, and which is available to, the Calculation Agent) in compliance with Section 2.9(b)(vii).
4877-9956-3567.4
29 “SOFR Index Rate” means a daily variable interest rate equal to the sum of (a) the product of the SOFR Index and the Applicable Factor, plus (b) the Applicable Spread on each day of a SOFR Effective Period, not to exceed the Maximum Rate.
“SOFR Index Rate Period” means, with respect to a Series of Bonds, an Index Rate Period during which such Bonds bear interest at the SOFR Index Rate. “SOFR Interest Calculation Date” means the last Business Day of each month. “SOFR Lookback Date” means the third Business Day immediately preceding each SOFR Effective Date.
“SOFR Publish Date” means the second Business Day immediately preceding each SOFR Effective Date.
“SPE Custodian” has the meaning given to such term in the SPE Master Custodial Agreement.
“SPE Master Custodial Agreement” has the meaning given to such term in the Master Power Supply Agreement.
“Special Record Date” has the meaning set forth in Section 3.8. “Special Tax Counsel” means Nixon Peabody LLP or any other counsel of nationally recognized standing in matters pertaining to the tax-exempt status of interest on obligations issued by states and their political subdivisions, duly admitted to the practice of law before the highest court of any state of the United States, and selected by the Issuer. Bond Counsel may serve as Special Tax Counsel.
“State” means the State of California.
“Subsidy Payments” means (a) with respect to a Series of Bonds issued under Section 54AA of the Internal Revenue Code, the amounts relating to such Series of Bonds which are payable by the federal government under Section 6431 of the Internal Revenue Code, which the Issuer has elected to receive under Section 54AA(g)(1) of the Internal Revenue Code, and (b) with respect to a Series of Bonds issued under any other provision of the Internal Revenue Code that creates a substantially similar direct-pay subsidy program, the amounts relating to such Series of Bonds which are payable by the federal government under the applicable provision of the Internal Revenue Code which the Issuer has elected to receive under the applicable provisions of the Internal Revenue Code.
“Supplemental Indenture” means any indenture supplemental to or amendatory of this Indenture executed and delivered by the Issuer and the Trustee in accordance with Article X. “Swap Deficiency Call Option Notice” has the meaning given to such term in the Receivables Purchase Exhibit.
4877-9956-3567.4
30 “Swap Deficiency Call Receivable” has the meaning given to such term in the Receivables Purchase Exhibit.
“Swap Deficiency Call Receivables Offer” has the meaning given to such term in the Receivables Purchase Exhibit.
“Swap Payment Deficiency” means, as of any date, (a) the amount of the next Commodity Swap Payment expected to become due, minus (b) the amount of any funds deposited in the Operating Fund and not otherwise allocable to Rebate Payments pursuant to Section 5.6(a)(i), minus (c) the Commodity Reserve Account balance; provided, however, that if such difference is a negative number, then the Swap Payment Deficiency shall be zero. “Swap Termination Account” means the Swap Termination Account established in Section 5.2.
“Tax Agreement” means the Tax Certificate and Agreement of the Issuer with respect to the Bonds dated as of the Initial Issue Date, as originally executed or as it may from time to time be supplemented, modified or amended pursuant to the terms thereof. “Term Rate” means, with respect to a Series of Bonds, a fixed interest rate for each maturity of such Bonds established in accordance with Section 2.7. “Term Rate Conversion Date” means, with respect to a Series of Bonds, each date on which such Bonds begin to bear interest at a Term Rate pursuant to the provisions of Section 2.7, including each date on which a new Term Rate Period is established for such Bonds and the Final Fixed Rate Conversion Date with respect to such Bonds.
“Term Rate Period” means, with respect to a Series of Bonds, each period during which a Term Rate is in effect for such Bonds.
“Term Rate Tender Date” means (a) with respect to the initial Term Rate Period for the Series 2023_ Bonds maturing on the Final Maturity Date, the Series 2023_ Mandatory Purchase Date, and (b) with respect to any other Term Rate Period for a Series of Bonds, the date so specified in the related Supplemental Indenture or notice of Conversion to or continuation of such Term Rate Period provided by the Issuer pursuant to Section 2.7(b), as applicable, which date shall be a Mandatory Purchase Date pursuant to Section 4.13 and shall not be later than the Final Maturity Date for such Series of Bonds. The Term Rate Tender Date shall always be a Business Day, unless such date is the Final Maturity Date. If a date (other than the Final Maturity Date) that is not a Business Day is specified as a Term Rate Tender Date, then the Term Rate Tender Date shall be the Business Day immediately following such specified date. “Termination Payment” has the meaning given to such term in the Master Power Supply Agreement.
“Trust Estate” means (a) the proceeds of the sale of the Bonds, (b) all right, title and interest of the Issuer in, to and under the Clean Energy Purchase Contract (excluding payments related to Assigned PAYGO Product and the right to receive the Administrative Fee), (c) the Revenues, (d) any Termination Payment or the right to receive such Termination Payment, (e) all right, title 4877-9956-3567.4
31 and interest of the Issuer in, to and under the Receivables Purchase Exhibit, including payments received from the Product Supplier pursuant thereto, (f) all right, title and interest of the Issuer in, to and under each Interest Rate Swap and the Interest Rate Swap Receipts, and (g) the Pledged Funds (but excluding the Administrative Fee Fund, Rebate Payments held in any Fund or Account), including the investment income, if any, thereof subject only to the provisions of this Indenture permitting the application thereof for the purposes and on the terms and conditions set forth herein.
“Trustee” means U.S. Bank Trust Company, National Association, and its successors or assigns, and any other corporation or national banking association which may at any time be substituted in its place as trustee pursuant to this Indenture. “Undelivered Bond” means any Bond which constitutes an Undelivered Bond under the provisions of Section 4.16.
“Underwriter” means (a) with respect to the Series 2023_ Bonds, Goldman Sachs & Co.
LLC and (b) with respect to any other Series of Bonds, the municipal securities broker-dealer engaged by the Issuer to underwrite such Series of Bonds. “Unpaid Amounts” has the meaning given to such term in the Commodity Swap or the Product Supplier Commodity Swap as the context requires. “Variable Rate Bonds” means Bonds bearing interest at a Daily Interest Rate, a Weekly Interest Rate, CP Interest Term Rates or an Index Rate. “Weekly Interest Rate” means, with respect to a Series of Bonds, a variable interest rate established for such Bonds in accordance with Section 2.6. “Weekly Interest Rate Period” means, with respect to a Series of Bonds, each period during which a Weekly Interest Rate is in effect for such Series of Bonds. “Written Certificate,” “Written Direction,” “Written Instrument,” “Written Notice,” “Written Request” and “Written Statement” of the Issuer means in each case an instrument in writing signed on behalf of the Issuer by an Authorized Officer thereof. Any such instrument and any supporting opinions or certificates may, but need not, be combined in a single instrument with any other instrument, opinion or certificate, and the two or more so combined shall be read and construed so as to form a single instrument. Any such instrument may be based, insofar as it relates to legal, accounting or engineering matters, upon the opinion or certificate of counsel, consultants, accountants or engineers, unless the Authorized Officer signing such Written Certificate, Direction, Instrument, Notice, Request or Statement knows, or in the exercise of reasonable care should know, that the opinion or certificate with respect to the matters upon which such Written Certificate, Direction, Instrument, Notice, Request or Statement may be based, as aforesaid, is erroneous. The same Authorized Officer, or the same counsel, consultant, accountant or engineer, as the case may be, need not certify to all of the matters required to be certified under any provision of this Indenture, but different Authorized Officers, counsel, consultants, accountants or engineers may certify to different facts, respectively. Every Written Certificate, Direction, Instrument, Notice, Request or Statement of the Issuer, and every certificate or opinion of counsel, consultants, accountants or engineers provided for herein shall include:
4877-9956-3567.4
32 (a) a statement that the person making such certificate, direction, instrument, notice, request, statement or opinion has read the pertinent provisions of this Indenture to which such certificate, direction, instrument, notice, request, statement or opinion relates;
(b) a brief statement as to the nature and scope of the examination or investigation upon which the certificate, direction, instrument, notice, request, statement or opinion is based;
(c) a statement that, in the opinion of such person, he or she has made such examination or investigation as is necessary to enable him or her to express an informed opinion with respect to the subject matter referred to in the instrument to which his or her signature is affixed; and
(d) with respect to any statement relating to compliance with any provision hereof, a statement whether or not, in the opinion of such person, such provision has been complied with.
Section 1.2 Captions.
The captions or headings in this Indenture are for convenience only and in no way define, limit or describe the scope and intent of any provisions of this Indenture.
Section 1.3 Rules of Construction.
Except where the context otherwise requires, words of any gender shall include correlative words of the other genders; words importing the singular number shall include the plural number and vice versa; and words importing persons shall include firms, associations, trusts, corporations or governments or agencies or political subdivisions thereof. The term “include” and its derivations are not limiting.
References herein to contracts and agreements include all amendments, modifications or supplements thereto made in accordance with the terms thereof. Unless otherwise indicated, references herein to Articles, Sections, Exhibits and Schedules are references to the Articles, Sections, Exhibits and Schedules of and to this Indenture.
Section 1.4 Governing Law.
This Indenture shall be governed by and construed in accordance with the laws of the State.
Section 1.5 Consents.
Whenever the consent of the Owners, the Issuer, the Product Supplier, the Remarketing Agent, the Interest Rate Swap Counterparty or the Commodity Swap Counterparty is required under the terms of this Indenture, such consent shall be evidenced by a written instrument providing for such consent and delivered to the Trustee. 4877-9956-3567.4
33 ARTICLE II
AUTHORIZATION AND ISSUANCE OF BONDS
Section 2.1 Authorization of Bonds and Refunding Bonds; Application of Proceeds. (a) For the purpose of financing the Cost of Acquisition of the Clean Energy Project and funding certain reserves, the following Series of Bonds, each of which shall be entitled to the benefit, protection and security of this Indenture are hereby authorized to be issued:
$[PAR] Clean Energy Project Revenue Bonds, Series 2023_ (Term Rate), which shall bear interest during the Initial Interest Rate Period at a Term Rate.
(b) The net proceeds of the Series 2023_ Bonds shall be deposited with the Trustee and applied as follows:
(i) for credit to the Acquisition Account of the Project Fund, from the proceeds of the Series 2023_ Bonds, (A) an amount equal to $[__________], which amount shall be applied pursuant to Section 5.3 to permit the Issuer to make the payment for Product pursuant to and in accordance with the Master Power Supply Agreement, (B) an amount equal to $[______________] to pay costs of issuance on the Series 2023_ Bonds in accordance with Section 5.3(a) and (C) an amount equal to $[__________] to provide capitalized interest on the Series 2023_ Bonds in accordance with Section 5.3(a); (ii) for credit to the Debt Service Reserve Account of the Debt Service Fund, from the proceeds of the Series 2023_ Bonds, an amount equal to $[_________]; (iii) for credit to the Commodity Reserve Account of the Project Fund, from the proceeds of the Series 2023_ Bonds, an amount equal to $[__________]; and (c) In addition to the Series 2023_ Bonds, there are hereby authorized to be issued by Supplemental Indenture one or more Series of Refunding Bonds for the purpose of refunding any Bonds then Outstanding hereunder, subject to the following conditions:
(i) the Supplemental Indenture providing for issuance of a Series of Refunding Bonds shall set forth (A) the Bonds to be refunded, (B) the Series designation and aggregate principal amount of the Refunding Bonds, (C) the Maturity Dates (which shall be no later than the Final Maturity Date) and any Sinking Fund Installments for the Refunding Bonds, (D) the Scheduled Debt Service Deposits for such Bonds, (E) the initial Interest Rate Period for such Refunding Bonds, and if such Interest Rate Period is to be an Index Rate Period, the applicable Index and the Applicable Spread and, if the Index is the SOFR Index, the Applicable Factor, and (F) such other terms and provisions concerning the Refunding Bonds as are not inconsistent with this Indenture; (ii) a Series of Refunding Bonds issued in a Term Rate Period may be sold at a premium;
4877-9956-3567.4
34 (iii) the proceeds of a Series of Refunding Bonds (including any sale premium) shall be used exclusively to pay the Cost of Acquisition relating to the Refunding Bonds;
(iv) if such Bonds are Variable Rate Bonds, and if such Bonds are to bear interest at a Daily Interest Rate, a Weekly Interest Rate or CP Interest Term Rates, the Issuer shall have appointed a Remarketing Agent for such Bonds and shall have entered into an Interest Rate Swap with respect to such Series of Bonds; (v) the delivery to the Trustee of an Accountant’s Certificate verifying ongoing cash flow sufficiency and Termination Payment sufficiency, provided that the Trustee shall have no duty or obligation to review the contents thereof and shall receive such Accountant’s Certificate solely as a repository on behalf of Bondholders; (vi) the delivery to the Trustee of the requests, opinions and documents required by Section 2.3; and
(vii) the receipt by the Trustee of a Rating Confirmation; provided however, a Rating Confirmation shall be required in connection with a Series of Refunding Bonds only to the extent a portion of the Bonds Outstanding prior to said refunding is not so refunded.
Section 2.2 Terms of Bonds; Payment.
(a) The Bonds shall be dated as of the date of the initial authentication and delivery thereof, shall bear interest from such date, payable on each Interest Payment Date for the applicable Series of Bonds, and shall be subject to redemption as provided in Article IV. The principal and Redemption Price of and interest on Bonds shall be payable at the designated corporate trust office of the Trustee, and such banking institution is hereby appointed Paying Agent and Bond Registrar for the Bonds; provided that interest on the Bonds may be paid, at the option of the Issuer, by check payable to the order of the Person entitled thereto, and mailed by first class mail, postage prepaid, to the address of such Person as shall appear on the books held and controlled by the Bond Registrar as of the close of business on the Regular Record Date for such Interest Payment Date, whether or not such Regular Record Date is a Business Day, which books the Bond Registrar shall keep for such purposes at its designated corporate trust office. Upon the written request of any Owner of one million dollars ($1,000,000) or more in aggregate principal amount of Bonds received by the Trustee prior to the applicable Regular Record Date (which request shall remain in effect until rescinded in writing by such Owner), interest shall be paid on each Interest Payment Date by wire transfer of immediately available funds to an account maintained in any bank or trust company in the United States of America that is a member of the Federal Reserve System designated in writing by such Owner. The principal and Redemption Price of and interest on all Bonds shall also be payable at any other place which may be provided for such payment by the appointment of any other Paying Agent or Paying Agents as permitted by this Indenture. The Issuer shall provide Written Notice to the Trustee of the appointment of any additional Paying Agent.
4877-9956-3567.4
35 (b) The Series 2023_ Bonds shall mature on the Maturity Dates and in the principal amounts, subject to Sinking Fund Installments as set forth in Section 4.2, and shall bear interest at the rates and in the Interest Rate Periods set forth below.
The Series 2023_ Bonds shall be issued in the aggregate principal amount of $[PAR] and shall mature on the dates and in the principal amounts set forth below. The Initial Interest Rate Period for the Series 2023_ Bonds shall be a Term Rate Period, and the Series 2023_ Bonds shall bear interest during such Period at the following rates:
Maturity Date
Principal
Amount
Interest
Rate
*Final Maturity
; provided that, if a Ledger Event occurs and J. Aron makes the Ledger Event Payments (which the Trustee shall deposit directly into the Debt Service Account), the Series 2023_ Bonds shall bear interest at the Increased Interest Rate during an Increased Interest Rate Period that begins on the day on which such Ledger Event occurs. If the Increased Interest Rate Period ends due to the occurrence of a Termination Payment Event, then the Series 2023_ Bonds shall bear interest at the rate(s) shown in the table above from and including the date of such Termination Payment Event to the associated extraordinary redemption date of the Series 2023_ Bonds pursuant to Section 4.1. If the Increased Interest Rate Period ends due to the failure of J. Aron to pay the Ledger Event Payments, then the Series 2023_ Bonds shall bear interest at the rate(s) shown in the table above from and including the Interest Payment Date immediately succeeding the last date on which J. Aron paid the Ledger Event Payments until the earlier of their stated maturity, the Series 2023_ Mandatory Purchase Date or any prior redemption date with respect to the Series 2023_ Bonds. The Issuer shall give prompt Written Notice to the Trustee of (i) the occurrence and date of a Ledger Event (which shall be the first day of the related Increased Interest Rate Period), and (ii) the occurrence and date of any Termination Payment Event (which shall be the last day of the related Increased Interest Rate Period). All references herein and in the Series 2023_ Bonds to “interest” on the Series 2023_ Bonds during the Initial Interest Rate Period, including all provisions relating to the accrual, computation and payment of interest, shall include interest at the Increased Interest Rate during any Increased Interest Rate Period. (c) Interest on the Series 2023_ Bonds shall be payable to the date on which such Bonds shall have been paid in full. Interest shall be computed, in the case of any Term Rate Period for a Series of Bonds, on the basis of a 360-day year consisting of twelve 30-day months, 4877-9956-3567.4
36 and in the case of any other Interest Rate Period for a Series of Bonds, on the basis of a 365 or 366-day year, as applicable, and the actual number of days elapsed. Interest on the Bonds of each Series shall be payable on each Interest Payment Date for the period commencing on the immediately preceding Interest Accrual Date for such period and ending on the day immediately preceding such Interest Payment Date. The first Interest Payment Date for the Series 2023_ Bonds is [________ 1, 20__].
(d) The initial interest rates for the Bonds of each Series and the determination for such Bonds of the Daily Interest Rate, the Weekly Interest Rate, the Index Rate or the Term Rate, each CP Interest Term and CP Interest Term Rate, each Applicable Spread and each Applicable Factor by the applicable Remarketing Agent or Calculation Agent for such Series of Bonds, as the case may be, shall be conclusive and binding upon the Issuer, the Trustee, the Remarketing Agent and the Owners of the Bonds.
(e) In connection with any Term Rate Conversion Date of a Series of Bonds, the Sinking Fund Installments, if any, established for such Series pursuant to the applicable Supplemental Indenture may be re-designated as Maturity Dates and Sinking Fund Installments for such Bonds on the Term Rate Conversion Date for such Bonds as provided for in the applicable Supplemental Indenture.
Section 2.3 Conditions for Issuance of Bonds.
The Bonds of each Series shall be executed by the Issuer and delivered to the Trustee and thereupon shall be authenticated by the Trustee and delivered upon the Written Direction of the Issuer, but only upon the receipt by the Trustee of:
(a) A copy, certified by an Authorized Officer, of a resolution and/or evidence of any other official actions taken by the Issuer that authorize the execution and delivery of the Bonds of such Series, together with a Written Request as to the authentication and delivery of the Bonds of such Series, signed by an Authorized Officer;
(b) An Opinion or Opinions of Counsel to the effect that (A) the Issuer has the right and power to enter into this Indenture, the Clean Energy Purchase Contract, the Master Power Supply Agreement, the Commodity Swap and any Interest Rate Swap, and (B) the Clean Energy Purchase Contract, the Master Power Supply Agreement, the Commodity Swap and any Interest Rate Swap have been duly and lawfully authorized, executed and delivered by the Issuer and (assuming due authorization, execution and delivery by, and validity and binding effect upon, the other parties thereto) are valid and binding obligations of the Issuer, and no other authorization for the Clean Energy Purchase Contract, the Master Power Supply Agreement, the Commodity Swap or any Interest Rate Swap is required; provided, that such Opinion(s) of Counsel may take customary exceptions, including as to the effect of, or for restrictions or limitations imposed by or resulting from, bankruptcy, insolvency, receivership, debt adjustment, moratorium, reorganization, arrangement, fraudulent conveyance or other similar laws relating to or affecting creditors’ rights generally, the application of equitable principles, the exercise of judicial discretion, limitations on legal remedies against public entities in the State, and the valid exercise of the sovereign police powers of the State and of the constitutional power of the United States of 4877-9956-3567.4
37 America and may state that no opinion is being rendered as to the availability of any particular remedy under the financing documents;
(c) An Opinion of Bond Counsel to the effect that (A) the Bonds of Such Series constitute the valid and binding limited obligations of the Issuer; (B) this Indenture has been duly executed and delivered by, and constitutes the valid and binding obligation of, the Issuer; (C) this Indenture creates a valid pledge to secure the payment of principal of and interest on the Bonds, of the Trust Estate, subject to the pledge of the Commodity Reserve Account in favor of the Commodity Swap Counterparty and the Project Participant, and subject further to the provisions of this Indenture permitting the application thereof for the purposes and on the terms and conditions set forth in this Indenture; provided, that such Opinion of Bond Counsel may take customary exceptions, including as to the effect of, or for restrictions or limitations imposed by or resulting from, bankruptcy, insolvency, receivership, debt adjustment, moratorium, reorganization, arrangement, fraudulent conveyance, or other similar laws relating to or affecting creditors’ rights generally, the application of equitable principles, the exercise of judicial discretion, limitations on legal remedies against public entities in the State, and the valid exercise of the sovereign police powers of the State and of the constitutional power of the United States of America and may state that no opinion is being rendered as to the availability of any particular remedy;
(d) An opinion of Special Tax Counsel to the effect that, if applicable, interest on the Bonds of such Series is excluded from gross income for federal income tax purposes under Section 103 of the Internal Revenue Code of 1986 and is exempt from State of California personal income taxes (it being agreed that if Special Tax Counsel also serves as Bond Counsel, the opinion described in this clause (d) may be consolidated with the Opinion of Bond Counsel described in the preceding clause (c));
(e) An executed or certified copy of the Clean Energy Purchase Contract with the Project Participant relating to the Clean Energy Project; (f) An opinion of counsel to the Project Participant to the effect that the Clean Energy Purchase Contract between the Project Participant and the Issuer has been duly authorized, executed and delivered by the Project Participant, is the valid and binding obligation of the Project Participant and is enforceable in accordance with its terms, subject to customary assumptions and exceptions with respect to enforceability;
(g) Ratings from at least one Rating Agency.
Section 2.4 Initial Interest Rate Periods; Subsequent Interest Rate Periods. (a) The Series 2023_ Bonds shall be initially issued in the Interest Rate Period set forth in Section 2.2(b). Upon the purchase of the Series 2023_ Bonds on the Mandatory Purchase Date, the Interest Rate Period for each Series of the Series 2023_ Bonds may be converted to a Daily Interest Rate Period, a Weekly Interest Rate Period, a Commercial Paper Interest Rate Period, an Index Rate Period, a Term Rate Period or a combination thereof, as provided in this Article II.
4877-9956-3567.4
38 (b) In the manner hereinafter provided, the term of each Series of Bonds will be divided into consecutive Interest Rate Periods during each of which such Bonds shall bear interest at the Daily Interest Rate, the Weekly Interest Rate, CP Interest Term Rates, Term Rates or an Index Rate; provided, however, that the Interest Rate Period shall be the same for all Bonds of a Series, and, notwithstanding anything herein to the contrary, no Bond shall bear interest in excess of the Maximum Rate. The initial Interest Rate Period for any Series of Bonds (other than the Initial Interest Rate Period for the Series 2023_ Bonds) shall be established pursuant to the related Supplemental Indenture.
Section 2.5 Daily Interest Rate Period.
(a) Determination of Daily Interest Rates. During each Daily Interest Rate Period for a Series of Bonds, the Bonds of such Series shall bear interest at the Daily Interest Rate, which shall be determined by the Remarketing Agent on or before 11:00 a.m., New York City time, on each Business Day for such Business Day. The Remarketing Agent will advise the Trustee by Electronic Means of the final Daily Interest Rate by 12:00 noon, New York City time, on the day such rate is determined. The Daily Interest Rate shall be the rate of interest per annum determined by the Remarketing Agent to be the minimum interest rate which, if borne by the Bonds of the applicable Series, would enable the Remarketing Agent to sell the Bonds of such Series on that Business Day at a price (without regard to accrued interest) equal to 100% of the principal amount thereof. With respect to any day that is not a Business Day, the Daily Interest Rate for that day shall be the same Daily Interest Rate established for the immediately preceding Business Day.
In the event the Remarketing Agent fails to establish a Daily Interest Rate for any Business Day, then the Daily Interest Rate for that Business Day shall be the Daily Interest Rate for the immediately preceding Business Day if the Daily Interest Rate for the immediately preceding Business Day was established by the Remarketing Agent. Subject to the provisions of Section 2.10(d), in the event that the Daily Interest Rate for the immediately preceding Business Day was not determined by the Remarketing Agent, or in the event that the Daily Interest Rate determined by the Remarketing Agent shall be held to be invalid or unenforceable by a court of law, then the Daily Interest Rate shall be deemed to be equal to the SIFMA Index on the Business Day such Daily Interest Rate would otherwise be determined as provided herein for such Daily Interest Rate Period.
(b) Conversion to Daily Interest Rate Period. Subject to Section 2.10, at any time the Issuer, in a Written Direction of the Issuer delivered to the Trustee and the Remarketing Agent (if any), may elect that a Series of Bonds shall bear interest at a Daily Interest Rate. Such direction of the Issuer shall specify the proposed effective date of such Conversion to a Daily Interest Rate Period, which shall be a Business Day not earlier than the 30th day following the second Business Day after receipt by the Trustee of the Written Direction of the Issuer, and either (A) in the case of a Conversion from a Commercial Paper Interest Rate Period, an Index Rate Period or a Term Rate Period, the day immediately following the last day of such Interest Rate Period, or (B) a day on which all of the Outstanding Bonds of such Series are subject to optional redemption pursuant to Section 4.3(b) or an applicable Supplemental Indenture. In addition, such direction shall be accompanied by a form of notice required by Section 2.5(c) and the form of a Favorable Opinion of Bond Counsel proposed to be delivered on the effective date of the Conversion to the Daily Interest Rate Period. Upon the Conversion of any Series of Bonds to the Daily Interest Rate Period and until the day immediately preceding the effective date of the next 4877-9956-3567.4
39 succeeding Interest Rate Period under the terms of this Indenture, the interest rate borne by such Series of Bonds shall be a Daily Interest Rate as provided in Section 2.5(a). (c) Notice of Conversion to Daily Interest Rate Period. Following timely receipt of a Written Direction of the Issuer directing the Conversion of a Series of Bonds to the Daily Interest Rate Period as provided in Section 2.5(b), the Trustee shall give notice by first class mail of the Conversion of such Bonds to bear interest in a Daily Interest Rate Period to the Owners of such Bonds not less than 30 days prior to the proposed effective date of such Daily Interest Rate Period. Such notice shall state: (i) that the Interest Rate Period for such Bonds will be converted to a Daily Interest Rate Period unless (A) the Issuer rescinds its election to convert the Interest Rate Period for the Bonds of such Series to a Daily Interest Rate Period as provided in Section 2.10(b) or (B) Bond Counsel shall fail to deliver a Favorable Opinion of Bond Counsel as to such Conversion on the applicable Conversion Date; (ii) the proposed Conversion Date to the Daily Interest Rate Period; (iii) that the Bonds of such Series are subject to mandatory tender for purchase on the proposed Conversion Date unless the Issuer rescinds its election to convert the Interest Rate Period for the Bonds of such Series to a Daily Interest Rate Period as provided in Section 2.10(b); and (iv) the applicable Purchase Price and the place of delivery for purchase of such Bonds.
Section 2.6 Weekly Interest Rate Period.
(a) Determination of Weekly Interest Rates. The Weekly Interest Rate for the initial Weekly Interest Rate Period following the issuance of a Series of Bonds bearing interest in a Weekly Interest Rate Period or Conversion of a Series of Bonds to a Weekly Interest Rate Period shall be determined on or prior to the first day of such Weekly Interest Rate Period and shall apply to the period commencing on the first day of such Weekly Interest Rate Period and ending on the succeeding Wednesday (whether or not a Business Day). Thereafter, during each Weekly Interest Rate Period for a Series of Bonds, the Bonds of such Series shall bear interest at the Weekly Interest Rate, which shall be determined by the Remarketing Agent by no later than 5:00 p.m., New York City time, on Wednesday of each week during such Weekly Interest Rate Period, or if such day shall not be a Business Day, then on the next succeeding Business Day. Each Weekly Interest Rate so determined shall apply to the period commencing on Thursday (whether or not a Business Day) and ending on the next succeeding Wednesday (whether or not a Business Day), unless such Weekly Interest Rate Period shall end on a day other than Wednesday, in which event the last Weekly Interest Rate for such Weekly Interest Rate Period shall apply to the period commencing on Thursday (whether or not a Business Day) and ending on the last day of such Weekly Interest Rate Period. The Weekly Interest Rate shall be the rate of interest per annum determined by the Remarketing Agent to be the minimum interest rate which, if borne by the Bonds of the applicable Series, would enable the Remarketing Agent to sell the Bonds of such Series on the effective date of such rate at a price (without regard to accrued interest) equal to 100% of the principal amount thereof. In the event that the Remarketing Agent fails to establish a Weekly Interest Rate for any week, then the Weekly Interest Rate for such week shall be the same as the Weekly Interest Rate for the immediately preceding week if the Weekly Interest Rate for such preceding week was determined by the Remarketing Agent. Subject to the provisions of Section 2.10(d), in the event that the Weekly Interest Rate for the immediately preceding week was not determined by the Remarketing Agent, or in the event that the Weekly Interest Rate determined by the Remarketing Agent shall be held to be invalid or unenforceable by a court of 4877-9956-3567.4
40 law, then the interest rate for such week shall be equal to the SIFMA Index on the day such Weekly Interest Rate would otherwise be determined as provided herein for such Weekly Interest Rate Period.
(b) Conversion to Weekly Interest Rate Period. Subject to Section 2.10, at any time, the Issuer, in a Written Direction of the Issuer delivered to the Trustee and the Remarketing Agent (if any), may elect that a Series of Bonds shall bear interest at a Weekly Interest Rate. Such direction of the Issuer shall specify the proposed effective date of such Conversion to a Weekly Interest Rate Period, which shall be a Business Day not earlier than the later of (a) the 30th day following the second Business Day after receipt by the Trustee of such Written Direction of the Issuer, and either (A) in the case of a Conversion from a Commercial Paper Interest Rate Period, an Index Rate Period or a Term Rate Period, the day immediately following the last day of such Interest Rate Period, or (B) a day on which all of the Outstanding Bonds of such Series are subject to optional redemption pursuant to Section 4.3(b) or an applicable Supplemental Indenture. In addition, such direction shall be accompanied by a form of notice required by Section 2.6(c) and the form of a Favorable Opinion of Bond Counsel proposed to be delivered on the effective date of the Conversion to the Weekly Interest Rate Period. Upon Conversion of any Series of Bonds to the Weekly Interest Rate Period and until the day immediately preceding the effective date of the next succeeding Interest Rate Period under the terms of this Indenture, the interest rate borne by such Series of Bonds shall be a Weekly Interest Rate as provided in Section 2.6(a). (c) Notice of Conversion to Weekly Interest Rate. Following timely receipt of a Written Direction of the Issuer directing the Conversion of a Series of Bonds to the Weekly Interest Rate Period as provided in Section 2.6(b), the Trustee shall give notice by first-class mail of the Conversion of such Bonds to bear interest in a Weekly Interest Rate Period to the Owners of such Bonds not less than 30 days prior to the proposed effective date of such Weekly Interest Rate Period. Such notice shall state: (i) that the Interest Rate Period on such Bonds will be converted to a Weekly Interest Rate unless (A) the Issuer rescinds its election to convert the Interest Rate Period for the Bonds of such Series to a Daily Interest Rate Period as provided in Section 2.10(b) or (B) Bond Counsel shall fail to deliver a Favorable Opinion of Bond Counsel as to such Conversion on the applicable Conversion Date; (ii) the proposed Conversion Date to the Weekly Interest Rate Period; and (iii) that the Bonds of such Series are subject to mandatory tender for purchase on the proposed Conversion Date unless the Issuer rescinds its election to convert the Interest Rate Period for the Bonds of such Series to a Weekly Interest Rate Period as provided in Section 2.10(b); and (iv) the applicable Purchase Price and the place of delivery for purchase of such Bonds.
Section 2.7 Term Rate Period.
(a) Determination of Term Rates. For each Term Rate Period for a Series of Bonds, (i) the Issuer may by Written Notice to the Trustee delivered in connection with a Term Rate Conversion Date establish one or more Maturity Dates for the Bonds of such Series and Sinking Fund Installments for any maturities of the Bonds of such Series, and (ii) each maturity of the Bonds of such Series shall bear interest at a Term Rate; provided that the Term Rate, Maturity Dates and Sinking Fund Installments for each maturity of Bonds of any Series upon initial issuance of such Bonds, if any, shall be specified in this Indenture or a Supplemental Indenture providing for the issuance of such Series of Bonds. The Term Rate for each maturity of Bonds of a Series bearing interest in the Term Rate Period shall be determined by the Underwriter or the 4877-9956-3567.4
41 Remarketing Agent, as applicable, on a Business Day no later than the Issue Date or the Term Rate Conversion Date for such Series of Bonds, as applicable. Subject to the provisions of Section 2.7(d), each Term Rate shall be the rate of interest per annum determined by the Underwriter or the Remarketing Agent, as applicable, to be the minimum interest rate which, if borne by the Bonds of the applicable Series and maturity, would enable the Underwriter or the Remarketing Agent, as the case may be, to sell such Bonds and maturity on such date at a price (without regard to accrued interest) equal to 100% of the principal amount thereof. If, for any reason, with respect to any Series of Bonds being converted to a Term Rate Period, the Term Rate for such Term Rate Period is not determined by the Remarketing Agent on or prior to the first day of such Term Rate Period, then the Interest Rate Period for the Bonds of the applicable Series shall be a Weekly Interest Rate Period and such Weekly Interest Rate Period shall continue until such time as the Interest Rate Period for such Series of Bonds shall have been converted to a Daily Interest Rate Period, a Commercial Paper Interest Rate Period, a Term Rate Period or an Index Rate Period as provided herein.
(b) Conversion to or Continuation of Term Rate Period. Subject to Section 2.10, at any time, the Issuer, in a Written Direction of the Issuer delivered to the Trustee and the Remarketing Agent (if any), may elect that a Series of Bonds shall bear interest at Term Rates. Such direction of the Issuer shall specify (i) the proposed effective date of the Term Rate Period, which date shall be a Business Day not earlier than the 30th day following receipt by the Trustee of such Written Direction of the Issuer, and either (A) in the case of a Conversion from a Commercial Paper Interest Rate Period, an Index Rate Period or a Term Rate Period, the day immediately following the last day of such Interest Rate Period, or (B) a day on which all of the Outstanding Bonds of such Series are subject to optional redemption pursuant to Section 4.3(b) or an applicable Supplemental Indenture; (ii) the last day of such Term Rate Period, which day shall be either the day immediately prior to the Final Maturity Date for the applicable Series of Bonds, or a day which both immediately precedes a Business Day and is at least one hundred eighty-one (181) days after the effective date of the Term Rate Period; (iii) with respect to any such Term Rate Period, may specify redemption prices and periods different than those set forth in this Indenture or the applicable Supplemental Indenture providing for the issuance of such Series of Bonds, subject to the Favorable Opinion of Bond Counsel as provided in Section 2.7(b)(iii). In addition, such direction shall be accompanied by the form of a Favorable Opinion of Bond Counsel proposed to be delivered on the Term Rate Conversion Date and by a form of the notice to be mailed by the Trustee as provided in Section 2.7(c).
Upon Conversion of any Series of Bonds to the Term Rate Period and until the day immediately preceding the effective date of the next succeeding Interest Rate Period under the terms of this Indenture, the interest rate or rates borne by such Series of Bonds shall be Term Rates as provided in Section 2.7(a). The day following the last day of any Term Rate Period for a Series of Bonds shall be a Term Rate Tender Date for such Series of Bonds. After the Final Fixed Rate Conversion Date for a Series of Bonds, the Bonds of such Series shall no longer be subject to or have the benefit of the provisions of Section 4.11 through Section 4.22. (c) Notice of Conversion to or Continuation of Term Rate. Following timely receipt of a Written Direction of the Issuer directing the Conversion of a Series of Bonds to the Term Rate Period as provided in Section 2.7(b), the Trustee shall give notice by first-class mail of the Conversion of such Bonds to bear interest in a (or the establishment of another) Term Rate 4877-9956-3567.4
42 Period for a Series of Bonds to the Owners of the Bonds of such Series not less than thirty (30) days prior to the proposed effective date of such Term Rate Period. Such notice shall state: (i) that the Interest Rate Period for such Bonds shall be converted to, or continue to be, a Term Rate Period unless (A) the Issuer rescinds its election to convert the Interest Rate Period for the Bonds of such Series to a Term Rate Period as provided in Section 2.10(b) or (B) Bond Counsel shall fail to deliver a Favorable Opinion of Bond Counsel as to such Conversion on the Term Rate Conversion Date; (ii) that such Bonds are subject to mandatory tender for purchase on the Term Rate Conversion Date and setting forth the applicable Purchase Price and the place of delivery for purchase of such Bonds; and (iii) that the Bonds of such Series are subject to mandatory tender for purchase on the proposed Conversion Date unless the Issuer rescinds its election to convert the Interest Rate Period for the Bonds of such Series to a Term Rate Period as provided in Section 2.10(b); and (iv) the applicable Purchase Price and the place of delivery for purchase of such Bonds.
(d) Sale at Premium or Discount. Notwithstanding the provisions of Section 2.7(a), the Term Rate for each maturity of any Series of Bonds as initially issued, or the Term Rate for each maturity of any other Series of Bonds upon Conversion to a Term Rate Period, shall be the rate of interest per annum determined by the Underwriter or the Remarketing Agent, as applicable, to be the interest rate which, if borne by the Bonds of such Series and maturity, would enable the Underwriter or the Remarketing Agent, as applicable, to sell the Bonds of such Series and maturity at a price (without regard to accrued interest) which will result in the lowest net interest cost for the Bonds of such Series and maturity, after taking into account any premium or discount at which the Bonds of such Series and maturity are sold by the Underwriter or the Remarketing Agent, as applicable, provided that:
(i) The Underwriter or the Remarketing Agent, as applicable, certifies in writing to the Trustee and the Issuer that the sale of the Bonds of such Series at the interest rate and premium or discount specified by the Underwriter or the Remarketing Agent, as applicable, is expected to result in the lowest net interest cost for such Bonds; (ii) the Issuer consents in writing to the sale of the Bonds of such Series at such premium or discount;
(iii) In the case of the Bonds of such Series to be sold at a premium, the Underwriter or the Remarketing Agent, as applicable, shall transfer the amount of such premium to the Trustee for deposit into such Funds and Accounts as shall be specified in a Written Direction of the Issuer;
(iv) On or before the date of determination of the Term Rates for the Bonds of such Series, the Issuer delivers to the Trustee and the Remarketing Agent a form of a Favorable Opinion of Bond Counsel proposed to be delivered on the Term Rate Conversion Date; and
(v) On or before the Conversion Date, a Favorable Opinion of Bond Counsel shall have been delivered.
4877-9956-3567.4
43 Section 2.8 Commercial Paper Interest Rate Periods.
(a) Determination of CP Interest Terms and CP Interest Term Rates. During each Commercial Paper Interest Rate Period for a Series of Bonds, each Bond of such Series shall bear interest during each CP Interest Term for such Bond at the CP Interest Term Rate for such Bond. The CP Interest Term and the CP Interest Term Rate for each Bond need not be the same for any two Bonds of such Series, even if determined on the same date. Each of such CP Interest Terms and CP Interest Term Rates for each Bond shall be determined by the Remarketing Agent no later than the first day of each CP Interest Term. Each CP Interest Term shall be for a period of days within the range or ranges announced as possible CP Interest Terms no later than 9:30 a.m., New York City time, on the first day of each CP Interest Term by the Remarketing Agent. Each CP Interest Term for each Bond of the applicable Series shall be a period of not more than two hundred seventy (270) days, determined by the Remarketing Agent to be the period which, together with all other CP Interest Terms for all Bonds of the applicable Series then Outstanding, will result in the lowest overall interest expense on such Bonds over the next succeeding two hundred seventy (270) days. Each CP Interest Term shall end on either a day which immediately precedes a Business Day or on the day immediately preceding the Final Maturity Date for the applicable Series of Bonds. If, for any reason, a CP Interest Term for any Bond cannot be so determined by the Remarketing Agent, or if the determination of such CP Interest Term is held by a court of law to be invalid or unenforceable, then such CP Interest Term shall be thirty (30) days, but if the last day so determined shall not be a day immediately preceding a Business Day, such CP Interest Term shall end on the first day immediately preceding the Business Day next succeeding such last day, or if such last day would be after the day immediately preceding the Final Maturity Date for the applicable Series of Bonds, shall end on the day immediately preceding such Final Maturity Date. In determining the number of days in each CP Interest Term, the Remarketing Agent shall take into account the following factors: (i) existing short-term, tax-exempt market rates and indices of such short-term rates; (ii) the existing market supply and demand for short-term tax-exempt securities; (iii) existing yield curves for short-term and long-term tax-exempt securities for obligations of credit quality comparable to the Bonds of the applicable Series; (iv) general economic conditions; (v) industry economic and financial conditions that may affect or be relevant to the Bonds of the applicable Series; (vi) the CP Interest Terms of other Bonds of the applicable Series; and (vii) such other facts, circumstances and conditions pertaining to financial markets as the Remarketing Agent, in its sole discretion, shall determine to be relevant.
The CP Interest Term Rate for each CP Interest Term for each Bond in a Commercial Paper Interest Rate Period shall be the rate of interest per annum determined by the Remarketing Agent to be the minimum interest rate which, if borne by such Bond, would enable the Remarketing Agent to sell such Bond on the effective date of such rate at a price equal to the principal amount thereof. Subject to the provisions of Section 2.10(d), if, for any reason, a CP Interest Term Rate for any Bond in a Commercial Paper Interest Rate Period is not so established by the Remarketing Agent for any CP Interest Term, or if such CP Interest Term Rate is determined by a court of law to be invalid or unenforceable, then the CP Interest Term Rate for such CP Interest Term shall be a rate per annum equal to the SIFMA Index on the first day of such CP Interest Term. (b) Conversion to Commercial Paper Interest Rate Period. Subject to Section 2.10, at any time, the Issuer, in a Written Direction of the Issuer to the Trustee and the 4877-9956-3567.4
44 Remarketing Agent (if any), may elect that a Series of Bonds shall bear interest at CP Interest Term Rates. Such Written Direction of the Issuer shall specify (i) the proposed effective date of the Commercial Paper Interest Rate Period, which shall be a Business Day not earlier than the thirtieth (30th) day following the second Business Day after receipt by the Trustee of such direction, and either (A) in the case of a Conversion from a Commercial Paper Interest Rate Period, an Index Rate Period or a Term Rate Period, the day immediately following the last day of such Interest Rate Period, or (B) a day on which all of the Outstanding Bonds of such Series are subject to optional redemption pursuant to Section 4.3(b) or an applicable Supplemental Indenture. In addition, the Written Direction of the Issuer shall be accompanied by the form of a Favorable Opinion of Bond Counsel proposed to be delivered on the effective date of the Conversion to the Commercial Paper Interest Rate Period and a form of the notice to be mailed by the Trustee pursuant to Section 2.8(c). Upon Conversion of any Series of Bonds to the Commercial Paper Interest Rate Period and until the day immediately preceding the effective date of the next succeeding Interest Rate Period under the terms of this Indenture, each Bond of such Series shall bear interest at a CP Interest Term Rate applicable to the CP Interest Term then in effect for such Bond, which may differ from the CP Interest Term Rate and CP Interest Term applicable to other Bonds of such Series.
(c) Notice of Conversion to CP Interest Term Rates. Following timely receipt of a Written Direction of the Issuer directing the Conversion of a Series of Bonds to the Commercial Paper Interest Rate Period as provided in Section 2.8(b), the Trustee shall give notice by first-class mail of the Conversion of such Bonds to bear interest in a Commercial Paper Interest Rate Period to the Owners of the Bonds of the applicable Series not less than thirty (30) days prior to the proposed effective date of such Commercial Paper Interest Rate Period. Such notice shall state: (i) that such Bonds shall bear interest at CP Interest Term Rates unless (A) the Issuer rescinds its election to convert the Interest Rate Period for the Bonds of such Series to a Commercial Paper Interest Rate Period as provided in
Section 2.10(b) or (B) Bond Counsel shall fail to deliver a Favorable Opinion of Bond Counsel as to such Conversion on the applicable Conversion Date; (ii) the proposed Conversion Date to the Commercial Paper Interest Rate Period; and (iii) that Bonds of such Bonds are subject to mandatory tender for purchase on such proposed Conversion Date unless the Issuer rescinds its election to convert the Interest Rate Period for the Bonds of such Series to a Commercial Paper Interest Rate Period as provided in Section 2.10(b); and (iv) the applicable Purchase Price and the place of delivery for purchase of such Bonds.
(d) Conversion from Commercial Paper Interest Rate Period. Subject to Section 2.10(b), at any time during a Commercial Paper Interest Rate Period for a Series of Bonds, the Issuer may elect, pursuant to Section 2.5(b), Section 2.6(b), Section 2.7(b) or Section 2.9(c), that such Bonds no longer shall bear interest at CP Interest Term Rates and shall instead bear interest at a Daily Interest Rate, a Weekly Interest Rate, a Term Rate or an Index Rate, as specified in such election. In connection with any such election, and notwithstanding any provision contained in this Section 2.8 to the contrary, each CP Interest Term established by the Remarketing Agent for the Bonds shall end on the same date in order to facilitate the Conversion of such Bonds.
The date on which all CP Interest Terms determined for the Bonds end shall be the last day of the then-current Commercial Paper Interest Rate Period and the day next succeeding such date shall 4877-9956-3567.4
45 be the effective date of the Daily Interest Rate Period, Weekly Interest Rate Period, Term Rate Period or Index Rate Period elected by the Issuer for such Bonds.
Section 2.9 Index Rate Periods.
(a) Determination of Applicable Spread and Applicable Factor. In connection with the issuance of a Series of Bonds bearing interest at an Index Rate, or the Conversion of the Interest Rate Period for a Series of Bonds to an Index Rate Period, the Underwriter or the Remarketing Agent, as applicable, shall determine the Applicable Spread and, if applicable, the Applicable Factor, and shall specify the same in the Index Rate Determination Certificate for the applicable Index Rate Period. The Applicable Spread and any Applicable Factor for an Index Rate Period shall be such amount or percentage as shall result in the minimum interest rate which, if borne by the Bonds of the applicable Series as of the first day of the applicable Index Rate Period, under Prevailing Market Conditions, would enable the Underwriter or the Remarketing Agent, as applicable, to sell the Bonds at a price equal to one hundred percent (100%) of the aggregate principal amount of such Bonds on the first day of the applicable Index Rate Period. (b) Determination of Index Rate.
(i) During each Index Rate Period for a Series of Bonds, such Bonds shall bear interest at an Index Rate, as specified in the applicable Index Rate Determination Certificate delivered to the Trustee on the first day of such Interest Rate Period. (ii) With respect to each SIFMA Index Rate Period, the Calculation Agent shall (A) determine the SIFMA Index by 4:00 p.m., New York City time, on each Wednesday or, if such Wednesday is not a Business Day, the Business Day immediately succeeding such Wednesday, and (B) determine the SIFMA Index Rate at or before 12:00 noon, New York City time, on each Index Rate Reset Date. The Calculation Agent shall furnish each SIFMA Index Rate so determined to the Issuer and the Trustee by Electronic Means not later than each Index Rate Reset Date.
(iii) With respect to each SOFR Index Rate Period, the Calculation Agent shall (A) determine and provide to the Trustee by Electronic Means the SOFR Index by 4:00 p.m., New York City time, on each SOFR Publish Date, and (B) determine and provide to the Trustee by Electronic Means the SOFR Index Rate at or before 12:00 noon, New York City time, on each SOFR Effective Date.
(iv) During any Index Rate Period, interest shall be computed on the basis of a 365 or 366 day year and actual days elapsed. The Calculation Agent shall calculate and provide by Electronic Means to the Issuer and the Trustee the amount of interest due and payable on each Series of Bonds bearing interest at an Index Rate (A) with respect to a Series of Bonds bearing interest at the SIFMA Index Rate, on or prior to each Interest Payment Date, and (B) with respect to a Series of Bonds bearing interest at the SOFR Index Rate, on each Interest Payment Date, which in the case of a Series of Bonds bearing interest at the SOFR Index Rate shall be the SOFR Interest Calculation Date. The amount of interest due on a Series of Bonds bearing interest at the SIFMA Index Rate on any Interest Payment Date shall be calculated on the basis of the actual number of days in 4877-9956-3567.4
46 the calendar month immediately preceding such Interest Payment Date. The amount of interest due on a Series of Bonds bearing interest at the SOFR Index Rate on any Interest Payment Date shall be calculated on the basis of the actual number of days in the SOFR Accrual Period immediately preceding such Interest Payment Date. All percentages resulting from any step in the calculation of interest on a Series of Bonds while in an Index Rate Period will be rounded to the nearest six decimal places (with 0.0000005 being rounded up to 0.000001).
(v) Upon the written request of any Bondholder, the Trustee shall confirm the applicable Index Rate then in effect.
(vi) In determining the Index Rate that any Bond shall bear as provided in this Section 2.9, neither the Underwriter nor the Remarketing Agent, as applicable, the Calculation Agent, nor the Trustee shall have any liability to the Issuer or the Holder of such Bond, except for its negligence or willful misconduct. (vii) If, during any Index Rate Period, the Index or rate used to determine an Index Rate is not reported by the relevant source at the time necessary for determination of such Index Rate or otherwise ceases to be available, the Issuer or its independent financial advisor shall determine a substitute or replacement Index Rate (as applicable), including any Alternative Rate and any Adjustments, and promptly provide the same via Electronic Means to the Trustee and the Calculation Agent, together with the effective date of the substitute or replacement Index Rate, which substitute or replacement must be consistent with any corresponding substitute or replacement index designated pursuant to the relevant Interest Rate Swap.
(c) Conversion to or Continuation of Index Rate Period. Subject to Section 2.10, at any time, the Issuer, in a Written Direction of the Issuer delivered to the Trustee and the Remarketing Agent (if any), may elect that a Series of Bonds shall bear interest at an Index Rate. Such direction of the Issuer shall specify the proposed effective date of the Index Rate Period, which date shall be a Business Day not earlier than the 30th day following the second Business Day after receipt by the Trustee of the Written Direction of the Issuer, and either (A) in the case of a Conversion from a Commercial Paper Interest Rate Period, an Index Rate Period or a Term Rate Period, the day immediately following the last day of such Interest Rate Period, or (B) a day on which all of the Outstanding Bonds of such Series are subject to optional redemption pursuant to Section 4.3(b) or an applicable Supplemental Indenture; (ii) the last day of such Index Rate Period, which day shall be either the day immediately prior to the Final Maturity Date for the applicable Series of Bonds, or a day which immediately precedes a Business Day. In addition, such direction of the Issuer shall be accompanied by the form of a Favorable Opinion of Bond Counsel proposed to be delivered on the Conversion Date and a form of the notice to be mailed by the Trustee pursuant to Section 2.9(d).
(d) Notice of Conversion to or Continuation of Index Rate. Following timely receipt of a Written Direction of the Issuer directing the Conversion of a Series of Bonds to the Index Rate Period as provided in Section 2.9(c), the Trustee shall give notice by first-class mail of the Conversion of such Bonds to bear interest in a (or the establishment of another) Index Rate Period for a Series of Bonds to the Owners of the Bonds of such Series not less than thirty (30) 4877-9956-3567.4
47 days prior to the proposed effective date of such Index Rate Period. Such notice shall state: (i) that the Interest Rate Period for such Bonds shall be converted to, or continue to be, an Index Rate Period unless (A) the Issuer rescinds its election to convert the Interest Rate Period for the Bonds of such Series to an Index Rate Period as provided in Section 2.10(b) or (B) Bond Counsel shall fail to deliver a Favorable Opinion of Bond Counsel as to such Conversion on the Index Rate Conversion Date; (ii) that such Bonds are subject to mandatory tender for purchase on the Index Rate Conversion Date and setting forth the applicable Purchase Price and the place of delivery for purchase of such Bonds; and (iii) that the Bonds of such Series are subject to mandatory tender for purchase on the proposed Conversion Date unless the Issuer rescinds its election to convert the Interest Rate Period for the Bonds of such Series to an Index Rate Period as provided in Section 2.10(b); and (iv) the applicable Purchase Price and the place of delivery for purchase of such Bonds.
Section 2.10 Notice of Conversion.
(a) In the event that the Issuer shall elect to convert the Interest Rate Period for a Series of Bonds to a Daily Interest Rate Period, a Weekly Interest Rate Period, a Term Rate Period, an Index Rate Period or a Commercial Paper Interest Rate Period as provided in this Article II, then the Written Direction of the Issuer required to be delivered to the Trustee by the applicable provision of this Article IIshall be given by registered or certified mail, or by Electronic Means.
(b) Notwithstanding anything in this Article II, in connection with any Conversion of the Interest Rate Period for a Series of Bonds, the Issuer shall have the right to deliver to the Trustee and the Remarketing Agent (if any), on or prior to 10:00 a.m., New York City time, on the third Business Day preceding the effective date of any such Conversion a Written Direction of the Issuer to the effect that the Issuer elects to rescind its election to make such Conversion. If the Issuer rescinds its election to make such Conversion, then the Interest Rate Period shall not be converted and the Bonds of the applicable Series shall continue to bear interest in the Daily Interest Rate Period, Weekly Interest Rate Period, Term Rate Period, Commercial Paper Interest Rate Period or Index Rate Period, as the case may be, as in effect immediately prior to such proposed Conversion, and the Term Rate Tender Date or Index Rate Tender Date, if applicable, for any such Series of Bonds shall also remain unchanged from that in effect immediately prior to such proposed Conversion.
(c) No Conversion of a Series of Bonds from one Interest Rate Period to another, and no continuation or establishment of a new Term Rate Period or Index Rate Period, shall take effect under this Indenture unless each of the following conditions, to the extent applicable, shall have been satisfied:
(i) the Trustee shall have received a Favorable Opinion of Bond Counsel with respect to such Conversion;
(ii) with respect to any Series of Bonds bearing interest at an Index Rate or a Term Rate, no Conversion may occur with respect to such Bonds earlier than (A) the Business Day following the last day of the applicable Interest Rate Period or (B) a day on 4877-9956-3567.4
48 which all of the Outstanding Bonds of such Series are subject to optional redemption pursuant to Section 4.3(b) or an applicable Supplemental Indenture; (iii) in the case of any Conversion of the Interest Rate Period for a Series of Bonds to a Daily Interest Rate Period, a Weekly Interest Rate Period or a Commercial Paper Interest Rate Period, prior to the Conversion Date the Issuer shall have appointed a Remarketing Agent and shall have executed and delivered a Remarketing Agreement with respect to such Series of Bonds, and shall have obtained a Liquidity Facility with respect to such Series of Bonds as required by Section 2.11;
(iv) in the case of a Conversion of the Interest Rate Period for a Series of Bonds to an Index Rate Period, prior to the Conversion Date the Issuer shall have appointed a Calculation Agent and executed and delivered a Calculation Agent Agreement with respect to such Series of Bonds; and
(v) the remarketing proceeds available on the Conversion Date shall not be less than the amount required to purchase all of the Bonds of such Series at the applicable Purchase Price (unless the Issuer in its sole discretion elects to transfer to the Trustee the amount of such deficiency on or before the Conversion Date). (d) If any condition to the Conversion of the Interest Rate Period for a Series of Bonds shall not have been satisfied, then the Interest Rate Period shall not be converted and the Bonds of the applicable Series shall continue in the Daily Interest Rate Period, Weekly Interest Rate Period, Index Rate Period, Term Rate Period, or Commercial Paper Interest Rate Period, as the case may be, as in effect immediately prior to such proposed Conversion (provided, that the period of any such continuing Term Rate Period shall be one year), and the Bonds of such Series shall continue to be subject to mandatory tender for purchase on the date which would have been the effective date of the Conversion as provided in Section 4.14.
Section 2.11 Liquidity Facility.
In connection with the issuance of any Series of Bonds, or the Conversion of any Series of Bonds, to bear interest in a Daily Interest Rate Period, a Weekly Interest Rate Period, an Index Rate Period or a Commercial Paper Interest Rate Period, the Issuer shall obtain a Liquidity Facility for such Series of Bonds, and the Issuer may elect to obtain a Liquidity Facility for any Series of Bonds bearing interest in a Term Rate Period or an Index Rate Period. Provisions concerning any Liquidity Facility so obtained with respect to such Series of Bonds shall be set forth in a Supplemental Indenture.
Section 2.12 Provisions Regarding Commodity Swap.
(a) In connection with the Clean Energy Project, the Issuer shall enter into the initial Commodity Swap with the Commodity Swap Counterparty. The following shall apply to the Commodity Swap:
(i) The method for the calculation of the Commodity Swap Payments and Commodity Swap Receipts, as applicable, and the scheduled payment dates therefor, are set forth in Schedule II hereto.
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49 (ii) Commodity Swap Payments shall be made by the Trustee for the account of the Issuer from the Operating Fund and thereafter, if required, from the Commodity Reserve Account (to the extent of amounts available therein and subject to the terms of the Issuer Custodial Agreements).
(iii) Commodity Swap Receipts shall be payable directly to the Trustee for the account of the Issuer and shall be deposited directly into the Revenue Fund. (b) The following shall apply with respect to restrictions on replacement and termination of the Commodity Swap:
(i) Except as provided in clause (c) below, the Issuer agrees that it will not exercise any right to declare an early termination date under a Commodity Swap unless either (A) the Issuer has entered into a replacement Commodity Swap in accordance with clause (ii) or (iii) below, and such replacement Commodity Swap will be effective as of such early termination date and cover price exposure from and after such early termination date, (B) a “Product Delivery Termination Date” has occurred or been designated under (and as such term is defined in) the Master Power Supply Agreement prior to or as of such early termination date; or (C) the Issuer causes or permits the termination of the Master Power Supply Agreement prior to or as of such early termination date. (ii) The Issuer may replace the Commodity Swap (and any related guaranty of a Commodity Swap Counterparty’s obligations thereunder) with a similar agreement for the same hedging purposes with an alternate Commodity Swap Counterparty at any time upon delivery to the Trustee of a Rating Confirmation. (iii) If the Commodity Swap is subject to termination (or, in the case of clause (B) below, is terminated) by either party in accordance with its terms, then (A) the Issuer may, subject to clause (i) above, terminate the Commodity Swap if the Issuer has the right to do so, and (B) (I) the Issuer may replace such Commodity Swap by exercising its right to increase its notional quantities under a Commodity Swap with another Commodity Swap Counterparty if such Commodity Swap is in effect and is not subject to termination, or (II) if the Issuer cannot increase its notional quantities under clause (I) or if the Issuer desires to enter into a new Commodity Swap in order to reduce its notional quantities under the Commodity Swap to their level prior to an increase of such notional quantities under clause (I), the Issuer may enter into a replacement Commodity Swap with an alternate Commodity Swap Counterparty without Rating Confirmation, but only if the replacement Commodity Swap is identical in all material respects to the existing Commodity Swap, except for the identity of such Commodity Swap Counterparty, and such replacement Commodity Swap Counterparty enters into a replacement Product Supplier Custodial Agreement with the Product Supplier and the Custodian that is identical in all material respects to the existing Product Supplier Custodial Agreement for the Commodity Swap being replaced, and (1) the replacement Commodity Swap Counterparty (or its credit support provider under the Commodity Swap) is then rated at least the lower of (a) the higher of the credit rating of the Product Supplier, if any, or the Minimum Rating, or (b) the rating then assigned by each Rating Agency to the Bonds, or (2) the Commodity 4877-9956-3567.4
50 Swap Counterparty provides such collateral and security arrangements as the Issuer shall determine to be necessary.
(c) The following shall apply with respect to the mandatory termination of the Commodity Swap and Master Power Supply Agreement:
(i) Upon the occurrence of a Commodity Swap Mandatory Termination Event, the Issuer shall (A) notify the Product Supplier of such event pursuant to Section 17.5(b) of the Master Power Supply Agreement, and (B) in accordance with Section 17.5 of the Master Power Supply Agreement, either (I) replace such Commodity Swap by exercising its right to increase its notional quantities under a Commodity Swap with another Commodity Swap Counterparty if such Commodity Swap is in effect and is not subject to termination and, subsequent to such replacement, cooperate in good faith with the Product Supplier to locate replacement agreements with another Swap Counterparty and enter into a replacement Commodity Swap as provided in the Master Power Supply Agreement, and otherwise (II) use its good faith efforts to replace such Commodity Swap with an alternate Commodity Swap during the replacement period contemplated by Section 17.5 of the Master Power Supply Agreement, or an “Alternate Replacement Period” as hereinafter defined, as applicable, subject to the conditions of subsection (b)(ii) or (b)(iii) above. An “Alternate Replacement Period” shall be applicable during any period that the Custodian, under the terms of the Custodial Agreements, is making payments and shall begin upon the occurrence of a Commodity Swap Mandatory Termination Event and end upon the sixth consecutive monthly payment by the Custodian. (ii) If the Issuer is unable to enter into an alternate Commodity Swap pursuant to clause (i)(B) above during such replacement period or Alternate Replacement Period, as applicable, the Issuer shall (A) designate a Product Delivery Termination Date for the Master Power Supply Agreement in accordance with Section 17.4 of the Master Power Supply Agreement, with such Product Delivery Termination Date occurring immediately at the end of such replacement period, and (B) designate an early termination date for the applicable Commodity Swap pursuant to Section 6(a) thereof with such early termination date occurring concurrently with the Product Delivery Termination Date under the Master Power Supply Agreement described in clause (A) above. (iii) A “Commodity Swap Mandatory Termination Event” occurs if a Commodity Swap becomes terminable by the Issuer pursuant to Section 5(a)(vii) (Bankruptcy) or Part 1(d)(iv) (Payment Failure) of the Schedule to the Commodity Swap.
Section 2.13 Provisions Regarding Interest Rate Swap.
(a) In connection with the issuance of any Series of Bonds, or the Conversion of any Series of Bonds, to bear interest in a Daily Interest Rate Period, a Weekly Interest Rate Period, an Index Rate Period or a Commercial Paper Interest Rate Period, the Issuer shall enter into an Interest Rate Swap with an Interest Rate Swap Counterparty with respect to such Series of Bonds. The following shall apply to the Interest Rate Swap:
4877-9956-3567.4
51 (i) The method for the calculation of the Interest Rate Swap Payments and Interest Rate Swap Receipts, as applicable, and the scheduled payment dates therefor are set forth in the Interest Rate Swap;
(ii) Interest Rate Swap Payments shall be made by the Trustee for the account of the Issuer out of the Debt Service Account (to the extent of amounts available therein) on parity with principal and interest payments on Bonds; and (iii) Interest Rate Swap Receipts shall be payable directly to the Trustee for the account of the Issuer and shall be deposited directly into the Debt Service Account. (b) The following shall apply with respect to restrictions on replacement and termination of the Interest Rate Swap:
(i) the Issuer agrees that it will not exercise any right to declare an early termination date under the Interest Rate Swap unless either (a) the Issuer has entered into a replacement Interest Rate Swap in accordance with clause (ii) and (iii) below, and such replacement Interest Rate Swap will be effective as of such early termination date and cover interest rate exposure from and after such early termination date, or (b) in all other cases, the Master Power Supply Agreement will terminate prior to or as of such early termination date.
(ii) the Issuer may replace an Interest Rate Swap (and any related guaranty of the Interest Rate Swap Counterparty’s obligations thereunder) with a similar agreement for the same hedging purposes with an alternate Interest Rate Swap Counterparty at any time upon delivery to the Trustee of a Rating Confirmation. (iii) If an Interest Rate Swap is subject to termination (or, in the case of clause (B) below, is terminated) by either party in accordance with its terms, then (A) the Issuer may, subject to clause (i) above, terminate such Interest Rate Swap if the Issuer has the right to do so, and (B) the Issuer may enter into a replacement Interest Rate Swap with an alternate Interest Rate Swap Counterparty without Rating Confirmation, but only if the replacement Interest Rate Swap is identical in all material respects to the existing Interest Rate Swap, except for the identity of the Interest Rate Swap Counterparty, and (1) the alternate Interest Rate Swap Counterparty (or its credit support provider under the Interest Rate Swap) is then rated at least the lower of (a) the Minimum Rating or (b) the rating then assigned by each Rating Agency to the Bonds, or (2) the Interest Rate Swap Counterparty provides such collateral and security arrangements as the Issuer shall determine to be necessary.
4877-9956-3567.4
52 ARTICLE III
GENERAL TERMS AND PROVISIONS OF BONDS
Section 3.1 Medium of Payment; Form and Date; Letters and Numbers. (a) The Bonds shall be payable, with respect to interest, principal and Redemption Price, in any coin or currency of the United States of America which at the time of payment is legal tender for the payment of public and private debts. (b) The Bonds may be issued only in the form of fully registered Bonds without coupons, in Authorized Denominations. The Bonds shall be in substantially the form set forth in Exhibit A hereto, and may be printed, engraved, typewritten or otherwise produced. (c) Unless the Issuer shall otherwise direct, the Bonds shall be numbered from one upward, with a separate designation for each Series.
Section 3.2 Legends. The Bonds may contain or have endorsed thereon such provisions, specifications and descriptive words not inconsistent with the provisions of this Indenture as may be necessary or desirable to comply with custom, the rules of any securities exchange or commission or brokerage board, or otherwise, as may be determined by the Issuer prior to the authentication and delivery thereof.
Section 3.3 Execution and Authentication.
(a) The Issuer and the Trustee agree that the Electronic Signature of a party to this Indenture, including all acknowledgements, authorizations, directions, waivers and consents thereto (or any amendment or supplement thereto) shall be as valid as an original signature of such party and shall be effective to bind such party to this Indenture. The Issuer and the Trustee agree that any Electronically Signed Document (including this Indenture) shall be deemed (i) to be “written” or “be in writing,” (ii) to have been signed, and (iii) to constitute a record established and maintained in the ordinary course of business and an original written record when printed from electronic files.
(b) The Bonds shall be executed on behalf of the Issuer by the manual or facsimile signature the Chair or any other Authorized Officer of the Issuer, and attested by the manual or facsimile signature of the Secretary of the Issuer or any other Authorized Officer. In case any one or more of the officers who shall have signed any of the Bonds shall cease to be such officer before the Bonds so signed shall have been authenticated and delivered by the Trustee, such Bonds may, nevertheless, be authenticated and delivered as herein provided, and may be issued as if the Persons who signed such Bonds had not ceased to hold such offices. Any Bond may be signed on behalf of the Issuer by such Persons as at the time of the execution of such Bonds shall be duly authorized or hold the proper office in the Issuer, although at the date borne by the Bonds such Persons may not have been so authorized or have held such office. (c) The Bonds shall bear thereon a certificate of authentication, in the form set forth in Exhibit A hereto, executed manually by the Trustee. Only such Bonds as shall bear thereon such certificate of authentication shall be entitled to any right or benefit under this Indenture, and 4877-9956-3567.4
53 no Bond shall be valid or obligatory for any purpose until such certificate of authentication shall have been duly executed by the Trustee. Such certificate of the Trustee upon any Bond executed on behalf of the Issuer shall be conclusive evidence that the Bond so authenticated has been duly authenticated and delivered under this Indenture and that the Holder thereof is entitled to the benefits of this Indenture.
Section 3.4 Exchange, Transfer and Registry.
(a) The Bonds shall be registered and transferred only upon the books held and controlled by the Bond Registrar and kept for such purposes at the designated corporate trust office of the Bond Registrar, and may be transferred by the registered owner thereof in person or by its attorney duly authorized in writing, upon surrender thereof together with a written instrument of transfer, in form and with guaranty of signature satisfactory to the Bond Registrar duly executed by the registered owner or its duly authorized attorney and in compliance with applicable terms of this Indenture. Upon the registration of transfer of any Bond, the Issuer shall issue in the name of the transferee a new Bond or Bonds of the same Series, aggregate principal amount and maturity as the surrendered Bond.
(b) The registered owner of any Bond or Bonds of one or more denominations shall have the right to exchange such Bond or Bonds for a new Bond or Bonds of any denomination then authorized for such Bond or Bonds of the same Series, aggregate principal amount and maturity of the surrendered Bond or Bonds. Such Bond or Bonds shall be exchanged by the Issuer for a new Bond or Bonds upon the request of the registered owner thereof in person or by its attorney duly authorized in writing, upon surrender of such Bond or Bonds together with a written instrument requesting such exchange, in form and with guaranty of signature satisfactory to the Bond Registrar duly executed by the registered owner or its duly authorized attorney. (c) The Issuer and each Fiduciary may deem and treat the Person in whose name any Bond shall be registered upon the Bond registration books held by the Bond Registrar as the absolute owner of such Bond, whether such Bond shall be overdue or not, for the purpose of receiving payment of, or on account of, the principal and Redemption Price, if any, of and interest on such Bond and for all other purposes, and all such payments so made to any such registered owner or upon its order shall be valid and effectual to satisfy and discharge the liability upon such Bond to the extent of the sum or sums so paid, and neither the Issuer nor any Fiduciary shall be affected by any notice to the contrary.
Section 3.5 Regulations with Respect to Exchanges and Registration of Transfers. In all cases in which the privilege of exchanging or registering the transfer of Bonds is exercised, the Issuer shall execute and the Trustee shall authenticate and deliver Bonds in accordance with the provisions of this Indenture. All Bonds surrendered in any such exchanges or registration of transfer shall forthwith be delivered to the Trustee and cancelled by the Trustee. Prior to every such exchange or registration of transfer of Bonds, whether temporary or definitive, the Issuer or the Bond Registrar may require the Holder to pay an amount sufficient to reimburse it for any tax, fee or other governmental charge required to be paid with respect to such exchange or transfer.
Unless otherwise provided in a Supplemental Indenture, neither the Issuer nor the Bond Registrar shall be required (a) to register the transfer or exchange of Bonds for the period next preceding any Interest Payment Date for the Bonds, beginning with the Regular Record Date for such Interest 4877-9956-3567.4
54 Payment Date and ending on such Interest Payment Date, or for the period next preceding any date for the proposed payment of Defaulted Interest with respect to such Bonds beginning with the Special Record Date for the date of such proposed payment and ending on the date of such proposed payment, (b) to register the transfer or exchange of Bonds for a period beginning 15 days before the mailing of any notice of redemption of such Bonds and ending on the day of such mailing, or (c) to register the transfer or exchange of any Bonds called for redemption. Every Person that transfers Bonds shall timely provide or cause to be timely provided to the Trustee all information necessary to allow the Trustee to comply with any applicable tax reporting obligations, including without limitation any cost-basis reporting obligations under section 6045 of the Internal Revenue Code and regulations promulgated thereunder. The Trustee may rely on the information provided to it and shall have no responsibility to verify or ensure the accuracy of such information.
Section 3.6 Bonds Mutilated, Destroyed, Stolen or Lost. If any Bond becomes mutilated or is lost, stolen or destroyed, the Issuer may execute and the Trustee shall authenticate and deliver a new Bond of like Series, date of issue, maturity date, principal amount and interest rate per annum as the Bond so mutilated, lost, stolen or destroyed, provided that (a) in the case of such mutilated Bond, such Bond is first surrendered to the Trustee, (b) in the case of any such lost, stolen or destroyed Bond, there is first furnished evidence of such loss, theft or destruction, in form satisfactory to the Trustee together with indemnity satisfactory to the Trustee, (c) all other reasonable requirements of the Issuer, set forth in a Written Instrument of the Issuer delivered to the Trustee are complied with, and (d) expenses in connection with such transaction are paid by the Holder. Any Bond surrendered for registration or transfer shall be cancelled. Any such new Bonds issued pursuant to this Section 3.6 in substitution for Bonds alleged to be destroyed, stolen or lost shall constitute original additional contractual obligations on the part of the Issuer, whether or not the Bonds so alleged to be destroyed, stolen or lost be at any time enforceable by anyone, and shall be equally secured by and entitled to equal and proportionate benefits with all other Bonds issued under this Indenture, in any moneys or securities held by the Issuer or any Fiduciary for the benefit of the Bondholders.
Section 3.7 Temporary Bonds.
(a) Until the definitive Bonds are prepared, the Issuer may execute, in the same manner as is provided in Section 3.3, and upon the request of the Issuer, the Trustee shall authenticate and deliver, in lieu of definitive Bonds, but subject to the same provisions, limitations and conditions as the definitive Bonds, one or more temporary Bonds substantially of the tenor of the definitive Bonds in lieu of which such temporary Bond or Bonds are issued, and with such omissions, insertions and variations as may be appropriate to temporary Bonds. The Issuer at its own expense shall prepare and execute and, upon the surrender of such temporary Bonds for exchange and the cancellation of such surrendered temporary Bonds, the Trustee shall authenticate and, without service charge to the Owner thereof (except a sum sufficient to cover any tax, fee or other governmental charge that may be imposed in relation thereto), deliver in exchange therefor, definitive Bonds of the same aggregate principal amount and maturity as the temporary Bonds surrendered. Until so exchanged, the temporary Bonds shall in all respects be entitled to the same benefits and security as definitive Bonds authenticated and issued pursuant to this Indenture. (b) All temporary Bonds surrendered in exchange either for another temporary Bond or Bonds or for a definitive Bond or Bonds shall be forthwith cancelled by the Trustee. 4877-9956-3567.4
55 Section 3.8 Payment of Interest on Bonds; Interest Rights Preserved. Interest on any Bond which is payable, and is punctually paid or duly provided for, on any Interest Payment Date shall be paid to the Person in whose name that Bond is registered at the close of business on the Regular Record Date.
Any interest on any Bond which is payable, but is not punctually paid or duly provided for, on any Interest Payment Date (hereinafter, “Defaulted Interest”) shall forthwith cease to be payable to the Person who was the registered owner on the relevant Regular Record Date; and such Defaulted Interest shall be paid by the Issuer to the Persons in whose names the Bonds are registered at the close of business on a date (hereinafter, the “Special Record Date”) for the payment of such Defaulted Interest, which shall be fixed in the following manner. The Issuer shall notify the Bond Registrar in writing of the amount of Defaulted Interest proposed to be paid on each Bond and the date of the proposed payment, and at the same time the Issuer shall deposit with the Paying Agent an amount of money equal to the aggregate amount proposed to be paid in respect of such Defaulted Interest or shall make arrangements satisfactory to the Paying Agent for such deposit prior to the date of the proposed payment, such money when deposited to be held in trust for the benefit of the Persons entitled to such Defaulted Interest as in this Section 3.8 provided.
Thereupon the Bond Registrar shall fix a Special Record Date for the payment of such Defaulted Interest which shall be not more than 15 days nor less than 10 days prior to the date of the proposed payment and not less than 10 days after the receipt by the Bond Registrar of notice of the proposed payment. The Bond Registrar shall promptly notify the Issuer of such Special Record Date and, in the name and at the expense of the Issuer, shall cause notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor to be mailed, first class postage prepaid, to each Bondholder at its address as it appears upon the registry books, not less than 10 days prior to such Special Record Date.
Subject to the foregoing provisions of this Section 3.8, each Bond delivered under this Indenture upon registration or transfer of or in exchange for or in lieu of any other Bond shall carry the rights to interest accrued and unpaid, and to accrue, which were carried by such other Bond.
Section 3.9 Book Entry System; Appointment of Securities Depository. All Bonds shall be registered in the name of Cede & Co., as nominee for DTC, as Securities Depository, and held in the custody or for the account of the Securities Depository. A single certificate will be issued and delivered to the Securities Depository for each maturity of a Series of Bonds, and the Beneficial Owners will not receive physical delivery of Bond certificates except as provided in this Indenture. For so long as the Securities Depository shall continue to serve as securities depository for the Bonds as provided herein, all transfers of Beneficial Ownership interests will be made by book-entry only, and no investor or other party purchasing, selling or otherwise transferring Beneficial Ownership of Bonds is to receive, hold or deliver any Bond certificate.
The Issuer may, with written notice to the Trustee but without the consent of any Bondholders, appoint a successor Securities Depository and enter into an agreement with the successor Securities Depository, to establish procedures with respect to a Book-Entry System for the Bonds not inconsistent with the provisions of this Indenture. Any successor Securities Depository shall be a “clearing agency” registered under Section 17A of the Securities Exchange Act of 1934, as amended.
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56 The Issuer and the Trustee may rely conclusively upon (i) a certificate of the Securities Depository as to the identity of the Participants in the Book-Entry System with respect to the Bonds, and (ii) a certificate of any such Participant as to the identity of, and the respective principal amount of the Bonds beneficially owned by the Beneficial Owners.
Whenever, during the term of the Bonds, the Beneficial Ownership of any Series thereof is determined by a book-entry at the Securities Depository, the requirements in this Indenture of holding, delivering or transferring such Bonds shall be deemed modified to require the appropriate Person to meet the requirements of the Securities Depository as to registering or transferring the book-entry to produce the same effect. Any provision hereof permitting or requiring delivery of the Bonds shall, while such Bonds are in such Book-Entry System, be satisfied by the notation on the books of the Securities Depository in accordance with applicable state law. Notwithstanding the foregoing, the Trustee shall have no obligation or duty to monitor, determine or inquire as to compliance with any restrictions on transfer imposed under this Indenture with respect to any transfer of any interest in any security other than to require delivery of such certificates and other documentation or evidence as are expressly required by, and to do so if and when expressly required by the terms of, this Indenture, and to examine the same to determine substantial compliance as to form with the express requirements hereof.
Except as otherwise specifically provided herein with respect to the rights of Participants and Beneficial Owners, when a Book-Entry System is in effect, the Issuer and the Trustee may treat the Securities Depository (or its nominee) as the sole and exclusive owner of the Bonds registered in its name for the purposes of payment of the principal, Redemption Price or Purchase Price of and interest on such Bonds or portion thereof to be redeemed or purchased, of giving any notice permitted or required to be given to the Bondholders under this Indenture and of voting, and neither the Issuer nor the Trustee shall be affected by any notice to the contrary. Neither the Issuer nor the Trustee will have any responsibility or obligations to the Securities Depository, any Participant, any Beneficial Owner or any other Person which is not shown on the bond register, with respect to (a) the accuracy of any records maintained by the Securities Depository or any Participant; (b) the payment by the Securities Depository or by any Participant of any amount due to any Beneficial Owner in respect of the principal amount, Redemption Price or Purchase Price of, or interest on, any Bonds; (c) the delivery of any notice by the Securities Depository or any Participant; (d) the selection of the Beneficial Owners to receive payment in the event of any partial redemption of any of the Bonds; or (e) any other action taken by the Securities Depository or any Participant. The Trustee shall pay all principal or Redemption Price of and interest on the Bonds registered in the name of Cede only to or “upon the order of” the Securities Depository (as that term is used in the Uniform Commercial Code as adopted in the State and New York), and all such payments shall be valid and effective to fully satisfy and discharge the Issuer’s obligations with respect to the principal, Redemption Price or purchase price of and interest on such Bonds to the extent of the sum or sums so paid.
The Book-Entry System may be discontinued by the Trustee and the Issuer, at the Written Direction and expense of the Issuer, and the Issuer and the Trustee will cause the delivery of Bond certificates to such Beneficial Owners of the Bonds and registered in the names of such Beneficial Owners as shall be specified to the Trustee by the Securities Depository in writing, under the following circumstances:
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57 (a) The Securities Depository determines to discontinue providing its service with respect to any Bonds and no successor Securities Depository is appointed as described above.
Such a determination may be made at any time by giving 30 days’ written notice to the Issuer and the Trustee and discharging its responsibilities with respect thereto under applicable law; or (b) the Issuer determines, with written notice to the Trustee, not to continue the Book-Entry System through a Securities Depository for the Bonds.
When the Book-Entry System is not in effect, all references herein to the Securities Depository shall be of no further force or effect.
Section 3.10 Subsidy Payments.
In the event that one or more Series of Bonds are issued which qualify the Issuer to receive Subsidy Payments and the Issuer. in a Supplemental Indenture, pledges such Subsidy Payments to the repayment of the principal of, and interest on, the Bonds, then, to the extent such Subsidy Payments are received by the Trustee, they shall constitute Revenues under the Indenture.
Section 3.11 Limitation of Liability of Issuer.
Notwithstanding anything to the contrary herein or in the Bonds, all obligations of the Issuer to make payments of any kind pursuant to this Indenture are special, limited obligations of the Issuer, payable solely from, and secured solely by, the Trust Estate as and to the extent provided herein. The Issuer shall not be required to advance any moneys derived from any source other than the Revenues and other assets pledged under this Indenture for any of the purposes in this Indenture mentioned, whether for the payment of the principal of or interest on the Bonds or for any other purpose of this Indenture. Neither the faith and credit of the Issuer nor the taxing power of the State or any political subdivision thereof is pledged to payments pursuant to this Indenture or the Bonds. 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 Indenture or the Clean Energy Project, except solely to the extent Revenues are received for the payment thereof.
ARTICLE IV
REDEMPTION OF BONDS AND TENDER PROVISIONS
Section 4.1 Extraordinary Redemption.
(a) The Bonds shall be subject to mandatory redemption prior to maturity in whole, and not in part, (1) except in the case of a Failed Remarketing of Bonds bearing interest in a Term Rate Period or Index Rate Period, on the first day of the Month following the Early Termination Payment Date and (2) in the case of a Failed Remarketing, on the Term Rate Tender Date or Index Rate Tender Date, as applicable, following such Failed Remarketing, at the following Redemption Prices:
(i) in the case of a Series of Bonds bearing interest in a Term Rate Period, the Amortized Value thereof, and
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58 (ii) in the case of a Series of Bonds bearing interest in a Daily Interest Rate Period, a Weekly Interest Rate Period, a Commercial Paper Interest Rate Period or an Index Rate Period, 100% of the principal amount thereof, plus, in each case, accrued and unpaid interest to the redemption date. The Issuer shall provide the Trustee with Written Notice of the Early Termination Payment Date as provided in Section 7.11(b).
(b) The Bonds shall be subject to redemption for remediation at the direction of the Issuer prior to maturity, in whole or in part, on any date, at the then-applicable optional Redemption Price for the Bonds to be redeemed as set forth in Section 4.3, plus accrued interest to the redemption date, to the extent provided in Section 7.6(c) of the Clean Energy Purchase Contract. The Issuer shall provide the Trustee with Written Notice of the requirement for any such redemption not more than five (5) Business Days after determining that such redemption will be required.
Section 4.2 Sinking Fund Redemption.
The Series 2023_ Bonds maturing on [______ 1, 20__] shall be subject to mandatory redemption prior to their stated maturity in part (by lot) from Sinking Fund Installments, at a Redemption Price equal to the principal amount thereof, without premium, plus accrued interest to the date of redemption, on [______] 1 of each of the following years and in the following amounts:
Sinking Fund Installments
Year Principal Amount Year Principal Amount
* Stated Maturity
Section 4.3 Optional Redemption.
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59 (a) The Series 2023_ Bonds are subject to redemption at the option of the Issuer in whole or in part (in such amounts and by such maturities as may be specified by the Issuer and by lot within a maturity) on any date at a Redemption Price, calculated by a quotation agent selected by the Issuer, equal to the greater of:
(i) the sum of the present values of the remaining unpaid payments of principal and interest to be paid on the Series 2023_ Bonds to be redeemed from and including the date of redemption (not including any portion of the interest accrued and unpaid as of the redemption date) to the earlier of the stated maturity date of such Series 2023_ Bonds or the Series 2023_ Mandatory Purchase Date, discounted to the date of redemption on a semiannual basis at a discount rate equal to the Applicable Tax-Exempt Municipal Bond Rate for such Series 2023_ Bonds minus [__.__]% per annum, and (ii) the Amortized Value thereof; in each case plus accrued and unpaid interest to the date of redemption.
(b) The Series 2023_ Bonds maturing after the Series 2023_ Mandatory Purchase Date are subject to redemption at the option of the Issuer in whole or in part on and after the first Business Day of the third month preceding the Series 2023_ Mandatory Purchase Date at a Redemption Price, calculated by a quotation agent selected by the Issuer, equal to the Amortized Value thereof (as of the first Business Day of the month of redemption), plus $[__.__] per $1,000 of the principal amount thereof and accrued and unpaid interest to the date of redemption. (c) the Issuer shall provide Written Notice of the identity of the quotation agent to the Trustee.
(d) The Series 2023_ Bonds shall also be subject to redemption at the option of the Issuer, as provided in a Supplemental Indenture executed in connection with a Conversion of the Bonds.
(e) For so long as a Series of Bonds is bearing interest in an Index Rate Period, the Bonds of such Series are subject to optional redemption by the Issuer, in whole or in part (in such amounts and by such maturities as may be specified by the Issuer and at random within a maturity), on any Business Day on or after the first Business Day of the third month preceding the Index Rate Tender Date for such Series of Bonds at a Redemption Price equal to 100% of the principal amount thereof to be redeemed, plus accrued and unpaid interest to the date of redemption.
(f) For so long as a Series of Bonds is bearing interest in a Daily Interest Rate Period or a Weekly Interest Rate Period, the Bonds of such Series are subject to optional redemption by the Issuer in whole or in part (in such amounts and by such maturities as may be specified by the Issuer and at random within a maturity) on any Business Day at a Redemption Price equal to 100% of the principal amount thereof to be redeemed, plus accrued and unpaid interest to the date of redemption.
(g) For so long as a Series of Bonds is bearing interest in a Commercial Paper Interest Rate Period, each Bond of such Series is subject to optional redemption by the Issuer on the day succeeding the last day of any CP Interest Term for such Bond at a Redemption Price equal 4877-9956-3567.4
60 to 100% of the principal amount thereof to be redeemed, plus accrued and unpaid interest to the date of redemption.
(h) Notwithstanding anything to the contrary contained herein, in connection with the Conversion of a Series of Bonds from one Interest Rate Period to another or the establishment of a new Term Rate Period or Index Rate Period for a Series of Bonds, the Issuer may, in the Written Direction to the Trustee delivered in connection with such Conversion or establishment of a new Term Rate Period or Index Rate Period, designate additional or different terms upon which the Bonds of such Series will be subject to optional redemption during the new Interest Rate Period for such Series of Bonds if such additional or different terms of optional redemption are approved by Bond Counsel.
(i) In lieu of redeeming Series 2023_ Bonds pursuant to this Section 4.3, the Trustee may, upon the Written Direction of the Issuer, use such funds as may be available by the Issuer or as are otherwise available hereunder to purchase such Series 2023_ Bonds on the applicable redemption date at a Purchase Price equal to the applicable Redemption Price of such Series 2023_ Bonds. Any Series 2023_ Bonds so purchased may be remarketed in a new Interest Rate Period or may be cancelled by the Trustee, in either case as set forth in the Written Direction of the Issuer.
Section 4.4 Redemption Notice. When the Trustee receives Written Notice from the Issuer of the Issuer’s election or direction to optionally redeem Bonds, the Trustee shall give notice, in the name of the Issuer, or when redemption of Bonds is authorized or required pursuant to Section 4.1 or other than at the election or direction of the Issuer pursuant to Section 4.7, the Trustee shall give notice, at the expense and for and on behalf of the Issuer, of the redemption of such Bonds by first-class mail, postage prepaid, (i) for Term Rate Bonds, not less than 20 days (15 days in the case of redemption pursuant to Section 4.1) (or such shorter time as may be permitted by the Securities Depository) and not more than 45 days (30 days in the case of redemption pursuant to Section 4.1) prior to the redemption date and (ii) for Variable Rate Bonds, not less than 20 days (15 days in the case of redemption pursuant to Section 4.1) (or such shorter time as may be permitted by the Securities Depository) and not more than 30 days prior to the redemption date, to the registered owner of each Bond being redeemed, at its address as it appears on the books maintained by the Bond Registrar or at such address as such owner may have filed with the Trustee for that purpose, as of the Regular Record Date. In case of a redemption pursuant to Section 4.1, the notice of redemption of the Series 2023_ Bonds may (A) include a statement that, if the Series 2023_ Bonds are not redeemed for any reason, the Series 2023_ Bonds shall be subject to mandatory tender for purchase on the Series 2023_ Mandatory Purchase Date, and (B) be combined with notice of the mandatory tender of the Series 2023_ Bonds on the Series 2023_ Mandatory Purchase Date pursuant to Section 4.16.
Each notice of redemption shall identify the Bonds to be redeemed and shall state (i) the redemption date, (ii) the Redemption Price or the manner in which it will be calculated, (iii) that the Bonds called for redemption must be surrendered to collect the Redemption Price, (iv) the address or addresses of the Trustee at which the Bonds redeemed must be surrendered, and (v) that interest on the Bonds called for redemption ceases to accrue on the redemption date. 4877-9956-3567.4
61 With respect to any notice of optional redemption of Bonds, unless upon the giving of such notice such Bonds shall be deemed to have been paid within the meaning of Article XI of this Indenture, such notice shall state that such redemption shall be conditioned upon the receipt by the Trustee on or prior to the date fixed for such redemption of money sufficient to pay the Redemption Price of and interest on the Bonds to be redeemed, and that if such money shall not have been so received said notice shall be of no force and effect, and the Issuer shall not be required to redeem such Bonds. In the event that such notice of redemption contains such a condition and such money is not so received, the redemption shall not be made and the Trustee shall within a reasonable time thereafter give notice, in the manner in which the notice of redemption was given, that such money was not so received and that such redemption was not made.
In the event that the Bonds may be subject to extraordinary redemption as a result of a Failed Remarketing that could occur if the Trustee has not received the Purchase Price of the Bonds by 12:00 noon New York City time on the fifth Business Day preceding a Mandatory Purchase Date, a notice of extraordinary redemption of the Bonds pursuant to this Section 4.4 may be a conditional notice of redemption, delivered in each case not less than 15 days prior to such Mandatory Purchase Date, stating that: (a) such redemption shall be conditioned upon the Trustee’s failure to receive, by 12:00 noon New York City time on the fifth Business Day preceding such Mandatory Purchase Date, the Purchase Price of the Bonds required to be purchased on such Mandatory Purchase Date, and (b) if the full amount of the Purchase Price has been received by the Trustee by 12:00 noon New York City time on the fifth Business Day preceding such Mandatory Purchase Date, the Bonds shall be purchased pursuant to Section 4.13 or Section 4.14 hereof on such Mandatory Purchase Date rather than redeemed. If the full amount of the Purchase Price has been received by the Trustee by 12:00 noon New York City time on the fifth Business Day preceding such Mandatory Purchase Date, the Trustee shall withdraw such conditional notice of redemption prior to such Mandatory Purchase Date and the Bonds shall be purchased pursuant to Section 4.13 or Section 4.14 hereof on such Mandatory Purchase Date rather than redeemed.
Failure of the registered owner of any Bonds which are to be redeemed to receive any such notice, or any defect in such notice, shall not affect the validity of the proceedings for the redemption of any Bonds.