Governing Board and Alternates
Chair: Alice Dowdin Calvillo, City of Auburn
Vice Chair: Jeff Duncan, Town of Loomis
Wes Heathcock, City of Colfax
John Hidahl, County of El Dorado
Jim Holmes, County of Placer
Suzanne Jones, County of Placer
Greg Janda, City of Rocklin
Dan Karleskint, City of Lincoln
Dennis Thomas, City of Placerville
Alternate City of Auburn, Rachel Radell-Harris
Alternate Town of Loomis, Jan Clark-Crets
Alternate City of Colfax, David Ackerman
Alternate County of El Dorado, Lori Parlin
Alternate County of Placer, Bonnie Gore
Alternate City of Rocklin, To Be Determined
Alternate City of Lincoln, Paul Joiner
Alternate City of Placerville, Michael Saragosa
The Pioneer Board Regular Session will be live streamed and can be accessed and viewed at the following web link: https://us06web.zoom.us/j/89967227073.
Pursuant to AB 361 regarding public meetings held during the COVID-19 emergency, Board members may attend this Pioneer Governing Board Meeting via teleconference. In order to protect public health and the safety of our Placer and El Dorado County residents, public access will be entirely by remote audio/visual participation, and the meeting will be closed to in-person public participation. Residents who wish to comment should be prepared to use the Zoom platform via computer or telephone. Public comment will be opened for each agenda item in sequence.
How to Participate Using Zoom
You can join the meeting using the following link https://us06web.zoom.us/j/89967227073.
When you join the meeting, you will be muted by default. To inform the Clerk that you would like to make a public comment, you will use the “Raise Hand” feature.
Public Comment via Computer or Smartphone
If you would like to make a comment, you will use the “Raise Your Hand” feature. Please note that you should only raise your hand during the item to which you will comment. Instructions for using the “Raise Hand” feature when using a computer or mobile device can be found at the link:
https://support.zoom.us/hc/en-us/articles/205566129-Raising-your-hand-in-a-webinar Public Comment via telephone (Audio Only Option)
1. Dial 1 (669) 900-6833
2. When asked for the meeting ID, enter 899 6722 7073#
3. When asked for your participant ID, press # to continue You will be muted by default. To inform the Clerk that you would like to make a comment during each agenda item, dial *9 to “Raise your hand.” When it is your turn to speak, the clerk will identify you by the last three digits of your phone number, at that time dial *6 to unmute yourself and state your name and comment for the record. Please note that you should only raise your hand during the item to which you will comment.
Board of Directors Agenda
October 20, 2022
Pioneer Community Energy Offices
2510 Warren Drive, Suite B, Rocklin, CA 95677
3:00 PM Regular Session
3:00 PM Call to Order
I. GENERAL ADMINISTRATIVE FUNCTION – PART I
A. CALL TO ORDER
1. Roll Call
B. AGENDA REVIEW
C. PRESENTATIONS BY THE PUBLIC ON MATTERS NOT ON THE AGENDA WITHIN THE JURISDICTION OF THE BOARD Persons may address the Board on items not on this agenda. Please limit comments to 3 minutes per person. According to State Law (the Brown Act), items must first be noticed on the agenda before any discussion or action. The Board is prohibited from discussing issues not on the agenda brought to them at this time.
II. CONSENT AGENDA
1) APPROVAL OF THE CONSENT AGENDA
All items on the Consent Agenda have been recommended for approval by the Executive Director. All Consent items will be approved by a single vote. Anyone may ask to address Consent items prior to the Board acting, and the item may be moved for discussion. a) ADMINISTRATION
Approve minutes of the September 15, 2022 regular meeting. (ACTION - ECKERT) b) ADMINISTRATION
1) Determine pursuant to Government Code Section 54953(e)(1) that, as a result of the COVID-19 state of emergency, conducting in-person public meetings would present imminent risks to the health or safety of attendees at the meetings of the Board of Directors and all other legislative bodies of Pioneer Community Energy (PCE), including all of the Board-appointed Committees; and 2) Direct that the meetings of the Board of Directors and all other legislative bodies of PCE be conducted by teleconferencing, pursuant to Government Code Section 54953(e), with an option for in-person attendance of up to five Directors. (ACTION - ECKERT)
c) FINANCE & ADMINISTRATION
Receive Draft Financial Reports for August 2022. (ACTION - KOEHN) d) MARKETING & COMMUNICATIONS
Approve Customer Satisfaction Survey Incentives. (ACTION - RIFFEY) e) FINANCE & ADMINISTRATION
Adopt Resolution approving and authorizing the Executive Director to execute a Memorandum of Understanding with Special District Risk Management Authority (SDRMA) (ACTION - KOEHN)
REGULAR SESSION
III. REGULAR AGENDA
2) ADMINISTRATION & FINANCE
Adopt Resolution authorizing the execution of a power supply contract and certain other documents to enable Pioneer Community Energy to enter into a 30-year Prepay Transaction (ACTION - KOEHN)
RECOMMENDATION: Adopt Resolution authorizing the execution and delivery of a clean energy purchase contract and certain other documents in connection with the issuance by the California Community Choice Financing Authority of its clean energy project revenue bonds to finance a 30- year Prepay Transaction.
3) POWER PROCUREMENT
Adopt Resolution approving Pioneer’s 2022 Integrated Resource Plan (ACTION - KANG) RECOMMENDATION: Adopt a resolution approving the Pioneer Community Energy 2022 Integrated Resource Plan (IRP) in substantive form and authorizing submission of the IRP to the California Public Utilities Commission (CPUC) pursuant to the requirements of CPUC Rulemaking (R.) 20-05-003, under Senate Bill (SB) 350. 4) MARKETING & COMMUNICATIONS
Residential Customer Outreach (DISCUSSION - RIFFEY)
RECOMMENDATION: Receive an overview of residential customer outreach updates.
IV. GENERAL ADMINISTRATIVE FUNCTION – PART II
A. BOARD MEMBER COMMUNICATIONS
B. EXECUTIVE DIRECTOR COMMUNICATIONS
C. ITEMS FOR INFORMATION
1. mPOWER Program Report – June 2022
2. Glossary of Terms
D. ADJOURNMENT
Pioneer Community Energy is committed to ensuring that persons with disabilities are provided the resources to participate fully in its public meetings. If you are hearing impaired, we have listening devices available. If you require additional disability-related modifications or accommodations, including auxiliary aids or services, please contact the Clerk of the Board. If requested, the agenda shall be provided in appropriate alternative formats to persons with disabilities. All requests must be in writing and must be received by the Clerk five business days prior to the scheduled meeting for which you are requesting accommodation. Requests received after such time will be accommodated only if time permits.
Next Regular Meeting Scheduled for:
November 17, 2022 at 3:00 pm
County of Placer – Board of Supervisors
Affidavit of Posting
I, Teresa Willock, Board Secretary, declare under penalty of perjury that the foregoing agenda for the October 20, 2022 regular meeting of the Pioneer Community Energy Governing Board was posted and available for public review on October 15, 2022 at the offices of Pioneer Community Energy, 2510 Warren Drive, Suite B, Rocklin, CA 95677; and was available on the Pioneer website at: https://pioneercommunityenergy.org/about-us/meetings-and-agendas/ All public materials related to an item on this agenda submitted to the Governing Board after distribution of the agenda packet are also made available for public inspection on Pioneer’s website at:
https://pioneercommunityenergy.org/about-us/meetings-and-agendas/ Any document provided at the meeting by staff or by the public will be provided by the Board Clerk upon request by phone at (916) 758-8946, or by email at: [email protected].
PIONEER COMMUNITY ENERGY
GOVERNING BOARD
September 15, 2022
Minutes
Entry No. 1
Heard General Administration Functions, Part I.
Call to Order
Pioneer Community Energy Governing Board met in open session at 3:00 PM on September 15, 2022. This meeting convened at the City of Auburn Council Chamber, 1225 Lincoln Way, Auburn, California 95603.
Pursuant to Government Code section 54953(e) and other applicable provisions of the Brown Act, the meeting was conducted via live streamed teleconference accessed and viewed at the following web link:
https://us02web.zoom.us/j/85898653452 and livestream viewing at City of Auburn’s YouTube account:
https://www.youtube.com/channel/UCmZkDGdt8ce1ckCRgcX-15A/live.
Roll Call
P A Title Name Agency
x Chair Alice Dowdin Calvillo City of Auburn
x Vice Chair Jeff Duncan Town of Loomis
x - 3:10 Director Wes Heathcock City of Colfax
x Director John Hidahl County of El Dorado
x Director Jim Holmes County of Placer
x Director Greg Janda City of Rocklin
x Director Suzanne Jones County of Placer
x Director Dan Karleskint City of Lincoln
x Director Dennis Thomas City of Placerville
Chair Dowdin Calvillo presided over the meeting.
Agenda Review
Reviewed and made no revision to the meeting agenda for September 15, 2022.
Public Comment
There were no comments from members of the public on items not listed on this agenda.
Entry No. 2
Approved minutes of the July 21, 2022 regular meeting.
1) Determined pursuant to Government Code Section 54953(e)(1) that, as a result of the COVID-19 state of emergency, conducting in-person public meetings would present imminent risks to the health or safety of attendees at the meetings of the Board of Directors and all other legislative bodies of Pioneer Community Energy (PCE), including all of the Board-appointed Committees; and 2) Directed that the meetings of the Board of Directors and all other legislative bodies of PCE be conducted by teleconferencing, pursuant to Government Code Section 54953(e), with an option for in-person attendance of up to five Directors.
Received Draft Financial Reports for July 2022.
1) Adopted Resolution 2022-19 approving the attestations to the veracity of the 2021 Power Source Disclosure Report for Pioneer Standard and the associated Power Content Label. (2) Adopted Resolution 2022-20 approving the attestations to the veracity of the 2021 Power Source Disclosure Report for Green100 and the associated Power Content Label. (3) Approved the Pioneer Power Content Label Notice for distribution per Public Utilities Code Sections 398.4 and 398.5.
Received Conflict of Interest Code Amendment update.
ITEM 1a
Adopted Resolution 2022-21 approving the job description for the Commercial Coordinator and salary range for both the Commercial Coordinator and the Residential Coordinator job classifications.
MOTION: Duncan/Hidahl. Vote: 8:0:1.
ROLL CALL: Dowdin Calvillo, Duncan, Hidahl, Holmes, Janda, Jones, Karleskint, Thomas.
No/Abstain: None.
Absent: Heathcock.
Entry No. 3
Received the results of the Impact Study for the expansion of Pioneer Community Energy into Unincorporated Nevada County and City of Grass Valley.
Entry No. 4
Adopted Resolution 2022-22 authorizing staff to prepare Addendum No. 2 to Pioneer Community Energy’s Implementation Plan and Statement of Intent and Amendment No. 5 to the Joint Exercise of Powers Agreement to allow the addition of three new members, Unincorporated Nevada County, the City of Grass Valley and Nevada City.
MOTION: Hidahl/Holmes. Vote: 9:0:0.
ROLL CALL: Dowdin Calvillo, Duncan, Heathcock, Hidahl, Holmes, Janda, Jones, Karleskint, Thomas.
No/Abstain: None.
Absent: None.
Entry No. 5
Received draft Fiscal Year 2021-22 year-end Financial Reports through June 30, 2022.
Entry No. 6
Heard General Administration Functions, Part II.
A. Board Member Communications
Committee Chair Dowdin Calvillo reported that the Expansion ad hoc Committee met on September 14, 2022, to receive a presentation of the Impact Studies Report from Pacific Energy Advisors; and discussed the process for bringing the new members on board in 2024.
Chair Dowdin Calvillo also reported her activities with PCWA in support of better forestry management as it relates to effects from wildfires on water storage and hydroelectric generation. As a proactive approach needs to be taken, his will be brought to a policy committee while attending Cap-to-Cap in Washington, D.C.
Director Hidahl reported that as a result of the Caldor fire in El Dorado County, $7.8 Million in federal funding was received by the water agency; and he will share the contact for more information to any interested Member agencies.
Director Hidahl also reported that he will be remotely attending the October meeting due to participating in the League of California Cities retreat and confirmed that the El Dorado County facility would still be available for the Pioneer Board of Directors but he will not be there in person.
B. Executive Director Communications
General Counsel Khalsa provided an update as to legislation activities regarding the Brown Act.
AB 1944 has been postponed to next year; and AB 2449 was signed by the Governor on September 13, 2022.
As long as we are under the state of emergency declaration, AB 361 determinations will still allow for remote participation as currently in place. However, once the emergency is lifted, the original Brown Act rules would Governing Board Minutes
September 15, 2022
apply in that a Member attending from a different location – accessible to the public and posted on the agenda, there would be no limit to the number of meetings a member is attending remotely.
AB 2449 specifies that a minority of the body could participate remotely; at least a quorum of the members to attend in person. General Counsel Khalsa confirmed that she and Executive Director Eckert are working on the specifics as to a solution for Pioneer Community Energy.
Chair Dowdin Calvillo requested that the language regarding no in person public participation be removed from this Board’s agenda, to continue with the hybrid model and allow anyone who is interested in doing so to attend in person.
Director Hidahl commented that at times there are severe weather conditions and would not be able to drive to in person meeting; and inquired if severe weather is consider an emergency.
General Counsel Khalsa confirmed that it would be any emergency situation that prevents in person participation, not only illness.
Executive Director Eckert reported that Pioneer’s new Manager of Legislative and Regulatory Affairs will be onboard and introduced to the Board at the October meeting; expressed sympathy for the victims of the Mosquito fire; and appreciation for the City of Auburn staff and crew for hosting Pioneer for today’s meeting.
Executive Director Eckert informed the Board that the meeting location is to be determined for the October meeting.
C. Informational Items
Received the Glossary of Terms.
D. Adjournment
The meeting adjourned at 4:05 PM
ATTEST:
Minutes approved as presented by a majority vote of
the Governing Board on September 15, 2022.
Teresa Willock, Board Secretary
Governing Board Minutes
September 15, 2022
Staff Report – Item 1b
To: The Governing Board
From: Inder Khalsa, Acting General Counsel
Item 1b: Determination Under AB 361 Regarding Imminent Risks to Health and Safety and Direction that the Meetings of the Board of Directors and All Other Legislative Bodies Be Conducted Remotely in Accordance with Government Code Section 54953(e)(3) Date: 10/20/2022
RECOMMENDATION
Determine pursuant to Government Code Section 54953(e)(1) that, as a result of the COVID-19 state of emergency, conducting in-person public meetings would present imminent risks to the health or safety of attendees at the meetings of the Board of Directors and all other legislative bodies of Pioneer Community Energy (PCE), including all of the Board-appointed Committees.
Direct that the meetings of the Board of Directors and all other legislative bodies of PCE be conducted by teleconferencing, pursuant to Government Code Section 54953(e), with an option for in-person attendance of up to five Directors.
BACKGROUND
The Board of Directors and other legislative bodies of PCE have met remotely throughout the COVID-19 pandemic to protect the health and safety of the public and staff. AB 361 authorizes the Board to conduct its meeting remotely provided that certain conditions are met. A state of emergency declared by the Governor must be in place and either of the following apply:
a. State or local officials have imposed or recommended measures to promote social distancing; or b. By a majority vote, the Board determines that meeting in person would present imminent risks to the health and safety of attendees.
(Gov. Code § 54953(e)(1).)
After making this determination, AB 361 requires the Board to make findings reconsidering the circumstances of the state of emergency at least every 30 days to continue holding meetings by teleconference. (Gov. Code § 54953(e)(3).) As Board last made the required findings on March 17, 2022, the recommended action is to make a new determination that meeting in person would present imminent risks to the health or safety of attendees.
ANALYSIS & DISCUSSION
The state of emergency is still in effect and on March 17, 2022, the Board of Directors determined that as a result of the COVID-19 state of emergency, meeting in person would present imminent risks to the health or safety of attendees at the meetings of the Board of Directors and all other legislative bodies of Pioneer Community Energy. At the March 17 meeting, the Directors provided direction to staff to facilitate meetings with up to five Directors in-person at the Pioneer office, with the remaining Directors and members of the public continuing to participate via video or teleconference.
COVID-19 spreads more easily indoors, and people are more likely to be exposed to COVID-19 when they are closer than 6 feet apart from others for longer periods of time. As discussed during the March 17 Board of Directors meeting, before the rise of COVID-19 Pioneer held its public meetings at the Pioneer offices. The Agenda Item: 1b Agenda Date: 10/20/2022
Pioneer facilities are not designed to ensure circulation of fresh or outdoor air, and would not allow all Directors and attendees to remain six or more feet apart. The size and unique characteristics of the Pioneer facilities remains a factor for the health and safety risks associated with in-person meetings, including the increased mixing associated with bringing people together from across several communities; the need to enable those who are immunocompromised or unvaccinated, or who live with someone who is immunocompromised or unvaccinated, to be able to safely continue to participate in Pioneer meetings; and the challenge of achieving compliance with safety requirements and recommendations in the Pioneer facilities.
The adoption of the recommended determination does not require the Board to meet remotely. Rather, by determining that holding regular in-person meetings would present imminent risks to the health or safety of attendees, Pioneer may continue to hold public meetings by Zoom, including with the option for a subset of the Directors to attend in-person from the Pioneer offices. Within 30 days after making this determination, and each 30 days thereafter, the Board must reconsider the circumstances of the state of emergency and find that it continues to directly impact the ability of members to meet safely in person.
STRATEGIC PLAN
Strategic Policy 1: Local Engagement, Objective 1.5
FISCAL IMPACT
None
ATTACHMENTS
None
Staff Report – Item 1c
To: The Governing Board
From: Brad Koehn, Director of Finance and Administration Item 1c: Receive Draft Financial Reports for August 2022 Date: 10/20/2022
ACTION REQUESTED
Receive draft Financial Reports for August 2022.
BACKGROUND
The Year-To-Date (YTD) financial reports are produced by Maher Accountancy for Board member and management review. Although these reports are unaudited, they provide the most up-to-date financial data for Pioneer Community Energy. The mPOWER program accepted its last application in August 2021 and mPOWER activity is now limited to the administering of the outstanding mPOWER Bonds. Financials for the mPOWER program will be included in the audited year end reports. For August 2022, the financial reporting package includes the following reports for the CCA Fund only:
• Statement of Net Position (Balance Sheet) – Accounting of Assets, Liabilities and Net Position as of the reporting period end date for the CCA program. • Statement of Revenues, Expenses, and Changes in Net Position (P&L) – Accounting of all revenues, expenses, and changes in net position on a YTD basis through the reporting period end date for the CCA program.
• Budget to Actuals – Comparison of budget to actuals on a YTD basis through the reporting period end date for the CCA program.
STRATEGIC PLAN
Strategic Priority 5: Financial Stability & Strategic Growth
FISCAL IMPACT
The YTD change in net position through two months of the fiscal year is $6.4 million.
ATTACHMENTS
1. Financial Reports through August 31, 2022
1 ACCOUNTANTS’ COMPILATION REPORT
Management
Pioneer Community Energy
Management is responsible for the accompanying financial statements of the CCA Program of Pioneer Community Energy (a California Joint Powers Authority) which comprise the statement of net position as of August 31, 2022, and the related statement of revenues, expenses, and changes in net position for the period then ended in accordance with accounting principles generally accepted in the United States of America. We have performed a compilation engagement in accordance with Statements on Standards for Accounting and Review Services promulgated by the Accounting and Review Services Committee of the AICPA. We did not audit or review the accompanying statements nor were we required to perform any procedures to verify the accuracy or completeness of the information provided by management. Accordingly, we do not express an opinion, conclusion, nor provide any assurance on these financial statements.
Management has elected to omit substantially all of the disclosures and the statement of cash flows required by accounting principles generally accepted in the United States of America in these interim financial statements. Pioneer Community Energy’s annual audited financial statements include the note disclosures omitted from these interim statements. If the omitted disclosures were included in these financial statements, they might influence the user’s conclusions about Pioneer Community Energy’s financial position, results of operations, and cash flows. Accordingly, these financial statements are not designed for those who are not informed about such matters.
We are not independent with respect to the Pioneer Community Energy because we performed certain accounting services that impaired our independence.
Maher Accountancy
San Rafael, CA
October 10, 2022
1101 Fifth Avenue, Suite 200 San Rafael, CA 94901 415 459 1249 mahercpa.com CCA Fund
ASSETS
Current assets
Cash and cash equivalents 15,795,118 $
Investments 14,858,418
Accounts receivable, net of allowance 25,673,694
Accrued revenue 11,424,284
Other receivables 1,114,619
Interest receivable 20,000
Prepaid expenses 27,777
Deposits 6,806,495
Total current assets 75,720,405
LIABILITIES
Current liabilities
Accrued cost of energy 21,990,849
Accounts payable 548,448
Other accrued liabilities 367,467
Interest payable 32,632
Deposits 209,057
Note payable 553,525
Total current liabilities 23,701,978
Noncurrent liabilities
Note payable 9,289,356
Total noncurrent liabilities 9,289,356
Total liabilities 32,991,334
NET POSITION
Unrestricted net position 42,729,071
Total net position 42,729,071 $
PIONEER COMMUNITY ENERGY
STATEMENT OF NET POSITION
As of August 31, 2022
CCA FUND
See accountants' compilation report. 2
CCA Fund
OPERATING REVENUES
Electricity sales, net 43,878,979 $
Total operating revenues 43,878,979
OPERATING EXPENSES
Cost of electricity 35,916,966
Contract services 883,333
Staff compensation 483,645
General and administration 110,360
Total operating expenses 37,394,304
Operating income (loss) 6,484,675
NONOPERATING REVENUES (EXPENSES)
Investment gains (losses) 20,001
Interest and financing expense (65,410)
Nonoperating revenues (expenses), net (45,409)
CHANGE IN NET POSITION 6,439,266
Net position at beginning of period 36,289,805
Net position at end of period 42,729,071 $
PIONEER COMMUNITY ENERGY
Two Months Ended August 31, 2022
AND CHANGES IN NET POSITION
STATEMENT OF REVENUES, EXPENSES
CCA FUND
See accountants' compilation report. 3
4 ACCOUNTANTS’ COMPILATION REPORT
Board of Directors
Pioneer Community Energy
Management is responsible for the accompanying special purpose statement for the CCA Program of Pioneer Community Energy, a California Joint Powers Authority, which comprise the budgetary comparison schedule for the period ended August 31, 2022, and for determining that the budgetary basis of accounting is an acceptable financial reporting framework. We have performed a compilation engagement in accordance with Statements on Standards for Accounting and Review Services promulgated by the Accounting and Review Services Committee of the AICPA. We did not audit or review the accompanying statement nor were we required to perform any procedures to verify the accuracy or completeness of the information provided by management. Accordingly, we do not express an opinion, a conclusion, nor provide any assurance on this special purpose budgetary comparison statement.
The special purpose statement is prepared in accordance with the budgetary basis of accounting, which is a basis of accounting other than accounting principles generally accepted in the United States of America. This report is intended for the information of the Board of Directors of Pioneer Community Energy.
Management has elected to omit substantially all of the note disclosures required by accounting principles generally accepted in the United States of America in these interim financial statements.
Pioneer Community Energy’s annual audited financial statements include the note disclosures omitted from these interim statements. If the omitted disclosures were included in these financial statements, they might influence the user’s conclusions about Pioneer Community Energy’s financial position, results of operations, and cash flows. Accordingly, these financial statements are not designed for those who are not informed about such matters.
We are not independent with respect to Pioneer Community Energy because we performed certain accounting services that impaired our independence.
Maher Accountancy
San Rafael, CA
October 10, 2022
1101 Fifth Avenue, Suite 200 San Rafael, CA 94901 415 459 1249 mahercpa.com 2022/23 YTD
Amended
Budget
2022/23 YTD
Actual
2022/23 YTD
Amended
Budget
Variance
(Under) Over
2022/23
YTD
Actual/
Amended
Budget %
2022/23
Amended
Budget
2022/23
Amended
Budget
Remaining
ENERGY REVENUES
Energy Sales $ 44,460,962 45,537,729 $ (1,076,766) $ 98% 199,630,000 $ 155,169,038 $ Green100 Sales 4,969 10,494 (5,525) 47% 48,000 43,031
Congestion Revenue Rights 865,262 655,842 209,420 132% 3,000,000 2,134,738 Less Uncollectible Accounts (586,950) (455,482) (131,468) 129% (1,996,780) (1,409,830) Total Operating Revenues 44,744,243 45,748,582 (1,004,339) 200,681,220 155,936,977
ENERGY EXPENSES
Power Supply 36,782,228 37,857,899 (1,075,671) 97% 149,977,000 113,194,772 OPERATING MARGIN 7,962,015 7,890,683 71,331 50,704,220 42,742,205
OPERATING EXPENSES
Administration
Compensation 87,826 94,375 (6,549) 93% 566,252 478,426
Contract services 26,434 46,888 (20,453) 56% 431,325 404,891 Operating expenses 90,071 149,663 (59,591) 60% 656,225 566,154 Total Administration expenses 204,331 290,925 (86,594) 1,653,802 1,449,471 Finance
Compensation 125,164 124,255 909 101% 745,530 620,367
Contract services 54,225 164,917 (110,692) 33% 603,350 549,125 Operating expenses 79,563 32,997 46,566 241% 197,983 118,420 Total Finance expenses 258,952 322,169 (63,217) 1,546,863 1,287,911 Power Procurement
Compensation 105,397 136,314 (30,917) 77% 817,886 712,489 Contract services 236,711 198,404 38,307 119% 1,285,426 1,048,715 Operating expenses 1,336 15,908 (14,572) 8% 35,450 34,114 Total Power Procurement expenses 343,445 350,627 (7,182) 2,138,762 1,795,317 Customer Care
Compensation 71,245 71,260 (14) 100% 427,557 356,312
Contract services 426,225 482,502 (56,277) 88% 2,895,012 2,468,787 Operating expenses - 4,211 (4,211) 0% 25,263 25,263
Total Customer Care expenses 497,470 557,972 (60,502) 3,347,832 2,850,362 Marketing & Communications
Compensation 13,760 44,065 (30,305) 31% 264,388 250,628 Contract services 39,393 67,406 (28,013) 58% 546,240 506,848 Operating expenses 18,440 40,508 (22,069) 46% 243,050 224,610 Total Marketing expenses 71,592 151,979 (80,387) 1,053,678 982,086 Legislative & Regulatory
Compensation 53,205 91,108 (37,903) 58% 546,649 493,444 Contract services 32,175 61,391 (29,215) 52% 353,808 321,633 Operating expenses 273 875 (602) 31% 5,250 4,977
Total Legislative expenses 85,653 153,374 (67,720) 905,707 820,054 Programs
Compensation 15,376 42,053 (26,677) 37% 252,320 236,944 Contract services - 40,909 (40,909) 0% 100,000 100,000
Operating expenses 520 583 (63) 89% 3,500 2,980
Total Programs expenses 15,896 83,546 (67,650) 355,820 339,924 Total Operating Expenses 1,910,591 1,477,339 (433,252) 11,002,464 9,525,125
NON-OPERATING REVENUES (EXPENSES)
Investment gains (losses) 20,001 12,500 7,501 160% 75,000 54,999 Term Loan Debt Service (154,527) (158,334) 3,807 98% (540,000) (385,473) Additional Term Loan Principal - - - (2,100,000) (2,100,000) Line/Letter of Credit Fees - (62,500) 62,500 0% (250,000) (250,000) Financial Security Requirement - - - (356,000) (356,000) Nonoperating revenues (expenses), net (134,527) (208,334) 73,807 (3,171,000) (3,036,473) Total Expenses (Energy, Operating, Non-Operating) 39,976,824 38,394,094 (1,582,731) 164,150,464 125,756,370 Contribution to/(from) Reserves 5,771,758 $ 6,350,149 $ 578,391 $ 36,530,756 $ 30,180,607 $
BUDGETARY COMPARISON SCHEDULE
Two Months Ended August 31, 2022
PIONEER COMMUNITY ENERGY
CCA FUND
Staff Report – Item 1d
To: The Governing Board
From: Mark Riffey, Director, Public Affairs, Marketing and Programs Item 1d: 2022 Customer Satisfaction Survey Incentive
Date: 10/20/2022
RECOMMENDATION
Approve the allocation of $1,500 from the budget for funding to incentivize responses of Pioneer’s second customer listening surveys to both residential and non-residential customers.
BACKGROUND
In November and December 2020, JSR, together with Pioneer staff, developed and conducted the first survey of residential and business customers to ascertain 1) whether customers knew who Pioneer was and what Pioneer does, 2) what was important to them in terms of Pioneer value (e.g., rates, renewable energy, etc.), 3) what programs are interesting to them, and 4) general open comments/feedback on Pioneer and/or what is important to them.
At the November 19, 2020, Governing Board meeting, the Board approved funding to incentivize responses of Pioneer’s inaugural launch of customer listening surveys to both residential and non-residential customers.
At the January 21, 2021, Governing Board meeting, the results of the first survey were presented to the board.
At the September 16, 2021, Governing Board meeting, the Board adopted the 2021-2024 Strategic Plan. In that plan it was stated that staff would conduct a customer satisfaction survey near the end of 2022 calendar year.
ANALYSIS & DISCUSSION
The 2022 customer satisfaction survey is scheduled to be conducted in November of 2022. The survey will be online and take individuals less than 15 minutes to complete. The goal is to increase the number of participants by at least 50 percent, when compared to the 2020 survey responses. The following are the desired responses
Residential
Goal – 750 respondents
Stretch – 1,000 respondents
Business
Goal – 75 respondents
Stretch – 100 respondents
The incentives, which will be in the form of bill credits, will be four (4) at $250 for residential customers and two (2) at $250 for business customers. To be eligible for the drawing, a customer must complete the survey.
STRATEGIC PLAN
Strategic Priority #1 – Local Engagement
Strategic Priority #2 – Quality in Service
Agenda Item: 1d Agenda Date: 10/20/2022
FISCAL IMPACT
The $1,500 required for this item will come from the Customer Care Division and is part of the Board approved Fiscal Year 2022-2023 Operating Budget.
Staff Report – Item 1e
To: The Governing Board
From: Brad Koehn, Director of Finance and Administration Item 1e: Adopt Resolution Approving and Authorizing the Executive Director to Execute a Memorandum of Understanding with Special District Risk Management Authority (SDRMA)
Date: 10/20/2022
RECOMMENDATION
Staff recommends the Board Adopt Resolution Approving and Authorize the Executive Director to Execute a Memorandum of Understanding with Special District Risk Management Authority (SDRMA).
BACKGROUND
SDRMA is a Joint Powers Authority (JPA) that administers property, liability, worker’s compensation insurance programs and also health benefit programs, specifically to serve special districts such as Pioneer. SDRMA currently administers worker’s compensation insurance coverage for Pioneer.
Pioneer provides certain employee health benefits including dental coverage (Delta Dental) through ChoiceBuilder, the administrator of the program. Pioneer provides a monthly dental allotment towards the premium and the employee pays the additional premium cost over the employer provided allotment.
Additionally, the Board approved at the June 2022 Board meeting to add Employee Assistance Program (EAP) to the Pioneer’ benefit package.
ANALYSIS & DISCUSSION
Delta Dental is the insurance provider for both ChoiceBuilder (Pioneer’s current administrator) and SDRMA.
The coverage is similar for both administrators with some benefit improvements with SDRMA for what are described as Major Services. Aside from improved benefits, Delta Dental through SDRMA also has slightly lower premium cost.
SDRMA also administers EAP services that allow employees to receive certain services such as counseling, life management services, and referral services for child and elder care.
The executed Memorandum of Understanding (MOU) will allow Pioneer to participate in the health benefit programs including ancillary coverages that SDRMA offers. At this time, dental coverage and EAP are the only additional coverages that Pioneer will be obtaining from SDRMA. SDRMA has submitted Pioneer’s census data for underwriting approval and coverage is anticipated to begin early 2023.
FISCAL IMPACT
The Proposed FY 2022-23 Budget provided appropriations sufficient to fund the employer-provided allotment towards dental coverage and the EAP services. The change in dental coverage does not increase the employer-provided allotment towards the premium, but because it is a lower premium cost, annual savings to employees Agenda Item: 1e Agenda Date: 10/20/2022
are estimated to be $1,500. The EAP cost is employer-funded and is estimated to be approximately $300 for fiscal year 2022-23 and for a full fiscal year $600.
ATTACHMENTS
1. Resolution Approving and Authorize the Executive Director to Execute a Memorandum of Understanding with Special District Risk Management Authority (SDRMA).
Before the Governing Board of
Pioneer Community Energy
Resolution No.: ____________
The following Resolution was duly passed by the Governing Board of Pioneer Community Energy at a regular meeting held October 20, 2022, by the following vote on roll call:
Ayes:
Noes:
Absent:
Signed and approved by me after its passage.
______________________________
Chair of the Governing Board
Attest:
_______________________
Secretary
WHEREAS, Pioneer Community Energy, a public agency duly organized and existing under and by virtue of the laws of the State of California (Pioneer), has determined that it is in the best interest and to the advantage of Pioneer to participate in the Health Benefits Program offered by Special District Risk Management Authority (the “Authority”); and WHEREAS, the Authority was formed in 1986 in accordance with the provisions of California Government Code 6500 et seq., for the purpose of providing risk financing, risk management programs and other coverage protection programs; and
WHEREAS, participation in Authority programs requires Pioneer to execute and enter into a Memorandum of Understanding which states the purpose and participation requirements for the Health Benefits Program; and
WHEREAS, all acts, conditions and things required by the laws of the State of California to exist, to have happened and to have been performed precedent to and in connection with the In the matter of: Resolution of Pioneer Community
Energy Approving the Form of and Authorizing the
Execution of a Memorandum of Understanding and
Authorizing Participation in the Special District
Risk Management Authority’s Health Benefits
Program
Resolution No. ___
2 consummation of the transactions authorized hereby do exist, have happened and have been performed in regular and due time, form and manner as required by law, and Pioneer is now duly authorized and empowered, pursuant to each and every requirement of law, to consummate such transactions for the purpose, in the manner and upon the terms herein provided.
BE IT RESOLVED, the Governing Board of Pioneer Community Energy, State of California, hereby finds, declares, and resolves as follows:
1. Findings. Pioneer’s Governing Body hereby specifically finds and determines that the actions authorized hereby relate to the public affairs of Pioneer.
2. Memorandum of Understanding. The Memorandum of Understanding, to be executed and entered into by and between Pioneer and the Authority, in the form presented at this meeting and on file with Pioneer’s Secretary, is hereby approved.
Pioneer’s Governing Body and/or Authorized Officers (“The Authorized Officers”) are hereby authorized and directed, for and in the name and on behalf of Pioneer, to execute and deliver to the Authority the Memorandum of Understanding.
3. Program Participation. Pioneer’s Governing Body approves participating in the Special District Risk Management Authority’s Health Benefits Program.
4. Severability. If any provision of this resolution or the application thereof to any person or circumstance is held invalid, such invalidity shall not affect other provisions or applications of the resolution which can be given effect without the invalid provision or application, and to this end the provisions of this resolution are severable.
5. Other Actions. The Authorized Officers of Pioneer are each hereby authorized and directed to execute and deliver any and all documents which are necessary in order to consummate the transactions authorized hereby and all such actions heretofore taken by such officers are hereby ratified, confirmed and approved.
6. Effective Date. This resolution shall take effect immediately upon its adoption.
Attachment: Memorandum of Understanding
Special District Risk Management Authority Page 1:4 Tel 800.537.7790 Fax 916.231.4111
www.sdrma.org
MEMORANDUM OF UNDERSTANDING
THIS MEMORANDUM OF UNDERSTANDING (HEREAFTER “MEMORANDUM”) IS
ENTERED INTO BY AND BETWEEN THE SPECIAL DISTRICT RISK MANAGEMENT AUTHORITY (HEREAFTER “SDRMA”) AND THE PARTICIPATING PUBLIC ENTITY (HEREAFTER “ENTITY”) WHO IS SIGNATORY TO THIS MEMORANDUM.
WHEREAS, on August 1, 2006, SDRMA was appointed administrator for the purpose of enrolling small public entities into the Public Risk Innovation, Solutions and Management (PRISM) Health and/or Employee Benefits Small Group Program (hereinafter "PROGRAM"); and WHEREAS, the terms and conditions of the PROGRAM as well as benefit coverage, rates, assessments, and premiums are governed by the PRISM Health Committee and/or PRISM Employee Benefits Committee for the PROGRAM (the "COMMITTEE") and not SDRMA; and WHEREAS, ENTITY desires to enroll and participate in the PROGRAM.
NOW THEREFORE, SDRMA and ENTITY agree as follows:
1. PURPOSE. ENTITY is signatory to this MEMORANDUM for the express purpose of enrolling in the PROGRAM.
2. ENTRY INTO PROGRAM. ENTITY shall enroll in the PROGRAM by making application through SDRMA which shall be subject to approval by the PROGRAM's Underwriter and governing documents and in accordance with applicable eligibility guidelines.
3. MAINTENANCE OF EFFORT. PROGRAM is designed to provide an alternative health benefit solution to all participants of the ENTITY including active employees, retired employees (optional), dependents (optional) and public officials (optional). ENTITY public officials may participate in the PROGRAM only if they are currently being covered and their own ENTITY’s enabling act, plans and policies allow it. ENTITY must contribute at least the minimum percentage required by the eligibility requirements
4. PREMIUMS. ENTITY understands that premiums and rates for the PROGRAM are set by the COMMITTEE. ENTITY will remit monthly premiums based upon rates established for each category of participants and the census of covered employees, public officials, dependents and retirees.
Rates for the ENTITY and each category of participant will be determined by the COMMITTEE designated for the PROGRAM based upon advice from its consultants and/or a consulting Benefits Actuary and insurance carriers. In addition, SDRMA adds an administrative fee to premiums and rates for costs associated with administering the PROGRAM. Rates may vary depending upon factors including, but not limited to,
Special District Risk Management Authority Page 2:4 Tel 800.537.7790 Fax 916.231.4111
www.sdrma.org
demographic characteristics, loss experience of all public entities participating in the PROGRAM and differences in benefits provided (plan design), if any.
SDRMA will administrate a billing to ENTITY each month, with payments due by the date specified by SDRMA. Payments received after the specified date will accrue penalties up to and including termination from the PROGRAM. Premiums are based on a full month, and there are no partial months or prorated premiums. Enrollment for mid‐year qualifying events and termination of coverage will be made in accordance with the SDRMA Program Administrative Guidelines.
5. BENEFITS. Benefits provided to ENTITY participants shall be as set forth in ENTITY’s Plan Summary for the PROGRAM and as agreed upon between the ENTITY and its recognized employee organizations as applicable. Not all plan offerings will be available to ENTITY, and plans requested by ENTITY must be submitted to PROGRAM underwriter for approval.
6. COVERAGE DOCUMENTS. Except as otherwise provided herein, coverage documents from each carrier outlining the coverage provided, including terms and conditions of coverage, are controlling with respect to the coverage of the PROGRAM and will be provided by SDRMA to each ENTITY. SDRMA will provide each ENTITY with additional documentation, defined as the SDRMA Program Administrative Guidelines which provide further details on administration of the PROGRAM.
7. PROGRAM FUNDING. It is the intent of this MEMORANDUM to provide for a fully funded PROGRAM by any or all of the following: pooling risk; purchasing individual stop loss coverage to protect the pool from large claims; and purchasing aggregate stop loss coverage.
8. ASSESSMENTS. Should the PROGRAM not be adequately funded for any reason, pro‐rata assessments to the ENTITY may be utilized to ensure the approved funding level for applicable policy periods. Any assessments which are deemed necessary to ensure approved funding levels shall be made upon the determination and approval of the COMMITTEE in accordance with the following:
a. Assessments/dividends will be used sparingly. Generally, any over/under funding will be factored into renewal rates.
b. If a dividend/assessment is declared, allocation will be based upon each ENTITY’S proportional share of total premiums paid for the preceding 3 years. An ENTITY must be a current participant to receive a dividend, except upon termination of the PROGRAM and distribution of assets.
Special District Risk Management Authority Page 3:4 Tel 800.537.7790 Fax 916.231.4111
www.sdrma.org
c. ENTITY will be liable for assessments for 12 months following withdrawal from the PROGRAM.
d. Fund equity will be evaluated on a total PROGRAM‐wide basis as opposed to each year standing on its own.
9. WITHDRAWAL. ENTITY may withdraw subject to the following condition: ENTITY shall notify SDRMA and the PROGRAM in writing of its intent to withdraw at least 90 days prior to their requested withdrawal date. ENTITY may rescind its notice of intent to withdraw. Once ENTITY withdraws from the PROGRAM, there is a 3‐year waiting period to come back into the PROGRAM, and the ENTITY will be subject to underwriting approval again.
10. LIAISON WITH SDRMA. Each ENTITY shall maintain staff to act as liaison with SDRMA and between the ENTITY and SDRMA’S designated PROGRAM representative.
11. GOVERNING LAW. This MEMORANDUM shall be governed in accordance with the laws of the State of California.
12. VENUE. Venue for any dispute or enforcement shall be in Sacramento, California.
13. ATTORNEY FEES. The prevailing party in any dispute shall be entitled to an award of reasonable attorney fees.
14. COMPLETE AGREEMENT. This MEMORANDUM together with the related PROGRAM documents constitutes the full and complete agreement of the ENTITY.
15. SEVERABILITY. Should any provision of this MEMORANDUM be judicially determined to be void or unenforceable, such determination shall not affect any remaining provision.
16. AMENDMENT OF MEMORANDUM. This MEMORANDUM may be amended by the SDRMA Board of Directors and such amendments are subject to approval of ENTITY’S designated representative, or alternate, who shall have authority to execute this MEMORANDUM.
Any ENTITY who fails or refuses to execute an amendment to this MEMORANDUM shall be deemed to have withdrawn from the PROGRAM on the next annual renewal date.
17. EFFECTIVE DATE. This MEMORANDUM shall become effective on the later of the first date of coverage for the ENTITY or the date of signing of this MEMORANDUM by the Chief Executive Officer or Board President of SDRMA.
18. EXECUTION IN COUNTERPARTS. This MEMORANDUM may be executed in several counterparts, each of which shall be an original, all of which shall constitute but one and the same instrument.
Special District Risk Management Authority Page 4:4 Tel 800.537.7790 Fax 916.231.4111
www.sdrma.org
In Witness Whereof, the undersigned have executed the MEMORANDUM as of the date set forth below.
Dated: By:
Special District Risk
Management Authority
Dated: By:
Pioneer Community Energy
Staff Report – Item 2
To: The Governing Board
From: Don Eckert, Executive Director
Item 2: Adopt Resolution Authorizing the Execution of a Power Supply Contract and Certain Other Documents to Enable Pioneer Community Energy to Enter into a 30-Year Energy Prepayment Transaction
Date: 10/20/2022
RECOMMENDATION
Adopt Resolution authorizing the execution and delivery of a clean energy purchase contract and certain other documents in connection with the issuance by the California Community Choice Financing Authority (“CCCFA”) of its clean energy project revenue bonds to finance the project described herein; and certain other actions in connection therewith.
AUDIT & FINANCE COMMITTEE RECOMMENDATION
At the September 19, 2022, Audit & Finance Committee, the Committee received a presentation by Michael Berwanger of PFM Financial Advisors, who is serving as Pioneer’s municipal advisor on the transaction and Douglas Bird of Chapman & Cutler, who is serving as Pioneer’s legal counsel on the transaction. The Committee voted unanimously to recommend approval to the Board for Pioneer to enter into a long-term energy prepayment transaction.
BACKGROUND
At the March 3, 2022 Audit & Finance Committee, the Committee received a presentation from PFM Financial Advisors providing an overview of the prepay transaction. The Committee unanimously approved the issuance of a Request for Proposal (“RFP”) for prepay suppliers (“Bank”). At the May 11, 2022 Audit & Finance Committee, the Committee received an update on the closing of the RFP and the selection of Goldman Sachs as the bank.
At the May 11, 2022, Governing Board meeting, the Board received an overview of the prepay transaction from PFM Financial Advisors. At the June 16, 2022, Governing Board meeting, the Board approved the Executive Director to execute professional services agreements for legal and financial support of the prepay transaction.
At the July 21, 2022, Governing Board meeting, the Board approved Pioneer joining CCCFA as an associate member and the execution of the CCCFA Joint Powers Agreement (“JPA”).
Prepay Review
An energy prepayment – or “prepay” – is a long-term financial transaction available for municipal utilities and tax-exempt entities such as Community Choice Aggregators (“CCAs”) that enables a meaningful power procurement cost savings opportunity. This prepay structure has historically been utilized for natural gas procurement and is now being applied towards renewable energy. A number of other CCAs have either executed or in the process of completing a similar structure.
Agenda Item: 2 Agenda Date: 10/20/2022
ANALYSIS & DISCUSSION
Prepay Process:
Tax-exempt bonds are issued by a third-party conduit (CCCFA in this case, called “Municipal Conduit”) to raise funds to prepay a taxable financial counterparty (Bank, called “Prepay Supplier”) for a 30-year supply of electricity that will be resold by the Issuer to a tax-exempt Load Serving Entity (LSE, also called “Prepay Buyer”).
Over the term of the prepay transaction, the LSE will assign existing power supply contracts (or power purchase agreements, “PPA”) to the Prepay Supplier. The LSE is required to continue to perform under the PPA, while maintaining rights to the electricity and attributes under the PPA.
Contractually, the electricity and other attributes under each PPA will flow to the Issuer and from the Issuer to the LSE. The Prepay Supplier pays the PPA contract price to the PPA provider, while the LSE pays the Issuer at a discounted rate. The discount is based on the spread between the taxable rate used to determine the prepayment amount and tax-exempt rate bond rate used to fund the prepayment. The discount is historically estimated at 8-12% but is subject to change based on market conditions and will be re-established periodically (typically every 5-7 years, each a “Reset Period”) over the term of the transaction. There is a negotiated minimum discount that, if not met by the Prepay Supplier for a Reset Period, allows the LSE to exit the transaction. For this prepay, the initial discount target is 10% and the minimum discount will be 7%. The table below illustrates the major flows of the transaction:
The total combined notional value of the assigned PPAs flowing through the prepay over the 30 years will be no greater than $500 million; these can be long-term renewables PPAs or commodity supply contracts. While the PPAs are assigned to the Prepay Supplier, the LSE continues to ultimately take and pay for all the energy and attributes delivered through the contract; all other terms of the PPA remain unchanged. If the prepay program terminates early for any reason – either the Prepay Supplier or the LSE fails to perform – the LSE forgoes future savings and the assigned PPA is put back completely to the LSE.
Prepay Parties:
The prepay transaction requires the selection and involvement of multiple parties. Name and functions are as follows:
Prepay Buyer: Pioneer Community Energy
• Role: Enter into the Clean Energy Purchase Contract with CCCFA and provide PPAs to flow through prepay and receive discount
Prepay Supplier: Goldman Sachs
• Role: Structure transaction, enter into the Master Power Supply Agreement with CCCFA, deliver electricity to CCCFA for delivery by CCCFA to Pioneer, and pay contract price to PPA provider
PREPAY BUYER
(CCA)
NON-RECOURSE
TAX EXEMPT
BONDS
EXISTING PPA's
TO BE
ASSIGNED
MUNICIPAL
CONDUIT
EXISTING PPA
COUNTERPARTY
PREPAY
SUPPLIER
(BANK)
CONTRACT PRICE LESS DISOUNT
MWh's + REC's
CONTRACT PRICE
PREPAYMENT $
MWh's + REC's + DEBT
SERVICE
BOND
PROCEEDS
DEBT
SERVICE
CONTRACT PRICE MWh's + REC's
Agenda Item: 2 Agenda Date: 10/20/2022
Municipal Advisor: PFM Financial Advisors
• Role: Serve as financial advisor to Pioneer in negotiations; registered as a municipal advisor with the Municipal Securities Rulemaking Board (MSRB)
Bond Counsel: Orrick, Herrington & Sutcliffe
• Role: Represent the interests of bondholders; draft Trust Indenture for the Bonds and provide opinion that the Bonds are validly issued and secured
Tax Counsel: Orrick, Herrington & Sutcliffe
• Role: Provide opinion that the interest on the Bonds is exempt from federal and State of California income tax
Issuer’s Counsel: Chapman and Cutler
• Role: Serve as legal counsel to Pioneer; supporting drafting and negotiating terms of prepay documents, Bond documents and associated energy supply agreements
Disclosure Counsel: Chapman and Cutler
• Role: Prepare Pioneer disclosure included as Appendix A to Preliminary and Final Official Statement Bond Issuer: California Community Choice Financing Authority (CCCFA) • Role: Issue the Bonds for prepay
Custodian: U.S. Bank Trust Company, National Association • Role: Trustee for the Bonds and Custodian for various payments accounts Commodity Swap Counterparty: Royal Bank of Canada
• Role: Provide financial commodity swap to CCCFA, which will only become active if the price of electricity delivered to Pioneer is changed to floating rather than fixed Credit Rating Agency: To-be-determined
• Role: Rate the bonds, which rating will be based on the rating of the Prepaid Supplier Prepay Documents:
The prepay transaction requires the preparation of numerous documents. Below are the key documents (all included as attachments to this item):
Clean Energy Purchase Contract
• Function: Set forth terms for which Pioneer receives energy for 30-year term • Signed by: Pioneer and Issuer (CCCFA)
Letter Agreement Regarding PPA Assignments
• Function: Details the terms of the limited assignment of PPA’s between Pioneer and third-party energy sellers
• Signed by: Pioneer and Prepay Supplier (Goldman Sachs) Form of Limited Assignment
• Function: Signed for each PPA assigned into prepay; Attachment to “Letter Agreement Regarding PPA Assignments”
• Signed by: Pioneer, Prepay Supplier (Goldman Sachs) and Original PPA Counterparty Project Administration Agreement
• Function: Sets out terms for Pioneer to act on behalf of the issuer (CCCFA) • Signed by: Pioneer and Issuer (CCCFA)
Preliminary Official Statement (POS)
• Function: Distributed to investors to market the Bonds. Includes details regarding the Bonds including transaction size and key terms, the transaction structure and documents, investment risks and certain information regarding the various transaction parties (including appendix of information on Pioneer’s operational history)
• Signed by: Not a signed document; once the Bonds are sold, a final version will be prepared for signature by Issuer (CCCFA)
Re-Pricing Agreement
• Function: Set forth terms for remarketing and repricing for future Reset Periods • Signed by: Issuer (CCCFA) and Prepay Supplier (Goldman Sachs) Master Power Supply Agreement
Agenda Item: 2 Agenda Date: 10/20/2022
• Function: Provides for the prepayment from CCCFA to Prepaid Supplier. Details the flow of electricity and attributes from Prepaid Supplier to Issuer and payments between the Prepay Supplier (Goldman Sachs) and the Issuer (CCCFA) for failure to deliver/take • Signed by: Issuer (CCCFA) and Prepay Supplier (Goldman Sachs) Trust Indenture
• Function: Sets forth terms of bond issuance and rights of bondholders • Signed by: Issuer (CCCFA) and Trustee (U.S. Bank Trust Company, National Association) PPA Payments Custodial Agreement
• Function: Details cash flows between Pioneer, Prepay Supplier (Goldman Sachs), and Custodian (US Bank)
• Signed by: Pioneer, Prepay Supplier (Goldman Sachs) and Custodian (US Bank) Details of Requested Board Approval
Adopt the Resolution which approves the Preliminary Official Statement and authorizes Pioneer to sign:
• Clean Energy Purchase Contract with CCCFA (Issuer)
• Letter Agreement regarding PPA Assignments with Goldman Sachs (Prepay Supplier) • Limited Assignment Agreements with Goldman Sachs (Prepay Supplier) and future PPA sellers • Project Administration Agreement with CCCFA (Issuer)
• PPA Payments Custodial Agreement with Goldman Sachs (Prepay Supplier) and US Bank (Custodian) The adoption of the Resolution and the execution of the above documents by the Pioneer Board would enable Pioneer to then seek approval for the transaction by the CCCFA Board, further enabling the municipal bond raise required to initiate the prepay and start receiving a discount. The approvals provided shall be subject to the following parameters:
a) The Bonds will be not obligations of Pioneer, but will be limited obligations of the issuer payable solely from the revenues and other amounts pledged therefor under the Indenture, including amounts payable by Pioneer under the Power Supply Contract;
b) The aggregate principal amount of the Bonds shall not exceed $600 million; c) The annual energy savings to Pioneer under the Power Supply Contract shall be a minimum of a 7% discount.
The resolution designates the Chair of the Board, Executive Director, Chief Operating Officer and the Director of Finance and Administration as authorized officers to sign certain documents or direct certain actions. Pioneer’s internal policies will still govern the implementation of that designated authority.
STRATEGIC PLAN
The report supports the following strategic plan priorities:
1. Quality of Service by keeping rates stable and competitive
2. Financial Stability & Strategic Growth by supporting significant cost savings
FISCAL IMPACT
The purpose of pursuing the prepay transaction is to achieve meaningful energy procurement cost savings.
This initial transaction will amount to approximately $500 million of annual procurement costs running through the prepay; targeting a minimum 7% discount from the original PPA prices which translates to $1.6-$2.5 million of annual savings for Pioneer.
The fees paid to all of the various parties involved in the prepay will all be payable from the proceeds of the prepay bonds. This results in no out-of-pocket cost to Pioneer; the cost will be paid out of the savings realized from the prepay transaction. The only cost funded by Pioneer was the $50,000 one-time membership fee to CCCFA.
Agenda Item: 2 Agenda Date: 10/20/2022
Additionally, it is important to note that the prepay is non-recourse to Pioneer. The ultimate counterparty with the Prepay Supplier is CCCFA; CCCFA is therefore the counterparty to all the underlying agreements. CCCFA is a public entity separate and apart from the parties to the CCCFA JPA Agreement, and the debts, liabilities, and obligations of the CCCFA will not constitute debts, liabilities, or obligations of Pioneer.
ATTACHMENTS
1. Resolution authorizing the execution of a Clean Energy Purchase Contract and Certain Other Documents to enable Pioneer to enter into a 30-year energy prepayment transaction
2. Clean Energy Purchase Contract
3. Letter Agreement Regarding PPA Assignments
4. Form of Limited Assignment
5. Project Administration Agreement
6. PPA Payments Custodial Agreement
7. Trust Indenture
8. Master Power Supply Agreement
9. Re-Pricing Agreement
10. Preliminary Official Statement
Before the Governing Board of
Pioneer Community Energy
Resolution No.: ____________
The following Resolution was duly passed by the Governing Board of Pioneer Community Energy at a regular meeting held October 20, 2022, by the following vote on roll call:
Signed and approved by me after its passage.
_____________________________
Chair, Board of the Governing Board
Attest:
_______________________
Secretary
THE GOVERNING BOARD OF PIONEER COMMUNITY ENERGY DOES
HEREBY RESOLVE AS FOLLOWS:
WHEREAS, Pioneer Community Energy (“Pioneer”) is a joint powers authority established and organized under the Joint Exercise of Powers Act, constituting Chapter 5 of Division 7 of Title 1 (commencing with Section 6500) of the California Government In the matter of: AUTHORIZING THE
EXECUTION AND DELIVERY OF A CLEAN
ENERGY PURCHASE CONTRACT AND
CERTAIN OTHER DOCUMENTS IN
CONNECTION WITH THE ISSUANCE BY THE
CALIFORNIA COMMUNITY CHOICE FINANCING
AUTHORITY OF ITS CLEAN ENERGY PROJECT
REVENUE BONDS TO FINANCE THE PROJECT
DESCRIBED HEREIN; AND CERTAIN OTHER
ACTIONS IN CONNECTION THEREWITH
Ayes:
Noes:
Absent:
Code, as amended and supplemented (the “Act”), as a “community choice aggregator” (“CCA”) as defined in Section 331.1 of the Public Utilities Code of the State of California, as amended; and
WHEREAS, California Community Choice Financing Authority (the “Issuer”) is a joint powers authority established and organized under the Act, with the power and authority to enter into contracts and issue bonds to assist CCAs in financing the acquisition of supplies of clean energy; and
WHEREAS, the Issuer is authorized by its Joint Powers Agreement to acquire supplies of clean energy by any means and to issue revenue bonds to finance the cost of acquisition of such supplies, and is vested with all powers necessary to accomplish the purposes for which it was created; and
WHEREAS, Pioneer has determined that it is desirable to acquire a long-term supply of clean energy from the Issuer; and
WHEREAS, Pioneer is requesting that the Issuer agree to purchase certain quantities of clean energy from Aron Energy Prepay 15 LLC, a Delaware limited liability company (“Prepay LLC”) on a prepaid basis (the “Project”) and to sell such clean energy to Pioneer, as contemplated herein; and
WHEREAS, Pioneer is requesting that the Issuer finance the costs of the Project with the proceeds of its Clean Energy Project Revenue Bonds, with such series designation(s) as is determined by CCCFA (the “Bonds”); and WHEREAS, Pioneer has determined to authorize the officers of Pioneer to take all necessary action to accomplish the purchase of clean energy from the Issuer and to assist the Issuer in the issuance, sale and delivery of the Bonds; and WHEREAS, there have been made available to the Board of Pioneer for approval forms of the following agreements to which Pioneer is a party (collectively, the “Pioneer Documents”):
1. Clean Energy Purchase Contract between Pioneer and the Issuer;
2. PPA Payments Custodial Agreement by and among Pioneer, J. Aron & Company LLC, a New York limited liability company (“J. Aron”), Prepay LLC, and U.S. Bank Trust Company, National Association, as custodian;
3. Form of Limited Assignment Agreement, by and among Pioneer, J. Aron and the counterparty under the power purchase agreement to be identified therein;
4. Letter Agreement between Pioneer and J. Aron regarding matters relating to Limited Assignment Agreements; and
5. Clean Energy Project Operational Services Agreement relating to the Project, by and between Pioneer and the Issuer; and
WHEREAS, there have also been made available to the Board of Pioneer forms of the following additional documents relating to the Project:
1. Trust Indenture (the “Indenture”) between the Issuer and U.S. Bank Trust Company, National Association, as trustee, providing for, among other things, the issuance of and security for the Bonds;
2. Master Power Supply Agreement (the “Master Power Supply Agreement”) between the Issuer and Prepay LLC, providing for the delivery of the Prepaid Energy Supply to the Issuer;
3. Re-pricing Agreement (the “Re-pricing Agreement”) between the Issuer and Prepay LLC, relating to the period re-pricing of the Bonds and the discount available to Pioneer under the Clean Energy Purchase Contract; and
4. Preliminary Official Statement (the “Preliminary Official Statement”), to be used in connection with the offering and sale of the Bonds, including the information relating to Pioneer included as Appendix A thereto (the Indenture, the Master Power Supply Agreement and the Preliminary Official Statement, together with the Pioneer Documents, the “Project Documents”).
THEREFORE, BE IT RESOLVED, the Governing Board of Pioneer Community Energy hereby finds, declares, and resolves as follows:
1. The proposed forms of the Pioneer Documents, as made available to the Board of Directors for this meeting, are hereby approved. The Limited Assignment Agreement form may be used, in substantially the same form, for assignments of Pioneer power purchase agreements as needed to maintain the transactions approved hereby, and any such Limited Assignment Agreements shall be included in the Pioneer Documents hereby approved. Subject to the parameters set forth in Section 4 of this Resolution, any of the Executive Director, Chief Operating Officer, Chair of the Board, the Director of Finance and Administration (each an “Authorized Officer”) is hereby authorized and directed, for and on behalf of Pioneer, to execute and deliver the Pioneer Documents in substantially said form, with such changes and insertions therein as the Authorized Officer executing the same may approve, such approval to be conclusively evidenced by the execution and delivery thereof.
2. The proposed form of the Preliminary Official Statement, as made available to the Board of Directors for this meeting, is hereby approved.
Any Authorized Officer is hereby authorized and directed, for and on behalf of Pioneer, to execute and deliver a certificate as to the information regarding Pioneer contained therein and in the final version of the Official Statement, with such changes and insertions therein as the Authorized
Officer approving the same may deem necessary or appropriate. Subject to approval by the Issuer, Pioneer hereby authorizes the distribution of the Preliminary Official Statement to persons who may be interested in the purchase of the Bonds, and the delivery of the Official Statement in final form to the purchasers of the Bonds, in each case with such changes as may be approved as aforesaid.
3. The Authorized Officers, each acting alone, are hereby authorized and directed, for and in the name and on behalf of Pioneer, to execute and deliver any and all documents, including, without limitation, any tax certificate relating to its expected use of the energy to be purchased by it from the Project, any continuing disclosure certificate or similar agreement required for the offering or sale of the Bonds, and any and all closing certificates to be executed in connection with the issuance of the Bonds and to take any and all actions which may be necessary or advisable, in their discretion, to effectuate the actions which Pioneer has approved in this Resolution, for the issuance, sale and delivery of the Bonds, and to consummate by Pioneer the transactions contemplated by the Pioneer Documents approved hereby and the other Project Documents presented to the Board herewith, including any subsequent amendments, waivers or consents entered into or given under or in accordance with such documents.
4. The approvals provided for herein shall be subject to the following parameters:
a. the Bonds will not be obligations of Pioneer, but will be limited obligations of the Issuer payable solely from the revenues and other amounts pledged therefor under the Indenture, including amounts payable by Pioneer under the Clean Energy Purchase Contract;
b. the aggregate principal amount of the Bonds shall not exceed $600,000,000;
c. the proceeds of the Bonds shall be applied to fund the prepayment to be made by the Issuer to Prepay LLC under the Master Power Supply Agreement, fund reserves as required by the Indenture, and pay costs of issuance of the Bonds, which shall not exceed 1.5% of the proceeds of the Bonds; and d. the Monthly Discount Percentage for the initial Reset Period as provided for in the Clean Energy Purchase Contract shall be at least 7%.
5. Execution and delivery of the Pioneer Documents by an Authorized Officer or Officers shall be conclusive evidence that the parameters set forth in Section 4 have been met, and all actions heretofore taken by the Authorized Officers with respect to the issuance of the Bonds are hereby ratified, confirmed and approved.
6. If the provisions of Section 4 and Section 5 have been met, an Authorized Officer may direct the payment to professionals that provided services to Pioneer to complete the Pioneer Documents. These professional services include legal counsel, bond counsel, tax counsel, municipal financial advisor, swap advisor, and any other consultant needed to support the completion of the Pioneer Documents. Payment to these professionals will be out of the proceeds of the sale of the Bonds and pursuant to the terms of the agreements between such professionals and Pioneer.
7. If the provisions of Section 4 and Section 5 have been met, an Authorized Officer may direct the payment to additional vendors and/or parties to the Pioneer Documents or other Project Documents to complete the issuance of the Bonds. These vendors, if any, will be paid pursuant to an agreement for services rendered in completing the issuance of the Bonds and out of the proceeds of the sale of the Bonds.
8. This Resolution shall take effect immediately.
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SM Draft 12 October 2022
CLEAN ENERGY PURCHASE CONTRACT
between
CALIFORNIA COMMUNITY CHOICE FINANCING AUTHORITY
and
PIONEER COMMUNITY ENERGY
Dated as of [____], 2022
-i-TABLE OF CONTENTS
Page
ARTICLE I. DEFINITIONS ........................................................................................................2 Section 1.1 Defined Terms ................................................................................................2 Section 1.2 Definitions; Interpretation .............................................................................12 ARTICLE II. DELIVERY PERIOD; NATURE OF CLEAN ENERGY PROJECT; CONDITION PRECEDENT ........................................................................12 Section 2.1 Delivery Period .............................................................................................12 Section 2.2 Nature of Clean Energy Project ....................................................................12 Section 2.3 Condition Precedent ......................................................................................12 Section 2.4 Pledge of this Agreement ..............................................................................13 ARTICLE III. SALE AND PURCHASE; PRICING ...............................................................13 Section 3.1 Sale and Purchase of Product ........................................................................13 Section 3.2 Purchaser Payments ......................................................................................13 Section 3.3 Limited Obligation to Take Base Quantities ................................................14 Section 3.4 Annual Refund ..............................................................................................14 Section 3.5 Reset Period Remarketing.............................................................................14 ARTICLE IV. FAILURE TO SCHEDULE PRODUCT .........................................................15 Section 4.1 Issuer’s Failure to Schedule Base Quantity (Not Due to Force Majeure) ........................................................................................................15 Section 4.2 Purchaser’s Failure to Schedule or Take Base Quantities (Not Due to Force Majeure) ..............................................................................................16 Section 4.4 Assigned Product ..........................................................................................16 Section 4.5 Sole Remedies ...............................................................................................16 ARTICLE V. DELIVERY POINTS; SCHEDULING .............................................................16 Section 5.1 Delivery Points..............................................................................................16 Section 5.2 Transmission and Scheduling .......................................................................17 Section 5.3 Title and Risk of Loss ...................................................................................17 Section 5.4 PCC1 Product and .........................................................................................17 Section 5.5 Communications Protocol .............................................................................20 -ii-Section 5.6 Deliveries within CAISO or another Balancing Authority...........................20 Section 5.7 Assigned Products.........................................................................................21 ARTICLE VI. ASSIGNMENT OF POWER PURCHASE AGREEMENTS........................21 Section 6.1 Assignments Generally .................................................................................21 Section 6.2 Failure to Obtain ...........................................................................................22 Section 6.3 Adjustments to Base Quantities....................................................................22 Section 6.4 J. Aron Non-Payment to APC Party. ............................................................23 ARTICLE VII. USE OF PRODUCT .........................................................................................23 Section 7.1 Tax Exempt Status of the Bonds...................................................................23 Section 7.2 Priority Products...........................................................................................23 Section 7.3 Assistance with Sales to Third Parties..........................................................23 Section 7.4 Qualifying Use ..............................................................................................24 Section 7.5 Remediation ..................................................................................................24 Section 7.6 Remediation; Ledger Entries; Redemption...................................................25 ARTICLE VIII. REPRESENTATIONS AND WARRANTIES; ADDITIONAL COVENANTS ................................................................................................25 Section 8.1 Representations and Warranties of Issuer.....................................................25 Section 8.2 Warranty of Title...........................................................................................27 Section 8.3 Disclaimer of Warranties..............................................................................27 Section 8.4 Continuing Disclosure ..................................................................................27 ARTICLE IX. TAXES.................................................................................................................27 ARTICLE X. JURISDICTION; WAIVER OF JURY TRIAL ...............................................27 Section 10.1 Consent to Jurisdiction..................................................................................28 Section 10.2 Waiver of Jury Trial......................................................................................28 ARTICLE XI. FORCE MAJEURE...........................................................................................28 Section 11.1 Applicability of Force Majeure.....................................................................28 Section 11.2 Settlement of Labor Disputes........................................................................29 ARTICLE XII. GOVERNMENTAL RULES AND REGULATIONS...................................29 Section 12.1 Compliance with Laws .................................................................................29 -iii-Section 12.2 Contests.........................................................................................................29 Section 12.3 Defense of Agreement ..................................................................................29 ARTICLE XIII. ASSIGNMENT................................................................................................29 ARTICLE XIV. PAYMENTS.....................................................................................................30 Section 14.1 Monthly Statements......................................................................................30 Section 14.2 Payments.......................................................................................................31 Section 14.3 Payment of Disputed Amounts.....................................................................32 Section 14.4 Late Payment ................................................................................................32 Section 14.5 Audit; Adjustments.......................................................................................32 Section 14.6 Netting; No Set-Off.......................................................................................33 Section 14.7 Rate Covenant...............................................................................................33 ARTICLE XV. [RESERVED]....................................................................................................33 ARTICLE XVI. NOTICES.........................................................................................................33 ARTICLE XVII. DEFAULT; REMEDIES; TERMINATION...............................................34 Section 17.1 Issuer Default................................................................................................34 Section 17.2 Purchaser Default..........................................................................................34 Section 17.3 Remedies Upon Default................................................................................35 Section 17.4 Termination of Master Power Supply Agreement........................................36 Section 17.5 Limitation on Damages.................................................................................36 ARTICLE XVIII. MISCELLANEOUS.....................................................................................37 Section 18.1 Indemnification Procedure............................................................................37 Section 18.2 Deliveries......................................................................................................38 Section 18.3 Entirety; Amendments..................................................................................38 Section 18.4 Governing Law .............................................................................................38 Section 18.5 Non-Waiver...................................................................................................38 Section 18.6 Severability ...................................................................................................38 Section 18.7 Exhibits.........................................................................................................39 Section 18.8 Winding Up Arrangements...........................................................................39 Section 18.9 Relationship of Parties..................................................................................39 Section 18.10 Immunity.......................................................................................................39 -iv-Section 18.11 Rates and Indices ..........................................................................................39 Section 18.12 Limitation of Liability...................................................................................39 Section 18.13 Counterparts..................................................................................................40 Section 18.14 Third Party Beneficiaries; Rights of Trustee ................................................40 Section 18.15 No Recourse to Members of Purchaser ........................................................40 Section 18.16 Waiver of Defenses.......................................................................................40 Section 18.17 Rate Changes ................................................................................................40 Exhibit A-1 — Base Quantities; Base Delivery Point; Commodity Reference Prices Exhibit A-2 — Initial Assigned Rights and Obligations
Exhibit B — Notices
Exhibit C — Remarketing Election Notice
Exhibit D — Federal Tax Certificate
Exhibit E — Purchaser’s Legal Opinion
Exhibit F — Assignment of Assignable Power Contracts
Exhibit G — Communications Protocol
Exhibit H — Pricing and Other Terms
Exhibit I — Closing Certificate
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CLEAN ENERGY PURCHASE CONTRACT
This Clean Energy Purchase Contract (this “Agreement”) is made and entered into as of [____], 2022 (the “Execution Date”), by and 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 Pioneer Community Energy, a California joint powers authority (“Purchaser”).
W I T N E S S E T H:
WHEREAS, Issuer has planned and developed a project to acquire long-term supplies of Product from Aron Energy Prepay 15 LLC, a Delaware limited liability company (“Prepay LLC”) and a wholly-owned subsidiary of The Goldman Sachs Group, Inc., pursuant to a Master Power Supply Agreement, dated as of [____], 2022 (the “Master Power Supply Agreement”), to meet a portion of the Product supply requirements of Purchaser through a discounted clean energy purchase product (the “Clean Energy Project”); WHEREAS, Purchaser desires to enter into an agreement with Issuer for the purchase of Product acquired by the Issuer under the Clean Energy Project; WHEREAS, Issuer will finance its payment for Product under, and the other costs of, the Clean Energy Project by issuing Bonds;
WHEREAS, Purchaser is a joint powers authority and a community choice aggregator, duly organized, validly existing and in good standing under the laws of the State of California and the rules, regulations and orders of the California Public Utilities Commission, and is qualified to conduct business in each jurisdiction of the Joint Powers Agreement members for the transmission, distribution, sale, and delivery of Product to retail electric consumers within its service area;
WHEREAS, Purchaser is agreeable to purchasing a portion of its Product requirements from Issuer under the terms and conditions set forth in this Agreement and Issuer is agreeable to selling to Purchaser such supplies of Product under the terms and conditions set forth in this Agreement;
WHEREAS, concurrently herewith, Purchaser has assigned to J. Aron (as defined below) certain Assigned Rights and Obligations (as defined below), including the right to receive Assigned Product (as defined below), which Assigned Product will be resold to Prepay LLC under the Electricity Sale and Service Agreement, then resold to Issuer under the Master Power Supply Agreement and then resold to Purchaser hereunder; and
WHEREAS, as a condition precedent to the effectiveness of the Parties’ obligations under this Agreement, Issuer shall have entered into the Master Power Supply Agreement and shall have issued the Bonds.
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NOW, THEREFORE, in consideration of the premises above and the mutual covenants and agreements herein set forth, Issuer and Purchaser (the “Parties” hereto; each is a “Party”) agree as follows:
ARTICLE I.
DEFINITIONS
Section 1.1 Defined Terms. The following terms, when used in this Agreement (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” means the amount per MWh specified as such in Exhibit H. “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). “Annual Refund” means the annual refund, if any, to be provided to the Purchaser and calculated pursuant to the procedures specified in Section 3.4. “APC Contract Price” has the meaning specified in Exhibit F. “APC Party” has the meaning specified in Exhibit F.
“Applicable Project” has the meaning specified in Exhibit F. “Assignable Power Contract” has the meaning specified in Section 6.1. “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 Discounted Product” means, for any Month, the lesser of (i) the total quantity of Assigned Product (in MWh) delivered hereunder in such Month and (ii) the aggregate Assigned Prepay Quantities for such Month.
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“Assigned Energy” means any Energy, including Energy associated with PCC1 Product and Long-Term PCC1 Product, to be delivered to J. Aron or any successor thereto pursuant to any Assigned Rights and Obligations.
“Assigned PAYGO Product” means, for any Month, the amount, if any, by which the total quantity of Assigned Product delivered hereunder in such Month exceeds the aggregate Assigned Discounted Product for such Month.
“Assigned PPA” means any power purchase agreement that is assigned pursuant to an Assignment Agreement in accordance with the terms of this Agreement. “Assigned Prepay Quantity” has the meaning specified in Exhibit F. “Assigned Prepay Value” means, for any Month and each Assignment Schedule, the Assigned Prepay Quantity for such Month multiplied by the applicable APC Contract Price. “Assigned Product” means, as applicable, PCC1 Product, Long-Term PCC1 Product, Assigned Energy, Assigned RECs and any other Product included on an Assignment Schedule, subject to the limitations for such other Product set forth in Exhibit F. “Assigned Quantity” means, with respect to each Month during an Assignment Period, the quantity of Assigned Energy (in MWh) delivered in connection with the Assigned Product during such Month.
“Assigned RECs” means any RECs associated with PCC1 Product or Long-Term PCC1 Product to be delivered to J. Aron or any successor thereto pursuant to any Assigned Rights and Obligations.
“Assigned Rights and Obligations” has the meaning specified in Section 6.1. “Assignment Agreement” means, for any Assigned Rights and Obligations, an agreement among Purchaser, J. Aron and the APC Party, approved by Issuer, in the form attached hereto as Annex II to Exhibit F (with such changes thereto as may be mutually agreed upon by Purchaser, J. Aron, the APC Party, and Issuer, each in its sole discretion). “Assignment Period” for any Assigned Rights and Obligations has the meaning specified in the applicable Assignment Agreement.
“Assignment Schedule” has the meaning specified in Exhibit F. “Available Discount Percentage” has the meaning specified in the Re-Pricing Agreement. For the avoidance of doubt, the “Available Discount Percentage” under the Re-Pricing Agreement includes the Monthly Discount Percentage, as well as additional discounting expected to be made available through the Annual Refund.
“Balancing Authority” has the meaning specified in the CAISO Tariff. -4-
“Base Delivery Point” has the meaning specified in Section 5.1(a). “Base Product” means Firm (LD) Energy delivered to the Base Delivery Point. “Base Quantity” means, with respect to each Delivery Hour during the Delivery Period, the Base Unadjusted Quantity for such Delivery Hour less the Base Quantity Reduction for such Delivery Hour, each as set forth on Exhibit A-1, as Exhibit A-1 may be revised pursuant to Article VI.
“Base Quantity Reduction” means, with respect to each Delivery Hour during the Delivery Period, the “Base Quantity Reduction” of Base Product (in MWh) set forth for such Delivery Hour on Exhibit A-1, as Exhibit A-1 may be revised pursuant to Article VI. “Base Unadjusted Quantity” means, with respect to each Delivery Hour during the Delivery Period, the “Base Unadjusted Quantity” (in MWh) set forth for such Delivery Hour on Exhibit A-1.
“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 Issuer and the Trustee, and (ii) any trust indenture entered into in connection with the commencement of any Interest Rate Period after the initial Interest Rate Period between 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 generally in either New York, New York or the State of California are authorized or required by Law to close, or (iv) any day excluded from “Business Day” as therein defined, pursuant to the Bond Indenture. “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
“Calculation Agent” has the meaning specified in the Re-Pricing Agreement. “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.
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“CEC” means California’s State Energy Resources Conservation and Development Commission, also known as the California Energy Commission, and any successor agency thereto. “Claiming Party” has the meaning specified in Section 11.1. “Claims” means all claims or actions, threatened or filed, that directly or indirectly relate to the indemnities provided herein, and the resulting losses, damages, expenses, attorneys’ fees, experts’ fees, and court costs, whether incurred by settlement or otherwise, and whether such claims or actions are threatened or filed prior to or after the termination of this Agreement. “Clean Energy Project” has the meaning specified in the recitals. “Code” means the Internal Revenue Code of 1986, as amended. “Commercially Reasonable” or “Commercially Reasonable Efforts” means, with respect to any purchase or sale or other action required to be made, attempted or taken by a Party under this Agreement, such efforts as a reasonably prudent Person would undertake for the protection of its own interest under the conditions affecting such purchase or sale or other action, including without limitation, the amount of notice of the need to take such action, the duration and type of the purchase or sale or other action, the competitive environment in which such purchase or sale or other action occurs, and the risk to the Party required to take such action. “Commodity Reference Price” means either (i) the Day-Ahead Market Price, or (ii) the Real-Time Market Price, as applicable.
“Contract Price” means (i) with respect to the Base Product and any Delivery Hour, (A) the Day-Ahead Market Price for such Delivery Hour at the Base Delivery Point less (B) the product of the Fixed Price multiplied by the Monthly Discount Percentage, (ii) with respect to Assigned Discounted Product, (A) the applicable APC Contract Price(s) multiplied by (B) the result of 100% less the Monthly Discount Percentage, and (iii) with respect to Assigned PAYGO Product, the APC Contract Price(s).
“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 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” has the meaning specified in Exhibit H. -6-
“Delivery Point” means the Base Delivery Point or an Assigned Delivery Point, as applicable.
“Disqualified Sale Proceeds” has the meaning specified in Section 7.6. “Disqualified Sale Units” has the meaning specified in Section 7.6. “Electricity Sale and Service Agreement” 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” means Energy that Purchaser can contract for and purchase in compliance with EPS requirements that are applicable to Purchaser. “EPS Energy Period” means any Assignment Period or J. Aron EPS Energy Period. “Execution Date” has the meaning specified in the preamble. “Federal Tax Certificate” means the executed Federal Tax Certificate delivered by Purchaser in the form attached as Exhibit D.
“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 Article IV.
“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 date this Agreement was executed, which is not within the reasonable control of, or the -7-
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; provided that, for the avoidance of doubt, the declaration of “Force Majeure” by an APC Party under a PPA (as defined in an Assignment Agreement) shall constitute Force Majeure hereunder. Force Majeure shall include, provided the criteria in the first sentence are met, riot, insurrection, war, labor dispute, natural disaster, vandalism, terrorism, sabotage. Force Majeure shall not be based on (i) the loss of Purchaser’s markets; (ii) Purchaser’s inability economically to use or resell the Product purchased hereunder; (iii) the delay, loss or failure of Issuer’s supply; or (iv) Issuer’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 a 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 a Force Majeure absent a showing of other facts and circumstances which in the aggregate with such factors establish that a Force Majeure as defined in the first sentence hereof has occurred. Force Majeure invoked by Prepay LLC under the Master Power Supply Agreement shall constitute Force Majeure in respect of Issuer hereunder to the extent the conditions set forth above have been satisfied with respect to Prepay LLC. “Government Agency” means the United States of America, any state thereof, any municipality, or any local jurisdiction, or any political subdivision of any of the foregoing, including, but not limited to, courts, administrative bodies, departments, commissions, boards, bureaus, agencies, or instrumentalities.
“Governmental Approval” means any authorization, consent, approval, license, ruling, permit, exemption, variance, order, judgment, registration, filing, giving of notice to, decree, declaration of or regulation by any Government Agency relating to the valid execution, delivery or performance of this Agreement or the consummation of any of the transactions contemplated hereby.
“Hour” means the 60-minute period commencing at 00:00 (LPT) on first Day of the Delivery Period and ending at 01:00 (LPT) on the first Day of the Delivery Period, and each 60-minute interval thereafter.
“Initial Assigned Rights and Obligations” means the Assigned Rights and Obligations set forth in Exhibit A-2 hereto as of the date hereof. “Initial Reset Period” has the meaning specified in Exhibit H. “Interest Rate Period” has the meaning specified in the Bond Indenture. “Issuer” has the meaning specified in the preamble.
“Issuer Default” has the meaning specified in Section 17.1. -8-
“ISTs” has the meaning specified in Section 5.1(a).
“J. Aron” means J. Aron & Company LLC, a New York limited liability company, and its permitted successors and assigns under an Assignment Agreement. “J. Aron EPS Energy Period” has the meaning specified in Section 6.1(c). “J. Aron Fixed Payment” has the meaning specified in the Pioneer Custodial Agreement.
“J. Aron Prepay Payment” has the meaning specified in the Pioneer Custodial Agreement.
“Joint Powers Act” means the Joint Exercise of Powers Act of the State of California (Government Code Section 6500 et seq.).
“Joint Powers Agreement” means that certain Joint Powers Agreement dated December 19, 2008, as amended from time to time, under which Purchaser is organized as a Joint Powers Authority in accordance with the Joint Powers Act. “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. “Long-Term PCC1 Product” means bundled renewable energy and RECs meeting the requirements of Portfolio Content Category 1, and the California Long-Term Contracting Requirements, to be delivered to J. Aron or any successor thereto pursuant to any Assigned Rights and Obligations.
“LPT” means the local prevailing time then in effect in the State of California. “Mandatory Purchase Date” has the meaning specified in the Bond Indenture. “Master Power Supply Agreement” has the meaning specified in the recitals. “Minimum Discount Percentage” has the meaning specified in Exhibit H. “Month” means a period beginning on the first Day of a calendar month and ending immediately prior to the commencement of the first Day of the next calendar month. “Monthly Discount Percentage” has the meaning specified in Exhibit H. “Municipal Utility” means any Person that (i) is a “governmental person” as defined in the implementing regulations under Section 141 of the Code and any successor provision, (ii) owns either or both a gas distribution utility or an electric distribution utility (or provides natural gas or electricity at wholesale to, or that is sold to entities that provide natural gas -9-
or electricity at wholesale to, governmental Persons that own such utilities), and (iii) agrees in writing to use the gas or electricity purchased by it (or cause such gas or electricity to be used) for a qualifying use as defined in U.S. Treas. Reg. § 1.148-1(e)(2)(iii). “MWh” means megawatt-hour.
“Non-Priority Products” means any Products that are not Priority Products. “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.
“Pioneer Custodial Agreement” means that certain Custodial Agreement, dated as of [____], by and among Purchaser, Issuer, J. Aron, Prepay LLC and the Pioneer Custodian. “Pioneer Custodian” means U.S. Bank National Association, a national banking association.
“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.
“Potential Remarketing Event” has the meaning specified in Section 3.5(b). “Prepay LLC” has the meaning stated in the recitals.
“Primary Delivery Point” has the meaning specified in Section 5.1(a). “Priority Products” means the Base Quantity and Assigned Products to be purchased by Purchaser under this Agreement, together with Products that (i) Purchaser is obligated to take under a long-term agreement, which Products either have been purchased by Purchaser or a joint action agency pursuant to a long-term prepaid power purchase agreement using the proceeds of bonds, notes, or other obligations, the interest on which is excluded from income for federal income tax purposes, or (ii) with respect to Energy, Energy that is generated using capacity that was constructed using the proceeds of bonds, notes, or other obligations, the interest on which is excluded from income for federal income tax purposes (provided that, for the avoidance of doubt, Priority Products shall not include Energy that is generated using capacity that was wholly or partially financed through the monetization of renewable tax credits, whether such monetization is accomplished through a tax equity investment or otherwise, or that is generated from federally owned and operated hydroelectric facilities, including through the United States -10-
Army Corps of Engineers and the United States Bureau of Reclamation, and marketed by the Bonneville Power Administration or the Western Area Power Administration). “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. “Purchaser” has the meaning specified in the preamble.
“Purchaser Default” has the meaning specified in Section 17.2. “Qualifying Use Requirements” means, with respect to any Product delivered under this Agreement, such Product is used (i) for a “qualifying use” as defined in U.S. Treas.
Reg. § 1.148-1(e)(2)(iii), (ii) in a manner that will not result in any “private business use” within the meaning of Section 141 of the Code, and (iii) in a manner that is consistent with the Federal Tax Certificate attached as Exhibit D.
“Re-Pricing Agreement” means the Re-Pricing Agreement, dated as of the Bond Closing Date (as defined in the Master Power Supply Agreement), by and between Prepay LLC and Issuer.
“Real-Time Market Price” has the meaning specified on Exhibit A-1 for each Delivery Point.
“Remarketing Election Deadline” means, for any Reset Period, the last date and time by which the Purchaser may provide a Remarketing Election Notice as set forth in the applicable Reset Period Notice.
“Remarketing Election Notice” has the meaning specified in Section 3.5(b). “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” means any Assigned Rights and Obligations other than the Initial Assigned Rights and Obligations. “Replacement Price” means, with respect to any Shortfall Quantity of Base Quantities, the price at which Purchaser, acting in a Commercially Reasonable manner, purchases at the applicable Delivery Point Replacement Product for such Shortfall Quantity, plus (i) costs reasonably incurred by Purchaser in purchasing Replacement Product, and (ii) additional transmission charges, if any, reasonably incurred by Purchaser to the applicable Delivery Point, or at Purchaser’s option, the market price at the Delivery Point for such Product not delivered as determined by Purchaser in a Commercially Reasonable manner. The Replacement Price for any Shortfall Quantity shall not include any administrative or other internal costs incurred by Purchaser 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 -11-
demand or similar charges, nor shall Purchaser be required to utilize or change its utilization of its owned or controlled assets or market positions to minimize Issuer’s liability. “Replacement Product” means any Energy purchased by Purchaser 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. “Reset Period Notice” has the meaning specified in Section 3.5(a). “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 Issuer, Purchaser 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. “Shortfall Quantity” has the meaning specified in Section 4.1(a). “Transmission Provider” means any entity or entities transmitting or transporting the Product on behalf of Issuer or Purchaser to or from the Delivery Point. “Trustee” means U.S. Bank National Association, a national banking association, and its successors as trustee under the Bond Indenture. “Utility Revenues” means all income, rents, rates, fees, charges and other moneys derived from the ownership or operation of Purchaser’s electric system, including, without limiting the generality of the foregoing, (1) all income, rents, rates, fees, charges, or other moneys derived by the Purchaser from the sale, furnishing and supplying of the electric capacity or energy or other services, facilities, and commodities sold, furnished or supplied through the facilities of or in the conduct or operation of the business of the Purchaser’s electric system, (2) the earnings on and income derived from the investment of such income, rents, rates, fees, charges, or other moneys to the extent that the use of such earnings and income is limited to Purchaser’s electric system by or pursuant to law, (3) deferred revenues and moneys maintained in the Purchaser’s operating reserve fund and (4) such other income, charges, revenue or moneys maintained in reserves as the Purchaser may specify in a written order of the Purchaser filed with the Issuer, but excluding (A) in all cases customers’ deposits or any other deposits or advances subject to refund until such deposits or advances have become the property of the Purchaser; and (B) such other income, charges, revenue or moneys as the Purchaser may specify in a written order of the Purchaser filed with the Issuer, provided that such written order of the Purchaser confirms that, following the filing of such written order of the Purchaser, (i) the requirements of Section 14.7 shall be satisfied; and -12-
(ii) the income, charges, revenue or moneys specified in such written order of the Purchaser shall be accounted for separately from the “Utility Revenues” as defined herein “Voided Remarketing Election Notice” has the meaning specified in Section 3.5(b). “Western EIM” has the meaning ascribed to “Energy Imbalance Market (EIM)” under the CAISO Tariff.
“WREGIS” means the Western Renewable Energy Generation Information System or its successor.
Section 1.2 Definitions; Interpretation. References to “Articles,” “Sections,” “Schedules” and “Exhibits” shall be to Articles, Sections, Schedules and Exhibits, as the case may be, of this Agreement unless otherwise specifically provided. Section headings in this Agreement are included herein for convenience of reference only and shall not constitute a part of this Agreement for any other purpose or be given any substantive effect. Any of the terms defined herein may, unless the context otherwise requires, be used in the singular or the plural, depending on the reference. The use herein of the word “include” or “including”, when following any general statement, term or matter, shall not be construed to limit such statement, term or matter to the specific items or matters set forth immediately following such word or to similar items or matters, whether or not nonlimiting language (such as “without limitation” or “but not limited to” or words of similar import) is used with reference thereto, but rather shall be deemed to refer to all other items or matters that fall within the broadest scope of such general statement, term or matter.
Except where expressly provided otherwise, any reference herein to any agreement or document includes all amendments, supplements or restatements to and of such agreement or document as may occur from time to time in accordance with its terms and the terms hereof, and any reference 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.
DELIVERY PERIOD; NATURE OF CLEAN ENERGY PROJECT; CONDITION
PRECEDENT
Section 2.1 Delivery Period. Subject to Section 2.3, delivery of Product by Issuer to Purchaser shall commence at the beginning of the Delivery Period and, except for any Reset Period for which a Remarketing Election Notice is in effect as provided in Section 3.5(b), shall continue throughout the Delivery Period.
Section 2.2 Nature of Clean Energy Project. Purchaser acknowledges and agrees that Issuer will meet its obligations to provide Product to Purchaser under this Agreement exclusively through its purchase of Product from Prepay LLC pursuant to the Master Power Supply Agreement and that Issuer is financing its purchase of such supplies through the issuance of the Bonds.
Section 2.3 Condition Precedent. Notwithstanding anything to the contrary herein, commencement of deliveries and the rights and obligations of Issuer and Purchaser hereunder are -13-
subject to the condition precedent that Issuer shall have entered into the Master Power Supply Agreement and shall have issued the Bonds.
Section 2.4 Pledge of this Agreement. Purchaser acknowledges and agrees that Issuer will pledge its right, title and interest under this Agreement and the revenues to be received under this Agreement to secure Issuer’s obligations under the Bond Indenture.
ARTICLE III.
SALE AND PURCHASE; PRICING
Section 3.1 Sale and Purchase of Product. Issuer shall sell and deliver or cause to be delivered to Purchaser, and Purchaser shall purchase and receive from Issuer, the applicable Product in the quantities and at the times and subject to the terms and conditions set forth in this Agreement. The quantities of Product to be sold and purchased and delivered and received pursuant to the terms and conditions set forth in this Agreement shall be equal to (a) the Base 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.
Section 3.2 Purchaser Payments.
(a) For each Month for which an EPS Energy Period is in effect at the start of such Month:
(i) Purchaser shall pay Issuer the Contract Price multiplied by the Assigned Prepay Quantities actually delivered for such Month; and (ii) Pursuant to the terms of the Pioneer Custodial Agreement Purchaser shall owe a separate Pioneer Gross Payment for each Assigned PPA consistent with the terms of the Pioneer Custodial Agreement, and, upon satisfying its obligations under the Pioneer Custodial Agreement in respect of such amount (after taking into consideration any PPA Seller Payment Obligation (as such term is defined in the Pioneer Custodial Agreement) credited to Pioneer in respect thereof), any portion of such amount attributable to Assigned PAYGO Product shall be deemed to be paid by Purchaser to the applicable APC Party on behalf of J. Aron and shall satisfy the obligations of the respective parties under each of the Electricity Sale and Service Agreement, the Master Power Supply Agreement, this Agreement and the applicable Assignment Agreement for such Assigned PAYGO Product.
(b) To the extent that Base Quantities are delivered hereunder in any Month, Purchaser shall pay Issuer the Contract Price multiplied by the Base Quantities actually delivered. (c) The Contract Price for Assigned Energy is inclusive of any amounts due in respect of other Assigned Products.
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Section 3.3 Limited Obligation to Take Base Quantities. Notwithstanding anything to the contrary in this Agreement, Purchaser shall not be required to purchase and receive any Base Quantities hereunder, and Issuer, with respect to any Base Quantities that otherwise would be delivered hereunder, shall cause Prepay LLC to remarket such Base Quantities pursuant to the provisions of Exhibit C to the Master Power Supply Agreement.
Section 3.4 Annual Refund. In addition to any Monthly Discount Percentage applied to Energy Scheduled hereunder, Issuer shall credit such Annual Refund to Purchaser as may be available for distribution by Issuer pursuant to Section 5.10 of the Bond Indenture, subject to the provisions of this Section 3.4. Such Annual Refund, if any, shall be credited to the next amount due from Purchaser following the release of funds for such purpose to Issuer under the terms of the Bond Indenture. In determining the amount of such Annual Refund, if any, to be credited to Purchaser, Issuer may reserve such funds (i) as may be required under the terms of the Bond Indenture or (ii) with the prior written consent of Purchaser (a) to fund or maintain the Minimum Discount Percentage for any future Reset Period, (b) to fund or maintain any rate stabilization or working capital reserve, (c) to reserve or account for unfunded liabilities and expenses or (d) for other costs of the Clean Energy Project.
Section 3.5 Reset Period Remarketing.
(a) Reset Period Notice. For each Reset Period, Issuer shall provide to Purchaser, at least ten (10) days prior to the Remarketing Election Deadline, written notice (a “Reset Period Notice”) setting forth (i) the duration of such Reset Period, (ii) the estimated Available Discount Percentage for such Reset Period, and (iii) the applicable Remarketing Election Deadline. Issuer may thereafter update such notice at any time prior to the Remarketing Election Deadline and in any such update may extend the Remarketing Election Deadline in its sole discretion.
(b) Remarketing Election. If the Reset Period Notice (or any update thereto) for any Reset Period indicates that the estimated Available Discount Percentage specified in such notice is not at least equal to the Minimum Discount Percentage for such Reset Period, then: (i) a “Potential Remarketing Event” shall be deemed to exist, and (ii) Purchaser may, not later than the Remarketing Election Deadline, issue a written notice in the form attached hereto as Exhibit C (a “Remarketing Election Notice”) to Issuer, Prepay LLC and the Trustee electing for the Assignment Agreements to be terminated and all Base Quantities with respect to such Reset Period to be remarketed; provided, however, if the actual Available Discount Percentage, as finally determined under the Re-Pricing Agreement, is equal to or greater than the Minimum Discount Percentage, then Issuer may, in its sole discretion, elect by written notice (a “Voided Remarketing Election Notice”) to Purchaser to treat such Remarketing Election Notice as void. If Purchaser issues a valid Remarketing Election Notice (other than a Voided Remarketing Election Notice) in accordance with this Section 3.5(b) for any Reset Period, then Purchaser shall have no rights or obligations to receive any Product hereunder during such Reset Period or to receive any Annual Refund attributable to such Reset Period.
(c) Final Determination of Available Discount Percentage. The Parties acknowledge and agree that the final Available Discount Percentage for any Reset Period -15-
following the Initial Reset Period will be determined on the Re-Pricing Date (as defined in the Re-Pricing Agreement) for such Reset Period, and that such Available Discount Percentage may differ from the estimate or estimates of such Available Discount Percentage last provided to Purchaser prior to the Remarketing Election Deadline for such Reset Period; provided that the Available Discount Percentage for any Reset Period will not be less than the lower of (i) the last estimated Available Discount Percentage set forth in the Reset Period Notice for such Reset Period (or any update thereof) sent to Purchaser by Issuer and (ii) the Minimum Discount Percentage for Reset Period.
(d) Obligations Following a Remarketing Election. Notwithstanding the issuance of any Remarketing Election Notice for a Reset Period, Purchaser shall not make any new commitment to purchase Priority Products during such Reset Period to the extent any such commitment could reasonably be expected to cause, during any portion of the Delivery Period after such Reset Period, Purchaser’s aggregate obligations to purchase Priority Products (including its obligation to purchase Priority Products hereunder) to exceed Purchaser’s expected aggregate requirements for Products that will be used (i) for a “qualifying use” as defined in U.S. Treas. Reg. § 1.148-1(e)(2)(iii) and (ii) in a manner that will not result in any “private business use” within the meaning of Section 141 of the Code. Unless Purchaser issues a new Remarketing Election Notice (other than a Voided Remarketing Election Notice) for any subsequent Reset Period in accordance with this Section 3.5, Purchaser and J. Aron will cooperate in good faith and exercise Commercially Reasonable Efforts to locate EPS Compliant Energy for redelivery hereunder in any such Reset Period.
ARTICLE IV.
FAILURE TO SCHEDULE PRODUCT
Section 4.1 Issuer’s Failure to Schedule Base Quantity (Not Due to Force Majeure). (a) Shortfall Quantity. If, for any Delivery Hour during the Delivery Period, Issuer breaches its obligation to Schedule or deliver all or any portion of the Base Quantity, after giving effect to reductions for Assigned Energy at any Delivery Point pursuant to the terms of this Agreement, then the portion of the Base Quantity that Issuer failed to Schedule or deliver shall be a “Shortfall Quantity”.
(b) Issuer Cover Damage Payments. To the extent Purchaser actually purchases Replacement Product with respect to any Shortfall Quantity, then Issuer shall pay to Purchaser the result determined by the following formula:
P = Q x (RP - CP + AF)
Where:
P = The amount payable by Issuer under this Section 4.1(b); Q = The quantity of Replacement Product purchased;
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RP = The Replacement Price;
CP = The Contract Price that would have applied to such Product; and AF = The Administrative Fee.
(c) Purchaser Obligation to Mitigate. Purchaser shall exercise Commercially Reasonable Efforts to mitigate Issuer’s damages paid by Issuer hereunder.
Section 4.2 Purchaser’s Failure to Schedule or Take Base Quantities (Not Due to Force Majeure). If, for any Delivery Hour during the Delivery Period, Purchaser breaches its obligation to Schedule or take all or any portion of the Base Quantity at any Delivery Point pursuant to the terms of this Agreement, then Purchaser shall remain obligated to pay Issuer the Contract Price for such Base Quantity. Issuer shall credit to Purchaser’s account any net revenues Issuer may receive from Prepay LLC under the Master Power Supply Agreement in connection with the ultimate sale of any such Product by Prepay LLC to Municipal Utilities or, if necessary, other purchasers, up to the Contract Price.
Section 4.3 Failure to Deliver or Take Due to Force Majeure. If with respect to all or any portion of Base Quantities or Assigned Prepay Quantities:
(a) Purchaser fails to take or fails to deliver all or any portion of the 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 the Parties shall have no payment obligations with respect to such quantities hereunder.
Section 4.4 Assigned Product. Notwithstanding anything herein to the contrary, neither Purchaser nor Issuer shall have any liability or other obligation to one another for any failure to Schedule, take, or deliver Assigned Product.
Section 4.5 Sole Remedies. Except with respect to the termination of this Agreement pursuant to Article XVII, 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 take Product, as applicable, pursuant to this Agreement.
ARTICLE V.
DELIVERY POINTS; SCHEDULING
Section 5.1 Delivery Points.
(a) Base Delivery Points. All Base Product delivered under this Agreement shall be Scheduled for delivery and receipt at (i) the Delivery Point set forth in Exhibit A-1 (the -17-
“Primary Delivery Point”) or (ii) any other point (an “Alternate Delivery Point”) that has been mutually agreed by Issuer, Purchaser and Prepay LLC (the Primary Delivery Point or, to the extent specified, any Alternate Delivery Point being the “Base Delivery Point”). Delivery of Energy to Purchaser at the Primary Delivery Point shall be facilitated through submission of Inter-SC Trades, as defined in the CAISO Tariff (“ISTs”). Purchaser shall designate a scheduling coordinator in the CAISO market for this purpose as specified in Exhibit G. (b) Alternate Base Market Prices. The Day-Ahead Market Price and Real-Time Market Price for each Alternate Delivery Point, as applicable, shall be the price mutually agreed and identified by the Parties, or if no such price is identified for such Alternate Delivery Point, the Day-Ahead Market Price and Real-Time Market Price, as applicable, specified on Exhibit A-1 for the Primary Delivery Point from which quantities are being shifted to such Alternate Delivery Point.
(c) Assigned Energy Delivery Points. Assigned Energy delivered under this Agreement shall be Scheduled for delivery 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 Section 5.2 Transmission and Scheduling. Issuer shall Schedule or arrange for Scheduling services with CAISO in accordance with the CAISO Tariff, to deliver the Base Product to the Base Delivery Point. Purchaser 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 Prepay LLC Schedules or arranges for Scheduling services, to deliver Base Product to the Base Delivery Point, then Issuer’s obligations under this Section shall be relieved pro tanto. Scheduling of Assigned Energy shall be in accordance with the applicable Assignment Schedule.
Section 5.3 Title and Risk of Loss. Title to and risk of loss of the Product delivered under this Agreement shall pass from Issuer to Purchaser 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. 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 Product 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) Issuer shall have no obligations to indemnify, defend or hold harmless Purchaser for any such Claims relating to replacement costs, cover damages or similar liabilities that are payable to any Person because of Purchaser’s failure to deliver any Product to such Person and (b) no obligation to indemnify, defend or hold harmless shall supplant or control the provisions of this Agreement relating to Force Majeure. Notwithstanding anything to the contrary herein, no Party shall have any obligations to indemnify, defend or hold harmless the other Party in respect of any Claims relating to any Assigned Product.
Section 5.4 PCC1 Product and Long-Term PCC1 Product. To the extent that any Assigned Product is PCC1 Product or Long-Term PCC1 Product, the following provisions apply:
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(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 “Issuer”, Buyer means “Purchaser”, 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 “Issuer”, Buyer means “Purchaser”, 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 “Issuer”, Buyer means “Purchaser”, 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]
(e) Issuer Representations and Warranties.
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Issuer represents and warrants:
(i) Issuer has the right to sell the Assigned Product from the Applicable Project;
(ii) Issuer has not sold the Assigned Product or any REC or other attributes of the Assigned Product to be transferred to Purchaser to any other person or entity;
(iii) the Energy component of the Assigned Product produced by the Applicable Project and purchased by Issuer for resale to Purchaser hereunder is not being sold by Issuer back to the Applicable Project or APC Party;
(iv) Assigned Energy and Assigned RECs to be purchased and sold pursuant to this Agreement are not committed to another party; (v) The Assigned Product is free and clear of all liens or other encumbrances;
(vi) Issuer will deliver to Purchaser 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 Purchaser 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) Issuer will cooperate and work with Purchaser, 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.
Issuer further represents and warrants to Purchaser that, to the extent that the Product sold by Issuer is a resale of part or all of a contract between Issuer and one or more third parties, Issuer represents, warrants and covenants that the resale complies with the following conditions in (i) through (iv) below during the Assignment Period and throughout the generation period:
(i) The original upstream third-party contract(s) meets the criteria of California Public Utilities Code Section 399.16(b)(1);
(ii) This Agreement transfers only electricity and RECs that have not yet been generated prior to the Assignment Period;
(iii) The electricity transferred by this Agreement is transferred to -20-
Purchaser 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, Issuer 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) Issuer 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 has agreed pursuant to the Electricity Sale and Service Agreement to terminate the applicable Assignment Period in the event that any representation or warranty in this Section 5.4 proves to be incorrect in any respect; and
(iii) Purchaser agrees that its sole recourse for any breach of the provisions of this Section 5.4 shall be the termination of the applicable Assignment Period and Purchaser shall have no other recourse against Issuer or remedies under this Agreement.
Section 5.5 Communications Protocol. With respect to the Scheduling and delivery of Base Quantities, Issuer and Purchaser shall comply with the communications protocol set forth in Exhibit G. Scheduling and transmission of Assigned Energy shall be in accordance with the applicable Assignment Agreement pursuant to which the Project Participant shall act as scheduling agent for each of J. Aron, Prepay LLC and Issuer.
Section 5.6 Deliveries within CAISO or another Balancing Authority. The Parties acknowledge that Energy delivered by Issuer at a Delivery Point within CAISO or another Balancing Authority (including a Balancing Authority operating within the Western EIM) will be delivered in accordance with the CAISO Tariff and rules of the Balancing Authority as applicable.
Scheduling such Energy in accordance with the requirements of the applicable Product into the applicable Balancing Authority shall constitute delivery of such Product to Purchaser hereunder, -21-
provided that any associated Renewable Energy Credits and other Assigned Product are also delivered to Purchaser.
Section 5.7 Assigned Products. Notwithstanding anything to the contrary herein, except as provided in Section 6.3, Issuer shall have no liability under this Article V with respect to any Assigned Products.
ARTICLE VI.
ASSIGNMENT OF POWER PURCHASE AGREEMENTS
Section 6.1 Assignments Generally.
(a) Initial Assigned Rights and Obligations. Prior to the commencement of the Delivery Period, Purchaser agrees to exercise Commercially Reasonable Efforts to assign the Initial Assigned Rights and Obligations to J. Aron. (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, Purchaser shall exercise Commercially Reasonable Efforts and cooperate with J. Aron in good faith to assign a portion of Purchaser’s 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 Purchaser is purchasing EPS Compliant Energy, RECs and other products that may be assigned pursuant to Exhibit F. The Parties recognize that, in the case of such an assignment, J. Aron will be obligated to sell and deliver Assigned Product it receives under all Assigned Rights and Obligations to Prepay LLC under the terms of the Electricity Sale and Service Agreement, and Prepay LLC will be obligated to deliver such Product to Issuer under the terms of the Master Power Supply Agreement. To be effective hereunder, any assignment of Replacement Assigned Rights and Obligations must be proposed, agreed and consented to in accordance with Exhibit F and the Master Power Supply Agreement.
(c) J. Aron Procurement of EPS Compliant Energy. Under certain circumstances specified in Section 6.1(c) of the Electricity Sale and Service Agreement, J. Aron is obligated to exercise Commercially Reasonable Efforts to obtain EPS Compliant Energy for ultimate redelivery to Purchaser hereunder, and, in such case, Purchaser shall cooperate in good faith with J. Aron in connection therewith, provided that:
(i) J. Aron’s procurement of any such EPS Compliant Energy for ultimate redelivery hereunder shall be subject to Purchaser’s prior written consent, with such consent not to be unreasonably withheld, -22-
provided, for the avoidance of doubt, that it shall be reasonable for Purchaser to withhold its consent based on the requirements of the EPS or other regulatory requirements;
(ii) Issuer and Purchaser 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 such succeeding Reset Period; and
(iv) during a J. Aron EPS Energy Period, if requested by J. Aron, Purchaser shall 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) Amendments. Purchaser and Issuer agree to seek the written consent of J. Aron prior to any amendment to this Article VI or Exhibit F hereto.
Section 6.2 Failure to Obtain EPS Compliant Energy. To the extent an EPS Energy Period terminates or expires and Purchaser and J. Aron have been unable to obtain EPS Compliant Energy for delivery hereunder pursuant to the provisions of Section 6.1, then, until EPS Compliant Energy is obtained for delivery hereunder, Prepay LLC shall remarket Purchaser’s Base Quantities pursuant to the provisions of Exhibit C to the Master Power Supply Agreement, subject to the following:
(a) Purchaser’s and J. Aron’s obligations set forth in Section 6.1 shall continue to apply; and
(b) Purchaser shall not make any new commitment to purchase Priority Products during such a remarketing.
Section 6.3 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 in Exhibit F hereto. Effective upon the first day of the Month following the termination or expiration of an EPS Energy Period for any reason, Issuer shall revise Exhibit A-1 to (i) update the Base Quantity Reductions as provided in Exhibit F to the extent a subsequent EPS Energy -23-
Period will commence immediately following such termination or expiration or (ii) reverse such Base Quantity Reductions associated with the EPS Energy Period that terminated or expired for all remaining Hours in the Delivery Period to the extent a replacement EPS Energy Period will not commence immediately following such termination or expiration. In the case of any other commencement of a subsequent EPS Energy Period, Issuer shall revise the Base Quantity Reductions in Exhibit A-1 as provided by Exhibit F hereto.
Section 6.4 J. Aron Non-Payment to APC Party. To the extent that (a) J. Aron fails to pay when due any J. Aron Prepay Payment and (b) Purchaser makes a payment for such amounts to the applicable APC Party, Purchaser shall provide notice thereof to Issuer upon Purchaser’s payment to the applicable APC Party and Issuer shall make a payment to Purchaser in the amount of such non-payment.
ARTICLE VII.
USE OF PRODUCT
Section 7.1 Tax Exempt Status of the Bonds. Purchaser acknowledges that the Bonds will be issued with the intention that the interest thereon will be exempt from federal taxes under Section 103 of the Code. Accordingly, Purchaser agrees that it will (a) provide such information with respect to its community choice aggregation program as may be requested by Issuer in order to establish the tax-exempt status of the Bonds, and (b) act in accordance with such written instructions as Issuer may provide from time to time in order to maintain the tax-exempt status of the Bonds. Purchaser further agrees that it will not at any time take any action, or fail to take any action, that, if taken or omitted, respectively, would adversely affect the tax-exempt status of the Bonds.
Section 7.2 Priority Products. Purchaser agrees to purchase and receive the Products to be delivered under this Agreement (a) in priority over and in preference to all other Products available to Purchaser that are not Priority Products; and (b) on at least a pari passu and non-discriminatory basis with other Priority Products.
Section 7.3 Assistance with Sales to Third Parties. If (a) a quantity of Assigned Energy less than the Assigned Prepay Quantity is delivered hereunder in any Month during an Assignment Period for any reason other than Force Majeure, (b) Issuer is required under Section 3.3 to cause Base Quantities that otherwise would be delivered hereunder to be remarketed or (c) notwithstanding Purchaser’s compliance with Section 7.1, Purchaser does not require all or any portion of the Assigned Prepay Quantity to meet its requirements for Energy that it is obligated to purchase under this Agreement as a result of (i) insufficient demand by Purchaser’s retail customers or (ii) a change in Law, Purchaser may, with reasonable notice issued in the form of a remarketing notice in accordance with Exhibit G, request (and, in the case of clauses (a) and (b), shall be deemed to request) that Prepay LLC, as permitted by the Master Power Supply Agreement, sell such portion of such Base Quantities or Assigned Energy (i) to another Municipal Utility, or (ii) if necessary, to another purchaser. Any remarketing notice issued under clause (ii) above shall constitute a Structural Remarketing Notice (as defined in the Master Power Supply Agreement) and shall be subject to the requirements set forth in the Master Power Supply Agreement. If Prepay -24-
LLC makes such a sale under Exhibit C to the Master Power Supply Agreement, Issuer shall credit against the amount owed by Purchaser to Issuer hereunder the amount received by Issuer from Prepay LLC for such sales less all reasonable costs and expenses directly incurred by Issuer, including but not limited to remarketing administrative charges paid by it to Prepay LLC under the Master Power Supply Agreement, but in no event shall the amount of such credit be more than the Contract Price for the Energy so sold.
Section 7.4 Qualifying Use. Without limiting Purchaser’s other obligations under this Article VII, Purchaser agrees that, subject to Section 7.5, it will use all of the Product purchased under this Agreement in compliance with the Qualifying Use Requirements. Purchaser agrees that it will provide such additional information, records and certificates as Issuer may reasonably request to confirm Purchaser’s compliance with this Section 7.4.
Section 7.5 Remediation.
(a) The Parties acknowledge that Purchaser may at times inadvertently remarket Products received hereunder in a manner that does not comply with Qualifying Use Requirements due to daily and hourly fluctuations in Purchaser’s Product needs. To the extent Purchaser does so, Purchaser shall (a) exercise Commercially Reasonable Efforts to use any Disqualified Sale Proceeds of such remarketing to purchase Products (other than Priority Products) that Purchaser then uses in compliance with the Qualifying Use Requirements and (b) reserve funds in an amount equal to any Disqualified Sale Proceeds until such Disqualified Sale Proceeds are remediated or transferred to the Trustee pursuant to Section 7.6(b) below.
(b) To the extent that all or any portion of Assigned Quantities or Base Quantities are remarketed under Section 3.3 or under Section 7.3, as applicable, and any such remarketing results in a Ledger Entry (as defined in the Master Power Supply Agreement), Purchaser agrees that it shall (i) exercise Commercially Reasonable Efforts to use an amount equivalent to the remarketing proceeds associated with such any such Ledger Entry to purchase Non-Priority Products and use such Non-Priority Products in compliance with the Qualifying Use Requirements in order to remediate such Ledger Entries; and (ii) apply its purchases of Non-Priority Products to remediate any such proceeds under the Master Power Supply Agreement prior to remediating such proceeds under any other contract that provides for the purchase of Priority Products. To track compliance with Purchaser’s obligations under this Section 7.5(b), Purchaser shall deliver a remediation certificate to Issuer and Prepay LLC by the tenth day of the Month subsequent to any relevant Non-Priority Products purchases (which may include purchases of Energy from CAISO to the extent such Energy is used in compliance with the Qualifying Use Requirements). For Ledger Entries remediated under this Section 7.5(b) that have not otherwise been remediated by Prepay LLC pursuant to the remarketing provisions of the Master Power Supply Agreement, Issuer shall pay Purchaser any portion of the Monthly Discount Percentage associated with such Ledger Entries that is available under the Bond Indenture on or before the last -25-
Business Day of the Month in which Purchaser provides a certificate under this Section 7.5(b) evidencing such remediation.
Section 7.6 Remediation; Ledger Entries; Redemption.
(a) Remediation. To track compliance with the requirements of Section 7.5(a), Purchaser will provide a quarterly report to Issuer (delivered not later than the 15th day of each April, July, October and January until the end of the Delivery Period) showing the following: the total quantity of proceeds from sales of Products received hereunder that (i) were sold by Purchaser to any Person in a transaction that does not comply with the Qualifying Use Requirements and (ii) have not been remediated by Purchaser by applying such proceeds to purchase Products that are used in compliance with the Qualifying Use Requirements (the quantities of Product producing such proceeds, “Disqualified Sale Units” and such proceeds received, “Disqualified Sale Proceeds”).
(b) Ledger Entries. Issuer shall report such unremediated Disqualified Sale Proceeds and the associated Disqualified Sale Units to Prepay LLC for addition to the remarketing ledgers maintained by Prepay LLC under the Master Power Supply Agreement, with the ledger entries to be dated as of the end of the first month of the relevant quarter. (c) Transfers to Trustee. Purchaser shall transfer (to the extent such unremediated Disqualified Sales Proceeds and associated Disqualified Sale Units remain reflected on the remarketing ledger described under Section 7.6(b) at the time such transfer is required by this Section 7.6(c)) any such unremediated Disqualified Sale Proceeds and any other required funds (i.e., all additional funds necessary for redemption of the Bonds referred to in this Section
7.6(c)) to the Trustee at least 95 days prior to the second anniversary of the date on which such unremediated Disqualified Sale Proceeds and the associated Disqualified Sale Units were first reflected on the remarketing ledgers in accordance with Section 7.6(b), with such funds to be deposited in the Debt Service Account (as defined in the Bond Indenture) and applied to the redemption of Bonds as directed by Issuer and approved by Special Tax Counsel (as defined in the Bond Indenture) as preserving the tax-exempt status of the Bonds.
ARTICLE VIII.
REPRESENTATIONS AND WARRANTIES; ADDITIONAL COVENANTS
Section 8.1 Representations and Warranties of Issuer. 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) in the case of Issuer as the representing Party, Issuer is a joint powers authority, duly organized and validly existing under the Laws of the State of California, (b) in the case of Purchaser as the representing Party, Purchaser is a public agency of the State of California, duly organized and validly existing under the Laws of the State of California;
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(c) it has all requisite power and authority, corporate or otherwise, to own its material properties, carry on its material business as now being conducted, enter into, deliver and to perform its obligations under this Agreement and to carry out the terms and conditions hereof and the transactions contemplated hereby;
(d) there is no litigation, action, suit, proceeding with service of process accomplished with respect to such Party or investigation pending or, to the best of such Party’s knowledge, threatened, in each case before or by any Government Agency and, in each case, which could reasonably be anticipated to materially and adversely affect such Party’s ability to perform its obligations under this Agreement or that questions the validity, binding effect or enforceability hereof, any action taken or to be taken by such Party pursuant hereto, or any of the transactions contemplated hereby;
(e) the execution, delivery and performance of this Agreement by such Party have been duly authorized by all necessary action on the part of such Party and its governing body and do not require any approval or consent of any security holder of such Party or any holder (or any trustee for any holder) of any indebtedness or other obligation of such Party; (f) this Agreement has been duly executed and delivered on behalf of such Party by an appropriate officer or authorized Person of such Party and constitutes the legal, valid and binding obligation of such Party, enforceable against it in accordance with its terms, as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium and similar Laws affecting creditors’ rights generally and by general principles of equity; (g) the execution, delivery and performance of this Agreement by such Party shall not violate any provision of any Law, order, writ, judgment, decree or other legal or regulatory determination applicable to it;
(h) the execution, delivery and performance by such Party of this Agreement, and the consummation of the transactions contemplated hereby, including the incurrence by such Party of its financial obligations under this Agreement, shall not result in any violation of any term of any material contract or agreement applicable to it, or any of its charter or bylaws or of any license, permit, franchise, judgment, writ, injunction or regulation, decree, order, charter, Law, ordinance, rule or regulation applicable to it or any of its properties or to any obligations incurred by it or by which it or any of its properties or obligations are bound or affected, or of any determination or award of any arbitrator applicable to it, and shall not conflict with, or cause a breach of, or default under, any such term or result in the creation of any lien upon any of its properties or assets, except with respect to Issuer, the lien of the Bond Indenture; (i) to the best of the knowledge and belief of such Party, no Governmental Approval is required in connection with the valid authorization, execution, delivery and performance by such Party of this Agreement or the consummation of any of the transactions contemplated hereby other than those Governmental Approvals that have been obtained; and -27-
(j) it enters this Agreement as a bona-fide, arms-length transaction involving the mutual exchange of consideration and, once executed by both Parties, considers this Agreement a legally enforceable contract.
Section 8.2 Warranty of Title. Issuer warrants that it will deliver to Purchaser (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 Issuer’s or Prepay LLC’s actions.
Section 8.3 Disclaimer of Warranties. EXCEPT FOR THE WARRANTIES EXPRESSLY MADE BY ISSUER IN THIS Article VIII, ISSUER HEREBY DISCLAIMS ALL
WARRANTIES, EXPRESS OR IMPLIED, INCLUDING ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
Section 8.4 Continuing Disclosure. Purchaser agrees to provide to Issuer: (a) such financial and operating information as may be requested by Issuer, including Purchaser’s most recent audited financial statements, for use in Issuer’s offering documents for the Bonds; and (b) annual updates to such information and statements to enable Issuer to comply with its undertakings to enable the underwriters of the offerings of the Bonds to comply with the continuing disclosure provisions of Rule 15(c)2-12 of the United States Securities and Exchange Commission. Failure by Purchaser to comply with its agreement to provide such annual updates shall not be a default under this Agreement, but any such failure shall entitle Issuer or an owner of the Bonds to take such actions and to initiate such proceedings as may be necessary and appropriate to cause Purchaser to comply with such agreement, including without limitation the remedies of mandamus and specific performance.
ARTICLE IX.
TAXES
As between Issuer and Purchaser, Issuershall (i) be responsible for and pay or cause to be paid all ad valorem, excise, severance, production and other taxes assessed with respect to Product (other than any Assigned Product) delivered pursuant to this Agreement arising prior to the applicable Delivery Point and (ii) indemnify Purchaser and its Affiliates for any such taxes paid by Purchaser or its Affiliates. As between Issuer and Purchaser, Purchaser shall (i) be responsible for all taxes with respect to Product received pursuant to this Agreement assessed at or from the applicable Delivery Point, and (ii) indemnify Issuer and its Affiliates for any such taxes paid by Issuer or its Affiliates. Nothing shall obligate or cause a Party to pay or be liable for any tax for which it is exempt under Law.
ARTICLE X.
JURISDICTION; WAIVER OF JURY TRIAL
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Section 10.1 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 CALIFORNIA
LOCATED IN THE CITY OF SAN FRANCISCO, (B) THE FEDERAL COURTS OF THE
UNITED STATES OF AMERICA FOR THE NORTHERN DISTRICT OF CALIFORNIA SITTING IN THE CITY AND COUNTY OF SAN FRANCISCO. BY EXECUTING AND
DELIVERING THIS AGREEMENT, EACH PARTY AGREES THAT SERVICE OF ALL
PROCESS IN ANY SUCH PROCEEDING IN ANY SUCH COURT MAY BE MADE BY
REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT REQUESTED, TO THE PARTY AT ITS ADDRESS PROVIDED IN ACCORDANCE WITH ARTICLE XVI; AND AGREES
THAT SERVICE AS PROVIDED ABOVE IS SUFFICIENT TO CONFER PERSONAL
JURISDICTION OVER THE PARTY IN ANY SUCH PROCEEDING IN ANY SUCH COURT,
AND OTHERWISE CONSTITUTES EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT.
Section 10.2 Waiver of Jury Trial. TO THE EXTENT PERMITTED BY LAW, EACH
OF THE PARTIES HEREBY AGREES TO WAIVE ITS RESPECTIVE RIGHTS TO A JURY
TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING UNDER THIS AGREEMENT. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT
AND THAT RELATE TO THE SUBJECT MATTER OF THIS AGREEMENT, INCLUDING
CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS. EACH PARTY ACKNOWLEDGES THAT
THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS
RELATIONSHIP, THAT EACH HAS ALREADY RELIED ON THIS WAIVER IN ENTERING
INTO THIS AGREEMENT, AND THAT EACH WILL CONTINUE TO RELY ON THIS WAIVER IN ITS RELATED FUTURE DEALINGS. EACH PARTY FURTHER WARRANTS
AND REPRESENTS THAT IT HAS REVIEWED THIS WAIVER WITH ITS LEGAL
COUNSEL AND THAT IT KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. THIS WAIVER IS
IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN
WRITING (OTHER THAN BY MUTUAL WRITTEN WAIVER SPECIFICALLY REFERRING TO THIS SECTION 10.2 AND EXECUTED BY EACH OF THE PARTIES), AND THIS
WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS HERETO. IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY A COURT.
ARTICLE XI.
FORCE MAJEURE
Section 11.1 Applicability of Force Majeure. To the extent either Party is prevented by Force Majeure from carrying out, in whole or part, its obligations under this Agreement and such Party (the “Claiming Party”) gives notice and details of the Force Majeure to the other Party as soon as practicable, then the Claiming Party shall be excused from the performance of its -29-
obligations with respect to this Agreement (other than the obligation to make payments then due or becoming due with respect to performance prior to the Force Majeure). The Claiming Party shall remedy the Force Majeure with all reasonable dispatch. For the duration of the Claiming Party’s non-performance (and only for such period), the non-Claiming Party shall not be required to perform or resume performance of its obligations to the Claiming Party corresponding to the obligations of the Claiming Party excused by Force Majeure.
Section 11.2 Settlement of Labor Disputes. Notwithstanding anything to the contrary herein, the Parties agree that the settlement of strikes, lockouts or other industrial disturbances shall be within the sole discretion of the Party experiencing such disturbance, and the failure of a Party to settle such strikes, lockouts or other industrial disturbances shall not prevent the existence of Force Majeure or of reasonable dispatch to remedy the same.
ARTICLE XII.
GOVERNMENTAL RULES AND REGULATIONS
Section 12.1 Compliance with Laws. This Agreement shall be subject to all present and future Laws of any Government Agency having jurisdiction over this Agreement or the transactions to be undertaken hereunder, and neither Party has knowingly undertaken or will knowingly undertake or knowingly cause to be undertaken any activity that would conflict with such Laws; provided, however, that nothing herein shall be construed to restrict or limit either Party’s right to object to or contest any such Law, or its application to this Agreement or the transactions undertaken hereunder, and neither acquiescence therein or compliance therewith for any period of time shall be construed as a waiver of such right.
Section 12.2 Contests. Excluding all matters involving a contractual dispute between the Parties, no Party shall contest, cause to be contested or in any way actively support the contest of the equity, fairness, reasonableness or lawfulness of any terms or conditions set forth or established pursuant to this Agreement, as those terms or conditions may be at issue before any Government Agency in any proceeding, if the successful result of such contest would be to preclude or excuse the performance by either Party of this Agreement or any provision hereunder.
Section 12.3 Defense of Agreement. Excluding all matters involving a contractual dispute between the Parties, each Party shall hereafter exercise Commercially Reasonable Efforts to defend and support this Agreement before any Government Agency in any proceeding, if the substance, validity or enforceability of all or any part of this Agreement is hereafter directly challenged or if any proposed changes in regulatory practices or procedures 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
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The terms and provisions of this Agreement shall extend to and be binding upon the Parties and their respective successors, assigns, and legal representatives; provided, however, that, subject to Section 18.14, neither Party may assign this Agreement or its rights and interests, in whole or in part, under this Agreement without the prior written consent of the other Party; provided furthermore that, for the avoidance of doubt, any applicable Assignment Agreement shall terminate concurrent with the assignment of this Agreement. Prior to assigning this Agreement, Purchaser shall deliver to Issuer written confirmation from each Rating Agency (as defined in the Bond Indenture) then rating the Bonds, provided that such agency has rated and continues to rate the Bonds, that the assignment will not result in a reduction, qualification, or withdrawal of the then-current ratings assigned by such Rating Agency to the Bonds. Whenever an assignment or a transfer of a Party’s interest in this Agreement is requested to be made with the written consent of the other Party, the assigning or transferring Party’s assignee or transferee shall expressly assume, in writing, the duties and obligations under this Agreement of the assigning or transferring Party.
Upon the agreement of a Party to any such assignment or transfer, the assigning or transferring Party shall furnish or cause to be furnished to the other Party a true and correct copy of such assignment or transfer and assumption of duties and obligations ARTICLE XIV.
PAYMENTS
Section 14.1 Monthly Statements.
(a) Purchaser’s Statements. No later than the 5th day of each Month during the Delivery Period and the first Month following the end of the Delivery Period, Purchaser shall deliver to Issuer a statement (a “Purchaser’s Statement”) listing (i) in respect of any Shortfall Quantity in the prior Month, the Replacement Price applicable to such Shortfall Quantity, and (ii) any other amounts due to Purchaser in connection with this Agreement with respect to the prior Months.
(b) Billing Statements.
(i) No later than the [___] day of each Month during the Delivery Period and the first Month following the end of the Delivery Period (the “Billing Date”), Issuer shall deliver a statement (a “Billing Statement”). On the Billing Date for each Month of the Delivery Period, Issuer shall deliver a statement (a “Billing Statement”) to Purchaser indicating (i) the total amount due to Issuer for Product delivered in the prior Month, (ii) any other amounts due to Issuer or Purchaser in connection with this Agreement with respect to the prior Months, and (iii) the net amount due to Issuer or Purchaser; provided that Prepay LLC’s delivery of a Billing Statement to Issuer and Purchaser pursuant to and as defined in the Master Power Supply Agreement shall be deemed to satisfy Issuer’s obligation to deliver a Billing Statement hereunder; provided furthermore that invoicing for all Assigned PAYGO Products shall occur under the Pioneer Custodial Agreement. -31-
(ii) If a Monthly Statement (as defined in the Pioneer Custodial Agreement) for an Assigned PPA has not been delivered by the [___] day of the Month following deliveries, Issuer shall provisionally prepare or cause to be prepared 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 Pioneer 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) Issuer shall owe a resettlement payment to Purchaser 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 shall have a separate resettlement payment obligation with respect to the amounts described in the clause (C) of the preceding sentence under the Electricity Sale and Service Agreement, and J. Aron’s payment of the [J. Aron Resettlement Payment] as defined in and pursuant to the Pioneer Custodial Agreement shall satisfy the corresponding obligations of the respective parties under each of the Electricity Sale and Service Agreement, the Master Power Supply Agreement and this Agreement. (iii) Notwithstanding anything to the contrary in this Agreement, the Parties acknowledge and agree that (A) the Shell PPA (as defined in the Pioneer Custodial Agreement) provides for advance payment to the APC Party thereunder in the Month preceding deliveries, and (B) invoicing for the Assigned Quantities under the Shell PPA shall occur and payments shall be due under this Agreement and the Pioneer Custodial Agreement in the Month preceding deliveries as further detailed in the Pioneer Custodial Agreement.
(c) Supporting Documentation. Upon request by either Party, the other Party shall deliver such supporting documentation of the foregoing statements and information described in this Section 14.1 as such requesting Party may reasonably request.
Section 14.2 Payments.
(a) Payments Due. If the Billing Statement indicates an amount due from Purchaser, then Purchaser shall remit such amount to Issuer by wire transfer (pursuant to the Trustee’s instructions), in immediately available funds, on or before the later of (i) the 23rd day of the Month following the most recent Month to which such Billing Statement relates, or (ii) the 10th day following Purchaser’s receipt of Issuer’s Billing Statement, or if either such day is not a Business Day, the preceding Business Day. If the Billing Statement indicates an amount due from Issuer, then Issuer shall remit such amount to Purchaser by wire transfer (pursuant to Purchaser’s instructions), in immediately available funds, on or before the later of (i) the 28th day of the Month -32-
following the most recent Month to which such Billing Statement relates, or (ii) the 10th day following Issuer’s receipt of Purchaser’s Statement, or if either such day is not a Business Day, the following Business Day. Notwithstanding the foregoing, payments due from Purchaser for Assigned PAYGO Product shall be satisfied by Purchaser’s compliance with Section 3.2(a)(ii) in respect of such Assigned PAYGO Product.
(b) No Duty to Estimate. If Purchaser fails to issue a Purchaser’s Statement with respect to any Month, Issuer shall not be required to estimate any amounts due to Purchaser for such Month, provided that Purchaser may include any such amount on subsequent Purchaser’s Statements issued within the next sixty (60) days. The sixty (60)-day deadline in this subsection (b) replaces the two (2) year deadline in Section 14.5 with respect to any claim by any non-delivering Party of inaccuracy in any estimated invoice issued or payment made pursuant to this subsection (b).
Section 14.3 Payment of Disputed Amounts. If Purchaser disputes any amounts included in a Billing Statement, Purchaser shall (except in the case of manifest error) nonetheless 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 Purchaser may have; provided, however, that Purchaser shall have the right, after payment, to dispute any amounts included in a Billing Statement or otherwise used to calculate payments due under this Agreement pursuant to Section 14.5. If Issuer disputes any amounts included in the Purchaser’s Statement, Issuer may withhold payment to the extent of the disputed amount; provided, however, that interest shall be due at the Default Rate for any withheld amount later found to have been properly due.
Section 14.4 Late Payment. If Purchaser fails to remit within one Business Day the full amount payable when due, interest on the unpaid portion shall accrue from the date due until the date of payment at the Default Rate.
Section 14.5 Audit; Adjustments.
(a) Right to Audit. A Party shall have the right, at its own expense, upon reasonable notice to the other Party and at reasonable times, to examine and audit and to obtain copies of the relevant portion of the books, records, and telephone recordings of the other Party to the extent reasonably necessary, but only to such extent, to verify the accuracy of any statement, charge, payment, or computation made under this Agreement. This right to examine, audit, and obtain copies shall not be available with respect to proprietary information not directly relevant to transactions under this Agreement.
(b) Deadline for Objections. Each Purchaser’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 Purchaser’s Statement or Billing Statement is objected to in writing, with adequate explanation and/or documentation, within two (2) years after the applicable Month of Product delivery.
(c) Payment of Adjustments. All retroactive adjustments shall be paid in full by the Party owing payment within 30 days of notice and substantiation of such inaccuracy. If the -33-
Parties are unable to agree upon any retroactive adjustments requested by either Party within the time period specified in Section 14.5(b), then either Party may pursue any remedies available with respect to such adjustments at law or in equity. Retroactive adjustments for payments made based on an incorrect Purchaser’s Statement or Billing Statement shall bear interest at the Default Rate from the date such payment was made.
Section 14.6 Netting; No Set-Off. The Parties shall net all amounts due and owing, including any past due amounts (which, for the avoidance of doubt, shall include any accrued interest), arising under this Agreement such that the Party owing the greater amount shall make a single payment of the net amount to the other Party in accordance with this Article XIV.
Notwithstanding the foregoing, no Party shall be entitled to net any amounts that are in dispute and payment for all amounts set forth in a Billing Statement provided to Purchaser shall be made without set-off or counterclaim of any kind.
Section 14.7 Rate Covenant. Purchaser agrees to make payments it is required to make under this Agreement from Utility Revenues, and only from such Utility Revenues, and as a charge against such Utility Revenues, as an operating expense of its electric system and a cost of purchased Product; provided, however, that Purchaser, in its discretion, may apply any legally available moneys to the payment of amounts due under this Agreement. Purchaser hereby covenants and agrees that it will establish, maintain, and set rates and charges for its electric system so as to provide Utility Revenues sufficient, together with all available electric system revenues, to enable Purchaser to pay to Issuer all amounts payable under this Agreement and to pay all other amounts payable from the revenues of Purchaser’s electric system, and to maintain any reserves as required by the Purchaser’s reserve policy. Purchaser further covenants and agrees that it shall not furnish or supply electric services free of charge to any person, firm, corporation association, or other entity, public or private, except any such service free of charge that Purchaser is supplying on the date hereof or such free service as required by order of the CPUC or the State of California, and that it shall promptly enforce the payment of any and all accounts owing to Purchaser for the sale of electricity or the provision of transmission, distribution or other services to its customers.
Purchaser further covenants and agrees that in any future bond issue, certificate of participation issue, interest rate swap agreement, commodity swap agreement or any other financing or financial transaction undertaken by, or on behalf of, Purchaser in connection with its electric system, Purchaser shall not pledge or encumber the Utility Revenues through a gross revenue pledge or in any other way which creates a prior or superior obligation to its obligation to make payments under this Agreement.
ARTICLE XV.
[RESERVED]
ARTICLE XVI.
NOTICES
Any notice, demand, statement or request required or authorized by this Agreement to be given by one Party to the other Party (or to any third party) shall be in writing and shall either -34-
be sent by email transmission, courier, or personal delivery (including overnight delivery service) to each of the notice recipients and addresses specified in Exhibit B for the receiving Party. Any such notice, demand, or request shall be deemed to be given (i) when delivered by email transmission, or (ii) when actually received if delivered by courier or personal delivery (including overnight delivery service). Each Party shall have the right, upon 10 days’ prior written notice to the other Party, to change its list of notice recipients and addresses in Exhibit B. The Parties may mutually agree in writing at any time to deliver notices, demands or requests through alternate or additional methods, such as electronic mail. Notwithstanding the foregoing, either Party may at any time notify the other that any notice, demand, statement or request to it must be provided by email transmission for a specified period of time or until further notice, and any communications delivered by means other than email transmission during the specified period of time shall be ineffective.
ARTICLE XVII.
DEFAULT; REMEDIES; TERMINATION
Section 17.1 Issuer Default. Each of the following events shall constitute a “Issuer Default” under this Agreement:
(a) any representation or warranty made by Issuer in this Agreement shall prove to have been incorrect in any material respect when made; or (b) Issuer shall have failed to perform, observe or comply with any covenant, agreement or term contained in this Agreement, and such failure continues for more than thirty (30) days following receipt by Issuer of written notice thereof.
Section 17.2 Purchaser Default. Each of the following events shall constitute a “Purchaser Default” under this Agreement:
(a) Purchaser fails to pay when due any amounts owed to Issuer pursuant to this Agreement and such failure continues for three Days following receipt by Purchaser of written notice thereof;
(b) Purchaser (i) is dissolved (other than pursuant to a consolidation, amalgamation or merger); (ii) becomes insolvent or is unable to pay its debts or fails or admits in writing its inability generally to pay its debts as they become due; (iii) makes a general assignment, arrangement or composition with or for the benefit of its creditors; (iv) institutes or has instituted against it a proceeding seeking a judgment of insolvency or bankruptcy or any other relief under any bankruptcy or insolvency Law or other similar Law affecting creditors’ rights, or a petition is presented for its winding-up or liquidation, and, in the case of any such proceeding or petition instituted or presented against it, such proceeding or petition (A) results in a judgment of insolvency or bankruptcy or the entry of an order for relief or the making of an order for its winding-up or liquidation or (B) is not dismissed, discharged, stayed or restrained, in each case within 30 days of the institution or presentation thereof; (v) has a resolution passed for its winding-up, official management or liquidation (other than pursuant to a consolidation, amalgamation or -35-
merger); (vi) 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 of its assets; (vii) has a secured party take possession of all or substantially all of its assets or has a distress, execution, attachment, sequestration or other legal process levied, enforced or sued on or against all or substantially all its of assets and such secured party maintains possession, or any such process is not dismissed, discharged, stayed or restrained, in each case within 30 days thereafter; (viii) causes or is subject to any event with respect to it which, under the applicable Laws of any jurisdiction, has an analogous effect to any of the events specified in clauses (i) through (vii); or (ix) takes any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any of the foregoing acts; (c) any representation or warranty made by Purchaser in this Agreement proves to have been incorrect in any material respect when made, and such default is not remedied within thirty (30) days after receipt by Purchaser of written notice thereof; (d) Purchaser shall have failed to perform, observe or comply with any material covenant, agreement or term contained in this Agreement, and such failure continues for more than 30 days following the earlier of receipt by Purchaser of notice thereof; or (e) Purchaser shall have failed to establish, maintain, or collect rates or charges adequate to provide Utility Revenues sufficient to enable Purchaser to pay all amounts due to Issuer under this Agreement in accordance with Section 14.7 (Rate Covenant), and such failure continues for more than 30 days following the earlier of receipt by Purchaser of notice thereof.
Section 17.3 Remedies Upon Default.
(a) Termination. If at any time a Issuer Default or a Purchaser Default has occurred and is continuing, then the non-defaulting Party may do any or all of the following (i) by notice to the defaulting Party specifying the relevant Issuer Default or Purchaser Default, as applicable, terminate this Agreement effective as of a day not earlier than the day such notice is deemed given under Article XVI and/or (ii) declare all amounts due to the non-defaulting Party under this Agreement or any part thereof immediately due and payable, and the same shall thereupon become immediately due and payable, without notice, demand, presentment, notice of dishonor, notice of intent to demand, protest or other formalities of any kind, all of which are hereby expressly waived by the defaulting Party; provided, however, this Agreement shall automatically terminate and all amounts due to the non-defaulting Party hereunder shall immediately become due and payable as of the time immediately preceding the institution of the relevant proceeding or the presentation of the relevant petition giving rise to a Purchaser Default specified in Section
17.2(b)(iv) or, to the extent analogous thereto, Section 17.2(b)(viii). In addition, during the existence of an Issuer Default or a Purchaser Default, as applicable, the non-defaulting Party may exercise all other rights and remedies available to it at Law or in equity, including without limitation mandamus, injunction and action for specific performance, to enforce any covenant, agreement or term of this Agreement.
(b) Additional Remedies. In addition to the remedies set forth in Section
17.3(a) (and without limiting any other provisions of this Agreement), during the existence of any -36-
Purchaser Default, Issuer may suspend its performance hereunder and discontinue the supply of all or any portion of the Product otherwise to be delivered to Purchaser by it under this Agreement. If Issuer exercises its right to suspend performance under this Section 17.3(b), Purchaser shall remain fully liable for payment of all amounts in default and shall not be relieved of any of its payment obligations under this Agreement. Deliveries of Product may only be reinstated, at a time to be determined by Issuer, upon (i) payment in full by Purchaser of all amounts then due and payable under this Agreement and (ii) unless otherwise agreed by Issuer, payment in advance by Purchaser at the beginning of each Month of amounts estimated by Issuer to be due to Issuer for the future delivery of Product under this Agreement for such Month. Issuer may continue to require payment in advance from Purchaser after the reinstatement of Issuer’s supply services under this Agreement for such period of time as Issuer in its sole discretion may determine is appropriate. In addition, and without limiting any other provisions of or remedies available under this Agreement, if Purchaser fails to accept from Issuer any Product tendered for delivery under this Agreement, Issuer shall have the right to sell such Product to third parties on any terms that Issuer, in its sole discretion, determines are appropriate.
(c) Effect of Early Termination. As of the effectiveness of any termination date in accordance with clause (i) of Section 17.3(a), (i) the Delivery Period shall end, (ii) the obligation of Issuer to make any further sales and deliveries of Product to Purchaser under this Agreement shall terminate, and (iii) the obligation of Purchaser to purchase and receive deliveries of Product from Issuer under this Agreement will terminate. Neither this Agreement nor the Delivery Period may be terminated for any reason except as specified in this Article XVII. Without prejudice to any payment obligation in respect of periods prior to termination, no payments will be due from either Party in respect of periods occurring after the effective termination date of this Agreement.
Section 17.4 Termination of Master Power Supply Agreement. Purchaser acknowledges and agrees that (i) in the event the Master Power Supply Agreement terminates prior to the end of the primary term of this Agreement, this Agreement shall terminate on the effective date of early termination of the Master Power Supply Agreement (which date shall be the last date upon which deliveries are required thereunder, subject to all winding up arrangements), (ii) Issuer’s obligation to deliver Product under this Agreement shall terminate upon the termination of deliveries of Product to Issuer under the Master Power Supply Agreement and (iii) Purchaser shall exercise its right to terminate any Assignment Agreements in effect. Issuer shall provide notice to Purchaser of any early termination date of the Master Power Supply Agreement. The Parties recognize and agree that, in the event that the Master Power Supply Agreement terminates because of a Failed Remarketing (as defined in the Bond Indenture) of the Bonds that occurs in the first Month of a Reset Period, Issuer shall deliver Product under this Agreement for the remainder of such first Month, and, notwithstanding anything in this Agreement to the contrary, no Monthly Discount Percentage or Annual Refunds shall be associated with such deliveries and the Contract Price shall be adjusted accordingly.
Section 17.5 Limitation on Damages. THE PARTIES CONFIRM THAT THE
EXPRESS REMEDIES AND MEASURES OF DAMAGES PROVIDED IN THIS AGREEMENT SATISFY THE ESSENTIAL PURPOSES HEREOF. FOR BREACH OF ANY
PROVISION FOR WHICH AN EXPRESS REMEDY OR MEASURE OF DAMAGES IS -37-
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
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
Section 18.1 Indemnification Procedure. With respect to each indemnification included in this Agreement, the indemnity is given to the fullest extent permitted by applicable Law and the following provisions shall be applicable. The indemnified Party shall promptly notify the indemnifying Party in writing of any Claim and the indemnifying Party shall have the right to assume its investigation and defense, including employment of counsel, and shall be obligated to pay related court costs, attorneys’ fees and experts’ fees and to post any appeals bonds; provided, however, that the indemnified Party shall have the right to employ at its expense separate counsel and participate in the defense of any Claim. The indemnifying Party shall not be liable for any settlement of a Claim without its express written consent thereto. In order to prevent double recovery, the indemnified Party shall reimburse the indemnifying Party for payments or costs incurred in respect of an indemnity with the proceeds of any judgment, insurance, bond, surety or other recovery made by the indemnified Party with respect to a covered event. -38-
Section 18.2 Deliveries. Contemporaneously with this Agreement (unless otherwise specified),
(a) each Party shall deliver to the other Party evidence reasonably satisfactory to it of (i) such Party’s authority to execute, deliver and perform its obligations under this Agreement and (ii) the appropriate individuals who are authorized to sign this Agreement on behalf of such Party;
(b) on the Bond Closing Date, Purchaser shall deliver to Issuer a fully executed Federal Tax Certificate in substantially the form attached hereto as Exhibit D; (c) on the Bond Closing Date, Purchaser shall deliver to Issuer an opinion of counsel to Purchaser set forth in the form attached hereto as Exhibit E; and (d) on the Bond Closing Date, Purchaser shall deliver to Issuer a Closing Certificate in substantially the form set forth hereto as Exhibit I.
Section 18.3 Entirety; Amendments. This Agreement, including the exhibits and attachments hereto, 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. Except for any matters that, in accordance with the express provisions of this Agreement, may be resolved by oral agreement between the Parties, no amendment, modification, supplement, or change hereto shall be enforceable unless reduced to writing and executed by both Parties.
Section 18.4 Governing Law. THIS AGREEMENT AND THE RIGHTS AND DUTIES
OF THE PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED, ENFORCED AND PERFORMED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF CALIFORNIA, WITHOUT REGARD TO ANY CONFLICTS OF LAW PRINCIPLE THAT WOULD DIRECT THE APPLICATION OF ANOTHER JURISDICTION’S LAW.
Section 18.5 Non-Waiver. No waiver of any breach of any of the terms of this Agreement shall be effective unless such waiver is in writing and signed by the Party against whom such waiver is claimed. No waiver of any breach or breaches shall be deemed a waiver of any other subsequent breach.
Section 18.6 Severability. If any provision of this Agreement, or the application thereof, shall for any reason be invalid or unenforceable, then to the extent of such invalidity or unenforceability, the remainder of this Agreement and the application of such provision to other Persons or circumstances shall not be affected thereby, but rather shall be enforced to the maximum extent permissible under applicable Law, so long as the economic and legal substance of the transactions contemplated hereby is not affected in any materially adverse manner as to either Party.
-39-
Section 18.7 Exhibits. Any and all Exhibits and attachments referenced in this Agreement are hereby incorporated herein by reference and shall be deemed to be an integral part hereof.
Section 18.8 Winding Up Arrangements. All indemnity and confidentiality obligations, audit rights, and other provisions specifically providing for survival shall survive the expiration or termination of this Agreement. The expiration or termination of this Agreement shall not relieve either Party of (a) any unfulfilled obligation or undischarged liability of such Party on the date of such termination or (b) the consequences of any breach or default of any warranty or covenant contained in this Agreement. All obligations and liabilities described in the preceding sentence of this Section 18.8, and applicable provisions of this Agreement creating or relating to such obligations and liabilities, shall survive such expiration or termination.
Section 18.9 Relationship of Parties. The Parties shall not be deemed to be in a relationship of partners or joint venturers by virtue of this Agreement, nor shall either Party be an agent, representative, trustee or fiduciary of the other. Neither Party shall have any authority to bind the other to any agreement. This Agreement is intended to secure and provide for the services of each Party as an independent contractor.
Section 18.10 Immunity. Each Party represents and covenants to and agrees with the other Party that it is not entitled to and shall not assert the defense of sovereign immunity with respect to its obligations or any Claims under this Agreement.
Section 18.11 Rates and Indices. If the source of any publication used to determine the index or other price used in the Contract Price 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 by Issuer and Prepay LLC under Section 18.11 of the Master Power Supply Agreement. Issuer shall provide Purchaser the opportunity to provide its recommendations and other input to Issuer for Issuer’s use in the process for selecting such alternative index or other price under Section 18.11 of the Master Power Supply Agreement.
Section 18.12 Limitation of Liability. Notwithstanding anything to the contrary herein, all obligations of Issuer under this Agreement, including without limitation all obligations to make payments of any kind whatsoever, are special, limited obligations of Issuer payable solely from Trust Estate (as such term is defined in the Bond Indenture) as and to the extent provided in the Bond Indenture, including with respect to Operating Expenses (as such term is defined in the Bond Indenture). 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 Issuer nor the taxing power of the State of California or any political subdivision thereof is pledged to payments pursuant to this Agreement. 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.
-40-
Section 18.13 Counterparts. This Agreement may be executed and acknowledged in multiple counterparts and by the Parties in separate counterparts, each of which shall be an original and all of which shall be and constitute one and the same instrument.
Section 18.14 Third Party Beneficiaries; Rights of Trustee. Purchaser acknowledges and agrees that (a) Issuer will pledge and assign its rights, title and interest in this Agreement and the amounts payable by Purchaser under this Agreement to secure Issuer’s obligations under the Bond Indenture, (b) the Trustee shall be a third-party beneficiary of this Agreement with the right to enforce Issuer’s rights and Purchaser’s obligations under this Agreement, (c) J. Aron shall be a third-party beneficiary of this Agreement with the right to enforce the provisions of Article VI and Exhibit F of this Agreement, (d) the Trustee or any receiver appointed under the Bond Indenture shall have the right to perform all obligations of Issuer under this Agreement, and (e) in the event of any Purchaser Default under Section 17.2(a), (i) Prepay LLC may, to the extent provided for in, and in accordance with, the Receivables Purchase Exhibit to the Master Power Supply Agreement, take assignment from Issuer of receivables owed by Purchaser to Issuer under this Agreement, and Prepay LLC or any third party transferee who purchases and takes assignment of such receivables from Prepay LLC shall thereafter have all rights of collection with respect to such receivables (provided that, if at any time an insurance provider agrees to insure Purchaser’s payment obligations hereunder, then such insurance provider shall have the same rights under this Section
18.14 as Prepay LLC), and (ii) if such receivables are not so assigned, the Swap Counterparty or Swap Counterparties (as defined in the Bond Indenture) shall have the right to pursue collection of such receivables to the extent any non-payment by Issuer to any Swap Counterparty was caused by Purchaser’s payment default. 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 Agreement. Purchaser may rely on notices or other actions taken by Issuer or the Trustee and Purchaser has the right to exclusively rely on any notices delivered by the Trustee, regardless of any conflicting notices that it may receive from Issuer.
Section 18.15 No Recourse to Members of Purchaser. Purchaser is organized as a Joint Powers Authority in accordance with the Joint Exercise of Powers Act of the State of California (Government Code Section 6500, et seq.) pursuant to its Joint Powers Agreement and is a public entity separate from its constituent members. Purchaser shall solely be responsible for all debts, obligations and liabilities accruing and arising out of this Agreement. Issuer shall have no rights and shall not make any claims, take any actions or assert any remedies against any of Purchaser’s constituent members, or the employees, directors, officers, consultants or advisors or Purchaser or its constituent members, in connection with this Agreement.
Section 18.16 Waiver of Defenses. Each Party waives all rights to set-off, counterclaim, recoupment and any other defenses that might otherwise be available to it with regard to its obligations pursuant to the terms of this Agreement.
Section 18.17 Rate Changes.
(a) Standard of Review. Absent the agreement of the Parties to the proposed change, the standard of review for changes to any rate, charge, classification, term or condition of -41-
this Agreement, whether proposed by a Party (to the extent that any waiver in Section 18.17(b) below is unenforceable or ineffective as to such Party), a non-party or FERC acting sua sponte, shall solely be the “public interest” application of the “just and reasonable” standard of review set forth in United Gas Pipe Line Co. v. Mobile Gas Service Corp., 350 U.S. 332 (1956) and Federal Power Commission v. Sierra Pacific Power Co., 350 U.S. 348 (1956) and clarified by Morgan Stanley Capital Group Inc. v. Public Util. Dist. No. 1 of Snohomish, 554 U.S. 527 (2008). (b) Waiver. In addition, and notwithstanding Section 18.17(a), to the fullest extent permitted by applicable Law, each Party, for itself and its successors and assigns, hereby expressly and irrevocably waives any rights it can or may have, now or in the future, whether under Section 205 and/or 206 of the Federal Power Act or otherwise, to seek to obtain from FERC by any means, directly or indirectly (through complaint, investigation or otherwise), and each hereby covenants and agrees not at any time to seek to so obtain, an order from FERC changing any section of this Agreement specifying the rate, charge, classification, or other term or condition agreed to by the Parties, it being the express intent of the Parties that, to the fullest extent permitted by applicable Law, neither Party shall unilaterally seek to obtain from FERC any relief changing the rate, charge, classification, or other term or condition of this Agreement, notwithstanding any subsequent changes in applicable Law or market conditions that may occur. In the event it were to be determined that applicable Law precludes the Parties from waiving their rights to seek changes from FERC to their market-based power sales contracts (including entering into covenants not to do so) then this Section 18.17(b) shall not apply, provided that, consistent with Section
18.17(a), neither Party shall seek any such changes except solely under the “public interest” application of the “just and reasonable” standard of review and otherwise as set forth in Section
18.17(a).
IN WITNESS WHEREOF, the Parties have caused this Clean Energy Purchase Agreement to be duly executed and delivered by their respective officers thereunto duly authorized as of the date first above written.
[Separate Signature Page(s) Attached]
Signature Page to the Clean Energy Purchase Contract
CALIFORNIA COMMUNITY CHOICE FINANCING AUTHORITY
By:____________________________________
Name:______________________________
Title:_______________________________
Signature Page to the Clean Energy Purchase Contract
PIONEER COMMUNITY ENERGY
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 ISSUER: California Community Choice Financing Authority 1125 Tamalpais Avenue
San Rafael, CA 94901
Email: [____]
IF TO PURCHASER: Pioneer Community Energy
[____]
[____]
Email: [____]
C-1
EXHIBIT C
REMARKETING ELECTION NOTICE
California Community Choice Financing Authority
1125 Tamalpais Avenue
San Rafael, CA 94901
Email: [____]
Aron Energy Prepay 15 LLC
c/o J. Aron & Company LLC
200 West Street
New York, NY 10282
U.S. Bank National Association
1349 W. Peachtree Street, Suite 1050
Atlanta, Georgia 30309
Attention: Mark Hallam
Telephone: (404) 898-2463
Email: [email protected]
To the Addressees:
The undersigned, duly authorized representative of [______________________] (the "Purchaser"), is providing this notice (the “Remarketing Election Notice”) pursuant to the Clean Energy Purchase Contract, dated as of [____], 2022 (the “Clean Energy Purchase Contract”), between California Community Choice Financing Authority and Purchaser. Capitalized terms used herein shall have the meanings set forth in the Clean Energy Purchase Contract.
Pursuant to Section 3.5(b) of the Clean Energy Purchase Contract, the Purchaser has elected to have its Base Quantity, for each Hour of the Reset Period commencing __________ and extending to and including ______________, remarketed beginning as of the commencement of such Reset Period. The resumption of deliveries of Base Quantities in any future Reset Period shall be in accordance with Section 3.5(d) of the Clean Energy Purchase Contract.
Given this [___] day of [_________], 20[__].
PIONEER COMMUNITY ENERGY
By: _____________________
Printed Name:
C-2
Title:
-1
EXHIBIT D
FORM OF FEDERAL TAX CERTIFICATE
This Federal Tax Certificate is executed in connection with the Clean Energy Purchase Contract dated as of [____], 2022 (the “Clean Energy Purchase Contract”), by and between the California Community Choice Financing Authority (“Issuer”) and Pioneer Community Energy, a California joint powers authority (“Power Purchaser”). Capitalized terms used and not otherwise defined herein shall have the meanings given to them in the Clean Energy Purchase Contract, in the Tax Certificate and Agreement, or in the Bond Indenture.
WHEREAS Power Purchaser acknowledges that Issuer is issuing the Bonds to fund the prepayment price under the Master Power Supply Agreement; and WHEREAS the Bonds are intended to qualify for tax exemption under Section 103 of the Internal Revenue Code of 1986, as amended; and
WHEREAS Power Purchaser’s use of Energy acquired pursuant to the Clean Energy Purchase Contract and certain funds and accounts of Power Purchaser will affect the Bonds’ qualification for such tax exemption.
NOW, THEREFORE, POWER PURCHASER HEREBY CERTIFIES AS FOLLOWS:
Power Purchaser is a joint powers authority and a community choice aggregator created and existing pursuant to the provisions of California law, organized under the laws of the State of California. As a community choice aggregator, the Power Purchaser is a load-serving entity providing electricity to customers within the boundaries of cities and/or counties that have elected to participate in Power Purchaser’s community choice aggregation program. For purposes of this Certificate, the term “service area” of the Power Purchaser means the boundaries of the cities and/or counties that have elected to participate in the Power Purchaser’s community choice aggregation program, as well as any other area recognized as the service area of the Power Purchaser under state or federal law.
Power Purchaser will resell all of the Energy acquired pursuant to the Clean Energy Purchase Contract to its retail Energy customers within its service area, with retail sales in all cases being made pursuant to regularly established and generally applicable tariffs.
From [____, ] to [____, __], the annual average amount of Energy purchased (other than for resale) by customers of Power Purchaser who are located within the service area of Power Purchaser is [________] MWh. Over the term of the Clean Energy Purchase Contract, the Power Purchaser expects the annual average amount of Energy purchased (other than for resale) by customers of the Power Purchaser who are located within the service area of the Power Purchaser to be at least [_____] MWh. The maximum annual amount of Energy in any year being acquired pursuant to the Clean Energy Purchase Contract is [_______] MWh. The annual average amount of Energy which Power Purchaser otherwise has a right to acquire as of the Closing Date (including -2
rights to capacity to generate electricity, whether owned, leased or otherwise contracted for) is [________] MWh. The sum of (a) the maximum amount of Energy in any year being acquired pursuant to the Clean Energy Purchase Contract, and (b) the amount of Energy that Power Purchaser otherwise has a right to acquire (including rights to capacity to generate electricity, whether owned, leased or otherwise contracted for) in the year described in the foregoing clause (a), is [________] MWh. Accordingly, the amount of Energy to be acquired under the Clean Energy Purchase Contract by Power Purchaser, supplemented by the amount of Energy otherwise available to Power Purchaser as of the Closing Date, during any year does not exceed the sum of [___]% of the expected annual average amount of Energy to be purchased (other than for resale) by customers of Power Purchaser who are located within the service area of Power Purchaser; In the event of the expiration or termination of an EPS Energy Period, Power Purchaser agrees to comply with its obligations in the Clean Energy Purchase Contract, including but not limited to its obligations to (a) exercise Commercially Reasonable Efforts to assign a portion of Power Purchaser’s rights and obligations under a power purchase agreement under which Power Purchaser is purchasing EPS Compliant Energy to J. Aron pursuant to an Assignment Agreement and (b) cooperate in good faith with Issuer and J. Aron with respect to any proposed assignments.
Power Purchaser expects to pay for Energy acquired pursuant to the Clean Energy Purchase Contract solely from funds derived from its power distribution operations. Power Purchaser expects to use current net revenues of its to pay for current Energy acquisitions. Neither the Power Purchaser nor any person who is a related party to the Purchaser will hold any funds or accounts in which monies are invested and which are reasonably expected to be used to pay for Energy acquired more than one year after such monies are set aside. No portion of the proceeds of the Bonds will be used directly or indirectly to replace funds of Power Purchaser or any persons who are related Persons to Power Purchaser that are or were intended to be used for the purpose for which the Bonds were issued.
_______________, 2022
By: ________________________________
[Name]
[Title]
E-1
EXHIBIT E
OPINION OF COUNSEL
California Community Choice Financing Authority
San Rafael, CA
Aron Energy Prepay 15 LLC
New York, NY
Goldman Sachs & Co. LLC
New York, NY
U.S. Bank National Association
Atlanta, Georgia
[Swap Counterparty 1]
[____]
[Swap Counterparty 2]
[____]
Re: Power Supply Contract between Pioneer Community
Energy and California Community Choice Financing
Authority dated as of [____], 2022
Ladies and Gentlemen:
We are Counsel to Pioneer Community Energy (“Purchaser”). Purchaser is a Purchaser in the Energy Project undertaken by California Community Choice Financing Authority (“Issuer”).
We are furnishing this opinion to you in connection with the Power Supply Contract between Issuer and Purchaser dated as of [____], 2022 (the “Supply Contract”).
Unless otherwise specified herein, all terms used but not defined in this opinion shall have the same meaning as is ascribed to them in the Supply Contract.
In connection with this opinion, we have examined originals or copies, certified or otherwise identified to our satisfaction, of the following:
(a) The Constitution and laws of the State of California (the “State”) including, as applicable, acts, ordinances, certificates, articles, charters, bylaws, and agreements pursuant to which Purchaser was created and by which it is governed; E-2
(b) Resolution No. [__], duly adopted by Purchaser on [___________] (the “Resolution”) and certified as true and correct by certificate and seal, authorizing Purchaser to execute and deliver the Supply Contract;
(c) A copy of the Supply Contract executed by Purchaser; and (d) All outstanding instruments relating to bonds, notes, or other indebtedness of or relating to Purchaser and Purchaser's CCA System (as defined in the Supply Contract).
We have also examined and relied upon originals or copies, certified or otherwise authenticated to our satisfaction, of such records, documents, certificates, and other instruments, and made such investigations of law, as in our judgment we have deemed necessary or appropriate to enable us to render the opinions expressed below.
Based upon the foregoing, we are of the opinion that:
1. Purchaser is a joint powers authority of the State, duly organized and validly existing as a community choice aggregator under the laws of the State, and has the power and authority to own its properties, to carry on its business as now being conducted, and to enter into and to perform its obligations under the Agreement.
2. The execution, delivery, and performance by Purchaser of the Supply Contract have been duly authorized by the governing body of Purchaser and do not and will not require, subsequent to the execution of the Supply Contract by Purchaser, any consent or approval of the governing body or any officers of Purchaser.
3. The Supply Contract is the legal, valid, and binding obligation of Purchaser, enforceable in accordance with its terms, except as such enforceability may be subject to (i) the exercise of judicial discretion in accordance with general principles of equity and (ii) bankruptcy, insolvency, reorganization, moratorium, and other similar laws affecting creditors' rights heretofore or hereafter enacted, to the extent constitutionally applicable.
4. No approval, consent or authorization of any governmental or public agency, authority, commission or person, or, to our knowledge, of any holder of any outstanding bonds or other indebtedness of Purchaser, is required with respect to the execution, delivery and performance by Purchaser of the Supply Contract or Purchaser's participation in the transactions contemplated thereby other than those approvals, consents and/or authorizations that have already been obtained.
5. The authorization, execution and delivery of the Supply Contract and compliance with the provisions thereof (a) will not conflict with or constitute a breach of, or default under, (i) any instrument relating to the organization, existence or operation of Purchaser, (ii) any ruling, regulation, ordinance, judgment, order or decree to which Purchaser (or any of its officers in their respective capacities as such) is subject or (iii) any provision of the laws of the State relating to Purchaser and its affairs, and (b) to our knowledge will not result in, or require the creation or E-3
imposition of, any lien on any of the properties or revenues of Purchaser pursuant to any of the foregoing.
6. Purchaser is not in breach of or default under any applicable constitutional provision or any law or administrative regulation of the State or the United States or any applicable judgment or decree or, to our knowledge, any loan or other agreement, resolution, indenture, bond, note, resolution, agreement or other instrument to which Purchaser is a party or to which Purchaser or any of its property or assets is otherwise subject, and to our knowledge no event has occurred and is continuing which with the passage of time or the giving of notice, or both, would constitute a default or event of default under any such instrument.
7. Payments to be made by Purchaser under the Supply Contract shall constitute operating expenses of Purchaser's CCA System payable solely from the revenues and other available funds of Purchaser's CCA System as a cost of purchased electricity. The application of the revenues and other available funds of Purchaser's CCA System to make such payments is not subject to any prior lien, encumbrance or other restriction.
8. As of the date of this opinion, to the best of our knowledge after due inquiry, there is no pending or threatened action or proceeding at law or in equity or by any court, government agency, public board or body affecting or questioning the existence of Purchaser or the titles of its officers to their respective offices or affecting or questioning the legality, validity, or enforceability of this Supply Contract nor to our knowledge is there any basis therefor.
This opinion is rendered solely for the use and benefit of the addressees listed above in connection with the Supply Contract and may not be relied upon other than in connection with the transactions contemplated by the Supply Contract, or by any other person or entity for any purpose whatsoever, nor may this opinion be quoted in whole or in part or otherwise referred to in any document or delivered to any other person or entity, without the prior written consent of the undersigned.
Very truly yours,
1 EXHIBIT F
ASSIGNMENT OF ASSIGNABLE POWER CONTRACTS
1. General Requirements. Assigned Rights and Obligations under an Assignable Power Contract may only be assigned under this Exhibit F if the following requirements are satisfied or waived by J. Aron and Issuer:
1.1. The seller under such Assignable Power Contract (the “APC Party”) either (i) has a long-term senior unsecured credit rating that is “Baa3” or higher from Moody’s Investor’s Service, Inc. (or any successor to its credit rating service operation), “BBB- ” or higher from Standard & Poor’s Global Ratings (or any successor to its credit rating service operation) or “BBB-” or higher from Fitch Ratings, Inc. (or any successor to its credit rating service operation), (ii) provides credit support that is reasonably satisfactory to J. Aron or (iii) otherwise provides evidence of its creditworthiness that is reasonably satisfactory to J. Aron (which, for the avoidance of doubt, may include credit support provided by such APC Party to Purchaser).
1.2. The APC Party satisfies J. Aron’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.
1.3. The APC Party is organized in the United States and in a jurisdiction that does not present adverse tax consequences to J. Aron or Issuer in connection with such proposed assignment.
1.4. J. Aron, Purchaser, and Issuer have agreed on and executed an Assignment Schedule for such assignment.
1.5. J. Aron, Purchaser, Issuer, and the applicable APC Party have agreed on and executed an Assignment Agreement for such assignment.
1.6. The contract price (in $/MWh) payable by Purchaser under the applicable Assignable Power Contract (the “APC Contract Price”) is a fixed price unless Issuer, Purchaser and J. Aron agree, each in their sole discretion, to appropriate changes to the relevant documents to accommodate a floating APC Contract Price. For purposes of this Exhibit H, a “fixed price” shall be deemed to include any price that is fixed but for a periodic escalation, whether pre-determined or by reference to a price index, provided that the Base Quantity Reductions required to reflect any index-based escalation shall be made promptly following the time that such index is available.
1.7. If the Assignable Power Contract is unit-contingent or for an as-generated Product, then:
1.7.1. J. Aron has determined with a high degree of certainty that the Applicable Project will be able to generate the Assigned Prepay Value in each Month during the proposed Assignment Period.
1.7.2. The Applicable Project (as defined below) has generated the Assigned Prepay Value (as defined below) in each Month since commencing commercial operation.
2 2. Proposed Assignment. Purchaser may propose an assignment of Assigned Rights and Obligations under Article VI of the Clean Energy Purchase Contract by delivering the following items to Issuer and to J. Aron:
2.1. A written notice of the proposed assignment signed by Purchaser.
2.2. A true and complete copy of the Assignable Power Contract under which such Assigned Rights and Obligations would arise.
2.3. Evidence reasonably satisfactory to Issuer and J. Aron that all authorizations, consents, approvals, licenses, rulings, permits, exemptions, variances, orders, judgments, decrees, declarations of or regulations by any Government Agency necessary in connection with the transactions contemplated by the Assignable Power Contract and the assignment of the Assignable Power Contract to J. Aron have been obtained and are in full force and effect. Such evidence may be provided by a closing certificate with appropriate back-up materials.
2.4. Such additional information as Issuer and J. Aron may reasonably request regarding the Assignable Power Contract and the APC Party.
2.5. If the Assignable Power Contract is unit-contingent or for an as-generated Product, then:
2.5.1. A description and information of the applicable project to which the Assignable Power Contract applies (the “Applicable Project”), including but not limited to information on the location, interconnection(s), and operating and compliance history of Applicable Project.
2.5.2. Either (i) a report from a nationally recognized consultant in the energy industry that is reasonably acceptable to Issuer and J. Aron showing the “P99” forecasted generation (“P99 Generation”) and “P50” forecasted generation (“P50 Generation”) of the Applicable Project for the entire Assignment Period, as the terms P99 and P50 are commonly used in the renewable energy industry or (ii) monthly historical generation and meteorological data of the Applicable Project dating back to the commercial operation date.
Following Issuer’s and J. Aron’s receipt of such information, Purchaser and Issuer will and J.
Aron has agreed in the Electricity Sale and Service Agreement to (i) negotiate in good faith with one another and exercise Commercially Reasonable Efforts to agree upon an Assignment Schedule, with the initial draft of such Assignment Schedule to be developed by J. Aron, and (ii) negotiate in good faith with one another and the APC Party regarding an Assignment Agreement, in each case related to the proposed assignment. If such Assignment Schedule and Assignment Agreement are agreed to by the representative parties thereto, the applicable parties will execute such Assignment Agreement and Assignment Schedule to be effective upon the assignment of the Assigned Rights and Obligations from Purchaser to J. Aron pursuant to the Assignment Agreement. J. Aron will act in good faith in considering proposed assignments that meet the criteria set forth in this Exhibit F, in accordance with the provisions set forth in the Electricity Sale and Service Agreement. For the avoidance of doubt, Purchaser acknowledges that J. Aron will not be required to execute any Assignment Agreement or Assignment Schedule, or otherwise accept any Assigned Rights and Obligations unless the APC Party (i) satisfies J. Aron’s internal requirements as they relate to “know your customer” rules, policies and procedures, anti-money laundering rules and regulations, Dodd-Frank Act, 3 Commodity Exchange Act, Patriot Act and similar rules, regulations, requirements and corresponding policies, (ii) is organized in the United States, and (iii) satisfies all other requirements in Section 1 of this Exhibit F.
3. Assignment Schedule. In connection with each assignment, an “Assignment Schedule” will be prepared in the form attached hereto as Annex I (with such changes as agreed by the Parties in their sole discretion), must be executed by Purchaser, Issuer and J. Aron, and must include each of the following:
3.1. The term of such Assigned Rights and Obligations (an “Assignment Period”) shall have the meaning specified in each applicable Assignment Agreement and shall (i) end not later than (a) the end of the delivery period under the Assignable Power Contract and (b) the end of the Delivery Period under this Agreement, (ii) not commence any earlier than sixty (60) days after Purchaser’s original notice under Section 2.1 above, and (iii) have a primary term that is not less than 18 Months in duration (provided, for the avoidance of doubt, the primary term references the term of the applicable Assignment Period and not the term of the Assignable Power Contract).
3.2. If the Assignable Power Contract is unit-contingent or for an as-generated product, then a description of the Applicable Project.
3.3. The “Assigned Prepay Quantity” means, for each Month of an Assignment Period and each Assignment Agreement, a quantity of Energy agreed upon by J. Aron, Issuer and Purchaser, which Assigned Prepay Quantity, if the Assignable Power Contract is unit contingent or for an as-generated Product, shall not exceed an amount that J. Aron has determined with a high degree of certainty that the Applicable Project will be able to generate in each Month during the Assignment Period; provided that the Assigned Prepay Quantity for each Month may not exceed the limit expressed in the proviso to Section 3.4 below. For the avoidance of doubt, the Assigned Rights and Obligations will include all of Purchaser’s rights to receive Energy under the Assignable Power Contract even if such rights to receive Energy may exceed the Assigned Prepay Quantity.
3.4. An updated Exhibit A-1 to the Clean Energy Purchase Contract reflecting a reduction in Base Quantity for each Hour during an Assignment Period after giving effect to the Assignment Schedule (each, a “Base Quantity Reduction”), which Base Quantity Reduction for each Hour will equal (i) the Assigned Prepay Quantity for such Hour, multiplied by (ii) the result of (A) the APC Contract Price applicable for such Hour, divided by (B) the Fixed Price; provided that if the Base Quantity Reduction for any Hour would result in a Base Quantity of less than zero, then the Assigned Prepay Quantity for such Hour will be reduced to the closest whole MWh such that the Base Quantity is not reduced below zero.
3.5. The APC Contract Price, which as set forth in Section 1.6 above must be a fixed price unless Issuer, Purchaser and J. Aron agree to appropriate changes to the relevant documents to accommodate a floating APC Contract Price.
3.6. The Assigned Delivery Point for all Assigned Energy.
3.7. The Assigned Product included in the Assigned Rights and Obligations, which Assigned Product may not include any Product other than (a) Energy, (b) associated RECs, and (c) other product included within the sale of Energy and not separately 4 delivered from Energy, provided that the APC Contract Price must be inclusive of any amounts due in respect of all Assigned Product.
5 ASSIGNMENT SCHEDULE
Assigned Product: [_____]
Assigned Delivery Point: [____]
Assigned Prepay Quantity: As set forth in Appendix 2; provided that all Assigned Products shall be delivered pursuant to the Limited Assignment Agreement during the Assignment Period as provided in Appendix 1.
APC Contract Price: $[____]/MWh
Assignment Period: [____]
Other Provisions:
Attachment: Updated Exhibit A-1 to Clean Energy Purchase Contract 1 FORM OF LIMITED ASSIGNMENT AGREEMENT
NOTE: Purchaser may include the form included in this Annex II as an exhibit to any PPA executed by Purchaser and include the following or similar language in the PPA: “[Seller] agrees that [Buyer] may assign a portion of its rights and obligations under this Agreement to J. Aron & Company LLC (“J. Aron”) at any time upon not less than [___] days’ notice by delivering a written request for such assignment, which request must include a proposed assignment agreement in the form attached hereto as [Exhibit ___], with the blanks in such form completed in [Buyer’s] sole discretion. Provided that [Buyer] delivers a proposed assignment agreement complying with the previous sentence, [Seller] agrees to (i) comply with J. Aron’s reasonable requests for know-your-customer and similar account opening information and documentation with respect to [Seller], including but not limited to information related to forecasted generation, credit rating, and compliance with anti-money laundering rules, the Dodd-Frank Act, the Commodity Exchange Act, the Patriot Act and similar rules, regulations, requirements and corresponding policies; and (ii) promptly execute such assignment agreement and implement such assignment as contemplated thereby, subject only to the countersignature of J. Aron and Company, LLC and [Buyer].” [To be attached in the form agreed by J. Aron and Pioneer.] 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:
1.1. “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.
1.2. “Clean Energy Purchase Contract” means that certain Clean Energy Purchase Contract dated as of [____], 2022 by and between Issuer and Project Participant.
1.3. “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.
1.4. “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).
1.5. “Master Power Supply Agreement” means that certain Master Power Supply Agreement dated as of [____], 2022 by and between Prepay LLC and Issuer that is specified as relating to the Clean Energy Purchase Contract with Project Participant.
1.6. “Operational Nomination” has the meaning specified in Section 4.1.1.
1.7. “Prepay LLC” means Aron Energy Prepay 15 LLC, a Delaware limited liability company.
1.8. “Project Participant” means Pioneer Community Energy, a California joint powers authority.
1.9. “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 G-2
Receipt Scheduling Entity will be Issuer or a Person designated by Issuer for such Delivery Point in accordance with this Communications Protocol.
1.10. “Relevant Contract” means the Master Power Supply Agreement and the Clean Energy Purchase Contract.
1.11. “Relevant Party” means Issuer, Prepay LLC or the Project Participant.
1.12. “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.
1.13. “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 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 G-3
extent necessary or convenient to enforce the obligations of the Burdened Party under this Communications Protocol.
2.4 Amendment of Relevant Contracts. No Relevant Party shall amend, waive or otherwise modify any provision of any Relevant Contract to which it is a party without the consent of each other Relevant Party whose rights or obligations would be materially and adversely affected by such amendment, waiver or modification as it relates to this Communications Protocol.
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 G-4
writing (the “Operational Nomination”) indicating any inability of a Project Participant to receive all of its Base Quantities during such Day, which Operational Nomination shall be without prejudice to any party’s rights under the Relevant Contracts for failure to receive Base Quantities. If no changes to Base Quantities are so submitted, the Operational Nomination shall be deemed to nominate the full Base Quantities required to be delivered on a Day.
4.1.2 Not later than three Days prior to each Day during which Base Product is required to be delivered under the Agreement, the Delivery Scheduling 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.
G-5
6 NOTICES
Any notice, demand, request or other communication required or authorized by this Communications Protocol to be given by one Relevant Party to another Relevant Party shall be in writing, except as otherwise expressly provided herein. It shall either be sent by facsimile (with receipt confirmed by telephone and electronic transmittal receipt), courier, or personally delivered (including overnight delivery service) to the representative of the other Relevant Party designated in Attachment 1 hereto. Any such notice, demand, or request shall be deemed to be given (i) when sent by facsimile confirmed by telephone and electronic transmittal receipt or (ii) when actually received if delivered by courier or personal delivery (including overnight delivery service).
Each Relevant Party shall have the right, upon written notice to the 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
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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
Carly Norlander
ICE Chat: cnorlander1
Email: [email protected]
Direct Phone: (403) 233-9299
Fax: (212) 493-9847
Other Prepay LLC Personnel:
Eric Hudson
Telephone: (212) 855-0880
[email protected]
Patricia Hazel
Telephone: (212) 855-0880
[email protected]
Andres E. Aguila
Telephone: (212) 855-6008
Fax: (212) 291-2124
[email protected]
Issuer Personnel:
[email protected]
Project Participant Personnel:
[Email]
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 “Master Power Supply Agreement”) dated as of [____], 2022 by and between Aron Energy Prepay 15 LLC (“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) (“Issuer”) and relates to the Clean Energy Purchase Contract (the “Clean Energy Purchase Contract”) dated as of [____], 2022 by and between Issuer and Pioneer Community Energy (“Project Participant”). Capitalized terms not defined herein are defined in the Master Power Supply 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 Delivery Points and Alternate Delivery Points set forth in Exhibit A-1 of the Agreement, or as may be designated by the Parties from time to time):
Monthly Remarketing Notice:
Month(s) for which remarketing is requested: _____________________, 20__ through _______________________, 20__.
Pursuant to Section 3(b) of Exhibit C of the Clean Energy Purchase Contract, Project Participant requests that 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:
G-8
Hours for which remarketing is requested: _____________________, 20__ through _______________________, 20__.
Pursuant to Section 3(c) of Exhibit C of the Clean Energy Purchase Contract, 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:
Delivery Point (P/A, #) MWh/Hour
Submitted by Project Participant:
PIONEER COMMUNITY ENERGY
By:____________________
Name:
Title:
G-9
Attachment 3
Designation of Alternate Base Delivery Points Form
This designation is delivered pursuant to that certain Master Power Supply Agreement (the “Master Power Supply Agreement”) dated as of [____], 2022 by and between Aron Energy Prepay 15 LLC (“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) (“Issuer”) and the Clean Energy Purchase Contract (the “Clean Energy Purchase Contract”) dated as of [____], 2022 by and between Issuer and Pioneer 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 [____], 2022 by and between J. Aron Energy Prepay 15 LLC (“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) (“Issuer”) and relates to the Clean Energy Purchase Contract (the “Clean Energy Purchase Contract”) dated as of [____], 2022 by and between Issuer and Pioneer 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 G-11
Notice Information for Delivery Scheduling Entity:
Name: ______________________________
Attention: ______________________________
Address: ______________________________
______________________________
Telephone: ______________________________
Fax: ______________________________]
Submitted by:
[Project Participant or Prepay LLC]
By: _____________________________
Name: _____________________________
Title: _____________________________
H-1
EXHIBIT H
PRICING AND OTHER TERMS
Administrative Fee: $[____]/MWh
Delivery Period: The period beginning on and including [____], 2022 and ending at the end of the Day before [____], 20[__]; provided that the Delivery Period shall end immediately upon
termination of deliveries of Product under the Master Power Supply Agreement pursuant to Article XVII thereof or early termination of the Clean Energy Purchase Contract pursuant to Article XVII hereof.
Initial Reset Period: The period beginning at the beginning of the Day on [____], 2022 and ending at the end of the Day before [____], 20[__].
Minimum Discount
Percentage:
An Available Discount Percentage as determined under the Re-Pricing Agreement of [____]%.
Monthly Discount Percentage: For each Month of the Initial Reset Period, [____]%, and for each Month of any other Reset Period, the percentage
determined by the Calculation Agent as defined in and
pursuant to the Re-Pricing Agreement, exclusive of any
Annual Refund.
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EXHIBIT I
FORM OF CLOSING CERTIFICATE
CLOSING CERTIFICATE OF PURCHASER
__________, 2022
Re: California Community Choice Financing Authority
[Clean Energy Project Revenue Bonds]
The undersigned _____________________________ of Pioneer Community Energy (“Purchaser”) hereby certifies as follows in connection with the Power Supply Contract dated as of __________, 2022 (the “Agreement”) between the Purchaser and California Community Choice Financing Authority (“Issuer”) and the issuance and sale by Issuer of the above-referenced bonds (the “Bonds”) (capitalized terms used and not defined herein shall have the meanings given to them in the Agreement):
1. Purchaser is a joint powers authority, duly organized and validly existing and in good standing under the laws of the State of California (the “State”), and has the corporate power and authority to enter into and perform its obligations under the Agreement.
2. By all necessary official action on its part, Purchaser has duly authorized and approved the execution and delivery of, and the performance by Purchaser of the obligations on its part contained in, the Agreement, and such authorization and approval has not been amended, supplemented, rescinded or modified in any respect since the date thereof.
3. The Agreement constitutes the legal, valid and binding obligation of Purchaser.
4. The authorization, execution and delivery of the Agreement and compliance with the provisions on Purchaser's part contained therein (a) will not conflict with or constitute a breach of or default under (i) any instrument relating to the organization, existence or operation of Purchaser, (ii) any ruling, regulation, ordinance, judgment, order or decree to which Purchaser (or any of its officers in their respective capacities as such) is subject, or (iii) any provision of the laws of the State relating to Purchaser and its affairs, and (b) will not result in, or require the creation or imposition of, any lien on any of the properties or revenues of Purchaser pursuant to any of the foregoing.
I-1
5 Purchaser is not in breach of or default under any applicable constitutional provision, law or administrative regulation of the State or the United States or any applicable judgment or decree or any loan agreement, indenture, bond, note, resolution, agreement or other instrument to which Purchaser is a party or to which Purchaser or any of its property or assets are subject, and no event has occurred and is continuing which constitutes, or with the passage of time or the giving of notice, or both, would constitute, a default or event of default by Purchaser under any of the foregoing.
6. Payments to be made by Purchaser under the Agreement shall constitute operating expenses of Purchaser's power supply system payable solely from the revenues and other available funds of Purchaser's power supply system as a cost of purchased electricity.
7. No litigation, proceeding or tax challenge is pending or, to its knowledge, threatened, against Purchaser in any court or administrative body which would (a) contest the right of the officials of Purchaser to hold and exercise their respective positions, (b) contest the due organization and valid existence of Purchaser, (c) contest the validity, due authorization and execution of the Agreement, or (d) attempt to limit, enjoin or otherwise restrict or prevent Purchaser from executing, delivering and performing the Agreement, nor to the knowledge of Purchaser is there any basis therefor.
8. All authorizations, approvals, licenses, permits, consents and orders of any governmental authority, legislative body, board, agency or commission having jurisdiction of the matter which are required for the due authorization of, which would constitute a condition precedent to, or the absence of which would materially adversely affect the due performance by Purchaser of its obligations under the Agreement have been duly obtained.
9. The representations and warranties of Purchaser contained in the Agreement were true, complete and correct on and as of the date thereof and are true, complete and correct on and as of the date hereof.
10. The statements and information with respect to Purchaser contained in the Preliminary Official Statement dated [___________], 2022 and the Official Statement dated [_____], 2022 with respect to the Bonds, including Appendix A thereto (together, the “Official Statement”), fairly and accurately describe and summarize the financial and operating position of Purchaser for the periods shown therein, and such statements and information did not as of the respective dates of the Official Statement and do not as of the date hereof contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make such statements and information, in the light of the circumstances under which they were made, not misleading.
11. To Purchaser's knowledge, no event affecting Purchaser has occurred since the date of the Official Statement which should be disclosed therein in order to make the statements and I-1
information with respect to Purchaser contained therein, in light of the circumstances under which they were made, not misleading in any material respect.
IN WITNESS WHEREOF the undersigned has executed this Certificate on and as of the date first written above.
PIONEER COMMUNITY ENERGY
By
Name:
Title:
HB Draft 30 June 2022
LETTER AGREEMENT
[____], 2022
Pioneer Community Energy
[____]
[____]
Re: Prepay Limited Assignment Agreements
Ladies and Gentlemen:
This Letter Agreement (this “Letter Agreement”) confirms our mutual agreement with respect to the matters set forth below and relates to those certain Limited Assignment Agreements listed on Exhibit A (the “Assignment Agreements”, which definitions shall include any new Assignment Agreements identified by J. Aron’s delivery of an updated Exhibit A consistent with Section 2), with each of the PPA Sellers identified in Exhibit A (each, individually, a “PPA Seller” and collectively the “PPA Sellers”, and which definitions shall include any new PPA Seller identified by J. Aron’s delivery of an updated Exhibit A consistent with Section 2). Any capitalized term used in this Letter Agreement and not otherwise defined herein shall have the meaning assigned to such term in the Clean Energy Purchase Contract. In consideration of each party’s execution of the Assignment Agreements, as well as the premises above and the mutual covenants and agreements set forth herein, J. Aron & Company LLC (“J. Aron”) and Pioneer Community Energy (“Pioneer” and together with J. Aron, collectively the “Parties”) agree as follows:
1. Assignment Early Termination. Each of the Parties agrees that it shall only exercise its right to deliver a written notice of terminating an Assignment Period under an Assignment Agreement consistent with the following:
(a) Either Party may deliver a notice of termination in the event of (i) the suspension, expiration, or termination of performance of a PPA by either Pioneer or the applicable PPA Seller; or (ii) the termination or suspension of deliveries for any reason other than force majeure under (A) that certain Clean Energy Purchase Contract (the “Clean Energy Purchase Contract”), dated as of [____], 2022 by and between Pioneer and California Community Choice Financing Authority (including, for the avoidance of doubt, due to a “Remarketing Election” by Pioneer under the Clean Energy Purchase Contract) or (B) that certain Electricity Purchase, Sale and Service Agreement, dated as of [____], 2022 by and between J. Aron and Aron Energy Prepay 5 LLC (the “Electricity Sale and Service Agreement”);
(b) Pioneer shall deliver a notice of termination contemporaneous with any assignment by Pioneer of its interest in the Clean Energy Purchase Contract, provided that J. Aron in any event shall be entitled to deliver a notice of termination to the extent Pioneer fails to do so in connection with the assignment of Pioneer’s interest under the Clean Energy Purchase Contract; (c) J. Aron may deliver a notice of termination if (i) PPA Seller delivers less than the Assigned Prepay Quantity for any four months in the aggregate during a twelve month period or 2 (ii) any event or circumstance occurs that would give either Pioneer or a PPA Seller the right to terminate or suspend performance under a PPA (regardless of whether Pioneer or the applicable PPA Seller exercises such right);
(d) either Party may deliver a notice of termination to the extent that the Parties have mutually agreed upon an assignment of Replacement Assigned Rights and Obligations (as defined in the Clean Energy Purchase Contract) that will replace the Assigned Rights and Obligations under the applicable Assignment Agreement immediately following the termination thereof; and (e) either Party may deliver a notice of termination under the applicable Assignment Agreement to the extent that:
(i) any of the representations and warranties set forth in Sections 5.4 of the Electricity Sale and Service Agreement and the Clean Energy Purchase Contract, respectively, ceases to be true with respect to an Assigned PPA; (ii) the Assigned Energy being delivered pursuant to an Assignment Agreement ceases to be EPS Compliant Energy; or
(iii) any Assigned Product that constituted PCC1 Product or Long-Term PCC1 Product while being delivered directly to Pioneer under an Assigned PPA ceases to qualify as PCC1 Product or Long-Term PCC1 Product when being redelivered through the Electricity Sale and Service Agreement, Master Power Supply Agreement and Clean Energy Purchase Contract.
For the avoidance of doubt, each of the Parties agrees that it shall not terminate an Assignment Agreement pursuant to Section 4(a)(1) thereof except as set forth immediately above.
2. Exhibit A. Promptly following execution of the Assignment Agreements with respect to the Initial Assigned Rights and Obligations, J. Aron shall deliver an Exhibit A that lists such Assignment Agreements. J. Aron shall deliver an updated Exhibit A to this Agreement to reflect any changes to the information set forth therein in connection with the termination, expiration or replacement of an Assignment Agreement consistent with the terms of the Clean Energy Purchase Contract.
3. Representations, Warranties and Covenants.
(a) Pioneer agrees that it shall provide a true, complete, and correct copy to J. Aron of any PPA to be assigned pursuant to an Assignment Agreement. (b) Each Party represents to the other:
(i) Status. It is duly organized and validly existing under the laws of the jurisdiction of its organization or incorporation and, if relevant under such laws, in good standing.
3 (ii) Powers. It has the power to execute, deliver and perform its obligations under this Letter Agreement, the Assignment Agreement and any other documentation to which it is a party relating to this Letter Agreement and the Assignment Agreement, and it has taken all necessary action to authorize such execution, delivery and performance.
(iii)No Violation or Conflict. Such execution, delivery and performance of this Letter Agreement and the Assignment Agreement and the consummation of the transactions contemplated hereby and thereby, including the incurrence by such Party of its obligations under this Letter Agreement and the Assignment Agreement, will not result in any violation of, or conflict with; (i) any term of any material contract or agreement applicable to it; (ii) any of its charter, bylaws, or other constitutional documents; (iii) any determination or award of any arbitrator applicable to it or (iv) any license, permit, franchise, judgment, writ, injunction or regulation, decree, order, charter, law, ordinance, rule or regulation of any government agency, applicable to it or any of its assets or properties or to any obligations incurred by it or by which it or any of its assets or properties or obligations are bound or affected, and shall not cause a breach of, or default under, any such term or result in the creation of any lien upon any of its properties or assets.
(iv)Consents. All consents, approvals, orders or authorizations of; registrations, declarations, filings or giving of notice to; obtaining of any licenses or permits from; or taking of any other action with respect to, any Person or Government Agency, that are required to have been obtained or made by such Party with respect to this Letter Agreement and Assignment Agreement and the transactions contemplated hereby and thereby, including the due authorization of such Party and its governing body and any approval or consent of any security holder of such Party or any holder (or any trustee for any holder) of any indebtedness or other obligation of such Party, have been obtained and are in full force and effect and all conditions of any such consents have been complied with.
(v) Obligations Binding. Its obligations under this Agreement and the Assignment Agreement constitute its legal, valid and binding obligations, enforceable in accordance with their respective terms (subject to applicable bankruptcy, reorganization, insolvency, moratorium or similar laws affecting creditors’ rights generally and subject, as to enforceability, to equitable principles of general application (regardless of whether enforcement is sought in a proceeding in equity or at law)).
(vi)Non-Reliance. It is acting for its own account, and it has made its own independent decisions to enter into this Agreement and the Assignment Agreement and as to whether this Agreement and the Assignment Agreement are appropriate or proper for it based upon its own judgment and upon advice from such advisers as it has deemed necessary. It is not relying on any communication (written or oral) of the other Parties as investment advice or as a recommendation to enter into this 4 Agreement or the Assignment Agreement; it being understood that information and explanations related to the terms and conditions of this Agreement and the Assignment Agreement shall not be considered investment advice or a recommendation to enter into this Agreement. It is entering into this Agreement and the Assignment Agreement as a bona-fide, arm’s-length transaction involving the mutual exchange of consideration and, once executed by the applicable parties, considers this Agreement and the Assignment Agreement to be legally enforceable contracts. No communication (written or oral) received from any of the other Parties shall be deemed to be an assurance or guarantee as to the expected results of this Agreement or the Assignment Agreement.
(vii) Assessment and Understanding. It is capable of assessing the merits of and understanding (on its own behalf or through independent professional advice), and understands and accepts, the terms, conditions and risks of this Agreement and the Assignment Agreement. It is also capable of assuming, and assumes, the risks of this Agreement and the Assignment Agreement.
(viii) Status of Parties. Neither of Parties is acting as a fiduciary for or an adviser to the other in respect of this Agreement or the Assignment Agreement.
4. Governing Law, Jurisdiction, Waiver of Jury Trial
(a) Governing Law. This Letter Agreement and the rights and duties of the parties under this Letter Agreement will be governed by and construed, enforced and performed in accordance with the laws of the State of New York, without reference to any conflicts of laws provisions that would direct the application of another jurisdiction’s laws; provided, however, that the authority of Pioneer to enter into and perform its obligations under this Letter Agreement shall be determined in accordance with the laws of the State of California. (b) Jurisdiction. Each party submits to the exclusive jurisdiction of the federal courts of the United States of America for the Northern District of California sitting in the city and county of San Francisco.
(c) Waiver of Right to Trial by Jury. Each party waives, to the fullest extent permitted by applicable law, any right it may have to a trial by jury in respect of any suit, action or proceeding relating to this Letter Agreement.
[Signature Pages to Follow]
Signature Page to Letter Agreement
Very truly yours,
J. ARON
J. ARON & COMPANY LLC
By:
Name:
Title:
ACKNOWLEDGED, ACCEPTED AND AGREED TO as of the date first set forth above:
PIONEER
PIONEER COMMUNITY ENERGY
By:
Name:
Title:
Exhibit A
Assignment Agreements
[To come.]
CONFIDENTIAL HB Draft 30 June 2022
PIONEER DRAFT
JUNE 17, 2022
FORM OF ASSIGNMENT SCHEDULE
[PROJECT NAME]
Assigned Product: [____]
Assigned Delivery Point: [____]
Assigned Prepay Quantity: As set forth in Appendix 2; provided that (i) all Assigned Products shall be delivered pursuant to the Limited Assignment Agreement during the Assignment Period as provided in Appendix 1 and (ii) the Assigned Prepay Quantity is defined for the convenience of PPA Buyer and J. Aron and shall have no impact on the obligations of the Parties under the Limited Assignment Agreement.
APC Contract Price: $[____]/MWh
Assignment Period: [____]
Other Provisions: [____]
1 FORM OF LIMITED ASSIGNMENT AGREEMENT
This Limited Assignment Agreement (this “Assignment Agreement” or “Agreement”) is entered into as of [____], 2022 by and among [____], a [____] (“PPA Seller”), Pioneer Community Energy, a California joint powers authority (“PPA Buyer”), and J. Aron & Company LLC, a New York limited liability company (“J. Aron”), and relates to that certain power purchase agreement (the “PPA”) between PPA Buyer and PPA Seller as described on Appendix 1. Unless the context otherwise specifies or requires, capitalized terms used but not defined in this Agreement have the meanings set forth in the PPA.
In consideration of the premises above and the mutual covenants and agreements herein set forth, PPA Seller, PPA Buyer and J. Aron (the “Parties” hereto; each is a “Party”) agree as follows:
1. Limited Assignment and Delegation.
(a) PPA Buyer hereby assigns, transfers and conveys to J. Aron all right, title and interest in and to the rights of PPA Buyer under the PPA to receive delivery of the products described in Appendix 1 (the “Assigned Products”) during the Assignment Period (as defined in Appendix 1), as such rights may be limited or further described in the “Further Information” section in Appendix 1 (the “Assigned Product Rights”). All Assigned Products shall be delivered pursuant to the terms and conditions of this Agreement during the Assignment Period as provided in Appendix 1. All other rights of PPA Buyer under the PPA are expressly reserved for PPA Buyer. (b) PPA Buyer hereby delegates to J. Aron the obligation to pay for all Assigned Products that are actually delivered to J. Aron pursuant to the Assigned Product Rights during the Assignment Period (the “Delivered Product Payment Obligation” and together with the Assigned Product Rights, collectively the “Assigned Rights and Obligations”). All other obligations of PPA Buyer under the PPA are expressly retained by PPA Buyer. To the extent J. Aron fails to pay for any Assigned Products by the due date for payment set forth in the PPA, PPA Buyer agrees that it will remain responsible for such payment within five (5) Business Days (as defined in the PPA) of receiving notice of such non-payment from PPA Seller. (c) J. Aron hereby accepts and PPA Seller hereby consents and agrees to the assignment, transfer, conveyance and delegation described in clauses (a) and (b) above. (d) All scheduling of Assigned Products and other communications related to the PPA shall take place between PPA Buyer and PPA Seller pursuant to the terms of the PPA; provided that (i) title to Assigned Product will pass from PPA Seller to J. Aron upon delivery by PPA Seller of Assigned Product in accordance with the PPA; (ii) PPA Buyer is hereby authorized by J. Aron to and shall act as J. Aron’s agent with regard to scheduling Assigned Product; (iii) PPA Buyer will provide copies to J. Aron of any Notice (as defined in the PPA) of a Force Majeure Event or Event of Default or default, breach or other occurrence that, if not cured within the applicable grace period, could result in an Event of Default contemporaneously upon delivery thereof to PPA Seller and promptly after receipt thereof from PPA Seller; (iv) PPA Seller will provide copies to J. Aron of annual forecasts of Metered Energy and monthly forecasts of Available Capacity provided pursuant to Section [__] of the PPA; (v) PPA Seller will provide copies to J. Aron of all invoices and supporting data provided to PPA Buyer pursuant to Section [__], provided that any payment adjustments or subsequent reconciliations occurring after the date that is 10 days prior to the payment 2 due date for a monthly invoice, including pursuant to Section [__], will be resolved solely between PPA Buyer and PPA Seller and therefore PPA Seller will not be obligated to deliver copies of any communications relating thereto to J. Aron; and (vi) PPA Buyer and PPA Seller, as applicable, will provide copies to J. Aron of any other information reasonably requested by J. Aron relating to Assigned Products. (e) PPA Seller acknowledges that (i) J. Aron intends to immediately transfer title to any Assigned Products received from PPA Seller through one or more intermediaries such that all Assigned Products will be re-delivered to PPA Buyer, and (ii) J. Aron has the right to purchase receivables due from PPA Buyer for any such Assigned Products.
PPA. To the extent J. Aron purchases any such receivables due from PPA Buyer, J.
Aron may transfer such receivables to PPA Seller and apply the face amount thereof as a reduction to any Delivered Product Payment Obligation. (f) On or before the commencement of the Assignment Period, The Goldman Sachs Group (the “Guarantor”), Inc. will issue, in favor of PPA Seller, a guaranty of J.
Aron’s payment obligations under this Assignment Agreement substantially in the form of Appendix 3 attached hereto (“Guaranty”). PPA Seller may draw upon, apply, or make demand under the Guaranty to recover any unpaid amounts not timely paid as set forth herein.
(g) Notwithstanding any other provision of this Agreement, PPA Buyer shall be entitled to retain for its own account all CAISO revenues associated with delivery of the Assigned Product to CAISO, including where PPA Buyer is acting as Scheduling Coordinator for the Facility (as defined in the PPA) and through scheduling of ISTs.
Nothing in this Agreement modifies or amends any rights or obligations of PPA Buyer and PPA Seller under the PPA with respect to CAISO revenues and costs. As used in this clause (f), the following terms have the meanings specified below. “CAISO” means California Independent System Operator or its successor. “CAISO Tariff” means CAISO’s Federal Energy Regulatory Commission approved tariff, as modified, amended or supplemented from time to time. “Inter-SC Trade” or “IST” has the meaning set forth in the CAISO Tariff. “Scheduling Coordinator” means an entity certified by the CAISO as qualifying as a Scheduling Coordinator pursuant to the CAISO Tariff for the purposes of undertaking the functions specified in “Responsibilities of a Scheduling Coordinator,” of the CAISO.
2. Assignment Early Termination.
(a) The Assignment Period may be terminated early upon the occurrence of any of the following:
(1) delivery of a written notice of termination by either J. Aron or PPA Buyer to each of the other Parties hereto;
(2) delivery of a written notice of termination by PPA Seller to each of J. Aron and PPA Buyer following J. Aron’s failure to pay when due any amounts owed to PPA Seller in respect of any Delivered Product Payment Obligation and such 3 failure continues for one business day following receipt by J. Aron of written notice thereof;
(3) delivery of a written notice by PPA Seller if any of the events described in Section [__] [Bankruptcy] of the PPA occurs with respect to J. Aron; or (4) delivery of a written notice by J. Aron if any of the events described in Section [__] [Bankruptcy] of the PPA occurs with respect to PPA Seller. (b) The Assignment Period will end at the end of the last delivery hour on the date specified in the termination notice provided pursuant to Section 2(a), which date shall not be earlier than the end of the last day of the calendar month in which such notice is delivered if termination is pursuant to clause (a)(1) or (a)(2) above. All Assigned Rights and Obligations shall revert from J. Aron to PPA Buyer upon the early termination of the Assignment Period, provided that (i) J. Aron shall remain responsible for the Delivered Product Payment Obligation with respect to any Assigned Product delivered to J. Aron prior to the end of the Assignment Period, and (ii) any legal restrictions on the effectiveness of such reversion (whether arising under bankruptcy law or otherwise) shall not affect the expiration or early termination of the Assignment Period.
(c) The Assignment Period will automatically terminate upon the expiration or early termination of the PPA. All Assigned Rights and Obligations shall revert from J.
Aron to PPA Buyer upon the expiration of or early termination of the PPA, provided that (i) J. Aron shall remain responsible for the Delivered Product Payment Obligation with respect to any Assigned Product delivered to J. Aron prior to the end of the Assignment Period, and (ii) any legal restrictions on the effectiveness of such reversion (whether arising under bankruptcy law or otherwise) shall not affect the expiration or early termination of the Assignment Period.
3. Representations and Warranties. The PPA Seller and the PPA Buyer represent and warrant to J. Aron that (a) the PPA is in full force and effect; (b) no event or circumstance exists (or would exist with the passage of time or the giving of notice) that would give either of them the right to terminate the PPA or suspend performance thereunder; and (c) all of its obligations under the PPA required to be performed on or before the Assignment Period Start Date have been fulfilled.
4. Notices. Any notice, demand, or request required or authorized by this Assignment Agreement to be given by one Party to another Party shall be delivered in accordance with Section [__] and the Cover Sheet of the PPA and to the addresses of each of PPA Seller and PPA Buyer specified in the PPA. PPA Buyer agrees to notify J. Aron of any updates to such notice information, including any updates provided by PPA Seller to PPA Buyer. Notices to J. Aron shall be provided to the following address, as such address may be updated by J. Aron from time to time by notice to the other Parties:
J. Aron & Company LLC
200 West Street
New York, New York 10282-2198
Email: [email protected]
5. Miscellaneous. Sections [__] (Buyer’s Representations and Warranties), [__] (Confidential Information), Sections [__] (Severability), [__] (Counterparts), [__] (Amendments), [__] (No Agency), [__] (Mobile-Sierra), [__] (Counterparts), [__] (Facsimile 4 or Electronic Delivery), Section [__] (Binding Effect) and [__] (No Recourse to Members of Buyer) of the PPA are incorporated by reference into this Agreement, mutatis mutandis, as if fully set forth herein.
6. U.S. Resolution Stay Provisions. The Parties hereby confirm that they are adherents to the ISDA 2018 U.S. Resolution Stay Protocol (“ISDA U.S. Stay Protocol”), the terms of the ISDA U.S. Stay Protocol are incorporated into and form a part of this Agreement, and for the purposes of such incorporation, (i) J. Aron shall be deemed to be a Regulated Entity, (ii) each of PPA Buyer and PPA Seller shall be deemed to be an Adhering Party, and (iii) this Agreement shall be deemed a Protocol Covered Agreement. In the event of any inconsistencies between this Agreement and the ISDA U.S. Stay Protocol, the ISDA U.S. Stay Protocol will prevail.
7. Governing Law, Jurisdiction, Waiver of Jury Trial.
1 (a) Governing Law. This Assignment Agreement and the rights and duties of the Parties under this Assignment Agreement will 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.
(b) Jurisdiction. Each Party submits to the exclusive jurisdiction of the federal courts of the United States of America for the Northern District of California sitting in the city and county of San Francisco for any disputes arising under this Assignment Agreement; provided, that if the federal courts do not have jurisdiction over such dispute, the Parties agree that such dispute shall be brought in the courts of the State of California, sitting in the city and county of San Francisco. (c) Waiver of Right to Trial by Jury. Each Party waives, to the fullest extent permitted by applicable law, any right it may have to a trial by jury in respect of any suit, action or proceeding relating to this Assignment Agreement.
[Remainder of Page Intentionally Blank]
1 NTD: Subject to continuing GS review.
5 IN WITNESS WHEREOF, the Parties have executed this Assignment Agreement effective as of the date first set forth above.
[PPA SELLER]
a [____]
By:
Name:
Title:
PIONEER COMMUNITY ENERGY,
a California joint powers authority
By:
Name:
Title:
J. ARON & COMPANY LLC
By:
Name:
Title:
Execution and delivery of the foregoing Assignment Agreement is hereby approved. [ISSUER]
By:
Name:
Title:
6 Appendix 1
Assigned Rights and Obligations
PPA: “PPA” means that certain Power Purchase and Sale Agreement dated [____], by and between Pioneer Community Energy, a California joint powers authority, and [____], a [____], as amended from time to time.
“Assignment Period” means the period beginning on [___________] and extending until [___________], provided that in no event shall the Assignment Period extend past the earlier of (i) the termination of the Assignment Period pursuant to Section 2 of the Assignment Agreement and (ii) the end of the Delivery Term under the PPA; provided that applicable provisions of this Agreement shall continue in effect after termination of the Assignment Period to the extent necessary to enforce or complete, duties, obligations or responsibilities of the Parties arising prior to the termination.
Assigned Product: “Assigned Products” include [____].
Further Information: PPA Seller shall continue to transfer the WREGIS Certificates associated with all Renewable Energy Credits corresponding to all Metered Energy under the PPA pursuant to Section [__] of the PPA, provided that the transferee of such WREGIS Certificates may be changed from time to time in accordance with the written instructions of both J. Aron and [____] upon twenty (20) Business Days’ notice, which change shall be effective as of the first day of the next calendar month, unless otherwise agreed. All Assigned Product delivered by PPA Seller to J. Aron shall be a sale made at wholesale, with J. Aron reselling all such Assigned Product. 7 Appendix 2
Assigned Prepay Quantity
[NOTE: To be set forth in a monthly volume schedule.]
8 Appendix 3
Form of GSG Guaranty
, 2022
NAME
ADDRESS
Attention:
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 COUNTERPARTY NAME (the “Counterparty”) arising out of or under the Limited Assignment Agreement among the Company, the Counterparty and Pioneer Community Energy dated as of [ ], 2022. 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 Counterparty against, and any other notice to, the Company, the Guarantor or others.
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 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 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 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 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 9 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, and (ii) the Guarantor may transfer this Guaranty or any interest or obligation of the Guarantor in or under this Guaranty, or any property securing this Guaranty, 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
1 C&C Draft: 9.29.22
CLEAN ENERGY PROJECT OPERATIONAL SERVICES AGREEMENT
This Clean Energy Project Operational Services Agreement (this “Agreement”) is made and entered into as of [_______] 1, 2022, by and between California Community Choice Financing Authority (“CCCFA”) and Pioneer Community Energy (“Pioneer”) with respect to the Clean Energy Project (defined below). CCCFA and Pioneer may be referred to individually herein as a “Party” and collectively as the “Parties”.
W I T N E S S E T H:
WHEREAS, Pioneer is a “community choice aggregator” under the Public Utilities Code of the State of California, as amended; and
WHEREAS, CCCFA is a joint exercise of powers authority under and pursuant to the Joint Exercise of Powers Act, constituted as Chapter 5 of Division 7 of Title 1 of the California Government Code, being Section 6500 and following, as amended (the “Joint Powers Act”), and pursuant to the Joint Powers Act, a Joint Powers Agreement by and among the Founding Members of CCCFA named therein (as the same may be amended or supplemented from time to time in accordance with its terms, the “Joint Powers Agreement”); and
WHEREAS, Pioneer has joined CCCFA as an Associate Member (together with the Founding Members, the “Members” of CCCFA); and
WHEREAS, CCCFA’s purpose is to assist its Members, including Pioneer, by undertaking the financing or refinancing of energy prepayments that can be financed with tax advantaged bonds and other obligations on behalf of one or more of the Members by, among other things, issuing or incurring bonds and entering into related contracts with Members; and
WHEREAS, CCCFA and Pioneer are entering into a Clean Energy Purchase Contract, dated [_________], 2022 (as amended, restated, supplemented or otherwise modified from time to time, the “Clean Energy Purchase Contract”), pursuant to which CCCFA has agreed to supply Energy to Pioneer under the terms set forth therein; and
WHEREAS, in order to provide such Energy to Pioneer under the Clean Energy Purchase Contract, CCCFA is entering into a Master Power Supply Agreement, dated [_________], 2022 (as amended, restated, supplemented or otherwise modified from time to time, the “Master Power Supply Agreement”), between CCCFA, as buyer, and Aron Energy Prepay [__] LLC, a Delaware limited liability company, as seller (the “Prepaid Seller”), under which it will make a prepayment to the Prepaid Seller for the purchase and delivery of such Energy; and
WHEREAS, in order to meet its obligations under the Master Power Supply Agreement, Prepaid Seller will enter into an Electricity Purchase, Sale and Service Agreement, dated as of [________], 2022 (as amended, restated, supplemented or otherwise modified from time to time, the “ESSA”) with J. Aron & Company LLC, a New York limited liability company (“J. Aron”); and WHEREAS, the Issuer will finance the prepayment under the Master Power Supply Agreement and related costs by issuing its Clean Energy Project Revenue Bonds, Series 2022[__] (the “Bonds”) pursuant to a Trust Indenture, dated as of [_______] 1, 2022 (as amended, restated, supplemented or 2 otherwise modified from time to time, the “Indenture”), between CCCFA and [______________], as trustee (together with any successor or replacement trustee under the Indenture, the “Trustee”); and WHEREAS, the issuance of the Bonds by CCCFA and related undertakings of CCCFA under the Indenture, the acquisition and sale of Energy and related undertakings of CCCFA under the Master Power Supply Agreement and the Clean Energy Purchase Contract, and the sale to Pioneer of such Energy and related undertakings of Pioneer under the Clean Energy Purchase Contract are referred to herein as the “Clean Energy Project”; and
WHEREAS, the Parties are entering into this Agreement in order to provide for the administration of certain operational matters relating to the Clean Energy Project; NOW, THEREFORE, in consideration of the premises and mutual covenants set forth in this Agreement and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:
Section 1. Defined Terms. Capitalized terms used herein and not otherwise defined shall have the meanings set forth in the Indenture, the Clean Energy Purchase Contract or the Master Power Supply Agreement, as applicable.
Section 2. Assignment Agreements. As contemplated by the ESSA, the Master Power Supply Agreement and the Clean Energy Purchase Contract, Pioneer will enter into the Initial Assignment Agreements and may from time to time enter into additional Assignment Agreements to provide for the assignment of Assigned Product for delivery to CCCFA under the Master Power Supply Agreement and to Pioneer under the Clean Energy Purchase Contract. With respect to any Assignment Agreement, the Parties acknowledge and agree as follows:
(a) as of the date of this Agreement, Pioneer has entered into the Initial Assignment Agreements specified in the Clean Energy Purchase Contract; (b) subject to the terms of the applicable Assignment Letter Agreement, Pioneer may from time to time enter into additional Assignment Agreements with respect to all or a portion of the Base Quantities specified in the Clean Energy Purchase Contract; and (c) Pioneer shall determine in its sole discretion when and if any Assignment Agreement is entered into (subject to J. Aron’s consent as provided in the Clean Energy Purchase Contract) or terminated (subject to the terms of the Assignment Letter Agreement) and the underlying power purchase agreement and the Base Quantities to which such Assignment Agreement relates.
Section 3. Scheduling and Delivery of Assigned Energy. Assigned Energy and any other Assigned Product delivered to CCCFA under the Master Power Supply Agreement shall be Scheduled by Pioneer for delivery to CCCFA under the Master Power Supply Agreement and for delivery to Pioneer under the Clean Energy Purchase Contract, and CCCFA shall have no responsibility for (a) any Scheduling or other operational requirements necessary for the delivery of Assigned Energy to Pioneer’s Assigned Delivery Point and the transfer of other Assigned Product to Pioneer, or (b) any accounting for under-deliveries or over-deliveries or other record-keeping requirements with respect to any Assigned Energy and other Assigned Product, all of which shall be the sole responsibility of Pioneer. 3 Section 4. Qualified Use; Remarketing of Base Energy. Any Base Quantities required to be delivered by the Prepaid Seller are required to be remarketed by the Prepaid Seller pursuant to the Master Power Supply Agreement except in the circumstances specified in Section 3.2 of the Master Power Supply Agreement. Pioneer shall be responsible for any notices or other communications required from CCCFA in connection with such remarketing, as well communications required for the Scheduling and delivery of Base Quantities under the communications protocol set forth in Exhibit G to the Master Power Supply Agreement and any other operational requirements related to the delivery and remarketing of Base Quantities under the Master Power Supply Agreement. Pioneer will account for any Base Quantities and subsequently remarketed, including accounting for any remediation of any such remarketing sales as may be required pursuant to the Qualifying Use Requirements and the terms of the Clean Energy Purchase Contract. Pioneer agrees to provide to CCCFA any information reasonably requested by it in order to comply with any reporting or record-keeping requirements related to such delivery and remarketing of Base Quantities, including such information relating to compliance with the Qualifying Use Requirements, as may be required pursuant to the Master Power Supply Agreement or the Indenture.
Section 5. Directions, Consents and Waivers. CCCFA may be requested or required from time to time to provide certain directions, consents, or waivers under the terms of the Master Power Supply Agreement, the Indenture and the Re-pricing Agreement. Provided no event of default has occurred and is continuing with respect to Pioneer under the Clean Energy Purchase Contract, such direction, consent or waiver shall only be provided by CCCFA in accordance with written instructions provided by Pioneer.
Section 6. Re-pricing Information. CCCFA shall provide, or cause Prepaid Seller to provide, to Pioneer such information as is required to be provided by Prepaid Seller to CCCFA in accordance the Re-pricing Agreement at such times as are required under the Re-pricing Agreement. Provided no event of default has occurred and is continuing with respect to Pioneer under the Clean Energy Purchase Contract, any direction, consent or waiver requested or required to be provided by CCCFA under the Re-pricing Agreement shall only be provided by CCCFA in accordance with written instructions provided by Pioneer.
Section 7. Project Administration Fee; Reimbursement and Refund of Operating Expenses. (a) Under the Clean Energy Purchase Contract, Pioneer is required to include in its payment to CCCFA for [______] of each year commencing [______ 202_], an annual Project Administration Fee determined by CCCFA based on the budgeted Operating Expenses of CCCFA for the next succeeding annual period, but only to the extent the expected Revenues (as defined in the Indenture) for such annual period will not be sufficient to pay such Operating Expenses as the same become due. CCCFA agrees to allocate amounts received in respect of the Project Administration Fee to pay Operating Expenses (as defined in the Indenture) as the same become due and payable during such annual period to the extent not paid from Revenues. In the event amounts paid in respect of the Project Administration Fee are not sufficient to pay such Operating Expenses when due, Pioneer agrees to pay such additional amounts as are necessary to pay such Operating Expenses upon receipt of notice of the amount due from the Trustee or CCCFA.
(b) As soon as practicable following the end of each annual period referred to in paragraph (a), CCCFA agrees to reconcile the amounts received in respect of the Project Administration Fee for such annual period with the Operating Expenses paid or accrued for such period. In the event that, following each such reconciliation, it is determined that the amounts received in respect of the Project Administration Fee during the applicable annual period exceed Operating Expenses paid or accrued for such period, 4 CCCFA will provide written notice thereof to Pioneer and include the amount of such excess in its Annual Refund to Pioneer under the Clean Energy Purchase Contract.
Section 8. Notices. Notices and other information to be provided by a Party to the other Party under this Agreement shall be provided in accordance with Article XVI of the Clean Energy Purchase Contract.
Section 9. Governing Law. This Agreement and the obligations of the Parties hereunder shall be governed by and determined in accordance with the laws of the State of California.
Section 10. Counterparts. This Agreement may be executed and acknowledged in multiple counterparts and by the Parties in separate counterparts, each of which shall be an original and all of which shall be and constitute one and the same instrument.
5 IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed and delivered by their respective officers thereunto duly authorized as of the date first above written.
CALIFORNIA COMMUNITY CHOICE FINANCING
AUTHORITY
By: ________________________________
Name: ______________________________
Title: _______________________________
PIONEER COMMUNITY ENERGY
By: ________________________________
Name: ______________________________
Title: _______________________________
SM Draft 12 October 2022
CUSTODIAL AGREEMENT
This Agreement (this “Agreement”) is made and entered into as of [____], 2022, by and among Pioneer Community Energy, a California joint powers authority (“Pioneer”), J. Aron & Company LLC, a New York limited liability company (“J. Aron”), Aron Energy Prepay 15 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 U.S. Bank National Association, a national banking association, (the “Custodian” and together with Pioneer, J. Aron, Prepay LLC and Issuer, the “Parties”).
RECITALS:
WHEREAS, Issuer is issuing its [Clean Energy Project Revenue Bonds, Series 2022 (Green Bonds – Climate Bond Certified)] (the “Bonds”) pursuant to the Trust Indenture, dated as of [____], 2022 (the “Bond Indenture”) between Issuer and U.S. Bank 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 [____], 2022 (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 [____], 2022 (the “Electricity Sale and Service Agreement”); and WHEREAS, in connection with the execution of the Master Supply Agreement, Issuer and Pioneer are entering into a Clean Energy Purchase Contract, dated as of [____], 2022 (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 Pioneer 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 Pioneer 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:
“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 Pioneer 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 Pioneer as the total amount to be withdrawn from the Assigned PPA Payments Account by the Custodian and paid to the relevant PPA Seller in respect of such Monthly PPA Invoice, which shall equal the total net amount due to such PPA Seller in respect of such Monthly PPA Invoice and shall consist of the following components:
(a) The J. Aron Prepay Payment, which shall be deemed to be paid to the relevant PPA Seller on behalf of J. Aron in respect of Assigned Energy; and (b) the Pioneer Net Payment.
“Pioneer Gross Payment” means, in respect of any Monthly PPA Invoice, an amount determined by Pioneer 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 Pioneer Gross Payment (i) shall be deemed to be paid to the relevant PPA Seller on behalf of J. Aron to the extent it relates to any Assigned PAYGO Energy and Assigned RECs, and (ii) otherwise shall be deemed to be paid to the relevant PPA Seller on behalf of Pioneer. 3 “Pioneer Net Payment” means, in respect of any Monthly PPA Invoice, an amount determined by Pioneer as the positive result, if any, of (a) the Pioneer Gross Payment, less (b) the PPA Seller Payment Obligation.
“PPA Seller Payment Obligation” means, in respect of any Monthly PPA Invoice, an amount determined by Pioneer 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 Pioneer and credited against the Pioneer Gross Payment thereby resulting in the Pioneer Net Payment required to be made by Pioneer hereunder. “Shell PPA” means that certain Transaction Confirmation, dated November 10, 2021, entered into by and between Pioneer and Shell Energy North America (US), L.P. subject to the terms and conditions of the WSPP Agreement, effective August 12, 2021, promulgated by WSPP, Inc.
(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. Pioneer, J. Aron, Prepay LLC and Issuer hereby appoint U.S. Bank National Association 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; Shell PPA. (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”), Pioneer shall deliver a statement (the “Monthly Statement”) showing each of the following (based on the information provided by the relevant PPA Seller in the Monthly PPA Invoice) to each of the Parties hereto:
(i) the J. Aron Prepay Payment;
(ii) the J. Aron Resettlement Payment;
(iii) the Pioneer Gross Payment;
(iv) the PPA Seller Payment Obligation;
(v) the Pioneer Net Payment;
(vi) the Monthly PPA Payment;
4 (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; and (viii) the “Custodial Agreement Payment Date,” which shall be two Business Days preceding the Monthly PPA Invoice Payment Date.
provided that Pioneer shall deliver an updated Monthly Statement within seven days following agreement by Pioneer 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 Pioneer and the relevant PPA Seller as provided in the Assignment Agreements.
(b) Monthly Statement Verification. J. Aron shall notify Pioneer and each other Party promptly, but in no event more than three (3) Business Days, following Pioneer’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, Pioneer 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) Pioneer 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 Pioneer and J. Aron under separate contracts, and (iii) none of Pioneer, 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 Pioneer to timely or properly calculate any amount to be included in a Monthly Statement. Without limiting the foregoing, J. Aron acknowledges that it will have an opportunity to review and comment on each calculation and date included in a Monthly Statement (and shall be aware if such Monthly Statement has not been timely delivered) and Pioneer 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.
(d) Shell PPA Invoicing and Payments. Notwithstanding anything to the contrary in this Agreement or the Clean Energy Prepay Agreements, the Parties hereto acknowledge and agree that the Shell PPA provides for advance payment to the PPA Seller by the 20th day of the Month preceding deliveries (with such amounts subject to adjustment to the extent the actual quantity of 5 Product delivered differs from the contract quantity under the Shell PPA upon which such advance payment was made).
1 Accordingly, the Parties acknowledge and agree as follows:
(i) the Monthly PPA Invoice Payment Date with respect to the Shell PPA will be the 20th day of each Month preceding deliveries during the Assignment Period for the Shell PPA (or the preceding Business Day if the 20th is not a Business Day) (e.g., for an Assignment Period commencing on January 1, 2023, the Monthly PPA Invoice Date for the first Month of the Assignment Period would be December 20, 2022 or the preceding Business Day if December 20, 2022 is not a Business Day); (ii) payments with respect to the Shell PPA will be made under this Agreement and the Clean Energy Prepay Agreements for the Assigned Quantities attributable to the Shell PPA in the Month preceding deliveries, with such payments due from (A) Pioneer to Issuer under the Clean Energy Purchase Contract on or before the [___] day of each Month preceding deliveries and (B) Prepay LLC to J. Aron under the Electricity Sale & Service Agreement on or before the [___] day of each Month preceding deliveries; (iii) J. Aron agrees to make the J. Aron Fixed Payment with respect to the Shell PPA for each Month of the applicable Assignment Period; (iv) Pioneer will deliver a Monthly Statement hereunder with respect to the Shell PPA no later than the [___] day of each Month preceding deliveries during the Assignment Period, which Monthly Statement shall provide for J. Aron to make the J. Aron Fixed Payment for the applicable Month of deliveries in all cases consistent with clause (iii) above;
(v) to the extent that the actual quantities delivered under the Shell PPA are less than the Assigned Prepay Quantities for the Shell PPA for any given Month, then:
(A) 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 (B) any payment to Pioneer under clause (vi) below will be deemed to be a reimbursement to Pioneer for over-payment under the Clean Energy Purchase Contract for such Month;
(vi) the Custodian shall withdraw and remit to Pioneer any excess of the J. Aron Fixed Payment over the Monthly PPA Payment with respect to the Shell PPA for any Month, which Monthly PPA Payment for the Shell PPA will equal (x) the advance payment due under the Shell PPA for the following Month’s deliveries and (y) any adjustments to such amount based on over- or -under-deliveries in the preceding Month or any other amounts payable under the Shell PPA; and
1 SM NTD: GS and Pioneer to discuss timing of Shell PPA invoicing and payments. 6 (vii) to the extent that (x) an early termination of the Shell PPA occurs and (y) Pioneer has made advance payment under this Agreement or the Clean Energy Purchase Contract for Assigned Products that are not ultimately delivered pursuant to the Shell PPA, Pioneer agrees that its sole and exclusive recourse for such amounts shall be against Shell Energy North America (US), L.P.
Section 4. Assigned PPA Payments Account.
(a) Payments. With respect to certain payments required to be made by J. Aron and Pioneer 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 (Pioneer Proj) 2022 PPA Cust]”, bearing Custodian’s Account No. [____] (the “Assigned PPA Payments Account”), and all payments made by J. Aron and Pioneer hereunder shall be wired to such Assigned PPA Payments Account :
[____]
ABA: [____]
FBO: [____]
Acct: [____]
FFC: [____] – [CCCFA (Pioneer Proj) 2022 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. 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 Pioneer 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 Pioneer 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 Pioneer will have a reimbursement claim against Issuer under Section 6.4 of the Clean Energy Purchase Contract). (c) Pioneer Payments. Pioneer shall pay the Pioneer 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 be by Pioneer on J. Aron’s behalf pursuant to the last sentence of Section 4(b)) and any Pioneer Net Payment received from Pioneer 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 7 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 Pioneer consistent with such PPA Seller’s contact information provided in Exhibit A; and
(ii) any J. Aron Resettlement Payment received from J. Aron shall be remitted to Pioneer on the relevant Monthly PPA Invoice Payment Date pursuant to Pioneer’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 Pioneer until applied as set forth in Section 4(d) and Section 12, as applicable, and there is hereby granted to Pioneer 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 Pioneer 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 Pioneer 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 Pioneer for the Month to which such Monthly Statement relates, J. Aron may, at its option, (i) notify the Custodian that it intends to transfer all or any portion of such Receivables to the applicable PPA Seller, and (ii) reduce the J. Aron Prepay Payment by the face amount of such Receivables to be transferred. To the extent J. Aron has notified the Custodian of its intent to transfer any such Receivables, J. Aron shall cause such Receivables to be transferred to the relevant PPA Seller not later than the relevant Custodial Agreement Payment Date.
Section 5. Custodian; Fees.
(a) Limitation on Liability. The Custodian shall have (i) no liability under any agreement other than this Agreement and (ii) no duty to inquire as to the provisions of any agreement other than this Agreement and the Assigned PPAs. The Custodian may rely upon and shall not be liable for acting or refraining from acting upon any written notice, document, instruction or request furnished to it hereunder in accordance with the terms hereof and believed by it to be genuine and to have been signed or presented by the proper Party or Parties. The Custodian shall be under no duty to inquire into or investigate the validity, accuracy or content of any such document, notice, instruction or request. The Custodian shall have no duty to solicit any payments which may be due to it, or to take any action to compel J. Aron or Pioneer 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 8 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.
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 9 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 Pioneer 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 Pioneer, 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 Pioneer 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 Pioneer, and the Custodian shall have no responsibility for the preparation and/or filing of any tax return with respect to any income earned on the Assigned PPA Payments Account. In addition, any tax or other payments required to be made pursuant to such tax return or filing shall be paid by Pioneer. 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 10 delivered by means other than email transmission during the specified period of time shall be ineffective.
Section 10. Notices.
(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 5, 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 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 11 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 Pioneer, 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 Pioneer.
Section 13. Indemnification. J. Aron and Pioneer, 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 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.
12 Section 15. Patriot Act. J. Aron and Pioneer 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 Pioneer.
Accordingly, prior to opening the Assigned PPA Payments Account described in Section 3 of this Agreement, the Custodian will ask J. Aron and Pioneer 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 Pioneer’s identities, such as organizational documents, certificate of good standing, license to do business, or other pertinent identifying information. J. Aron and Pioneer agree that the Custodian cannot open any account hereunder unless and until the Custodian verifies J. Aron’s and Pioneer’s identities in accordance with its CIP.
Section 16. Third Party Beneficiary. The Issuer shall be a third party beneficiary of this Agreement with the right to rely upon and enforce the provisions hereof relating to invoicing and payments under the Shell PPA. Except as provided in the immediately preceding sentence, it is specifically agreed that there are no other third-party beneficiaries of this Agreement and that this Agreement shall not impart any rights enforceable by any other Person not a party to this Agreement.
[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.
PIONEER COMMUNITY ENERGY
By:___________________________________
Name: _____________________________
Title: ______________________________
Taxpayer ID Number:_________________
J. ARON & COMPANY LLC
By:___________________________________
Name: _____________________________
Title: ______________________________
Taxpayer ID Number: _________________
ARON ENERGY PREPAY 15 LLC
By: J. Aron & Company LLC, its
Manager
By:___________________________________
Name: _____________________________
Title: ______________________________
U.S. BANK NATIONAL ASSOCIATION
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 15 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: [_____]
Pioneer:
Pioneer Community Energy
[____]
[____]
Email: [____]
Pioneer Wire Instructions:
[____]
[____]
[____]
Email: [____]
Custodian:
U.S. Bank National Association
1349 W. Peachtree Street, Suite 1050
Atlanta, Georgia 30309
Attention: Mark Hallam
Telephone: (404) 898-2463
Email: [email protected]
OHS DRAFT 10/4/22
4142-7576-9148.4
TRUST INDENTURE
between
CALIFORNIA COMMUNITY CHOICE FINANCING AUTHORITY
and
U.S. BANK TRUST COMPANY, NATIONAL ASSOCIATION,
as Trustee
$__________
CLEAN ENERGY PROJECT REVENUE BONDS
SERIES 2022_
Dated as of __________ 1, 2022
TABLE OF CONTENTS
Page
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ARTICLE I DEFINITIONS AND GOVERNING LAW.............................................................. 3 Section 1.1 Definitions.................................................................................................. 3 Section 1.2 Captions................................................................................................... 28 Section 1.3 Rules of Construction .............................................................................. 28 Section 1.4 Governing Law ........................................................................................ 28 Section 1.5 Consents................................................................................................... 28 ARTICLE II AUTHORIZATION AND ISSUANCE OF BONDS ............................................ 28 Section 2.1 Authorization of Bonds and Refunding Bonds; Application of Proceeds................................................................................................... 28 Section 2.2 Terms of Bonds; Payment........................................................................ 30 Section 2.3 Conditions for Issuance of Bonds............................................................ 32 Section 2.4 Initial Interest Rate Periods; Subsequent Interest Rate Periods............... 33 Section 2.5 Daily Interest Rate Period........................................................................ 34 Section 2.6 Weekly Interest Rate Period .................................................................... 35 Section 2.7 Term Rate Period ..................................................................................... 36 Section 2.8 Commercial Paper Interest Rate Periods ................................................. 39 Section 2.9 Index Rate Periods................................................................................... 41 Section 2.10 Notice of Conversion ............................................................................... 43 Section 2.11 Liquidity Facility ..................................................................................... 45 Section 2.12 Provisions Regarding Commodity Swaps ............................................... 45 Section 2.13 Provisions Regarding Interest Rate Swap................................................ 47 ARTICLE III GENERAL TERMS AND PROVISIONS OF BONDS....................................... 48 Section 3.1 Medium of Payment; Form and Date; Letters and Numbers................... 48 Section 3.2 Legends.................................................................................................... 48 Section 3.3 Execution and Authentication.................................................................. 48 Section 3.4 Exchange, Transfer and Registry............................................................. 49 Section 3.5 Regulations with Respect to Exchanges and Registration of Transfers .................................................................................................. 50 Section 3.6 Bonds Mutilated, Destroyed, Stolen or Lost............................................ 50 Section 3.7 Temporary Bonds..................................................................................... 51 Section 3.8 Payment of Interest on Bonds; Interest Rights Preserved........................ 51 Section 3.9 Book Entry System; Appointment of Securities Depository ................... 52 Section 3.10 Subsidy Payments.................................................................................... 53 Section 3.11 Limitation of Liability of Issuer............................................................... 54 ARTICLE IV REDEMPTION OF BONDS AND TENDER PROVISIONS............................. 54 Section 4.1 Extraordinary Redemption....................................................................... 54 Section 4.2 Sinking Fund Redemption ....................................................................... 55 Section 4.3 Optional Redemption............................................................................... 55 Section 4.4 Redemption Notice .................................................................................. 57 Section 4.5 Bonds Redeemed in Part.......................................................................... 58 Section 4.6 Redemption at the Election or Direction of the Issuer............................. 58 Section 4.7 Redemption Other than at the Issuer’s Election or Direction.................. 58 Section 4.8 Selection of Bonds to Be Redeemed........................................................ 59
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Section 4.9 Payment of Redeemed Bonds.................................................................. 59 Section 4.10 Cancellation and Destruction of Bonds................................................... 59 Section 4.11 Optional Tender During Daily or Weekly Interest Rate Periods............. 59 Section 4.12 Mandatory Tender for Purchase on Day Next Succeeding the Last Day of Each CP Interest Term................................................................. 60 Section 4.13 Mandatory Tender for Purchase on the Index Rate Tender Date or Term Rate Tender Date............................................................................ 61 Section 4.14 Mandatory Tender for Purchase on Conversion of Interest Rate Period ....................................................................................................... 61 Section 4.15 General Provisions Relating to Tenders .................................................. 61 Section 4.16 Notice of Mandatory Tender for Purchase............................................... 64 Section 4.17 Irrevocable Notice Deemed to Be Tender of Bond; Undelivered Bonds....................................................................................................... 65 Section 4.18 Remarketing of Bonds; Notice of Interest Rates ..................................... 66 Section 4.19 The Remarketing Agent........................................................................... 66 Section 4.20 Qualifications of Remarketing Agent; Resignation; Removal ................ 67 Section 4.21 Successor Remarketing Agents................................................................ 67 Section 4.22 Tender Agent ........................................................................................... 67 ARTICLE V ESTABLISHMENT OF FUNDS AND APPLICATION THEREOF................... 68 Section 5.1 The Pledge Effected by This Indenture ................................................... 68 Section 5.2 Establishment of Funds and Accounts..................................................... 69 Section 5.3 Project Fund............................................................................................. 70 Section 5.4 Revenues and Revenue Fund................................................................... 72 Section 5.5 Payments from Revenue Fund................................................................. 73 Section 5.6 Operating Fund ........................................................................................ 74 Section 5.7 Debt Service Fund – Debt Service Account ............................................ 75 Section 5.8 Debt Service Fund – Redemption Account ............................................. 78 Section 5.9 Debt Service Fund – Debt Service Reserve Account .............................. 78 Section 5.10 Swap Termination Account ..................................................................... 80 Section 5.11 Reserved................................................................................................... 80 Section 5.12 General Reserve Fund.............................................................................. 80 Section 5.13 Remarketing Reserve Fund...................................................................... 81 Section 5.14 Assignment Payment Fund ...................................................................... 81 Section 5.15 Purchases of Bonds.................................................................................. 81 Section 5.16 Administrative Fee Fund.......................................................................... 81
ARTICLE VI DEPOSIT OF MONEYS, SECURITY FOR DEPOSITS AND INVESTMENT OF FUNDS ............................................................................. 82 Section 6.1 Deposits.................................................................................................... 82 Section 6.2 Investment of Certain Funds.................................................................... 82 Section 6.3 Valuation and Sale of Investments .......................................................... 83 ARTICLE VII PARTICULAR COVENANTS OF THE ISSUER............................................. 84 Section 7.1 Payment of Bonds.................................................................................... 84
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Section 7.2 Extension of Payment of Bonds............................................................... 84 Section 7.3 Offices for Servicing Bonds..................................................................... 85 Section 7.4 Further Assurance .................................................................................... 85 Section 7.5 Power to Issue Bonds and Pledge the Trust Estate .................................. 85 Section 7.6 Power to Fix and Collect Fees and Charges for the Sale of Product ....... 85 Section 7.7 Restriction on Additional Obligations..................................................... 85 Section 7.8 Limitations on Operation and Maintenance and Other Costs.................. 86 Section 7.9 Fees and Charges ..................................................................................... 86 Section 7.10 Clean Energy Purchase Contract; Product Remarketing ......................... 86 Section 7.11 Master Power Supply Agreement; Product Supplier Documents............ 88 Section 7.12 [Reserved ................................................................................................. 88 Section 7.13 Commodity Swaps................................................................................... 88 Section 7.14 Interest Rate Swap ................................................................................... 89 Section 7.15 Accounts and Reports.............................................................................. 89 Section 7.16 Payment of Taxes and Charges................................................................ 90 Section 7.17 Tax Covenants ......................................................................................... 90 Section 7.18 General..................................................................................................... 91 Section 7.19 Bankruptcy............................................................................................... 92 Section 7.20 Avoidance of Failed Remarketing ........................................................... 92 ARTICLE VIII EVENTS OF DEFAULT AND REMEDIES .................................................... 92 Section 8.1 Events of Default; Remedies ................................................................... 92 Section 8.2 Accounting and Examination of Records after Default........................... 94 Section 8.3 Enforcement of Agreements; Application of Moneys after Default........ 94 Section 8.4 Appointment of Receiver......................................................................... 96 Section 8.5 Proceedings Brought by Trustee.............................................................. 96 Section 8.6 Restriction on Bondholder’s Action ........................................................ 97 Section 8.7 Remedies Not Exclusive .......................................................................... 98 Section 8.8 Effect of Waiver and Other Circumstances............................................. 98 Section 8.9 Notice of Default...................................................................................... 98 ARTICLE IX CONCERNING THE FIDUCIARIES.................................................................. 98 Section 9.1 Acceptance by Trustee of Duties............................................................. 98 Section 9.2 Paying Agents; Appointment and Acceptance of Duties......................... 98 Section 9.3 Responsibilities of Fiduciaries................................................................. 99 Section 9.4 Evidence on Which Fiduciaries May Act .............................................. 100 Section 9.5 Compensation ........................................................................................ 102 Section 9.6 Certain Permitted Acts........................................................................... 102 Section 9.7 Resignation of Trustee ........................................................................... 102 Section 9.8 Removal of the Trustee.......................................................................... 102 Section 9.9 Appointment of Successor Trustee ........................................................ 102 Section 9.10 Transfer of Rights and Property to Successor Trustee........................... 103 Section 9.11 Merger or Consolidation........................................................................ 103 Section 9.12 Adoption of Authentication ................................................................... 104
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Section 9.13 Resignation or Removal of Paying Agent and Appointment of Successor................................................................................................ 104 Section 9.14 Trustee’s Reliance.................................................................................. 104 Section 9.15 Trustee’s Liability.................................................................................. 105 Section 9.16 Trustee’s Agents or Attorneys............................................................... 106 Section 9.17 Lien Filings............................................................................................ 106
ARTICLE X MODIFICATION, AMENDMENT OR SUPPLEMENT OF THE
INDENTURE .................................................................................................. 106 Section 10.1 Amendments Permitted.......................................................................... 106 Section 10.2 General Provisions................................................................................. 108 Section 10.3 Effect of Supplemental Indenture .......................................................... 110 Section 10.4 Endorsement of Bonds; Preparation of New Bonds.............................. 110 Section 10.5 Amendment of Particular Bonds............................................................ 110 ARTICLE XI DEFEASANCE .................................................................................................. 111 Section 11.1 Discharge of Indenture........................................................................... 111 Section 11.2 Discharge of Liability on Bonds............................................................ 111 Section 11.3 Deposit of Money or Securities with Trustee ........................................ 112 Section 11.4 Payment of Bonds After Discharge of Indenture................................... 112 ARTICLE XII MISCELLANEOUS.......................................................................................... 113 Section 12.1 Disqualified Bonds................................................................................. 113 Section 12.2 Evidence of Signatures of Bondholders and Ownership of Bonds........ 113 Section 12.3 Moneys Held for Particular Bonds ........................................................ 114 Section 12.4 Preservation and Inspection of Documents............................................ 114 Section 12.5 Parties Interested Herein........................................................................ 114 Section 12.6 No Recourse on the Bonds; Non-Liability of Issuer.............................. 115 Section 12.7 Waiver of Personal Liability.................................................................. 115 Section 12.8 Severability of Invalid Provisions.......................................................... 115 Section 12.9 Holidays................................................................................................. 115 Section 12.10 Notices ................................................................................................... 115 Section 12.11 Notices to Rating Agencies.................................................................... 117 Section 12.12 Counterparts........................................................................................... 117 Section 12.13 Waiver of Jury Trial............................................................................... 117 Section 12.14 Electronic Signatures............................................................................. 117
EXHIBIT A - FORM OF BOND
SCHEDULE I - SCHEDULED DEBT SERVICE DEPOSITS
SCHEDULE II - TERMS OF COMMODITY SWAPS
SCHEDULE III - AMORTIZED VALUE OF THE SERIES 2022_ BONDS 4142-7576-9148.4
THIS TRUST INDENTURE, dated as of __________ 1, 2022 (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, East Bay Community Energy, Marin Clean Energy and Silicon Valley Clean Energy entered into a joint powers agreement pursuant to which the Issuer was organized and established for the purpose, among other things, of entering into contracts for electricity and energy services and agreements for services to facilitate the sale and purchase of electricity and other related services, and for issuing bonds to assist the Members (as defined herein) in financing such contracts, agreements, purchases, sales and services; and WHEREAS, the Issuer is authorized under the Act to acquire electricity and energy services and enter into agreements for services to facilitate the sale and purchase of electricity and other related services, and to issue revenue bonds to finance the cost of acquisition of such electricity and energy services and other agreements, and is vested with all powers necessary to accomplish the purposes for which it was created; and
WHEREAS, the Issuer has determined to finance the Cost of Acquisition of the Clean Energy Project through the issuance of Bonds pursuant to this Indenture; and WHEREAS, the execution and delivery of this Indenture has been in all respects duly and validly authorized and approved by resolution of the Board of the Issuer; and WHEREAS, the Trustee is willing to accept the trusts provided for in this Indenture.
NOW, THEREFORE, THIS INDENTURE WITNESSETH, and the Issuer and the Trustee agree as follows for the benefit of the other, for the benefit of the Holders of the Bonds issued pursuant hereto and 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 (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 2 4142-7576-9148.4
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 Counterparties 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 Counterparties under the Commodity Swaps and the mutual covenants of the Issuer and the Commodity Swap Counterparties 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 Counterparties and the Project Participant, and their 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 Swaps 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 11.1, 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 Swaps and the Interest Rate Swap shall cease to be entitled to any lien, benefit or security under this Indenture, and all covenants, agreements and obligations of the Issuer to the Holders of the Bonds shall thereupon cease, terminate and be discharged and satisfied; otherwise this Indenture shall remain in full force and effect.
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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 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 4 4142-7576-9148.4
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 2022_ Bonds and certain dates, produces the amounts for all of the Series 2022_ 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 2022_ 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. one Business Day prior to the date that notice of redemption is required to be given pursuant to Section 4.4. 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 Advisors and is available to its subscribers through its internet address: www.mma research.com. In the further event Municipal Market Advisors no longer publishes the Consensus Scale, the Applicable Tax Exempt Municipal Bond Rate shall be determined by a major market maker in municipal 5 4142-7576-9148.4
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.
“Assigned Product Reimbursement Payment” means a payment due and payable to the Project Participant pursuant to Section 6.5 of 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.
“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.
“Bond” or “Bonds” means any of the Series 2022_ Bonds and any Refunding Bonds authorized by Section 2.1, and at any time Outstanding pursuant to, this Indenture. 6 4142-7576-9148.4
“Bond Counsel” means Orrick, Herrington & Sutcliffe LLP or any other counsel of nationally recognized standing in matters pertaining to the tax-exempt status of interest on obligations issued by states and their political subdivisions and instrumentalities, duly admitted to the practice of law before the highest court of any state of the United States, and selected by the Issuer.
“Bond Payment Date” means each date on which (a) interest on the Bonds is due and payable 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, (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.
“Call Receivable” means the aggregate of any Elective Call Receivable and Swap Deficiency Call Receivable.
7 4142-7576-9148.4
“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 __________, 2022, between the Issuer and Pioneer, as the same may be amended from time to time.
“Clean Energy Purchase Contract” means that certain Clean Energy Purchase Contract, dated as of ___________, 2022, between the Issuer and Pioneer, 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, 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 the Trustee and __________, as provider, dated as of __________, 2022.
“Commodity Swap Counterparties” means, with respect to the initial Commodity Swaps, (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). “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 a Commodity Swap, the amounts, if any, payable to the Commodity Swap Counterparties by the Issuer (including any amounts paid by the Custodian pursuant to Section 3(d) of the Issuer Custodial Agreements); provided that, upon an early termination of a Commodity Swap, Commodity Swap Payments shall not include any amounts other than Unpaid Amounts due to a 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 Counterparties (including any amounts paid to the Trustee pursuant to Section 3(d) of the Product Supplier Custodial Agreements).
8 4142-7576-9148.4
“Commodity Swaps” means the ISDA Master Agreement, Schedule and Confirmation between the Issuer and the Commodity Swap Counterparties, or any replacement agreement permitted by Section 2.12(b), pursuant to which the Issuer will pay to the Commodity Swap Counterparties an index-based floating price and the Commodity Swap Counterparties 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; (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. 9 4142-7576-9148.4
“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, collectively, the Product Supplier Custodial Agreement and the Issuer Custodial Agreement.
“Custodian” means U.S. Bank Trust Company, National Association, 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, 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, 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 among the Trustee, the Issuer and __________, as provider, dated as of ___________, 2022.
“Debt Service Fund” means the Debt Service Fund established in Section 5.2. 10 4142-7576-9148.4
“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, 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 Investment Agreement, between the Trustee and ___________, as provider, dated as of ___________, 2022. “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 in accordance with the Continuing Disclosure Undertaking. “DTC” means The Depository Trust Company, New York, New York, and its successors and assigns.
“Early Termination Payment Date” has the meaning given to such term in 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 11 4142-7576-9148.4
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). “Favorable Opinion of Bond Counsel” means an Opinion of Bond Counsel to the effect that an action proposed to be taken is not prohibited by this Indenture and will not, in and of itself, cause interest on the applicable Bonds to be included in gross income for purposes of federal income taxation.
“Fiduciary” or “Fiduciaries” means the Trustee, the Paying Agents, the Bond Registrar, the 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 2022_ Bonds, __________1, 205_, and (b) with respect to any other Series of Bonds, the final Maturity Date set forth in the related Supplemental Indenture.
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“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 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 13 4142-7576-9148.4
that, the Trustee shall have no responsibility for determining whether any bond, note or other obligation is a Government Obligation.
“Increased Interest Rate” means (a) during the Initial Interest 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 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 2022_ Bonds, the period from the Initial Issue Date to and including __________, 20__; provided that in the event that all 14 4142-7576-9148.4
of the Series 2022_ 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 2022_ 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.
“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.
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“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 2022_ 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 Agreements” means the separate Custodial Agreements, each dated as of the Initial Issue Date among the Issuer, the Custodian and each of the Commodity Swap Counterparties.
“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.
“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. 16 4142-7576-9148.4
“Mandatory Purchase Date” means (i) the Series 2022_ 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 __________, 2022 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 2022_ 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” means each of Central Coast Community Energy, Clean Power Alliance of Southern California, East Bay Community Energy, Marin Clean Energy, Silicon Valley Clean Energy and Pioneer Community Energy.
“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, 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 17 4142-7576-9148.4
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 (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. 18 4142-7576-9148.4
“Person” means any and all natural persons, firms, associations, corporations and public bodies.
“Pioneer” means Pioneer Community Energy, a joint powers authority and a community choice aggregator duly organized and existing under the laws of the State of California. “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 Counterparties 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 __ LLC, a Delaware limited liability company.
“Product Supplier Commodity Swaps” means the ISDA Master Agreement, Schedule and Confirmation between the Product Supplier and the Commodity Swap Counterparties, or any replacement agreement entered into consistent with the terms of the Master Power Supply Agreement, pursuant to which the Commodity Swap Counterparties will pay to Product Supplier an index-based floating price and Product Supplier will pay to the Commodity Swap Counterparties 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.
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“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 Swaps.
“Product Supplier LLCA” means the Amended and Restated Limited Liability Company Agreement of the Product Supplier, dated as of __________, 2022. “Project Fund” means the Project Fund established in Section 5.2. “Project Participant” means (a) Pioneer and (b) any other Person that enters into the 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 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.
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“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 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;
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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.
“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.
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“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; (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.
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provided that, the term “Revenues” shall not include: (i) any amounts received under the Clean Energy Purchase Contract with respect to Assigned PAYGO Product; (ii) any Termination Payment or 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 2022_ Bonds, and authorized to be issued hereunder pursuant to Section 2.1.
“Series 2022_ Bonds” means the Clean Energy Project Revenue Bonds, Series 2022_ (Term Rate), authorized to be issued under Section 2.1(a). “Series 2022_ Mandatory Purchase Date” means ___________, 20__, which is the day following the last day of the Initial Interest Rate Period for the Series 2022_ 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 Municipal Market Data 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 24 4142-7576-9148.4
Date, the 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 2022_ 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).
“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. 25 4142-7576-9148.4
“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.
“Special Record Date” has the meaning set forth in Section 3.8. “Special Tax Counsel” means Orrick, Herrington & Sutcliffe LLP or any other counsel of nationally recognized standing in matters pertaining to the tax-exempt status of interest on obligations issued by states and their political subdivisions, 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.
“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.
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“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 2022_ Bonds maturing on the Final Maturity Date, the Series 2022_ 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 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 successor 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.
27 4142-7576-9148.4
“Underwriter” means (a) with respect to the Series 2022_ 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 Swaps or the Product Supplier Commodity Swaps 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:
(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
28 4142-7576-9148.4
(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 Counterparties 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.
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:
$__________ Clean Energy Project Revenue Bonds, Series 2022_ [(Term Rate)] ][([SOFR][SIFMA] Index Rate)], which shall bear interest during the Initial Interest Rate Period at a [Term Rate][[SOFR][SIFMA] Index Rate]. 29 4142-7576-9148.4
(b) The proceeds of the Series 2022_ 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 2022_ 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 2022_ Bonds in accordance with Section 5.3(a) and (C) an amount equal to $___________ to provide capitalized interest on the Series 2022_ 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 2022_ Bonds, an amount equal to $___________;
(iii) for credit to the Commodity Reserve Account of the Project Fund, from the proceeds of the Series 2022_ Bonds, an amount equal to $___________; and
(c) In addition to the Series 2022_ 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;
(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; 30 4142-7576-9148.4
(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. (b) The Series 2022_ 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 2022_ Bonds shall be issued in the aggregate principal amount of $__________ and shall mature on the dates and in the principal amounts set forth below.
The Initial Interest Rate Period for the Series 2022_ Bonds shall be a Term Rate Period, and the Series 2022_ Bonds shall bear interest during such Period at the following rates:
31 4142-7576-9148.4
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 2022_ 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 2022_ 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 2022_ 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 2022_ 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 2022_ Mandatory Purchase Date or any prior redemption date with respect to the Series 2022_ 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 2022_ Bonds to “interest” on the Series 2022_ 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 2022_ 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, 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 2022_ Bonds is __________1, 2022. (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 32 4142-7576-9148.4
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 Swaps and any Interest Rate Swap, and (B) the Clean Energy Purchase Contract, the Master Power Supply Agreement, the Commodity Swaps 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 Swaps 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 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 Counterparties and the Project 33 4142-7576-9148.4
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 2022_ Bonds shall be initially issued in the Interest Rate Period set forth in Section 2.2(b). Upon the purchase of the Series 2022_ Bonds on the Mandatory Purchase Date, the Interest Rate Period for each Series of the Series 2022_ 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.
(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 2022_ Bonds) shall be established pursuant to the related Supplemental Indenture. 34 4142-7576-9148.4
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 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 35 4142-7576-9148.4
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 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.
36 4142-7576-9148.4
(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 37 4142-7576-9148.4
Period shall be determined by the Underwriter or the 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 38 4142-7576-9148.4
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 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
39 4142-7576-9148.4
(v) On or before the Conversion Date, a Favorable Opinion of Bond Counsel shall have been delivered.
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 40 4142-7576-9148.4
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 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 41 4142-7576-9148.4
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 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. 42 4142-7576-9148.4
(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 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 43 4142-7576-9148.4
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) 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 44 4142-7576-9148.4
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 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.
45 4142-7576-9148.4
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 Swaps.
(a) In connection with the Clean Energy Project, the Issuer shall enter into the initial Commodity Swaps with the Commodity Swap Counterparties. The following shall apply to each 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.
(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 Swaps:
(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 a 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.
46 4142-7576-9148.4
(iii) If a 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 a 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 a 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 a 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 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 a 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. 47 4142-7576-9148.4
(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:
(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. 48 4142-7576-9148.4
(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.
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 49 4142-7576-9148.4
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 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 50 4142-7576-9148.4
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 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 51 4142-7576-9148.4
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.
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 Agents 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 Agents 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 52 4142-7576-9148.4
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.
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. 53 4142-7576-9148.4
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:
(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. 54 4142-7576-9148.4
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
(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.
55 4142-7576-9148.4
Section 4.2 Sinking Fund Redemption.
The Series 2022_ Bonds maturing on __________ 1, 205_ 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 October 1 of each of the following years and in the following amounts:
Sinking Fund Installments
Year Principal Amount Year Principal Amount
8 $ $
*
________________________
* Stated Maturity
Section 4.3 Optional Redemption.
(a) The Series 2022_ 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 2022_ 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 2022_ Bonds or the Series 2022_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 2022_ Bonds minus 0.25% per annum, and
(ii) the Amortized Value thereof;
in each case plus accrued and unpaid interest to the date of redemption. 56 4142-7576-9148.4
(b) The Series 2022_ Bonds maturing after the Series 2022_ 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 2022_ 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 $0.__ 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 2022_ 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 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 2022_ Bonds pursuant to this Section 4.3, the Trustee may, upon the Written Direction of the Issuer, use such funds as may be available 57 4142-7576-9148.4
by the Issuer or as are otherwise available hereunder to purchase such Series 2022_ Bonds on the applicable redemption date at a Purchase Price equal to the applicable Redemption Price of such Series 2022_ Bonds. Any Series 2022_ 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 2022_ Bonds may (A) include a statement that, if the Series 2022_ Bonds are not redeemed for any reason, the Series 2022_ Bonds shall be subject to mandatory tender for purchase on the Series 2022_ Mandatory Purchase Date, and (B) be combined with notice of the mandatory tender of the Series 2022_ Bonds on the Series 2022_ 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.
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 58 4142-7576-9148.4
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.
Section 4.5 Bonds Redeemed in Part. Upon surrender of a Bond redeemed in part, the Issuer will execute and the Trustee will authenticate and deliver to the Holder thereof a new Bond or Bonds of the same Series, maturity and tenor in Authorized Denominations equal in principal amount to the unredeemed portion of the Bond surrendered. Notwithstanding anything herein to the contrary, so long as the Bonds are held in the Book-Entry System the Bonds will not be delivered as set forth above; rather transfers of Beneficial Ownership of such Bonds to the Person indicated above will be effected on the registration books of the Securities Depository pursuant to its rules and procedures.
Section 4.6 Redemption at the Election or Direction of the Issuer. In the case of any redemption of Bonds at the election or direction of the Issuer, the Issuer shall give Written Notice to the Trustee of its election or direction so to redeem, the Series, Maturity Dates, principal amounts by Maturity Dates and CUSIP numbers of the Bonds to be redeemed, the Redemption Price or the manner in which it will be calculated for each Maturity Date of Bonds to be redeemed, and the date on which such Bonds are to be redeemed, and directing the Trustee to provide notice of such redemption to the Owners of such Bonds pursuant to Section 4.4 (maturities and principal amounts thereof to be redeemed shall be determined by the Issuer in its sole discretion), at least 35 days prior to the applicable redemption date or such lesser notice period as shall be acceptable to the Trustee. In the event notice of redemption shall have been given as in Section 4.4 provided, there shall be paid on or prior to the redemption date to the appropriate Paying Agents an amount in cash which, in addition to other moneys, if any, available therefor held by such Paying Agents, will be sufficient to redeem on the redemption date at the Redemption Price thereof, plus interest accrued and unpaid to the redemption date, all of the Bonds to be redeemed. The Issuer shall promptly notify the Trustee in writing of all such payments by it to such Paying Agents.
Section 4.7 Redemption Other than at the Issuer’s Election or Direction. Whenever by the terms of this Indenture the Trustee is required or authorized to redeem Bonds other than at the election or direction of the Issuer, the Trustee shall (a) select the Bonds or portions of Bonds to be redeemed, (b) give the notice of redemption and (c) pay out of moneys available therefor the 59 4142-7576-9148.4
Redemption Price thereof, plus interest accrued and unpaid to the redemption date, to the appropriate Paying Agents in accordance with the terms of this Article IV and, to the extent applicable, Section 5.7 and Section 5.8.
Section 4.8 Selection of Bonds to Be Redeemed. If less than all of the Bonds of like maturity, tenor and Series shall be called for redemption, the particular Bonds or portions of Bonds of such Series, maturity and tenor to be redeemed shall be selected by lot in such manner as the Trustee shall determine, in its sole discretion, from Bonds of such Series, maturity and tenor not previously called for redemption; provided, however, that the portion of any Bond of a denomination of more than a minimum Authorized Denomination to be redeemed shall be in the principal amount of such minimum Authorized Denomination or a multiple thereof, and that, in selecting portions of such Bonds for redemption, the Trustee shall treat each such Bond as representing that number of Bonds of a minimum Authorized Denomination which is obtained by dividing by such minimum Authorized Denomination the principal amount of such Bond to be redeemed in part.
Section 4.9 Payment of Redeemed Bonds. Notice having been given in the manner provided in Section 4.4, and, in the case of optional redemption of Bonds, sufficient moneys for payment of the Redemption Price of, together with interest accrued to the redemption date on such Bonds being held by the Trustee, the Bonds or portions thereof so called for redemption shall become due and payable on the redemption date so designated at the applicable Redemption Price, and, upon presentation and surrender thereof at the office specified in such notice, such Bonds, or portions thereof, shall be paid at the Redemption Price. If, on the redemption date, moneys for the redemption of all the Bonds or portions thereof of any like Series, maturity and tenor to be redeemed, together with interest to the redemption date, shall be held by the Paying Agents so as to be available therefor on said date and if notice of redemption shall have been given as aforesaid, then, from and after the redemption date interest on the Bonds or portions thereof of so called for redemption shall cease to accrue and become payable. If said moneys shall not be so available on the redemption date, such Bonds or portions thereof shall continue to bear interest until paid at the same rate as they would have borne had they not been called for redemption. Upon the payment of the Redemption Price of the Bonds or portions thereof being redeemed, each check or other transfer of funds issued for such purpose shall bear the CUSIP number identifying, by maturity, the Bonds being redeemed with the proceeds of such check or other transfer.
Section 4.10 Cancellation and Destruction of Bonds. All Bonds paid or redeemed either at or before maturity shall be delivered to the Trustee when such payment or redemption is made, and such Bonds, together with all Bonds purchased or redeemed pursuant to Section 5.12(c) that have been delivered to the Trustee for application as a credit against Sinking Fund Installments and all Bonds purchased by the Trustee for cancellation pursuant to the Written Direction of the Issuer, shall thereupon be promptly cancelled (or deemed to have been cancelled). Bonds so cancelled shall be destroyed by the Trustee.
Section 4.11 Optional Tender During Daily or Weekly Interest Rate Periods. (a) Optional Tender During Daily Interest Rate Period. During any Daily Interest Rate Period for a Series of Bonds, any Eligible Bond of such Series shall be purchased from its Owner at the option of the Owner on any Business Day at the applicable 60 4142-7576-9148.4
Purchase Price, payable in immediately available funds, upon delivery to the Trustee at its designated corporate trust office for delivery of notices and the Remarketing Agent, by no later than 11:00 a.m. New York City time on such Business Day, of an irrevocable written notice which states the name of the Owner and the principal amount of such Bonds to be purchased on such Business Day. Payment of such Purchase Price shall be made from the sources and in the order of priority set forth in Section 4.15(e) on such Business Day, provided such Bond is delivered, at or prior to 12:00 noon New York City time on such Business Day, to the Trustee at its designated corporate trust office, accompanied by an instrument of transfer thereof, in form satisfactory to the Trustee, executed in blank by the Owner thereof or by the Owner’s duly-authorized attorney, with such signature guaranteed by a commercial bank, trust company or member firm of the New York Stock Exchange. (b) Optional Tender During Weekly Interest Rate Period. During any Weekly Interest Rate Period for a Series of Bonds, any Eligible Bond of such Series shall be purchased from its Owner at the option of the Owner on any Business Day at the applicable Purchase Price, payable in immediately available funds, upon delivery to the Trustee at its designated corporate trust office for delivery of notices and the Remarketing Agent, of an irrevocable written notice which states the name of the Owner and the principal amount and the date on which the same shall be purchased, which date shall be a Business Day not prior to the seventh day next succeeding the date of the delivery of such notice to the Trustee. Any notice delivered to the Trustee after 4:00 p.m., New York City time, shall be deemed to have been received on the next succeeding Business Day. Payment of such Purchase Price shall be made from the sources and in the order of priority set forth in Section 4.15(e) on the date specified in such notice, provided such Bond is delivered, at or prior to 10:00 a.m., New York City time, on the date specified in such notice, to the Trustee at its designated corporate trust office, accompanied by an instrument of transfer thereof, in form satisfactory to the Trustee, executed in blank by the Owner thereof or by the Owner’s duly-authorized attorney, with such signature guaranteed by a commercial bank, trust company or member firm of the New York Stock Exchange. (c) So long as the Bonds are registered in the name of Cede & Co., as nominee for DTC, only direct or indirect Participants may give notice of the election to tender Bonds or portions thereof and the Beneficial Owners shall not have the right to tender Bonds directly to the Trustee, except through such Participants.
Section 4.12 Mandatory Tender for Purchase on Day Next Succeeding the Last Day of Each CP Interest Term. On the day next succeeding the last day of each CP Interest Term for an Eligible Bond in a Commercial Paper Interest Rate Period, unless such day is the first day of a new Interest Rate Period for such Bond (in which event such Bond shall be subject to mandatory purchase pursuant to Section 4.14), such Bond shall be purchased from its Owner at the applicable Purchase Price payable in immediately available funds, provided such Bond is delivered to the Trustee on or prior to 10:00 a.m., New York City time, on such day, or if delivered after 10:00 a.m., New York City time, on the next succeeding Business Day; provided, however, that in any event such Bond will not bear interest at the CP Interest Term Rate after the last day of the applicable CP Interest Term. The Purchase Price of any Bond so purchased shall be payable from the sources and in the order of priority set forth in Section 4.15(e) only upon surrender of such Bond to the Trustee at its designated corporate trust office, accompanied by an instrument of transfer thereof, 61 4142-7576-9148.4
in form satisfactory to the Trustee, executed in blank by the Owner thereof or by the Owner’s duly-authorized attorney, with such signature guaranteed by a commercial bank, trust company or member firm of the New York Stock Exchange.
Section 4.13 Mandatory Tender for Purchase on the Index Rate Tender Date or Term Rate Tender Date. On the Index Rate Tender Date or Term Rate Tender Date for a Series of Bonds, unless such day is the first day of a new Interest Rate Period for such Bonds (in which event such Bonds shall be subject to mandatory purchase pursuant to Section 4.14), each Eligible Bond of such Series shall be purchased from the Owner thereof at the applicable Purchase Price, payable in immediately available funds, provided such Bond is delivered to the Trustee on or prior to 10:00 a.m., New York City time, on such day, or if delivered after 10:00 a.m., New York City time, on the next succeeding Business Day; provided, however, that in any event such Bond will not bear interest at the applicable Index Rate or Term Rate after the last day of the applicable Index Rate Period or Term Rate Period, respectively. The Purchase Price of any Bond so purchased shall be payable from the sources and in the order of priority specified in Section 4.15(e) only upon surrender of such Bond to the Trustee at its designated corporate trust office, accompanied by an instrument of transfer thereof, in form satisfactory to the Trustee, executed in blank by the Owner thereof or by the Owner’s duly-authorized attorney, with such signature guaranteed by a commercial bank, trust company or member firm of the New York Stock Exchange. The Series 2022_ Bonds shall be subject to mandatory tender pursuant to this Section 4.13 on the Series 2022_ Mandatory Purchase Date.
Section 4.14 Mandatory Tender for Purchase on Conversion of Interest Rate Period.
Eligible Bonds of a Series shall be subject to mandatory tender for purchase upon the Conversion of the Interest Rate Period for such Series of Bonds pursuant to Section 2.5(b), Section 2.6(b), Section 2.7(b), Section 2.8(b), or Section 2.9(c) on the first day of such Interest Rate Period (or on the day which would have been the first day of an Interest Rate Period for such Bonds had one of the events specified in Section 2.10(c) not occurred which resulted in the Interest Rate Period not being converted) at the applicable Purchase Price, payable in immediately available funds. The Purchase Price of any Bond so purchased shall be payable from the sources and in the order of priority specified in Section 4.15(e) only upon surrender of such Bond to the Trustee at its designated corporate trust office, accompanied by an instrument of transfer thereof, in form satisfactory to such Trustee, executed in blank by the Owner thereof or by the Owner’s duly-authorized attorney, with such signature guaranteed by a commercial bank, trust company or member firm of the New York Stock Exchange at or prior to 10:00 a.m., New York City time, on the date specified for such delivery in this paragraph or in the notice provided pursuant to Section 2.10.
Section 4.15 General Provisions Relating to Tenders.
(a) Creation of Bond Purchase Fund.
(i) There shall be created and established hereunder with the Trustee a fund to be designated the “Bond Purchase Fund” to be held in trust only for the benefit of the Owners of tendered Bonds who shall thereafter be restricted exclusively to the moneys held in such fund for the satisfaction of any claim for 62 4142-7576-9148.4
the Purchase Price of such tendered Bonds. The Bond Purchase Fund and the Accounts therein are not Pledged Funds.
(ii) There shall be created and designated the following Accounts with respect to each Series of Bonds within the Bond Purchase Fund: the “Remarketing Proceeds Account” and the “the Issuer Purchase Account.” Moneys paid to the Trustee for the purchase of tendered or deemed tendered Bonds of a Series received from (A) the Remarketing Agent shall be deposited in the Remarketing Proceeds Account for such Series in accordance with the provisions of Section 4.15(d)(i) and (B) the Issuer shall be deposited in the Issuer Purchase Account in accordance with the provisions of Section 4.15(d)(ii).
Moneys provided by the Issuer not required to be used in connection with the purchase of tendered Bonds shall be returned to the Issuer in accordance with Section 4.15(d) and Section 4.15(e).
(iii) Moneys in the Issuer Purchase Account and the Remarketing Proceeds Account with respect to a Series of Bonds shall not be commingled with other funds held by the Trustee and shall remain uninvested. The Issuer shall have no right, title or interest in any of the funds held on deposit in the Remarketing Proceeds Account or any remarketing proceeds held for any period of time by the Remarketing Agent.
(b) Deposit of Bonds. The Trustee agrees to hold all Bonds delivered to it pursuant to Section 4.11, Section 4.12, Section 4.13, or Section 4.14 in trust for the benefit of the respective Owners which shall have so delivered such Bonds until moneys representing the Purchase Price of such Bonds have been delivered to such Owner in accordance with the provisions of this Indenture and until such Bonds shall have been delivered by the Trustee in accordance with Section 4.15(f). (c) Remarketing of Bonds.
(i) As soon as practicable, but in no event later than 12:00 noon New York City time on a Purchase Date in the case of Bonds to be purchased pursuant to Section 4.11(a) or Section 4.12, and by no later than 4:00 p.m. New York City time on the last Business Day prior to the Purchase Date in the case of Bonds to be purchased pursuant to Section 4.11(b), Section 4.13 or Section 4.14, the Remarketing Agent shall inform the Trustee by telephone, promptly confirmed in writing, of the principal amount of Purchased Bonds for which the Remarketing Agent has identified prospective purchasers, the principal amount of Purchased Bonds to be purchased on such date, the name, address, and taxpayer identification number of each such purchaser, and the Authorized Denominations in which such Purchased Bonds are to be delivered. Upon receipt from the Remarketing Agent of such information, the Trustee shall prepare Purchased Bonds in accordance with such information received from the Remarketing Agent for the registration of transfer and redelivery to the Remarketing Agent pursuant to Section 4.15(f).
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(ii) Any Purchased Bonds which are subject to mandatory tender for purchase in accordance with Section 4.12, Section 4.13 or Section 4.14 which are not presented to the Trustee on the Purchase Date and any Purchased Bonds which are the subject of a notice pursuant to Section 4.16 which are not presented to the Trustee on the Purchase Date, shall, in accordance with the provisions of Section 4.16, be deemed to have been purchased upon the deposit of moneys equal to the Purchase Price thereof into any or all of the accounts of the Bond Purchase Fund.
(d) Deposits of Funds.
(i) The Trustee shall deposit into the Remarketing Proceeds Account for the applicable Series of Bonds any amounts received by it in immediately available funds by 12:30 p.m., New York City time, on any Purchase Date from the Remarketing Agent against receipt of Bonds by the Remarketing Agent pursuant to Section 4.15(f) and on account of Purchased Bonds remarketed pursuant to the terms of the Remarketing Agreement.
(ii) the Issuer may, in its sole discretion, pay to the Trustee in immediately available funds the amount equal to the difference, if any, between the total Purchase Price of Bonds to be purchased and the amount of money deposited under Section 4.15(d)(i) (the “Additional Liquidity Drawing Amount”) by 12:45 p.m., New York City time. The Trustee shall deposit any Additional Liquidity Drawing Amounts into the Issuer Purchase Account for the applicable Series of Bonds.
(iii) The Trustee shall hold all proceeds received from the Remarketing Agent or the Issuer pursuant to this Section 4.15(d) in trust for the tendering Owners. In holding such proceeds and moneys, the Trustee will be acting on behalf of such Owners by facilitating the purchase of the Bonds and not on behalf of the Issuer and will not be subject to the control of the Issuer. Subject to the provisions of Section 4.15(e), following the discharge of the pledge created by Section 5.1 or after payment in full of the Bonds, the Trustee shall pay any moneys remaining in any Account of the Bond Purchase Fund directly to the Persons for whom such money is held upon presentation of evidence reasonably satisfactory to the Trustee that such Person is rightfully entitled to such money and the Trustee shall not pay such amounts to any other Person. (e) Disbursements; Payment of Purchase Price. Moneys delivered to the Trustee on a Purchase Date shall be applied at or before 1:00 p.m., New York City time, on such Purchase Date to pay the Purchase Price of Purchased Bonds of the applicable Series in immediately available funds as follows in the indicated order of application and, to the extent not so applied on such date, shall be held in the separate and segregated Accounts of the Bond Purchase Fund for the benefit of the Owners of the Purchased Bonds which were to have been purchased:
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FIRST: Moneys deposited in the Remarketing Proceeds Account for the Bonds of the applicable Series; and
SECOND: Moneys deposited in the Issuer Purchase Account for the Bonds of the applicable Series.
Any moneys held by the Trustee in the Issuer Purchase Account remaining unclaimed by the Owners of the Purchased Bonds which were to have been purchased for two years after the respective Purchase Date for such Bonds shall be paid to the Issuer, upon a request in a Written Direction of the Issuer against written receipt therefor. The Owners of Purchased Bonds who have not yet claimed money in respect of such Bonds shall thereafter be entitled to look only to the Trustee, to the extent it shall hold moneys on deposit in the Bond Purchase Fund, or the Issuer to the extent moneys have been transferred in accordance with this Section 4.15(e). The Trustee shall have no obligation to advance its own funds to fund the Bond Purchase Fund or otherwise pay the Purchase Price on any Bonds. (f) Delivery of Purchased Bonds.
(i) The Remarketing Agent shall give notice by Electronic Means to the Trustee on each date on which Bonds shall have been purchased pursuant to Section 4.11, Section 4.12, Section 4.13, or Section 4.14, specifying the principal amount of such Bonds, if any, sold by it and a list of such purchasers showing the names and Authorized Denominations in which such Bonds shall be registered, and the addresses and social security or taxpayer identification numbers of such purchasers. By 12:30 p.m., New York City time, on the Purchase Date, a principal amount of Bonds equal to the amount of Purchased Bonds purchased with moneys from the Remarketing Proceeds Account shall be made available by the Trustee to the Remarketing Agent against payment therefor in immediately available funds. The Trustee shall prepare each Bond to be so delivered in such names as directed by the Remarketing Agent pursuant to paragraph (c)(i) of this Section 4.15.
(ii) A principal amount of Bonds equal to the amount of Purchased Bonds purchased from moneys on deposit in the Issuer Purchase Account shall be delivered on the day of such purchase by the Trustee to or as directed by the Issuer. The Trustee shall register such Bonds in the name of the Issuer or as otherwise directed by the Issuer.
Section 4.16 Notice of Mandatory Tender for Purchase. In connection with any mandatory tender for purchase of Bonds in accordance with Section 4.12, Section 4.13 or Section 4.14, the Trustee shall give the notice (which in the case of a mandatory tender pursuant to Section 4.14 shall be given as a part of the notice given pursuant to Section 2.5(c), Section 2.6(c), Section 2.7(c), Section 2.8(c) or Section 2.9(d) stating: (a) that the Purchase Price of any Bond so subject to mandatory tender for purchase shall be payable only upon surrender of such Bond to the Trustee at its designated corporate trust office, accompanied by an instrument of transfer thereof in form satisfactory to the Trustee, executed in blank by the Owner thereof or by the Owner’s duly-authorized attorney, with such signature guaranteed by a commercial bank, trust 65 4142-7576-9148.4
company or member firm of the New York Stock Exchange; (b) that all Bonds so subject to mandatory tender for purchase shall be purchased on the Mandatory Purchase Date, which shall be explicitly stated, unless such Bonds shall have been redeemed on or prior to, or are not Outstanding as of, such Mandatory Purchase Date; and (c) that in the event that any Owner of a Bond so subject to mandatory tender for purchase shall not surrender such Bond to the Trustee for purchase on such mandatory purchase date, then such Bond shall be deemed to be an Undelivered Bond, and that no interest shall accrue thereon on and after such mandatory purchase date and that the Owner thereof shall have no rights under this Indenture other than to receive payment of the Purchase Price thereof. Any such notice of a mandatory tender of Bonds pursuant to Section 4.12, Section 4.13 or Section 4.14 shall be given no less than thirty (30) days prior to the applicable Mandatory Purchase Date, and in addition, the Trustee shall give a conditional notice of extraordinary redemption pursuant to Section 4.4 no later than the applicable deadlines set forth in that section to provide for the extraordinary redemption of the Bonds in the event that a Failed Remarketing occurs prior to the Mandatory Purchase Date. No later than five (5) Business Days prior to the date on which such conditional notice of extraordinary redemption is required to be given by the Trustee pursuant to Section 4.4, the Issuer shall direct the Trustee to send such conditional redemption notice pursuant to a Written Direction, which Written Direction shall include the applicable Redemption Date and method(s) for calculating the Redemption Price, to be followed by notice of the Redemption Price.
Each notice of mandatory tender of Bonds pursuant to Section 4.13 shall state that if a Failed Remarketing occurs before the applicable Index Rate Tender Date or Term Rate Tender Date, then the Bonds will be redeemed pursuant to Section 4.1(a) on such Index Rate Tender Date or Term Rate Tender Date instead of being purchased pursuant to Section 4.13 and shall otherwise set forth the applicable information required to be set forth in a notice of redemption pursuant to Section 4.4.
Section 4.17 Irrevocable Notice Deemed to Be Tender of Bond; Undelivered Bonds. (a) The giving of notice by an Owner of a Bond bearing interest at a Daily Interest Rate or a Weekly Interest Rate pursuant to Section 4.11 shall constitute the irrevocable tender for purchase of each such Bond with respect to which such notice shall have been given, regardless of whether such Bond is delivered to the Trustee for purchase on the relevant Purchase Date as provided in this Article IV. (b) The Trustee may refuse to accept delivery of any Purchased Bonds for which a proper instrument of transfer, with a satisfactory guaranty of signature, has not been provided; such refusal, however, shall not affect the validity of the purchase of such Bond as herein described. For purposes of this Article IV, the Trustee for the Bonds shall determine timely and proper delivery of Purchased Bonds and the proper endorsement of such Bonds. Such determination shall be binding on the Owners of such Bonds, the Issuer and the Remarketing Agent, absent manifest error. If any Owner of a Bond who shall have given notice of tender of purchase pursuant to Section 4.11 or any Owner of a Bond subject to mandatory tender for purchase pursuant to Section 4.12, Section 4.13 or Section 4.14 shall fail to deliver such Bond to the Trustee at the place and on the applicable date and at the time specified, or shall fail to deliver such Bond properly endorsed, such Bond shall constitute an Undelivered Bond. If funds in the amount of the Purchase Price of the 66 4142-7576-9148.4
Undelivered Bond are available for payment to the Owner thereof on the date and at the time specified, from and after the date and time of that required delivery, (i) the Undelivered Bond shall be deemed to be purchased and shall no longer be deemed to be Outstanding under this Indenture; (ii) interest shall no longer accrue thereon; and (iii) funds in the amount of the Purchase Price of the Undelivered Bond shall be held by the Trustee for such Bond for the benefit of the Owner thereof, to be paid on delivery (and proper endorsement) of the Undelivered Bond to the Trustee at its designated corporate trust office. Any funds held by the Trustee as described in clause (iii) of the preceding sentence shall be held uninvested.
Section 4.18 Remarketing of Bonds; Notice of Interest Rates. (a) Upon a mandatory tender or notice of the tender for purchase of Bonds, the Remarketing Agent shall offer for sale and use its best efforts to sell such Bonds subject to conditions in the Remarketing Agreement, any such sale to be made on the Purchase Date in accordance with this Article IV at a price equal to the principal amount thereof plus accrued interest, if any, thereon to the Purchase Date. The Remarketing Agent agrees that it shall not sell any Bonds purchased pursuant to this Article IV to the Issuer or the Project Participant, or to any Person who controls, is controlled by, or is under common control with the Issuer or the Project Participant.
(b) The Remarketing Agent shall determine the rate of interest to be borne by the Bonds bearing interest at a Daily Interest Rate, Weekly Interest Rate, CP Interest Term Rates or a Term Rate and the CP Interest Terms for each Bond during each Commercial Paper Interest Rate Period, and the Calculation Agent shall determine the rate of interest to be borne by each Series of Bonds bearing interest at an Index Rate, all as provided in Article II, and shall furnish to the Trustee and to the Issuer upon request, in a timely fashion by Electronic Means, each rate of interest and CP Interest Term so determined. (c) Anything in this Indenture to the contrary notwithstanding, if there shall have occurred and is continuing an Event of Default, there shall be no remarketing of Bonds tendered or deemed tendered for purchase.
Section 4.19 The Remarketing Agent.
(a) The Remarketing Agent shall be authorized by law to perform all the duties imposed upon it pursuant to the Remarketing Agreement. The Remarketing Agent or any successor shall signify its acceptance of the duties and obligations imposed upon it pursuant to the Remarketing Agreement by an agreement under which the Remarketing Agent will agree to:
(i) determine the interest rates applicable to the Bonds of the applicable Series and give notice to the Trustee of such rates and periods in accordance with Article II;
(ii) keep such books and records as shall be consistent with prudent industry practice; and
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(iii) use its best efforts to remarket Bonds in accordance with the Remarketing Agreement.
(b) The Remarketing Agent shall hold all amounts received by it in accordance with any remarketing of Bonds in trust only for the benefit of the Owners of tendered Bonds and shall not commingle such amounts with any other moneys.
Section 4.20 Qualifications of Remarketing Agent; Resignation; Removal. (a) Each Remarketing Agent shall be a member of the Financial Industry Regulatory Authority or subject to supervision by the Office of the Comptroller of the Currency, having a combined capital stock, surplus and undivided profits of at least $50,000,000 and be authorized by law to perform all the duties imposed upon it by this Indenture. Any successor Remarketing Agent shall have senior unsecured long term debt which shall be rated by each Rating Agency.
(b) A Remarketing Agent may at any time resign and be discharged of the duties and obligations created by the Remarketing Agreement by giving notice to the Trustee and the Issuer. A Remarketing Agent may be removed at the direction of the Issuer at any time on 30 days’ prior written notice, in a Written Direction of the Issuer, filed with such Remarketing Agent for the related Series of Bonds and the Trustee. No such resignation or removal shall be effective until a successor has been appointed and has accepted such duties.
Section 4.21 Successor Remarketing Agents.
(a) Any corporation, association, partnership or firm which succeeds to the business of the Remarketing Agent as a whole or substantially as a whole, whether by sale, merger, consolidation or otherwise, shall thereby become vested with all the property, rights and powers of such Remarketing Agent hereunder.
(b) In the event that the Remarketing Agent has given notice of resignation or has been notified of its impending removal in accordance with Section 4.20(b), the Issuer shall appoint a successor Remarketing Agent.
(c) In the event that the property or affairs of the Remarketing Agent shall be taken under control of any state or federal court or administrative body because of bankruptcy or insolvency, or for any other reason, and the Issuer shall not have appointed its successor, the Issuer shall appoint a successor and, if no appointment is made within 30 days, the Trustee shall apply to a court of competent jurisdiction for such appointment.
Section 4.22 Tender Agent. The Trustee shall serve as the tender agent for any Series of Bonds for which optional or mandatory tender for purchase is applicable under this Article IV, and as tender agent it and each successor Trustee appointed in accordance with this Indenture shall:
(a) hold all Bonds delivered to it for purchase hereunder in trust for the exclusive benefit of the respective Owners that shall have so delivered such Bonds until 68 4142-7576-9148.4
moneys representing the Purchase Price of such Bonds shall have been delivered to or for the account of or to the order of such Owners;
(b) hold all moneys delivered to it hereunder for the purchase of Bonds in trust for the exclusive benefit of the Person that shall have so delivered such moneys until the Bonds purchased with such moneys shall have been delivered to it for the account of such Person and, thereafter, for the benefit of the Owners tendering such Bonds; and (c) keep such books and records as shall be consistent with prudent industry practice and make such books and records available for inspection (upon reasonable prior written notice of inspection) by the Issuer and the Remarketing Agent for such Series of Bonds.
ARTICLE V
ESTABLISHMENT OF FUNDS AND APPLICATION THEREOF
Section 5.1 The Pledge Effected by This Indenture.
(a) The Bonds and the Interest Rate Swap are limited obligations of the Issuer payable solely from and secured as to the payment of the principal and Redemption Price thereof, and interest thereon, in accordance with their terms and the provisions of this Indenture solely by, the Trust Estate. Pursuant to the Granting Clauses of this Indenture, the Trust Estate has been conveyed, assigned and pledged to the payment of the principal and Redemption Price of and interest on the Bonds and the Interest Rate Swap Payments in accordance with their terms, and any other senior, parity and subordinate obligations of the Issuer secured by the lien of this Indenture, subject to (i) the pledge of and lien on the Commodity Reserve Account and the amounts and investments on deposit therein in favor of the Commodity Swap Counterparties and the Project Participant, and (ii) the provisions of this Indenture permitting the application thereof for the purposes and on the terms and conditions set forth in this Indenture. The Trust Estate thereby pledged and assigned shall immediately be subject to the lien of such pledge without any further physical delivery thereof or other further act, and the lien of such pledge shall be a first lien and shall be valid and binding as against all parties having claims of any kind in tort, contract or otherwise against the Issuer, irrespective of whether such parties have notice thereof. (b) None of the Bonds, the Interest Rate Swap or the Commodity Swaps constitute a debt or liability of the State or of any political subdivision thereof, other than as limited obligations of the Issuer, and the Issuer shall not be obligated to pay the principal or Redemption Price of, or interest on, the Bonds, the Interest Rate Swap Payments or the Commodity Swap Payments except from the funds provided therefor under this Indenture.
Neither the faith and credit nor the taxing power of the State or of any political subdivision thereof, including the Issuer, or of any Project Participant is pledged to the payment of the principal or Redemption Price of and interest on the Bonds, the Interest Rate Swap Payments or the Commodity Swap Payments. The issuance of the Bonds and the execution and delivery of the Interest Rate Swap and the Commodity Swap shall not directly or indirectly or contingently obligate the State or any political subdivision thereof to levy or 69 4142-7576-9148.4
to pledge any form of taxation or to make any appropriation for their payment. The Issuer has no taxing power.
(c) Nothing contained in this Indenture shall be construed to prevent the Issuer from acquiring, constructing or financing, through the issuance of its bonds, notes or other evidences of indebtedness, any facilities or supplies of Product other than the Clean Energy Project; provided that such bonds, notes or other evidences of indebtedness shall not be payable out of or secured by the Trust Estate or any portion thereof, and neither the cost of such facilities or supplies of Product nor any expenditure in connection therewith or with the financing thereof shall be payable from the Trust Estate or any portion thereof.
Section 5.2 Establishment of Funds and Accounts.
(a) The following Funds and Accounts are hereby established, each of which shall be held by the Trustee:
(i) Project Fund, consisting of the Acquisition Account and the Commodity Reserve Account,
(ii) Revenue Fund,
(iii) Operating Fund,
(iv) Debt Service Fund, consisting of the Debt Service Account, the Redemption Account and the Debt Service Reserve Account, (v) General Reserve Fund,
(vi) Remarketing Reserve Fund,
(vii) Assignment Payment Fund,
(viii) Bond Purchase Fund established pursuant to Section 4.15, consisting of the Issuer Purchase Account and the Remarketing Proceeds Account,
(ix) Swap Termination Account; and
(x) Administrative Fee Fund.
(b) Within the Funds and Accounts established hereunder and held by the Trustee, the Trustee may create additional Accounts in any Fund or subaccounts in any Accounts as may facilitate the administration of this Indenture. The Issuer may, by Supplemental Indenture, with the prior written approval of the Trustee, establish one or more additional accounts or subaccounts. By Supplemental Indenture, the Issuer may also (i) establish one or more custodial accounts to be held by the Trustee as custodian to receive Revenues paid by the Project Participant under the Clean Energy Purchase Contract and 70 4142-7576-9148.4
(ii) provide for the application of such amounts for transfer to the Revenue Fund and for such other purposes as may be specified therein.
Section 5.3 Project Fund.
(a) There shall be paid into the Acquisition Account a portion of the proceeds of the Bonds in the amount specified in Section 2.1(b), and there may be paid into the Acquisition Account, at the option of the Issuer, any moneys received for or in connection with the Clean Energy Project by the Issuer from any other source, unless required to be otherwise applied as provided by this Indenture. Upon delivery of the Series 2022_ Bonds, the Trustee shall immediately transfer from the Acquisition Account to the Debt Service Account an amount, specified by Written Request of the Issuer, representing capitalized interest on the Series 2022_ Bonds to the date set forth in such Written Request, and such amounts shall be held exclusively for, and applied solely to, payment of interest on the Series 2022_ Bonds. Except as otherwise provided in this Section 5.3, amounts in Acquisition Account shall be applied by the Issuer to pay the Cost of Acquisition. (b) There shall be paid into the Commodity Reserve Account a portion of the proceeds of the Bonds in an amount equal to the Minimum Amount. Amounts credited to the Commodity Reserve Account shall be applied by the Trustee to (i) the payment of Commodity Swap Payments in the event the amounts on deposit in the Operating Fund are not sufficient to make such payments, and (ii) any Assigned Product Reimbursement Payment to the extent that the Trustee determines on the Business Day prior to the transfer in any month into the Operating Fund pursuant to Section 5.5(a)(i) that, after taking into account amounts to be transferred into the Operating Fund pursuant to Section 5.5(a)(i), there will not be sufficient amounts available in the Operating Fund for payment of such Assigned Product Reimbursement Payment; provided that (A) any amounts in the Commodity Reserve Account in excess of the Minimum Amount shall be transferred by the Trustee to the Revenue Fund, and (B) any amounts remaining on deposit in the Commodity Reserve Account on the final date for payment of the principal of the Bonds, whether upon maturity, redemption or acceleration, shall be applied to make such payment. (c) In the event that, on the Business Day prior to the transfer in any month into the Operating Fund pursuant to Section 5.5(a)(i), the Trustee determines that after taking into account amounts to be transferred into the Operating Fund pursuant to Section 5.5(a)(i), there is a Swap Payment Deficiency, the Trustee on behalf of the Issuer shall prepare and deliver to the Product Supplier a Swap Deficiency Call Receivables Offer pursuant to Section 2.2(a) of the Receivables Purchase Provisions. If the Product Supplier elects to purchase Swap Deficiency Call Receivables pursuant to such Swap Deficiency Call Receivables Offer, which election shall not be later than the Business Day following receipt by the Product Supplier of the Swap Deficiency Call Receivables Offer, the Product Supplier shall deliver to the Trustee the Swap Deficiency Call Option Notice setting forth the purchase date, which shall not be later than the Payment Date (as defined in the Confirmation to the Commodity Swaps) for the Month in which the Product Supplier receives the Swap Deficiency Call Receivables Offer. Upon receipt of such Swap Deficiency Call Option Notice, the Trustee shall, and is hereby directed and authorized, to sell the Swap Deficiency Call Receivables then owed by the Project Participant under the 71 4142-7576-9148.4
Clean Energy Purchase Contract pursuant to the Receivables Purchase Provisions (as contemplated by this Section) and to take all actions on its part necessary in connection therewith. If the Product Supplier elects to purchase such Swap Deficiency Call Receivables, all amounts received by the Trustee pursuant to the Receivables Purchase Provisions in respect of Swap Deficiency Call Receivables purchased pursuant to this Section 5.3(c) shall be deposited in the Commodity Reserve Account and applied to payment of Commodity Swap Payments.
(d) Within one Business Day after the Product Supplier delivers a Swap Deficiency Call Option Notice or is deemed not to have exercised its right to purchase Swap Deficiency Call Receivables pursuant to the last sentence of Section 2.2(b) of the Receivables Purchase Provisions, the Trustee shall deliver written notice to the Commodity Swap Counterparties indicating whether the Product Supplier has elected to purchase Swap Deficiency Call Receivables pursuant to the Swap Deficiency Call Receivables Offer sufficient to increase the balance in the Commodity Reserve Account to an amount sufficient to pay the next succeeding Commodity Swap Payment. (e) The Trustee shall deliver to the Custodian pursuant to the Custodial Agreements, written notice as follows: (i) on any Business Day on which the Trustee delivers a Swap Deficiency Call Receivables Offer to the Product Supplier pursuant to Section 2.2(a) of the Receivables Purchase Provisions, written notice that a Swap Payment Deficiency exists and the amount of such Swap Payment Deficiency; (ii) on any Business Day on which the Product Supplier is required to make an election to purchase Swap Deficiency Call Receivables pursuant to Section 2.2(b) of the Receivables Purchase Provisions, written notice as to whether the Product Supplier has elected to purchase such Swap Deficiency Call Receivables and, if so, the purchase date of such Swap Deficiency Call Receivables; and (iii) if the Product Supplier has elected to purchase Swap Deficiency Call Receivables, on the purchase date thereof written notice that the purchase price has been received by the Trustee in immediately available funds; provided that, in addition to the foregoing, the Trustee shall deliver written notice to the Custodian if any Swap Payment Deficiency is otherwise cured on the date that such Swap Payment Deficiency is cured. (f) Before any payment is made by the Trustee from the Acquisition Account, the Issuer shall file with the Trustee a Written Request of the Issuer, showing with respect to each payment to be made, the name of the Person to whom payment is due and the amount to be paid, and stating that the obligation to be paid was incurred and is a proper charge against the Project Fund (or the Acquisition Account therein). To the extent that the Written Request includes amounts to be paid pursuant to the Master Power Supply Agreement, copies of the invoices or requests for direct payments submitted under the Master Power Supply Agreement shall be attached to the Written Request. Each such Written Request shall be sufficient evidence to the Trustee: (i) that obligations in the stated amounts have been incurred by the Issuer and that each item thereof is a proper charge against the Project Fund or Acquisition Account therein; and (ii) that there has not been filed with or served upon the Issuer notice of any lien, right to lien or attachment upon, or claim affecting the right to receive payment of, any of the moneys payable to any of the Persons named in such Written Request which has not been released or will not be released 72 4142-7576-9148.4
simultaneously with the payment of such obligation other than materialmen’s or mechanics’ liens accruing by mere operation of law.
(g) Upon receipt of each such Written Request, the Trustee shall pay the amounts set forth therein as directed by the terms thereof from the applicable Account in accordance with and subject to the applicable terms of this Section 5.3. (h) Notwithstanding any of the other provisions of this Section 5.3, to the extent that other moneys are not available therefor, amounts in Acquisition Account shall be applied to the payment of principal of and interest on Bonds when due. (i) Upon Written Direction of the Issuer, but not earlier than six (6) months after the date of delivery of a Series of Bonds, the Trustee shall transfer to the Revenue Fund any proceeds of such Series of Bonds remaining on deposit in Acquisition Account of the Project Fund.
Section 5.4 Revenues and Revenue Fund.
(a) All Revenues shall be deposited promptly by the Trustee upon receipt thereof into the Revenue Fund.
(b) The following amounts, which are payable to the Trustee but do not constitute Revenues, shall be applied by the Trustee as follows:
(i) any Termination Payment shall be deposited into the Redemption Account;
(ii) any Assignment Payment shall be deposited directly into the Assignment Payment Fund as provided in Section 5.14;
(iii) amounts received from the Product Supplier under the Receivables Purchase Provisions shall be deposited into the Debt Service Account, the Commodity Reserve Account, the Redemption Account or the Operating Fund as provided herein;
(iv) Interest Rate Swap Receipts shall be deposited directly into the Debt Service Account as provided in Section 2.13;
(v) payments by the Product Supplier or a Commodity Swap Counterparty of any amounts due upon an early termination of a Product Supplier Commodity Swap other than Unpaid Amounts;
(vi) any Seller Swap MTM Payment shall be applied as provided in Section 5.10;
(vii) any amounts required by Section 5.13 to be deposited into the Remarketing Reserve Fund shall be deposited directly therein; 73 4142-7576-9148.4
(viii) Ledger Event Payments shall be deposited directly into the Debt Service Account as provided in Section 2.2; and
(ix) amounts representing the Administrative Fee, together with any amounts paid by the Project Participant under the Clean Energy Project Operational Services Agreement, shall be paid as received to Issuer into the Administrative Fee Fund.
Section 5.5 Payments from Revenue Fund.
(a) In each Month during which there is a deposit of Revenues into the Revenue Fund (but in no case later than the respective dates set forth below), the Trustee shall credit to or transfer to the required party for deposit in the Funds and Accounts indicated below, as applicable, and otherwise make payments as appropriate and to the extent available from amounts held in the Revenue Fund, in the following order the amounts set forth below (such application to be made in such a manner so as to assure good funds are available on the respective dates set forth below):
(i) To the Operating Fund, not later than the 25th day of such Month, the amount, if any, required so that the balance therein shall equal the amount necessary for the payment of Commodity Swap Payments coming due for such Month;
(ii) To the Debt Service Fund, not later than the last Business Day of such Month, for the credit to the Debt Service Account an amount equal to the greater of (A) the Scheduled Debt Service Deposit, as set forth in Schedule I hereto, or (B) the amount necessary to cause an amount equal to the cumulative unpaid Scheduled Debt Service Deposits due through such date to be on deposit therein (without credit for undisbursed Interest Rate Swap Receipts on deposit therein);
(iii) To the Commodity Reserve Account in the Project Fund, not later than the last Business Day of such Month, the amount, if any, required so that the balance in the Commodity Reserve Account is at least equal to the Minimum Amount;
(iv) To the Debt Service Fund, not later than the last Business Day of such Month, for deposit in the Debt Service Reserve Account, the amount, if any, required so that the balance in such Debt Service Reserve Account shall equal the Debt Service Reserve Requirement related thereto as of the last day of the then current Month; and
(v) To the Product Supplier, not later than the last Business Day of such Month, the amount, if any, required for the repurchase of Call Receivables and Put Receivables, and the payment of interest on all receivables sold to the Product Supplier pursuant to the Receivables Purchase Provisions. 74 4142-7576-9148.4
(b) If, after a scheduled monthly deposit to the Debt Service Account, the balance therein is below the cumulative Scheduled Debt Service Deposits for such month as specified on Schedule I, the Trustee shall immediately notify the Issuer of such deficiency and the Trustee shall (i) if the Issuer has not previously done so, cause the Issuer to suspend all deliveries of all quantities of Product under the Clean Energy Purchase Contract to any Project Participant that is in default thereunder, and (ii) promptly give notice to the Product Supplier to follow the provisions set forth in the Remarketing Exhibit. (c) In each Month during which (i) there is a deposit of Revenues into the Revenue Fund and (ii) payment of a Principal Installment is due, after making such transfers, credits and deposits as required by paragraph (a) above and after the applicable Principal Installment payment date, the Trustee shall credit to the General Reserve Fund the remaining balance in the Revenue Fund.
(d) So long as there shall be held in the Debt Service Fund an amount sufficient to pay in full all Outstanding Bonds and Interest Rate Swap Payments in accordance with their terms (including principal or applicable Sinking Fund Installments and interest thereon), no transfers shall be required to be made to the Debt Service Fund.
Section 5.6 Operating Fund.
(a) Amounts credited to the Operating Fund shall be applied from time to time by the Trustee to the payment of (i) first, Rebate Payments then due and payable, if any, (ii) second, Commodity Swap Payments then due and payable, if any, (iii) third, any Assigned Product Reimbursement Payments, and (iv) fourth, any other Operating Expenses then due and payable, if any, in each case as directed in a Written Request of the Issuer received by the Trustee.
(b) Amounts credited to the Operating Fund that the Trustee, on the last Business Day of each Month, determines to be in excess of the requirements of such Fund for such Month as set forth in this Indenture, shall be applied to make up any deficiencies first in the Debt Service Account, then in the Commodity Reserve Account and then in the Debt Service Reserve Account. Any balance of such excess not required to be so applied shall be transferred to the Revenue Fund for application in accordance with Section 5.5(a). (c) To the extent the Project Participant defaults on its obligation to make any payment under the Clean Energy Purchase Contract with the Issuer and such payment default does not result in a Swap Payment Deficiency, then on such Business Day, the Issuer shall notify the Trustee of such payment default by Electronic Means by 2:30 p.m. and on the same Business Day the Trustee on behalf of the Issuer shall deliver an Elective Call Receivables Offer pursuant to Section 2.3(a) of the Receivables Purchase Provisions.
If the Product Supplier elects to purchase Elective Call Receivables pursuant to such Elective Call Receivables Offer, which election shall not be later than the Business Day following receipt by the Product Supplier of the Elective Call Receivables Offer, the Product Supplier shall deliver to the Trustee the Elective Call Option Notice pursuant to Section 2.3(b) of the Receivables Purchase Provisions setting forth the purchase date, which shall not be later than the Payment Date determined by the Product Supplier. Upon 75 4142-7576-9148.4
receipt of such Elective Call Option Notice, the Trustee shall, and is hereby directed and authorized, to sell the Elective Call Receivables then owed by the Project Participant under the Clean Energy Purchase Contract pursuant to the Receivables Purchase Provisions (as contemplated by this Section) and to take all actions on its part necessary in connection therewith. If the Product Supplier elects to purchase such Elective Call Receivables, all amounts received by the Trustee pursuant to the Receivables Purchase Provisions in respect of Elective Call Receivables purchased pursuant to this Section 5.6(c) shall be deposited in the Operating Fund.
Section 5.7 Debt Service Fund – Debt Service Account.
(a) The amounts deposited into the Debt Service Account pursuant to Section 5.5(a)(ii) shall be held in such Account and applied to the payment of the Debt Service payable on each Bond Payment Date and the Interest Rate Swap Payments payable on each payment date therefor (as set forth in the Interest Rate Swap); provided that, for the purposes of computing the amount to be deposited in such Account, there shall be excluded from the required deposit the amount, if any, set aside therein from the proceeds of Bonds (including amounts, if any, transferred thereto from the Project Fund) for the payment of interest on the Bonds or Interest Rate Swap Payments. (b) The Trustee shall pay out of the Debt Service Account to the Paying Agent:
(i) on or before each Interest Payment Date, the amount required for the interest on the Bonds payable on such date; (ii) on or before each payment date under the Interest Rate Swap (as set forth in the Interest Rate Swap), the Interest Rate Swap Payments then due, (iii) on or before the Bond Payment Date on which a Principal Installment is due, the amount required for the Principal Installment payable on such date; and (iv) on or before any redemption date, the amount required for the payment of the Redemption Price of and accrued interest on such Bonds then to be redeemed; provided, however, that if with respect to any Bonds or portions thereof the amounts due on any such Bond Payment Date and/or redemption date are intended to be paid from a source other than amounts in the Debt Service Account prior to any application of amounts in the Debt Service Account to such payments, then the Trustee (after written notice from the Issuer to the Trustee that the Issuer intends to make payments from a source other than amounts in the Debt Service Account) shall not pay any such amounts to the Paying Agent until such amounts have failed to be provided from such other source at the time required and if any such amounts due are paid from such other source the Trustee shall apply the amounts in the Debt Service Account to provide reimbursement for such payment from such other source as instructed in a Written Direction of the Issuer and provided in the agreement governing reimbursement of such amounts to such other source. Such amounts shall be applied by the Paying Agent on and after the due dates thereof. The Trustee shall also pay out of the Debt Service Account the accrued interest included in the purchase price of Bonds purchased for cancellation Interest included in the purchase price of Bonds purchased by the Issuer for delivery to the Trustee for cancellation as directed by the Issuer.
(c) Amounts accumulated in the Debt Service Account with respect to any Sinking Fund Installment (together with amounts accumulated therein with respect to interest on the Bonds for which such Sinking Fund Installment was established) shall, if so 76 4142-7576-9148.4
directed by the Issuer in a Written Request delivered not less than 30 days before the due date of such Sinking Fund Installment, be applied by the Trustee to (i) the purchase of Bonds of the Series, maturity and tenor for which such Sinking Fund Installment was established, (ii) the redemption at the applicable Redemption Price of such Bonds, if then redeemable by their terms, or (iii) any combination of (i) and (ii). All purchases and redemptions of any Bonds pursuant to this subsection (c) shall be made at prices not exceeding the principal amount of such Bonds plus accrued interest, and such purchases and redemptions shall be made in such manner as the Issuer shall direct the Trustee. The principal amount of any Bonds so purchased or redeemed shall be deemed to constitute part of the Debt Service Account until such Sinking Fund Installment date, for the purpose of calculating the amount of such Account. As soon as practicable after the 30th day preceding the due date of any such Sinking Fund Installment, the Trustee shall proceed to call for the redemption on such due date, by giving notice as required by this Indenture, Bonds of the Series, maturity and tenor for which such Sinking Fund Installment was established (except in the case of Bonds maturing on a Sinking Fund Installment date) in such amount as shall be necessary to complete the retirement of the unsatisfied balance of such Sinking Fund Installment after making allowance for any Bonds purchased or redeemed pursuant to Section 5.12 which the Issuer has directed the Trustee to apply as a credit against such Sinking Fund Installment as provided in Section 5.12(c). The Trustee shall pay out of the Debt Service Account to the Paying Agent, on or before such redemption date or maturity date, as applicable, the amount required for the redemption of the Bonds so called for redemption (or for the payment of such Bonds then maturing), and such amount shall be applied by such Paying Agents to such redemption or payment, as applicable. All expenses in connection with the purchase or redemption of Bonds shall be paid by the Issuer from the Operating Fund.