4.1 SCHEDULING COORDINATOR RESPONSIBILITIES. ............................................................... 22 ARTICLE 5 TAXES ..................................................................................................................... 22
5.1 ALLOCATION OF TAXES AND CHARGES ........................................................................... 22
5.2 COOPERATION .................................................................................................................... 23 ARTICLE 6 MAINTENANCE OF THE FACILITY .................................................................. 23
6.1 MAINTENANCE OF THE FACILITY ....................................................................................... 23
6.2 MAINTENANCE OF HEALTH AND SAFETY ........................................................................... 23 ARTICLE 7 INVOICING AND PAYMENT; CREDIT .............................................................. 23
7.1 INVOICING ....................................................................................................................... 23
7.2 PAYMENT ........................................................................................................................ 23
7.3 BOOKS AND RECORDS ........................................................................................................ 24
7.4 PAYMENT ADJUSTMENTS; BILLING ERRORS ...................................................................... 24
7.5 BILLING DISPUTES ........................................................................................................... 24
7.6 NETTING OF PAYMENTS ..................................................................................................... 25
7.7 SELLER SECURITY .............................................................................................................. 25
7.8 FINANCIAL STATEMENTS. .................................................................................................. 26
7.9 FIRST PRIORITY SECURITY INTEREST IN CASH OR CASH EQUIVALENT COLLATERAL ........ 26
ARTICLE 8 NOTICES ................................................................................................................. 28
8.1 ADDRESSES FOR THE DELIVERY OF NOTICES ..................................................................... 28
8.2 ACCEPTABLE MEANS OF DELIVERING NOTICE .................................................................. 28 ARTICLE 9 FORCE MAJEURE ................................................................................................. 28 -ii-9.1 DEFINITION. ....................................................................................................................... 28
9.2 NO LIABILITY IF A FORCE MAJEURE EVENT OCCURS ........................................................ 29
9.3 NOTICE ............................................................................................................................ 29
9.4 TERMINATION FOLLOWING FORCE MAJEURE EVENT ......................................................... 30 ARTICLE 10 DEFAULTS; REMEDIES; TERMINATION ....................................................... 30
10.1 EVENTS OF DEFAULT ..................................................................................................... 30
10.2 REMEDIES; DECLARATION OF EARLY TERMINATION DATE ........................................... 32
10.3 TERMINATION PAYMENT ............................................................................................... 33
10.4 NOTICE OF PAYMENT OF TERMINATION PAYMENT ........................................................ 33
10.5 DISPUTES WITH RESPECT TO TERMINATION PAYMENT ............................................... 33
10.6 RIGHTS AND REMEDIES ARE CUMULATIVE................................................................. 33
10.7 MITIGATION ................................................................................................................... 34 ARTICLE 11 LIMITATION OF LIABILITY AND EXCLUSION OF WARRANTIES........... 34
11.1 NO CONSEQUENTIAL DAMAGES ..................................................................................... 34
11.2 WAIVER AND EXCLUSION OF OTHER DAMAGES ............................................................ 34 ARTICLE 12 REPRESENTATIONS AND WARRANTIES; AUTHORITY ............................ 35
12.1 SELLER’S REPRESENTATIONS AND WARRANTIES ........................................................... 35
12.2 BUYER’S REPRESENTATIONS AND WARRANTIES. .......................................................... 36
12.3 GENERAL COVENANTS ................................................................................................ 36 ARTICLE 13 ASSIGNMENT ...................................................................................................... 37
13.1 GENERAL PROHIBITION ON ASSIGNMENTS ..................................................................... 37
13.2 COLLATERAL ASSIGNMENT ........................................................................................... 37
13.3 PERMITTED ASSIGNMENT; CHANGE OF CONTROL. ...................................................... 37 ARTICLE 14 DISPUTE RESOLUTION ..................................................................................... 38
14.1 VENUE ........................................................................................................................... 38
14.2 DISPUTE RESOLUTION .................................................................................................... 38 ARTICLE 15 INDEMNIFICATION ............................................................................................ 38
15.1 INDEMNIFICATION. ......................................................................................................... 38
15.2 CLAIMS ....................................................................................................................... 38 ARTICLE 16 INSURANCE ......................................................................................................... 39
16.1 INSURANCE. ................................................................................................................... 39 ARTICLE 17 CONFIDENTIAL INFORMATION ..................................................................... 40
17.1 DEFINITION OF CONFIDENTIAL INFORMATION ............................................................... 40
17.2 DUTY TO MAINTAIN CONFIDENTIALITY ......................................................................... 40
17.3 IRREPARABLE INJURY; REMEDIES .................................................................................. 41
17.4 PERMITTED DISCLOSURES .............................................................................................. 41
17.5 PRESS RELEASES ............................................................................................................ 41 ARTICLE 18 MISCELLANEOUS .............................................................................................. 41
18.1 ENTIRE AGREEMENT; INTEGRATION; EXHIBITS ............................................................. 41 -iii-18.2 AMENDMENTS ............................................................................................................. 41
18.3 NO WAIVER ................................................................................................................... 42
18.4 NO AGENCY, PARTNERSHIP, JOINT VENTURE OR LEASE ................................................ 42
18.5 SEVERABILITY ............................................................................................................... 42
18.6 MOBILE-SIERRA ............................................................................................................. 42
18.7 COUNTERPARTS ........................................................................................................... 42
18.8 ELECTRONIC DELIVERY............................................................................................... 42
18.9 BINDING EFFECT ......................................................................................................... 42
18.10 CHANGE IN ELECTRIC MARKET DESIGN ...................................................................... 42
18.11 NO RECOURSE TO MEMBERS OF BUYER......................................................................... 43
18.12 FORWARD CONTRACT ................................................................................................. 43
18.13 FURTHER ASSURANCES ............................................................................................... 43 -iv-Exhibits:
Exhibit A Facility Descriptions
Exhibit B Form of Letter of Credit
Exhibit C Form of Guaranty
Exhibit D Notices
Exhibit E Form of Progress Report
Exhibit F Form of Commercial Operation Date Certificate -1-
RESOURCE ADEQUACY BENEFITS PURCHASE AND SALE AGREEMENT
This Resource Adequacy Benefits Purchase and Sale Agreement (“Agreement”) is entered into as of [DATE] (the “Effective Date”), between Buyer and Seller. Buyer and Seller are sometimes referred to herein individually as a “Party” and jointly as the “Parties.”
RECITALS
WHEREAS, Seller owns and operates the Duran Mesa Wind Project, and Seller or its Affiliates is developing and will own and operate the SunZia Wind Project; and WHEREAS, Seller desires to sell, and Buyer desires to purchase, on the terms and conditions set forth in this Agreement, the Product;
NOW THEREFORE, in consideration of the mutual covenants and agreements herein contained, and for other good and valuable consideration, the sufficiency and adequacy of which are hereby acknowledged, the Parties agree to the following:
ARTICLE 1
DEFINITIONS
1.1 Contract Definitions. The following terms, when used herein with initial capitalization, shall have the meanings set forth below:
“Accepted Compliance Costs” has the meaning set forth in Section 3.6. “Affiliate” means, with respect to any Person, each Person that directly or indirectly controls, is controlled by, or is under common control with such designated Person. “Agreement” has the meaning set forth in the Preamble and includes any Exhibits, schedules and any written supplements hereto, the Cover Sheet, and any designated collateral, credit support or similar arrangement between the Parties. “Availability Incentive Payments” has the meaning set forth in the CAISO Tariff. “Bankrupt” means with respect to any entity, such entity that (a) files a petition or otherwise commences, authorizes or acquiesces in the commencement of a proceeding or cause of action under any bankruptcy, insolvency, reorganization or similar Law, (b) has any such petition filed or commenced against it which remains unstayed or undismissed for a period of thirty (30) days (provided that such thirty (30) day period shall be extended to sixty (60) days if Seller is actively contesting the petition), (c) makes an assignment or any general arrangement for the benefit of creditors, (d) otherwise becomes bankrupt or insolvent (however evidenced), (e) has a liquidator, administrator, receiver, trustee, conservator or similar official appointed with respect to it or any substantial portion of its property or assets, or (f) is generally unable to pay its debts as they fall due.
“Bid” has the meaning set forth in the CAISO Tariff.
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“Business Day” means any day except a Saturday, Sunday, the Friday after the U.S.
Thanksgiving holiday, or a Federal Reserve Bank holiday in California. A Business Day begins at 8:00 a.m. and ends at 5:00 p.m. local time for the Party sending a Notice, or payment, or performing a specified action.
“Buyer” has the meaning set forth on the Cover Sheet.
“Buyer’s Share” has the meaning set forth on the Cover Sheet. “CAISO” means the California Independent System Operator Corporation or any successor entity performing similar functions.
“CAISO Grid” has the same meaning as “CAISO Controlled Grid” as defined in the CAISO Tariff.
“CAISO Operating Instruction” has the same meaning as “Operating Instruction” as defined in the CAISO Tariff.
“CAISO Tariff” means the California Independent System Operator Corporation Agreement and Tariff, Business Practice Manuals (BPMs), and Operating Procedures, including the rules, protocols, procedures and standards attached thereto, as the same may be amended or modified from time-to-time and, to the extent subject to approval by FERC, as approved by FERC. “Capacity Attribute” means Buyer’s Share of any current or future defined characteristic, certificate, tag, credit, or accounting construct associated with the amount of power that the Facility can generate and deliver at a particular moment, including those that can be delivered to the CAISO Grid and that can be purchased and sold pursuant to the CAISO Tariff (including Resource Specific Import RA).
“Change of Control” means any circumstance in which (a) in respect of Buyer, the Person that has ultimate control over Buyer ceases to have such ultimate control, and (b) in the case of Seller, the Ultimate Parent ceases to have control over Seller; provided that, for the avoidance of doubt, it shall not be a Change of Control of Seller if the Ultimate Parent retains either (i) the direct or indirect right to cast at least fifty percent (50%) of the votes exercisable at an annual general meeting (or its equivalent) of Seller or, if there are no such rights, ownership of at least fifty percent (50%) of the equity or other ownership interest in Seller, or (ii) the right to direct the policies or -3-
operations of Seller.
“CIRA Tool” means the CAISO Customer Interface for Resource Adequacy. “Collateral Assignment Agreement” has the meaning set forth in Section 13.2. “Commercially Reasonable MIC Efforts” has the meaning set forth in Section 2.2. “Compliance Actions” has the meaning set forth in Section 3.6. “Compliance Expenditure Cap” has the meaning set forth in Section 3.6. “Confidential Information” has the meaning set forth in Section 17.1. “Contract Price” has the meaning set forth on the Cover Sheet. “Contract Quantity” has the meaning set forth on the Cover Sheet. “Contract Term” has the meaning set forth in Section 2.1. “Contract Year” means a period of twelve (12) consecutive months during the Delivery Term. The first Contract Year shall commence on January 1, 2025 and each subsequent Contract Year shall commence on January 1 of the subsequent calendar year. “Costs” means, with respect to the Non-Defaulting Party, brokerage fees, commissions and other similar third-party transaction costs and expenses reasonably incurred by such Party either in terminating any arrangement pursuant to which it has hedged its obligations or entering into new arrangements which replace the Agreement; and all reasonable expenses, including reasonable attorneys’ fees, incurred by the Non-Defaulting Party in connection with terminating the Agreement.
“Cover Sheet” means the cover sheet to this Agreement, which is incorporated into this Agreement.
“COVID-19” means the pandemic disease designated COVID-19 and the related virus designated SARS-CoV-2 and any mutations thereof, or the efforts of a Governmental Authority to combat or mitigate such disease.
“CPUC” means the California Public Utilities Commission, or successor entity. “CPUC Decisions” means CPUC Decisions 04-01-050, 04-10-035, 05-10-042, 06-04-040, 06-06-064, 06-07-031, 07-06-029, 08-06-031, 09-06-028, 10-06-036, 11-06-022, 12-06-025, 13- 06-024, 14-06-050, 19-02-022, 20-06-002, 20-06-031, and any other existing or subsequent decisions, resolutions or rulings related to the resource adequacy program or any successor program, as may be amended from time to time by the CPUC. “Credit Rating” means, with respect to any entity, the rating then assigned to such entity’s -4-
unsecured, senior long-term debt obligations (not supported by third-party credit enhancements) or if such entity does not have a rating for its senior unsecured long-term debt, then the rating then assigned to such entity as an issuer rating by S&P or Moody’s. Unless otherwise indicated herein, ratings by S&P and Moody’s are not equivalent, the lower rating shall apply. “Curtailment Order” means any of the following:
(a) the CAISO orders, directs, alerts, or provides notice to a Party, including a CAISO Operating Instruction, to curtail deliveries of Energy from the Facility for the following reasons: (i) any System Emergency, or (ii) any warning of an anticipated System Emergency, or warning of an imminent condition or situation, which jeopardizes CAISO’s electric system integrity or the integrity of other systems to which CAISO is connected; (b) a curtailment ordered by a Transmission Provider for reasons including, but not limited to, (i) any situation that affects normal function of the electric system including, but not limited to, any abnormal condition that requires action to prevent circumstances such as equipment damage, loss of load, or abnormal voltage conditions, or (ii) any warning, forecast or anticipation of conditions or situations that jeopardize the Transmission Provider’s electric system integrity or the integrity of other systems to which the Transmission Provider is connected; (c) a curtailment ordered by CAISO or a Transmission Provider due to scheduled or unscheduled maintenance on the Transmission Provider’s transmission facilities that prevents (i) Buyer from receiving or (ii) Seller from delivering Energy at the Delivery Point; or (d) a curtailment in accordance with Seller’s obligations under its Interconnection Agreement with the Participating Transmission Owner. “Day-Ahead Market” has the meaning set forth in the CAISO Tariff. “Deemed Delivered Product” means, for any Showing Month, the amount of Resource Adequacy Benefits expressed in kW that Seller would have delivered to Buyer, but for Buyer’s actions or inactions (including failure to obtain Sufficient Import Capability), as further described in Section 3.3(f).
“Defaulting Party” has the meaning set forth in Section 10.1(a). “Delivery Point” has the meaning set forth on the Cover Sheet. “Delivery Term” shall mean the period of Contract Years set forth on the Cover Sheet, unless terminated earlier in accordance with the terms and conditions of this Agreement. “Disclosing Party” has the meaning set forth in Section 17.2. “Duran Mesa Wind Project” the wind-powered electricity generating facility located in Torrance County, New Mexico, as further described in Exhibit A. “Early Termination Date” has the meaning set forth in Section 10.2(a). -5-
“Effective Date” has the meaning set forth on the Preamble. “Energy” means electrical energy, measured in MWh.
“Event of Default” has the meaning set forth in Section 10.1. “Facility” has the meaning set forth on the Cover Sheet. “FERC” means the Federal Energy Regulatory Commission or any successor government agency.
“Force Majeure Event” has the meaning set forth in Section 9.1. “Forced Facility Outage” means an unexpected failure of one or more components of the Facility or any outage on the Transmission System that prevents Seller from making power available at the Delivery Point and that is not the result of a Force Majeure Event. “Gains” means, with respect to any Party, an amount equal to the present value of the economic benefit to it, if any (exclusive of Costs), resulting from the termination of this Agreement for the remaining Contract Term, determined in a commercially reasonable manner. Factors used in determining the economic benefit to a Party may include, without limitation, reference to information supplied by one or more third parties, which shall exclude Affiliates of the Non-Defaulting Party, including without limitation, quotations (either firm or indicative) of relevant rates, prices, yields, yield curves, volatilities, spreads or other relevant market data in the relevant markets, comparable transactions, forward price curves based on economic analysis of the relevant markets, settlement prices for comparable transactions at liquid trading hubs (e.g., SP-15), all of which should be calculated for the remaining Contract Term. “Governmental Authority” means any federal, state, provincial, local or municipal government, any political subdivision thereof or any other governmental, congressional or parliamentary, regulatory, or judicial instrumentality, authority, body, agency, department, bureau, or entity with authority to bind a Party at law, including CAISO. “Guaranteed RA Amount” means
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“Guarantor” means (a) (i) Pattern Energy Group LP, (ii) Western Spirit B Member LLC, (iii) SunZia B Member LLC, or (iv) any Person that (A) does not already have any material credit exposure to Buyer under any other agreements, guarantees, or other arrangements at the time its Guaranty is issued, (B) is an Affiliate of Seller, or other third party reasonably acceptable to Buyer, (C) has
and (D) is incorporated or organized in a jurisdiction of the United States and is in good standing in such jurisdiction, and (b) that executes and delivers a Guaranty for the benefit of Buyer.
“Guaranty” means a guaranty from a Guarantor provided for the benefit of Buyer substantially in the form attached as Exhibit C, or as reasonably acceptable to Buyer. “Import Capability” means the amount of the Maximum Import Capability at the applicable Intertie allocated by the CAISO to Buyer, which Buyer shall use to support the deliveries of Resource Adequacy Benefits from the Facility to the Delivery Point. “Indemnified Party” has the meaning set forth in Section 15.1(a). “Indemnifying Party” has the meaning set forth in Section 15.1(a). “Installed Capacity” means, in respect of periods (i) prior to the SunZia Switch Date, the nameplate capacity of the Duran Mesa Wind Project as set forth in Exhibit A, and (ii) from and after the SunZia Switch Date, the nameplate capacity of the SunZia Wind Project at the point of interconnection (which point of interconnection is specified in the Interconnection Agreement for the SunZia Wind Project), as evidenced by a commercial operation certificate delivered in accordance with Section 2.3(d), and as it may be updated by Seller by delivery of a subsequent certificate from a Licensed Professional Engineer.
“Interconnection Agreement” means the interconnection agreement entered into by Seller pursuant to which the Facility will be interconnected with the PTO’s Transmission System. “Interconnection Facilities” means the interconnection facilities, control and protective devices and metering facilities required to connect the SunZia Wind Project with the PTO’s Transmission System in order to meet the terms and conditions of this Agreement. “Interest Rate” has the meaning set forth in Section 7.2. “Intertie” has the meaning set forth in the CAISO Tariff. -7-
“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 October 1, 2019 as amended, under which Buyer is organized as a Joint Powers Authority in accordance with the Joint Powers Act.
“kW” means kilowatts measured in alternating current.
“Law” means any applicable law, statute, rule, regulation, decision, writ, order, decree or judgment, permit or any interpretation thereof, promulgated or issued by a Governmental Authority.
“Lender” means, collectively, any Person (i) providing senior or subordinated construction, interim, back leverage or long-term debt, equity or tax equity financing or refinancing for or in connection with the development, construction, purchase, installation or operation of the Duran Mesa Wind Project or the SunZia Wind Project, whether that financing or refinancing takes the form of private debt, equity, public debt or any other form (including financing or refinancing provided to a member or other direct or indirect owner of Seller), including any equity or tax equity investor directly or indirectly providing financing or refinancing for the Duran Mesa Wind Project or the SunZia Wind Project or purchasing equity ownership interests of Seller and/or its Affiliates, and any trustee or agent acting on their behalf, (ii) providing Interest Rate or commodity protection under an agreement hedging or otherwise mitigating the cost of any of the foregoing obligations, and/or (iii) participating in a lease financing (including a sale leaseback or leveraged leasing structure) with respect to the Duran Mesa Wind Project or the SunZia Wind Project.
“Letter(s) of Credit” means one or more irrevocable, standby letters of credit (a) issued by a U.S. commercial bank or a foreign bank with a U.S. branch with such bank having a Credit Rating of at least A- with an outlook designation of “stable” from S&P or A3 with an outlook designation of “stable” from Moody’s, and (b) in a form substantially similar to the letter of credit set forth in Exhibit B or as otherwise reasonably acceptable to the Party that is the beneficiary of the Letter of Credit.
“Licensed Professional Engineer” means either (i) DNV Energy USA Inc., (ii) UL Services Group LLC, (iii) any independent engineer retained by the Lenders, or on their behalf under customary terms and conditions, in connection with a financing of the Duran Mesa Wind Project or the SunZia Wind Project, which engineer, employee or principal thereof (a) is licensed to practice engineering in New Mexico, (b) has training and experience in the power industry specific to the technology of the Duran Mesa Wind Project or the SunZia Wind Project, (c) is not a representative of a consultant, engineer, contractor, designer or other individual involved in the development of the Duran Mesa Wind Project or the SunZia Wind Project or of a manufacturer or supplier of any equipment installed at the Duran Mesa Wind Project or the SunZia Wind Project other than as the independent engineer for the Lenders, and (d) is licensed in an appropriate engineering discipline for the required certification being made, or (ii) a person acceptable to -8-
Buyer in its reasonable judgment.
“Losses” means, with respect to any Party, an amount equal to the present value of the economic loss to it, if any (exclusive of Costs), resulting from termination of this Agreement for the remaining Contract Term, determined in a commercially reasonable manner. Factors used in determining economic loss to a Party may include, without limitation, reference to information supplied by one or more third parties, which shall exclude Affiliates of the Non-Defaulting Party, including without limitation, quotations (either firm or indicative) of relevant rates, prices, yields, yield curves, volatilities, spreads or other relevant market data in the relevant markets, comparable transactions, forward price curves based on economic analysis of the relevant markets, settlement prices for comparable transactions at liquid trading hubs (e.g., SP-15), all of which should be calculated for the remaining Contract Term.
“Maximum Import Capability” has the meaning set forth in the CAISO Tariff, and includes any replacement or successor metric used by the CAISO with respect to the ability of generating units that are external to the CAISO balancing authority area to provide Resource Adequacy Benefits.
“Moody’s” means Moody’s Investors Service, Inc., or its successor. “MW” means megawatts measured in alternating current.
“Net Qualifying Capacity” has the meaning set forth in the CAISO Tariff. “Non-Availability Charges” has the meaning set forth in the CAISO Tariff. “Non-Defaulting Party” has the meaning set forth in Section 10.2. “Notice” shall, unless otherwise specified in the Agreement, mean written communications by a Party to be delivered by hand delivery, United States mail, overnight courier service or electronic communication (including email or other electronic means). “Notification Deadline” means, for any Showing Month, the date that is five (5) Business Days before the deadline for the submission of Buyer’s Resource Adequacy Plan for such Showing Month.
“Participating Transmission Owner” or “PTO” means an entity that owns, operates and maintains the Transmission System or distribution lines and associated facilities and/or has entitlements to use certain transmission or distribution lines and associated facilities where the Facility is interconnected. For purposes of this Agreement, the Participating Transmission Owner is set forth in Exhibit A.
“Party” has the meaning set forth in the Preamble.
“Parties” has the meaning set forth in the Preamble.
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“Permitted Transferee” means
“Person” means any individual, sole proprietorship, corporation, limited liability company, limited or general partnership, joint venture, association, joint-stock company, trust, incorporated organization, institution, public benefit corporation, unincorporated organization, government entity or other entity.
“Planned Outage” means a period during which the Facility is either in whole or in part not capable of providing service due to planned maintenance which has been scheduled in advance, subject to the following: during each period from June 1 to October 31 during the Delivery Term, Seller shall not schedule any non-emergency maintenance of the Facility which reduces the energy generation capability of the Facility by more than unless (i) such outage is required to avoid an emergency or damage to the Facility or its interconnection facilities, (ii) such maintenance is necessary to maintain equipment warranties or is otherwise in accordance with equipment manufacturer recommendations and cannot reasonably be scheduled outside such period, (iii) such outage is in connection with a Force Majeure Event, (iv) such outage is required by applicable Law, the requirements of CAISO, a Transmission Provider and/or any other applicable Governmental Authority, or Prudent Operating Practices, (v) such outage is required for safety reasons, or (vi) the Parties agree otherwise in writing. “PPA Provider” has the meaning set forth in the Security Agreement. “Product” has the meaning set forth on the Cover Sheet. “Progress Report” means a progress report including the items set forth in Exhibit E. “Project Bifurcation” has the meaning set forth in Section 2.3(f). “Project Transition” has the meaning set forth in Section 2.3(f). “Prudent Operating Practice” means the practices, methods and standards of professional care, skill and diligence engaged in or approved by a significant portion of the utility-scale wind energy industry for facilities of similar size, type and design, that, in the exercise of reasonable judgment, in light of the facts known at the time, would have been expected to accomplish results consistent with Law, reliability, safety, environmental protection, applicable codes, and standards of economy and expedition. Prudent Operating Practice is not necessarily defined as the optimal standard practice method or act to the exclusion of others, but rather refer to a range of actions reasonable under the circumstances. -10-
“RA Compliance Showing” means the resource adequacy compliance or advisory showings (or similar or successor showings) that Buyer is required to make to the CAISO pursuant to the CAISO Tariff, or to the CPUC (and, to the extent authorized by the CPUC, to the CAISO) pursuant to the CPUC Decisions.
“RA Deficiency Amount” has the meaning set forth in Section 3.4(a). “RA Deficiency Amount Cap” means the maximum RA Deficiency Amount Seller shall pay to Buyer pursuant to Section 3.4(a), equal to
“RA Shortfall Amount” means, in each month, the difference (expressed in kW) of the Contract Quantity for such month, minus the amount of Resource Adequacy Benefits delivered to Buyer for such month, minus any Deemed Delivered Product for such month. “Real-Time Market” has the meaning set forth in the CAISO Tariff. “Receiving Party” has the meaning set forth in Section 18.2. “Replacement Product” means Resource Adequacy Benefits from a facility other than the Facility (as determined at the time of provision of Replacement Product) provided by Seller to Buyer in accordance with Section 3.4(b).
“Resource Adequacy Benefits” means the rights and privileges attached to Buyer’s Share of the Capacity Attributes available from the Facility that satisfy any entity’s resource adequacy obligations, as those obligations are set forth in the CPUC Decisions and any subsequent CPUC ruling or decision and shall include any local, zonal or otherwise locational attributes associated with the Facility (or other facility with regard to Replacement Product). “Resource Adequacy Plan” has the meaning set forth in the CAISO Tariff.
Resource Adequacy Requirement” means the capacity procurement obligations established by the CPUC pursuant to the CPUC Decisions, or by CAISO pursuant to the CAISO Tariff, or any other regional entity.
“Resource Specific Import RA” means Capacity Attributes from a resource located outside of the CAISO Control Area (as defined in the CAISO Tariff) that is listed on the CPUC Net Qualifying Capacity list and that satisfies all other applicable requirements under the CPUC Decisions for delivery of Resource Adequacy Benefits, other than requirements that are required to be satisfied by Buyer pursuant to Section 3.3(f).
“S&P” means the Standard & Poor’s Financial Services, LLC (a subsidiary of The McGraw-Hill Companies, Inc.) or its successor.
“Scheduling Coordinator” or “SC” means an entity certified by the CAISO as qualifying -11-
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 Tariff, as amended from time to time.
“Security Interest” has the meaning set forth in Section 7.9. “Seller” has the meaning set forth on the Cover Sheet.
“Seller Security” means at Seller’s option (i) cash (ii) a Letter of Credit, and/or (iii) a Guaranty, in the amount set forth on the Cover Sheet.
“Settlement Amount” means the Non-Defaulting Party’s Costs and Losses, on the one hand, netted against its Gains, on the other. If the Non-Defaulting Party’s Costs and Losses exceed its Gains, then the Settlement Amount shall be an amount owing to the Non-Defaulting Party. If the Non-Defaulting Party’s Gains exceed its Costs and Losses, then the Settlement Amount shall be zero dollars ($0). The Settlement Amount does not include consequential, incidental, punitive, exemplary or indirect or business interruption damages. “Showing Month” means the calendar month of the Delivery Term that is the subject of an RA Compliance Showing. For illustrative purposes only, pursuant to the applicable CPUC Decisions in effect as of the Effective Date, the RA Compliance Showing made in June is for the Showing Month of August.
“Specified Quantity” has the meaning set forth on the Cover Sheet. “Subsequent Buyer” means the purchaser of Product from Buyer in a re-sale of Product by Buyer.
“Sufficient Import Capability” means Import Capability at the applicable Intertie in the amount of the Guaranteed RA Amount.
“SunZia Transfer” has the meaning set forth in Section 2.3(a). -12-
“SunZia Transmission Line” means that certain 3,000-MW high-voltage (+/-525-kV) transmission line originating at the Point of Interconnection (as defined in the Interconnection Agreement) in New Mexico and terminating near Phoenix, Arizona. The western terminus of the line will connect to the 500-kV Pinal Central Substation. “SunZia Wind North” means that portion of the Facility identified as SunZia North in Exhibit A.
“SunZia Wind Project” means the wind-powered electricity generating facility to be located in Lincoln, Torrance and San Miguel Counties, New Mexico, as further described in Exhibit A.
“SunZia Wind South” means that portion of the Facility identified as SunZia South in Exhibit A.
“Supply Plan” has the meaning set forth in the CAISO Tariff. “System Emergency” means any condition that: (a) requires, as determined and declared by CAISO, the PTO or a Transmission Provider, automatic or immediate action to (i) prevent or limit harm to or loss of life or property, (ii) prevent loss of transmission facilities or generation supply in the immediate vicinity of the Facility, or (iii) to preserve Transmission System reliability, and (b) directly affects the ability of any Party to perform under any term or condition in this Agreement, in whole or in part.
“Tax” or “Taxes” means all U.S. federal, state and local and any foreign taxes, levies, assessments, surcharges, duties and other fees and charges of any nature imposed by a Governmental Authority, whether currently in effect or adopted during the Contract Term, including ad valorem, excise, franchise, gross receipts, import/export, license, property, sales and use, stamp, transfer, payroll, unemployment, income, and any and all items of withholding, deficiency, penalty, additions, interest or assessment related thereto. “Terminated Transaction” has the meaning set forth in Section 10.2(a). “Termination Payment” has the meaning set forth in Section 10.3. “Transmission Provider” means any entity or entities transmitting or transporting the Product on behalf of Seller or Buyer to or from the Delivery Point, including the Participating Transmission Owner.
“Transmission System” means the transmission facilities operated by the Transmission Provider(s), now or hereafter in existence, which provide energy transmission service upstream to or downstream from the Delivery Point.
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1.2 Rules of Interpretation.
In this Agreement, except as expressly stated otherwise or unless the context otherwise requires:
(a) headings and the rendering of text in bold and italics are for convenience and reference purposes only and do not affect the meaning or interpretation of this Agreement; (b) words importing the singular include the plural and vice versa and the masculine, feminine and neuter genders include all genders; (c) the words “hereof”, “herein”, and “hereunder” and words of similar import shall refer to this Agreement as a whole and not to any particular provision of this Agreement; (d) a reference to an Article, Section, paragraph, clause, Party, or Exhibit is a reference to that Section, paragraph, clause of, or that Party or Exhibit to, this Agreement unless otherwise specified;
(e) a reference to a document or agreement, including this Agreement shall mean such document, agreement or this Agreement including any amendment or supplement to, or replacement, novation or modification of this Agreement, but disregarding any amendment, supplement, replacement, novation or modification made in breach of such document, agreement or this Agreement;
(f) a reference to a Person includes that Person’s successors and permitted assigns;
(g) the term “including” means “including without limitation” and any list of examples following such term shall in no way restrict or limit the generality of the word or provision in respect of which such examples are provided; (h) references to any statute, code or statutory provision are to be construed as a reference to the same as it may have been, or may from time to time be, amended, modified or reenacted, and include references to all bylaws, instruments, orders and regulations for the time being made thereunder or deriving validity therefrom unless the context otherwise requires; (i) in the event of a conflict, a mathematical formula or other precise description of a concept or a term shall prevail over words providing a more general description of a concept or a term;
(j) references to any amount of money shall mean a reference to the amount in United States Dollars;
(k) the expression “and/or” when used as a conjunction shall connote “any or -14-
all of”;
(l) words, phrases or expressions not otherwise defined herein that (i) have a generally accepted meaning in Prudent Operating Practice shall have such meaning in this Agreement or (ii) do not have well known and generally accepted meaning in Prudent Operating Practice but that have well known and generally accepted technical or trade meanings, shall have such recognized meanings;
(m) references to “reasonably acceptable” shall require that the Party with discretion shall not unreasonably withhold, delay or condition its approval; and (n) each Party acknowledges that it was represented by counsel in connection with this Agreement and that it or its counsel reviewed this Agreement and that any rule of construction to the effect that ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of this Agreement.
ARTICLE 2
TERM
2.1 Contract Term.
(a) The term of this Agreement shall commence on the Effective Date and shall remain in full force and effect until the conclusion of the Delivery Term, subject to any early termination provisions set forth herein (“Contract Term”). (b) Applicable provisions of this Agreement shall continue in effect after termination, including early termination, to the extent necessary to enforce or complete the duties, obligations or responsibilities of the Parties arising prior to termination. The confidentiality obligations of the Parties under Article 17 shall remain in full force and effect for following the termination of this Agreement, all indemnity obligations shall remain in full force and effect for following termination of this Agreement, all audit rights shall remain in full force and effect for following the termination of this Agreement, and Buyer’s obligation to return to Seller the Seller Security less any amounts drawn in accordance with this Agreement shall remain in full force and effect following the termination of this Agreement.
2.2 Import Capability. Buyer shall participate in CAISO’s process for allocating Maximum Import Capability and take necessary actions to obtain Sufficient Import Capability at the Delivery Point, which shall include timely submission by Buyer of a request to CAISO specifying a requested volume of the Maximum Import Capability at such Intertie that is not less than the Sufficient Import Capability (“Commercially Reasonable MIC Efforts”). (a) Buyer shall use Commercially Reasonable MIC Efforts to obtain Sufficient Import Capability at the CAISO Intertie Willow Beach 500 (Branch Group: ELDORADO_ITC), or at such other Intertie as is mutually acceptable to both Parties, for each calendar year of the Delivery Term until the SunZia Switch Date. To the extent that Buyer obtains Import Capability at a mutually acceptable Intertie other than Willow Beach 500 (Branch Group: ELDORADO_ITC) in accordance with the preceding sentence, unless otherwise agreed by the Parties, such Intertie -15-
shall be considered the Delivery Point hereunder until the SunZia Switch Date. Buyer shall provide Notice to Seller of the amount of Import Capability at the Delivery Point that it obtains for 2025 no later than If Buyer fails to obtain Sufficient Import Capability at the CAISO Intertie Willow Beach 500 for calendar year 2025 by , despite using Commercially Reasonable MIC Efforts, then
(ii)
2.3 SunZia Transfer. Seller shall provide the Product from the SunZia Wind Project on and after the SunZia Switch Date (the “SunZia Transfer”), subject to the following terms:
Each calendar month until the SunZia Wind Project achieves commercial operation, Seller shall provide to Buyer a Progress Report. The content of the Progress Report is set forth in Exhibit E. Seller shall also provide Buyer with any reasonably requested documentation (subject to availability and confidentiality restrictions) directly related to the items discussed in the Progress Reports within ten (10) Business Days of receipt of such request. (b) No later than Seller shall provide Notice to Buyer of Seller’s expectation as to whether it will effect the SunZia Transfer for deliveries of Product during . If Seller informs Buyer that Seller intends to effect the SunZia Transfer in , Buyer shall use Commercially Reasonable MIC Efforts to obtain Sufficient Import Capability at the CAISO Intertie Palo Verde (Branch Group: PALOVERDE_ITC) for -16-
. Buyer shall provide to Seller a copy of such request to CAISO promptly upon submission. Buyer shall provide Notice to Seller of the amount of Maximum Import Capability that it has obtained through the CAISO process for at CAISO Intertie Palo Verde (Branch Group: PALOVERDE_ITC) no later than along with a copy of CAISO’s notice to Buyer of such amount. If Buyer fails to obtain Sufficient Import Capability at the Delivery Point for any Showing Month of despite such Commercially Reasonable MIC Efforts, the SunZia Transfer shall not occur in (c) Seller shall provide Notice to Buyer at least before the date on which Seller anticipates the SunZia Transfer is to occur. If the SunZia Switch Date does not occur during , Seller shall use commercially reasonable efforts to effect the SunZia Transfer for deliveries of Product in (subject to Section 2.3(d) below), by providing Notice to Buyer on or before . Upon any such Notice from Seller, the provisions of Section 2.3(b) shall apply mutatis mutandis to such Notice. (ii)
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(B)
(d) The Parties acknowledge and agree that (i) the SunZia Transfer shall not take place until (x) the SunZia Wind Project has commenced commercial operation and is capable of delivering the Product to Buyer as set forth herein and Seller has provided to Buyer a commercial operation certificate from a Licensed Professional Engineer in substantially the form of Exhibit F, and (y) Buyer has obtained Sufficient Import Capability at the CAISO Intertie Palo Verde (Branch Group: PALOVERDE_ITC), and (ii) any delay in the SunZia Switch Date due to the failure of the SunZia Wind Project to achieve commercial operation, including any such delay following Seller's delivery of Notice pursuant to Sections 2.3(b) and/or 2.3(c) above, shall not be a breach or default of Seller under this Agreement.
(e) Subject to Section 2.3(f) below, on and after the SunZia Switch Date and through the remainder of the Delivery Term, the Product shall be provided from the SunZia Wind Project, except for Replacement Product described in Section 3.4(b). No later than thirty (30) days before the SunZia Switch Date, Seller shall provide to Buyer a revised Exhibit A with complete information for the SunZia Wind Project, a commercial operation certificate for the SunZia Wind Project in a form reasonably acceptable to Buyer, and any other information reasonably requested by Buyer.
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ARTICLE 3
PURCHASE AND SALE
3.1 Sale of Product. Subject to the terms and conditions of this Agreement, during the Delivery Term, Seller shall sell and deliver to Buyer, and Buyer shall purchase from Seller at the applicable Contract Price, the Product in the amount of the Contract Quantity. Except for Replacement Product described in Section 3.4(b), the Product shall be provided from the Facility.
For the avoidance of doubt, the Product does not include Energy, environmental attributes, renewable energy credits, ancillary services, tax or other financial incentives, or any other similar -20-
product or benefit; and Seller has the right to sell, transfer, utilize or retain such products and benefits in its sole discretion and to receive and incur all market revenues and costs associated with such products and benefits. Seller may reduce the Contract Quantity, from time to time, to account for (a) Buyer’s Share of the reduction in Facility output due to Planned Outages (subject to Buyer’s receipt of Notice of such Planned Outages before the Notification Deadline), (b) the amount of Import Capability that Buyer obtains, (c) Force Majeure Events, and (d) changes in Law that would require Seller to incur any costs in connection with Compliance Actions that exceed the Compliance Expenditure Cap and that Buyer has not agreed to accept as Accepted Compliance Costs as set forth in Section 3.6 (“Change in Law”). The Parties also acknowledge that the Contract Quantity may vary from time to time as a result of changes by the CPUC or CAISO to the Net Qualifying Capacity of the Facility and/or the amount of Resource Adequacy Benefits available from the Facility. No later than , in respect of the first Contract Year of the Delivery Term, and then no later than of each subsequent calendar year during the Delivery Term, Seller shall provide to Buyer a non-binding forecast of each month’s expected amount of Product, in MW, for each month of the ensuing calendar year. No later than the Notification Deadline, Seller shall provide to Buyer a statement showing the Contract Quantity for the upcoming Showing Month.
3.2 Compensation.
3.3 Resource Adequacy Benefits.
(a) Throughout the Delivery Term, Seller grants, pledges, assigns and otherwise commits to Buyer all of the Resource Adequacy Benefits associated with the Contract Quantity, as such amount may be adjusted pursuant to this Agreement. (b) Throughout the Delivery Term, Seller shall take all commercially reasonable actions consistent with the operating restrictions of the Facility and Prudent Operating Practice to ensure that the Facility qualifies to provide the Resource Adequacy Benefits to Buyer.
Throughout the Delivery Term, Seller hereby covenants and agrees to transfer all Resource Adequacy Benefits associated with the Contract Quantity, as such amount may be adjusted pursuant to this Agreement, to Buyer.
(c) For the duration of the Delivery Term, Seller shall take all commercially reasonable actions, including complying with all applicable registration and reporting requirements, and execute any and all documents or instruments reasonably necessary to enable Buyer to use all of the Resource Adequacy Benefits associated with the Contract Quantity pursuant to this Agreement, including submitting Supply Plans in accordance with CAISO and CPUC requirements. Seller and Buyer shall coordinate prior to the Delivery Term to enable Buyer to include the Contract Quantity in the 2025 year-ahead annual Supply Plan, and the applicable monthly Supply Plans during the Delivery Term starting with the Showing Month of January, 2025. For illustrative purposes only, as of the Effective Date, the applicable CAISO deadlines for the submission of Supply Plans and Resource Adequacy Plans are as follows: (A) forty-five (45) -21-
days prior to the Showing Month for monthly Supply Plans; and (B) the last Business Day of October that is prior to commencement of the year for the annual Supply Plans. The Parties acknowledge and agree that such dates may be modified by the CAISO from time to time throughout the Delivery Term.
(d) If CAISO rejects either the Supply Plan or the Resource Adequacy Plan with respect to any part of the Contract Quantity in any Showing Month, the Parties shall confer, make such corrections as are necessary for acceptance, and resubmit the corrected Supply Plan or Resource Adequacy Plan for validation before the applicable deadline for the Showing Month. (e) The Product is delivered and received when the CIRA Tool shows that the Supply Plan submitted in compliance with all applicable requirements, including the requirements of this Agreement, has been accepted for the Product by CAISO. Seller shall not have failed to deliver the Contract Quantity if Buyer fails to submit the Contract Quantity, as specified by Seller, in its Resource Adequacy Plan with the CPUC or CAISO, or the Supply Plan and the relevant Resource Adequacy Plan are not matched due to Buyer’s failure to comply with its obligations under this Agreement.
(f) Buyer acknowledges that it will be required to take certain actions and obtain certain rights at the Delivery Point in order to make use of the Resource Adequacy Benefits associated with the Product (including obtaining and maintaining Sufficient Import Capability as set forth in Sections 2.2 and 2.3(c)), in each case as may be required under applicable Law and as may change from time to time, and Seller shall have no liability for the failure to make available to Buyer the Resource Adequacy Benefits associated with the Product if such failure is due to Buyer’s failure to obtain Sufficient Import Capability. Upon Buyer’s request, Seller shall use commercially reasonable efforts to support Buyer in obtaining Sufficient Import Capability. To the extent Buyer does not or cannot maintain Sufficient Import Capability or any other rights or capacities necessary to support the importation of the Guaranteed RA Amount into the CAISO or otherwise receive or utilize the Resource Adequacy Benefits, for reasons other than a Seller failure under this Agreement or the inability of Seller to maintain the Facility as (i) a Dynamic System Resource (as defined in the CAISO Tariff) or otherwise ensure that the Product can be delivered to Buyer at the applicable Delivery Point as contemplated under this Agreement (in the case of the Duran Mesa Wind Project) or (ii) a Pseudo-Tie (as defined in the CAISO Tariff) resource or otherwise ensure that the Product can be delivered to Buyer at the applicable Delivery Point as contemplated under this Agreement (in the case of the SunZia Wind Project), in each case as defined in the CAISO Tariff, the Resource Adequacy Benefits that are not imported or that cannot be imported shall constitute Deemed Delivered Product.
3.4 Buyer Remedies for Seller Failure to Deliver Contract Quantity. (a)
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Payment by Seller of amounts owing under this Section 3.4(a) shall be Buyer’s sole and exclusive remedy for any failure of Seller to deliver Product in the amount of the Contract Quantity hereunder. Notwithstanding anything herein to the contrary, Seller shall have no liability to Buyer under this Agreement for any failure by Seller to deliver Product hereunder to the extent that such failure results from (a) Buyer’s failure to obtain Sufficient Import Capability or otherwise to comply with its obligations hereunder, (b) Forced Facility Outages, (c) Changes in Law (subject to the Compliance Expenditure Cap), (d) Planned Outages (subject to Buyer’s receipt of Notice of such Planned Outages before the Notification Deadline), or (e) Force Majeure Event.
(b)
3.5 Buyer’s Re-Sale of Product.
(a) Buyer may re-sell all or part of the Product; provided that any such re-sale must not increase Seller’s obligations hereunder other than as explicitly set forth in this Section 3.5(a). For any resale, the Resource Adequacy Plan of Buyer as used herein will refer to the Resource Adequacy Plan of Subsequent Buyer. Seller shall follow Buyer’s instructions with respect to providing such resold Product to Subsequent Buyers, to the extent such instructions are consistent with Seller’s obligations (including with respect to timing) under this Agreement. Seller shall take all commercially reasonable actions, including execution of all documents or instruments reasonably necessary to allow such Subsequent Buyers to use such resold Product in a manner consistent with Buyer’s rights under this Agreement. If Buyer incurs any liability to a Subsequent Buyer due to the failure of Seller to comply with this Agreement, Seller shall be liable to Buyer for the same amounts Seller would have owed Buyer under this Agreement if Buyer had not resold the Product and Buyer shall indemnify and hold Seller harmless from any liability that Seller may incur to the Subsequent Buyer.
(b) Buyer shall notify Seller in writing of any resale of Product and the Subsequent Buyer no later than ten (10) Business Days before Seller’s deadline for the submission of its Supply Plan for the relevant Showing Month for which Buyer has resold Product. (c) If CAISO or CPUC develops a centralized capacity market, Buyer shall have the exclusive right to direct Seller to offer, bid, or otherwise submit the Contract Quantity for re-sale into such market, and Seller shall comply with Buyer’s direction and Buyer shall retain and receive all revenues from such re-sale; provided that Seller shall not be obligated to incur any -23-
incremental costs or risks associated with any participation in such market, Seller shall not be obligated to change the manner in which it operates the Facility and Buyer will enter into such agreements and provide such other assurances as Seller may reasonably request in connection with any participation by Seller in such market.
3.6 Compliance Expenditure Cap. Notwithstanding anything herein to the contrary, if Seller establishes to Buyer’s reasonable satisfaction that a change in Law occurring after the Effective Date has increased Seller’s out-of-pocket costs above the costs that could reasonably have been contemplated as of the Effective Date to take all actions to comply with Seller’s obligations under the Agreement with respect to obtaining, maintaining, conveying or effectuating Buyer’s use of (as applicable), the Product, then the Parties agree that the maximum amount of out-of-pocket costs and expenses Seller shall be required to bear during any Contract Year shall be capped at and in the aggregate
during the Delivery Term shall be capped at
(“Compliance Expenditure Cap”):
Any actions required for Seller to comply with its obligations set forth in the first paragraph above, the cost of which will be included in the Compliance Expenditure Cap, shall be referred to collectively as the “Compliance Actions.”
If Seller reasonably anticipates the need to incur out-of-pocket expenses in excess of the Compliance Expenditure Cap in order to take any Compliance Action, Seller shall provide Notice to Buyer reasonably demonstrating such anticipated out-of-pocket expenses.
Buyer will have sixty (60) days to evaluate such Notice (during which time period Seller is not obligated to take any Compliance Actions described in the Notice) and shall, within such time, either (1) agree to reimburse Seller for all or some portion of the reasonably incurred costs that exceed the Compliance Expenditure Cap specified in such Notice (such Buyer-agreed upon costs, the “Accepted Compliance Costs”), or (2) waive Seller’s obligation to take such Compliance Actions, or any part thereof, for which Buyer has not agreed to reimburse Seller; provided, if in any Contract Year, Seller’s costs to take Compliance Actions exceed the annual Compliance Expenditure Cap: (i) Buyer may pay to Seller any reasonably demonstrated amounts that Seller expends in connection with Compliance Actions that are over the annual Compliance Expenditure Cap; (ii) in the following Contract Year, Seller shall reimburse Buyer for all such amounts paid by Buyer up to , and provided that all
such reimbursed amounts in combination with all other Seller costs and expenses associated with Compliance Actions shall not exceed
in the aggregate over the Contract Term; and (iii) such reimbursed amounts shall be considered costs and expenses associated with Compliance Actions and shall count towards the current annual and aggregate Compliance Expenditure Cap; for the avoidance of doubt, in no case shall Seller be required to bear any unreimbursed costs in connection with Compliance Actions (including those associated with a reimbursement by Seller of Buyer payments hereunder) in any Contract Year or in the aggregate in excess of the respective Compliance Expenditure Cap. If Buyer does not respond to a Notice given by Seller under this Section 3.6 within sixty (60) days after Buyer’s receipt of same, Buyer shall be deemed to have waived its rights to require Seller to take the Compliance Actions that are the subject of the Notice and Seller shall have no further obligations to take, and no liability for a failure to take, such Compliance Actions for the remainder -24-
of the Contract Term.
If Buyer agrees to reimburse Seller for the Accepted Compliance Costs, then Seller shall take such Compliance Actions covered by the Accepted Compliance Costs as agreed upon by Buyer, and Buyer shall reimburse Seller for Seller’s actual costs to effect the Compliance Actions, not to exceed the Accepted Compliance Costs, within sixty (60) days from the time that Buyer receives an invoice and documentation of such costs from Seller. If Buyer agrees to reimburse Seller for the Accepted Compliance Costs for less than all of the costs that exceed the Compliance Expenditure Cap, Seller shall only be obligated to take the Compliance Actions covered by the Accepted Compliance Costs.
The term “commercially reasonable efforts” as used in Section 3.3 means efforts consistent with and subject to this Section 3.6.
ARTICLE 4
SCHEDULING COORDINATION AND CAISO REVENUES
4.1 Scheduling Coordinator Responsibilities.
(a) Seller as Scheduling Coordinator for the Facility. Seller shall be the Scheduling Coordinator or designate a qualified third party to provide Scheduling Coordinator services with the CAISO for the Facility for the delivery of the Product at the Delivery Point.
Seller shall determine in its sole discretion how to Bid and schedule the Energy from the Facility into each of the Day-Ahead Market and Real-Time Market; provided that Seller shall do so in accordance with the CAISO Tariff and in a manner that permits the delivery of the Product hereunder. Buyer is not liable for the failure of Seller or the Facility’s SC, owner, or operator to comply with the Tariff, and for any penalties, fines or costs imposed on Seller or the Facility’s SC, owner, or operator for noncompliance.
(b) CAISO Costs and Revenues. Seller shall be responsible for all CAISO costs (including penalties, imbalance energy charges, and other charges) and shall be entitled to all CAISO revenues (including credits, imbalance energy payments, and other payments), including costs and revenues associated with CAISO dispatches, bid cost recovery, Inter-SC Trade credits, ancillary services revenues or other credits in respect of the Energy scheduled or delivered from the Facility. Buyer shall be responsible for all CAISO costs associated with obtaining an allocation of Import Capability at the Delivery Point and shall be entitled to receive and retain any capacity and availability revenues under the Capacity Procurement Mechanism, or its successor, associated with the Contract Quantity of Product. Any Availability Incentive Payments or Non-Availability Charges are for Seller to receive and pay.
(c) Master File and Resource Data Template. Seller shall provide the data to the CAISO (and to Buyer) that is required for the CAISO’s Master File and Resource Data Template (or successor data systems) for the Facility consistent with this Agreement.
ARTICLE 5
TAXES
5.1 Allocation of Taxes and Charges. Seller shall pay or cause to be paid all Taxes -25-
on or with respect to the Facility, or on or with respect to the sale and delivery of Product to Buyer, that are imposed on Product prior to the Delivery Point. Buyer shall pay or cause to be paid all Taxes on or with respect to the delivery to and purchase by Buyer of the Product that are imposed on Product at and from the Delivery Point (other than withholding or other Taxes imposed on Seller’s income, revenue, receipts or employees). If a Party is required to remit or pay Taxes that are the other Party’s responsibility hereunder, such Party shall promptly pay the Taxes due and then seek and receive reimbursement from the other for such Taxes. In the event any sale of Product hereunder is exempt from or not subject to any particular Tax, the exempted Party shall provide the other Party with all necessary documentation within thirty (30) days after the Effective Date to evidence such exemption or exclusion. If the exempted Party does not provide such documentation, then such Party shall indemnify, defend, and hold the other Party harmless from any liability with respect to Taxes from which the exempted Party claims it is exempt.
5.2 Cooperation. Each Party shall use reasonable efforts to implement the provisions of and administer this Agreement in accordance with the intent of the Parties to minimize all Taxes, so long as no Party is materially adversely affected by such efforts. The Parties shall cooperate to minimize Tax exposure; provided, however, that neither Party shall be obligated to incur any financial or operational burden to reduce Taxes for which the other Party is responsible hereunder without receiving due compensation therefor from the other Party.
ARTICLE 6
MAINTENANCE OF THE FACILITY
6.1 Maintenance of the Facility. Seller shall comply with Law and Prudent Operating Practice relating to the operation and maintenance of the Facility and the generation and sale of Product.
6.2 Maintenance of Health and Safety. Seller shall take reasonable safety precautions with respect to the operation, maintenance, repair and replacement of the Facility. If Seller becomes aware of any circumstances relating to the Facility that create an imminent risk of damage or injury to any Person or any Person’s property, Seller shall take prompt, reasonable action to prevent such damage or injury and shall give Buyer’s emergency contact identified on Exhibit D Notice of such condition. Such action may include disconnecting and removing all or a portion of the Facility, or suspending the supply of Product to Buyer.
6.3 System Resource. Seller shall, in compliance with all applicable requirements of the CAISO Tariff for such resources, either (a) (i), maintain the Duran Mesa Wind Project as a Dynamic System Resource (as defined in the CAISO Tariff) from the Effective Date to the SunZia Switch Date, and/or (ii) maintain the SunZia Wind Project as a Pseudo-Tie (as defined in the CAISO Tariff) resource from the SunZia Switch Date through the remainder of the Delivery Term, or (b) otherwise ensure that the Product can be delivered to Buyer at the applicable Delivery Point as contemplated under this Agreement.
ARTICLE 7
INVOICING AND PAYMENT; CREDIT
7.1 Invoicing. Seller shall make good faith efforts to deliver an invoice to Buyer no -26-
sooner than fifteen (15) days after the end of each Showing Month. Each invoice shall provide Buyer (a) CAISO and other transaction data sufficient to document and verify the amount of Product delivered during the applicable month, (b) the Contract Price, and (c) any additional information reasonably requested by Buyer. Seller shall provide Buyer access to any records, including invoices or settlement data from the CAISO, necessary to verify the accuracy of any amount. Each invoice shall be in an electronic format specified by Buyer (e.g., PDF, .xlsx).
7.2 Payment. Buyer shall make payment to Seller by wire transfer or ACH payment to the bank account provided on each monthly invoice. Buyer shall pay undisputed invoice amounts within twenty five (25) days after the end of the prior monthly delivery period; provided, if Seller delivers an invoice to Seller after the fifteenth (15th) day following the end of the prior monthly delivery period, Buyer shall pay undisputed invoice amounts no later than the tenth (10th) day following delivery of such invoice. If such due date falls on a weekend or legal holiday, such due date shall be the next Business Day. Payments made after the due date will be considered late and will bear interest on the unpaid balance. If the amount due is not paid on or before the due date or if any other payment that is due and owing from one party to another is not paid on or before its applicable due date, a late payment charge shall be applied to the unpaid balance and shall be added to the next billing statement. Such late payment charge shall be calculated based on an annual Interest Rate equal to the prime rate published on the date of the invoice in The Wall Street Journal (or, if The Wall Street Journal is not published on that day, the next succeeding date of publication), plus (the “Interest Rate”). If the due date occurs on a day that is not a Business Day, the late payment charge shall begin to accrue on the next succeeding Business Day.
7.3 Books and Records. To facilitate payment and verification, each Party shall maintain all books and records necessary for billing and payments, including copies of all invoices under this Agreement, for a period of at least two (2) years or as otherwise required by Law. Upon fifteen (15) days’ prior Notice to the other Party, either Party shall be granted reasonable access to the accounting books and records within the possession or control of the other Party (subject to the two (2) year retention requirement of the preceding sentence) pertaining to all invoices generated pursuant to this Agreement; provided, Seller’s books and records shall be subject to redaction by Seller with respect to Confidential Information. Seller acknowledges that in accordance with California Government Code Section 8546.7, Seller may be subject to audit by the California State Auditor with regard to Seller’s performance of this Agreement, for a period of three (3) years after final payment hereunder, because the compensation under this Agreement exceeds $10,000.
7.4 Payment Adjustments; Billing Errors. Payment adjustments shall be made if Buyer or Seller discovers there have been good faith inaccuracies in invoicing that are not otherwise disputed under Section 7.5. If the required adjustment is in favor of Buyer, Buyer’s monthly payment shall be credited in an amount equal to the adjustment. If the required adjustment is in favor of Seller, Seller shall add the adjustment amount to Buyer’s next monthly invoice.
Adjustments in favor of either Buyer or Seller shall bear interest at the Interest Rate, until settled in full, in accordance with Section 7.2, accruing from the date on which the non-erring Party received Notice thereof.
7.5 Billing Disputes. A Party may, in good faith, dispute the correctness of any invoice or any adjustment to an invoice rendered under this Agreement or adjust any invoice for any -27-
arithmetic or computational error within twelve (12) months of the date the invoice, or adjustment to an invoice, was rendered. In the event an invoice or portion thereof, or any other claim or adjustment arising hereunder, is disputed, payment of the undisputed portion of the invoice shall be required to be made when due. Any invoice dispute or invoice adjustment shall be in writing and shall state the basis for the dispute or adjustment. Payment of the disputed amount shall not be required until the dispute is resolved. Upon resolution of the dispute, any required payment shall be made within ten (10) Business Days of such resolution along with interest accrued at the Interest Rate from and including the original due date to but excluding the date paid. Inadvertent overpayments shall be returned upon request or deducted by the Party receiving such overpayment from subsequent payments, with interest accrued at the Interest Rate from and including the date of such overpayment but excluding the date repaid or deducted by the Party receiving such overpayment. Any dispute with respect to an invoice is waived if the other Party is not notified in accordance with this Section 7.5 within twelve (12) months after the invoice is rendered or subsequently adjusted, except to the extent any misinformation was from a third party not affiliated with any Party and such third party corrects its information after the twelve-month period. If an invoice is not rendered within twelve (12) months after the close of the month during which performance occurred, the right to payment for such performance is waived.
7.6 Netting of Payments. The Parties hereby agree that they shall discharge mutual debts and payment obligations due and owing to each other on the same date through netting, in which case all undisputed amounts owed by each Party to the other Party for the purchase and sale of Product during the monthly billing period under this Agreement or otherwise arising out of this Agreement, including any related damages calculated pursuant to Section 3.4, and payments or credits, shall be netted so that only the excess amount remaining due shall be paid by the Party who owes it.
7.7 Seller Security. To secure its obligations under this Agreement, Seller shall deliver Seller Security to Buyer. The Seller Security shall be delivered to Buyer on or before October 1, 2024. If the Seller Security is in the form of a Letter of Credit, it shall be substantially in the form set forth in Exhibit B. If the Seller Security is in the form of a Guaranty, it shall be in the form set forth in Exhibit C. Seller shall maintain the Seller Security in full force and effect until the following have occurred: (A) the Delivery Term has expired or terminated early; and (B) all payment obligations of the Seller arising under this Agreement, including compensation for penalties, Termination Payment, indemnification payments or other damages are paid in full (whether directly or indirectly such as through set-off or netting). Following the occurrence of both events, Buyer shall promptly return to Seller the unused portion of the Seller Security. Within ten (10) Business Days following a draw by Buyer on the Seller Security for any reason other than a Termination Payment, Seller shall replenish the Seller Security to the applicable amount or replace the Seller Security with a new form of Seller Security meeting the requirements of this Agreement in the required amount. Seller shall have no obligation to replenish the Seller Security following a draw thereupon by Buyer to satisfy a Termination Payment. If and to the extent that any portion of the Seller Security is a Letter of Credit and the issuer of such Letter of Credit (i) fails to maintain a Credit Rating of at least “A-” by S&P or “A3” by Moody’s, (ii) fails to honor Buyer’s properly documented request to draw on such Letter of Credit, or (iii) becomes Bankrupt, Seller shall have ten (10) Business Days to post substitute collateral that meets the requirements set forth in the definition of Seller Security. If and to the extent that any portion of the Seller Security is a Guaranty, Seller shall (i) provide prompt Notice to Buyer if Guarantor becomes -28-
Bankrupt or otherwise fails to meet the criteria for an acceptable Guarantor as set forth in clauses (c) and (d) of the definition of Guarantor, but not later than ten (10) Business Days after Seller becomes aware of such development and (ii) post substitute collateral that meets the requirements set forth in the definition of Seller Security within ten (10) Business Days.
7.8 Financial Statements.
(a)
(b) Buyer shall provide to Seller, both upon request and as indicated below: (a) within ninety (90) days following the end of each fiscal quarter, an unaudited quarterly financial statement of Buyer (including a balance sheet and statements of income and cash flows) prepared in accordance with generally accepted accounting principles as promulgated by the Government Accounting Standards Board in the United States, consistently applied; (b) within one hundred and eighty (180) days following the end of each fiscal year, annual financial statements of Buyer (including a balance sheet and statements of income and cash flows) prepared in accordance with the requirements of California law applicable to Joint Powers Authorities; (c) as available, Buyer’s annual report; (d) reserve levels; (e) subscription and opt out rates; and (f) other financial and operational information as may be reasonably requested by the Seller’s financing parties from time to time; provided that nothing in this Section 7.8(b) shall require Buyer to provide information that is not generally available to Buyer as part of its normal accounting and financing reporting processes.
7.9 First Priority Security Interest in Cash or Cash Equivalent Collateral. To secure its obligations under this Agreement, and until released as provided herein, Seller hereby grants to Buyer a present and continuing first-priority security interest (“Security Interest”) in, and lien on (and right to net against), and assignment of the Seller Security, any other cash collateral and cash equivalent collateral posted by Seller and any and all interest thereon or proceeds resulting therefrom or from the liquidation thereof, whether now or hereafter held by, on behalf of, or for the benefit of Buyer, and Seller agrees to take all action as Buyer reasonably requires in order to perfect Buyer’s Security Interest in, and lien on (and right to net against), such collateral and any and all proceeds resulting therefrom or from the liquidation thereof.
Upon or any time after the occurrence of an Event of Default caused by Seller, an Early Termination Date resulting from an Event of Default caused by Seller, or an occasion provided for in this Agreement where Buyer is authorized to retain all or a portion of the Seller Security, Buyer may do any one or more of the following (in each case subject to the final sentence of this Section 7.9):
(a) Exercise any of its rights and remedies with respect to the Seller Security, as applicable, including any such rights and remedies under law then in effect; (b) Draw on any outstanding Letter of Credit issued for its benefit and retain -29-
any cash held by Buyer as Seller Security; and
(c) Liquidate all Seller Security, as applicable then held by or for the benefit of Buyer free from any claim or right of any nature whatsoever of Seller, including any equity or right of purchase or redemption by Seller.
(d) Buyer shall apply the proceeds of the collateral realized upon the exercise of any such rights or remedies to reduce Seller’s obligations under this Agreement (Seller remains liable for any amounts owing to Buyer after such application), subject to Buyer’s obligation to return any surplus proceeds remaining after these obligations are satisfied in full. -30-
ARTICLE 8
NOTICES
8.1 Addresses for the Delivery of Notices. Any Notice required, permitted, or contemplated hereunder shall be in writing, shall be addressed to the Party to be notified at the physical or electronic addresses set forth on Exhibit D or at such other address or addresses as a Party may designate for itself from time to time by Notice hereunder.
8.2 Acceptable Means of Delivering Notice. Each Notice required, permitted, or contemplated hereunder shall be deemed to have been validly served, given or delivered as follows: (a) if sent by United States mail with proper first class postage prepaid, three (3) Business Days following the date of the postmark on the envelope in which such Notice was deposited in the United States mail; (b) if sent by a regularly scheduled overnight delivery carrier with delivery fees either prepaid or an arrangement with such carrier made for the payment of such fees, the next Business Day after the same is delivered by the sending Party to such carrier; (c) if sent by electronic communication (including email or other electronic means), at the time indicated by the time stamp upon delivery; or (d) if delivered in person, upon receipt by the receiving Party.
Notwithstanding the foregoing, Notices of outages or other scheduling or dispatch information or requests may be sent by electronic communication and shall be considered delivered upon successful completion of such transmission. In addition, for any Notice sent pursuant to (a), (b) or (d) above, the Party sending such Notice shall send a courtesy copy by email to the email address provided in Exhibit D.
ARTICLE 9
FORCE MAJEURE
9.1 Definition.
(a) “Force Majeure Event” means any act or event that delays or prevents a Party from timely performing all or a portion of its obligations under this Agreement or from complying with all or a portion of the conditions under this Agreement if such act or event, which event or circumstance was not anticipated as of the Effective Date and despite the exercise of reasonable efforts, cannot be avoided by and is beyond the reasonable control (whether direct or indirect) of and without the fault or negligence of the Party relying thereon as justification for such delay, nonperformance, or noncompliance.
(b) Without limiting the generality of the foregoing, so long as the following events, despite the exercise of reasonable efforts, cannot be avoided by, and are beyond the -31-
reasonable control (whether direct or indirect) of and without the fault or negligence of the Party relying thereon as justification for such delay, nonperformance or noncompliance, a Force Majeure Event may include an act of God or the elements, such as flooding, lightning, hurricanes, tornadoes, or ice storms; explosion; fire; volcanic eruption; flood; epidemic, or pandemic, including COVID-19 (but only to the extent that new governmental rules or mandates related to COVID-19 are implemented that were not in place as of the Effective Date); landslide; mudslide; sabotage; terrorism; earthquake; or other cataclysmic events; an act of public enemy; acts or failure to act by a Governmental Authority; war; blockade; civil insurrection; riot; civil disturbance; serial defect; or strikes or other labor difficulties caused or suffered by a Party or any third party except as set forth below.
(c) Notwithstanding the foregoing, the term “Force Majeure Event” does not include (i) economic conditions that render a Party’s performance of this Agreement at the Contract Price unprofitable or otherwise uneconomic (including Buyer’s ability to buy Resource Adequacy Benefits at a lower price, or Seller’s ability to sell Product at a higher price, than the Contract Price); (ii) Seller’s inability to obtain permits or approvals of any type for the construction, operation, or maintenance of the Facility, except to the extent such inability is caused by a Force Majeure Event; (iii) the inability of a Party to make payments when due under this Agreement, unless the cause of such inability is a disruption of payment systems caused by a Force Majeure Event; (iv) a Curtailment Order, except to the extent that a Curtailment Order is caused by an event that otherwise qualifies as a Force Majeure Event; (v) Seller’s inability to obtain sufficient labor, equipment, materials, or other resources to build or operate the Facility except to the extent such inability is caused by a Force Majeure Event; (vi) a strike, work stoppage or labor dispute limited only to any one or more of Seller, Seller’s Affiliates, Seller’s contractors, their subcontractors thereof or any other third party employed by Seller to work on the Facility; or (vii) any equipment failure except if such equipment failure is caused by a Force Majeure Event.
9.2 No Liability If a Force Majeure Event Occurs. Neither Seller nor Buyer shall be liable to the other Party in the event it is prevented from performing its obligations hereunder in whole or in part due to a Force Majeure Event. The Party rendered unable to fulfill any obligation by reason of a Force Majeure Event shall take reasonable actions necessary to remove such inability with due speed and diligence. Nothing herein shall be construed as permitting that Party to continue to fail to perform after said cause has been removed. The obligation to use due speed and diligence shall not be interpreted to require resolution of labor disputes by acceding to demands of the opposition when such course is inadvisable in the discretion of the Party having such difficulty. Neither Party shall be considered in breach or default of this Agreement if and to the extent that any failure or delay in the Party’s performance of one or more of its obligations hereunder is caused by a Force Majeure Event. The occurrence and continuation of a Force Majeure Event shall not suspend or excuse the obligation of a Party to make any payments due hereunder, except as provided above. Any delays caused by a Force Majeure Event will not serve to increase the Contract Term of this Agreement.
9.3 Notice. In the event of any delay or nonperformance resulting from a Force Majeure Event, the Party suffering the Force Majeure Event shall (a) as soon as practicable notify the other Party in writing of the nature, cause, estimated date of commencement thereof, the anticipated extent of any delay or interruption in performance, and, to the extent reasonably practicable, a mitigation plan for limiting or overcoming the impacts of the Force Majeure Event, -32-
and (b) notify the other Party in writing of the cessation or termination of such Force Majeure Event, all as known or estimated in good faith by the affected Party; provided, however, that a Party’s failure to give timely Notice shall not affect such Party’s ability to assert that a Force Majeure Event has occurred unless the delay in giving Notice materially prejudices the other Party.
Upon written request from the non-claiming Party, the Party claiming that a Force Majeure Event has delayed or interrupted its performance shall provide documentation demonstrating that the claimed delay or interruption was the result of a Force Majeure Event and the delay or interruption did not result from the affected Party’s actions or failure to take reasonable actions to mitigate the impacts of the Force Majeure Event.
9.4 Termination Following Force Majeure Event. If a Force Majeure Event has occurred that has caused either Party to be unable to perform its material obligations hereunder, and has continued for a , then the non-claiming Party may terminate this Agreement upon Notice to the other Party experiencing the Force Majeure Event; provided that if Seller is the Party claiming such Force Majeure Event and such Force Majeure Event cannot reasonably be cured within such , then Seller may provide a plan to Buyer, which must be acceptable to Buyer in its reasonable discretion, to cure such Force Majeure Event within an additional and Buyer may not terminate this Agreement due to such Force Majeure Event unless Seller has not resumed performance of its material obligations hereunder upon the expiration of such additional . Upon any such termination, neither Party shall have any liability to the other Party, save and except for those obligations specified in Section 2.1(b).
ARTICLE 10
DEFAULTS; REMEDIES; TERMINATION
10.1 Events of Default. An “Event of Default” shall mean, (a) with respect to a Party (the “Defaulting Party”) that is subject to the Event of Default the occurrence of any of the following:
(i) the failure by such Party to make, when due, any payment required pursuant to this Agreement and such failure is not remedied within after Notice thereof;
(ii) any representation or warranty made by such Party herein is false or misleading in any material respect when made or when deemed made or repeated, and such representation or warranty is not corrected within after Notice thereof; provided, that this period shall be extended by up to an additional if (a) the breach cannot reasonably be cured within the period despite diligent efforts, (b) the default is capable of being cured within the additional period, and (c) the Defaulting Party commences the cure within the original period and is at all times thereafter diligently and continuously proceeding to cure the breach;
(iii) the failure by such Party to perform any material covenant or obligation set forth in this Agreement (except to the extent constituting a separate Event of Default) and such failure is not remedied within after Notice thereof; provided, that this -33-
period shall be extended by an additional if (a) the breach cannot reasonably be cured within the period despite diligent efforts, (b) the default is capable of being cured within the additional period, and (c) the Defaulting Party commences the cure within the original period and is at all times thereafter diligently and continuously proceeding to cure the breach; (iv) failure by such Party to satisfy the collateral requirements pursuant to Sections 7.7 or 7.10, as applicable;
(v) such Party becomes Bankrupt;
(vi) such Party assigns this Agreement or any of its rights hereunder other than in compliance with Sections 2.3(e), 13.1, 13.2 or 13.3, as appropriate; or (vii) such Party consolidates or amalgamates with, or merges with or into, or transfers all or substantially all of its assets to, another entity and, at the time of such consolidation, amalgamation, merger or transfer, the resulting, surviving or transferee entity fails to assume all the obligations of such Party under this Agreement by operation of Law or pursuant to an agreement reasonably satisfactory to the other Party. (b) with respect to Seller as the Defaulting Party, the occurrence of any of the following:
(i) with respect to any Guaranty provided for the benefit of Buyer, the failure by Seller to provide for the benefit of Buyer either (1) cash, (2) a replacement Guaranty from a different Guarantor meeting the criteria set forth in the definition of Guarantor, or (3) a replacement Letter of Credit from an issuer meeting the criteria set forth in the definition of Letter of Credit, in each case, in the amount required hereunder within after Seller receives Notice of the occurrence of any of the following events:
(A) any representation or warranty made by the Guarantor in connection with this Agreement is false or misleading in any material respect when made or when deemed made or repeated, and such representation or warranty is not remedied within after Notice thereof;
(B) the failure of the Guarantor to make any payment required or to perform any other material covenant or obligation in any Guaranty; (C) the Guarantor becomes Bankrupt;
(D) the Guarantor shall fail to meet the criteria for an acceptable Guarantor as set forth in the definition of Guarantor;
(E) the failure of the Guaranty to be in full force and effect (other than in accordance with its terms) prior to the indefeasible satisfaction of all obligations of Seller hereunder; or
(F) the Guarantor shall repudiate, disaffirm, disclaim, or reject, -34-
in whole or in part, or challenge the validity of any Guaranty; or (ii) with respect to any outstanding Letter of Credit provided for the benefit of Buyer that is not then required under this Agreement to be canceled or returned, the failure by Seller to provide for the benefit of Buyer either (1) cash, or (2) a replacement Guaranty from a Guarantor meeting the criteria set forth in the definition of Guarantor, or (3) a substitute Letter of Credit from a different issuer meeting the criteria set forth in the definition of Letter of Credit, in each case, in the amount required hereunder within after Seller receives Notice of the occurrence of any of the following events:
(A) the issuer of the outstanding Letter of Credit shall fail to maintain a Credit Rating of at least “A-” by S&P or “A3” by Moody’s; (B) the issuer of such Letter of Credit becomes Bankrupt; (C) the issuer of the outstanding Letter of Credit shall fail to comply with or perform its obligations under such Letter of Credit and such failure shall be continuing after the lapse of any applicable grace period permitted under such Letter of Credit; (D) the issuer of the outstanding Letter of Credit shall fail to honor a properly documented request to draw on such Letter of Credit; (E) the issuer of the outstanding Letter of Credit shall disaffirm, disclaim, repudiate or reject, in whole or in part, or challenge the validity of, such Letter of Credit; (F) such Letter of Credit fails or ceases to be in full force and effect at any time; or
(G) Seller shall fail to renew or cause the renewal of each outstanding Letter of Credit on a timely basis as provided in the relevant Letter of Credit and as provided in accordance with this Agreement, and in no event less than prior to the expiration of the outstanding Letter of Credit.
10.2 Remedies; Declaration of Early Termination Date. If an Event of Default with respect to a Defaulting Party shall have occurred and be continuing, the other Party (“Non-Defaulting Party”) shall have the following rights:
(a) to send Notice, designating a day, no earlier than the day such Notice is deemed to be received and no later than twenty (20) days after such Notice is deemed to be received, as an early termination date of this Agreement (“Early Termination Date”) that terminates this Agreement (the “Terminated Transaction”) and ends the Contract Term effective as of the Early Termination Date;
(b) to accelerate all amounts owing between the Parties, and to collect as liquidated damages the Termination Payment calculated in accordance with Section 10.3 below; -35-
(c) to withhold any payments due to the Defaulting Party under this Agreement; (d) to suspend performance; and
(e) to exercise any other right or remedy available at law or in equity, including specific performance or injunctive relief, except to the extent such remedies are expressly limited under this Agreement;
provided, that payment by the Defaulting Party of the Termination Payment, as applicable, shall constitute liquidated damages and the Non-Defaulting Party’s sole and exclusive remedy for the Terminated Transaction and the Event of Default related thereto.
10.3 Termination Payment. The Termination Payment (“Termination Payment”) for a Terminated Transaction shall be the aggregate of all Settlement Amounts plus any or all other amounts due to the Non-Defaulting Party netted into a single amount. The Non-Defaulting Party shall calculate, in a commercially reasonable manner, a Settlement Amount for the Terminated Transaction as of the Early Termination Date. Third parties (which shall not include Affiliates of the Non-Defaulting Party) supplying information for purposes of the calculation of Gains or Losses may include, without limitation, dealers in the relevant markets, end-users of the relevant product, information vendors and other sources of market information. The Settlement Amount shall not include consequential, incidental, punitive, exemplary, indirect or business interruption damages; provided, however, that any lost Resource Adequacy Benefits shall be deemed direct damages covered by this Agreement. Without prejudice to the Non-Defaulting Party’s duty to mitigate, the Non-Defaulting Party shall not have to enter into replacement transactions to establish a Settlement Amount. Each Party agrees and acknowledges that (a) the actual damages that the Non-Defaulting Party would incur in connection with a Terminated Transaction would be difficult or impossible to predict with certainty, (b) the Termination Payment described in this Section 10.3 is a reasonable and appropriate approximation of such damages, and (c) the Termination Payment described in this Section 10.3 is the exclusive remedy of the Non-Defaulting Party in connection with a Terminated Transaction but shall not otherwise act to limit any of the Non-Defaulting Party’s rights or remedies if the Non-Defaulting Party does not elect a Terminated Transaction as its remedy for an Event of Default by the Defaulting Party.
10.4 Notice of Payment of Termination Payment. As soon as practicable after a Terminated Transaction, Notice shall be given by the Non-Defaulting Party to the Defaulting Party of the amount of the Termination Payment and whether the Termination Payment is due to the Non-Defaulting Party. The Notice shall include a written statement explaining in reasonable detail the calculation of such amount and the sources for such calculation. The Termination Payment shall be made to the Non-Defaulting Party, as applicable, within ten (10) Business Days after such Notice is effective.
10.5 Disputes With Respect to Termination Payment. If the Defaulting Party disputes the Non-Defaulting Party’s calculation of the Termination Payment, in whole or in part, the Defaulting Party shall, within five (5) Business Days of receipt of the Non-Defaulting Party’s calculation of the Termination Payment, provide to the Non-Defaulting Party a detailed written explanation of the basis for such dispute. Disputes regarding the Termination Payment shall be determined in accordance with Article 14.
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10.6 Rights And Remedies Are Cumulative. Except where liquidated damages are provided as the exclusive remedy, the rights and remedies of a Party pursuant to this Article 10 shall be cumulative and in addition to the rights of the Parties otherwise provided in this Agreement.
10.7 Mitigation. Any Non-Defaulting Party shall use commercially reasonable efforts to mitigate its Costs, Losses and damages resulting from any Event of Default of the other Party under this Agreement.
ARTICLE 11
LIMITATION OF LIABILITY AND EXCLUSION OF WARRANTIES.
11.1 No Consequential Damages. EXCEPT TO THE EXTENT PART OF AN
EXPRESS REMEDY OR MEASURE OF DAMAGES HEREIN OR AN INDEMNITY CLAIM UNDER ARTICLE 16, NEITHER PARTY SHALL BE LIABLE TO THE OTHER OR ITS
INDEMNIFIED PERSONS FOR ANY SPECIAL, PUNITIVE, EXEMPLARY, INDIRECT, OR
CONSEQUENTIAL DAMAGES, OR LOSSES OR DAMAGES FOR LOST REVENUE OR
LOST PROFITS, WHETHER FORESEEABLE OR NOT, ARISING OUT OF, OR IN
CONNECTION WITH THIS AGREEMENT, BY STATUTE, IN TORT OR CONTRACT, OR OTHERWISE.
11.2 Waiver and Exclusion of Other Damages. THE PARTIES CONFIRM THAT
THE EXPRESS REMEDIES AND MEASURES OF DAMAGES PROVIDED IN THIS AGREEMENT SATISFY THE ESSENTIAL PURPOSES HEREOF. ALL LIMITATIONS OF
LIABILITY CONTAINED IN THIS AGREEMENT, INCLUDING, WITHOUT LIMITATION, THOSE PERTAINING TO THE PARTIES’ LIMITATION OF LIABILITY AND THE PARTIES’ WAIVER OF CONSEQUENTIAL DAMAGES, SHALL APPLY EVEN IF THE
REMEDIES FOR BREACH OF WARRANTY PROVIDED IN THIS AGREEMENT ARE DEEMED TO “FAIL OF THEIR ESSENTIAL PURPOSE” OR ARE OTHERWISE HELD TO BE INVALID OR UNENFORCEABLE.
FOR BREACH OF ANY PROVISION FOR WHICH AN EXPRESS AND EXCLUSIVE
REMEDY OR MEASURE OF DAMAGES IS 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.
IF NO REMEDY OR MEASURE OF DAMAGES IS EXPRESSLY PROVIDED HEREIN, THE OBLIGOR’S LIABILITY SHALL BE LIMITED TO DIRECT DAMAGES ONLY.
TO THE EXTENT ANY DAMAGES REQUIRED TO BE PAID HEREUNDER ARE LIQUIDATED, INCLUDING UNDER SECTIONS 3.4, 10.2 AND 10.3, THE PARTIES
ACKNOWLEDGE THAT THE DAMAGES ARE DIFFICULT OR IMPOSSIBLE TO
DETERMINE, THAT OTHERWISE OBTAINING AN ADEQUATE REMEDY IS
INCONVENIENT, AND THAT THE LIQUIDATED DAMAGES CONSTITUTE A REASONABLE APPROXIMATION OF THE ANTICIPATED HARM OR LOSS. IT IS THE
INTENT OF THE PARTIES THAT THE LIMITATIONS HEREIN IMPOSED ON REMEDIES -37-
AND THE MEASURE OF DAMAGES BE WITHOUT REGARD TO THE CAUSE OR
CAUSES RELATED THERETO, INCLUDING THE NEGLIGENCE OF ANY PARTY,
WHETHER SUCH NEGLIGENCE BE SOLE, JOINT OR CONCURRENT, OR ACTIVE OR PASSIVE. THE PARTIES HEREBY WAIVE ANY RIGHT TO CONTEST SUCH PAYMENTS AS AN UNREASONABLE PENALTY.
THE PARTIES ACKNOWLEDGE AND AGREE THAT MONEY DAMAGES AND THE
EXPRESS REMEDIES PROVIDED FOR HEREIN ARE AN ADEQUATE REMEDY FOR THE
BREACH BY THE OTHER OF THE TERMS OF THIS AGREEMENT, AND EACH PARTY
WAIVES ANY RIGHT IT MAY HAVE TO SPECIFIC PERFORMANCE WITH RESPECT TO ANY OBLIGATION OF THE OTHER PARTY UNDER THIS AGREEMENT.
ARTICLE 12
REPRESENTATIONS AND WARRANTIES; AUTHORITY
12.1 Seller’s Representations and Warranties. As of the Effective Date, Seller represents and warrants as follows:
(a) Seller is a limited liability company, duly organized, validly existing and in good standing under the Laws of the jurisdiction of its formation, and is qualified to conduct business in each jurisdiction where the failure to so qualify would have a material adverse effect on the business or financial condition of Seller.
(b) Seller has the power and authority to enter into and perform this Agreement and is not prohibited from entering into this Agreement or discharging and performing all covenants and obligations on its part to be performed under and pursuant to this Agreement, except where such failure does not have a material adverse effect on Seller’s performance under this Agreement. The execution, delivery and performance of this Agreement by Seller has been duly authorized by all necessary corporate action on the part of Seller and does not and will not require the consent of any trustee or holder of any indebtedness or other obligation of Seller or any other party to any other agreement with Seller.
(c) The execution and delivery of this Agreement, consummation of the transactions contemplated herein, and fulfillment of and compliance by Seller with the provisions of this Agreement will not conflict with or constitute a breach of or a default under any Law presently in effect having applicability to Seller, subject to any permits that have not yet been obtained by Seller, the documents of formation of Seller or any outstanding trust indenture, deed of trust, mortgage, loan agreement or other evidence of indebtedness or any other agreement or instrument to which Seller is a party or by which any of its property is bound. (d) This Agreement has been duly executed and delivered by Seller. This Agreement is a legal, valid and binding obligation of Seller enforceable in accordance with its terms, except as limited by Laws of general applicability limiting the enforcement of creditors’ rights or by the exercise of judicial discretion in accordance with general principles of equity. (e) Subject to Buyer obtaining adequate Import Capability with respect to such Product, the Product delivered hereunder complies with all eligibility and counting rules of the applicable CPUC decisions included in the definition of Resource Adequacy Benefits in place as -38-
of the Effective Date.
12.2 Buyer’s Representations and Warranties. As of the Effective Date, Buyer represents and warrants as follows:
(a) Buyer is a California Joint Powers Authority, duly organized, validly existing and in good standing under the Laws of the jurisdiction of its formation, and is qualified to conduct business in each jurisdiction where the failure to so qualify would have a material adverse effect on the business or financial condition of Buyer. (b) Buyer has the power and authority to enter into and perform this Agreement and is not prohibited from entering into this Agreement or discharging and performing all covenants and obligations on its part to be performed under and pursuant to this Agreement, except where such failure does not have a material adverse effect on Buyer’s performance under this Agreement. The execution, delivery and performance of this Agreement by Buyer has been duly authorized by all necessary action on the part of Buyer and does not and will not require the consent of any trustee or holder of any indebtedness or other obligation of Buyer or any other party to any other agreement with Buyer.
(c) The execution and delivery of this Agreement, consummation of the transactions contemplated herein, and fulfillment of and compliance by Buyer with the provisions of this Agreement will not conflict with or constitute a breach of or a default under any Law presently in effect having applicability to Buyer, including but not limited to community choice aggregation, competitive bidding, public notice, open meetings, election, referendum, or prior appropriation requirements, the documents of formation of Buyer or any outstanding trust indenture, deed of trust, mortgage, loan agreement or other evidence of indebtedness or any other agreement or instrument to which Buyer is a party or by which any of its property is bound. (d) This Agreement has been duly executed and delivered by Buyer. This Agreement is a legal, valid and binding obligation of Buyer enforceable in accordance with its terms, except as limited by Laws of general applicability limiting the enforcement of creditors’ rights or by the exercise of judicial discretion in accordance with general principles of equity. (e) Buyer warrants and covenants that with respect to its contractual obligations under this Agreement, it will not claim immunity on the grounds of sovereignty or similar grounds with respect to itself or its revenues or assets from (1) suit, (2) jurisdiction of court, (3) relief by way of injunction, order for specific performance or recovery of property, (4) attachment of assets, or (5) execution or enforcement of any judgment.
12.3 General Covenants. Each Party covenants that commencing on the Effective Date and continuing throughout the Contract Term:
(a) It shall continue to be duly organized, validly existing and in good standing under the Laws of the jurisdiction of its formation and to be qualified to conduct business in each jurisdiction where the failure to so qualify would have a material adverse effect on its business or financial condition;
(b) It shall maintain (or obtain from time to time as required) all regulatory -39-
authorizations necessary for it to legally perform its obligations under this Agreement; and (c) It shall perform its obligations under this Agreement in compliance with all terms and conditions in its governing documents and any contracts to which it is a party and in material compliance with any Law.
12.4 Additional Seller’s Representations and Warranties. As of each delivery of Product hereunder, Seller represents and warrants as follows with respect to such Product:
(a) Seller owns or has the exclusive right to sell such Product sold under this Agreement, and shall deliver such Product to Buyer free and clear of all liens or other encumbrances.
(b) No part of such Product has been committed by Seller to any third party in any CAISO or non-CAISO markets.
(c) For the Showing Month for which such Product is provided, the aggregation of all amounts of Resource Adequacy Benefits that Seller has sold, assigned, or transferred for such Showing Month from the Duran Mesa Wind Project, in respect of Showing Months prior to the SunZia Switch Date, or the SunZia Wind Project, in respect of Showing Months from and after the SunZia Switch Date, does not exceed the respective aggregate Resource Adequacy Benefits for the applicable Facility for such Showing Month.
ARTICLE 13
ASSIGNMENT
13.1 General Prohibition on Assignments. Except as provided below, neither Party may voluntarily assign this Agreement or its rights or obligations under this Agreement, without the written consent of the other Party, which consent shall not be unreasonably withheld. Any direct or indirect Change of Control of a Party (whether voluntary or by operation of Law) will be deemed an assignment and will require the prior written consent of the other Party, except as provided in Section 2.3(e) and/or Section 13.3. Any assignment made without required written consent, or in violation of the conditions to assignment set out below, shall be null and void. The assigning Party shall be responsible for the other Party’s costs associated with the preparation, review, execution and delivery of documents in connection with any assignment of this Agreement, including without limitation reasonable attorneys’ fees.
13.2 Collateral Assignment. Subject to the provisions of this Section 13.2, Seller has the right to assign this Agreement as collateral for any financing or refinancing of the Duran Mesa Wind Project and/or the SunZia Wind Project without the consent of Buyer. In connection with any financing or refinancing of the Duran Mesa Wind Project and/or the SunZia Wind Project, Buyer shall work in good faith with Seller (and its Affiliate(s)) and Lender to agree upon a consent to collateral assignment of this Agreement (“Collateral Assignment Agreement”) in a form mutually agreeable to Buyer, Seller and Lender; provided, however, that Buyer shall be under no obligation to ultimately enter into a Collateral Assignment Agreement to the extent the form thereof cannot be agreed.
13.3 Permitted Assignment; Change of Control.. Notwithstanding Section 13.1, and -40-
in addition to its rights set forth in Section 13.2, Seller may at any time, without the prior written consent of Buyer, transfer or assign this Agreement (including by a Change of Control) (i) to an Affiliate of Seller, or (ii) in connection with a tax equity financing (regardless of whether a Change of Control results from such tax equity financing). Seller may also, without the prior written consent of Buyer, transfer or assign this Agreement (including by a Change of Control) to a Person that is, individually, or to Persons that collectively qualify as, a Permitted Transferee.
ARTICLE 14
DISPUTE RESOLUTION
14.1 Venue. The Parties agree that any suit, action or other legal proceeding by or against any party (or its affiliates or designees) with respect to or arising out of this Agreement shall be brought in the federal courts of the United States or, if such federal courts refuse jurisdiction notwithstanding the Parties’ agreement, then in the courts of the State of California, in either case sitting in County of Los Angeles, California.
14.2 Dispute Resolution. In the event of any dispute arising under this Agreement, within ten (10) days following the receipt of a Notice from either Party identifying such dispute, the Parties shall meet, negotiate and attempt, in good faith, to resolve the dispute quickly, informally and inexpensively. If the Parties are unable to resolve a dispute arising hereunder within the earlier of either thirty (30) days of initiating such discussions, or within forty (40) days after Notice of the dispute, either Party may seek any and all remedies available to it at Law or in equity, subject to the limitations set forth in this Agreement.
ARTICLE 15
INDEMNIFICATION
15.1 Indemnification.
(a) Each Party (the “Indemnifying Party”) agrees to indemnify, defend and hold harmless the other Party and its Affiliates, directors, officers, employees, attorneys, representatives and agents (collectively, the “Indemnified Party”) from and against all third-party claims, demands, losses, liabilities, penalties, and expenses (and expert witness fees) (collectively “Indemnifiable Event”), to the extent such Indemnifiable Event arises out of, results from, or is caused by any of the following: (a) the negligent act or omission, recklessness, or willful misconduct of the Indemnifying Party, its Affiliates, its or their directors, officers, employees, agents, subcontractors, and anyone directly or indirectly employed by the Indemnifying Party or any of its subcontractors or anyone that they control; (b) any violation of applicable Law by the Indemnifying Party; or (c) third-party claims resulting from the Indemnifying Party’s material breach (including inaccuracy of any representation or warranty made hereunder) or non-performance of its material obligations under this Agreement. Upon the Indemnified Party’s written request, the Indemnifying Party, at its own expense, must defend any suit or action that is subject to the Indemnifying Party’s indemnity obligations. The Parties’ indemnification obligations survive the expiration or termination of this Agreement until the relevant statute of limitations.
(b) Nothing in this Section 15.1 shall enlarge or relieve Seller or Buyer of any -41-
liability to the other for any breach of this Agreement. Neither Party shall be indemnified for its damages resulting to the extent of its own negligence, intentional acts or willful misconduct. These indemnity provisions shall not be construed to relieve any insurer of its obligation to pay claims consistent with the provisions of a valid insurance policy.
15.2 Claims. Promptly after receipt by a Party of any claim or Notice of the commencement of any action, administrative, or legal proceeding, or investigation as to which the indemnity provided for in this Article 15 may apply, the Indemnified Party shall notify the Indemnifying Party in writing of such fact. The Indemnifying Party shall assume the defense thereof with counsel designated by such Party and reasonably satisfactory to the Indemnified Party, provided, however, that if the defendants in any such action include both the Indemnified Party and the Indemnifying Party and the Indemnified Party shall have reasonably concluded that there may be legal defenses available to it which are different from or additional to, or inconsistent with, those available to the Indemnifying Party, the Indemnified Party shall have the right to select and be represented by separate counsel, at the Indemnifying Party’s expense, unless a liability insurer is willing to pay such costs. If the Indemnifying Party fails to assume the defense of a claim meriting indemnification, the Indemnified Party may at the expense of the Indemnifying Party contest, settle, or pay such claim, provided that settlement or full payment of any such claim may be made only following consent of the Indemnifying Party or, absent such consent, written opinion of the Indemnified Party’s counsel that such claim is meritorious or warrants settlement.
Notwithstanding the preceding sentence, if the settlement consists solely of a monetary payment by the Indemnifying Party, such settlement shall not require the consent of the Indemnifying Party.
Except as otherwise provided in this Article 15, in the event that a Party is obligated to indemnify and hold the other Party and its successors and assigns harmless under this Article 15, the amount owing to the Indemnified Party will be the amount of the Indemnified Party’s damages net of any insurance proceeds received by the Indemnified Party following a reasonable effort by the Indemnified Party to obtain such insurance proceeds.
ARTICLE 16
INSURANCE
16.1 Insurance.
(a) General Liability. Seller shall maintain, or cause to be maintained at its sole expense, (i) commercial general liability insurance against claims for personal injury (including bodily injury and death) and property damage with a limit of liability of per occurrence, and a general aggregate of not less than for combined bodily injury and property damage; and (ii) an umbrella insurance policy in a minimum limit of liability of . The amounts of liability insurance described in this Article 16 may be satisfied by primary insurance or by any combination of primary and excess/umbrella insurance. Such insurance shall contain standard cross-liability and severability of interest provisions such that each person is protected in the same manner as though a separate policy has been issued to each but nothing therein shall operate to increase the insurance company’s liability beyond the amount the insurance company would have been liable if only one Person or interest had been named as insured. The liability insurance policies referenced in this Article 16 shall (x) provide an endorsement waiving rights of subrogation against Buyer, (y) name Buyer as additional insured on all required liability insurance -42-
(except workers compensation), and (z) be primary to any insurance of Buyer that may apply to such occurrence, accident or claim and no “other insurance” provision shall be applicable to Buyer or any additional insureds, by virtue of having been named an additional insured under any policy of insurance.
(b) Workers Compensation and Employer’s Liability Insurance. Employers’ Liability insurance shall not be less than providing statutory benefits as required by Law (if any exposure exists) for injury, sickness, disability or death of the employees.
(c) Business Auto Liability Insurance. Seller shall maintain at all times during the Contract Term business auto insurance for bodily injury and property damage with limits of combined single limit. Such insurance shall cover liability arising out of Seller’s use of all owned (if any), non-owned and hired motor vehicles in the performance of the Agreement.
(d) Property Insurance. Seller shall maintain or cause to be maintained property insurance covering the Facility against physical loss or damage, including coverage for natural perils including but not limited to flood, earthquake, windstorm, severe convective storm and wildfire, all with limits in accordance with industry standard recognizing that natural perils may be subject to a lower sublimit. Coverage will be on an “all-risk” basis including mechanical and electrical breakdown.
CONFIDENTIAL INFORMATION
17.1 Definition of Confidential Information. The following constitutes “Confidential Information,” whether oral or written which is delivered by Seller to Buyer or by Buyer to Seller:
(a) pricing and other commercially-sensitive or proprietary information provided to or from Buyer in connection with the terms and conditions of, and proposals and negotiations related to, this Agreement, and (b) information that either Seller or Buyer stamps or otherwise identifies as “confidential” or “proprietary” before disclosing it to the other. Confidential Information does not include (i) information that was publicly available at the time of the disclosure, other than as a result of a disclosure in breach of this Agreement; (ii) information that becomes publicly available through no fault of the recipient after the time of the delivery; (iii) information that was rightfully in the possession of the recipient (without confidential or proprietary restriction) at the time of delivery or that becomes available to the recipient from a source not subject to any restriction against disclosing such information to the recipient; and (iv) information that the recipient independently developed without a violation of this Agreement.
17.2 Duty to Maintain Confidentiality. Except as permitted in this Article 17, neither Party shall disclose Confidential Information to a third party, except upon the written consent of the Disclosing Party. Confidential Information will retain its character as Confidential Information but may be disclosed by the recipient (the “Receiving Party”) if and to the extent such disclosure is required (a) to be made by any requirements of Law, including the California Public Records Act, (b) pursuant to an order of a court or (c) in order to enforce or implement this Agreement. If the Receiving Party becomes legally compelled (by interrogatories, requests for information or documents, subpoenas, summons, civil investigative demands, or similar processes or otherwise in connection with any litigation or to comply with any applicable Law, order, regulation, ruling, -43-
regulatory request, accounting disclosure rule or standard or any exchange, control area or independent system operator rule) to disclose any Confidential Information of the disclosing Party (the “Disclosing Party”), Receiving Party shall provide Disclosing Party with prompt Notice so that Disclosing Party, at its sole expense, may seek an appropriate protective order or other appropriate remedy. If the Disclosing Party takes no such action within five (5) Business Days after receiving the foregoing Notice from the Receiving Party, the Receiving Party is not required to defend against such request and shall be permitted to disclose such Confidential Information of the Disclosing Party to the extent required under applicable Law, with no liability for any damages that arise from such disclosure. Each Party acknowledges and agrees that information and documentation provided in connection with this Agreement may be subject to the California Public Records Act (Government Code Section 6250 et seq.).
17.3 Irreparable Injury; Remedies. Receiving Party acknowledges that its obligations hereunder are necessary and reasonable in order to protect Disclosing Party and the business of Disclosing Party, and expressly acknowledges that monetary damages may be inadequate to compensate Disclosing Party for any breach or threatened breach by Receiving Party of any covenants and agreements set forth herein. Accordingly, Receiving Party acknowledges that any such breach or threatened breach may cause irreparable injury to Disclosing Party and that, in addition to any other remedies that may be available, in Law, in equity or otherwise, Disclosing Party will be entitled to seek injunctive relief against the threatened breach of this Agreement or the continuation of any such breach, without the necessity of proving actual damages.
17.4 Permitted Disclosures. Notwithstanding anything to the contrary in this Article 17, Confidential Information may be disclosed by either Party to such Party’s counsel, accountants, auditors, advisors, other professional consultants, credit rating agencies, Affiliates or actual or prospective owners, investors, lenders, directors, underwriters, contractors, suppliers or others involved in the construction, operation and financing transactions and arrangements for a Party or its Affiliates, or any of its or their agents, consultants or trustees, so long as the Person to whom Confidential Information is disclosed agrees in writing to be bound by the confidentiality provisions of this Article 17 to the same extent as if it were a Party, or is bound by substantially similar confidentiality requirements.
17.5 Press Releases. Neither Party shall issue (or cause its Affiliates to issue) a press release regarding the transactions contemplated by this Agreement unless both Parties have agreed upon the contents of any such public statement.
ARTICLE 18
MISCELLANEOUS
18.1 Entire Agreement; Integration; Exhibits. This Agreement, together with the Cover Sheet and Exhibits attached hereto, constitutes the entire agreement and understanding between Seller and Buyer with respect to the subject matter hereof and supersedes all prior agreements relating to the subject matter hereof, which are of no further force or effect. The Exhibits attached hereto are integral parts hereof and are made a part of this Agreement by reference. The headings used herein are for convenience and reference purposes only. In the event of a conflict between the provisions of this Agreement and those of the Cover Sheet or any Exhibit, the provisions of first the Cover Sheet, and then this Agreement shall prevail, and such Exhibit -44-
shall be corrected accordingly. This Agreement shall be considered for all purposes as prepared through the joint efforts of the Parties and shall not be construed against one Party or the other as a result of the preparation, substitution, submission or other event of negotiation, drafting or execution hereof.
18.2 Amendments. This Agreement may only be amended, modified or supplemented by an instrument in writing executed by duly authorized representatives of Seller and Buyer; provided, that, for the avoidance of doubt, this Agreement may not be amended by electronic mail communications.
18.3 No Waiver. Waiver by a Party of any default by the other Party shall not be construed as a waiver of any other default.
18.4 No Agency, Partnership, Joint Venture or Lease. Seller and the agents and employees of Seller shall, in the performance of this Agreement, act in an independent capacity and not as officers or employees or agents of Buyer. Under this Agreement, Seller and Buyer intend to act as seller and purchaser, respectively, of Resource Adequacy Benefits, and do not intend to be treated as, and shall not act as, partners in, co-venturers in or lessor/lessee with respect to the Facility or any business related to the Facility. This Agreement shall not impart any rights enforceable by any third party (other than a permitted successor or assignee bound to this Agreement).
18.5 Severability. In the event that any provision of this Agreement is unenforceable or held to be unenforceable, the Parties agree that all other provisions of this Agreement have force and effect and shall not be affected thereby. The Parties shall, however, use their best endeavors to agree on the replacement of the void, illegal or unenforceable provision(s) with legally acceptable clauses which correspond as closely as possible to the sense and purpose of the affected provision and this Agreement as a whole.
18.6 Mobile-Sierra. Notwithstanding any other provision of this Agreement, neither Party shall seek, nor shall they support, any third party seeking to prospectively or retroactively revise the rates, terms or conditions of service of this Agreement through application or complaint to FERC pursuant to the provisions of Section 205, 206 or 306 of the Federal Power Act, or any other provisions of the Federal Power Act, absent prior written agreement of the Parties. Further, absent the prior written agreement in writing by both Parties, the standard of review for changes to the rates, terms or conditions of service of this Agreement proposed by a Party shall be the “public interest” 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). Changes proposed by a non-Party or FERC acting sua sponte shall be subject to the most stringent standard permissible under applicable law.
18.7 Counterparts. This Agreement may be executed in one or more counterparts, including electronic signatures, all of which taken together shall constitute one and the same instrument and each of which shall be deemed an original.
18.8 Electronic Delivery. This Agreement may be duly executed and delivered by a Party by execution and electronic format (including portable document format (.pdf)) delivery of -45-
the signature page of a counterpart to the other Party.
18.9 Binding Effect. This Agreement shall inure to the benefit of and be binding upon the Parties and their respective successors and permitted assigns.
18.10 Change in Electric Market Design.
(a) If a change in the CPUC Decisions or resource adequacy rules or the CAISO Tariff renders this Agreement or any provisions hereof incapable of being performed or administered, then any Party may request that Buyer and Seller enter into negotiations to make the minimum changes to this Agreement necessary to make this Agreement capable of being performed and administered, while attempting to preserve to the maximum extent possible the benefits, burdens, and obligations set forth in this Agreement as of the Effective Date. Upon delivery of such a request, Buyer and Seller shall engage in such negotiations in good faith. If Buyer and Seller are unable, within sixty (60) days after delivery of such request, to agree upon changes to this Agreement or to resolve issues relating to changes to this Agreement, then any Party may submit issues pertaining to changes to this Agreement to the dispute resolution process set forth in Article 14. Notwithstanding the foregoing, (i) a change in cost shall not in and of itself be deemed to render this Agreement or any of the provisions hereof incapable of being performed or administered, or constitute, or form the basis of, a Force Majeure Event, and (ii) all of unaffected provisions of this Agreement shall remain in full force and effect during any period of such negotiation or dispute resolution.
(b) If any of the Transmission Systems utilized to deliver Product to the Delivery Point under this Agreement are integrated into a new or existing regional transmission organization or independent system operator and such integration has a material and adverse impact on either Party’s performance under this Agreement, including the costs of either Party to perform, then the affected Party may request that Buyer and Seller enter into negotiations to make the minimum changes to this Agreement necessary to restore the balance of benefits, burdens, and obligations set forth in this Agreement as of the Effective Date. Upon delivery of such a request, Buyer and Seller shall engage in such negotiations in good faith; provided, that neither Party shall be obligated to amend this Agreement if such amendment(s) would materially adversely affect, or could reasonably be expected to have or result in a material adverse effect on, any of such Party’s rights, benefits, risks and/or obligations under this Agreement.
18.11 No Recourse to Members of Buyer. Buyer 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. Buyer shall solely be responsible for all debts, obligations and liabilities accruing and arising out of this Agreement. Seller shall have no rights and shall not make any claims, take any actions or assert any remedies against any of Buyer’s constituent members or the employees, directors, officers, consultants or advisors of Buyer or its constituent members, in connection with the PPA.
18.12 Forward Contract. The Parties acknowledge and agree that this Agreement constitutes a “forward contract” within the meaning of the U.S. Bankruptcy Code, and Buyer and Seller are “forward contract merchants” within the meaning of the U.S. Bankruptcy Code. Each -46-
Party further agrees that, for all purposes of this Agreement, each Party waives and agrees not to assert the applicability of the provisions of 11 U.S.C. § 366 in any bankruptcy proceeding wherein such Party is a debtor. In any such proceeding, each Party further waives the right to assert that the other Party is a provider of last resort to the extent such term relates to 11 U.S.C. §366 or another provision of 11 U.S.C. § 101-1532.
18.13 Further Assurances. Each of the Parties hereto agree to use commercially reasonable efforts to provide such information, execute and deliver any instruments and documents and to take such other actions as may be necessary or reasonably requested by the other Party which are not inconsistent with the provisions of this Agreement and which do not involve the assumptions of obligations other than those provided for in this Agreement, to give full effect to this Agreement and to carry out the intent of this Agreement. [Signatures on following page]
IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed as of the Effective Date.
DURAN MESA LLC, a Delaware limited
liability company
By:
Name:
Title:
SAN DIEGO COMMUNITY POWER, a
California joint powers authority
By:
Name:
Title:
Exhibit A - 1
EXHIBIT A
FACILITY DESCRIPTIONS
Unit Specific Information
Resource Name Duran Mesa Wind Project
Physical Location Torrance County, New Mexico
CAISO Resource ID DURNMESA_3_WBDYN
SCID of Resource
Resource Type (e.g., gas, hydro, solar, etc.) Wind
Capacity Area Import
Resource Category as defined by the CPUC
(DR, 1, 2, 3, 4)
Participating Transmission Owner Public Service Company of New Mexico Unit Specific Information
Resource Name SunZia Wind Project
Physical Location Lincoln, Torrance and San Miguel Counties, New Mexico
CAISO Resource ID [TBD]
SCID of Resource
Resource Type (e.g., gas, hydro, solar, etc.) Wind
Capacity Area Import
Resource Category as defined by the CPUC
(DR, 1, 2, 3, 4)
Participating Transmission Owner SunZia Transmission, LLC Exhibit A - 2
Exhibit B - 1
EXHIBIT B
FORM OF LETTER OF CREDIT
(follows on next page)
Exhibit B - 2
IRREVOCABLE STANDBY LETTER OF CREDIT NO. [●]
DATE: [●]
BENEFICIARY: SAN DIEGO COMMUNITY POWER
[BENEFICIARY ADDRESS]
APPLICANT: [SUNZIA WIND POWERCO LLC]
1088 SANSOME STREET, SAN FRANCISCO, CA 94111
EXPIRATION DATE: [●]
AMOUNT/CURRENCY: [●]
AT THE REQUEST OF AND FOR THE ACCOUNT OF APPLICANT, WE, [INSERT BANK NAME AND ADDRESS] (“ISSUER”), HEREBY ESTABLISH IN YOUR FAVOR IN
RESPECT OF OBLIGATIONS OF APPLICANT OUR IRREVOCABLE STANDBY LETTER OF CREDIT NUMBER [●] (“LETTER OF CREDIT”) IN FAVOR OF SAN DIEGO COMMUNITY POWER (“BENEFICIARY”), [BENEFICIARY ADDRESS], WHEREBY,
SUBJECT TO THE TERMS AND CONDITIONS CONTAINED HEREIN, BENEFICIARY IS
HEREBY AUTHORIZED TO DRAW ON US, BY SIGHT, BY ITS DRAWING STATEMENT
AS PROVIDED HEREIN, FOR AN AGGREGATE AMOUNT UP TO BUT NOT EXCEEDING [●] (THE “FACE AMOUNT”).
WE ARE ADVISED THIS LETTER OF CREDIT IS IRREVOCABLE AND IS ESTABLISHED AS [DEVELOPMENT][PERFORMANCE] SECURITY PURSUANT TO THAT CERTAIN
RENEWABLE POWER PURCHASE AND SALE AGREEMENT DATED AS OF ___________, 2023 BETWEEN APPLICANT AND BENEFICIARY (THE “AGREEMENT”).
THIS LETTER OF CREDIT SHALL BE EFFECTIVE IMMEDIATELY AND SHALL EXPIRE ON [●], WHICH IS ONE YEAR AFTER THE ISSUE DATE OF THIS LETTER OF CREDIT,
OR ANY EXPIRATION DATE EXTENDED IN ACCORDANCE WITH THE TERMS HEREOF (THE “EXPIRATION DATE”).
IT IS A CONDITION OF THIS LETTER OF CREDIT THAT IT SHALL BE
AUTOMATICALLY EXTENDED WITHOUT AMENDMENT FOR ADDITIONAL TWELVE (12) MONTH PERIODS FROM THE PRESENT OR EACH FUTURE EXPIRATION DATE, BUT IN NO EVENT TO AN EXPIRATION DATE LATER THAN [●] (THE “FINAL EXPIRATION DATE”), UNLESS AT LEAST NINETY (90) DAYS PRIOR TO THE
EXPIRATION DATE WE SEND NOTICE IN WRITING TO YOU VIA HAND DELIVERY OR
OVERNIGHT COURIER AT THE ABOVE ADDRESS, THAT WE ELECT NOT TO
AUTOMATICALLY EXTEND THIS LETTER OF CREDIT FOR ANY ADDITIONAL PERIOD.
ON OR BEFORE THE EXPIRATION DATE OF THIS LETTER OF CREDIT YOU MAY
DRAW ON US HEREUNDER FOR UP TO THE FULL UNUTILIZED AMOUNT AVAILABLE AS OF THE DATE OF DRAWING ON THIS LETTER OF CREDIT.
Exhibit B - 3
PARTIAL AND MULTIPLE DRAWINGS ARE PERMITTED UNDER THIS LETTER OF
CREDIT (PROVIDED THAT THE CUMULATIVE AGGREGATE AMOUNT THAT MAY BE
DEMANDED UNDER THIS LETTER OF CREDIT SHALL NOT EXCEED THE FACE
AMOUNT), AND THIS LETTER OF CREDIT SHALL REMAIN IN FULL FORCE AND EFFECT WITH RESPECT TO ANY CONTINUING BALANCE.
FUNDS UNDER THIS LETTER OF CREDIT SHALL BE AVAILABLE TO THE
BENEFICIARY UPON PRESENTATION TO US OF A DATED DRAWING CERTIFICATE
IN THE FORM OF EXHIBIT A HERETO (WHICH IS AN INTEGRAL PART OF THIS
LETTER OF CREDIT) PURPORTEDLY SIGNED BY THE BENEFICIARY'S DULY AUTHORIZED REPRESENTATIVE.
THE DRAWING CERTIFICATE MAY BE PRESENTED BY (A) PHYSICAL DELIVERY TO [ADDRESS] OR (B) BY FACSIMILE TO FACSIMILE NUMBER [FAX NUMBER] (EACH SUCH DRAWING, A “FAX DRAWING”); PROVIDED, HOWEVER, THAT A FAX
DRAWING WILL NOT BE EFFECTIVELY PRESENTED UNTIL YOU CONFIRM BY
TELEPHONE OUR RECEIPT OF SUCH FAX DRAWING BY CALLING US AT TELEPHONE NUMBER [TELEPHONE NUMBER] . IF YOU PRESENT A FAX DRAWING UNDER THIS
LETTER OF CREDIT YOU DO NOT NEED TO PRESENT THE ORIGINAL OF ANY
DRAWING DOCUMENTS, AND IF WE RECEIVE ANY SUCH ORIGINAL DRAWING DOCUMENTS THEY WILL NOT BE EXAMINED BY US. IN THE EVENT OF A FULL AND
FINAL DRAWING THE ORIGINAL STANDBY LETTER OF CREDIT MUST BE RETURNED TO US BY OVERNIGHT COURIER.
ALL PAYMENTS MADE UNDER THIS LETTER OF CREDIT SHALL BE MADE WITH ISSUER’S OWN IMMEDIATELY AVAILABLE FUNDS BY MEANS OF WIRE TRANSFER IN IMMEDIATELY AVAILABLE UNITED STATES DOLLARS TO BENEFICIARY’S
ACCOUNT AS INDICATED BY BENEFICIARY IN ITS DRAWING CERTIFICATE OR IN A COMMUNICATION ACCOMPANYING ITS DRAWING CERTIFICATE.
WE HEREBY AGREE THAT THE DRAWING DOCUMENTS DRAWN UNDER AND IN
COMPLIANCE WITH THE TERMS OF THIS LETTER OF CREDIT WILL BE DULY
HONORED BY US UPON DELIVERY OF THE ABOVE SPECIFIED DRAWING
CERTIFICATE, IF PRESENTED ON OR BEFORE THE EXPIRATION DATE AS SPECIFIED HEREIN.
AS STIPULATED HEREIN, “BUSINESS DAY” SHALL MEAN ANY DAY OTHER THAN A
SATURDAY, SUNDAY OR A DAY ON WHICH BANKING INSTITUTIONS IN THE STATE OF NEW YORK ARE AUTHORIZED OR REQUIRED BY LAW TO CLOSE. IF ANY
DRAWING OR THE DOCUMENTATION PRESENTED IN CONNECTION THEREWITH,
DOES NOT CONFORM TO THE TERMS AND CONDITIONS HEREOF, WE WILL ADVISE
YOU OF THE SAME BY TELEPHONE OR FACSIMILE AND GIVE THE REASONS FOR SUCH NON-CONFORMANCE.
Exhibit B - 4
THIS LETTER OF CREDIT IS ISSUED SUBJECT TO THE RULES OF THE ‘INTERNATIONAL STANDBY PRACTICES 1998’, INTERNATIONAL CHAMBER OF COMMERCE PUBLICATION NO. 590 (‘ISP98’) AND AS TO MATTERS NOT ADDRESSED BY ISP98 SHALL BE GOVERNED AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF STATE OF NEW YORK.
NOTWITHSTANDING ANY REFERENCE IN THIS LETTER OF CREDIT TO ANY OTHER
DOCUMENTS, INSTRUMENTS OR AGREEMENTS (OTHER THAN AS SET FORTH IN
THE IMMEDIATELY PRIOR PARAGRAPH), THIS LETTER OF CREDIT CONTAINS THE
ENTIRE AGREEMENT BETWEEN BENEFICIARY AND ISSUER RELATING TO THE OBLIGATIONS OF ISSUER HEREUNDER.
OTHER THAN AS PROVIDED HEREIN, COMMUNICATIONS WITH RESPECT TO THIS
LETTER OF CREDIT SHALL BE IN WRITING, SHALL SPECIFICALLY REFER TO BENEFICIARY AND TO OUR LETTER OF CREDIT NO. [●], AND SHALL BE ADDRESSED TO: [___].
ALL NOTICES TO BENEFICIARY SHALL BE IN WRITING AND ARE REQUIRED TO BE SENT BY CERTIFIED LETTER, OVERNIGHT COURIER OR DELIVERED IN PERSON TO:
SAN DIEGO COMMUNITY POWER, ATTN: [BENEFICIARY ADDRESS]. ONLY NOTICES
TO BENEFICIARY MEETING THE REQUIREMENTS OF THIS PARAGRAPH SHALL BE CONSIDERED VALID. ANY NOTICE TO BENEFICIARY WHICH IS NOT IN
ACCORDANCE WITH THIS PARAGRAPH SHALL BE VOID AND OF NO FORCE OR EFFECT.
ALL COSTS RELATED TO THIS LETTER OF CREDIT SHALL BE PAID BY THE APPLICANT.
ALL PARTIES TO THIS LETTER OF CREDIT ARE ADVISED THAT THE U.S. AND
CANADIAN GOVERNMENT HAS IN PLACE CERTAIN SANCTIONS AGAINST CERTAIN COUNTRIES, TERRITORIES, INDIVIDUALS, ENTITIES, AND VESSELS. ISSUER
ENTITIES, INCLUDING BRANCHES AND, IN CERTAIN CIRCUMSTANCES,
SUBSIDIARIES, ARE/WILL BE PROHIBITED FROM ENGAGING IN TRANSACTIONS OR OTHER ACTIVITIES WITHIN THE SCOPE OF APPLICABLE SANCTIONS. [___]
_________________________________
AUTHORIZED SIGNATURE
Exhibit B - 5
EXHIBIT “A”
DRAWING CERTIFICATE
TO:
[__]
RE: IRREVOCABLE STANDBY LETTER OF CREDIT NUMBER [●] ISSUED BY [ISSUING BANK] TO SAN DIEGO COMMUNITY POWER (“LETTER OF CREDIT”); CAPITALIZED
TERMS USED BUT NOT DEFINED IN THIS DRAWING CERTIFICATE HAVE THE
MEANINGS ASCRIBED TO THEM IN THE LETTER OF CREDIT)
THIS IS A DRAWING CERTIFICATE UNDER THE ABOVE-MENTIONED LETTER OF CREDIT.
I, , AN AUTHORIZED REPRESENTATIVE OF SAN DIEGO COMMUNITY POWER (“BENEFICIARY”), DO HEREBY CERTIFY THAT:
APPLICANT AND BENEFICIARY ARE PARTY TO THAT CERTAIN RENEWABLE POWER PURCHASE AND SALE AGREEMENT DATED AS OF ___________, 2023 (THE “AGREEMENT”).
[CHOOSE ONLY ONE OF THE FOLLOWING]
(1) BENEFICIARY IS MAKING A DRAWING UNDER THIS LETTER OF CREDIT IN THE AMOUNT OF U.S. $___________ BECAUSE A SELLER
EVENT OF DEFAULT (AS SUCH TERM IS DEFINED IN THE AGREEMENT)
HAS OCCURRED OR OTHER OCCASION PROVIDED FOR IN THE
AGREEMENT WHERE BENEFICIARY IS AUTHORIZED TO DRAW ON THE LETTER OF CREDIT HAS OCCURRED.
(2) BENEFICIARY IS MAKING A DRAWING UNDER THIS LETTER OF CREDIT IN THE AMOUNT OF U.S. $___________, WHICH EQUALS THE
FULL AVAILABLE AMOUNT UNDER THE LETTER OF CREDIT, BECAUSE
APPLICANT IS REQUIRED TO MAINTAIN THE LETTER OF CREDIT IN
FORCE AND EFFECT BEYOND THE EXPIRATION DATE OF THE LETTER
OF CREDIT BUT HAS FAILED TO PROVIDE BENEFICIARY WITH A
REPLACEMENT LETTER OF CREDIT OR OTHER ACCEPTABLE
INSTRUMENT WITHIN SIXTY (60) DAYS PRIOR TO SUCH EXPIRATION DATE.
IN ACCORDANCE WITH THE TERMS OF THE AGREEMENT, BENEFICIARY IS ENTITLED TO AND HEREBY DEMANDS PAYMENT OF USD _________, SUCH
AMOUNT TO BE PAID TO BENEFICIARY BY WIRE TRANSFER IN IMMEDIATELY AVAILABLE FUNDS TO: (INSERT WIRE INSTRUCTIONS),WHICH BENEFICIARY CERTIFIES IT IS ENTITLED TO UNDER THE AGREEMENT.
Exhibit B - 6
COMMUNICATIONS TO ME CONCERNING THIS DRAWING CERTIFICATE MAY BE MADE AT FOLLOWING TELEPHONE AND FACSIMILE NUMBERS: ____________; _________________.
IN WITNESS WHEREOF, BENEFICIARY THROUGH ITS AUTHORIZED
REPRESENTATIVE HAS EXECUTED AND DELIVERED THIS DRAWING CERTIFICATE THIS DAY OF , 20 _.
[____]
BY:
NAME:
TITLE:
Exhibit C - 1
EXHIBIT C
FORM OF GUARANTY
This Guaranty (this “Guaranty”) is entered into as of [_____] (the “Effective Date”) by and between [_____], a [______] (“Guarantor”), and [____] (together with its successors and permitted assigns, “Buyer” and together with Guarantor, the “Parties” and each a “Party”).
Recitals
A. Buyer and _____________________, a _____________________ (“Seller”), entered into that certain Resource Adequacy Benefits Purchase and Sale Agreement (as amended, restated or otherwise modified from time to time, the “RA PSA”) dated as of [____], 20___.
B. Guarantor is entering into this Guaranty as Seller Security to secure Seller’s obligations under the RA PSA, as required by Section 7.7 of the RA PSA.
C. It is in the best interest of Guarantor to execute this Guaranty inasmuch as Guarantor will derive substantial direct and indirect benefits from the execution and delivery of the PPA.
D. Initially capitalized terms used but not defined herein have the meaning set forth in the PPA.
Agreement
1. Guaranty. For value received, Guarantor does hereby unconditionally, absolutely and irrevocably guarantee, as primary obligor and not as a surety, to Buyer the full, complete and prompt payment by Seller of any and all amounts and payment obligations now or hereafter owing from Seller to Buyer under the RA PSA, including, without limitation, compensation for penalties, the Termination Payment, indemnification payments or other damages, as and when required pursuant to the terms of the PPA (the “Guaranteed Amount”), provided, that Guarantor’s aggregate liability under or arising out of this Guaranty shall not exceed the sum of ________ Dollars ($___________) plus reasonable costs incurred by Buyer in enforcing this Guaranty, if successful, up to Three-Hundred Thousand Dollars ($300,000) for an aggregate maximum liability of ________ Dollars ($___________) (the “Guarantee Limit”). The Parties understand and agree that any payment by Guarantor shall thereafter reduce the Guarantee Limit hereunder on a dollar-for-dollar basis. This Guaranty is an irrevocable, absolute, unconditional and continuing guarantee of the full and punctual payment and performance, and not of collection, of the Guaranteed Amount and, except as otherwise expressly addressed herein, is in no way conditioned upon any requirement that Buyer first attempt to collect the payment of the Guaranteed Amount from Seller, any other guarantor of the Guaranteed Amount or any other person or entity or resort to any other means of obtaining payment of the Guaranteed Amount. In the event Seller shall fail to duly, completely or punctually pay any Guaranteed Amount as required pursuant to the RA PSA, Guarantor shall promptly pay such amount as required herein.
Exhibit C - 2
2. Demand Notice. For avoidance of doubt, a payment shall be due for purposes of this Guaranty only when and if a payment is due and payable by Seller to Buyer under the terms and conditions of the Agreement. If Seller fails to pay any Guaranteed Amount as required pursuant to the RA PSA for five (5) Business Days following Seller’s receipt of Buyer’s written notice of such failure (the “Demand Notice”), then Buyer may elect to exercise its rights under this Guaranty and may make a demand upon Guarantor (a “Payment Demand”) for such unpaid Guaranteed Amount. A Payment Demand shall be in writing and shall reasonably specify in what manner and what amount Seller has failed to pay and an explanation of why such payment is due and owing, with a specific statement that Buyer is requesting that Guarantor pay under this Guaranty. Guarantor shall, within five (5) Business Days following its receipt of the Payment Demand, pay the Guaranteed Amount to Buyer.
3. Scope and Duration of Guaranty. This Guaranty applies only to the Guaranteed Amount. This Guaranty shall continue in full force and effect from the Effective Date until the earlier of the following: (x) all Guaranteed Amounts have been paid in full (whether directly or indirectly through set-off or netting of amounts owed by Buyer to Seller), or (y) replacement Seller Security is provided in an amount and form required by the terms of the RA PSA. Further, this Guaranty (a) shall remain in full force and effect without regard to, and shall not be affected or impaired by any invalidity, irregularity or unenforceability in whole or in part of this Guaranty, and (b) subject to the preceding sentence, shall be discharged only by complete performance of the undertakings herein. Without limiting the generality of the foregoing, the obligations of the Guarantor hereunder shall not be released, discharged, or otherwise affected and this Guaranty shall not be invalidated or impaired or otherwise affected for the following reasons:
(i) the extension of time for the payment of any Guaranteed Amount, or (ii) any amendment, modification or other alteration of the RA PSA, or (iii) any indemnity agreement Seller may have from any party, or (iv) any insurance that may be available to cover any loss, except to the extent insurance proceeds are used to satisfy the Guaranteed Amount, or (v) any voluntary or involuntary liquidation, dissolution, receivership, insolvency, bankruptcy, assignment for the benefit of creditors, reorganization, arrangement, composition or readjustment of, or other similar proceeding affecting, Seller or any of its assets, including but not limited to any rejection or other discharge of Seller’s obligations under the RA PSA imposed by any court, trustee or custodian or any similar official or imposed by any law, statue or regulation, in each such event in any such proceeding, or (vi) the release, modification, waiver or failure to pursue or seek relief with respect to any other guaranty, pledge or security device whatsoever, or (vii) any payment to Buyer by Seller that Buyer subsequently returns to Seller pursuant to court order in any bankruptcy or other debtor-relief proceeding, or (viii) those defenses based upon (A) the legal incapacity or lack of power or authority of any person, including Seller and any representative of Seller to enter into the RA PSA Exhibit C - 3
or perform its obligations thereunder, (B) lack of due execution, delivery, validity or enforceability, including of the RA PSA, or (C) Seller’s inability to pay any Guaranteed Amount or perform its obligations under the RA PSA, or
(ix) any other event or circumstance that may now or hereafter constitute a defense to payment of the Guaranteed Amount, including, without limitation, statute of frauds and accord and satisfaction;
provided that Guarantor reserves the right to assert for itself any defenses, setoffs or counterclaims that Seller is or may be entitled to assert against Buyer (except for such defenses, setoffs or counterclaims that may be asserted by Seller with respect to the RA PSA, but that are expressly waived under any provision of this Guaranty).
4. Waivers by Guarantor. Guarantor hereby unconditionally waives as a condition precedent to the performance of its obligations hereunder, with the exception of the requirements in Paragraph 2, (a) notice of acceptance, presentment or protest with respect to the Guaranteed Amounts and this Guaranty, (b) notice of any action taken or omitted to be taken by Buyer in reliance hereon, (c) any requirement that Buyer exhaust any right, power or remedy or proceed against Seller under the RA PSA, and (d) any event, occurrence or other circumstance which might otherwise constitute a legal or equitable discharge of a surety. Without limiting the generality of the foregoing waiver of surety defenses, it is agreed that the occurrence of any one or more of the following shall not affect the liability of Guarantor hereunder:
(i) at any time or from time to time, without notice to Guarantor, the time for payment of any Guaranteed Amount shall be extended, or such performance or compliance shall be waived;
(ii) the obligation to pay any Guaranteed Amount shall be modified, supplemented or amended in any respect in accordance with the terms of the RA PSA; (iii) (a) sale, transfer or consolidation of Seller into or with any other entity, (b) sale of substantial assets by, or restructuring of the corporate existence of, Seller or (c) change in ownership of any membership interests of, or other ownership interests in, Seller; or (iv) the failure by Buyer or any other person to create, preserve, validate, perfect or protect any security interest granted to, or in favor of, Buyer or any person.
5. Subrogation. Notwithstanding any payments that may be made hereunder by the Guarantor, Guarantor hereby agrees that until the earlier of payment in full of all Guaranteed Amounts or expiration of the Guaranty in accordance with Section 3, it shall not be entitled to, nor shall it seek to, exercise any right or remedy arising by reason of its payment of any Guaranteed Amount under this Guaranty, whether by subrogation or otherwise, against Seller or seek contribution or reimbursement of such payments from Seller.
6. Representations and Warranties. Guarantor hereby represents and warrants that (a) it has all necessary and appropriate limited liability company powers and authority and the legal right to execute and deliver, and perform its obligations under, this Guaranty, (b) this Guaranty constitutes its legal, valid and binding obligations enforceable against it in accordance Exhibit C - 4
with its terms, except as enforceability may be limited by bankruptcy, insolvency, moratorium and other similar laws affecting enforcement of creditors’ rights or general principles of equity, (c) the execution, delivery and performance of this Guaranty does not and will not contravene Guarantor’s organizational documents, any applicable law or any contractual provisions binding on or affecting Guarantor, (d) there are no actions, suits or proceedings pending before any court, governmental agency or arbitrator, or, to the knowledge of the Guarantor, threatened, against or affecting Guarantor or any of its properties or revenues which may, in any one case or in the aggregate, adversely affect the ability of Guarantor to enter into or perform its obligations under this Guaranty, and (e) no consent or authorization of, filing with, or other act by or in respect of, any arbitrator or governmental authority, and no consent of any other Person (including, any stockholder or creditor of the Guarantor), that has not heretofore been obtained is required in connection with the execution, delivery, performance, validity or enforceability of this Guaranty by Guarantor.
7. Notices. Notices under this Guaranty shall be deemed received if sent to the address specified below: (i) on the day received if served by overnight express delivery, and (ii) four business days after mailing if sent by certified, first class mail, return receipt requested. If transmitted by facsimile, such notice shall be deemed received when the confirmation of transmission thereof is received by the Party giving the notice. Any Party may change its address or facsimile to which notice is given hereunder by providing notice of the same in accordance with this Paragraph 8.
If delivered to Buyer, to it at [____]
Attn: [____]
Fax: [____]
If delivered to Guarantor, to it at [____]
Attn: [____]
Fax: [____]
8. Governing Law and Forum Selection; WAIVER OF JURY TRIAL. This Guaranty shall be governed by, and interpreted and construed in accordance with, the laws of the United States and the State of California, excluding choice of law rules. The Parties agree that any suit, action or other legal proceeding by or against any party (or its affiliates or designees) with respect to or arising out of this Guaranty shall be brought in the federal courts of the United States sitting in the County of Los Angeles, California. 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 GUARANTY.
9. Miscellaneous. This Guaranty shall be binding upon Guarantor and its successors and assigns and shall inure to the benefit of Buyer and its successors and permitted assigns pursuant to the RA PSA. No provision of this Guaranty may be amended or waived except by a written instrument executed by Guarantor and Buyer. This Guaranty is not assignable by Guarantor without the prior written consent of Buyer. No provision of this Guaranty confers, nor is any provision intended to confer, upon any third party (other than Buyer’s successors and permitted assigns) any benefit or right enforceable at the option of that third party. This Guaranty embodies the entire Exhibit C - 5
agreement and understanding of the Parties with respect to the subject matter hereof and supersedes all prior or contemporaneous agreements and understandings of the Parties, verbal or written, relating to the subject matter hereof. If any provision of this Guaranty is determined to be illegal or unenforceable (i) such provision shall be deemed restated in accordance with applicable Laws to reflect, as nearly as possible, the original intention of the Parties and (ii) such determination shall not affect any other provision of this Guaranty and all other provisions shall remain in full force and effect. This Guaranty may be executed in any number of separate counterparts, each of which when so executed shall be deemed an original, and all of said counterparts taken together shall be deemed to constitute one and the same instrument. This Guaranty may be executed and delivered by electronic means with the same force and effect as if the same was a fully executed and delivered original manual counterpart.
10. DISPUTE RESOLUTION.
In the event of any dispute arising under this Guaranty, within ten (10) days following the receipt of a notice from either Party identifying such dispute, the Parties shall meet, negotiate and attempt, in good faith, to resolve the dispute quickly, informally and inexpensively. If the Parties are unable to resolve a dispute arising hereunder within the earlier of either thirty (30) days of initiating such discussions, or within forty (40) days after notice of the dispute, either Party may seek any and all remedies available to it at law or in equity, subject to the limitations set forth in this Guaranty.
IN WITNESS WHEREOF, the undersigned has caused this Guaranty to be duly executed and delivered by its duly authorized representative on the date first above written.
GUARANTOR:
[_______]
By:
Printed Name:
Title:
BUYER:
[_______]
By:
Printed Name:
Title:
Exhibit C - 6
By:
Printed Name:
Title:
EXHIBIT D
NOTICES
DURAN MESA LLC
(“Seller”)
SAN DIEGO COMMUNITY POWER
(“Buyer”)
All Notices:
Street: 1088 Sansome St.
City: San Francisco, CA
Attn: General Counsel
Phone: (415) 283-4000
Email: [email protected]
All Notices:
PO Box 12716
San Diego, CA 92112
Attn: Byron Vosburg, Director of Power
Services
Phone: (619) 880-6545
Email: [email protected],
[email protected]
Reference Numbers: Reference Numbers:
Invoices:
Attn: Pattern Energy Settlements
Phone: (713) 308-4200
Email:
[email protected]
Invoices:
Attn: SDCP Settlements
Phone: (619) 880-6545
Email: [email protected]
Scheduling:
Attn: Manager 24/7 Operations Control
Center
888 Westheimer Road, Suite 213
Houston, TX 77006
Email: [email protected]
[email protected]
Phone: (713) 308-4242
Facsimile: (281) 694-2848
Scheduling:
Tenaska Power Services Co.
Attn: Kara Whillock
Phone: (972) 333-6122
Email: [email protected]
Day Ahead: (817) 303-1115
Real Time: (817) 303-1852
Facsimile: (817) 303-1104
Confirmations:
Attn: Pattern Energy Settlements
Phone: (713) 308-4200
Email:
[email protected]
Confirmations:
Attn: SDCP Settlements
Phone: (619) 880-6545
Email: [email protected]
Payments:
Attn: Pattern Energy Settlements
Phone: (713) 308-4200
Email:
[email protected]
Payments:
Attn: SDCP Settlements
Phone: (619) 880-6545
Email: [email protected]
Wire Transfer: Wire Transfer:
Emergency Contact:
Attn: 24/7 Operations Control Center
Phone: (713) 308-4242
Email: [email protected]
With additional Notices of an Event of
Default to:
Best, Best & Krieger
Attn: Ryan Barron, General Counsel
655 West Broadway, 15th Floor
San Diego, CA 92101
Phone: (949) 263-6568
Email: [email protected]
Emergency Contact:
Attn: Byron Vosburg, Director of Power
Services
Phone: (619) 880-6545
Email: [email protected]
EXHIBIT E
FORM OF PROGRESS REPORT
Each Progress Report must include the following items:
1. Executive summary.
2. Facility description.
3. Site plan of the Facility.
4. Description of any planned changes to the Facility or the site.
5. Schedule showing progress on achieving commercial operation.
6. Summary of activities during the previous calendar month/quarter.
7. Forecast of activities scheduled for the current calendar month/quarter.
8. Written description about the progress relative to achieving commercial operation, including whether Seller has met or is on target to achieve commercial operation in 2026.
9. List of issues that could reasonably foreseeably affect achieving commercial operation.
10. A status report of start-up activities including a forecast of activities ongoing and after start-up, a report on Facility performance including performance projections for the next twelve (12) months.
11. Progress and schedule of all major agreements, contracts, permits, approvals, technical studies, financing agreements and major equipment purchase orders showing the start dates, completion dates, and completion percentages.
12. Pictures, in sufficient quantity and of appropriate detail, in order to document construction and startup progress of the Facility, the interconnection into the PTO’s Transmission System and all other interconnection utility services.
13. Any other documentation, including copies of the Interconnection Agreement, transmission agreements and permits, as reasonably requested by Buyer, as such documentation may be redacted by Seller as necessary.
EXHIBIT F
FORM OF COMMERCIAL OPERATION DATE CERTIFICATE
This certification (“Certification”) of commercial operation is delivered by the undersigned, a licensed professional engineer and duly authorized representative of ____________________ in its capacity as independent engineer (“Engineer”) for purposes of this certification, to [____] (“Buyer”), pursuant to the [agreement between Seller and Engineer] and in connection with that certain Resource Adequacy Benefits Purchase and Sale Agreement dated _______ (“Agreement”) by and between [Seller Entity] (“Seller”) and Buyer. All capitalized terms used in this Certification but not otherwise defined herein shall have the respective meanings assigned to such terms in the Agreement.
Engineer hereby certifies and represents to Buyer the following:
(1) Wind turbines with a nameplate capacity at least equal to of the Specified Quantity have been installed at the Facility.
(2) Testing and commissioning of each wind turbine referred to in paragraph (1) above has been completed in accordance with the turbine supply agreement and each such wind turbine has delivered electricity to the point of interconnection specified in the Interconnection Agreement.
(3) Authorization to parallel the Facility was obtained by the Participating Transmission Owner on ______[DATE]______.
EXECUTED on this ________ day of _____________, 20__.
Sincerely,
By:
[NAME], P.E.
[TITLE]
New Mexico License No. [##]
September 14, 2023
VIA U.S. MAIL AND/OR EMAIL
Re: IBEW Support for the SunZia Clean Energy Transmission and Wind Infrastructure Project
To Whom It May Concern:
On behalf of the more than 820,000 active and retired members of the International Brotherhood of Electrical Workers (IBEW), I write in full support of the SunZia Clean Energy Transmission and Wind Infrastructure Project. The IBEW is committed to supporting projects that create job and training opportunities like SunZia.
Pattern Energy and its contractor(s) are ensuring that a highly qualified, skilled, and trained labor workforce is employed on SunZia, and IBEW members look forward to contributing to the success of the project. Building and maintaining a highly qualified workforce is extremely important to build the clean future generations.
The IBEW asks that you support the SunZia Clean Energy Infrastructure Project to create highly skilled jobs with family-sustaining wages as we build a clean and resilient electrical grid.
Sincerely yours,
Kenneth W. Cooper
International President
KWC:mea