Agenda packet, first session — Glendale City Council, October 10, 2023 (part 2 of 5)

ATTACHMENT NO. 1

TO QUARTERLY CERTIFICATE
This Attachment No. 1 is attached to and made a part of a Quarterly Certificate dated as of [____________, ____] and pertains to the period from [____________, ____] to [____________, ____].

A. Facility Debt:

1. Principal of and premium on indebtedness: $ [________]

2. Fees, charges, expenses and penalties related to indebtedness: $ [________]

3. Amounts due upon acceleration or in connection with prepayment or restructuring of indebtedness: $ [________]

4. Swap or interest rate hedging breakage costs: $ [________]

5. Any claims or interest due with respect to any of the foregoing: $ [________]

6. Other payment obligations of Seller in connection with borrowed money:
$ [________]

7. Total Facility Debt (Add A.1-6): $ [________]
B. Facility Cost:

1. Cost of all labor, services, materials, supplies, equipment, tools, transportation, supervision, storage, training, demolition, site preparation, civil works, and remediation in connection with the development, design, engineering, equipping, procuring, constructing, installing, starting up and testing the Facility: $ [________]

2. Cost of acquiring the leasehold interest and any other property, easement or other interest in the Site: $ [________]

3. Cost of acquiring the Permits for the Facility: $ [________]

4. Cost of establishing a spare parts inventory for the Facility: $ [________] 238 of 1291
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5. Other costs and expenses incurred by Seller for the development, design, engineering, equipping, procuring, constructing, installing, starting up and testing the Facility: $ [________]

6. Total Facility Cost (Add B.1-5): $ [_________]
C. Facility Debt to Facility Cost Ratio:

1. Facility Debt (A.8 above): $ [________]

2. Facility Cost (B.6 above): $ [________]

3. Facility Debt to Facility Cost Ratio: C(1):(2): [___]:1.00

4. Maximum Facility Debt to Facility Cost Ratio permitted: 70% 239 of 1291
Q-1

APPENDIX Q
TO THE

AMENDED AND RESTATED

POWER PURCHASE AGREEMENT

BETWEEN

SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY
and

STAR PEAK GEOTHERMAL LLC

ENERGY GENERATION AND PRODUCTION

EXPECTED MONTHLY GENERATION AND GUARANTEED MONTHLY

DELIVERED ENERGY
Contract Month Expected Monthly
Generation
(in MWh)
Guaranteed Monthly
Delivered Energy
(in MWh)
January 6,687 6,018
February 5,839 5,255
March 6,262 5,636
April 5,891 5,302
May 5,783 5,205
June 5,127 4,614
July 4,982 4,484
August 5,129 4,616
September 5,352 4,817
October 6,042 5,438
November 6,226 5,603
December 6,680 6,012
ANNUAL
TOTAL
70,000 63,000
240 of 1291
R-1

APPENDIX R
TO THE

AMENDED AND RESTATED

POWER PURCHASE AGREEMENT

BETWEEN

SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY
and

STAR PEAK GEOTHERMAL LLC

SINGLE-LINE DIAGRAM
See attached.
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APPENDIX S
TO THE

AMENDED AND RESTATED

POWER PURCHASE AGREEMENT

BETWEEN

SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY
and

STAR PEAK GEOTHERMAL LLC

METERING DIAGRAM
See attached.
242 of 1291
T-1

APPENDIX T
TO THE

AMENDED AND RESTATED

POWER PURCHASE AGREEMENT

BETWEEN

SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY
and

STAR PEAK GEOTHERMAL LLC

POINT OF METERING DIAGRAM
See attached.
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U-1

APPENDIX U
TO THE

AMENDED AND RESTATED

POWER PURCHASE AGREEMENT

BETWEEN

SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY
and

STAR PEAK GEOTHERMAL LLC

LIST OF IDENTIFIED FACILITIES FOR REPLACEMENT ENERGY
[Seller to provide.]
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V-1

APPENDIX V
TO THE

AMENDED AND RESTATED

POWER PURCHASE AGREEMENT

BETWEEN

SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY
and

STAR PEAK GEOTHERMAL LLC

FORM OF MONTHLY REPORT
Southern California Public Power Authority
1160 Nicole Court
Glendora, CA 91740
Telephone: 626-793-9364
Attention: Executive Director
Email: [email protected]
RE: Monthly Report for Star Peak Geothermal Energy Project Dear Southern California Public Power Authority,
Star Peak Geothermal LLC is pleased to submit the following monthly report for the Star Peak Geothermal energy project.
(i) a performance summary of the Contract Month- and Contract Year-to-date MWh delivery of Facility Energy, capacity factor, availability (including actual availability vs. expected availability), weather for the month and reasons for downtimes [Facility Energy information in MWh (month and year-to-date)] [Capacity factor and availability information in MWh]
[Weather]
[Downtime Summary]
(ii) reports of expected generation indicators of when a Shortfall may occur (iii) any regularly prepared operations and maintenance status reports of the Facility provided to WECC or any Facility Lenders
(iv) reports regarding the ongoing operations of the Facility during such month, which set forth the status of the operation of the Facility or any component thereof, including any equipment or other operational or maintenance failures, defects or other issues and any repairs, replacements or other remediation provided or to be provided therefor 245 of 1291
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(v) descriptions of weather, reasons for any downtime, maintenance or repairs, and curtailment periods during the applicable month
(vi) a safety and environmental summary
Below, please find additional information related to the project:
[Include such other information regarding the permitting, engineering, construction or operations of the Facility as Buyer has reasonably requested.]
Please contact us with any questions or if you need additional information.

Regards,
Star Peak Geothermal LLC
246 of 1291
W-1

APPENDIX W
TO THE

AMENDED AND RESTATED

POWER PURCHASE AGREEMENT

BETWEEN

SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY
and

STAR PEAK GEOTHERMAL LLC

Each of Buyer, Seller and Lender is referred to under this Agreement as a “Party” and together they are referred to as the “Parties”; provided, that in no event shall the term “Buyer” refer to any of the members of Buyer and in no event shall the term “Seller” refer to any of the members of Seller. Capitalized terms used but not defined herein shall have the meanings set forth in the PPA (as defined below).

RECITALS
A. [[_____________] (“Borrower”)[, an owner of Seller,] entered into a [Financing Agreement] with Lender[, as administrative agent and collateral agent and certain other lenders party thereto,] dated as of ____________, 20__ (the “Financing Agreement”), under which Seller will finance the construction of an up to 14.5 MW nominal nameplate capacity geothermal electric generating facility (the “Facility”, as further described in the PPA). Seller and Lender have also entered into a [Guarantee and Security Agreement] (the “Security Agreement”) under which Seller collaterally assigned its interest under the PPA to Lender as collateral for the credit facilities under the Financing Agreement and a deed of trust or mortgage under which Seller has granted to Lender a lien on the Facility to be recorded in Pershing County, Nevada (the “Financing Deed of Trust”).

Additionally, [_____________] (“Pledgor”) has entered into a [Guarantee, Pledge and Security Agreement] pursuant to which it has pledged to Lender all of the membership interests in Seller, to secure Borrower’s obligations under the Financing Agreement (the “Pledge Agreement” and, together with the Security Agreement and Financing Deed of Trust, the “Lender Collateral Documents”).]5 A true and correct copy of each of the Lender Collateral Documents has been furnished to Buyer.

B. Buyer and Seller entered into that certain Power Purchase Agreement, dated as of February 20, 2020 (as may be amended, supplemented, or modified from time to time, the “PPA”), pursuant to which Seller will develop, finance, construct, own, and operate the Facility, and will, except as otherwise provided in the PPA, sell the Facility Energy to Buyer. 5 Bracketed language to be included/updated as applicable. 247 of 1291
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C. Pursuant to Section 14.7(e) of the PPA, Seller has requested Buyer’s consent to the assignment, pursuant to the Security Agreement, by Seller to Lender of Seller’s interest under the PPA.

AGREEMENT

1. Assignment and Agreement.

1.1 Consent to Assignment. [Buyer hereby consents to the collateral assignment to Lender pursuant to the Security Agreement of Seller’s rights to and under the PPA, pursuant to the Financing Deed of Trust of Seller’s interests in the Facility and pursuant to the Pledge Agreement of Pledgor’s membership interests in Seller]6 (together, the “Assigned Interests”) as security for Borrower’s obligations under the Financing Agreement and the other related financing documents.

Buyer agrees not to cancel, terminate, suspend performance or waive compliance under the PPA, except as provided in the PPA or by operation of law and, to the extent applicable, in accordance with Section 1.2 of this Consent. Subject to the terms and conditions of this Consent, Buyer agrees that in exercising its remedies, Lender may exercise Seller’s rights under the PPA.

1.2 Notices: Right to Cure by Lender. Buyer shall give concurrent notice to Seller and Lender if any event or circumstance set forth in Section 13.1 of the PPA gives rise to a Default or, following expiration of any applicable cure period, could give rise to a Default, and Lender shall be entitled to cure any such event or circumstance during the applicable cure period (if any) set forth therein. Failure of Buyer to provide such notice to Lender shall not constitute a breach of the PPA or this Consent by Buyer and Lender agrees that Buyer shall have no liability to Lender for such failure whatsoever. If Lender and Seller fail to cure a Default within the applicable period, Buyer shall have all its rights and remedies with respect to such Default as set forth in the PPA.

1.3 Subsequent Owner. Subject to the terms and conditions of this Consent, the Parties agree that the Lender shall, at least thirty (30) days prior to any foreclosure or other transfer of the Facility or the Assigned Interests, notify Buyer of the pendency of such foreclosure or transfer and, in addition, Lender shall subsequently notify Buyer following the occurrence of such foreclosure or transfer. If Lender notifies Buyer in writing that it has foreclosed on the Facility or the Assigned Interests pursuant to the Lender Collateral Documents, or taken a “deed in lieu of foreclosure”, Lender or its permitted successor or assigns, or any other purchaser of the Assigned Interests (each such permitted successor or assign or other purchaser of the Assigned Interests, a “Subsequent Owner”), shall be recognized as a party substituting for Seller under the PPA so long as such Subsequent Owner meets the qualifications for a Qualified Transferee and the terms and conditions of the PPA as in effect on such date of assignment or foreclosure shall continue to apply to such Subsequent Owner.

1.4 Foreclosure Notice. In the event of any default by Seller under the Financing Agreement that has not been cured as provided hereunder or thereunder, prior to taking any action, whether judicial or non-judicial, to foreclose upon and sell the Facility or the Assigned Interests (in either case, a “Foreclosure Sale”) pursuant to the Lender Collateral Documents, or prior to taking a deed in lieu of foreclosure, Lender shall, concurrent with any statutory notice required to 6 Bracketed language to be updated as applicable.
248 of 1291
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be delivered to Seller, give notice in writing to Buyer not less than thirty (30) days prior to the date of such Foreclosure Sale or taking of a deed in lieu of foreclosure in the form of Exhibit A hereto containing the information specified therein (the “Foreclosure Notice”).

1.5 Foreclosure Sale. Lender may effect the Foreclosure Sale or take a deed in lieu of foreclosure at any time subject to (x) thirty (30) days’ advance notice to Buyer from Lender and (y) the terms of this Consent, the Financing Agreement and the Lender Collateral Documents. In the event that a Foreclosure Sale under the Lender Collateral Documents shall take place (a) Buyer or any member of Buyer that is a purchaser from Buyer of Facility Energy (each a “Member”) shall have the right to bid at such Foreclosure Sale for the purchase of the Facility, and (b) failing a successful bid by Buyer or any such Member at such Foreclosure Sale, Lender may sell the Assigned Interests pursuant to such Foreclosure Sale, free of any rights of Buyer under this Section

1.5, and, in each such case, Seller waives, to the extent permitted by law, all rights of redemption, stay or appraisal.

1.6 No Deemed Waiver. No action of Buyer taken pursuant to the exercise of its rights as provided in this Consent shall be deemed to be a waiver of any right accruing to Buyer on account of the occurrence of any matter which constitutes a default or a breach of Seller’s obligations under the Financing Agreement.

1.7 Limitation of Liability.
(a) Seller agrees that it shall indemnify and hold Buyer harmless from any third-party claims, losses, liabilities, damages, costs or expenses (including, without limitation, any direct, indirect or consequential claims, losses, liabilities, damages, costs or expenses, including legal fees) in connection with or arising out of any of the transactions related to the Financing Agreement, any of the Lender Collateral Documents or this Consent. (b) In the event of any Foreclosure Sale, or any deed in lieu of foreclosure, in connection with any Lender Collateral Documents, Lender or Subsequent Owner, and their successors in interest and assigns, if performance of the PPA is reasonably possible, shall cause the Seller or Subsequent Owner to assume in writing and agree to be bound by the covenants and agreements of Seller in the PPA; provided, however, that until the Subsequent Owner executes and delivers to Buyer a written assumption of Seller’s obligations under the PPA in form and substance reasonably acceptable to Buyer, such Person will not be entitled to any of the benefits of the PPA. In addition, Lender agrees that in no event shall Buyer be liable to Lender or any Subsequent Owner for any claims, losses, expenses or damages whatsoever other than, following such Person’s assumption of Seller’s obligations under the PPA in accordance with the prior sentence, liability Buyer may have to Seller under the PPA (without duplication of any liability Buyer owes to the assigning Seller).

2. Payments under the PPA. [Without limiting the rights of Buyer under the PPA and subject to the terms of the PPA, commencing on the date of this Consent and until Seller or Lender notifies Buyer that either (i) the release of the PPA from the collateral in accordance with the Financing Agreement has occurred and (ii) the payment or other satisfaction in full of all obligations of Borrower under the Financing Agreement has occurred, Buyer shall pay any amounts owed in the manner and when required under the PPA directly to the account specified 249 of 1291
W-4
below or otherwise designated by Lender to Buyer in writing. From and after such time as an entity qualifies as a Subsequent Owner, Buyer shall pay all such amounts owed directly to or at the written direction of such Subsequent Owner subject to the terms of the PPA. Seller hereby directs Buyer, and Buyer agrees, to make all payments and amounts Buyer is obligated to pay to Seller under the PPA, subject to the terms of the PPA, which payments shall satisfy any such payment obligations of Buyer to Seller in full and complete satisfaction of Buyer’s obligations to Seller under the PPA, to the following account:

Bank Name: ___________
Account Number: ___________
ABA Number: ___________
Account Name: [_____________]]7
Lender and Seller agree that any change in payment notification shall become effective within thirty (30) days after receipt by Buyer of written notice thereof in accordance with this Consent. Buyer shall have no liability to Seller or Lender (or their successors and assigns) for making payments due or to become due under the PPA to Lender or for failure to direct such payments to Lender rather than Seller or Seller rather than Lender.

3. Acknowledgements; Representations and Warranties.
(a) Seller and Lender acknowledge that Buyer has not made and hereby makes no representation or warranty, expressed or implied, that Seller has any right, title or interest in the collateral secured by the Lender Collateral Documents (the “Collateral”) and Lender acknowledges that it has not relied upon any such representations of Buyer. Lender acknowledges that it is responsible for satisfying itself as to the existence and extent of Seller’s right, title, and interest in the Collateral.
(b) Except as otherwise expressly provided herein, Lender acknowledges that Buyer shall not have any contractual obligations to Lender, and Lender acknowledges that it has not relied upon any representations of Buyer in connection with its lending arrangements with Seller.
(c) Seller and Lender acknowledge that Buyer shall have no liability to Seller or Lender resulting from or related to this Consent, or for consenting to any future assignments of the Collateral or any interest of Seller or Lender therein. (d) Seller and Lender each agree that Buyer shall at all times have (and Buyer hereby expressly reserves) the right to set off or deduct from payments due to Seller under the PPA amounts owing to Buyer by Seller under the PPA.
(e) Lender represents and warrants that it is duly authorized to enter into and perform its obligations under this Consent.
(f) Buyer agrees that any foreclosure by Lender on the membership interests in Borrower or Pledgor upon the occurrence of a default by Borrower under the Financing Agreement 7 Remove bracketed provision if not applicable.
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shall not constitute a breach under the PPA if the Facility is operated and maintained by a Qualified Operator (as defined in the PPA) following any such foreclosure. Lender shall obtain Buyer’s consent (such consent not to be unreasonably withheld) prior to any transfer by Lender of the membership interests in Borrower or Pledgor upon the occurrence of a default by Borrower under the Financing Agreement to an entity other than a Qualified Transferee.

4. Miscellaneous.

4.1 Governing Law; Submission to Jurisdiction.
(a) This Consent shall be governed by, interpreted and enforced in accordance with the laws of the State of California, without regard to conflict of law principles. (b) All litigation arising out of, or relating to this Consent, shall be brought in a State or Federal court in the County of Los Angeles in the State of California. The Parties irrevocably agree to submit to the exclusive jurisdiction of such courts in the State of California and waive any defense of forum non conveniens.

4.2 Conflicts. This Consent does not modify or alter any of the terms of the PPA, and to the extent the terms and conditions herein conflict with those in the PPA, the term and conditions of the PPA shall control. Except as set forth herein, Buyer shall have no obligation or liability to Lender with respect to the PPA or any Ancillary Document. For purposes of this provision, Seller and Buyer agree that the extended cure periods provided in Section 1.2, the rights of a Subsequent Owner in Section 1.3, and the payments pursuant to Article 2 do not conflict with the PPA.

4.3 Severability. If any provision of this Consent is held to be illegal, invalid or unenforceable, (a) the legality, validity and enforceability of the remaining provisions of this Consent shall not be affected or impaired thereby and (b) the Parties shall endeavor in good faith negotiations to replace the illegal, invalid or unenforceable provision with valid provisions the economic effect of which comes as close as possible to that of the illegal, invalid or unenforceable provision. The invalidity of a provision of this Consent in a particular jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

4.4 Counterparts. This Consent may be executed in any number of counterparts and by the different Parties on separate counterparts, each of which, when so executed and delivered, shall be an original, but all of which shall together constitute one and the same instrument.

4.5 Binding Effect; Amendment, Waiver. This Consent shall be binding upon and shall inure to the benefit of Buyer, Seller and Lender and their respective successors and permitted transferees and assigns. Buyer agrees to confirm such continuing obligation in writing (in the form of a certificate signed by an authorized officer and dated as of the date of the confirmation) upon the reasonable request of Seller, Lender or any of their respective successors or permitted transferees or assigns. Buyer also agrees to cause any successor-in-interest to Buyer with respect to its interest in the PPA to assume, in writing in form and substance reasonably satisfactory to Lender, the obligations of Buyer hereunder. Neither this Consent nor any of the terms hereof may be terminated, amended, supplemented, waived or modified except by an instrument in writing 251 of 1291
W-6
signed by Buyer, Seller and Lender[, and after the initial funding by any Tax Equity Investor, such Tax Equity Investor]8
.

4.6 Successors and Assigns. This Consent shall bind and benefit Buyer and Lender, and their respective successors and permitted assigns.

4.7 Attorneys’ Fees. Seller shall reimburse Buyer for all actual and documented costs and expenses incurred by Buyer in connection with the facilitation of Seller’s collateral assignment or pledge of the PPA, or any other action taken in connection with the transactions contemplated in this Consent, or otherwise pursuant to any request made by Seller or any Lender.

4.8 Representation by Counsel. Each of the Parties was represented by its respective legal counsel during the negotiation and execution of this Consent.

4.9 Notices. All notices, requests, demands, consents, approvals, waivers and other communications which are required under this Consent shall be given to the following addresses:

If to Seller:

Star Peak Geothermal LLC
3451 North Triumph Blvd. Suite 201
Lehi, UT 84043
Email: [email protected]
Attn: Chief Operating Officer
If to Buyer:

Southern California. Public Power Authority
1160 Nicole Court
Glendora, CA 91740
Facsimile: (626) 793-9461
Telephone: (626) 793-9364
Attention: Executive Director
If to Lender: [_]
and shall be (a) in writing (regardless of whether the applicable provision expressly requires a writing, but except to the extent otherwise provided herein), (b) deemed properly sent if delivered in person or sent by facsimile transmission, reliable overnight courier or registered or certified mail, postage prepaid, and (c) deemed delivered, given and received on the date of delivery, in the case of delivery in person, facsimile transmission, and overnight courier, or on the date of receipt or rejection in the case of registered or certified mail. In addition to the foregoing, the Parties may agree in writing at any time to deliver notices, requests, demands, consents, approvals, waivers and other communications through alternate methods, such as electronic mail.

Any Party may change its address for notice hereunder by giving written notice of such change to the other Parties.

4.10 Further Assurances. Buyer will, upon the reasonable written request of Lender, execute and deliver such further documents and do such other acts and things as may be necessary to effectuate the purposes of this Consent.
[Signature page follows]
8 To be deleted if not applicable.
252 of 1291
[Signature Page to PPA Consent]

W-7
IN WITNESS WHEREOF, the Parties have caused this Consent and Agreement to be duly executed and delivered as of the date first above written.

SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY
By:
[__________]
President
Date:

Attest:
[__________]
Assistant Secretary

STAR PEAK GEOTHERMAL LLC
By:

Name: [_____________]
Title: [_____________]
[LENDER]
By:

Name: [_____________]
Title: [_____________]
253 of 1291
W-8

EXHIBIT A
to Consent and Agreement

FORM OF FORECLOSURE NOTICE
[Letterhead of Lender]
[Insert date]
Via Certified Mail, Return Receipt Requested
Southern California Public Power Authority
1160 Nicole Court
Glendora, CA 91740
Attn: Executive Director
Re: Star Peak Geothermal Project
Ladies and Gentlemen:

This is a Foreclosure Notice, as defined in the Consent. Capitalized terms used herein and not defined herein have the respective meanings given in the Consent.

As of the date hereof, the following amounts are due and owing by Seller under the Financing Agreement:

Principal amount of loans:

Accrued Interest:

Reimbursable Amounts
Fees:

As of the date hereof, interest is accruing at the rate of % per annum [Insert if applicable: and fees are accruing at the rate of % per annum]. This interest rate will apply until [insert date which is end of current interest period], from which time the interest rate may be higher or lower. A default rate of interest equal to [2]% above the otherwise applicable rate [does/does not] currently apply [If does not currently apply, add: but may be applied at any time]. [If applicable, state: The principal amount of loans shown above does not reflect the entire loan commitment under the Financing Agreement. Additional loans may be made, with or without the Seller’s consent, and such additional loans will accrue interest as provided in the Financing Agreement.]
An Event of Default, as defined in the Financing Agreement, has occurred and is continuing. The Lender intends to foreclose upon the Assigned Interests or take a deed in lieu of foreclosure on a date estimated to be [insert day no less than ninety (90) days from the date of notice]. Such date may be modified as permitted by law, but will in no event be prior to ninety (90) days after the date hereof.

Very truly yours,
254 of 1291
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[_______________________]
255 of 1291
X-1

APPENDIX X
TO THE

AMENDED AND RESTATED

POWER PURCHASE AGREEMENT

BETWEEN

SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY
and

STAR PEAK GEOTHERMAL LLC

LIST OF ANCILLARY DOCUMENTS
As of the Effective Date, none.
256 of 1291
Y-1

APPENDIX Y
TO THE

AMENDED AND RESTATED

POWER PURCHASE AGREEMENT

BETWEEN

SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY
and

STAR PEAK GEOTHERMAL LLC

SPECIFIED REAL PROPERTY
Leased Land (as defined in the Geothermal Lease and Agreement, dated April 28, 2022, by and between SP Land Company, LLC, as lessor, and Star Peak Geothermal LLC, as lessee) 30178059_v6
30178059_v9
257 of 1291
H&H Draft 9/8/23

AMENDED AND RESTATED

POWER PURCHASE AGREEMENT

BETWEEN

SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY
AND
WHITEGRASS NO. 1, LLC
DATED AS OF ____________, 2023
EXHIBIT 2
258 of 1291

TABLE OF CONTENTS
Page
i
ARTICLE I DEFINITIONS AND INTERPRETATION ........................................................ 1 Section 1.1 Definitions............................................................................................ 1 Section 1.2 Interpretation...................................................................................... 23 Section 1.3 Order of Precedence........................................................................... 23 ARTICLE II EFFECTIVE DATE, TERM AND EARLY TERMINATION...................... 24 Section 2.1 Effective Date .................................................................................... 24 Section 2.2 Agreement Term and Delivery Term................................................. 24 Section 2.3 Survivability....................................................................................... 24 Section 2.4 Early Termination .............................................................................. 24 ARTICLE III DEVELOPMENT OF THE FACILITY......................................................... 25 Section 3.1 In General........................................................................................... 25 Section 3.2 Commencement Date Notices............................................................ 26 Section 3.3 Other Information .............................................................................. 26 Section 3.4 Reserved............................................................................................. 26 Section 3.5 Performance Damages....................................................................... 27 Section 3.6 Remedial Action Plan ........................................................................ 27 Section 3.7 Decommissioning and Other Costs.................................................... 28 ARTICLE IV OPERATION AND MAINTENANCE OF THE FACILITY....................... 28 Section 4.1 Compliance with Electrical Service Requirements............................ 28 Section 4.2 General Operational Requirements.................................................... 28 Section 4.3 Operation and Maintenance Plan....................................................... 28 Section 4.4 Forecasting and Scheduling of Energy and Scheduled Outages........ 29 Section 4.5 Dynamic Scheduling.......................................................................... 32 Section 4.6 Reporting and Information................................................................. 33 ARTICLE V COMPLIANCE DURING OPERATION PERIOD........................................ 33 Section 5.1 In General........................................................................................... 33 Section 5.2 Compliance with Standards............................................................... 34 Section 5.3 Quality Assurance Program............................................................... 34 Section 5.4 Security Provided by Seller ............................................................... 34 Section 5.5 Effect of Review by Buyer ................................................................ 35 ARTICLE VI PURCHASE AND SALE OF POWER........................................................... 36 Section 6.1 Purchases by Buyer............................................................................ 36 Section 6.2 Point of Delivery................................................................................ 37 Section 6.3 Expected Monthly Generation Adjustment ....................................... 37 259 of 1291

TABLE OF CONTENTS
(continued)
Page
ii
Section 6.4 Buyer’s Failure................................................................................... 38 Section 6.5 Nature of Remedies............................................................................ 38 Section 6.6 Energy to Come Exclusively from Facility ....................................... 38 Section 6.7 Sales to Third Parties......................................................................... 39 Section 6.8 Curtailment Requested by Buyer....................................................... 39 ARTICLE VII TRANSMISSION AND SCHEDULING; TITLE AND RISK OF LOSS.. 41 Section 7.1 In General........................................................................................... 41 Section 7.2 Costs................................................................................................... 42 Section 7.3 Title; Risk of Loss.............................................................................. 42 ARTICLE VIII ENVIRONMENTAL ATTRIBUTES; EPS AND RPS COMPLIANCE.. 42 Section 8.1 Transfer of Environmental Attributes................................................ 42 Section 8.2 Reporting of Ownership of Environmental Attributes....................... 43 Section 8.3 Environmental Attributes................................................................... 43 Section 8.4 Use of Accounting System to Transfer Environmental Attributes............................................................................................ 43 Section 8.5 Further Actions Regarding Environmental Attributes....................... 44 Section 8.6 RPS and EPS Compliance ................................................................. 44 Section 8.7 Change in Law ................................................................................... 45 ARTICLE IX MAKEUP OF SHORTFALL ENERGY......................................................... 45 Section 9.1 Makeup of Shortfall ........................................................................... 45 Section 9.2 Makeup Energy.................................................................................. 46 Section 9.3 Shortfall Remedies............................................................................. 46 Section 9.4 Replacement Energy .......................................................................... 46 Section 9.5 Application of Shortfall Energy or Replacement Energy .................. 47 ARTICLE X CAPACITY RIGHTS......................................................................................... 47 Section 10.1 Purchase and Sale of Capacity Rights ............................................... 47 Section 10.2 Representation Regarding Ownership of Capacity Rights................ 47 Section 10.3 Further Action by Seller Regarding Capacity Rights........................ 47 ARTICLE XI BILLING; PAYMENT; AUDITS; METERING; ATTESTATIONS; POLICIES .................................................................................................................................. 48 Section 11.1 Billing and Payment........................................................................... 48 Section 11.2 Calculation of Energy Delivered; Payment ....................................... 49 Section 11.3 Payment.............................................................................................. 50 Section 11.4 WREGIS Withholding....................................................................... 50 Section 11.5 Disputed Invoices............................................................................... 50 260 of 1291

TABLE OF CONTENTS
(continued)
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Section 11.6 Right of Setoff.................................................................................... 51 Section 11.7 Records and Audits............................................................................ 51 Section 11.8 Electric Metering Devices.................................................................. 52 Section 11.9 Taxes.................................................................................................. 54 ARTICLE XII REPRESENTATIONS AND WARRANTIES; COVENANTS OF SELLER ...................................................................................................................................................... 54 Section 12.1 Representations and Warranties of Buyer.......................................... 54 Section 12.2 Representations and Warranties of Seller.......................................... 55 Section 12.3 Covenants of Seller Related to Real Property Agreements............... 57 Section 12.4 Covenants of Seller Related to Tax Equity Financing....................... 59 Section 12.5 Additional Covenants of Seller.......................................................... 60 Section 12.6 Additional Related Projects ............................................................... 60 Section 12.7 Storage Technology ........................................................................... 61 Section 12.8 Solar Technology............................................................................... 61 ARTICLE XIII DEFAULT; TERMINATION AND REMEDIES; PERFORMANCE DAMAGE ................................................................................................................................... 62 Section 13.1 Default................................................................................................ 62 Section 13.2 Default Remedy ................................................................................. 64 Section 13.3 Termination for Default ..................................................................... 65 ARTICLE XIV MISCELLANEOUS....................................................................................... 67 Section 14.1 Authorized Representative................................................................. 67 Section 14.2 Notices ............................................................................................... 67 Section 14.3 Dispute Resolution............................................................................. 67 Section 14.4 Further Assurances............................................................................. 68 Section 14.5 No Dedication of Facilities................................................................ 68 Section 14.6 Force Majeure .................................................................................... 68 Section 14.7 Assignment of Agreement; Change in Control.................................. 70 Section 14.8 Ambiguity .......................................................................................... 72 Section 14.9 Attorneys’ Fees and Costs ................................................................. 72 Section 14.10 Voluntary Execution .......................................................................... 72 Section 14.11 Entire Agreement; Amendments........................................................ 72 Section 14.12 Governing Law .................................................................................. 73 Section 14.13 Venue ................................................................................................. 73 Section 14.14 Execution in Counterparts.................................................................. 73 Section 14.15 Effect of Section Headings ................................................................ 73 Section 14.16 Waiver................................................................................................ 73 Section 14.17 Relationship of the Parties................................................................. 74 Section 14.18 Third Party Beneficiaries................................................................... 74 261 of 1291

TABLE OF CONTENTS
(continued)
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Section 14.19 Indemnification; Damage or Destruction; Insurance; Condemnation; Limit of Liability...................................................... 74 Section 14.20 Severability ........................................................................................ 75 Section 14.21 Confidentiality ................................................................................... 76 Section 14.22 Mobile-Sierra ..................................................................................... 77 Section 14.23 Service Contract................................................................................. 78 Section 14.24 Time is of the Essence ....................................................................... 78 Section 14.25 Right of First Offer and Right of First Refusal.................................. 78 Section 14.26 Market Disruption Event.................................................................... 79 262 of 1291
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Appendices

APPENDIX A CONTRACT PRICE AND PAYMENT SCHEDULE

APPENDIX B FACILITY

APPENDIX C BUYER AND SELLER BILLING, NOTIFICATION AND SCHEDULING

CONTACT INFORMATION

APPENDIX D FORM OF ATTESTATION

APPENDIX E FORM OF LETTER OF CREDIT

APPENDIX F INSURANCE

APPENDIX G QUALITY ASSURANCE PROGRAM
APPENDIX H [RESERVED]

APPENDIX I NON-CONSOLIDATION OPINION

APPENDIX J REAL PROPERTY AGREEMENTS
APPENDIX K [RESERVED]

APPENDIX L FORM OF CASH ESCROW AGREEMENT

APPENDIX M COMMENCEMENT DATE

APPENDIX N ORGANIZATIONAL STRUCTURE AND OWNERSHIP OF SELLER AND

PARENT ENTITIES

APPENDIX O METEOROLOGICAL AND PYRANOMETER MEASUREMENTS

APPENDIX P FORM OF QUARTERLY CERTIFICATE

APPENDIX Q ENERGY GENERATION AND PRODUCTION

APPENDIX R SINGLE-LINE DIAGRAM

APPENDIX S METERING DIAGRAM

APPENDIX T POINT OF METERING DIAGRAM

APPENDIX U LIST OF IDENTIFIED FACILITIES FOR REPLACEMENT ENERGY 263 of 1291
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APPENDIX V FORM OF MONTHLY REPORT

APPENDIX W FORM OF CONSENT TO COLLATERAL ASSIGNMENT

APPENDIX X LIST OF ANCILLARY DOCUMENTS
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1 AMENDED AND RESTATED

POWER PURCHASE AGREEMENT

PARTIES

THIS AMENDED AND RESTATED POWER PURCHASE AGREEMENT
(“Agreement”), which is dated for convenience as of this ___ day of ____________, 2023 (the “Amendment Date”) is being entered into by and between the Southern California Public Power Authority, a public entity and joint powers authority formed and organized pursuant to the California Joint Exercise of Powers Act (California Government Code Section 6500, et seq.) (“Buyer”), and Whitegrass No. 1, LLC (“Seller”), a limited liability company organized and existing under the laws of the State of Nevada. Each of Buyer and Seller is referred to individually in this Agreement as a “Party” and together they are referred to as the “Parties”.

RECITALS
WHEREAS, Buyer’s Members have adopted or are adopting policies to comply with the California Renewable Energy Resources Act that are designed to increase the amount of energy that they provide to their retail customers from eligible renewable energy resources; and WHEREAS, on January 12, 2018, Buyer issued a request for proposals to acquire eligible renewable energy resources; and
WHEREAS, on February 22, 2018, Seller’s Ultimate Parent Entity on behalf of Seller submitted its initial response to Buyer’s request for proposals and, following negotiation, Seller has agreed to sell to Buyer, and Buyer has agreed to purchase, certain renewable energy, capacity rights and associated environmental attributes;
WHEREAS, Buyer and Seller entered into that certain Power Purchase Agreement, dated for convenience as of February 20, 2020 but with an effective date of March 30, 2020 (the “Effective Date,” and such agreement, the “Original Agreement”); and WHEREAS, the Parties desire to amend and restate the Original Agreement in its entirety as provided herein.

AGREEMENT
NOW, THEREFORE, in consideration of the foregoing Recitals, which are incorporated herein, and the mutual covenants and agreements herein set forth, the Parties hereto amend and restate the Original Agreement as follows:

ARTICLE I

DEFINITIONS AND INTERPRETATION
Section 1.1 Definitions. The following terms in this Agreement and the appendices hereto shall have the following meanings when used with initial capitalized letters:
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2 “Acceptable Form of Performance Assurance” means a letter of credit issued by a Qualified Issuer, substantially in the form attached hereto as Appendix E, or cash that shall be delivered in one installment to a custodian and held, for the benefit of Buyer, pursuant to a Cash Escrow Agreement in substantially the form attached as Appendix L, which will guarantee Seller’s obligations under this Agreement.
“Act” means all of the provisions contained in the California Joint Exercise of Powers Act found in Chapter 5 of Division 7 of Title 1 of the Government Code of the State of California, beginning at California Government Code Section 6500 et seq. “Additional Related Project” has the meaning set forth in Section 12.6. “Additional System” has the meaning set forth in Section 12.8. “Affiliate” means, as to any Person, any other Person that, directly or indirectly, is in Control of, is Controlled by or is under common Control with such Person or is a director or officer of such Person or of an Affiliate of such Person.
“Agreement” has the meaning set forth in the preamble of this Agreement and includes Appendices A through Y, attached hereto.
“Agreement Term” has the meaning set forth in Section 2.2. “Ancillary Documents” means any agreement, instrument, certificate or other document required to be executed and delivered between Buyer, on the one hand, and any Seller Party, on the other hand, in connection with this Agreement. As of the Effective Date, there are no Ancillary Documents.
“ASCE” means American Society of Civil Engineers and any successor thereto. “ASME” means American Society of Mechanical Engineers and any successor thereto. “Assumed Daily Deliveries” has the meaning set forth in Section 13.3(c). “ASTM” means American Society for Testing and Materials and any successor thereto. “Authorized Auditors” means representatives of Buyer or Buyer’s Agents who are authorized to conduct audits on behalf of Buyer.
“Authorized Representative” means, with respect to each Party, the Person designated as such Party’s authorized representative pursuant to Section 14.1. “Auxiliary Capacity Percentage” means twenty-five percent (25%). “AWS” means American Welding Society and any successor thereto. “Bankruptcy” means any case, action or proceeding under any bankruptcy, reorganization, debt arrangement, insolvency or receivership law or any dissolution or liquidation proceeding commenced by or against a Person and, if such case, action or proceeding is not 266 of 1291
3 commenced by such Person, such case, action or proceeding that is consented to or acquiesced in by such Person or that results in an order for relief or that remains undismissed for sixty (60) days. “Bankruptcy Code” means Title 11 of the United States Code entitled “Bankruptcy”, as now and hereafter in effect, or any successor statute thereto. “Brown Act” has the meaning set forth in Section 14.21(d). “Business Day” means any day that is not a Saturday, a Sunday, or a day on which commercial banks are authorized or required to be closed in Los Angeles, California, or New York, New York.
“Buyer” has the meaning set forth in the preamble of this Agreement. “Buyer’s Agent” means any Person that Buyer may designate from time to time to perform certain tasks acting as Buyer’s agent, including the Participating Member. “Buyer’s Check Meters” has the meaning set forth in Section 11.8(e). “Buyer’s Members” means any member of Buyer that has entered into the Joint Powers Agreement.
“Buyer’s Non-Compensable Curtailment Hours” has the meaning set forth in Section 6.8(b).
“Cal-OSHA” means California Occupational Safety and Health Administration and any successor thereto.
“CAMD” means the Clean Air Markets Division of the EPA and any other state, regional or federal or intergovernmental entity or Person that is given authorization or jurisdiction or both over a program involving the registration, validation, certification or transferability of Environmental Attributes.
“Capacity Rights” means the rights, whether in existence as of the Effective Date or arising thereafter during the Agreement Term, to capacity, resource adequacy, associated attributes, excluding Environmental Attributes, or reserves associated with the electric generating capability of the Facility, including the right to resell such rights. “CARB” means California’s Air Resources Board, and any successor agency thereto. “CEC” means California’s State Energy Resources Conservation and Development Commission, also known as the California Energy Commission, and any successor agency thereto. “CEC Certified” or “CEC Certification” means that the CEC has certified that the Facility is an eligible renewable energy resource in accordance with Section 399.12(e) of the Public Utilities Code and the guidelines adopted by the CEC relating thereto/RPS Law. 267 of 1291
4 “CEC Performance Standard” means, at any time, the applicable greenhouse gas emissions performance standard in effect at such time for baseload electric generation facilities that are owned or operated (or both) by local publicly owned electric utilities, or for which a local publicly owned electric utility has entered into a contractual agreement for the purchase of power from such facilities, as established by the CEC or other Governmental Authority having jurisdiction over the Buyer.
“CEQA” means the California Environmental Quality Act, California Public Resources Code Section 21000 et seq., as amended from time to time, and any successor statute. “Change in Control” means the occurrence, whether voluntary or by operation of law and whether in a single transaction or in a series of related transactions following which the Ultimate Parent Entity directly or indirectly no longer (i) remains the owner of more than fifty percent (50%) of the equity ownership of Seller, or (ii) retains the power to control the management and policies of Seller; provided, however, that a Change in Control shall not include any (i) transaction or series of transactions in which a membership interest or other equity interest in Seller or any Parent Entity is issued or transferred to another Person solely for the purpose of a Tax Equity Financing, or (ii) a sale or transfer in accordance with Section 14.7(g).
“Commencement Date” means the first day of the first full month following the date on which (x) Seller has demonstrated, to the reasonable satisfaction of Buyer, that all Commencement Date Conditions have been satisfied with respect to the Facility as a whole and (y) the certificate associated therewith in the form attached as Appendix M has been accepted by Buyer, as determined in accordance with Section 3.5.
“Commencement Date Conditions” means the conditions to the Commencement Date identified on Appendix M.
“Compensable Curtailments” has the meaning set forth in Section 6.8(a). “Compliance Standards” has the meaning set forth in Section 8.6. “Confidential Information” has the meaning set forth in Section 14.21(a). “Contract Month” means any month during the Delivery Term for which the first date and last date of such month occur during the Delivery Term. “Contract Year” means (i) the stub year period beginning on the Commencement Date and ending on December 31 of the year in which the Commencement Date occurs; and (ii) each of the following calendar years, until and including the calendar year ending December 31, 2045. “Control” means the possession, directly or indirectly, of the power to direct or cause the direction of management, policies, or activities of a Person, whether through ownership of voting securities, by contract or otherwise.
“Costs” has the meaning set forth in Section 13.3(f)(3). “CPRA” has the meaning set forth in Section 14.21(d).
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5 “Daily Delay Damages” has the meaning set forth in Section 3.5. “Daily Delay Damages Cap” has the meaning set forth in Section 3.5 “Day Ahead Schedule” has the meaning set forth in Section 4.4(e). “Deemed Additional System Output” has the meaning set forth in Section 12.8. “Deemed Delivered Energy” has the meaning set forth in Section 6.8(b). “Default” has the meaning set forth in Section 13.1.
“Defaulting Party” has the meaning set forth in Section 13.1. “Deficient Month” has the meaning set forth in Section 6.1(c). “Delivered Energy” means: the MWh of Facility Energy and unspecified energy Scheduled and delivered by Seller and received by Buyer during such Contract Month at the Point of Delivery, which amount will not include Station Service, Parasitic Load, or transmission or transformation losses to the Point of Delivery in conformance with the most-current edition of the guidebook promulgated by the CEC.
“Delivery Term” has the meaning set forth in Section 2.2. “Dispute” has the meaning set forth in Section 14.3(a). “Dispute Notice” has the meaning set forth in Section 14.3(a). “DNP” has the meaning set forth in Section 4.4(j).
“Downgrade Event” means any event that results in a Person failing to meet the credit requirements of a Qualified Issuer or the commencement of involuntary or voluntary bankruptcy, insolvency, reorganization, arrangement, composition, readjustment, liquidation, dissolution, or similar proceeding (whether under any present or future statute, law, or regulation) with respect to such Person.
“Early Termination Date” has the meaning set forth in Section 13.3(a). “EEI” means Edison Electric Institute and any successor thereto. “Effective Date” has the meaning set forth in the Recitals. “Electric Metering Devices” means all meters, metering equipment and data processing equipment conforming to the requirements set forth in Section 11.8 and used to measure, record or transmit data relating to the Energy output from the Facility. Electric Metering Devices include the metering current transformers and the metering voltage transformers. “Energy” means electrical energy.
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6 “Environmental Attribute Reporting Rights” means all rights to report ownership of the Environmental Attributes to any Person, including under Section 1605(b) of the Energy Policy Act of 1992, as amended from time to time or any successor statute, or any other current or future international, federal, state or local law, regulation or bill, or otherwise. “Environmental Attributes” means RECs, and any and all other current or future credits, benefits, emissions reductions, offsets or allowances, howsoever entitled, named, registered, created, measured, allocated or validated (A) that are at any time recognized or deemed of value (or both) by Buyer, applicable law, or any voluntary or mandatory program of any Governmental Authority or other Person, and (B) that are attributable to (i) Facility Energy generation capability or generation during the Agreement Term or Replacement Energy required to be delivered by Seller to Buyer during the Delivery Term and (ii) the emissions or other environmental characteristics of such Facility Energy generation or such Replacement Energy or its displacement of conventional or other types of Energy generation. Environmental Attributes include any of the aforementioned arising out of legislation or regulation concerned with oxides of nitrogen, sulfur, carbon, or any other greenhouse gas or chemical compound, particulate matter, soot, or mercury, or implementing the United Nations Framework Convention on Climate Change (the “UNFCCC”), the Kyoto Protocol to the UNFCCC, the principles identified in the Paris Agreement of the UNFCCC that took effect in 2016, the Clean Power Plan promulgated by the United States Environmental Protection Agency, California’s greenhouse gas legislation (including RPS Law and California Assembly Bill 32 (Global Warming Solutions Act of 2006) and any regulations implemented pursuant to that act, including any compliance instruments accepted under the California Cap on Greenhouse Gas Emissions and Market-Based Compliance Mechanisms regulations of the California Air Resources Board or any successor regulations thereto) or any similar international, federal, state or local program or crediting “early action” with a view thereto, laws or regulations involving or administered by the CAMD and all Environmental Attribute Reporting Rights, including all evidences (if any) thereof such as renewable energy certificates of any kind. Environmental Attributes for purposes of this definition are separate from the Energy produced from the Facility. Notwithstanding any other provision in this definition, Environmental Attributes do not include (X) any tax credits associated with the Facility and (Y) any grants or any similar benefits related to the Facility.
“Environmental Laws” means any federal, state or local laws (including common law), statutes, ordinances, rules, regulations, binding orders, injunctions or judgments pertaining to public health, safety, pollution, or the presence of or release of Hazardous Materials on, under or about the Site.
“EPA” means the United States Environmental Protection Agency and any successor agency.
“EPS Compliant,” means, when used with respect to the Facility or any other facility at any time, that the Facility or other facility, as applicable, satisfies both the PUC Performance Standard and the CEC Performance Standard in effect at the time; provided, if it is impossible for the Facility or facility, as applicable, to satisfy both the PUC Performance Standard and the CEC Performance Standard in effect at any time, the Facility or facility, as applicable, shall be deemed EPS Compliant if it satisfies the CEC Performance Standard in effect at the time and those portions of the PUC Performance Standard in effect at the time that it is possible for the Facility or facility, 270 of 1291
7 as applicable, to satisfy while at the same time satisfying the CEC Performance Standard in effect at the time.
“EPS Law” means Sections 8340 and 8341 of the California Public Utilities Code, as implemented and amended from time to time, or any successor laws or regulations in the State of California.
“Escrow Account” means the account established in accordance with Appendix L. “e-tag” has the meaning set forth in Section 7.1(a).
“Excess Energy” means the portion of the Delivered Energy and Deemed Delivered Energy for any Contract Month that is in excess of the Expected Monthly Generation, other than any Delivered Energy received by Buyer in such Contract Month that cures outstanding Shortfall Energy from the prior two months in accordance with Article IX. “Excess Energy Rate” means the price per MWh ($/MWh) to be paid to Seller by Buyer for Excess Energy according to the provisions in paragraph 2 of Appendix A. “Excess Monthly Generation” means, for any Contract Month, the sum of the following for all hours in such Contract Month: the positive difference (if any) by which (a) the MWh of Delivered Energy for each hour exceeds (b) the MWh of Facility Energy measured during such hour by the Electric Metering Devices in accordance with Section 11.8. “Excused Conditions” has the meaning set forth in Section 9.1. “Expected Annual Generation” means, with respect to any Contract Year, the sum of the Expected Monthly Generation for all Contract Months during such Contract Year. “Expected Monthly Generation” means, with respect to any Contract Month, subject to Section 6.3, the applicable MWh set forth on Appendix Q for such Contract Month. “Expected Monthly Generation Adjustment Period” has the meaning given in Section 6.3(a).
“Extended Expected Monthly Generation Adjustment Period” has the meaning given in Section 6.3(b).
“Facility” means the four (4) MW nominal nameplate capacity geothermal generating facility known as the Whitegrass No. 1 Geothermal Energy Project, located in Lyon County, Nevada, including all property interests and related transmission and other facilities, described in Appendix B.
“Facility Assets” has the meaning given in Section 14.25. “Facility Cost” means, measured as of the applicable measurement date, the aggregate amount of all costs and expenses incurred by Seller for the development, design, engineering, equipping, procuring, constructing, installing, starting up and testing of the Facility, including (a) 271 of 1291
8 the cost of all labor, services, materials, supplies, equipment, tools, transportation, supervision, storage, training, demolition, site preparation, civil works, and remediation in connection therewith, (b) the cost of acquiring the leasehold interest and any other property, easement or other interest in the Site, (c) the cost of acquiring the Permits for the Facility, (d) real and personal property taxes, ad valorem taxes, sale, use, and excise taxes, and insurance (including title insurance) premiums payable with respect to the Facility, (e) initial working capital requirements of the Facility, (f) financial, legal, and consulting fees, costs, and expenses and (g) the cost of establishing a spare parts inventory for the Facility, if any. “Facility Debt” means, measured as of the applicable measurement date, any payment obligations of Seller in connection with borrowed money, including (a) principal of and premium on indebtedness, (b) fees, charges, expenses and penalties related to indebtedness, (c) amounts due upon acceleration or in connection with prepayment or restructuring of indebtedness, (d) swap or interest rate hedging breakage costs and (e) any claims or interest due with respect to any of the foregoing.
“Facility Energy” means Energy generated by the Facility, including Energy used to serve Parasitic Load.
“Facility Lender” means any lender providing senior or subordinated construction, interim or long-term debt or equity financing or refinancing for or in connection with the development, construction, purchase, installation or operation of the Facility, including any equity and tax investor providing financing or refinancing for the Facility or purchasing equity ownership interests of Seller or its Affiliates, and any trustee or agent acting on their behalf, and any Person providing interest rate protection agreements to hedge any of the foregoing debt obligations. “Facility’s Point of Delivery” means the interconnection facilities of Seller located at the point of interconnection between the Facility’s transmission line and the NV Energy North System (distribution line near Fort Churchill Substation) near Yerrington, NV. “FERC” means the Federal Energy Regulatory Commission or any successor agency thereto.
“Financing Agreement” shall mean any credit agreement, loan agreement or similar agreement, to be executed between Seller and a Facility Lender. “Firm Transmission” means transmission that cannot be curtailed within an operating hour for economic reasons or for higher priority transmission within the operating hour. “Force Majeure” has the meaning set forth in Section 14.6(b). “Force Majeure Notice” has the meaning set forth in Section 14.6(a). “Forced Outage” means the removal of service availability of the Facility, or any portion of the Facility, for emergency reasons or conditions in which the Facility, or any portion thereof, is unavailable due to unanticipated failure, including as a result of Force Majeure. “FTP” has the meaning set forth in Section 4.4(a).
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9 “GAAP” means generally accepted accounting principles set forth in opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity as may be approved by a significant segment of the accounting profession, in each case as the same are applicable to the circumstances as of the date of determination.
“Gains” has the meaning set forth in Section 13.3(f)(1). “Guaranteed Commencement Date” means the guaranteed Commencement Date and shall be April 1, 2020.
“Generator Interconnection Agreement” means that certain small generator interconnection agreement and associated documents (or any successor agreement and associated documentation) by and between Seller and Transmission Provider governing the terms and conditions of Seller’s interconnection with the Transmission System and allowing for delivery of Facility Energy to the Point of Delivery.
“Governmental Authority” means any federal, state, regional, city or local government, any intergovernmental association or political subdivision thereof, other governmental, regulatory or administrative agency, court, commission, administration, department, board, other governmental subdivision, legislature, rulemaking board, tribunal, other governmental authority with jurisdiction over the Person or matter at issue, or any Person acting as a delegate or agent of any Governmental Authority; provided that “Governmental Authority” specifically excludes Buyer, any successor or assignee of Buyer and the Participating Member. “Green Value” consists of the market value of (a) avoided greenhouse gas emissions and/or credits associated with RPS Compliant Energy, and (b) all other Environmental Attributes and avoided emissions-related attributes and benefits that would otherwise have been realized had Seller generated Facility Energy, and shall be calculated as an amount equal to the time-weighted average of the prices of greenhouse gases and other Environmental Attributes (as published in commercial indices related to California energy markets) that would have been realized as available from the Facility and included in the Environmental Attributes transferred to Buyer hereunder from the Facility for each MWh of the Shortfall Energy, provided that if for any Contract Month there does not exist a liquid trading market that is mutually agreeable to the Parties to determine such Green Value, the Green Value will be equal to the higher of the replacement cost for the attributes described in clauses (a) and (b) above, expressed in $/MWh, or $15/MWh. “Guaranteed Monthly Delivered Energy” means the amount of Net Delivered Energy guaranteed by Seller during each Contract Month, as set forth in Appendix Q, subject to Section 6.3.
“Hazardous Materials” means any hazardous substances, pollutants, contaminants, wastes, or materials (including petroleum (including crude oil or any fraction thereof), petroleum wastes, radioactive materials, hazardous wastes, toxic substances, or asbestos or any materials containing asbestos) designated, regulated, or defined under any Environmental Law. “ICCCP” has the meaning set forth in Section 11.8(a).
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10 “IEEE” means Institute of Electrical and Electronics Engineers and any successor thereto. “Indemnified Liability” has the meaning set forth in Section 14.19(a). “Indemnitee” has the meaning set forth in Section 14.19(a). “Independent Engineer” means Geologica, or such other engineer as may be jointly selected by the Seller and Buyer’s Authorized Representative. “Independent Manager” means a manager who is not, at the time of initial appointment or at any time while serving as Independent Manager, and has not been at any time during the preceding five (5) years: (a) a member, stockholder, equity holder, director, manager (except as such Independent Manager of the Seller), officer, employee, partner, attorney or counsel of the Seller, any member of Seller or any Affiliate of the Seller; (b) a customer, supplier or other Person who derives any of its purchases or revenues from its activities with any member of the Seller, the Seller or any Affiliate of the Seller (other than for serving as Independent Manager of the Seller); (c) a Person Controlling or under common Control with any such stockholder, equity holder, partner, manager, customer, supplier or other like Person; or (d) a member of the immediate family of any such member, stockholder, equity holder, director, officer, employee, manager, partner, customer, supplier or other like Person.
“Initial Security Amount” means One Hundred Thirty-Five Thousand Dollars ($135,000).
“Initial Synchronization” means that (i) the Facility is receiving back-feed energy, (ii) both the generator tie line and the Facility’s transformers are energized, (iii) the Transmission System’s circuit breakers and the Facility’s circuit breakers are closed, and (iv) the Facility is interconnected with the Transmission System.
“Insurance” means the policies of insurance as set forth in Appendix F. “Interest Rate” has the meaning set forth in Section 11.5. “ISA” means Instrument Society of America and any successor thereto. “Joint Powers Agreement” means the “Southern California Public Power Authority Joint Powers Agreement” entered into pursuant to the provisions of the Act among Buyer and Buyer’s members, dated as of November 1, 1980. “Knowledge” means the actual knowledge, after due inquiry, of any officer or any other agent, employee or representative of Seller responsible for the management of the operation or maintenance of the Facility. “Legal Opinion” means an executed original of a written legal opinion of Stoel Rives LLP, counsel for Seller, or other counsel reasonably acceptable to Buyer, addressed to Buyer and in form and substance reasonably acceptable to Buyer, concerning, among others, the enforceability and due authorization of this Agreement, and the other Ancillary Documents that are agreements between the Parties, dated as of the Effective Date.
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11 “Lessor” means the lessor or landowner under any Real Property Agreement. “Lien” means any mortgage, deed of trust, lien, security interest, retention of title or lease for security purposes, pledge, charge, encumbrance, equity, attachment, claim, easement, right of way, covenant, condition or restriction, leasehold interest, purchase right or other right of any kind, including any option, of any other Person in or with respect to any real or personal property. “Losses” has the meaning set forth in Section 13.3(f)(2). “Major Maintenance Blockout” has the meaning set forth in Section 4.4(k). “Makeup Energy” has the meaning set forth in Section 9.2. “Makeup Deadline” has the meaning set forth in Section 9.3. “Market Disruption Event” has the meaning set forth in Section 14.26. “Market Price” means (a) in the case of all Delivered Energy that is not Excess Energy, the lower of (i) the Market Price Index applicable to Delivered Energy and (ii) the applicable price set forth in Appendix A for such Delivered Energy, and (b) in the case of Excess Energy, 50% of the lower of the foregoing clauses (i) and (ii).
“Market Price Index” means the monthly firm forward market price at Palo Verde for On Peak hours and Off Peak hours, as reasonably calculated by Buyer, and verified by Seller, taking into account, among other valuations, a minimum of three (3) quotations from leading brokers in Energy contracts that are not Affiliates of either Party, settlement prices on established, actively traded power exchanges for Palo Verde and other bona fide third party offers, and other relevant market information, provided that in the event there are no longer market prices for Palo Verde, the Parties will mutually agree to a replacement market price index that most closely reflects the geographic location of the Palo Verde market at the Effective Date; provided, further, that if a market price index for Energy that would more accurately track the price of the Delivered Energy is created, the Parties may mutually agree to adapt such index price as the Market Price Index at such time.
“Market Value” means the median price of three bona fide offers from third parties for Facility Energy (excluding the value of Environmental Attributes), which shall be solicited by Seller in good faith if the RPS Law or EPS Law ceases to be effective and is not replaced with a functional equivalent as provided in Section 8.7(b) or if compliance with EPS Law and RPS Law becomes impossible as provided in Section 8.7(c).
“Monthly Report” means the report required to be delivered by Seller pursuant to Section

4.6 in form and substance substantially similar to Appendix V. “MW” means megawatt(AC).
“MWh” means megawatt-hour.
“NEPA” means the National Environmental Policy Act, as amended. 275 of 1291
12 “NERC” means the North American Electric Reliability Corporation and any successor thereto.
“NERC Reliability Standards” means the reliability standards developed by NERC or by any regional authority having jurisdiction, which are applicable to the owner or operator of the Facility or the Facility itself.
“Net Delivered Energy” means Delivered Energy that is not Excess Monthly Generation. “NV Energy” means NV Energy, Inc., a Nevada corporation. “Nominal Capacity Net of Parasitic Load” means 3.0 MW.
“Nominal Nameplate Capacity” means 4.0 MW.
“Non-Compensable Curtailments” has the meaning set forth in Section 6.8(a). “Non-Consolidation Opinion” means a reasoned opinion of Seller’s legal counsel, Stoel Rives LLP, addressed to Buyer and dated on or prior to the Effective Date, in form and substance reasonably acceptable to Buyer’s Authorized Representative, as to the non-consolidation of Seller in a bankruptcy proceeding of any member of Seller, the Ultimate Parent Entity or other Affiliate of Seller, attached hereto as Appendix I.
“Non-Defaulting Party” has the meaning set forth in Section 13.3(a). “Notice of Exemption” means a notice of exemption as described in California Public Resources Code Section 21108(b) and Title 14, California Code of Regulations, Section 15277. “Notice of Proposed Third Party Sale” has the meaning set forth in Section 14.25(b). “Notifying Party” has the meaning set forth in Section 14.3(a). “NVTREC” means the Nevada Tracks Renewable Energy Credits system that is used to register, track and manage PECs.
“Off Peak” means any time other than On Peak.
“On Peak” means 06:00 a.m. to 10:00 p.m. every day of the week except Sunday. “Operation and Maintenance Plan” has the meaning set forth in Section 4.3(a). “Original Agreement” has the meaning set forth in the preamble of this Agreement. “OSHA” means Occupational Safety and Health Administration of the United States Department of Labor and any successor thereto.
“Outside Commencement Date” has the meaning set forth in Section 3.5. “Outside Commencement Date Damages Cap” has the meaning set forth in Section 3.5. 276 of 1291
13 “Pacific Prevailing Time” means the local time in Los Angeles, California. “Parasitic Capacity” means the electric capacity required to serve the maximum Parasitic Load of the Facility, as determined and certified by the Independent Engineer prior to the date of commercial operation of the Additional System.
“Parasitic Load” means Facility Energy that is used to power the lights, motors, pumps, auxiliary facilities of the well field, control systems, cooling systems, ancillary equipment, and other electrical loads that are necessary for the operation of the power systems and related facilities for the production of Facility Energy.
“Parent Entity” or “Parent Entities” means any direct or indirect owner of Seller at any level below the Ultimate Parent Entity.
“Participating Member” means the City of Glendale, the member of Buyer participating in this Agreement.
“Party” or “Parties” has the meaning set forth in the preamble of this Agreement. “PECs” has the meaning given in Section 8.1.
“Performance Assurance” means Pre-Commencement Date Security or Performance Security.
“Performance Security” has the meaning set forth in Section 5.4(b). “Permit” means all applications, permits, licenses, franchises, certificates, concessions, consents, authorizations, certifications, self-certifications, approvals, registrations, orders, filings, entitlements and similar requirements of whatever kind and however described which are required to be filed, submitted, obtained or maintained by any Person with respect to the equipping, financing, ownership, possession, shakedown, operation or maintenance of the Facility, the production, sale and delivery of Facility Energy or Replacement Energy to Buyer, as applicable, Capacity Rights and Environmental Attributes or any other transactions or matter contemplated by this Agreement (including those pertaining to electrical, building, zoning, environmental and occupational safety and health requirements), including those described in Appendix B. “Permitted Encumbrances” means (i) the Lien in favor of the Facility Lender, (ii) any Lien approved by Buyer in a writing separate from this Agreement which expressly identifies the Lien as a Permitted Encumbrance, (iii) Liens for Taxes not yet due or for taxes being contested in good faith by appropriate proceedings, so long as such proceedings do not involve a risk of the sale, forfeiture, loss or restriction on the use of the Facility or any part thereof, provided that such proceedings end by the expiration of the Agreement Term, (iii) suppliers’, vendors’, mechanics’, workman’s, repairman’s, employees’ or other like Liens arising in the ordinary course of business for work or service performed or materials furnished in connection with the Facility for amounts the payment of which is either not yet delinquent or is being contested in good faith by appropriate proceedings so long as such proceedings do not involve a risk of the sale, forfeiture, loss or restriction on use of the Facility or any part thereof, and (iv) easements, rights of way, use rights, exceptions, encroachments, reservations, restrictions, conditions or limitations, so long as they 277 of 1291
14 have been identified by Seller to Buyer in writing prior to the Effective Date and do not materially interfere with or impair the operation of the Facility as contemplated by this Agreement. “Permitted Transfer” has the meaning set forth in Section 14.25. “Person” means any individual, corporation, partnership, joint venture, limited liability company, association, joint stock company, trust, unincorporated organization, entity, government or other political subdivision.
“Point of Delivery” means the point where any Energy sold and purchased under this Agreement is required to be delivered by Seller to Buyer, specifically McCullough 500kV Substation located in Clark County, Nevada.
“Pre-Commencement Date Security” has the meaning set forth in Section 5.4(a). “Present Value Rate” means, at any date, the sum of one-half percent (0.50%) plus the yield reported on page “USD” of the Bloomberg Financial Markets Services Screen (or, if not available, any other nationally recognized trading screen reporting on-line intraday trading in United States government securities) at 11:00 a.m. (New York City, New York time) for the United States government securities having a maturity that most nearly matches the Remaining Term at that date.
“Principals” means any board chair, president, chief executive officer, chief operating officer and any other individual who serves in the functional equivalent of one or more of those positions, as well as any individual who holds a direct ownership interest in Seller of at least twenty percent (20%).
“Project Substation” has the meaning set forth in Section 11.8(a). “Proposed PPA Notice” has the meaning set forth in Section 12.6(a). “Proposed Purchase Notice” has the meaning set forth in Section 14.25(a). “Proposed Sale Notice” has the meaning set forth in Section 14.25(a). “Prudent Utility Practices” means those practices, methods and acts, that are commonly used by a significant portion of the geothermal electric generation industry in prudent engineering and operations to operate and maintain electric equipment (including geothermal facilities) lawfully and with safety, dependability, reliability, efficiency and economy, including any applicable practices, methods, acts, guidelines, standards and criteria of FERC, NERC, WECC, as each may be amended from time to time, and all applicable Requirements of Law. Prudent Utility Practices are not intended to be limited to the optimum practice, method, or act, to the exclusion of all others, but rather is intended to include acceptable practices, methods, and acts generally accepted in the geothermal-powered electric generation industry. “Public Utilities Code” means the Public Utilities Code of the State of California, as amended from time to time, and any successor thereto.
278 of 1291
15 “PUC” means the California Public Utilities Commission and any successor thereto. “PUC Performance Standard” means, at any time, the greenhouse gas emission performance standard in effect at such time for baseload electric generation facilities owned or operated (or both) by load-serving entities and not local publicly-owned electric utilities, or for which a load-serving entity and not a local publicly owned electric utility has entered into a contractual agreement for the purchase of power from such facilities, as established by the PUC or other Governmental Authority under the EPS Law.
“Q/A” has the meaning set forth in Appendix G.
“Q/A Manual” has the meaning set forth in Appendix G.
“Q/C” has the meaning set forth in Appendix G.
“Qualified Issuer” means a U.S. Issuer Bank that has a current long-term credit rating (corporate or long-term senior unsecured debt) of (1) “A2” or higher by Moody’s Investors Service, Inc. and “A” or higher by Standard & Poor’s, if rated by both rating agencies; or (2) “A2” or higher by Moody’s Investors Service, Inc. or “A” or higher by Standard & Poor’s, if rated by only one rating agency.
“Qualified Operator” means, with respect to the Facility, (i) an Affiliate of Seller, or (ii) a Person reasonably acceptable to Buyer that, in either case, has at least three (3) years of operating experience with types of generation facilities similar to the Facility. “Qualified Transferee” means a Person that when considered collectively with its Affiliates,
(a) (i) has or is a direct or indirect subsidiary of a Person that has, a tangible net worth assets under management, or to the extent its securities are publicly traded, equity value of at least $500,000,000, or (ii) has a minimum long term unsecured credit rating of at least Baa2 or higher by Moody’s or at least BBB or higher by S&P, (ii) retains a Qualified Operator or Qualified Operators to operate the Facility (or otherwise agrees not to interfere with the existing Qualified Operator for the Facility),
(iii) executes a written assumption agreement in favor of Buyer pursuant to which such Person shall assume all of the obligations of Seller under this Agreement and the Ancillary Documents,
(iv) is a Special Purpose Entity, and
(v) is not at the time of transfer in active litigation against Buyer or the Participating Member, or
(b) is reasonably acceptable to Buyer.
279 of 1291
16 “Quality Assurance Program” has the meaning set forth in Section 5.3. “Quarterly Certificate” has the meaning set forth in Section 12.5(d). “Real Property Agreements” means the geothermal resource leases and the other leases, easements, rights-of-way or other real property agreements relating to the Site listed in Appendix J. “Recipient Party” has the meaning set forth in Section 14.3(a). “RECs” or “Renewable Energy Credits” means a certificate of proof associated with the generation of electricity from an RPS Complaint eligible renewable energy resource, which certificate is issued through the accounting system established by the CEC pursuant to the RPS Law, evidencing that one (1) MWh of Energy was generated from such eligible renewable energy resource. Such certificate is a tradable environmental commodity (also known as a “green tag” or “renewable energy credit”) for which the owner of the REC can prove that it has purchased renewable Energy.
“Reliability Authorities” means WECC and the Transmission Providers, balancing authorities, and independent system operators involved in dynamic scheduling of the Facility. “Remaining Term” means, at any date, the remaining portion of the Agreement Term at that date without regard to any early termination of this Agreement. “Remedial Action Plan” has the meaning set forth in Section 3.6. “Replacement Energy” has the meaning set forth in Section 9.4. “Replacement Energy Point of Delivery” has the meaning set forth in Section 9.4. “Requirement of Law” means federal, state and local laws, statutes, regulations, rules, codes, ordinances, resolutions, standards, directives, orders, judgments, decrees, rulings or determinations enacted, adopted, issued or promulgated by any federal, state, local or other Governmental Authority (including those pertaining to electrical, building, zoning, Environmental Laws, and occupational safety and health requirements). “Right of First Offer” or “ROFO” has the meaning set forth in Section 14.25. “Right of First Refusal” or “ROFR” has the meaning set forth in Section 14.25. “RPS Compliant” means, when used with respect to the Facility or any other facility at any time, that all Energy generated by such Facility or other facility, as applicable, at all times shall, together with all of the associated Environmental Attributes, qualify as a “portfolio content category 1” eligible renewable resource under the RPS Law and meet the requirements of Public Utilities Code Section 399.16(b)(1).
“RPS Law” means the California Renewable Energy Resources Act (also known as Senate Bill or SB X1-2), the Clean Energy and Pollution Reduction Act of 2015 (also known as SB 350) and The 100 Percent Clean Energy Act of 2018 (also known as SB 100), including the California 280 of 1291
17 Renewables Portfolio Standard Program (Article 16, commencing with Section 399.11, of Chapter

2.3 of Part 1 of Division 1 of the Public Utilities Code) along with the Renewable Energy Resources Program administered by the CEC and established pursuant to Chapter 8.6, commencing with Section 25740, of Division 15 of the Public Resources Code, and all policies established pursuant to Section 454.53 of the Public Utilities Code, any related regulations or guidebooks promulgated by the CEC, CARB, and, as applicable, the PUC, and as all of the foregoing may be promulgated, implemented or amended from time to time, and any successor or replacement laws or regulations.
“Sales Price” has the meaning set forth in Section 6.4. “SCADA” has the meaning set forth in Section 4.4(a).
“Schedule” or “Scheduling” or “Scheduled” means the actions of Seller and Buyer or their Authorized Representatives, including each Party’s Transmission Providers, if applicable, of notifying, requesting and confirming to each other the quantity of Energy to be delivered hourly at the Point of Delivery on any given date during the Delivery Term. “Scheduled Outage” means any outage with respect to the Facility other than a Forced Outage.
“Scheduled Outage Projection” has the meaning set forth in Section 4.4(k). “Scheduler” means the Persons doing Scheduling for each Party. “Scheduling Procedures” has the meaning set forth in Section 4.4(a). “Seller” has the meaning set forth in the preamble of this Agreement. “Seller Party(ies)” means Seller and any Affiliates of Seller executing any Ancillary Document.
“Shortfall” has the meaning set forth in Section 9.1.
“Shortfall Cure Period” has the meaning set forth in Section 9.2. “Shortfall Damages” has the meaning set forth in Section 9.3. “Shortfall Energy” has the meaning set forth in Section 9.1. “Site” means the real property (including all fixtures and appurtenances thereto), water, and related physical and intangible property generally identified in Appendix B as owned or leased by Seller or over which Seller has an easement, right-of-way or other right to use or access the property where the Facility is located or will be located, and including the well fields and land subject to the Real Property Agreements held or to be held by Seller for transmission lines or roadways servicing such Site or the Facility located (or to be located) thereon. 281 of 1291
18 “Site Control” means that Seller shall: (i) own the Site; (ii) be the grantee, licensee, or lessee under one or more Real Property Agreements that permit Seller to perform all of its obligations under this Agreement and, as applicable, the other Ancillary Documents; or (iii) have otherwise provided evidence satisfactory to Buyer of Seller’s exclusive right to control the Site so as to permit Seller to perform all of its obligations under this Agreement and the Ancillary Documents to which it is a party; each of the foregoing clauses (i) through (iii), for the Agreement Term.
“Six-Month Cure” has the meaning set forth in Section 11.4. “Solar Capacity Factor” means thirty percent (30%).
“Special Purpose Entity” means a limited liability company which at all times prior to (except as otherwise provided below), on and after the Effective Date hereof:
(a) shall not (without the prior written consent of Buyer) (i) engage in any dissolution, liquidation or consolidation or merger with or into any other business entity, (ii) acquire by purchase or otherwise all or substantially all of the business or assets of or beneficial interest in any other entity, (iii) transfer, lease or sell, in one transaction or any combination of transactions, all or substantially all of its properties or assets except to the extent permitted herein, (iv) modify, amend or waive any provisions of its organizational documents related to its status as a Special Purpose Entity, or (v) terminate its organizational documents or its qualifications and good standing in any jurisdiction; (b) has limited, is limiting and will limit its activities to acquiring, developing, owning, holding, selling, financing, leasing, transferring, exchanging, managing and operating the Facility, entering into this Agreement with Buyer and the Ancillary Documents and transacting lawful business that is incident, necessary and appropriate to accomplish the foregoing;
(c) has not been, is not, and will not be engaged in any business other than that relating to its limited purpose as set forth in the immediately preceding subsection (b); (d) has not had, does not have and will not have, any assets other than those related to the Facility;
(e) has held itself out and will hold itself out to the public as a legal entity separate and distinct from any other entity and has not failed and will not fail to correct any known misunderstanding regarding the separate identity of such entity, provided that (for the avoidance of doubt), the foregoing shall not restrict any Parent Entity, Ultimate Parent Entity or any other Seller Affiliate from identifying its indirect relationship to the Facility through Seller; (f) has maintained and will maintain its financial statements, bank accounts, accounts, books, resolutions, agreements and records separate from any other Person except as required by GAAP; provided, however, that to the extent permitted by GAAP, any such consolidated financial statement shall contain a note indicating that its separate assets and liabilities are neither available to pay the debts of the consolidated entity nor constitute obligations of the consolidated entity, and has filed and will file its own tax returns (except to 282 of 1291
19 the extent such limited liability company is treated as a “disregarded entity” for tax purposes and is not required to file separate tax returns under applicable law); (g) has held itself out and identified itself, and will hold itself out and identify itself, as a separate and distinct entity under its own name or in a name franchised or licensed to it by an entity other than an Affiliate of Seller (except to the extent such limited liability company is treated as a “disregarded entity” for tax purposes and is not required to file separate tax returns under applicable law) and not as a division, department or part of any other Person; (h) has maintained and will maintain its assets in such a manner that it will not be costly or difficult to segregate, ascertain or identify its individual assets from those of any other Person;
(i) has not made and will not make loans or advances to any Person or hold evidence of indebtedness issued by any other Person (other than cash and investment-grade securities issued by an entity that is not an Affiliate of or subject to common ownership with such entity) or made any gifts or fraudulent conveyances to any Person; (j) has not identified and will not identify its members, or any Affiliate of any member, as a division or department or part of it, and has not identified itself and shall not identify itself as a division or department of any other Person; (k) has not entered into or been a party to, and will not enter into or be a party to, any transaction with its members or Affiliates, except in the ordinary course of its business and on terms which are commercially reasonable and comparable with those which could be obtained in a comparable arm’s-length transaction with an unrelated third party; (l) has not had and will not have any obligation to indemnify, and has not indemnified and will not indemnify its officers, managers or members, as the case may be, other than (i) the Independent Manager in connection with the Independent Manager’s actions related to the performance of this Agreement, and (ii) its officers, managers, and members with respect to actions taken or omitted to be taken in good faith by such officer, manager or member with respect to the development, construction, financing, ownership and operation of the Facility; (m) has considered and shall consider the interests of its creditors in connection with all limited liability company actions;
(n) except for obligations to Facility Lenders or Tax Equity Investors, does not and will not have any of its obligations guaranteed by any Affiliate and will not hold itself out as being responsible for the debts or obligations of any other Person; (o) will comply with all of the terms and provisions contained in its organizational documents including the provision requiring that there be an Independent Manager at all times on and after the Effective Date and has done or caused to be done and will do all things necessary to preserve its existence;
(p) will not commingle, its funds or assets with those of any Person and will not participate in any cash management system with any other Person; 283 of 1291
20 (q) will conduct all business in its own name and, except in connection with a Tax Equity Financing utilizing a lease or inverted lease structure, from and after the Commencement Date, has held, and will hold, its assets in its own name and conducted and will conduct all business in its own name;
(r) has maintained and will maintain its financial statements, accounting records and other entity documents separate from any other Person and has not permitted and will not permit its assets to be listed as assets on the financial statement of any other entity except as required by GAAP; provided, however, that to the extent permitted by GAAP, any such consolidated financial statement shall contain a note indicating that its separate assets and liabilities are neither available to pay the debts of the consolidated entity nor constitute obligations of the consolidated entity;
(s) has paid and will pay its own liabilities and expenses, including the salaries of its own employees, out of its own funds and assets, and has maintained and will maintain a sufficient number of employees in light of its contemplated business operations (it being acknowledged and agreed that Seller may have no employees to the extent it contracts out its requirements for all necessary managerial, operational and other services); (t) has observed and will observe all limited liability company formalities; (u) has not assumed or guaranteed or become obligated for, and will not assume or guarantee or become obligated for, the debts of any other Person and has not held out and will not hold out its credit as being available to satisfy the obligations of any other Person; (v) has not acquired and will not acquire obligations or securities of its members or any Affiliate;
(w) will allocate fairly and reasonably any overhead expenses that are shared with any Affiliate, including paying for shared space and services performed by any employee of an Affiliate;
(x) now maintains and uses, and will maintain and use separate stationery, invoices and checks bearing its name; such stationery, invoices and checks utilized by it or utilized to collect its funds or pay its expenses have borne and shall bear its own name and shall not bear the name of any other entity unless such entity is clearly designated as being its agent; (y) except in connection with the development or construction, or financing of the development or construction of the Facility, has not pledged and will not pledge its assets for the benefit of any other Person;
(z) now has, and will have articles of organization, a certificate of formation or an operating agreement, as applicable, that provides that it will not: (A) dissolve, merge, liquidate or consolidate; (B) sell, transfer, lease or otherwise convey all or substantially all of its assets (other than as permitted under Section 14.7); (C) engage in any other business activity, or amend its organizational documents with respect to the matters set forth in this definition without the affirmative vote of its Independent Manager; or (D) without the affirmative vote of its Independent Manager, file a bankruptcy or insolvency petition or otherwise institute 284 of 1291
21 insolvency proceedings with respect to itself or to any other entity in which it has a direct or indirect legal or beneficial ownership interest;
(aa) has been, is and intends to remain solvent and has paid and intends to continue to pay its debts and liabilities (including, as applicable, shared personnel and overhead expenses) from its assets as the same shall have or become due, and has maintained, is maintaining and intends to maintain adequate capital for the normal obligations reasonably foreseeable in a business of its size and character and in light of its contemplated business operations; and
(bb) has and will have no indebtedness other than (i) Facility Debt relating to the development, construction or permanent financing or refinancing for the Facility, including indebtedness in its replacement or substitution thereof, (ii) Taxes and Insurance premiums, (iii) liabilities incurred in the ordinary course of business relating to its ownership, management, administration leasing and operation of the Facility and its routine administration, which liabilities are not more than sixty (60) days past due, are not evidenced by a note and are paid when due, and which amounts are normal and reasonable under the circumstances, and in any event not in excess of one percent (1%) of the Facility Cost in the aggregate, (iv) the Performance Security and indebtedness incurred in support of or connection with the Performance Security, and (v) such other liabilities that are permitted pursuant to this Agreement.
“Specified Transmission Path” means (i) the NV Energy north system to McCullough 500 kV Substation located in Clark County, Nevada, and (ii) any transmission path used by Seller to deliver Replacement Energy to Buyer at the Replacement Energy Point of Delivery as specified in Section 9.4.
“Station Service” has the meaning set forth in the guidebook promulgated by the CEC, as amended from time to time, or in other RPS Law, whichever is controlling. “System Credit” has the meaning set forth in Section 12.8. “System Emergency” means Emergency Conditions as set forth in the Generator Interconnection Agreement.
“Tax” or “Taxes” means each federal, state, county, local and other (a) net income, gross income, gross receipts, sales, use, ad valorem, business or occupation, transfer, franchise, profits, withholding, payroll, employment, excise, property or leasehold tax and (b) customs, duty or other fee, assessment or charge of any kind whatsoever, together with any interest and any penalties, additions to tax or additional amount with respect thereto. “Tax Equity Financing” means, with respect to Seller, any Parent Entity, or the Ultimate Parent Entity, any transaction or series of transactions (including without limitation any transaction of the type described in this definition that utilizes a lease or inverted lease structure) resulting in (i) a portion of the membership interests of Seller or any Parent Entity, as applicable, being issued or otherwise provided to another Person (a “Tax Equity Investor”) in exchange for capital contributions to Seller, a Parent Entity, or the Ultimate Parent Entity, as applicable, or the Facility being sold to and leased by Seller from a Tax Equity Investor, in either case for the purpose of 285 of 1291
22 raising a portion of the funds needed to finance the construction of the Facility by monetizing the Tax credits, depreciation and other tax benefits associated with the Facility and (ii) the Tax Equity Investor being granted only such management responsibilities in Seller, a Parent Entity, or the Ultimate Parent Entity, as applicable, as are permitted in a tax equity investment that is not subject to FERC’s review under Section 203 of the Federal Power Act. “Tax Equity Investor” has the meaning set forth in the definition of Tax Equity Financing. “Termination Notice” has the meaning set forth in Section 13.3(a). “Termination Payment” has the meaning set forth in Section 13.3(d). “Transmission Provider(s)” means the Person(s) operating the Transmission System(s) providing Transmission Services to or from the Point of Delivery. “Transmission Services” means the transmission and other services required to transmit Energy to or from the Point of Delivery.
“Transmission System” means the facilities utilized to provide Transmission Services. “Ultimate Parent Entity” means Open Mountain Energy, LLC, a Delaware limited liability company, together with its successors and assigns. “Unexcused Cause” has the meaning set forth in Section 14.6(b). “UNFCCC” has the meaning set forth in the definition of Environmental Attributes. “Unused Curtailment Credit” has the meaning set forth in Section 6.8(d). “U.S. Issuer Bank” means any issuer of a letter of credit that is organized under the laws of the United States or any state thereof.
“WECC” means the Western Electricity Coordinating Council and any successor entity thereto.
“Withholding Trigger Event” has the meaning set forth in Section 11.4. “WREGIS” means Western Renewable Energy Generation Information System, any successor thereto, including any replacement system required by the CEC, or any replacement system as determined by Buyer.
“WREGIS Certificate Deficit” has the meaning set forth in Section 6.1(c). “WREGIS Certificates” has the meaning set forth in Section 8.4. “WREGIS Operating Rules” means the rules describing the operations of WREGIS, as published by WREGIS and as may be amended from time to time. “WREGIS Withhold Amount” has the meaning set forth in Section 11.4. 286 of 1291
23 Other terms defined herein have the meanings so given them in this Agreement.

Section 1.2 Interpretation. In this Agreement, unless a clear contrary intention appears:
(a) the singular number includes the plural number and vice versa; (b) reference to any Person includes such Person’s successors and assigns but, in case of a Party hereto, only if such successors and assigns are permitted by this Agreement, and reference to a Person in a particular capacity excludes such Person in any other capacity or individually;
(c) reference to any gender includes the other;
(d) reference to any agreement (including this Agreement), document, instrument or tariff means such agreement, document, instrument or tariff as amended or modified and in effect from time to time in accordance with the terms thereof and, if applicable, the terms hereof;
(e) reference to any Article, Section, or Appendix means such Article of this Agreement, Section of this Agreement, or such Appendix to this Agreement, as the case may be, and references in any Article or Section or definition to any clause means such clause of such Article or Section or definition;
(f) “herein”, “hereunder”, “hereof”, “hereto” and words of similar import shall be deemed references to this Agreement as a whole and not to any particular Article or Section or other provision hereof or thereof;
(g) “including” (and with correlative meaning “include”) means including without limiting the generality of any description preceding such term; (h) relative to the determination of any period of time, “from” means “from and including”, “to” means “to but excluding” and “through” means “through and including”; (i) reference to time shall always refer to Pacific Prevailing Time; (j) reference to any “day” or “month” shall mean a calendar day or calendar month respectively, unless otherwise indicated, and assumes the use of Pacific Prevailing Time to determine the start and end of each referenced “day” or “month”, unless otherwise indicated; (k) the term “or” is not exclusive; and
(l) with respect to obligations, the terms “shall” and “will” shall have the same meaning and be of equal force and effect.

Section 1.3 Order of Precedence. In the event of any conflict or inconsistency between or among the terms and conditions of any of the body of this Agreement, the Appendices and Exhibits attached to the body of this Agreement and the Ancillary Documents, the following order 287 of 1291
24 of precedence, consistent with the controlling Requirements of Law, shall govern the interpretation of this Agreement: (i) the body of this Agreement, (ii) the Appendices and Exhibits attached to the body of this Agreement, and (iii) the Ancillary Documents.

ARTICLE II

EFFECTIVE DATE, TERM AND EARLY TERMINATION
Section 2.1 Effective Date. This Agreement shall be effective as of the Effective Date.

On or prior to the Effective Date, Seller shall deliver to Buyer (a) the Generator Interconnection Agreement, duly executed by Seller and Transmission Provider, (b) the Legal Opinion, (c) the Non-Consolidation Opinion, (d) the Real Property Agreements, duly executed by the parties thereto, (e) copies of (i) the true, correct and complete certificate of formation and limited liability company agreement of Seller, (ii) a certificate for Seller, dated no earlier than ten (10) days prior to the Effective Date, from the Secretary of State of the State of Nevada as to Seller’s valid existence and good standing, and (iii) all resolutions and other documents evidencing all limited liability company actions required to execute, deliver, and perform the Seller Parties’ obligations under this Agreement and the Ancillary Documents, in each case, certified by an authorized representative of the applicable Seller Party as being true, correct and complete, and (f) an incumbency certificate signed by the secretary of each Seller Party certifying as to the names and signatures of the authorized representatives, signatories, and officers of such Seller Party, in each case, in form and substance reasonably satisfactory to Buyer. No more than five (5) Business Days after the Effective Date, Seller shall deliver to Buyer acceptable evidence of the Insurance. No more than ten (10) days after the Effective Date, Seller shall deliver to Buyer the PreCommencement Date Security.

Section 2.2 Agreement Term and Delivery Term. This Agreement shall have a delivery term (the “Delivery Term”) commencing on the Commencement Date and ending on December 31, 2045, unless sooner terminated in accordance with the terms of this Agreement. The term of this Agreement (the “Agreement Term”) shall commence on the Effective Date and shall end upon the expiration of the Delivery Term or earlier termination of this Agreement in accordance with the terms hereof.

Section 2.3 Survivability. The provisions of this Article II, Article VII, Section 14.19 and Section 14.21 shall survive for a period of one year following the termination of this Agreement. The provisions of Article XI shall survive for a period of four (4) years following final payment made by the Buyer hereunder or the expiration or termination date of this Agreement, whichever is later. The provisions of Article V, Article VI, Article VIII and Article IX shall continue in effect after termination to the extent necessary to provide for final billing, adjustments and deliveries related to any period prior to termination of this Agreement.

Section 2.4 Early Termination.
(a) Early Termination by Mutual Agreement. This Agreement may be terminated by mutual written agreement of the Parties.
(b) Early Termination for Default. Upon the occurrence of a Default, the Non-Defaulting Party may terminate this Agreement as set forth in Section 13.3. 288 of 1291
25 (c) Early Termination for Force Majeure. This Agreement may be terminated pursuant to Section 14.6(d).
(d) Early Termination for Exercise of ROFO or ROFR. If Buyer accepts the Right of First Offer or Right of First Refusal for any Facility Asset, at the option of Buyer, this Agreement shall terminate effective upon the consummation of any such sale to Buyer pursuant to Section 14.25.
(e) Termination Due to Market Disruption Event. This Agreement may be terminated as provided in Section 14.26.
(f) Early Termination for Agreement’s failure to comply with Article I of Chapter 11 of Division 2 of Title 20 of the California Code of Regulations.

Notwithstanding the provisions of Section 8.7, in the event that, within sixty (60) days after the CEC’s receipt of a complete compliance filing under Sections 2909 and 2910 of Article 1 of Chapter 11 of Division 2 of Title 20 of the California Code of Regulations, the CEC issues a decision pursuant to Section 2910 thereof finding that this Agreement fails to comply with Article 1 of Chapter 11 of Division 2 of Title 20 of the California Code of Regulations, then this Agreement shall be void, and any and all deliveries of Delivered Energy shall be terminated no later than the effective date of such decision of noncompliance by the CEC. (g) Effect of Termination. Any early termination of this Agreement under this Section 2.4 shall be without prejudice to the rights and remedies of either Party for Defaults occurring prior to such termination.

ARTICLE III

DEVELOPMENT OF THE FACILITY
Section 3.1 In General.
(a) Permitting. Seller, at its expense, shall timely take all steps necessary to obtain and maintain all Permits required to own, maintain or operate the Facility in accordance with the requirements of this Agreement and all applicable Requirements of Law and for the performance of Seller’s obligations hereunder.
(b) Meetings with Governmental Authorities. Seller shall represent the Facility as necessary in all meetings with and proceedings before all Governmental Authorities. (c) CEQA Exemption. Seller represents and warrants that (1) the Facility is subject to environmental review pursuant to NEPA in connection with the procurement of rightof-way(s) from the U.S. Department of Interior, Bureau of Land management for the construction and installation of certain electrical facilities, (2) pursuant to NEPA, Seller has caused, or has caused its Affiliates to, submit to and complete the NEPA Environmental Assessment with respect to the Facility, (3) the lead agency conducting the review of the Facility as required under NEPA has certified a final environmental impact report (or equivalent environmental document) for the Facility and issued a final approval for the Facility, and Seller has delivered to Buyer a Record of Decision or Decision Record in connection therewith; and (4) the lead agency conducting the review of the Facility as required under the environmental 289 of 1291
26 laws of the State of Nevada has certified a final environmental impact report (or equivalent environmental document) for the Facility in compliance with NEPA, and Seller has delivered to Buyer a Record of Decision or Decision Record in connection therewith; and (5) the Facility is statutorily exempt from CEQA pursuant to Title 14, California Code of Regulations, Section 15277.
(d) Ownership of the Facility. Except as otherwise permitted by this Agreement, the Facility shall be owned by Seller during the Agreement Term. As more fully described in Section 5.1, Seller shall operate and maintain the Facility, at its sole risk and expense, and in compliance with the requirements of this Agreement, all applicable Requirements of Law, Prudent Utility Practices, and applicable manufacturer’s and operator’s specifications and recommended procedures; provided, however, meeting these requirements shall not relieve Seller of its other obligations under this Agreement. Seller shall not sell or otherwise dispose of or create, incur, assume or permit to exist any Lien (other than Permitted Encumbrances) on any portion of the Facility or any other property or assets which are related to the operation, maintenance and use of the Facility without the prior written approval of Buyer.

The Facility shall be operated during the Delivery Term by the party listed as the operator on Appendix B or such other Person as Buyer shall approve in the exercise of its reasonable discretion.

Section 3.2 Commencement Date Notices. Seller shall provide Buyer no fewer than five (5) days’ prior written notice of the date on which Seller anticipates achieving the Commencement Date Conditions. Seller shall provide Buyer with an additional notice when Seller believes that all Commencement Date Conditions have been satisfied. Buyer’s Authorized Representative shall in writing either accept or reject this notice in its reasonable discretion within ten (10) Business Days after receipt of Seller’s notice, and if Buyer’s Authorized Representative rejects the notice, Seller shall promptly correct any defects or deficiencies and resubmit the notice.

If Buyer fails to respond within such ten (10) Business Day period, it shall be deemed to have accepted Seller’s notice. If Buyer rejects the notice, Buyer shall state in detail the reason for its rejection and the Parties shall immediately meet and confer to address Buyer’s concerns. The Commencement Date shall occur as of the first day of the first full month following the date upon which the Seller certification of satisfaction of the Commencement Date Conditions is accepted or deemed accepted by Buyer.

Section 3.3 Other Information. Seller shall provide to Buyer such other information regarding the permitting or operations of Seller, its subcontractors or the Facility, financial or otherwise, and other data concerning the Seller, its subcontractors or the Facility as Buyer or Buyer’s Authorized Representative may, from time to time, reasonably request. Until the Commencement Date, Seller shall provide to Buyer notice of any significant developments or delays and Seller’s estimation of the Commencement Date and anticipated progress and activities for the upcoming month. Buyer and Buyer’s Authorized Representative shall be permitted to inspect the Facility from time to time upon reasonable notice to Seller and during reasonable business hours.

Section 3.4 [Reserved].
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27 Section 3.5 Performance Damages. If Seller fails to achieve the Commencement Date by the Guaranteed Commencement Date, Seller shall pay liquidated damages to Buyer in an amount equal to the applicable per day amount set forth in Appendix H (“Daily Delay Damages”) for each day intervening between the Guaranteed Commencement Date and the earlier of (i) the date the Commencement Date is achieved, and (ii) the date, if any, on which this Agreement is terminated by Buyer pursuant to Section 2.4, up to a maximum of the Initial Security Amount in the aggregate for Daily Damages for the achievement of the Commencement Date (“Daily Delay Damages Cap”). The Parties agree that (x) it is impractical or extremely difficult to determine actual damages to which Buyer would be entitled in the foregoing circumstance, and (y) the liquidated damages provided for in this subsection are a fair and reasonable calculation of actual damages to Buyer and are not a penalty in such a circumstance. Buyer may draw from the PreCommencement Date Security the amount of any such Daily Delay Damages due and owing to Buyer. Notwithstanding anything to the contrary set forth in this Agreement, in no event shall the Commencement Date occur later than June 1, 2020 (the “Outside Commencement Date”) and the failure to achieve the Commencement Date by the Outside Commencement Date shall be an immediate Default by Seller, not subject to extension or cure of any kind; provided that Seller’s liability for such Default shall be limited to damages not to exceed three times the Initial Security Amount in the aggregate minus all Daily Delay Damages paid by Seller (the “Outside Commencement Date Damages Cap”). Except as set forth herein, the payment of Daily Delay Damages shall not limit Buyer’s right to (i) exercise any right or remedy available under this Agreement or at law or in equity for any other breach or default occurring concurrently with, before, or after Seller’s delay in achieving the Commencement Date by the Guaranteed Commencement Date therefor, (ii) recover any damages not directly attributable to such delay or to pursue any indemnity claims in accordance with this Agreement, or (iii) terminate this Agreement pursuant to Section 2.4.

Section 3.6 Remedial Action Plan. In addition to the payment of Daily Delay Damages in accordance with Section 3.5 for failing to achieve the Commencement Date by the Guaranteed Commencement Date, if Seller fails to achieve the Commencement Date by the Guaranteed Commencement Date (or if Seller anticipates that it will not achieve the Commencement Date by the Guaranteed Commencement Date), Seller shall immediately notify Buyer of such failure and, no more than ten (10) days following the failure to achieve the Commencement Date (or the date upon which Seller anticipates such a failure will occur), provide Buyer with a written action plan detailing how Seller will cure such failure (such plan, in the form approved by Buyer in accordance with this Section, a “Remedial Action Plan”). The Remedial Action Plan shall specify in reasonable detail Seller’s analysis of the causes of the missed Guaranteed Commencement Date (or anticipated missed Guaranteed Commencement Date), the commercially reasonable actions that Seller plans to take to correct such underperformance and to ensure that the Guaranteed Commencement Date will be achieved, and the time needed to complete such corrective actions.

Buyer shall approve or reject Seller’s proposed Remedial Action Plan in its reasonable discretion within ten (10) days of receipt thereof. If Buyer rejects a proposed Remedial Action Plan, Seller shall explain the reasons for such rejection and identify the changes necessary for Buyer to approve such plan. Seller shall thereafter revise the Remedial Action Plan to incorporate such changes and re-submit it to Buyer for Buyer’s approval within ten (10) days after receipt of Buyer’s rejection.

Seller shall complete all corrective action pursuant to the provisions of any Remedial Action Plan.

Seller may (a) supplement the Remedial Action Plan, as may be reasonably required, or (b) provide Buyer with written notice of any deviations from the approved Remedial Action Plan; provided 291 of 1291
28 that in the case of (a) or (b), any supplements to, or deviations from, the Remedial Action Plan must be reasonably acceptable to Buyer. Seller shall provide additional information or documentation related to the missed Guaranteed Commencement Date and Remedial Action Plan related thereto as Buyer may from time to time reasonably request.

Section 3.7 Decommissioning and Other Costs. Except to the extent that Buyer purchases any portion of the Facility Assets in connection with Buyer’s exercise of its Right of First Offer or Right of First Refusal, Buyer shall not be responsible for any cost of decommissioning or demolition of the Facility Assets or any environmental or other liability associated with the decommissioning or demolition of the Facility Assets without regard to the timing or cause of the decommissioning or demolition of the Facility Assets.

ARTICLE IV

OPERATION AND MAINTENANCE OF THE FACILITY
Section 4.1 Compliance with Electrical Service Requirements. Seller shall, at its sole expense, operate and maintain, or cause a Qualified Operator to operate and maintain, the Facility (i) in accordance with Prudent Utility Practices, the requirements of this Agreement, all applicable Requirements of Law and the requirements of applicable manufacturers’ and operators’ specifications, using commercially reasonable efforts to comply with any published recommendations of the manufacturers and suppliers of the major components of the Facility, (ii) with due regard for the safety, security and reliability of the interconnection facilities and the Transmission System and (iii) in a manner that is reasonably likely to maximize the output of the Facility and result in a useful life for the Facility through the end of the Delivery Term.

Section 4.2 General Operational Requirements.

In addition to the requirements set forth in Section 4.1 and elsewhere in this Agreement, Seller shall or shall cause its Qualified Operator to, at all times:
(a) Employ qualified and trained personnel for managing, operating and maintaining the Facility and for coordinating with Buyer and Buyer’s Agent. Seller shall ensure that necessary personnel are available on-site or on-call twenty-four (24) hours per day during the Delivery Term;
(b) Operate and maintain the Facility with due regard for the safety, security and reliability of the interconnected facilities and Transmission System; and (c) Comply with operating and maintenance standards recommended by, and required by, the Facility’s equipment suppliers.

Section 4.3 Operation and Maintenance Plan.

Following the Commencement Date, Seller shall:
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29 (a) Devise, implement and maintain, or cause the Qualified Operator to devise, implement and maintain, a plan of inspection, maintenance and repair for the Facility and the components thereof in order to maintain such equipment in accordance with Prudent Utility Practices (the “Operation and Maintenance Plan”), and shall keep records with respect to inspections, maintenance and repairs thereto. The aforementioned plan and all records of such activities shall be available for inspection by Buyer and Buyer’s Authorized Representative during Seller’s regular business hours upon reasonable notice. (b) Provide to Buyer, on a monthly basis, any regularly prepared operation and maintenance status reports of the Facility provided to WECC or Facility Lenders pursuant to a Financing Agreement.
(c) In addition to the other required and preventive maintenance actions contained in this Agreement, provide notification to Buyer of its actions to: (i) conduct regular visual equipment inspections and log significant parameters; (ii) identify all preventive maintenance requirements for the following calendar year, including the performance of maintenance in accordance with Section 4.4(k); (iii) conduct periodic maintenance of various equipment, including a report about any findings, and provide a report about any findings to Buyer; (iv) conduct periodic Q/A and Q/C activities and inspections in accordance with Appendix G, including a report thereof; (v) hire subcontractors, as applicable, to meet the Facility’s maintenance, betterment and improvement needs; and (vi) schedule and assign routine maintenance during operations, planned outages, as well as maintenance that can be conducted during a Forced Outage, or during an outage occurring as a result of curtailment notifications.

Section 4.4 Forecasting and Scheduling of Energy and Scheduled Outages. (a) The Parties agree to the following scheduling procedures: (i) Seller shall notify Buyer and Buyer’s Agent on a forward (monthly, weekly and day ahead) basis, as provided in this Section 4.4 and, as needed, in real time, of any reduction in availability of the Facility that exceeds one (1) MW; (ii) Seller shall make available to Buyer and Buyer’s Agent, as a graphical display, the forecasted and actual output for the Facility in increments not to exceed fifteen (15) minute averages via a web portal and secure client login, including secure file transfer protocol (“FTP”); (iii) Seller shall make available to Buyer and Buyer’s Agent realtime data of actual output, which shall be automatically telemetered to Buyer’s or Buyer’s Agent’s supervisory control and data acquisition (“SCADA”) system; and (iv) either Buyer’s Authorized Representative, Buyer’s Agent or Buyer’s Transmission Provider shall have the right, in accordance with Section 6.8, to contact Seller and require that the Facility be curtailed or to directly curtail the Facility (collectively, the “Scheduling Procedures”), which may be modified, from time to time, by written agreement between the Seller’s Authorized Representative and, with respect to Buyer, Buyer’s Authorized Representative or Buyer’s Agent, in order to comply with all applicable requirements, including those of the Transmission Provider, WECC or any balancing authority involved in the Scheduling of Energy under this Agreement. The Authorized Representatives shall promptly cooperate with respect to any reasonably necessary and appropriate modifications to Scheduling Procedures. (b) Seller or Seller’s designee shall be responsible for providing a forecast of Delivered Energy during the Delivery Term consistent with the Scheduling Procedures, as may 293 of 1291
30 be updated from time to time in accordance with Section 4.4(a). All generation Scheduling and Transmission Services shall be performed in accordance with the applicable NERC and WECC operating policies, criteria and any other applicable guidelines. This may include, but not be limited to, dynamic adjustments to e-tags in order to reflect the previous hour’s metered Energy output. The procedures shall be developed so as to maximize the amount of Energy that is RPS Compliant and EPS Compliant that may be delivered by Seller under this Agreement consistent with the requirements of the Transmission Provider, WECC and any balancing authority involved in the Scheduling of Energy under this Agreement. The Authorized Representatives shall promptly cooperate with respect to any reasonably necessary and appropriate modifications to such forecasting or scheduling procedures. The Parties acknowledge that, because Scheduling takes place in advance of generation, there may be deviations between the amount of Energy generated by a Facility and the amount of Energy Scheduled by Buyer and Seller for delivery at the Point of Delivery. Seller shall fulfill any contractual, metering and interconnection requirements so as to be able to deliver Energy to the Point of Delivery. (c) No later than forty-five (45) days before the beginning of each Contract Year, Seller or Seller’s designee shall provide, or cause to be provided, a non-binding forecast of each month’s average day deliveries of Energy, by hour, for the following eighteen (18) months.
(d) Ten (10) Business Days before the beginning of each month during the Delivery Term, Seller or Seller’s designee shall provide, or cause to be provided, a non-binding forecast of each day’s average deliveries of Energy, by hour, for the following month. (e) By 5:00 a.m. on the WECC pre-scheduling day immediately preceding the date of delivery of Energy during the Delivery Term, Seller or Seller’s designee shall provide Buyer or Buyer’s Agent with a copy of a non-binding hourly forecast of deliveries of Energy for each hour of the next date of delivery of Energy (the “Day Ahead Schedule”). If the WECC pre-scheduling day pertains to multiple dates of delivery, then this requirement shall apply to each of those dates. After 4:30 a.m. on such WECC pre-scheduling day, subject to Section

4.4(k), Seller or Seller’s designee may contact Buyer or Buyer’s Agent by telephone to provide any Scheduling updates or changes and the reason for such updates or changes. Acceptable reasons for such updates shall be with respect to current conditions (other than commercial considerations), including weather and applicable balancing authority rules. (f) By 12:00 p.m. on the Business Day prior to each WECC pre-scheduling day during the Delivery Term, Seller shall provide Buyer, Buyer’s Authorized Representative, Buyer’s Agent, Buyer’s real-time operators, Buyer’s Scheduler and any other designated Scheduling representative of Buyer, via email, day-ahead pre-schedules for each of the succeeding twenty-four (24) hours in the form of an Excel spreadsheet. In order to allow Buyer or Buyer’s Agent to make schedule changes in conformity with applicable scheduling deadlines, Seller shall notify Buyer or Buyer’s Agent via telephone of any hourly changes due to a change in unit availability or an outage no later than one-hundred five (105) minutes prior to the start of such Scheduling hour.
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31 (g) Commencing on the Commencement Date, and continuing throughout the Delivery Term, Seller shall provide to Buyer and Buyer’s Agent the following data on a real-time basis:
(1) Read only access to meteorological and pyranometer measurements, the parameters of which are provided in Appendix O, MW capacity, and any other Facility availability information;
(2) Read only access to energy output information collected by the SCADA system for the Facility; provided that if Buyer or Buyer’s Agent is unable to access the Facility’s SCADA system, then upon written request from Buyer or Buyer’s Agent, Seller shall provide energy output information and pyranometer and meteorological measurements to Buyer and Buyer’s Agent in four (4) second intervals in the form of a one (1) hour flat file to Buyer and Buyer’s Agent through a FTP system with an email back up for each flat file submittal. Seller shall store such information for up to three (3) months after delivery thereof to Buyer and Buyer’s Agent; and
(3) Unless the Transmission Provider at the Facility’s Point of Delivery requires otherwise, read only access to all Electric Metering Devices (other than meteorological data) installed, owned and operated by Seller at the Project Substation that are used to measure Delivered Energy.
(h) Commencing on the Commencement Date, and continuing throughout the Delivery Term, Seller shall provide to Buyer NERC, WECC and FERC compliance reports regarding the Facility when they are issued.
(i) During the Delivery Term, if Seller or Seller or Seller’s designee becomes aware of changes to the Day Ahead Schedule on the actual date of delivery of Energy due to current conditions, including weather or environmental conditions, an unscheduled outage or a scheduling change imposed by Buyer or a Transmission Provider that results in a change to the Facility’s deliveries (whether in part or in whole), Seller or Seller’s designee shall immediately notify Buyer of any and all changes to the Day Ahead Schedule and provide a revised schedule as soon as possible in an electronic format, either via an internet website accessible to Buyer, Buyer’s Authorized Representative, Buyer’s Agent, Buyer’s real-time operators, Buyer’s Scheduler and any other designated Scheduling representative of Buyer or via email in the form of an excel spreadsheet (or any combination thereof); provided that Seller shall deliver any revised Day Ahead Schedule which reflects an increase in forecasted delivery of Energy in any hour in such Day Ahead Schedule no later than two (2) hours prior to the first updated hour.
(j) Seller shall provide forecasts and data required under this Section 4.4 in a format mutually agreeable to Seller and Buyer, which may include the following protocols: (i) Distributed Network Protocol (“DNP”) 3.0 TCP/IP for primary communications between the Facility and Buyer, (ii) DNP 3.0 Serial for backup communication between the Facility and Buyer, and (iii) DNP 3.0 for communication between the Participating Member’s Distributed Control Systems and Intelligent Electronic Devices (such as SEL Relays, ION Meters and Areva Relays).
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32 (k) Buyer and Seller shall cooperate to minimize Scheduled Outages during certain consecutive or nonconsecutive weeks of each Contract Year (not to exceed twelve (12) weeks per Contract Year) specified by Buyer’s Authorized Representative (the “Major Maintenance Blockout”), but in accordance with Prudent Utility Practices. No later than May 1, 2020 and the commencement of each Contract Year thereafter, Buyer’s Authorized Representative shall provide Seller with Buyer’s specified Major Maintenance Blockout. In the absence of such updated notification, the most recent previous Major Maintenance Blockout notification shall apply. Seller shall attempt to minimize its Scheduled Outages during the Major Maintenance Blockout consistent with Prudent Utility Practices. No later than sixty (60) days prior to the Commencement Date, and the commencement of each Contract Year thereafter, Seller shall provide Buyer or Buyer’s Agent with its non-binding written projection of all Scheduled Outages for the succeeding three (3) years (the “Scheduled Outage Projection”) reflecting a minimized schedule of scheduled maintenance during the Major Maintenance Blockout. In addition, Seller shall use commercially reasonable efforts to accommodate Buyer’s reasonable maintenance scheduling requests consistent with Prudent Utility Practices. The Scheduled Outage Projection shall include information concerning all projected Scheduled Outages during such period, including (i) the anticipated start and end dates of each Scheduled Outage; (ii) a description of the maintenance or repair work to be performed during the Scheduled Outage; and (iii) the anticipated MW of operational capacity, if any, during the Scheduled Outage. Seller shall notify Buyer or Buyer’s Agent of any change in the Scheduled Outage Projection as soon as practicable, but in no event later than thirty (30) days prior to the originally scheduled date of the Scheduled Outage. Seller shall use commercially reasonable efforts to accommodate reasonable requests of Buyer or Buyer’s Authorized Representative with respect to the timing of Scheduled Outages, and Seller shall, to the extent feasible and consistent with Prudent Utility Practices, arrange for Scheduled Outages to occur between October 1 and May 1 of each year and coincident with planned transmission outages, but not to overlap with the Major Maintenance Blockout. In the event of a System Emergency, Seller shall make all reasonable efforts to reschedule any Scheduled Outage previously scheduled so that it occurs during the System Emergency. (l) In the event of a Forced Outage affecting at least ten percent (10%) of the Nominal Capacity Net of Parasitic Load of the Facility, to the extent practicable, Seller shall notify Buyer or Buyer’s Agent within two (2) hours of the Forced Outage and provide detailed information concerning the Forced Outage, including (i) the start and anticipated end dates of the Forced Outage; (ii) a description of the cause of the Forced Outage; (iii) a description of the maintenance or repair work to be performed during the Forced Outage; and (iv) the anticipated MW of operational capacity, if any, during the Forced Outage. Seller shall take all reasonable measures and exercise commercially reasonable efforts to avoid Forced Outages and to limit the duration and extent of any such outages.
(m) Consistent with Prudent Utility Practices, Seller shall at all times maintain the ability to continue to provide real-time data to Buyer, to implement curtailments, and to adjust curtailment amounts in real-time in the event that Seller’s primary communications means become unavailable at any point in time.

Section 4.5 Dynamic Scheduling. If, during the Agreement Term, dynamic scheduling or pseudo-tie scheduling becomes available on a commercially reasonable basis that provides for 296 of 1291
33 fractional MWh deliveries, the Parties will (a) negotiate in good faith modifications to this Agreement that require Seller to use commercially reasonable efforts to pursue such dynamic scheduling or pseudo-tie arrangements with the applicable Reliability Authorities for the scheduling and delivery of Facility Energy to the Point of Delivery and (b) incorporate such arrangements into this Agreement through an amendment in accordance with Section 14.11.

Section 4.6 Reporting and Information. Commencing on the Commencement Date, Seller shall provide to Buyer (a) Monthly Reports of the operation of the Facility on or before the fifteenth (15th) day of each month, which shall include (i) a performance summary of the Contract Month- and Contract Year-to-date MWh delivery of Facility Energy, capacity factor, availability (including actual availability vs. expected availability), average illumination, weather for the month and reasons for downtimes, (ii) reports of expected generation indicators of when a Shortfall may occur; (iii) any regularly prepared operations and maintenance status reports of the Facility provided to WECC or any Facility Lenders, (iv) reports regarding the ongoing operations of the Facility during such month, which set forth the status of the operation of the Facility or any component thereof, including any equipment or other operational or maintenance failures, defects or other issues and any repairs, replacements or other remediation provided or to be provided therefor, (v) descriptions of weather, reasons for any downtime, maintenance or repairs, and curtailment periods during the applicable month, and (vi) a safety and environmental summary, and (b) such other information regarding the permitting, engineering, construction or operations of the Facility as Buyer may, from time to time, reasonably request.

ARTICLE V

COMPLIANCE DURING OPERATION PERIOD
Section 5.1 In General.
(a) The Facility. Seller represents and warrants that Seller performed, or caused to be performed, all engineering, design, development and construction of the Facility, and shall perform or cause to be performed any future engineering, design, development and construction the Facility, in a good and workmanlike manner and in accordance with applicable standards, Prudent Utility Practices, all applicable Requirements of Law, Seller’s Quality Assurance Program and all other requirements of this Agreement. Seller warrants and guarantees that throughout the Delivery Term: (i) the Facility, its engineering, design and construction, its components and related work, shall be free from material defects caused by errors or omissions in design, engineering and construction or repaired as provided herein, (ii) the Facility will be free and clear of all Liens other than Permitted Encumbrances, and (iii) the Facility will comply in all respects with the requirements of this Agreement and all applicable Requirements of Law. Seller also warrants and guarantees that throughout the Agreement Term it will monitor the operation and maintenance of the Facility and that said operation and maintenance is, and will be, in full compliance with all applicable standards, Prudent Utility Practices, Requirements of Law, Seller’s Quality Assurance Program and other provisions of this Agreement. Without limiting the foregoing, Seller shall promptly repair or replace, consistent with Prudent Utility Practices, any component of the Facility that does not comply with the foregoing warranties or guarantees. Seller shall at all times exercise commercially reasonable efforts to undertake all recommended or required updates or modifications to the Facility, its equipment and materials, including procedures, programming and software in a 297 of 1291
34 timely manner. Seller shall, at its expense, maintain throughout the Agreement Term an inventory of spare parts for the Facility in a quantity that is consistent with applicable manufacturers’ recommendations and Prudent Utility Practices. (b) Buyer’s Right to Monitor in General. Buyer shall have the right upon prior written notice to Seller, and Seller shall permit Buyer and its representatives, advisors, engineers and consultants to observe, inspect and monitor all operations and activities at the Site; provided, however, that Buyer shall comply with all of Seller’s applicable safety and health rules and requirements and shall not unreasonably interfere with or disrupt the activities of Seller.

Section 5.2 Compliance with Standards. Seller shall cause the Facility and all parts thereof to be operated and maintained to meet (i) all of the requirements of this Agreement, (ii) all applicable standards and requirements of the latest revision of standards or requirements of the ASTM, ASME, ASCE, AWS, EPA, EEI, IEEE, ISA, National Electrical Code, National Electric Safety Code, OSHA, Cal-OSHA, Uniform Building Code, Uniform Plumbing Code, Underwriters Laboratory Standards and the applicable local County Fire Department Standards of the applicable county, National Fire Protection Agency standards and requirements, or their successors, (iii) all FERC-approved NERC Reliability Standards, (iv) any other codes, standards and operations and maintenance requirements applicable to the services, equipment, and work as generally shown in this Agreement and (v) all applicable Requirements of Law not specifically mentioned in this Section 5.2. If Seller contracts with another Person to operate or maintain the Facility, Seller shall cause such contract to provide that such Person shall operate or maintain, as applicable, the Facility in compliance with the laws, regulations, standards and other requirements identified in clauses (i) through (v) of the prior sentence.

Section 5.3 Quality Assurance Program. As a condition of, and no later than the occurrence of the Commencement Date, Seller shall develop and initiate a written quality assurance policy (“Quality Assurance Program”) attached hereto as Appendix G. Seller shall maintain and comply with said Quality Assurance Program, and Seller shall cause all work performed on or in connection with the Facility to comply with said Quality Assurance Program.

Section 5.4 Security Provided by Seller.
(a) Seller shall, by no later than ten (10) days following the Effective Date, execute and deliver to Buyer an Acceptable Form of Performance Assurance in the Initial Security Amount, which Acceptable Form of Performance Assurance shall be subject to replenishment as set forth in Section 5.4(d) below and shall guarantee Seller’s obligations under this Agreement prior to the Commencement Date (the “Pre-Commencement Date Security”).

Seller shall maintain the Pre-Commencement Date Security until Seller executes and delivers the Performance Security pursuant to Section 5.4(b) below, or until the requirement to maintain the Pre-Commencement Date Security ceases under Section 5.4(c) below. (b) Seller shall, by the Commencement Date, execute, deliver to Buyer and maintain an Acceptable Form of Performance Assurance in the amount of Six Hundred Seven Thousand Five Hundred Dollars ($607,500), which Acceptable Form of Performance Assurance shall guarantee Seller’s obligations under this Agreement from and after the Commencement 298 of 1291
35 Date (the “Performance Security”). Seller may elect to use any amounts remaining under its Pre-Commencement Date Security as a component of the Performance Security. (c) If (i) upon the Commencement Date, no damages or other amounts are due and owing to Buyer under this Agreement, and Seller does not elect to use the PreCommencement Date Security as a component of the Performance Security, or (ii) this Agreement terminates prior to the occurrence of the Commencement Date while the PreCommencement Date Security is outstanding and no damages or other amounts are due and owing to Buyer under this Agreement, then Seller is no longer required to maintain the PreCommencement Date Security; provided that Buyer may draw on such Pre-Commencement Date Security in accordance with clause (d).
(d) Buyer may draw on the Performance Assurance for any undisputed amount owed to Buyer that is not timely paid due to Seller’s obligations under this Agreement, including any liquidated damages, Shortfall Damages, and Daily Delay Damages and any such draw shall be deemed a cure for such non-payment to the extent of the draw. Promptly, and in no event more than five (5) Business Days following any draw by Buyer on the Performance Assurance, Seller shall replenish the amount drawn on the Performance Assurance such that the amount of the Performance Assurance is restored to the full amount set forth in Section 5.4(a) or Section 5.4(b), as applicable.
(e) Seller shall, from time to time as requested by Buyer or Buyer’s Authorized Representative, execute, acknowledge, record, register, deliver and file all such notices, statements, instruments and other documents as may be necessary or advisable to render fully valid, perfected and enforceable under all applicable law the Performance Assurance contemplated by this Agreement and the Ancillary Documents and the rights, Liens and priorities of Buyer with respect to such credit support. (f) Seller shall notify Buyer of the occurrence of a Downgrade Event with respect to an issuer of Performance Assurance, which notice shall be given by Seller within five (5) Business Days of obtaining knowledge of the occurrence of such event. If, at any time, (i) there shall occur a Downgrade Event with respect to an issuer of Performance Assurance or (ii) Buyer elects to terminate any relationship with such issuer pursuant to directives from any Governmental Authorities applicable to Buyer or the Participating Member, then Buyer may require that Seller replace the Performance Assurance from the issuer that has suffered the Downgrade Event or with whom the relationship has been terminated by Buyer with Performance Assurance from a Qualified Issuer within ten (10) Business Days of notice from Buyer to Seller requesting such replacement Performance Assurance. (g) Notwithstanding the other provisions of this Agreement, the Performance Assurance contemplated by this Agreement: (a) constitutes security for, but is not a limitation of, Seller’s obligations under this Agreement, and (b) shall not be Buyer’s exclusive remedy against Seller for the Seller’s failure to perform in accordance with this Agreement.

Section 5.5 Effect of Review by Buyer. Any review by Buyer of the operation or maintenance of the Facility is solely for the information of Buyer. Buyer shall have no obligation to share the results of any such review or observation with Seller, nor shall any such review or 299 of 1291
36 observation or the results thereof (whether or not the results are shared with Seller), nor any failure to conduct any such review, relieve Seller from any of its obligations under this Agreement. By making any such review, Buyer makes no representation as to the economic and technical feasibility, operational capability or reliability of the Facility. Seller shall in no way represent to any third party that any such review by Buyer of the Facility, including any review of the operation or maintenance of the Facility by Buyer is a representation by Buyer as to the economic and technical feasibility, operational capability or reliability of the Facility. Seller is solely responsible for the economic and technical feasibility, operational capability and reliability thereof.

ARTICLE VI

PURCHASE AND SALE OF POWER
Section 6.1 Purchases by Buyer.
(a) On and after the Commencement Date and continuing for the Delivery Term, Seller shall sell and deliver, and Buyer shall receive and purchase, all Delivered Energy for the price set forth in paragraph 2 (for Excess Energy) or paragraph 1 (for other Delivered Energy and all Makeup Energy) of Appendix A, except as described in Section 6.8 or Section

8.7; provided, that (i) during the Delivery Term, Seller shall not deliver or invoice Buyer for, and Buyer shall not purchase or receive, Excess Monthly Generation in an amount greater than fifteen percent (15%) of the sum of the Expected Annual Generation for all Contract Years, and (ii) subject to the cap on Excess Monthly Generation in clause (i), the price for any Excess Monthly Generation shall be the price set forth in paragraph 3 of Appendix A. If at any point during the Delivery Term, Seller becomes aware that it has delivered or it will likely deliver Excess Monthly Generation in an amount greater than fifteen percent (15%) of the sum of the Expected Annual Generation for all Contract Years, then until the end of the Delivery Term, Seller shall take action to reduce or eliminate Excess Monthly Generation such that the fifteen percent (15%) threshold will not be exceeded, which action may include: (1) Seller rounding down the quantity of Facility Energy Scheduled and delivered to Buyer during each hour to the nearest whole MWh increment, in which case the fractional MWh difference between the nearest whole MWh increment of Facility Energy Scheduled and delivered to Buyer and the actual quantity of Facility Energy shall (A) not be included in clause (b) of the definition of “Excess Monthly Generation” for any purpose hereunder, and (B) count as Net Delivered Energy solely for the purpose of Seller’s obligations in Sections 9.1, 9.2, and 13.1(n), and Seller will be entitled to sell such fractional MWh difference of Facility Energy into the imbalance market as set forth in Section 6.7, or (2) the implementation of dynamic scheduling or pseudotie scheduling if and to the extent available pursuant to the terms of Section 4.5. (b) Notwithstanding the foregoing, (i) with respect to any Contract Month, Buyer has no obligation to receive or purchase Excess Energy in excess of the greater of (x) an amount equal to the Guaranteed Monthly Delivered Energy for such Contract Month plus the amount of any outstanding Shortfall Energy from the prior two (2) months or (y) one hundred twenty percent (120%) of the Expected Monthly Generation for such Contract Month, and (ii) in no event shall Buyer be required to receive or purchase at the Point of Delivery a quantity of Delivered Energy in any hour that exceeds the quantity of Delivered Energy that the Facility is capable of producing when operating at the Nominal Nameplate Capacity, unless Buyer agrees otherwise in its sole discretion.
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37 (c) For any month during which the WREGIS Withhold Amount provisions of Section 11.4 are not applicable or Buyer otherwise elects not to withhold the WREGIS Withhold Amount, a “WREGIS Certificate Deficit” means any deficit or shortfall in WREGIS Certificates delivered to Buyer for such month as compared to the Delivered Energy less any Excess Actual Generation, if applicable, for the same month (“Deficient Month”) (excluding any deficits or shortfalls caused by an error or omission of Buyer). If any WREGIS Certificate Deficit is caused, and such WREGIS Certificate Deficit is not caused by an error omission of Buyer, then Buyer will be entitled to a credit in the next monthly invoice after the Deficient Month equal to fifteen dollars ($15) per MWh for each WREGIS Certificate Deficit.

Section 6.2 Point of Delivery. Seller shall deliver all Delivered Energy to Buyer at the Point of Delivery. Buyer, or its designee, shall receive all such Delivered Energy from Seller under this Agreement at the Point of Delivery.

Section 6.3 Expected Monthly Generation Adjustment.
(a) During the Expected Monthly Generation Adjustment Period, Seller shall have the option to make one adjustment to the Expected Monthly Generation applicable to each month of a Contract Year; provided that (i) such adjustment shall not result in a change of more than 7.5% in the Expected Annual Generation, (ii) such adjustment shall result in the Expected Monthly Generation for each month in a Contract Year specified in Appendix Q changing by the same percentage (i.e., the percentage change to the Expected Annual Generation shall be equal to the percentage change to the Expected Monthly Generation of each month in a Contract Year), (iii) if Seller elects to make such an adjustment, the Guaranteed Monthly Delivered Energy of each month in a Contract Year specified on Appendix Q shall be adjusted by the same percentage applied to adjust each Expected Monthly Generation, and (iv) Seller shall deliver notice of such adjustment in accordance with the following sentence within the one year period following the Commencement Date, and such adjustment (if any) will be effected by the first day of the first full month following the date that is ninety (90) days after Seller provides such notice (the “Expected Monthly Generation Adjustment Period”). If Seller elects to make an adjustment under this Section 6.3(a), Seller shall give Buyer ninety (90) days prior written notice with respect to such adjustment, including (x) the percentage change that will be applied (subject to the prior sentence) and (y) an updated version of the table in Appendix Q, specifying the Expected Monthly Generation for each month in a Contract Year, the Guaranteed Monthly Delivered Energy for each such month, and the Expected Annual Generation following application of Seller’s adjustment subject to the terms of this Section 6.3(a). Upon the first day of the first full month after the end of the ninety (90) day period following delivery of notice of an adjustment, the updated version of Appendix Q delivered by Seller in connection with such notice shall hereby replace the table in Appendix Q so long as Seller has complied with this Section 6.3(a).
(b) During the Extended Expected Monthly Generation Adjustment Period, Seller shall have the option to make one adjustment to increase the Expected Monthly Generation applicable to each month of a Contract Year; provided that (i) such adjustment shall not result in an increase to the Expected Monthly Generation above the Expected Monthly Generation amounts included in Appendix Q of the Original Agreement, (ii) such adjustment shall result in the Expected Monthly Generation for each month in a Contract Year specified in 301 of 1291
38 Appendix Q changing by the same percentage (i.e., the percentage change to the Expected Annual Generation shall be equal to the percentage change to the Expected Monthly Generation of each month in a Contract Year), (iii) if Seller elects to make such an adjustment, the Guaranteed Monthly Delivered Energy of each month in a Contract Year specified on Appendix Q shall be adjusted by the same percentage applied to adjust each Expected Monthly Generation, and (iv) Seller shall deliver notice of such adjustment in accordance with the following sentence within the eighteen (18) months after the Amendment Date, and such adjustment (if any) will be effected by the first day of the first full month following the date that is ninety (90) days after Seller provides such notice (the “Extended Expected Monthly Generation Adjustment Period”). If Seller elects to make an adjustment under this Section 6.3(b), Seller shall give Buyer ninety (90) days prior written notice with respect to such adjustment, including (x) the percentage change that will be applied (subject to the prior sentence) and (y) an updated version of the table in Appendix Q, specifying the Expected Monthly Generation for each month in a Contract Year, the Guaranteed Monthly Delivered Energy for each such month, and the Expected Annual Generation following application of Seller’s adjustment subject to the terms of this Section 6.3(b). Upon the first day of the first full month after the end of the ninety (90) day period following delivery of notice of an adjustment, the updated version of Appendix Q delivered by Seller in connection with such notice shall hereby replace the table in Appendix Q so long as Seller has complied with this Section 6.3(b).

Section 6.4 Buyer’s Failure. Unless excused by Force Majeure, a curtailment required by Buyer under Section 6.8, or Seller’s failure to perform, if Buyer fails to take the actions necessary to receive at the Point of Delivery all or any part of any Energy required to be received by Buyer under this Article VI, Article VIII or Article IX at least seventy-five (75) minutes prior to the start of the applicable Scheduling hour, Buyer shall pay Seller, on the date payment would otherwise be due to Seller, an amount for each MWh of such deficiency equal to the positive difference, if any, obtained by subtracting the Sales Price from the price per MWh which would have been payable by Buyer for the Energy not received by Seller. “Sales Price” means the price at which Seller, acting in a commercially reasonable manner, resells the Energy, including the Environmental Attributes associated therewith, or, absent a resale following commercially reasonable efforts by Seller to resell such Energy, $0/MWh. Seller shall provide Buyer prompt written notice of the Sales Price together with back-up documentation. Seller shall use, and demonstrate to Buyer its use of, commercially reasonable efforts to resell the Energy that Buyer fails to receive, including the Environmental Attributes associated therewith.

Section 6.5 Nature of Remedies. The remedy set forth in Section 6.4 is the sole and exclusive remedy of Seller for any failure by Buyer to receive Energy as and when required by this Agreement, and all other remedies and damages for any such failure are hereby waived by Seller.

Section 6.6 Energy to Come Exclusively from Facility. In no event shall Seller have the right to procure energy from sources other than the Facility for sale and delivery pursuant to this Agreement except (a) as provided in Article IX and (b) subject to the obligations of Seller as set forth in Section 7.1(b), (i) imbalance energy in quantities of less than one (1) MWh per hour delivered by Seller to allow Seller to Schedule Delivered Energy in full MWh quantities, and (ii) imbalance energy that Seller has not been able to avoid delivering notwithstanding its commercially reasonable efforts not to do so, which commercially reasonable efforts shall include 302 of 1291
39 terminating or adjusting the Energy schedule as soon as Seller is aware of any material differences between the schedule and the anticipated quantity of Facility Energy, as provided in Section 4.3(i) and Section 4.4(l).

Section 6.7 Sales to Third Parties. Seller will use commercially reasonable efforts to deliver all Facility Energy, Replacement Energy required to be delivered to Buyer under this Agreement, Capacity Rights and associated Environmental Attributes from the Facility to Buyer and will not deliver any such Facility Energy, Replacement Energy required to be delivered to Buyer under this Agreement, Capacity Rights and associated Environmental Attributes to third parties, except that (a) Seller may cause Facility Energy to be sold into the imbalance market due to under-scheduling as permitted in Section 6.1(a) to avoid Excess Monthly Generation exceeding the fifteen percent (15%) restriction set forth therein, (b) Seller may sell Deemed Delivered Energy and any associated Capacity Rights and Environmental Attributes as provided in Section 6.8(g), (c) Seller is permitted to sell Facility Energy, Replacement Energy required to be delivered to Buyer under this Agreement, Capacity Rights and associated Environmental Attributes to third parties to the extent that Buyer is excused from receiving, and purchasing, and has elected by written notice to Seller not to receive and purchase, such Facility Energy, Replacement Energy, Capacity Rights, and associated Environmental Attributes as provided in this Agreement, and (d) Seller is permitted to sell Facility Energy, Replacement Energy required to be delivered to Buyer under this Agreement, Capacity Rights and associated Environmental Attributes to third parties to the extent that Buyer fails to take the actions necessary to receive at the Point of Delivery all or any part of any Energy required to be received by Buyer at least seventy-five (75) minutes prior to the start of the applicable Scheduling hour or when Buyer provides notice (which notice may be in writing or verbal, including by phone) to Seller that it is unable to receive such Facility Energy, Replacement Energy, Capacity Rights, and associated Environmental Attributes. Notwithstanding the foregoing, if Seller rounds down the quantity of Facility Energy Scheduled during any hour as permitted by Section 6.1(a), Seller shall deliver to Buyer the Environmental Attributes associated with the fractional MWh of Facility Energy sold to third parties as a result of such rounding down.

If Seller (i) is selling Facility Energy to third parties to avoid Excess Monthly Generation exceeding the fifteen percent (15%) restriction as permitted by clause (a) of this Section 6.7, and (ii) receives compensation from a third party for any such Facility Energy in a quantity that is greater than one MWh in any hour, and the price that Seller receives for such Facility Energy from a third party is greater than the applicable price set forth in Appendix A, Seller shall pay Buyer an amount equal to the product of (x) the quantity of Facility Energy Scheduled or unscheduled to a third party in such hour and (y) the positive difference between the price that Seller received from such third party and the applicable price Seller would have received for such Facility Energy if it had been delivered to Buyer hereunder as set forth in Appendix A..

Section 6.8 Curtailment Requested by Buyer.
(a) Buyer, Buyer’s Agent or Buyer’s Transmission Provider may require Seller to reduce deliveries of all or any portion of the Facility Energy, and Seller shall comply with any such requirement of Buyer, Buyer’s Agent or Buyer’s Transmission Provider, at any time and for the duration specified by Buyer, Buyer’s Agent or Buyer’s Transmission Provider in a notice to Seller, including for curtailments required by (i) a System Emergency; (ii) an event of Force Majeure on Buyer’s side after the Point of Delivery (curtailments under preceding clauses (i), or (ii), “Non-Compensable Curtailments”); (iii) system improvements, scheduled 303 of 1291
40 or unscheduled repairs or maintenance on Buyer’s side of the Point of Delivery (other than due a Force Majeure event as described in (ii) above); (iv) Buyer’s failure or inability to Schedule the Delivered Energy from the Point of Delivery (other than due to a Force Majeure event as described in (ii) above); and (v) for any other reason in the sole discretion of whichever representative of Buyer provided the applicable notice (curtailments under preceding clauses (iii), (iv) or (v), “Compensable Curtailments”). Curtailments shall be measured in five (5) minute increments and in a manner that is consistent with the Scheduling Procedures. Seller shall be excused from delivering the reduced deliveries of Facility Energy described in the notice described in this subsection. Subject to Section 6.8(b), Buyer shall be excused from receiving the reduced deliveries of Facility Energy described in the notice described in this subsection. (b) Buyer shall not pay Seller for any Non-Compensable Curtailments.

Buyer shall pay Seller for Deemed Delivered Energy during Compensable Curtailments occurring during the Delivery Term that is in excess of four percent (4%) of the Expected Annual Generation in each Contract Year. The Compensable Curtailments less than or equal to four percent (4%) of the Expected Annual Generation in such Contract Year are “Buyer’s NonCompensable Curtailment Hours”. During the Delivery Term, the Parties shall reasonably estimate the amount of curtailed Facility Energy that would have been delivered at the Point of Delivery during each Contract Month had the Non-Compensable or Compensable Curtailments not occurred, which shall include the Facility Energy actually generated during such NonCompensable or Compensable Curtailments (“Deemed Delivered Energy”), and such Deemed Delivered Energy shall count toward the Guaranteed Monthly Delivered Energy or, if the Guaranteed Monthly Delivered Energy has been met for such Contract Month, toward reducing any outstanding Shortfall Energy.
(c) With respect to any Compensable Curtailment, Buyer shall pay: (i) the price set forth in paragraph 1 of Appendix A for Deemed Delivered Energy that, had it been delivered to the Point of Delivery, would not have been Excess Energy or Excess Monthly Generation, (ii) the price set forth in paragraph 2 of Appendix A for Deemed Delivered Energy that, had it been delivered to the Point of Delivery, would have been Excess Energy and (iii) the price set forth in paragraph 3 of Appendix A for Deemed Delivered Energy that, had it been delivered to the Point of Delivery, would have been Excess Monthly Generation subject to Section 6.1.
(d) At the end of every Contract Year, Seller will provide to Buyer in the invoice delivered to Buyer pursuant to Section 11.1, a calculation of the total MWh Deemed Delivered Energy during Buyer’s Non-Compensable Curtailment Hours. If the total MWh of Deemed Delivered Energy during Buyer’s Non-Compensable Curtailment Hours is less than four percent (4%) of the Expected Annual Generation in each Contract Year, then Buyer will receive a credit equal to the product of (i) thirty-five dollars and twelve cents ($35.12), and (ii) the difference between (a) four percent (4%) of the Expected Annual Generation in each Contract Year and (b) the total MWh of Deemed Delivered Energy during Buyer’s NonCompensable Curtailment Hours in such Contract Year (“Unused Curtailment Credit”). The total Unused Curtailment Credit amount will be credited against amounts otherwise owing by Buyer to Seller for Energy in the first, and if necessary, subsequent months of the subsequent Contract Year.
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41 (e) For the avoidance of doubt, Buyer shall not pay Seller for any Deemed Delivered Energy calculated during Buyer’s Non-Compensable Curtailment Hours or during any Non-Compensable Curtailments.
(f) Seller shall provide the capability to implement curtailments and adjust curtailment amounts in real time by means of setpoints received from Buyer’s SCADA system.

Seller shall install sufficient measuring equipment at the Facility to collect data necessary to reasonably determine the amount of curtailed Facility Energy, including any Deemed Delivered Energy.
(g) Seller shall use, and demonstrate to Buyer its use of, commercially reasonable efforts to sell Deemed Delivered Energy arising during any Compensable Curtailments, including the Environmental Attributes associated therewith. Any proceeds from the sale of any Deemed Delivered Energy to a third party purchaser shall be the property of Seller, and Seller shall credit any such proceeds against any amounts owed by Buyer to Seller for such Deemed Delivered Energy pursuant to this Section 6.8.

ARTICLE VII
TRANSMISSION AND SCHEDULING; TITLE AND RISK OF LOSS
Section 7.1 In General.
(a) Seller shall arrange and be responsible for any Transmission Services required to deliver Facility Energy or Replacement Energy to the Point of Delivery or the Replacement Energy Point of Delivery, as applicable. Seller shall Schedule or arrange for Scheduling services with its Transmission Providers to deliver the Facility Energy to Buyer at the Point of Delivery. Buyer shall arrange and be responsible for Transmission Services at and from the Point of Delivery, and shall Schedule or arrange for Scheduling services with its Transmission Providers to receive Delivered Energy or Replacement Energy at the Point of Delivery or the Replacement Energy Point of Delivery, as applicable. This includes creation by Seller and, as needed, revisions of electronic tags (“e-tags”) associated with such Energy schedules. Seller shall provide additional information as reasonably requested by Buyer on etags or as reasonably necessary to facilitate Buyer’s reporting requirements under RPS Law.

Each Party shall designate an authorized Scheduler to effect the Scheduling of all Delivered Energy or Replacement Energy, as applicable. The contact information for Buyer’s Scheduler and Seller’s Scheduler as of the Effective Date shall be set forth in Appendix C and shall be revised by the Authorized Representative of the respective Party, as needed. (b) In performing its obligations with respect to Scheduling Facility Energy to the Point of Delivery hereunder, Seller will use commercially reasonable efforts to reduce the delivery of whole or fractional MWh of Excess Monthly Generation and to cause the quantity of Delivered Energy during each hour to be as close as possible to the quantity of Facility Energy produced during such hour, subject to the restrictions set forth herein. Seller and Buyer agree that such commercially reasonable efforts may include Seller scheduling Delivered Energy in an amount in excess of the forecasted available generation so that Seller delivers Excess Monthly Generation up to and until deliveries of Excess Monthly Generation equal or exceed the fifteen percent (15%) threshold set forth in Section 6.1(a). For clarity, Buyer is permitting 305 of 1291
42 Seller to deliver and sell to Buyer the Excess Monthly Generation as provided herein solely to meet the operating conditions set forth in this Agreement.

Section 7.2 Costs. Seller shall be responsible for any costs, expenses or charges imposed on or associated with Facility Energy up to the Point of Delivery, including charges related to control area services, inadvertent energy flows, transmission losses and the transmission of Facility Energy, and costs associated with transmission outages, congestion or curtailment.

Subject to Section 6.7, Buyer shall be responsible for any costs, expenses or charges imposed on or associated with Delivered Energy at and from the Point of Delivery, including charges related to control area services, inadvertent energy flows, transmission losses and the transmission of Delivered Energy, and costs associated with transmission outages, congestion or curtailment.

Section 7.3 Title; Risk of Loss. As between the Parties, Seller shall be deemed to be in exclusive control (and responsible for any damages or injury caused thereby) of all Facility Energy prior to and at the Point of Delivery, and Buyer shall be deemed to be in exclusive control (and responsible for any damages or injury caused thereby) of all Delivered Energy from the Point of Delivery. Seller shall deliver all Delivered Energy, Replacement Energy, Capacity Rights and Environmental Attributes to Buyer free and clear of all Liens created by any Person other than Buyer. Title to and risk of loss as to all Delivered Energy, Replacement Energy, Capacity Rights and Environmental Attributes shall pass from Seller to Buyer at the Point of Delivery; provided, however, that title and risk of loss as to any Replacement Energy specified by Buyer to be delivered to a Replacement Energy Point of Delivery and all of the associated Environmental Attributes shall pass from Seller to Buyer upon delivery of such Replacement Energy to such Replacement Energy Point of Delivery.

ARTICLE VIII
ENVIRONMENTAL ATTRIBUTES; EPS AND RPS COMPLIANCE
Section 8.1 Transfer of Environmental Attributes. For and in consideration of Buyer entering into this Agreement, and in addition to the agreement by and between Buyer and Seller to purchase and sell Delivered Energy on the terms and conditions set forth herein, Seller shall transfer to Buyer, and Buyer shall receive from Seller, all right, title, and interest in and to all Environmental Attributes, free and clear of all Liens, whether now existing or acquired by Seller or that hereafter come into existence or are acquired by Seller during the Agreement Term, for all Facility Energy and Replacement Energy, in each case, purchased by Buyer hereunder. In addition, Buyer shall be entitled to all Environmental Attributes associated with Facility Energy generated by Seller during a Compensable Curtailment and during a Buyer Failure to perform for which Buyer pays Seller pursuant to Section 6.4, in each case, that Seller was unable to sell notwithstanding its commercially reasonable efforts to do so. For the avoidance of doubt, Buyer is not entitled to, and Seller shall retain for its own benefit, all Environmental Attributes associated with (i) all Non-Compensable Curtailments and (ii) all Facility Energy during Buyer’s NonCompensable Curtailment Hours. Environmental Attributes that are in, or that shall come into, existence with respect to Energy generated by the Facility that services Parasitic Load shall be transferred by Seller to, and received by, Buyer. Seller agrees to transfer and make available to Buyer such Environmental Attributes to the fullest extent allowed by applicable law immediately upon Seller’s production or acquisition of the Environmental Attributes. To the extent allowable under Requirements of Law, Seller will register and report monthly geothermal generation 306 of 1291
43 auxiliary load to the NVTREC system to create Nevada Portfolio Energy Credits (“PECs”). All such PECs received by Seller will be transferred by Seller to, and received by, Buyer to the full extent allowed by Requirements of Law immediately upon Seller’s receipt of such PECs within the NVTREC system. Except as otherwise permitted herein, including as provided in Section 6.7, Seller represents and covenants that it has not assigned, transferred, conveyed, encumbered, sold or otherwise disposed of and will not in the future assign, transfer, convey, encumber, sell or otherwise dispose of all or any portion of such Environmental Attributes to any Person other than Buyer or attempt to do any of the foregoing with respect to any of the Environmental Attributes.

Buyer and Seller acknowledge and agree that the consideration for the transfer of Environmental Attributes is contained within the relevant prices for Delivered Energy under Article VI and Article IX and Appendix A. If at any time Seller becomes obligated to obtain pollution or environmental credits or offsets in order to own, operate or maintain the Facility in compliance with the Requirements of Law, Seller shall ensure that such credits or offsets are obtained in Seller’s own name and at Seller’s sole cost and expense. In no event shall Seller use any Environmental Attributes to satisfy the foregoing obligation.

Section 8.2 Reporting of Ownership of Environmental Attributes. During the Agreement Term, Seller shall not report to any Person that the Environmental Attributes granted hereunder to Buyer belong to any Person other than Buyer, and Buyer may report under any program that such Environmental Attributes purchased hereunder belong to it.

Section 8.3 Environmental Attributes. Upon the request of Buyer or Buyer’s Authorized Representative, Seller shall take all reasonable actions and execute all documents or instruments as are reasonable and necessary under all law, regulations, guidebooks promulgated by the CEC or PUC, bilateral arrangements or other voluntary Environmental Attribute programs of any kind, as applicable, to maximize the attribution, accrual, realization, generation, production, recognition and validation of Environmental Attributes throughout the Agreement Term.

Section 8.4 Use of Accounting System to Transfer Environmental Attributes. In furtherance and not in limitation of Section 8.3, Seller shall use WREGIS to evidence the transfer of any Environmental Attributes under applicable laws or any voluntary program (“WREGIS Certificates”), associated with Facility Energy or Replacement Energy, in either case, to be transferred to Buyer, in accordance with WREGIS reporting protocols and shall register the Facility with WREGIS. Within five (5) days after the Effective Date, Seller shall deliver sufficient evidence to Buyer that it has prepared and registered all required documents and has taken all necessary steps for final WREGIS approval, including the notice of substantial completion or commercial operation date to WREGIS, as appropriate. Seller shall deliver to Buyer sufficient evidence that substantial completion of the Facility is verified with WREGIS, and it has provided WREGIS with notice of the commercial operation date. After the Facility is registered with WREGIS, at the option of Buyer’s Authorized Representative, Seller shall transfer WREGIS Certificates using the Forward Certificate Transfer method, as described in WREGIS Operating Rules, from Seller’s WREGIS account to up to three WREGIS accounts, as designated by Buyer’s Authorized Representative. Seller shall be responsible for the WREGIS expenses associated with registering the Facility, maintaining its account, WREGIS Certificate issuance fees and transferring WREGIS Certificates to Buyer or Buyer’s Agent, or any other designees, and Buyer shall be responsible for the WREGIS expenses associated with maintaining its account, or the accounts of its designees, if any, and subsequent transferring or retiring of WREGIS Certificates. 307 of 1291
44 Buyer is not a QRE as defined by the WREGIS Operating Rules for Seller. Forward Certificate Transfers shall occur monthly based on the certificate creation timeline established by the WREGIS Operating Rules. Seller shall be responsible for, at its expense, validating and disputing data with WREGIS prior to WREGIS Certificate creation each month. In the event that WREGIS is not in operation, or WREGIS does not track Seller’s transfer of WREGIS Certificates to Buyer, Buyer’s Agent or Buyer’s designees for purposes of any Environmental Attributes attributed, accrued, realized, generated, produced, recognized or validated relative to the Facility Energy or Replacement Energy to which Buyer is entitled hereunder, or Buyer chooses not to use WREGIS for any reason, Seller shall document the production and transfer of Environmental Attributes under this Agreement by delivering to Buyer an attestation for the Environmental Attributes produced by the Facility, or Replacement Energy, measured in whole MWh, or by such other method as Buyer or Buyer’s Authorized Representative shall designate. If any of the foregoing is or becomes inconsistent with the WREGIS rules, the Parties shall reasonably cooperate to amend the foregoing procedures in a manner reasonably requested by Buyer consistent with the then effective WREGIS rules. Buyer shall take all reasonably necessary actions to facilitate the transfer of Environmental Attributes as provided above, including accepting any transfer request made by Seller through WREGIS in accordance with the foregoing.

Section 8.5 Further Actions Regarding Environmental Attributes. If WREGIS (or any successor thereto) is no longer available to provide the services described in Section 8.4, Seller shall, until such time as a substitute provider reasonably acceptable to both Parties is available to provide such services, continue to document the production of Environmental Attributes by delivering with each invoice to Buyer an attestation and bill of sale for Environmental Attributes (i) produced by the Facility to which Buyer is entitled as provided hereunder or (ii) included with Replacement Energy deliver to Buyer for the preceding month. The form of attestation and bill of sale is set forth as Appendix D. Upon the reasonable request of Buyer or Buyer’s Authorized Representative, the Parties shall execute all such documents and instruments and take such other action in order to effect the transfer of the Environmental Attributes specified in this Agreement to Buyer and to maximize the attribution, accrual, realization, generation, production, recognition and validation of the Environmental Attributes to which Buyer is entitled. In the event of the promulgation of a scheme involving Environmental Attributes administered by CAMD, upon notification by CAMD that any transfers contemplated by this Agreement shall not be recorded, the Parties shall promptly cooperate in taking all reasonable actions necessary so that such transfer can be recorded. Each Party shall promptly give the other Party copies of all documents it submits to CAMD to effectuate any transfers.

Section 8.6 RPS and EPS Compliance. Except as provided in Section 8.7, the Seller warrants and guarantees that, upon the achievement of the Commencement Date and at all times thereafter, the Facility will be both RPS Compliant and EPS Compliant (the “Compliance Standards”). In accordance with the terms set forth herein, including Section 8.7, Seller shall be responsible for all costs and charges associated with maintaining the Compliance Standards should the Facility not be RPS Compliant and EPS Compliant after the Commencement Date and throughout the Delivery Term. From time to time and at any time requested by Buyer or Buyer’s Authorized Representative, Seller will furnish to Buyer, Governmental Authorities or other Persons designated by Buyer, all certificates and other documentation reasonably requested by Buyer or Buyer’s Authorized Representative in order to establish compliance with the preceding sentence.
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45 Section 8.7 Change in Law.
(a) Notwithstanding the foregoing, if at any time during the Delivery Term a change in law occurs that causes the Facility to fail to comply with the Compliance Standards, then Seller shall use commercially reasonable efforts to bring the Facility into compliance with the Compliance Standards. During the Delivery Term, during all times in which the Facility fails to meet the Compliance Standards, including when Seller is using commercially reasonable efforts to bring the Facility into compliance with the Compliance Standards, the price for Delivered Energy set forth in paragraph 2 of Appendix A shall be the Market Price. (b) If, at any time during the Delivery Term, the RPS Law or EPS Law ceases to be effective and is not replaced with a functional equivalent law, where permitted by applicable laws, rules and regulations, the price for Delivered Energy set forth in paragraph 2 of Appendix A shall be, for the remainder of the Delivery Term, the higher of (x) the Market Price (excluding the value of the Environmental Attributes) or (y) the Market Value, subject to Section 8.7(d).
(c) If, Buyer determines, in its reasonable discretion, that it is impossible for Seller to comply with the RPS Law or the EPS Law, Buyer shall have the option to (i) cause the price for Delivered Energy set forth in paragraph 2 of Appendix A to be, for the remainder of the Delivery Term, the higher of (x) the Market Price (excluding the value of the Environmental Attributes) or (y) the Market Value, subject to Section 8.7(d), or (ii) terminate this Agreement. (d) Seller shall in good faith determine the Market Value as soon as reasonably practicable after the RPS Law or EPS Law ceases to be effective or Buyer makes a determination pursuant to Section 8.7(c) and promptly notify Buyer thereof. Buyer shall either accept or reject such Market Value within thirty (30) days after receiving such notice. If Buyer accepts such Market Value, the price set forth in paragraph 2 of Appendix A for Delivered Energy for the remainder of the Delivery Term shall be the higher of the Market Price and such Market Value. If Buyer rejects such Market Value, Seller may either, by notice to Buyer within thirty (30) days after receiving such rejection (i) agree that the price set forth in paragraph 2 of Appendix A for Delivered Energy for the remainder of the Delivery Term will be the Market Price, in which case such price shall be the Market Price, or (ii) terminate this Agreement. Seller will be deemed to have agreed that the price set forth in paragraph 2 of Appendix A for Delivered Energy will be the Market Price if Seller does not respond within such thirty (30) day period.

ARTICLE IX

MAKEUP OF SHORTFALL ENERGY
Section 9.1 Makeup of Shortfall. Unless excused by (a) a Force Majeure, (b) a System Emergency, (c) Buyer’s Default or a failure to Schedule energy from the Point of Delivery or any other Buyer failure under Section 6.4, or (d) a Non-Compensable Curtailment or a Compensable Curtailment ((a)-(d), collectively, “Excused Conditions”), if in any Contract Month beginning with the sixth (6th) Contract Month, the amount of Net Delivered Energy is less than the Guaranteed Monthly Delivered Energy for such Contract Month (such failure, a “Shortfall”), then Seller shall make up such shortfall of Net Delivered Energy (“Shortfall Energy”) in accordance with this Article IX; provided that any Excess Energy (excluding Excess Monthly Generation) 309 of 1291
46 delivered in the Contract Month immediately preceding the Contract Month in which the Net Delivered Energy is less than the Guaranteed Monthly Delivered Energy shall be credited to the Shortfall Energy, so long as both Contract Months are in the same compliance period and Buyer is able to use such Excess Energy for purposes of demonstrating its compliance obligations for such compliance period for purposes of RPS Law, unless Buyer elects that the foregoing shall not apply in such Contract Month.

Section 9.2 Makeup Energy. During any two-month period (the “Shortfall Cure Period”) following a Contract Month in respect of which there is Shortfall Energy due to Buyer, Seller may deliver additional Net Delivered Energy (“Makeup Energy”) to make up such Shortfall Energy until all Shortfall Energy is provided to Buyer; provided that no Net Delivered Energy in a Contract Month shall count toward curing Shortfall Energy until Buyer has received Net Delivered Energy (including Deemed Delivered Energy for such Contract Month counted toward the Guaranteed Monthly Delivered Energy) up to the Guaranteed Monthly Delivered Energy for such Contract Month. Except as provided in Section 6.1(b), all such Makeup Energy shall be paid for at the price specified in paragraph 1 of Appendix A.

Section 9.3 Shortfall Remedies. If Seller fails to make up the full amount of any Shortfall Energy by the end of the applicable Shortfall Cure Period (the “Makeup Deadline”), Buyer may elect, in its sole discretion, that (a) Seller pay to Buyer an amount for each MWh of then-remaining Shortfall Energy equal to the positive difference, if any, determined by subtracting (i) the per-MWh price for Delivered Energy identified in paragraph 1 of Appendix A from (ii) the sum of the time weighted average of the (x) Market Price Index for such Energy and (y) Green Value associated therewith; provided that (y) shall not apply if Section 8.7 applies such that Buyer is paying the Market Price for Delivered Energy (collectively, the “Shortfall Damages”) or (b) Seller, within ninety (90) days after the Makeup Deadline, provide Buyer with the quantity of Replacement Energy sufficient to cure any then-remaining Shortfall Energy from such Shortfall Cure Period pursuant to Section 9.4: provided, however, that if Seller is unable to provide Buyer with Replacement Energy pursuant to Section 9.4 within such ninety (90) day period notwithstanding its commercially reasonable efforts to do so, Seller shall cure the then-remaining amount of Shortfall Energy as if Buyer elected a cure pursuant to Section 9.3(a) (payment of Shortfall Damages). The Parties agree that (x) it is impractical or extremely difficult to determine actual damages to which Buyer would be entitled in the foregoing circumstance, and (y) the liquidated damages provided for in this subsection are a fair and reasonable calculation of actual damages to Buyer and are not a penalty in such a circumstance.

Section 9.4 Replacement Energy. Seller shall Schedule or arrange for Scheduling services with its Transmission Providers to deliver the Replacement Energy to the Point of Delivery; provided that the Replacement Energy shall be delivered to Buyer on a fixed twentyfour (24) hour per day delivery schedule consistent with the Facility’s historic percentage of onpeak and off-peak Delivered Energy or as otherwise mutually agreed to by the Parties. If Seller and Buyer mutually agree on a point or points of interconnection on Buyer’s transmission system other than the Point of Delivery for delivery of any Replacement Energy, Seller shall Schedule or arrange for Scheduling services with its Transmission Providers to deliver such Replacement Energy to such specified point or points instead of the Point of Delivery (“Replacement Energy Point of Delivery”). As employed in this Agreement, “Replacement Energy” means Energy produced by an identified facility listed by Seller in Appendix U other than the Facility that, at the 310 of 1291
47 time delivered to Buyer, (a) is both RPS Compliant and EPS Compliant, and (b) includes Environmental Attributes that have the same or comparable value, including with respect to the timeframe for retirement of such Environmental Attributes, if any, as the Environmental Attributes that would have been generated by the Facility on the day and at the time for which the Replacement Energy is being provided. Seller shall also provide to Buyer the associated Capacity Rights; provided that (a) and (b) shall not apply if Section 8.7 applies such that Buyer is paying the Market Price for Delivered Energy. Notwithstanding any other provision of this Agreement, other than Buyer’s remedies for a Default by Seller under Section 13.1(n), Shortfall Damages or the delivery of Replacement Energy shall be Buyer’s sole remedy, and Seller’s sole liability, for Seller’s failure to deliver Facility Energy and the associated Environmental Attributes and Replacement Energy and the associated Environmental Attributes, as provided under Sections 9.1 and 9.2 above; provided that the foregoing shall not limit Buyer’s rights to exercise any right or remedy available under this Agreement or at law or in equity for any other breach or default occurring concurrently with, before or after the failure to meet the Guaranteed Monthly Delivered Energy, including a Default under Section 13.1(b). Seller may update the list of identified facilities included on Appendix U from time to time during the Agreement Term by delivering notice of such update to Buyer and obtaining Buyer’s approval thereof, which approval shall not be unreasonably withheld, conditioned, or delayed.

Section 9.5 Application of Shortfall Energy or Replacement Energy. In the event of shortfalls in multiple Contract Months, any Makeup Energy or Replacement Energy delivered by Seller shall be applied in priority to the earliest outstanding shortfalls hereunder until all shortfalls are satisfied.

ARTICLE X

CAPACITY RIGHTS
Section 10.1 Purchase and Sale of Capacity Rights. For and in consideration of Buyer entering into this Agreement, and in addition to the agreement by and between Buyer and Seller to purchase and sell Facility Energy and Environmental Attributes on the terms and conditions set forth herein, Seller hereby transfers to Buyer, and Buyer hereby accepts from Seller, all of the Capacity Rights except as otherwise provided herein. Buyer and Seller acknowledge and agree that the consideration for the transfer of Capacity Rights is contained within the relevant prices for Delivered Energy. In no event shall Buyer have any obligation or liability whatsoever for any debt pertaining to the Facility by virtue of Buyer’s ownership of the Capacity Rights or otherwise.

Section 10.2 Representation Regarding Ownership of Capacity Rights. Seller represents and covenants that it has not assigned, transferred, conveyed, encumbered, sold or otherwise disposed of and will not in the future assign, transfer, convey, encumber, sell or otherwise dispose of any of the Capacity Rights to any Person other than Buyer or attempt to do any of the foregoing with respect to any of the Capacity Rights except as otherwise permitted herein. Seller shall not report to any Person that any of the Capacity Rights belong to any Person other than Buyer. Buyer may, at its own risk and expense, report to any Person that the Capacity Rights belong to it.

Section 10.3 Further Action by Seller Regarding Capacity Rights. Seller shall execute and deliver such documents and instruments and take such other action as Buyer or 311 of 1291
48 Buyer’s Authorized Representative may reasonably request to effect recognition and transfer of the Capacity Rights to Buyer. Seller shall bear the costs associated therewith.

ARTICLE XI
BILLING; PAYMENT; AUDITS; METERING; ATTESTATIONS; POLICIES Section 11.1 Billing and Payment. Billing and payment for the Energy purchases by Buyer under this Agreement and for any other amounts due and payable by Buyer hereunder shall be as follows:
(a) On or before the tenth (10th) day of the month following a month in which transactions occur hereunder, Seller shall render an invoice (including the name of the Facility, Seller’s address and the contact information of the preparer) to Buyer showing the following (with reasonable detail) for the preceding month, as applicable:
(1) (i) the total amount of Delivered Energy during such month, (ii) the portion of such Delivered Energy that is Excess Monthly Generation and the portion of such Excess Monthly Generation that Buyer must purchase subject to Section 6.1(a), and (iii) after the Amendment Date, (A) a summary of the Facility Energy as measured at the Electric Metering Devices detailed by day and hour, (B) a calculation of the total Excess Monthly Generation from the Effective Date through the end of such month, and (C) a calculation of the ratio of the quantity calculated pursuant to clause (B) to the sum of the Expected Annual Generation for all Contract Years during the Delivery Term; (2) an accounting of (i) the amount of the Net Delivered Energy counting toward Guaranteed Monthly Delivered Energy for the applicable Contract Month delivered as of such date (including confirmation that Seller met the Guaranteed Monthly Delivered Energy or a statement of the amount of Shortfall Energy resulting from a Shortfall in such Contract Month), (ii) the amount of Makeup Energy (which may not consist of Excess Monthly Generation) and Replacement Energy delivered, and the amount of Shortfall Damages paid, during such Contract Month, if applicable, and the amount outstanding Shortfall Energy was reduced as a result thereof and (iii) the amount of outstanding Shortfall Energy following such reductions as a result of Replacement Energy or Makeup Energy delivered, or Shortfall Damages, in such Contract Month (including a breakdown of such outstanding Shortfall Energy by Contract Month in which it was accrued);
(3) subject to Section 6.1(c), Excess Energy billed pursuant Section 6.1(b) at the price specified in paragraph 2 of Appendix A. (4) the amount of Buyer’s Non-Compensable Curtailment Hours incurred during such period in accordance with Section 6.8, including the cumulative total of Buyer’s Non-Compensable Curtailment Hours incurred during the current Contract Month and the prior Contract Month, including the current billing period, and consistent with the Scheduling Procedures, and in the first month after the end of each Contract Year, the total Deemed Delivered Energy during Buyer’s Non-Compensable Curtailment Hours 312 of 1291
49 for the prior Contract Year and the amount of the Unused Curtailment Credit, if any, to be applied as an offset to Buyer’s payment obligation;
(5) Seller’s reasonable calculation of the amount of Deemed Delivered Energy and amounts owed by Buyer in accordance with Section 6.8(c); (6) the amount of money received by Seller, if any, associated with the sale of any curtailed Facility Energy under Section 6.8(a); (7) Seller’s reasonable calculation of the System Credit (if applicable); (8) Seller’s reasonable calculation of the deficiency during Buyer’s failure in accordance with Section 6.4;
(9) the amount of money received by Seller, if any, associated with the sale of Energy not received by Buyer and the calculated Sales Price for each deficiency under Section 6.4;
(10) any other payments due to Buyer or Seller under this Agreement, including amounts owed to Buyer for a WREGIS Certificate Deficit pursuant to Section 6.1(c);
(11) the total quantity of WREGIS Certificates confirmed to have been uploaded by Seller to the WREGIS system; and
(12) any WREGIS Withhold Amount withheld during such Month or released to Seller in accordance with Section 11.4;
(b) Monthly invoices, to the extent applicable, shall be based on meter readings as described in Section 11.8.
(c) Monthly invoices shall be sent to the address set forth in Appendix C or such other address as is provided by Buyer in writing.
(d) Certification in form and substance reasonably satisfactory to Buyer of the maximum Parasitic Load of the Facility and the Deemed Additional System Output as required under Section 12.8 shall accompany the monthly invoice for the month in which such certification was obtained (which shall be within the time period provided herein). (e) Attestations of Environmental Attribute transfers to Buyer pursuant to Section 8.5, if applicable, shall accompany monthly invoices. (f) Confirmation of Seller’s compliance with the terms and conditions of this Agreement shall accompany monthly invoices.

Section 11.2 Calculation of Energy Delivered; Payment.
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50 (a) Delivered Quantity. For each month during the Agreement Term, commencing with the first month in which Energy is delivered by Seller to and received by Buyer under this Agreement, Seller shall calculate the amount of Energy so delivered and received during such month as determined (i) in the case of Delivered Energy, from recordings produced by Seller’s Electric Metering Devices maintained pursuant to Section 11.8, at or near midnight on the last day of the month in question, and (ii) in the case of Replacement Energy actually supplied to Buyer pursuant to Section 9.4, from recordings produced by metering equipment approved by Buyer’s Authorized Representative in his sole discretion.

Section 11.3 Payment. Subject to the provisions of Section 11.4, Buyer shall pay the amounts set forth in each monthly invoice by wire transfer to the accounts designated on the invoice rendered by Seller on or before the thirtieth (30th) day after receipt by Buyer of the applicable invoice. Bills or portions of bills which are not paid by the due date shall thereafter accrue interest at the Interest Rate, from and including the date payment was due until the date such payment is made. Seller shall pay to Buyer any amount owed to Buyer as set forth in Section

11.1(a)(5) and Section 11.1(a)(6) with respect to any month at the time Seller submits its next monthly invoice to Buyer, but in no event more than thirty (30) days after the date of the invoice showing any amount is owed to Buyer. Buyer shall not be required to pay any amounts included in an invoice received more than six (6) months after the billing period.

Section 11.4 WREGIS Withholding. Buyer shall have the right to withhold from any payment to Seller, for each MWh delivered under Section 6.1 (other than any Excess Monthly Generation), an amount equal to fifteen dollars ($15) per MWh (such amount, the “WREGIS Withhold Amount”) until such time as the first WREGIS Certificate has been delivered to Buyer’s WREGIS account, and Buyer shall pay the WREGIS Withhold Amount previously withheld by Buyer for each such MWh for which a WREGIS Certificate was credited to Buyer’s WREGIS account in such month. If at any time after the first WREGIS Certificate has been delivered to Buyer’s WREGIS Account, a WREGIS Certificate corresponding to Facility Energy and Replacement Energy (other than Excess Monthly Generation) purchased by Buyer hereunder is not delivered within one hundred twenty (120) days after delivery of such corresponding MWh of Facility Energy and Replacement Energy purchased by Buyer hereunder (a “Withholding Trigger Event”), Buyer shall have the right to reinstate withholding pursuant to this Section 11.4, in which case, Buyer may withhold the WREGIS Withhold Amount for each such MWh of Facility Energy and Replacement Energy purchased by Buyer hereunder until the corresponding WREGIS Certificate has been delivered to Buyer’s WREGIS Account. Buyer may continue such withholding until a Six-Month Cure occurs. A “Six-Month Cure” means the WREGIS Certificate for each MWh of Facility Energy and Replacement Energy (other than Excess Monthly Generation) purchased by Buyer hereunder during a six (6) consecutive month period is delivered to Buyer’s WREGIS account within one hundred twenty (120) days after delivery of such corresponding MWh of Facility Energy and Replacement Energy purchased by Buyer hereunder.

Buyer shall cease withholding the WREGIS Withhold Amount upon the expiration of a Six-Month Cure but may reinstate withholding at any time thereafter upon the occurrence of a Withholding Trigger Event subject to Seller’s right to again implement a Six-Month Cure.

Section 11.5 Disputed Invoices. In the event any portion of any invoice is in dispute, the undisputed amount shall be paid when due. The Party disputing a payment shall promptly notify the other Party of the basis for the dispute. Disputes shall be discussed by the Authorized 314 of 1291
51 Representatives, who shall use reasonable efforts to amicably and promptly resolve the disputes, and any failure to agree shall be subject to resolution in accordance with Section 14.3. Upon resolution of any dispute, if all or part of the disputed amount is later determined to have been due, then the Party owing such payment or refund shall pay within ten (10) days after receipt of notice of such determination the amount determined to be due plus interest thereon at the Interest Rate from the due date until the date of payment. For purposes of this Section 11.5, “Interest Rate” shall mean one percent (1%) per month. Either Party may dispute an invoice at any time after receipt of such invoice, provided that such Party or its Authorized Representative provides the other Party with a notification of such dispute, setting forth the details of such dispute in reasonable specificity.

Section 11.6 Right of Setoff. In addition to any right now or hereafter granted under applicable law and not by way of limitation of any such rights, Buyer shall have the right at any time or from time to time without notice to Seller or to any other Person, any such notice being hereby expressly waived, to set off against any amount due from Seller to Buyer under this Agreement or otherwise any amount due Buyer from Seller or Seller Party under this Agreement or otherwise, including any amounts due because of breach of this Agreement or any other obligation and any costs payable by Seller under Section 7.2, Section 9.3, or Section 9.4 if and to the extent paid in the first instance by Buyer.

Section 11.7 Records and Audits. Seller shall maintain, and shall cause Seller’s subcontractors and suppliers as applicable to maintain, all records pertaining to the management of this Agreement, related subcontracts and performance of services pursuant to this Agreement (including all billings, costs, metering, and Environmental Attributes), in their original form, including reports, documents, deliverables, employee time sheets, accounting procedures and practices, records of financial transactions and other evidence, regardless of form (e.g., machine readable media such as disk, tape, etc.) or type (e.g., databases, applications software, database management software, utilities, etc.), sufficient to properly reflect all costs claimed to have been incurred and services performed pursuant to this Agreement. If the Seller, the Seller’s subcontractors or suppliers are required to submit cost or pricing data in connection with this Agreement, the Seller shall maintain all records and documents necessary to permit adequate evaluation of the cost or pricing data submitted, along with the computations and projections used.

Buyer and the Authorized Auditors shall have the right to discuss such records with Seller’s officers and independent public accountants (and by this provision Seller authorizes said accountants to discuss such billings and costs), all at such times and as often as may be reasonably requested. All records shall be retained, and shall be subject to examination and audit by the Authorized Auditors, for a period of not less than five (5) years following final payment made by the Buyer hereunder or the expiration or termination date of this Agreement, whichever is later.

The Seller shall make said records or, to the extent accepted by the Authorized Auditors, photographs, micro-photographs, etc. or other authentic reproductions thereof, available to the Authorized Auditors at the Seller’s offices located at all reasonable times and without charge. The Authorized Auditors shall have the right to reproduce, photocopy, download, transcribe and the like any such records. Any information provided by the Seller on machine-readable media shall be provided in a format accessible and readable by the Authorized Auditors. The Seller shall not, however, be required to furnish the Authorized Auditors with commonly available software.

Seller, and the Seller’s subcontractors and suppliers, as applicable to the services provided under this Agreement, shall be subject at any time with fourteen (14) days’ prior written notice to audits 315 of 1291
52 or examinations by Authorized Auditors, relating to all billings and to verify compliance with all Agreement requirements relative to practices, methods, procedures, performance, compensation and documentation. Examinations and audits shall be performed using generally accepted auditing practices and principles and applicable Governmental Authority audit standards. If Seller utilizes or is subject to Federal Acquisition Regulation, Part 30 and 31, et seq. accounting procedures, or a portion thereof, examinations and audits shall utilize such information. To the extent that an Authorized Auditor’s examination or audit reveals inaccurate, incomplete or non-current records, or records are unavailable, the records shall be considered defective. Consistent with standard auditing procedures, the Seller shall be provided fifteen (15) days to review an Authorized Auditor’s examination results or audit and respond to the Buyer’s Authorized Representative prior to the examination’s or audit’s finalization and public release. If an Authorized Auditor’s examination or audit indicates the Seller has been overpaid under a previous payment application, the identified overpayment amount shall be paid by the Seller to the Buyer within fifteen (15) days of notice to the Seller of the identified overpayment. The Seller shall contractually require all subcontractors performing material services under this Agreement for aggregate consideration of at least ten percent (10%) of the Facility Cost to comply with the provisions of this Section by inserting this Section 11.7 in each contract of such material subcontractors and by contractually requiring each such subcontractor to insert this Section 11.7 in any of its subcontract contracts related to provision of such material services under this Agreement. In addition, Seller and such material subcontractors shall also include the following language in each contract of such subcontractor: “The Southern California Public Power Authority is a third party beneficiary of the foregoing audit provision. The benefits of the audit provision shall inure solely for the benefit of the Southern California Public Power Authority. The designation of the Southern California Public Power Authority as a third party beneficiary of the audit provision shall not confer any rights or privileges on the Seller, subcontractor or any other person/entity.” Notwithstanding the foregoing, if the audit reveals that the Buyer overpayment to the Seller is more than five percent (5.0%) of the billings reviewed, Seller shall pay all expenses and costs incurred by the Authorized Auditors arising out of or related to the examination or audit. Such examination or audit expenses and costs shall be paid by the Seller to the Buyer within fifteen (15) days of notice to the Seller of such costs and expenses. Any information provided by Seller to the Authorized Auditor shall be held by such Authorized Auditor in strict confidence and Seller may require such Authorized Auditor to enter into a reasonable confidentiality agreement prior to the disclosure of information hereunder; provided that the Authorized Auditors shall not be prevented from disclosure of such information to Buyer to the extent such disclosure to Buyer is required to enable Buyer to carry out its rights and responsibilities under this Agreement and Buyer shall treat such information as Confidential Information to the extent provided under Section 14.21.

Section 11.8 Electric Metering Devices.
(a) Metering requirements shall be consistent with this Section 11.8 unless the Transmission Provider at the Facility’s Point of Delivery requires otherwise or as otherwise mutually agreed to by the Parties. Facility Energy shall be measured using revenue grade Electric Metering Devices installed, owned and maintained by the Seller at the high side of the step-up transformer at the Facility substation (the “Project Substation”) and as depicted and labeled “Revenue Metering System” in the single-line diagram attached to this Agreement in Appendix R, the metering diagram attached to this Agreement in Appendix S, and the point of metering diagram attached to this Agreement as Appendix T. All Electric Metering Devices 316 of 1291
53 used to provide data for the computation of payments shall be sealed, and the Seller or its designee shall only break the seal when such Electric Metering Devices are to be inspected and tested or adjusted in accordance with this Section 11.8. Seller or its designee shall specify the number, type and location of such Electric Metering Devices. Seller shall provide Buyer and the Participating Member a live data connection to such Electronic Metering Devices that may be accessed using the Inter-Control Center Communications Protocol (“ICCCP”), as defined by the International Electrotechnical Commission, which connection will enable the exchange of real-time and historical power system monitoring and control data, including measured values and accounting data; provided that if such ICCCP connection is not available at any time, Seller shall provide to Buyer the data that would have been accessible through such ICCCP connection during such lapse in connection in a form reasonably acceptable to Buyer. (b) The Electric Metering Devices shall be capable of: (i) accurately metering back-feed load when generation output goes to zero, and (ii) conforming to the DNP

3.0 protocol and meeting N-1 redundancy (which dictates that if any one meter fails, the Electric Metering Devices will allow the missing telemetry data to be alternately sourced or calculated).

Examples of N-1 redundancy compliant architecture include placing backup meters at the same point of metering or installing one meter at each branch (i.e., gross, aux and net) so the missing telemetry data may be calculated as a difference. Notwithstanding such required capabilities, the Electric Metering Devices shall function in compliance with the guidebook promulgated by the CEC, as amended from time to time, or in compliance with other RPS Law, whichever is controlling.
(c) Seller or its designee, at no expense to Buyer, shall inspect and test all Electric Metering Devices upon installation and at least annually thereafter. Seller shall provide Buyer with reasonable advance notice of, and permit a representative of Buyer to witness and verify, such inspections and tests. Upon request by Buyer, Seller or its designee shall perform additional inspections or tests of any Electric Metering Device and shall permit a qualified representative of Buyer to inspect or witness the testing of any Electric Metering Device. The actual expense of any such requested additional inspection or testing shall be borne by Seller.

Seller shall provide copies of any inspection or testing reports to Buyer. (d) If an Electric Metering Device fails to register, or if the measurement made by an Electric Metering Device is found upon testing to be inaccurate by more than one percent (1.0%), an adjustment shall be made correcting all measurements by the inaccurate or defective Electric Metering Device for both the amount of the inaccuracy and the period of the inaccuracy. The adjustment amount and period shall be determined by reference to Buyer’s Check Meters for the Facility, if any, or as far as can be reasonably ascertained by Seller from the best available data, subject to review and approval by Buyer’s Authorized Representative.

If the period of the inaccuracy cannot be ascertained reasonably, any such adjustment shall be for a period equal to one-third of the time elapsed since the preceding test of the Electric Metering Devices. To the extent that the adjustment period covers a period of deliveries for which payment has already been made by Buyer, Buyer shall use the corrected measurements as determined in accordance with this Section 11.8 to recompute the amount due for the period of the inaccuracy and shall subtract the previous payments by Buyer for this period from such recomputed amount. If the difference is a positive number, the difference shall be paid by Buyer to Seller; if the difference is a negative number, that difference shall be paid by Seller to Buyer, 317 of 1291
54 or at the discretion of Buyer or Buyer’s Authorized Representative, may take the form of an offset to payments due to Seller from Buyer. Payment of such difference by the owing Party shall be made not later than thirty (30) days after the owing Party receives notice of the amount due, unless Buyer or Buyer’s Authorized Representative elects payment via an offset. (e) At Buyer’s or Buyer’s Agent’s option, Buyer may install, own and operate Electric Metering Devices at the Project Substation and/or the Point of Delivery (“Buyer’s Check Meters”). Seller shall, and shall cause each of its subcontractors to, grant to Buyer and Buyer’s Agent rights of access to the Buyer’s Check Meters upon reasonable notice to Seller and during reasonable business hours. Commencing on the Commencement Date, and continuing throughout the Delivery Term, Buyer shall provide to Seller on a real-time basis read only access to Buyer’s Check Meters. Buyer’s Check Meters shall be for check purposes only and shall not be used for the measurement of Facility Energy, except as provided in Section

11.8(d) above. The installation, operation and maintenance of Buyer’s Check Meters shall be performed entirely by Buyer or Buyer’s Agent at Buyer’s sole cost and expense.

Section 11.9 Taxes. Seller shall be responsible for and shall pay, before the due dates therefor, any and all federal, state and local Taxes incurred by it as a result of entering into this Agreement and all Taxes imposed or assessed with respect to the Facility, the Site, or any other assets of Seller, the sale or use of Facility Energy, Capacity Rights and Environmental Attributes and all Taxes related to Seller’s income. If Buyer is required under any Requirement of Law to remit or pay Taxes that are Seller’s responsibility hereunder, Buyer may deduct such amounts from payments to Seller hereunder; if Buyer elects not to deduct such amounts from payments to Seller, Seller shall promptly reimburse Buyer for such amounts promptly upon request. Further, if the Facility is exempt from one or more Taxes at any time and for any reason, and that exemption is lost at any time during the Agreement Term, Seller shall be responsible for any additional Taxes incurred as a result of the loss of that exemption.

ARTICLE XII
REPRESENTATIONS AND WARRANTIES; COVENANTS OF SELLER
Section 12.1 Representations and Warranties of Buyer. Buyer represents and warrants to Seller as of the Effective Date that:
(a) Buyer is a validly existing joint powers authority under the laws of the State of California and has the legal power and authority to own its properties, to carry on its business as now being conducted and to enter into this Agreement and each Ancillary Document to which it is a party and carry out the transactions contemplated hereby and thereby and perform and carry out all covenants and obligations on its part to be performed under and pursuant to this Agreement and all such Ancillary Documents.
(b) The execution, delivery and performance by Buyer of this Agreement and each Ancillary Document to which Buyer is a party have been duly authorized by all necessary action, and do not and will not require any consent or approval of Buyer’s Board of Directors or Buyer’s Members, other than that which has been obtained; provided, that further authorizations will be required for Buyer to exercise the Right of First Offer or the Right of First Refusal.
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55 (c) This Agreement and each of the Ancillary Documents to which the Buyer is a party constitute the legal, valid and binding obligation of Buyer enforceable in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization or similar laws relating to or affecting the enforcement of creditors’ rights generally or by general equitable principles, regardless of whether such enforceability is considered in a proceeding in equity or at law.

Section 12.2 Representations and Warranties of Seller. Seller represents and warrants to Buyer that:
(a) Each of the Seller Parties is a corporation or limited liability company duly organized, validly existing and in good standing under the laws of its respective state of incorporation or organization, is qualified to do business in the State of California and (the state where Facility is located, as applicable), and has the legal power and authority to own and lease its properties, to carry on its business as now being conducted and (in the case of Seller) to enter into this Agreement and (in the case of each Seller Party) each Ancillary Document to which it may be party and carry out the transactions contemplated hereby and thereby and perform and carry out all covenants and obligations on its part to be performed under and pursuant to this Agreement and all Ancillary Documents.
(b) The execution, delivery and performance by the Seller Parties of this Agreement and all Ancillary Documents, the consummation of the transactions contemplated hereby and thereby and the fulfilment of and compliance with the provisions of this Agreement and the Ancillary Documents, have been duly authorized by all necessary action, and do not and will not require any consent or approval other than those which have already been obtained. (c) The execution and delivery of this Agreement and all Ancillary Documents, the consummation of the transactions contemplated hereby and thereby and the fulfillment of and compliance with the provisions of this Agreement and the Ancillary Documents, do not conflict with or constitute a breach of or a default under, any of the terms, conditions or provisions of any Requirement of Law, or any organizational documents, agreement, deed of trust, mortgage, loan agreement, other evidence of indebtedness or any other agreement or instrument to which any Seller Party is a party or by which it or any of its property is bound, result in a breach of or a default under any of the foregoing or result in or require the creation or imposition of any Lien upon any of the properties or assets of any Seller Party (except as contemplated hereby), and each Seller Party has obtained, or shall timely obtain at no expense to Buyer, all Permits, including, to the extent required, any FERC authorization, required for the performance of its obligations hereunder and thereunder and operation of the Facility in accordance with Prudent Utility Practices, the requirements of this Agreement, the Ancillary Documents and all applicable Requirements of Law.
(d) Each of this Agreement and the Ancillary Documents constitutes the legal, valid and binding obligation of each Seller Party which is party thereto enforceable in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization or similar laws relating to or affecting the enforcement of creditors’ rights generally or by general equitable principles, regardless of whether such enforceability is considered in a proceeding in equity or at law.
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56 (e) There is no pending, or to the knowledge of the Seller, threatened action or proceeding affecting any Seller Party before any Governmental Authority, which purports to affect the legality, validity or enforceability of this Agreement or any of the Ancillary Documents.
(f) None of the Seller Parties is in violation of any Requirement of Law, which violations, individually or in the aggregate, would reasonably be expected to result in a material adverse effect on the business, assets, operations, condition (financial or otherwise) or prospects of any Seller Party, or the ability of any Seller Party to perform any of its obligations under this Agreement or any Ancillary Document.
(g) The organizational structure and ownership of Seller and each Parent Entity, including a list of each of such entity’s Principals, is as set forth in Appendix N.

Appendix N may be updated from time to time by agreement of Buyer and Seller to account for a Change in Control that has been consented to by Buyer in accordance with this Agreement. (h) Seller is and has always been a Special Purpose Entity. (i) The Seller Parties have (i) not entered into this Agreement or any Ancillary Document with the actual intent to hinder, delay or defraud any creditor, and (ii) received reasonably equivalent value in exchange for their respective obligations under this Agreement and the Ancillary Documents. No petition in bankruptcy has been filed against any of the Seller Parties, and none of Seller, the Seller Parties or any of their respective constituent Persons have ever made an assignment for the benefit of creditors or taken advantage of any insolvency act for its benefit as a debtor.
(j) All of the assumptions made in the Non-Consolidation Opinion, including but not limited to any exhibits attached thereto, are true and correct. Seller has complied and will comply after the date hereof with all of the assumptions made with respect to Seller in the Non-Consolidation Opinion.
(k) None of the Seller Parties has any reason to believe that any of the Permits required to maintain or operate the Facility in accordance with the requirements of this Agreement and all applicable Requirements of Law will not be timely obtained in the ordinary course of business.
(l) To the extent applicable to any Seller Party, all Tax returns and reports of each Seller Party required to be filed by it have been timely filed, and all Taxes shown on such Tax returns to be due and payable and all assessments, fees and other governmental charges upon the Seller Parties and upon its properties, assets, income, business and franchises that are due and payable have been paid when due and payable except for any such Taxes overdue for no more than sixty (60) days that are being contested in good faith by appropriate proceedings so long as such outstanding Taxes and proceedings do not (x) involve a material risk of the sale, forfeiture, loss or restriction on the use of the relevant Facility or any material part thereof or (y) cause, or could reasonably be expected to cause, a material adverse effect on Seller’s ability to perform its obligations under this Agreement. None of the Seller Parties knows of any 320 of 1291
57 proposed Tax assessment against any of the Seller Parties that is not being actively contested by it in good faith and by appropriate proceeding.
(m) As of the Effective Date, Seller has not assigned, transferred, conveyed, encumbered, sold or otherwise disposed of, and during the Agreement Term, Seller shall not assign, transfer, convey, encumber, sell or otherwise dispose of, any Facility Energy, Environmental Attributes, or Capacity Rights except as provided herein and except in connection with any Permitted Encumbrances.
(n) Seller owns or possesses, or will own or possess in a timely manner, all patents, rights to patents, trademarks, copyrights and licenses necessary for the performance by Seller of this Agreement and the Ancillary Documents and the transactions contemplated thereby, without any conflict with the rights of others, and Seller’s use thereof does not infringe on the intellectual property rights of third parties.
(o) To Seller’s knowledge, there are no investigations, inquiries, orders, hearings, actions or other proceedings by or before any Governmental Authority that are pending or, to the best of Seller’s knowledge, threatened in connection with any Permit or Environmental Laws with respect to the Facility or the Site. Neither Seller, nor to Seller’s knowledge, any third party has used, released, generated, manufactured, produced, or stored in, on, under or about the Site any Hazardous Materials that could reasonably be expected to subject Seller or Buyer to liability under any Environmental Laws. To Seller’s knowledge, with the exception of those Hazardous Materials used and stored in accordance with Environmental Laws and pursuant to any applicable Permit, there are no Hazardous Materials used, stored or present at, in, on or under the Site that could reasonably be expected to subject the Seller or Buyer to liability under any Environmental Laws.
(p) Seller has Site Control for the Agreement Term.

Section 12.3 Covenants of Seller Related to Real Property Agreements. (a) Seller shall at all times maintain Site Control and keep, perform, observe and comply with, or cause to be kept, performed, observed and complied with, all covenants, agreements, conditions and other provisions required to be kept, performed, observed and complied with, by or on behalf of Seller from time to time pursuant to the Real Property Agreements, and Seller shall not do or permit anything to be done, the doing of which, or refrain from doing anything, the omission of which, could impair or tend to impair the rights of Seller under any Real Property Agreement, or could be grounds for the Lessor to terminate any Real Property Agreement. Seller may not remove any portions of or rights or interests in the Site under the Real Property Agreements or amend or terminate any of the Real Property Agreements, or otherwise alter, diminish, or otherwise impact any obligation of Seller under this Agreement, unless Buyer has provided prior written consent to Seller, such consent to be determined in Buyer’s reasonable discretion.
(b) Seller shall give Buyer immediate notice of (i) any default or of any event which, with the giving of notice or passage of time, or both, would become a default under any Real Property Agreement or of the receipt by Seller of any notice from the Lessor thereof, or 321 of 1291
58 (ii) the commencement or threat of any action or proceeding or arbitration pertaining to any Real Property Agreement. Buyer, at its option, may take any action (but shall not be obligated to take any action) from time to time deemed necessary or desirable by Buyer to prevent or cure, in whole or in part, any default by Seller under any Real Property Agreement or any development agreement for the Facility, and Seller shall cause each such agreement to provide for a right for Buyer to take any such action. Seller shall deliver to Buyer, immediately upon service or delivery thereof on, to or by Seller, a copy of each petition, summons, complaint, notice of motion, order to show cause and other pleading or paper, however designated, which shall be served or delivered in connection with any such action, proceeding or arbitration. (c) As long as this Agreement is in effect, there shall be no merger of any Real Property Agreement or of any leasehold estate created thereby with the fee estate in the property subject to any Real Property Agreement, and Seller will not acquire any interest in such fee estate without the prior written consent of Buyer.
(d) Seller shall not modify, subordinate or amend any Real Property Agreement in any respect, either orally or in writing, and Seller shall not terminate, cancel, sever or surrender, or permit or suffer the modification, subordination, amendment, termination, cancellation, severance or surrender of any Real Property Agreement and shall not waive, excuse, condone or in any way release or discharge the Lessor of or from the obligations, covenants, conditions and agreements by the Lessor to be kept, performed, observed or complied with thereunder, and any such action taken by Seller without the prior written consent of Buyer shall be void at inception and of no force and effect. (e) Subject to the rights of Facility Lender as set forth in the Financing Agreements, in the event of the termination, rejection, or disaffirmance by Lessor (or by any receiver, trustee, custodian, or other party that succeeds to the rights of the Lessor) under any Real Property Agreement pursuant to the Bankruptcy Code, Seller hereby presently, absolutely, irrevocably and unconditionally grants and assigns to Buyer the sole and exclusive right to make or refrain from making any election available to lessees under the Bankruptcy Code (including the election available pursuant to Section 365(h) of the Bankruptcy Code and any successor provision), and Seller agrees that any such election, if made by Seller without the prior written consent of Buyer (which Buyer would not anticipate granting due to the importance of the Real Property Agreement as security), shall be void at inception and of no force or effect. Without limiting the generality of the foregoing sentence, Seller shall not, without Buyer’s prior written consent, elect to treat any Real Property Agreement or the leasehold estate created thereby as terminated under Section 365 of the Bankruptcy Code, after rejection or disaffirmance of a Real Property Agreement by the Lessor (whether as debtor in possession or otherwise) or by any trustee of the Lessor, and any such election made without such consent shall be void at inception and of no force or effect. At the request of Buyer, Seller will join in any election made by Buyer under the Bankruptcy Code and will take no action in contravention of the rights granted to Buyer pursuant to this Section 12.3.
(f) In the event there is a termination, rejection, or disaffirmance by the Lessor (whether as debtor in possession or otherwise) or by any trustee of the Lessor pursuant to the Bankruptcy Code and Buyer elects to have Seller remain in possession under any legal right Seller may have to occupy the property pursuant to the affected Real Property Agreement, 322 of 1291
59 then Seller shall remain in such possession and shall perform all acts necessary for Seller to retain its right to remain in such possession, whether such acts are required under the then existing terms and provisions of such Real Property Agreement or otherwise. (g) Subject to the rights of Facility Lender as set forth in the Financing Agreements, in the event that a petition under the Bankruptcy Code shall be filed by or against Seller and Seller or any trustee of Seller shall decide to reject or disaffirm a Real Property Agreement pursuant to the Bankruptcy Code (or allow same), Seller shall give Buyer at least ten (10) days’ prior notice of the date on which application shall be made to the court for authority to reject or disaffirm such Real Property Agreement or such Real Property Agreement will be otherwise rejected. Buyer shall have the right, but not the obligation, to serve upon Seller or such trustee within such ten (10) day period a notice stating that (i) Buyer demands that Seller (whether as debtor in possession or otherwise) or such trustee assume and assign such Real Property Agreement to Buyer pursuant to the Bankruptcy Code, and (ii) Buyer covenants to cure, or to provide adequate assurance of prompt cure of, all defaults (except defaults of the type specified in Section 365(b)(2) of the Bankruptcy Code and any successor provision) and to provide adequate assurance of future performance under such Real Property Agreement. In the event that Buyer serves any such notice as provided above, neither Seller (whether as debtor in possession or otherwise) nor such trustee shall seek to reject or disaffirm such Real Property Agreement, and Seller (whether as debtor in possession or otherwise) and such trustee shall comply with such demand within thirty (30) days after such notice shall have been given, subject to Buyer’s performance of such covenant.
(h) Upon any payment by Buyer under any Real Property Agreement to cure any default of Seller or the Lessor thereunder and thereby prevent termination of the Real Property Agreement or the exercise of any other remedy of the other party or parties thereunder arising out of such default, Seller, as such lessee, within ten (10) days following receipt of notice from Buyer that it made such payment, shall pay the amount of such payment to Buyer plus interest accruing thereon at the Interest Rate, from and including the date of the payment by Buyer to cure such default to but excluding the date of such payment by the Seller. Buyer shall be entitled to offset amounts otherwise due Seller by the amount of such cure payment or remedy cost until Buyer has been fully repaid.
(i) Seller shall cause any Real Property Agreement to be in form and substance reasonably acceptable to Buyer and a memorandum thereof to be recorded in the applicable county.
(j) Seller shall not develop or improve the Site other than so as to provide for the facilities and improvements of the Facility and the transmission line to be located thereon in accordance with this Agreement and the terms and conditions of any Permits and environmental documents required for the review of the Facility except as otherwise provided in Section 8.8.

Section 12.4 Covenants of Seller Related to Tax Equity Financing. 323 of 1291
60 (a) Seller shall provide Buyer with at least sixty (60) days’ prior written notice of the reasonably likely occurrence of any consolidation, merger, or reorganization or other similar transaction, or series of similar transactions, involving Seller or any Parent Entity. (b) Seller shall provide Buyer with at least sixty (60) days’ prior written notice of the consummation of a Tax Equity Financing, which notice shall include (i) introductory and contact information about and for any potential Tax Equity Investors, (ii) a summary of the provisions related to, and the structure surrounding, the power to Control the management and policies of Seller, and any entity that is jointly-owned by any Parent Entity and such Tax Equity Investor arising in connection with the Tax Equity Financing and (iii) a statement of the circumstances under which such provisions and structure could be modified by such Tax Equity Investor. Such notice shall be in addition to, and not in lieu of, any notice required under Section 14.7.

Section 12.5 Additional Covenants of Seller.
(a) Seller shall be a Special Purpose Entity at all times during the Agreement Term.
(b) Seller shall not, at any time, incur or permit Facility Debt in an amount that, in the aggregate, exceeds seventy percent (70%) of the Facility Cost. (c) Seller shall provide to Buyer within fifteen (15) days after the end of each of calendar quarter during the Agreement Term, a certificate of an authorized officer of Seller in the form attached hereto as Appendix P (each, a “Quarterly Certificate”). (d) Seller shall inform all investors in the Seller of the existence of this Agreement and all Ancillary Documents on or before the date of such investment in the Seller.

Section 12.6 Additional Related Projects.
(a) Buyer shall have a right of first offer to evaluate and negotiate a power purchase agreement for the output from any additional phases of the Facility developed by Seller or any Affiliate of Seller, as well as separate projects that are currently under development by, or will be developed by, Seller or any Affiliate of Seller, that will use or share infrastructure, land, or equipment (including the ability to jointly procure equipment) with the Facility (“Additional Related Project”) according to the terms and conditions of this Section 12.6. Prior to Seller entering into an agreement to sell the power from any Additional Related Project, Seller must first provide notice to Buyer of Seller’s proposed transaction, including the proposed contract price and material terms and conditions associated therewith (“Proposed PPA Notice”).

Upon receipt of the Proposed PPA Notice, Buyer will have thirty (30) Days in which to notify Seller that Buyer may purchase output from the Additional Related Project. If Buyer provides written notice to Seller that it may purchase output from the Additional Related Project, then the Parties will undertake for a period of ninety (90) days thereafter to reach an agreement on the terms and conditions of the power purchase agreement. Should Buyer decline to purchase output from any such Additional Related Project or not timely response to any Proposed PPA Notice, Seller or any Affiliate of Seller, as applicable, may consummate a power purchase agreement to any third party, provided that Seller or any Affiliate of Seller shall not subsequently 324 of 1291
61 offer monetary terms for the same Additional Related Project that are more favorable to another buyer without providing Buyer with a subsequent right to purchase the output from such project on such more favorable monetary terms according the provisions of this Section 12.6. Seller shall cause its Affiliates to comply with the provisions of this Section 12.6. (b) To the extent permissible under Requirements of Law, Seller shall cause the Facility to receive preference and priority in transmission and interconnection rights over new facilities developed by Seller or any Affiliate of Seller using the Project Substation. (c) Seller shall not share infrastructure, land, equipment or any other rights owned by it in connection with its ownership or operation of the Facility with any other entity without Buyer’s prior written consent, not to be unreasonably withhold, conditioned, or delayed.

Section 12.7 Storage Technology. In recognition of emerging technologies and opportunities that will continue to evolve during the Agreement Term, Seller shall have the right to incorporate the use of storage technologies into the Facility only upon Buyer’s prior written consent, which shall not be unreasonably withheld.

Section 12.8 Solar Technology. Seller’s failure to install, or cause to be installed, a solar photovoltaic energy generating system (the “Additional System”) at the Site, with a nameplate capacity no less than the Parasitic Capacity is not a breach or default of this Agreement by Seller, and Seller does not owe to Buyer any damages nor will Buyer be entitled to damages from Seller for breach or default under this Section 12.8 as a result of such failure.

Notwithstanding the foregoing, for each Contract Year after the Amendment Date (including the Contract Year that includes the Amendment Date),Buyer will receive a credit equal to the product of (i) Thirty-Nine Dollars and Fifty cents ($39.50) and (ii) the Deemed Additional System Output (“System Credit”). The total System Credit amount for each Contract Year will be credited against amounts otherwise owing by Buyer to Seller for Delivered Energy in the first, and if necessary, subsequent months of the subsequent Contract Year. On and after the Amendment Date, for purposes of this Section 12.8, the “Deemed Additional System Output” for each Contract Year will be either (i) if Seller has delivered an Independent Engineer report as described below reasonably acceptable to Buyer at any time on or by the end of such Contract Year, the annual and monthly amounts determined and certified by the Independent Engineer in the most recent Independent Engineer report that is reasonably acceptable to Buyer, or (ii) if Seller has not delivered the Independent Engineer report to Buyer at any time on or by the end of such Contract Year, an amount for such Contract Year equal to the product of (a) the Nominal Capacity Net of Parasitic Load, (b) the Auxiliary Capacity Percentage, (c) the number of hours in such Contract Year, and (d) the Solar Capacity Factor. In calculating the Deemed Additional System Output, the Independent Engineer shall take into account the expected nameplate capacity of the Additional System required to serve the Parasitic Load, the Parasitic Load, third party solar irradiation data for the geographic region in which the Additional System will be located, and expected outages and other curtailments reasonably expected for the Facility and the Additional System. If the Parties will use the Deemed Additional System Output to calculate the System Credit in any partial Contract Year, then only the estimated monthly amounts of Deemed Additional System Output included in such partial Contract Year will be used in determining the System Credit. Seller will use commercially reasonable efforts to provide Buyer an Independent Engineer report that meets the criteria set forth herein within six (6) full months after the Amendment Date. Notwithstanding 325 of 1291
62 the foregoing, Seller may provide an updated, revised or new Independent Engineer report that meets the criteria set forth herein at any time after the Amendment Date, which such updated, revised or new Independent Engineer report will be used to determine the System Credit thereafter as provided above.

ARTICLE XIII
DEFAULT; TERMINATION AND REMEDIES; PERFORMANCE DAMAGE
Section 13.1 Default. Each of the following events or circumstances shall constitute a “Default” by the responsible Party (the “Defaulting Party”):
(a) Payment Default. Failure by either Party to pay any amount when and as due under this Agreement which is not cured within thirty (30) days after receiving written notice thereof from the other Party (except in the case of Seller’s failure to pay Daily Delay Damages, which shall be subject to a five Business Day cure period after receiving written notice thereof from Buyer).
(b) Buyer Performance Default. Failure by Buyer to perform any of its duties or obligations under this Agreement or any of the Ancillary Documents (except for Buyer’s obligations to receive Energy as and when required by this Agreement, the exclusive remedy for which is provided in Section 6.4, and other than any failure described in Section 13.1(a)) when and as due which is not cured within thirty (30) days after receipt of notice thereof from the Seller.
(c) Seller Performance Default. Failure by any Seller Party to perform any of its other duties or obligations under this Agreement or any of the Ancillary Documents when and as due (other than (i) any failure described in Sections 5.4(f), 9.3, 9.4, 11.7 or 13.1(a) or (f) through (n) and (ii) any failure described in an Ancillary Document with a specified cure period) which Buyer may declare to be an immediate Default for which no cure period is given, which is not cured within thirty (30) days after receipt of notice thereof from the Buyer. (d) Buyer Breach of Representation and Warranty. Inaccuracy in any material respect as of the Effective Date of any representation, warranty, certification or other statement made by the Buyer herein or in any Ancillary Document that, if capable of being used, is not cured within thirty (30) days after receipt of notice thereof or in any Ancillary Document that, if capable of being cured, is not cured within thirty (30) days after receipt of notice thereof. (e) Buyer Bankruptcy. Bankruptcy of the Buyer.
(f) Seller Bankruptcy. Bankruptcy of Seller Party.
(g) Performance Assurance Failure. The failure of Seller to (i) obtain and maintain the Performance Assurance in compliance with Sections 2.1, 3.5 and 5.4, (ii) replenish the Performance Security within the periods provided under Section 3.5, Section 5.4(d) or (iii) replace such Performance Assurance within the applicable time period set forth Section 5.4 and, in any event, at least thirty (30) days prior to its expiration, unless alternative Performance Assurance that complies with the requirements of Section 5.4 is provided within ten (10) 326 of 1291
63 Business Days after notice sent by Buyer of any such failure; or, with respect to any obligor providing the Performance Assurance for the benefit of Buyer:
(1) the failure of such obligor to honor a drawing or make a payment thereunder;
(2) such obligor fails to meet the acceptance of Buyer or there shall have occurred a material adverse effect on the business, assets, operations, condition (financial or otherwise) or prospects of such obligor;
(3) the Performance Assurance issued by such obligor shall fail to be in full force and effect in accordance with the terms of this Agreement prior to the satisfaction of all obligations of Seller under this Agreement and each of the Ancillary Documents; or (4) such obligor shall repudiate, disaffirm, disclaim, or reject, in whole or in part, or challenge the validity of its Performance Assurance and in any such event, Seller fails to provide replacement Performance Assurance. (h) Material Adverse Effect. There shall have occurred a material adverse effect on the business, assets, operations, condition (financial or otherwise) or prospects of Seller or any Seller Party.
(i) Real Property Agreement Default. Any Real Property Agreement fails to be in effect, a default under a Real Property Agreement has occurred, or a Real Property Agreement is terminated for any reason or amended in any material respect without mutual agreement of the Parties except as otherwise permitted in this Agreement, if such failure, default, termination or amendment has or could reasonably be expected to have a material adverse effect on Seller’s ability to perform its obligations hereunder; provided that if the cause of such failure, default, termination or amendment is not due to Seller’s non-compliance with the terms and conditions of such Real Property Agreement, then Seller shall have a period of thirty (30) days following the date of such failure, default, termination or amendment to cure such default by reinstating or replacing such Real Property Agreement.
(j) Insurance Default. The failure of Seller to maintain, and provide acceptable evidence of, the Insurance for the required period of coverage as set forth in Appendix F unless, in the case of Seller’s failure to provide acceptable evidence of insurance, such failure is cured within two (2) Business Days after Buyer’s delivery of notice of such failure to Seller.
(k) Fundamental Change of Seller. Except as permitted by Section 14.7, (i) Seller makes an assignment of its rights or delegation of its obligations under this Agreement or any Ancillary Documents other than as a result of transaction or series of transactions that does not constitute a Change in Control, or (ii) a Change in Control occurs. (l) Failure to Provide Real-Time Data. The failure of Seller to provide any of the real-time data required to be delivered under Section 4.4(g), which failure is not cured within five (5) Business Days after receipt of written email notice thereof from Buyer; for purposes of the foregoing, “cured” means that Seller has (i) fixed the problem that caused 327 of 1291
64 Seller’s failure to provide real-time data and (ii) provided to Buyer all data that otherwise would have been provided to Buyer in the absence of such failure or if such data is not reasonably capable of being provided by Seller, then comparable substitute data reasonably acceptable to Buyer;
(m) Commencement Date Default. Failure by Seller to achieve (i) the Commencement Date by the date that Daily Delay Damages therefor accrue in aggregate amount equal to the Daily Delay Damages Cap or (ii) the Commencement Date by the Outside Commencement Date.
(n) Consecutive Shortfall. The failure of the Facility during any twelve consecutive Contract Month-period to deliver Net Delivered Energy in an amount equal to at least seventy percent (70%) of the Guaranteed Monthly Delivered Energy for such Contract Months shall be a Default of Seller under this Agreement; provided that if the cause of such failure is the failure of any long-lead time equipment, including the transformer, and such failure can be corrected through repair, restoration or replacement, then no default shall be deemed to occur unless such failure continues for eighteen consecutive Contract Months so long as Seller provides (i) evidence reasonably satisfactory to Buyer that it is diligently pursuing a cure for the long-lead time equipment failure, (ii) a monthly report describing Seller’s actions to overcome such failure, and (iii) evidence reasonably satisfactory to Buyer that Seller has the ability to finance the cost of such repair, restoration or replacement work.

Section 13.2 Default Remedy.
(a) If Buyer is in Default for nonpayment, subject to any duty or obligation under this Agreement, Seller may continue to provide services pursuant to its obligations under this Agreement; provided that nothing in this Section 13.2(a) shall affect Seller’s rights and remedies set forth in this Section 13.2. Seller’s continued service to Buyer shall not act to relieve Buyer of any of its duties or obligations under this Agreement. (b) Notwithstanding any other provision herein, if any Default has occurred and is continuing, the affected Party may, whether or not the dispute resolution procedure set forth in Section 14.3 has been invoked or completed, bring an action in any court of competent jurisdiction as set forth in Section 14.13 seeking injunctive relief in accordance with applicable rules of civil procedure.
(c) Except as expressly limited by this Agreement, if a Default has occurred and is continuing and the Buyer is the Defaulting Party, Seller may without further notice exercise any rights and remedies provided herein or otherwise available at law or in equity, including termination of this Agreement pursuant to Section 13.3. No failure of Seller to exercise, and no delay in exercising, any right, remedy or power hereunder shall operate as a waiver thereof, nor shall any single or partial exercise by Seller of any other right, remedy or power hereunder preclude any other or future exercise of any right, remedy or power. (d) Except as expressly limited by this Agreement, if a Default has occurred and is continuing and the Seller is the Defaulting Party, Buyer may without further notice exercise any rights and remedies provided for herein, or otherwise available at law or equity, 328 of 1291
65 including (i) application of all amounts available under the Performance Assurance against any amounts then payable by Seller to Buyer under this Agreement and (ii) termination of this Agreement pursuant to Section 13.3. No failure of Buyer to exercise, and no delay in exercising, any right, remedy or power hereunder shall operate as a waiver thereof, nor shall any single or partial exercise by Buyer of any right, remedy or power hereunder preclude any other or future exercise of any right, remedy or power. Notwithstanding anything to the contrary herein, Buyer’s exclusive remedies for a Default under Section 13.1(m) are the right to terminate this Agreement and be paid a Termination Payment capped at the Outside Commencement Date Damages Cap as provided in Section 13.3(d).

Section 13.3 Termination for Default.
(a) If a Default occurs, the Party that is not the Defaulting Party (the “NonDefaulting Party”) may, for so long as the Default is continuing and without limiting any other rights or remedies available to the Non-Defaulting Party under this Agreement, by notice (“Termination Notice”) sent to the Defaulting Party, (i) establish a date (which shall be no earlier than the date of such notice and no later than twenty (20) days after the date of such notice) (“Early Termination Date”) on which this Agreement shall terminate and (ii) withhold any payments due in respect of this Agreement; provided, upon the occurrence of any Default of the type described in Sections 13.1(e) and (f), this Agreement shall automatically terminate, without notice or other action by either Party as if an Early Termination Date had been declared immediately prior to such event.
(b) If an Early Termination Date has been designated, the Non-Defaulting Party shall calculate in a commercially reasonable manner its Gains, Losses and Costs resulting from the termination of this Agreement and the resulting Termination Payment. The Gains, Losses and Costs relating to the Facility Energy and associated Environmental Attributes and Capacity Rights that would have been required to be delivered under this Agreement had it not been terminated shall be determined by comparing the amounts Buyer (if the Non-Defaulting Party) would have paid or Seller (if the Non-Defaulting Party) would have received therefor under this Agreement to the equivalent quantities and relevant market prices either quoted by a bona fide third party offer or which are reasonably expected by Buyer (if the Non-Defaulting Party) or by Seller (if the Non-Defaulting Party) to be available in the market under a replacement contract for this Agreement covering the same products and having a term equal to the Remaining Term at the date of the Termination Notice adjusted to account for differences in transmission, if any. It is expressly agreed that the Non-Defaulting Party shall not be required to enter into any such replacement contract in order to determine its Gains, Losses and Costs or the Termination Payment. To ascertain the market prices of a replacement contract, the NonDefaulting Party may consider, among other valuations, quotations from dealers in energy contracts and bona fide third party offers.
(c) For purposes of the Non-Defaulting Party’s determination of its Gains, Losses and Costs and the Termination Payment, it shall be assumed, regardless of the facts, that Seller would have sold, and Buyer would have purchased, each day during the Remaining Term (i) Facility Energy in an amount equal to the Assumed Daily Deliveries, (ii) the Environmental Attributes associated therewith and (iii) all Capacity Rights associated therewith. The “Assumed Daily Deliveries” is an amount equal to the greater of (x) the quotient of the Expected 329 of 1291
66 Annual Generation divided by 365, and (y) the average daily deliveries of Delivered Energy during the Delivery Term, if any.
(d) The Non-Defaulting Party shall aggregate its Gains, Losses and Costs as so determined into a single net amount (the “Termination Payment”) and notify the Defaulting Party thereof. The notice shall include a written statement explaining in reasonable detail the calculation of such amount. If the Non-Defaulting Party’s aggregate Losses and Costs exceed its aggregate Gains, the Defaulting Party will, within ten (10) Business Days of receipt of such notice, pay the net amount to the Non-Defaulting Party, which amount shall bear interest at the Interest Rate from the Early Termination Date until paid; provided that for any Event of Default of Seller under Section 13.1(m), the Termination Payment will be capped at the Outside Commencement Date Damages Cap. If the Non-Defaulting Party’s aggregate Gains exceed its aggregate Losses and Costs, the amount of the Termination Payment shall be zero. (e) If the Defaulting Party disagrees with the calculation of the Termination Payment and the Parties cannot otherwise resolve their differences, the calculation issue shall be submitted to informal non-binding dispute resolution as provided in Section 14.3. Pending resolution of the dispute, the Defaulting Party shall pay the full amount of the Termination Payment calculated by the Non-Defaulting Party as and when required by this Agreement, subject to the Non-Defaulting Party refunding, with interest at the Interest Rate, any amounts determined to have been overpaid.
(f) For purposes of this Agreement:
(1) “Gains” means, with respect to a Party, an amount equal to the present value of the economic benefit (exclusive of Costs), if any, resulting from the termination of its obligations under this Agreement, determined in a commercially reasonable manner;
(2) “Losses” means, with respect to a Party, an amount equal to the present value of the economic loss (exclusive of Costs), if any, resulting from the termination of its obligations under this Agreement, determined in a commercially reasonable manner;
(3) “Costs” means, with respect to a Party, brokerage fees, commissions and other similar transaction costs and expenses reasonably incurred in terminating any arrangement pursuant to which it has hedged its obligations or entering into new arrangements which replace this Agreement, excluding attorneys’ fees, if any, incurred in connection with enforcing its rights under this Agreement. Each Party shall use reasonable efforts to mitigate or eliminate its Costs.
(4) In no event shall a Party’s Gains, Losses or Costs include any penalties or similar charges imposed by the Non-Defaulting Party. (5) The Present Value Rate shall be used as the discount rate in all present value calculations required to determine Gains, Losses and Costs. 330 of 1291
67 (g) At the time for payment of any amount due under this Section, each Party shall pay to the other Party all additional amounts, if any, payable by it under this Agreement.

ARTICLE XIV

MISCELLANEOUS
Section 14.1 Authorized Representative. Each Party hereto shall designate an authorized representative who shall be authorized to act on its behalf with respect to those matters contained herein (each an “Authorized Representative”), which shall be the functions and responsibilities of such Authorized Representatives. Each Party may also designate an alternate who may act for the Authorized Representative. Within thirty (30) days after execution of this Agreement, each Party shall notify the other Party of the identity of its Authorized Representative, and alternate if designated, and shall promptly notify the other Party of any subsequent changes in such designation. The Authorized Representatives shall have no authority to alter, modify, or delete any of the provisions of this Agreement. Prior to the Commencement Date, the Authorized Representative of each Party will meet periodically to discuss issues related to the sharing of information on the operation and maintenance of the Facility. To the extent that an Authorized Representative’s contact information is not provided in Appendix C, at the time a Party designates such Authorized Representative, such Party shall concurrently provide written notice to the other Party of such Authorized Representative’s contact information.

Section 14.2 Notices. With the exception of billing invoices pursuant to Section 11.1(a) hereof, all notices, requests, demands, consents, approvals, waivers and other communications which are required under this Agreement shall be (a) in writing (regardless of whether the applicable provision expressly requires a writing), (b) deemed properly sent if delivered in person or sent by facsimile transmission, reliable overnight courier or registered or certified mail, postage prepaid to the persons specified in Appendix C, and (c) deemed delivered, given and received on the date of delivery, in the case of delivery in person, facsimile transmission, and overnight courier, or on the date of receipt or rejection in the case of registered or certified mail. In addition to the foregoing, the Parties may agree in writing at any time to deliver notices, requests, demands, consents, approvals, waivers and other communications through alternate methods, such as electronic mail.

Section 14.3 Dispute Resolution.
(a) In the event of any claim, controversy or dispute between the Parties arising out of or relating to or in connection with this Agreement (including any dispute concerning the validity of this Agreement or the scope and interpretation of this Section 14.3) (a “Dispute”), either Party (the “Notifying Party”) may deliver to the other Party (the “Recipient Party”) notice of the Dispute with a detailed description of the underlying circumstances of such Dispute (a “Dispute Notice”). The Dispute Notice shall include a schedule of the availability of the Notifying Party’s senior officers (having a title of senior vice president (or its equivalent) or higher) duly authorized to settle the Dispute during the thirty (30) day period following the delivery of the Dispute Notice.
(b) The Recipient Party shall within five (5) Business Days following receipt of the Dispute Notice, provide to the Notifying Party a parallel schedule of availability of the 331 of 1291
68 Recipient Party’s senior officers (having a title of senior vice president (or its equivalent) or higher) duly authorized to settle the Dispute. Following delivery of the respective senior officers’ schedules of availability, the senior officers of the Parties shall meet and confer as often as they deem reasonably necessary during the remainder of the thirty (30) day period in good faith negotiations to resolve the Dispute to the satisfaction of each Party. (c) In the event a Dispute is not resolved pursuant to the procedures set forth in Sections 14.3(a) and 14.3(b) by the expiration of the thirty (30) day period set forth in Section

14.3(a), then either Party may pursue any legal remedy available to it in accordance with the provisions of Section 14.12 of this Agreement.
(d) As stated in Section 14.12, this Agreement shall be governed by, interpreted and enforced in accordance with laws of the State of California, without regard to the conflict of laws principles thereof. In addition to the dispute resolution process set forth in this section, parties to this Agreement must comply with California law governing claims against public entities and presentment of such claims.

Section 14.4 Further Assurances. Each Party agrees to execute and deliver all further instruments and documents, and take all further actions, not inconsistent with the provisions of this Agreement, which are reasonably necessary to effectuate the purposes and intent of this Agreement.

Section 14.5 No Dedication of Facilities. Any undertaking by one Party hereto to the other Party under any provisions of this Agreement shall not constitute the dedication of the system or any portion thereof of either Party to the public, the other Party or any other Person, and it is understood and agreed that any such undertaking by either Party shall cease upon the termination of such Party’s obligations under this Agreement.

Section 14.6 Force Majeure.
(a) A Party shall not be considered to be in default in the performance of any of its obligations under this Agreement other than an obligation to make payment when and to the extent such Party’s performance is prevented by a Force Majeure that, despite the exercise of due diligence, such Party is unable to prevent or mitigate, provided the Party has given a written detailed description of the full particulars of the Force Majeure to the other Party reasonably promptly after becoming aware thereof (and in any event within fourteen (14) days after knowledge of the initial occurrence of the claimed Force Majeure (the “Force Majeure Notice”), which notice shall include information with respect to the nature, cause and date and time of commencement of such event and the anticipated scope and duration of the delay. The Party providing such notice shall be excused from fulfilling its obligations under this Agreement until such time as the Force Majeure has ceased to prevent performance or other remedial action is taken, at which time such Party shall promptly notify the other Party of the resumption of its obligations under this Agreement. If Seller is unable to deliver, or Buyer is unable to receive, Energy due to a Force Majeure, Buyer shall have no obligation to pay Seller for the Energy not delivered or received by reason thereof. It is understood by the Parties that the foregoing provisions shall not excuse any obligations of the Seller with respect to Shortfall Energy and Replacement Energy, as provided under Article IX, whether or not caused by Force Majeure. 332 of 1291
69 In no event shall Buyer be obligated to compensate Seller or any other Person for any losses, expenses or liabilities that Seller or such other Person may sustain as a consequence of any Force Majeure.
(b) The term “Force Majeure” means an event or circumstance (i) which prevents one Party from performing any of its obligations under this Agreement, (ii) which could not reasonably be anticipated as of the date of this Agreement, (iii) which is not within the reasonable control of, or the result of negligence, willful misconduct, breach of contract, intentional act or omission or wrongdoing on the part of the affected Party (or any subcontractor or Affiliate of that Party, or any Person under the control of that Party or any of its subcontractors or Affiliates, or any Person for whose acts such subcontractor or Affiliate is responsible), and (iv) which by the exercise of due diligence the affected Party is unable to overcome or avoid or cause to be avoided; provided, nothing in this clause (iv) shall be construed so as to require either Party to accede or agree to any provision not satisfactory to it in order to settle and terminate a strike or labor dispute in which it may be involved. Force Majeure shall include, provided the criteria in the first sentence are met, any act of God, labor disturbance, act of the public enemy, war, insurrection, riot, fire, unusual or extreme adverse weather-related events or natural disasters (such as lightning, landslide, earthquake, tornado, hurricane, storm or flood), explosion, or any order, regulation or restriction imposed by governmental, military or lawfully established civilian authorities. Any Party rendered unable to fulfill any of its obligations by reason of a Force Majeure shall exercise due diligence to remove such inability with reasonable dispatch within a reasonable time period and mitigate the effects of the Force Majeure. The relief from performance shall be of no greater scope and of no longer duration than is required by the Force Majeure. Without limiting the generality of the foregoing, a Force Majeure does not include any of the following (each an “Unexcused Cause”): (1) any requirement to comply with a RPS Law or any change (whether voluntary or mandatory) in any renewable portfolio standard that may affect the value of the Energy purchased hereunder; (2) events arising from the failure by Seller to operate or maintain the Facilities in accordance with this Agreement; (3) any increase of any kind in any cost; (4) delays in or inability of a Party to obtain financing or other economic hardship of any kind; (5) Seller’s ability to sell any Energy at a price in excess of those provided in this Agreement; (6) Buyer’s ability to purchase any Energy, Environmental Attributes or Capacity Rights at a price less than those provided in this Agreement, (7) curtailment or other interruption of any Transmission Service except as otherwise expressly provided in Section 14.6(c); (8) failure of third parties to provide goods or services essential to a Party’s performance except to the extent caused by an event that otherwise constitutes Force Majeure hereunder; (9) Facility or equipment failure of any kind except to the extent caused by an event that otherwise constitutes Force Majeure hereunder; (10) any changes in the financial condition of the Buyer, any Seller Party, the Facility Lender or any subcontractor or supplier affecting the affected Party’s ability to perform its obligations under this Agreement; or (11) Seller’s inability to obtain sufficient fuel, including due to lack of fuel or power to operate the Facility except to the extent caused by an event that otherwise constitutes Force Majeure hereunder.
(c) Neither Party may raise a claim of Force Majeure based in whole or in part on curtailment or other interruption of Transmission Service for any Energy at any time unless (A) in the case of Seller, and for Replacement Energy only, (i) the Seller has contracted for Firm Transmission to be provided for the Delivered Energy or Replacement Energy on the 333 of 1291
70 Specified Transmission Path at the time, and (ii) the curtailment or interruption is due to “force majeure” or “uncontrollable force” or a similar term as defined under the Transmission Provider’s tariff; or (B) in the case of Buyer, the curtailment or interruption is due to “force majeure” or “uncontrollable force” on Buyer’s Transmission System; provided, that in either (A) or (B) above, the existence of the foregoing factors shall not be sufficient to conclusively or presumptively prove the existence of Force Majeure absent a showing of other facts and circumstances which in the aggregate with such factors establish that a Force Majeure as defined in Section 14.6(b) has occurred.
(d) If based on a Force Majeure Notice, the unaffected Party reasonably concludes that a Force Majeure or its impact on the affected Party or the Facility will continue (i) for a period of one hundred twenty (120) or more consecutive calendar days, or (ii) for an aggregate period of one hundred eighty (180) or more non-consecutive calendar days in the case of any claimed Force Majeure event or series of claimed Force Majeure events, the unaffected Party shall have the right to terminate this Agreement effective upon notice to the affected Party.

Section 14.7 Assignment of Agreement; Change in Control. (a) Buyer may assign this Agreement or the Ancillary Documents, without the consent of Seller, to (i) (x) the Participating Member or (y) one or more other members of Buyer, to a California municipal utility or (ii) (x) a joint powers authority established under the Act, or (y) a California municipal district that provides electric utility service to customers in its district, so long as, in the case of such an assignment pursuant to clause (i)(y), at the time of such assignment, such assignee had, and is reasonably forecasted to maintain, an investment grade rating from either Moody’s of “Baa3” or Standard & Poor’s of “BBB-”, or the equivalent ratings by any other credit rating agency of national standing, and so long as such credit rating is not on negative watch, and, in the case of such an assignment pursuant to clause (ii), at the time of such assignment, such assignee has, and is reasonably forecasted to maintain, an investment grade rating from either Moody’s or Standard & Poor’s equal to or better than the credit rating of the Participating Member as of the Effective Date, which is “Aa3” from Moody’s, “AA-” from Standard & Poor’s or “A+” from Fitch’s, or the equivalent ratings by any other credit rating agency of national standing, and so long as such credit rating is not on negative watch. Upon any such assignment and delegation of obligations by such an assignee, Buyer shall be relieved of and fully discharged from all its obligations hereunder, whether such obligations arose before or after the date of such assignment and delegation. All other assignments by Buyer shall require the prior written consent of Seller not to be unreasonably withheld, conditioned or delayed.
(b) Except as set forth in this Section 14.7, Seller shall not assign any of its rights, or delegate any of its obligations, under this Agreement without the prior written consent of Buyer. Any purported assignment or delegation in violation of this provision shall be null and void and of no force or effect. Any Change in Control (whether voluntary or by operation of law) shall be deemed an assignment and shall require the prior written consent of Buyer, which consent shall not be unreasonably withheld. Seller shall provide Buyer with ninety (90) days’ prior written notice of any proposed Change in Control. Concurrently with any reorganization or financing transaction or transactions constituting any Change in Control the successor entity to Seller shall acknowledge the continuing obligations of Seller under this 334 of 1291
71 Agreement and the Ancillary Documents. For any Change in Control pursuant to which Seller merges or consolidates with any other Person and ceases to exist, the successor entity to Seller shall execute a written assumption agreement in favor of Buyer pursuant to which any such successor entity shall assume all of the obligations of Seller under this Agreement and the Ancillary Documents and agree to be bound by all the terms and conditions of this Agreement and Ancillary Documents, as applicable. There shall be no amendments or other modifications to this Agreement in connection with a Change in Control unless Buyer consents to such amendments or modifications.
(c) Seller shall not sell or transfer all or any portion of the Facility or the Facility Assets to any Person other than a Person to whom Seller assigns this Agreement and the Ancillary Documents in accordance with this Section 14.7, without the prior written consent of Buyer, provided that any such sale or transfer shall be subject to compliance with the Right of First Offer and Right of First Refusal set forth in Section 14.25. Any purported sale or transfer in violation of this Section 14.7(c) shall be null and void and of no force or effect. (d) Buyer’s consent shall not be required in connection with a Permitted Transfer; provided that the terms of any Permitted Transfer, and the documentation relating thereto, comply with the applicable terms and conditions of this Agreement. Buyer’s consent shall not be required (i) in connection with the collateral assignment or pledge of this Agreement to any Facility Lender, or (ii) in connection with the pledge, directly or indirectly, of all or a portion of the membership interests in Seller to any Facility Lender; provided, however, that (1) the terms of any financing or refinancing, and the documentation relating thereto, comply with the applicable terms and conditions of this Agreement, and (2) in connection with any such assignment or pledge and the exercise of remedies by any Facility Lender, the Facility Lender acknowledges and agrees to be bound by the requirement that the Facility be operated and maintained by a Qualified Operator. Seller shall provide Buyer with sixty (60) days’ prior notice of any such collateral assignment or pledge. Notwithstanding the foregoing or anything else expressed or implied herein to the contrary, Seller shall not assign, transfer, convey, encumber, sell or otherwise dispose of all or any portion of the Energy, Environmental Attributes or Capacity Rights (not including the proceeds thereof) to any Facility Lender. (e) To facilitate Seller’s obtaining of term financing for the Facility, Buyer shall provide such consents to assignment (in substantially the form attached hereto as Appendix W) as may be reasonably requested by Seller or any Facility Lender in connection with the financing of the Facility, including the acquisition of equity for the operation of the Facility; provided, however, that the terms of such financing and the documentation relating thereto shall not conflict with the applicable terms and conditions of this Agreement. (f) Any collateral assignment in connection with a financing or refinancing that causes Facility Debt, in the aggregate, to exceed seventy percent (70%) of the Facility Cost as of the date of the collateral assignment is prohibited. (g) In no event shall Buyer be liable to any Facility Lender for any claims, losses, expenses or damages whatsoever other than liability Buyer may have to Seller under this Agreement. In the event of any foreclosure, whether judicial or nonjudicial, or any deed in lieu of foreclosure, in connection with any deed of trust, mortgage, or other similar Lien 335 of 1291
72 encumbering the Facility, such Facility Lender or its designee, and their successors in interest and assigns, shall be bound by the covenants and agreements of Seller in this Agreement; provided, however, that until the Person who acquires title to the Facility executes and delivers to Buyer a written assumption of Seller’s obligations under this Agreement in form and substance acceptable to Buyer, such Person shall not be entitled to any of the benefits of this Agreement. Any sale or transfer of all or any portion of the Facility by Facility Lender or its designee and their successors and assigns thereafter during the term of this Agreement shall be made only to an entity that is a Qualified Transferee. Any sale or transfer that meets the terms of this Section 14.7(g) shall not be a Change in Control and shall not require the consent of Buyer so long as Seller provides notice of any such sale or transfer at least thirty (30) days in advance of such sale or transfer or, if later, as early as is reasonably practicable (but in no event later than the date on which Seller receives notice of foreclosure). (h) Seller shall reimburse, or shall cause the Facility Lender to reimburse, Buyer for the incremental direct expenses incurred by Buyer in the preparation, negotiation, execution or delivery of any documents requested by Seller or the Facility Lender, and provided by Buyer, pursuant to this Section 14.7.

Section 14.8 Ambiguity. The Parties acknowledge that this Agreement was jointly prepared by them, by and through their respective legal counsel, and any uncertainty or ambiguity existing herein shall not be interpreted against either Party on the basis that the Party drafted the language, but otherwise shall be interpreted according to the application of the rules on interpretation of contracts.

Section 14.9 Attorneys’ Fees and Costs. Both Parties hereto agree that in any action to enforce the terms of this Agreement that each Party shall be responsible for its own attorneys’ fees and costs. Each of the Parties to this Agreement was represented by its respective legal counsel during the negotiation and execution of this Agreement. Notwithstanding the foregoing, to the extent Buyer incurs legal costs in order to facilitate a collateral assignment or pledge of this Agreement under Section 14.7, to evaluate whether the provisions of the Right of First Offer apply or whether a Change in Control has occurred, or such other action or review that is at the request of Seller, including in Section 14.7(h), or as may be required due to the actions or omissions of, Seller, Seller shall bear Buyer’s reasonable and documented legal costs therefor.

Section 14.10 Voluntary Execution. Both Parties hereto acknowledge that they have read and fully understand the content and effect of this Agreement and that the provisions of this Agreement have been reviewed and approved by their respective counsel. The Parties further acknowledge that they have executed this Agreement voluntarily, subject only to the advice of their own counsel, and do not rely on any promise, inducement, representation or warranty that is not expressly stated herein.

Section 14.11 Entire Agreement; Amendments. This Agreement (including all Appendices and Exhibits) contains the entire understanding concerning the subject matter herein and supersedes and replaces any prior negotiations, discussions or agreements between the Parties, including the Original Agreement, concerning that subject matter, whether written or oral, except as expressly provided for herein. This is a fully integrated document. Each Party acknowledges that no other party, representative or agent, has made any promise, representation or warranty, 336 of 1291
73 express or implied, that is not expressly contained in this Agreement that induced the other Party to sign this document. This Agreement may be amended or modified only by an instrument in writing signed by each Party, except as set forth in Section 9.4 and Section 6.3.

Section 14.12 Governing Law. This Agreement shall be governed by, interpreted and enforced in accordance with and construed under the laws of the State of California without regard to conflict of law principles.

Section 14.13 Venue. All litigation arising out of, or relating to, this Agreement shall be brought in a state or federal court in the County of Los Angeles in the State of California. The Parties irrevocably agree to submit to the exclusive jurisdiction of such courts in the State of California and waive any defense of forum non conveniens.

Section 14.14 Execution in Counterparts, Electronic Signatures and Document Transmission.
(a) This Agreement may be executed in counterparts, and, upon execution by each signatory, each executed counterpart shall have the same force and effect as an original instrument and as if all signatories had signed the same instrument. Any signature page of this Agreement may be detached from any counterpart of this Agreement without impairing the legal effect of any signature thereon, and may be attached to another counterpart of this Agreement identical in form hereto by having attached to it one or more signature pages. (b) The Parties may execute this Agreement by original signature or by electronic signature, each of which shall have the same force and effect. A signed copy of this Agreement transmitted by facsimile, email or other means of electronic transmission shall be deemed to have the same legal effect as delivery of an original executed copy of this Agreement for all purposes, to the extent provided under applicable law, including the Federal Electronic Signatures in Global and National Commerce Act and Records Act, and California’s Uniform Electronic Transactions Act.

Section 14.15 Effect of Section Headings. Section headings appearing in this Agreement are inserted for convenience only and shall not be construed as interpretations of text.

Section 14.16 Waiver. The failure of either Party to this Agreement to enforce or insist upon compliance with or strict performance of any of the terms or conditions hereof, or to take advantage of any of its rights hereunder, shall not constitute a waiver or relinquishment of any such terms, conditions or rights, but the same shall be and remain at all times in full force and effect. Notwithstanding anything expressed or implied herein to the contrary, nothing contained herein shall preclude either Party from seeking and obtaining any available remedies for breaches not rising to the level of a Default, including recovery of damages caused by the breach of this Agreement and specific performance or injunctive relief or any other remedy given under this Agreement or now or hereafter existing in law or equity or otherwise. Seller acknowledges that money damages may not be an adequate remedy for violations of this Agreement and that Buyer may, in its sole discretion, seek and obtain from a court of competent jurisdiction specific performance or injunctive or such other relief as such court may deem just and proper to enforce 337 of 1291
74 this Agreement or to prevent any violation hereof. Seller hereby waives any objection to specific performance or injunctive relief. The rights granted herein are cumulative.

Section 14.17 Relationship of the Parties. This Agreement shall not be interpreted to create an association, joint venture or partnership between the Parties hereto or to impose any partnership obligation or liability upon either such Party. Neither Party shall have any right, power or authority to enter into any agreement or undertaking for, or act on behalf of, or to act as an agent or representative of, the other Party.

Section 14.18 Third Party Beneficiaries. The (a) the provisions of this Agreement are solely for the benefit of the Parties hereto, and (b) nothing in this Agreement, whether express or implied, shall be construed to give to, or be deemed to create in, any other Person, whether as a third party beneficiary of this Agreement or otherwise, any legal or equitable right, remedy or claim in respect of this Agreement or any covenant, condition, provision, duty, obligation or undertaking contained or established herein.

Section 14.19 Indemnification; Damage or Destruction; Insurance; Condemnation; Limit of Liability.
(a) Indemnification. Seller undertakes and agrees to indemnify and hold harmless Buyer, the Participating Member, and Buyer’s Board of Directors, and all of their officers and employees, agents, employees, advisors, and Authorized Representatives, and each of the foregoing assigns and successors in interest (collectively, “Indemnitees”), and, at the option of Buyer, defend such Indemnitees from and against any and all suits and causes of action (including proceedings before FERC), claims, charges, damages (including indirect, consequential, or incidental), demands, judgments, costs, expenses, civil fines and penalties, other monetary remedies or losses of any kind or nature whatsoever, including but not limited to attorney’s fees (including allocated costs of internal counsel) or other monetary remedies and costs of litigation, obligation or liability of any kind or nature whatsoever, in any manner arising by reason of, or incident to, or connected in any manner with the performance, non-performance or breach of this Agreement, or any other act, error or omission or willful misconduct by or of the Seller or Seller’s officers, employees, agents, subcontractors of any tier, including but not limited to any such performance, non-performance, breach, act, error or omission or willful misconduct that results in intellectual property infringement or leads to death, bodily injury or personal injury to any person, including Seller’s employees and agents or third persons, or damage or destruction to any property of any kind or nature whatsoever, of either party or third person, or loss of use (hereinafter “Indemnified Liabilities”), except to the extent caused by the gross negligence or willful misconduct of any such Indemnitee. The provisions of this paragraph shall be in addition to, and not exclusive of, any other rights or remedies which Indemnitees have at law, in equity, under this Agreement or otherwise. To the extent that the undertakings to defend, indemnify, pay and hold harmless set forth in this subsection may be unenforceable in whole or in part because they are violative of any law or public policy, Seller shall contribute the maximum portion that it is permitted to pay and satisfy under applicable law to the payment and satisfaction of all Indemnified Liabilities incurred by Indemnitees or any of them. The provisions of this paragraph shall survive the expiration or termination of this Agreement.
338 of 1291
75 (b) Damage or Destruction. Subject to the consent of the Facility Lender, in the event of any damage or destruction of the Facility or any part thereof, Seller shall apply any applicable proceeds of insurance directly related to such damage or destruction to cause the Facility or such part thereof shall be diligently repaired, replaced or reconstructed by the Seller so that the Facility or such part thereof shall be restored to substantially the same general condition and use as existed prior to such damage or destruction, unless a different condition or use is approved by the Buyer. Proceeds of Insurance with respect to such damage or destruction maintained as provided in this Agreement shall be applied to the payment for such repair, replacement or reconstruction of the damage or destruction. (c) Insurance. Seller shall obtain and maintain the Insurance coverages listed in Appendix F.
(d) Condemnation or Other Taking. Throughout the Agreement Term, Seller shall immediately notify Buyer of the institution of any proceeding for the condemnation or other taking of the Facility or any portion thereof. Buyer may seek to participate in any such proceeding and Seller shall deliver to Buyer all instruments reasonably available to Seller that are necessary or required by Buyer to permit such participation. Without Buyer’s prior written consent, Seller (i) shall not agree to any compensation or award, and (ii) shall not take any action or fail to take any action which would cause the compensation to be determined. Subject to the consent of the Facility Lender, all awards and compensation for the taking or purchase in lieu of condemnation of the Facility or any portion thereof shall either, at the discretion of Buyer, be paid directly to Buyer (including damages and interest) in the amount of the loss in value of this Agreement to Buyer resulting from such condemnation or taking, or applied toward the repair, restoration, reconstruction or replacement of the Facility. (e) Limitation of Liability. EXCEPT TO THE EXTENT INCLUDED IN (I) DAILY DELAY DAMAGES, SHORTFALL DAMAGES, OR ANY LIQUIDATED

DAMAGES, (II) INDEMNIFICATION OBLIGATIONS BY SELLER TO THIRD PARTIES,

AND (III) ANY OTHER SPECIFIC CHARGES EXPRESSLY PROVIDED FOR HEREIN,

NEITHER PARTY HEREUNDER SHALL BE LIABLE FOR SPECIAL, INCIDENTAL,

EXEMPLARY, INDIRECT, PUNITIVE OR CONSEQUENTIAL DAMAGES ARISING OUT OF A PARTY’S PERFORMANCE OR NON PERFORMANCE UNDER THIS

AGREEMENT, WHETHER BASED ON OR CLAIMED UNDER CONTRACT, TORT (INCLUDING SUCH PARTY’S OWN NEGLIGENCE) OR ANY OTHER THEORY AT

LAW OR IN EQUITY, PROVIDED, HOWEVER, THE FOREGOING LIMITATION OF

LIABILITY SHALL NOT APPLY TO LIABILITY ARISING OUT OF THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF SELLER, OR ANY OF SELLER’S OFFICERS, AGENTS, EMPLOYEES OR SUBCONTRACTORS OF ANY TIER.

Section 14.20 Severability. In the event any of the terms, covenants or conditions of this Agreement, or the application of any such terms, covenants or conditions, shall be held invalid, illegal or unenforceable by any court having jurisdiction, all other terms, covenants and conditions of this Agreement and their application not adversely affected thereby shall remain in force and effect, provided that the remaining valid and enforceable provisions materially retain the essence of the Parties’ original bargain.
339 of 1291
76 Section 14.21 Confidentiality.
(a) Each Party agrees, and shall use reasonable efforts to cause its parent, subsidiary and Affiliates, and its and their respective directors, officers, employees and representatives, as a condition to receiving confidential information hereunder, to keep confidential, except as required by law, all documents, data, drawings, studies, projections, plans and other written information that relate to economic benefits to or amounts payable by either Party under this Agreement and documents that are clearly marked “Confidential” at the time a Party shares such information with the other Party (“Confidential Information”). The provisions of this Section 14.21 shall survive and shall continue to be binding upon the Parties for a period of one (1) year following the date of termination or expiration of this Agreement.

Notwithstanding the foregoing, information shall not be considered Confidential Information if such information (i) is disclosed with the prior written consent of the originating Party, (ii) was in the public domain prior to disclosure or is or becomes publicly known or available other than through the action of the receiving Party in violation of this Agreement, (iii) was lawfully in a Party’s possession or acquired by a Party outside of this Agreement, which acquisition was not known by the receiving Party to be in breach of any confidentiality obligation, or (iv) is developed independently by a Party based solely on information that is not considered confidential under this Agreement.
(b) Either Party may, without violating this Section 14.21, disclose matters that are made confidential by this Agreement:
(1) to its counsel, accountants, auditors, advisors, other professional consultants, credit rating agencies, actual or prospective co-owners, investors, lenders, underwriters, contractors, suppliers and others involved in operation and financing transactions and arrangements for a Party or its subsidiaries, affiliates, or parent; (2) to governmental officials and parties involved in any proceeding in which either Party is seeking a permit, certificate or other regulatory approval or order necessary or appropriate to carry out this Agreement; and (3) to governmental officials or the public as required by any law, regulation, order, rule, ruling or other Requirement of Law, including laws or regulations requiring disclosure of financial information and information material to financial matters and filing of financial reports and responding to oral questions, discovery requests, subpoenas and civil investigations or similar processes. (c) If a Party is requested or required, pursuant to any applicable law, regulation, order, rule, ruling or other Requirement of Law, discovery request, subpoena, civil investigation or similar process to disclose any of the Confidential Information, such Party shall provide prompt written notice to the other Party of such request or requirement so that at such other Party’s expense, such other Party can seek a protective order or other appropriate remedy concerning such disclosure.
(d) Notwithstanding the foregoing or any other provision of this Agreement, Seller acknowledges that Buyer, as a California joint powers authority, is subject to disclosure 340 of 1291
77 as required by the California Public Records Act, Cal. Govt. Code §§ 7920 et seq. (“CPRA”) and the Ralph M. Brown Act, Cal. Govt. Code §§ 54950 et seq. (“Brown Act”). Confidential Information of Seller provided to the Buyer pursuant to this Agreement shall become the property of the Buyer, and Seller acknowledges that Buyer shall not be in breach of this Agreement or have any liability whatsoever under this Agreement or otherwise for any claims or causes of action whatsoever resulting from or arising out of Buyer copying or releasing to a third party any of the Confidential Information of Seller pursuant to CPRA or Brown Act.

Notwithstanding the foregoing or any other provision of this Agreement, Buyer may record, register, deliver and file all such notices, statements, instruments and other documents as may be necessary or advisable to render fully valid, perfected and enforceable under all applicable law the credit support contemplated by this Agreement and the Ancillary Documents and the rights, Liens and priorities of Buyer with respect to such credit support. (e) If Buyer receives a CPRA request for Confidential Information of Seller, and Buyer or Buyer’s Authorized Representative determines that such Confidential Information is subject to disclosure under CPRA, then Buyer shall notify the Seller of the request and its intent to disclose the documents. The Buyer, as required by CPRA, shall release such documents unless the Seller timely obtains a court order prohibiting such release. If Seller (i) at its sole expense, chooses to seek a court order prohibiting the release of Confidential Information pursuant to a CPRA request, (ii) notifies Buyer of its intention to seek a court order within five (5) days after receipt of notice of such CPRA request, and (iii) undertakes and agrees to defend, indemnify and hold harmless the Indemnitees from and against all suits, claims, and causes of action brought against any Indemnitees for Buyer’s refusal to disclose Confidential Information of Seller to any person making a request pursuant to CPRA pursuant to documentation in form and substance reasonably satisfactory to Buyer, then Buyer shall, only if authorized under CPRA, delay release of the Confidential Information until Seller has had the opportunity to seek such court order. Seller’s indemnity obligations shall include, but are not limited to, all actual costs incurred by the Indemnitees, and specifically includes costs of experts and consultants, as well as all damages or liability of any nature whatsoever arising out of any such suits, claims, and causes of action brought against any Indemnitees, through and including any appellate proceedings. Seller’s obligations to all Indemnitees under this indemnification provision shall be due and payable on a monthly, ongoing basis within thirty (30) days after each submission to Seller of Buyer’s invoices for all fees and costs incurred by all Indemnitees, as well as all damages or liability of any nature.
(f) Each Party acknowledges that any disclosure or misappropriation of Confidential Information by such Party in violation of this Agreement could cause the other Party or their Affiliates irreparable harm, the amount of which may be extremely difficult to estimate, thus making any remedy at law or in damages inadequate. Therefore, each Party agrees that the non-breaching Party shall have the right to apply to any court of competent jurisdiction for a restraining order or an injunction restraining or enjoining any breach or threatened breach of this Agreement and for any other equitable relief that such non breaching Party deems appropriate. This right shall be in addition to any other remedy available to the Parties in law or equity, subject to the limitations set forth in Section 14.19(e).

Section 14.22 Mobile-Sierra. The Parties hereby stipulate and agree that this Agreement was entered into as a result of arm’s-length negotiations between the Parties. Further, the Parties 341 of 1291
78 believe that, to the extent the sale of Energy under this Agreement is subject to Sections 205 and 206 of the Federal Power Act, 16 U.S.C. Sections 824d and 824e, the rates, terms and conditions of this Agreement are just and reasonable within the meanings of Sections 205 and 206 of the Federal Power Act, and that the rates, terms and conditions of this Agreement will remain so during the Agreement Term.

Notwithstanding any provision of this Agreement, the Parties waive all rights to challenge the validity of this Agreement or whether it is just and reasonable for and with respect to the Agreement Term, under Sections 205 and 206 of the Federal Power Act, and to request the FERC to revise the terms and conditions and the rates or services specified in this Agreement, and neither Party shall seek, nor shall they support any third party in seeking, to prospectively or retroactively revise the rates, terms or conditions of this Agreement through application or complaint to FERC or any other state or federal agency, board, court or tribunal, related in any manner as to whether such rates, terms or conditions are just and reasonable or in the public interest under the Federal Power Act, absent prior written agreement of the Parties.

The Parties also agree that, absent prior agreement in writing by both Parties to a proposed change, the standard of review for changes to any rate, charge, classification, term or condition of this Agreement, whether proposed by a Party (to the extent that any provision of this section is unenforceable or ineffective as to such Party), a non-Party or the FERC acting sua sponte, shall be the “public interest” application of the “just and reasonable” standard of review that requires FERC to find an “unequivocal public necessity” or “extraordinary circumstances where the public will be severely harmed” to modify a contract, as set forth in United Gas Pipe Line Co. v. Mobile Gas Service Corp., 350 U.S. 332 (1956) and Federal Power Commission v. Sierra Pacific Power Co., 350 U.S. 348 (1956), and clarified by Morgan Stanley Capital Group, Inc. v. Public Util. Dist. No. 1 of Snohomish, 554 U.S. 527 at 550-51 (2008) and NRG Power Marketing, LLC v. Maine Public Utilities Comm’n, 558 U.S. 165 (2010).

Section 14.23 Service Contract. The Parties intend that this Agreement will qualify as a “Service Contract” as such term is used in Section 7701(e) of the United States Internal Revenue Code of 1986.

Section 14.24 Time is of the Essence. Time is of the essence for the performance of each of the terms and provisions of this Agreement.

Section 14.25 Right of First Offer and Right of First Refusal. Buyer shall have a “Right of First Offer” (or “ROFO”) and a “Right of First Refusal” (or “ROFR”) for any proposed sale of the Facility and related assets (“Facility Assets”) in accordance with the provisions of this Section

14.25, except that the ROFO and the ROFR shall not apply to any such sales or transfers of any interests of Seller in connection with a Tax Equity Financing or a sale, transfer or exercise of remedies in accordance with Section 14.7(g) (each a “Permitted Transfer”). (a) Prior to Seller consummating a sale of the Facility Assets (other than in connection with a Permitted Transfer), Seller shall provide notice to Buyer of Seller’s proposed transaction, including the proposed purchase price and basic terms and conditions associated therewith (a “Proposed Sale Notice”). Upon receipt of a Proposed Sale Notice, Buyer shall have sixty (60) days in which to notify Seller that Buyer may purchase the Facility Assets from 342 of 1291
79 Seller (a “Proposed Purchase Notice”). If Buyer provides Seller with a Proposed Purchase Notice (which notice shall, in the case of a ROFO, include Buyer’s proposed purchase price for the Facility Assets, and in the case of a ROFR, include Buyer’s response to the purchase price under consideration by Seller), then the Parties shall undertake for a period of up to ninety (90) days from the date of Buyer’s Proposed Purchase Notice to reach an agreement on the terms and conditions of a sale of the Facility Assets to Buyer. (b) With respect to a sale subject to the ROFO or the ROFR, if (i) Buyer does not timely provide a Proposed Purchase Notice to Seller, or (ii) the Parties are unable to agree upon the terms and conditions of a sale of the Facility Assets to Buyer within the ninety (90) day period set forth in Section 14.25(a), then Seller shall be free to negotiate the sale of the Facility Assets to any third party; provided, however, that (A) any sale of the Facility Assets to a third party shall include the assignment of this Agreement and Seller’s rights under the Ancillary Documents (in accordance with Section 14.7), and (B) prior to consummating any such sale, Seller shall provide Buyer with a concise summary of the commercial terms negotiated by Seller with the third party (a “Notice of Proposed Third Party Sale”). If the proposed purchase price set forth in the Notice of Proposed Third Party Sale is equal to or less than ninety five percent (95%) of the purchase price included in the Proposed Purchase Notice or negotiated in connection with Buyer’s exercise of the ROFO pursuant to Section 14.25(a), or otherwise on terms that are materially better than those last offered by Buyer, then Buyer shall have sixty (60) days to exercise its Right of First Refusal to purchase the Facility Assets or interests on substantially similar terms to those set forth in the Notice of Proposed Third Party Sale, subject to any modifications required to conform the transaction to requirements for transactions entered into by public agencies. If Buyer does not elect to exercise its Right of First Refusal and purchase the Facility Assets within such sixty (60) days, Seller shall be free to consummate the sale of the Facility Assets to the third party; provided that (A) such sale of the Facility Assets to a third party shall include the assignment of this Agreement and Seller’s rights and obligations under the Ancillary Documents, and (B) such sale shall be on substantially similar terms and conditions presented to Buyer in the Notice of Proposed Third Party Sale. (c) If Seller fails to (i) present a Notice of Proposed Third Party Sale within six (6) months after the expiration of the ninety (90) day period set forth in Section 14.25(a), or (ii) consummate the sale of the Facility Assets or interests to a third party within sixty (60) days after the expiration of the sixty (60) day period set forth in Section 14.25(b), then Seller shall provide another Proposed Sale Notice hereunder (and go through the ROFO process and the ROFR process) hereunder before commencing or continuing negotiations with any third party or consummating a sale of the Facility Assets or interests. (d) Neither the ROFO nor the ROFR shall apply to any sale or transfer by any Facility Lender in connection with the exercise of Facility Lender remedies under any Financing Agreement.

Section 14.26 Market Disruption Event. If at any point during the Agreement Term, the Facility, the Point of Delivery, or Buyer no longer reside in the same market that each exists in as of the Effective Date (a “Market Disruption Event”) and such Market Disruption Event materially changes the benefits, burdens or obligations of the Parties under this Agreement, then either Party, on written notice by the affected Party, may request the other Party to enter into negotiations to 343 of 1291
80 make mutually acceptable changes to this Agreement as necessary or appropriate, 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 receipt of such notice requesting negotiations, the Parties will promptly (but in any event commencing no later than fifteen (15) days after such request) negotiate in good faith such changes for a period of ninety (90) days. If the Parties fail to reach agreement as to such changes after negotiating in good faith for a period of ninety (90) days, then either Party may submit the issue for dispute resolution pursuant to the provisions of Section

14.3. Notwithstanding the foregoing, if a Market Disruption Event causes the performance of either Party hereunder to be impossible or impracticable, then either Party may terminate this Agreement at its option upon notice to the other Party, which such notice will be effective thirty (30) days after such notice is received by the other Party. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
344 of 1291

SIGNATURE PAGE TO AMENDED AND RESTATED POWER PURCHASE AGREEMENT

BETWEEN SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY AND
WHITEGRASS NO. 1, LLC
IN WITNESS WHEREOF, each Party was represented by legal counsel during the negotiation and execution of this Agreement and the Parties hereto have executed this Agreement as of the date first set forth above.

SOUTHERN CALIFORNIA PUBLIC POWER

AUTHORITY
By:

Dawn Roth Lindell
President
Attest:

Michael S. Webster
Assistant Secretary
Approved as to legal form and content:

By:

Christine Godinez
General Counsel
345 of 1291

SIGNATURE PAGE TO AMENDED AND RESTATED POWER PURCHASE AGREEMENT

BETWEEN SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY AND
WHITEGRASS NO. 1, LLC
WHITEGRASS NO. 1, LLC
By:

Name:

Title:
346 of 1291
A-1

APPENDIX A
TO THE

AMENDED AND RESTATED

POWER PURCHASE AGREEMENT

BETWEEN

SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY
and
WHITEGRASS NO. 1, LLC

CONTRACT PRICE AND PAYMENT SCHEDULE

1. Price for Delivered Energy. The price for all Delivered Energy (other than Excess Energy and Excess Monthly Generation) and associated Environmental Attributes and Capacity Rights shall be equal to $67.50 per MWh, as may be adjusted in accordance with the terms of this Agreement.

2. Price for Excess Energy. The price for all Excess Energy and associated Environmental Attributes and Capacity Rights shall be $33.75 per MWh, as such price may be adjusted in accordance with this Agreement.

3. Price for Excess Monthly Generation. The price for Excess Monthly Generation and associated Environmental Attributes and Capacity Rights shall be the lesser of: (a) the greater of (i) $70.25 per MWh minus the Green Value, and (ii) $0.00, or (b) the greater of (i) the Market Price minus Green Value and (ii) $0.00.
347 of 1291
B-1

APPENDIX B
TO THE

AMENDED AND RESTATED

POWER PURCHASE AGREEMENT

BETWEEN

SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY
and
WHITEGRASS NO. 1, LLC

FACILITY

1. Name of Facility: Whitegrass No. 1

2. Site: Yerington, Lyon County, NV

3. Generator Owner: Whitegrass No. 1, LLC

4. Qualified Operator: Open Mountain Energy LLC

5. Equipment:
(a) Type of Facility: Geothermal - Binary
(b) Nominal Nameplate Capacity: 3.0 MW

6. Commercial
Operation Date: October 18, 2018

7. Other included facilities: None

8. Permits: Nevada Division of Minerals (NDOM) Well Permits Well NDOM Permit ID
PW4 1240
PW5 1441
PW2 0672
Lyon County Use Permit – FLD – 17-0768L
Nevada Division of Water Resources Permit 70677
NDEP Groundwater Permit – 6557
348 of 1291
B-2
NDEP General Permit GNEVOSDS09-S-0473 - (On-site
Sewage Disposal System)
BLM Right-of-Way NVN 081493
349 of 1291
C-1

APPENDIX C
TO THE

AMENDED AND RESTATED

POWER PURCHASE AGREEMENT

BETWEEN

SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY
and
WHITEGRASS NO. 1, LLC

BUYER AND SELLER BILLING, NOTIFICATION AND SCHEDULING CONTACT

INFORMATION

1. Correspondence for the purpose of designating an Authorized Representative or alternate pursuant to Section 14.1 shall be transmitted to the following addresses:

1.1. If to Buyer:

Southern California Public Power Authority
1160 Nicole Court
Glendora, CA 91740
Telephone: 626-793-9364
Attention: Executive Director
Email: [email protected]

1.2. If to Seller:

Brady Olson
Chief Operating Officer
Open Mountain Energy, LLC
3451 North Triumph Blvd. Suite 201
Lehi, UT 84043
E-mail: [email protected]
For information only, telephone: (801) 885-1653

2. Billings and payments pursuant to Section 11.1 and Appendix A shall be transmitted to the following addresses:

2.1 If Billing to Buyer:

Southern California Public Power Authority
1160 Nicole Court
Glendora, CA 91740
Telephone: 626-793-9364
Attention: Finance and Accounting,
Email: [email protected]
350 of 1291
C-2
and to: [email protected]

2.2 If Payment to Buyer:

Southern California Public Power Authority
1160 Nicole Court
Glendora, CA 91740
Telephone: 626-793-9364
Attention: Finance and Accounting, [email protected]

2.3 If Billing to Seller:

Brady Olson
Chief Operating Officer
Open Mountain Energy, LLC
3451 North Triumph Blvd. Suite 201
Lehi, UT 84043
Phone: (801) 885-1653
E-mail: [email protected]

2.4 If Payment to Seller:

Brady Olson
Chief Operating Officer
Open Mountain Energy, LLC
3451 North Triumph Blvd. Suite 201
Lehi, UT 84043
Phone: (801) 885-1653
E-mail: [email protected]

3. All notices (other than Scheduling notices) required under this Agreement shall be sent pursuant to Section 14.2 to the address specified below.

If to Buyer:

Southern California Public Power Authority
1160 Nicole Court
Glendora, CA 91740
Telephone: 626-793-9364
Attention: Executive Director
Email: [email protected]
And, if prior to the Commencement Date, with a copy to:

Southern California Public Power Authority
351 of 1291
C-3
1160 Nicole Court
Glendora, CA 91740
Telephone: 626-793-9364
Attention: Randy Krager, [email protected]
Email: [email protected]
If to Seller:

Brady Olson
Chief Operating Officer
Open Mountain Energy, LLC
3451 North Triumph Blvd. Suite 201
Lehi, UT 84043
E-mail: [email protected]
For information only, telephone: (801) 885-1653

4. Following the Commencement Date, and throughout the Delivery Term, all notices related to scheduling of the Facility shall be sent to the following address:

If to Buyer:

Southern California Public Power Authority
1160 Nicole Court
Glendora, CA 91740
Telephone: 626-793-9364
Facsimile: 626-793-9461
Attention: Director of Asset Management
Email: [email protected]
With a copy to:

Glendale Water and Power
RE: Whitegrass Geothermal Project
141 N. Glendale Avenue, Level 4
Glendale, CA 91206
Telephone: 818-548-3246
Attention: AGM – Power Supply
Email: [email protected]
If to Seller:

Brady Olson
Chief Operating Officer
Open Mountain Energy, LLC
3451 North Triumph Blvd. Suite 201
Lehi, UT 84043
E-mail: [email protected]
352 of 1291
C-4
For information only, telephone: (801) 885-1653
353 of 1291
D-1

APPENDIX D
TO THE

AMENDED AND RESTATED

POWER PURCHASE AGREEMENT

BETWEEN

SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY
and
WHITEGRASS NO. 1, LLC

FORM OF ATTESTATION
____________(Seller)____________ Environmental Attribute Attestation and Bill of Sale __________________ (“Seller”) hereby sells, transfers and delivers to Southern California Public Power Authority (“Buyer”) the Environmental Attributes and Environmental Attribute Reporting Rights associated with the generation from the Facility described below:

Facility Name:

Facility Location:

Fuel Type:

Capacity (MW):

As applicable:

CEC-RPS-ID no. ______ Energy Admin. ID no. ______WREGIS Generating Unit no. ______ Qualifying Facility (18 C.F.R. Sec. 292.101(b)(1)) ID no. ______ MWhrs generated (up to four (4) decimal points
Vintage (Year/Month) to account for kWhrs)
________________ ___________
________________ ___________
________________ ___________
in the amount of one Environmental Attribute or its equivalent for each megawatt hour generated, up to four decimal points to account for kWhrs.

Seller further attests, warrants and represents as follows:
i) the information provided herein is true and correct; ii) its sale to Buyer is its one and only sale of the Environmental Attributes and associated Environmental Attribute Reporting Rights referenced herein; iii) the Facility generated and delivered to the grid the Energy in the amount indicated as undifferentiated Energy; and
354 of 1291
D-2
iv) Seller owns the Facility, and each of the Environmental Attributes and Environmental Attribute Reporting Rights associated with the generation of the indicated Energy for delivery to the grid have been generated and sold by the Facility.

This serves as a bill of sale, transferring from Seller to Buyer all of Seller’s right, title and interest in and to the Environmental Attributes and Environmental Attribute Reporting Rights associated with the generation of the Energy for delivery to the grid.

Contact Person: ____________________ tel:
355 of 1291
E-1

APPENDIX E
TO THE

AMENDED AND RESTATED

POWER PURCHASE AGREEMENT

BETWEEN

SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY
and
WHITEGRASS NO. 1, LLC

FORM OF LETTER OF CREDIT
IRREVOCABLE AND UNCONDITIONAL DOCUMENTARY LETTER OF CREDIT NO.

Applicant:
_______________
Beneficiary:

Southern California Public Power Authority
1160 Nicole Court
Glendora, California 91740
Telephone: (626) 793-9364
Facsimile: (626) 793-9461
Amount: [___________]
Expiration Date: [__________]1
Expiration Place: [__________]:

Ladies and Gentlemen:

We hereby issue our Irrevocable and Unconditional Documentary Letter of Credit (“Letter of Credit”) in favor of the Beneficiary by order and for the account of the applicant which is available at sight for USD $XX,XXX,XXX by sight payment
(a) upon presentation to us at our office at [bank’s address] of: (i) Beneficiary’s written demand for payment containing the text of Exhibit I and (ii) Beneficiary’s signed statement containing the text of Exhibit II; or
(b) [upon both Beneficiary’s telephone or fax advice of demand to the attention of ____________________ at telephone and/or fax number _______________ and presentation to us by fax or email to address _________________ of: (i) your written 1 Note: To be one year after issuance, subject to automatic renewals. 356 of 1291
E-2
demand for payment containing the text of Exhibit I and (ii) your statement containing the text of Exhibit II.]
Funds may be drawn under this Letter of Credit, from time to time, in one or more drawings, in amounts not exceeding in the aggregate the amount specified above.

Upon presentation to us in conformity with the foregoing prior to or at 12:00 p.m., Pacific Standard Time on any business day, we will, on the next business day, or, upon presentation to us in conformity with the foregoing after 12:00 p.m. Pacific Standard Time on any business day, we will, on the second succeeding business day, but in either case without any other delay whatsoever, irrevocably and without reserve or condition: (a) if the office set forth above for presentation is in Glendora, California, pay to Beneficiary’s order in the account at the bank designated by you in the demand, the full amount demanded by you in the same-day funds which are immediately available to you, or (b) if the office set forth above for presentation is not Glendora, California, issue payment instructions to the Federal Reserve wire transfer system in proper form to transfer to the account at the bank designated by you in the demand, the full amount demanded by you in the same-day funds which are immediately available to you in Glendora, California. We agree that if, on the expiration date of this Letter of Credit, the office specified above is not open for business by virtue of an interruption of the nature described in the 2007 Revision of the Uniform Customs and Practices for Documentary Credits, International Chamber of Commerce Publication No. 600 (“UCP 600”), in Article 36, this Letter of Credit will be duly honored if the specified statements are presented by you within thirty (30) days after such office is reopened for business.

Payment hereunder shall be made regardless of: (a) any written or oral direction, request, notice or other communication now or hereafter received by us from the Applicant or any other person except Beneficiary, including without limitation any communication regarding fraud, forgery, lack of authority or other defect not apparent on the face of the documents presented by you, but excluding solely an effective written order issued otherwise than at our instance by a court of competent jurisdiction which order is legally binding upon us and specifically orders us not to make such payment; (b) the solvency, existence or condition, financial or other, of the Applicant or any other person or property from whom or which we may be entitled to reimbursement for such payment; and (c) without limiting clause (b) above, whether we are in receipt of or expect to receive funds or other property as reimbursement in whole or in part for such payment. We agree that we will not take any action to cause the issuance of an order described in clause (a) of the preceding sentence. We agree that the time set forth herein for payment of any demand(s) for payment is sufficient to enable us to examine such demand(s) and the related documents(s) referred to above with care so as to ascertain that on their face they appear to comply with the terms of this credit and that if such demand(s) and document(s) on their face appear to so comply, failure to make any such payment within such time shall constitute dishonor of such demand(s) and this credit.

The stated amount of this Letter of Credit may be increased or decreased, and the expiration date of this Letter of Credit may be extended, by an amendment to this Letter of Credit in the form of Exhibit III. Any such amendment shall become effective only upon acceptance by your signature on a hard copy amendment.
357 of 1291
E-3
Beneficiary shall not be bound by any written or oral agreement of any type between us and the Applicant or any other person relating to this credit, whether now or hereafter existing.

We hereby engage with you that Beneficiary’s demand(s) for payment in conformity with the terms of this credit will be duly honored as set forth above. All fees and other costs associated with the issuance of and any drawing(s) against this Letter of Credit shall be for the account of the Applicant. All of the rights of the Beneficiary set forth above shall inure to the benefit of its successors. In this connection, in the event of a drawing made by a party other than the Beneficiary, such drawing must be accompanied by the following signed certification:
“The undersigned does hereby certify that ____[drawer]____ is the successor by operation of law to Southern California Public Power Authority, the Beneficiary named in [name of Bank] Letter of Credit No. __________.”
[name and title]
Except so far as otherwise expressly stated herein, this Letter of Credit is subject to the UCP 600.

As to matters not governed by the Uniform Customs, this Letter of Credit shall be governed by and construed in accordance with the laws of the State of California. Any litigation arising out of, or relating to this Letter of Credit, shall be brought in a State or Federal court in the County of Los Angeles in the State of California. The Parties irrevocably agree to submit to the exclusive jurisdiction of such courts in the State of California.

Yours faithfully,
(name of issuing bank)
By
Title
358 of 1291
E-4

EXHIBIT I

DEMAND FOR PAYMENT
Re: Irrevocable and Unconditional Documentary Letter of Credit No. ________________ Dated ___________, 20__
[Insert Bank Address]
To Whom It May Concern:

Demand is hereby made upon you for payment to us of $___________ by deposit to our account no. __________ at [insert name of bank]. This demand is made under, and is subject to and governed by, your Irrevocable and Unconditional Documentary Letter of Credit no. __________ dated __________, 20__ in the amount of $__________ established by you in our favor for the account of ____________________ as the Applicant.

DATED: ____________________, 20__.

SOUTHERN CALIFORNIA PUBLIC

POWER AUTHORITY
By:__________________________
Name:

Title:

Date:

Attest: ________________________
Name:

Title:
359 of 1291
E-5

EXHIBIT II

STATEMENT
Re: Your Irrevocable and Unconditional Documentary Letter of Credit No. _____________ Dated ________, 20________
[Insert Bank Address]
To Whom It May Concern:

Reference is made to your Irrevocable and Unconditional Documentary Letter of Credit no. __________, dated __________, 20____ in the amount of $_____________________ established by you in our favor for the account of ________________________.

We hereby certify to you that $________________ is due and owing to us by the Applicant.

DATED: ______________, 20__.

SOUTHERN CALIFORNIA PUBLIC

POWER AUTHORITY
By:
__________________________
Name:

Title:

Date:

Attest: ________________________
Name:

Title:
360 of 1291
E-6

EXHIBIT III

AMENDMENT
Re: Irrevocable and Unconditional Documentary Letter of Credit No. ________________ Dated ________________, 20__
Beneficiary: Applicant:

Southern California Public Power
Authority 1160 Nicole Court
Glendora, CA 91740
To Whom It May Concern:

The above referenced Irrevocable and Unconditional Documentary Letter of Credit is hereby amended as follows: by increasing / decreasing / leaving unchanged (strike two) the stated amount by $ _______________ to a new stated amount of $ __________________ or by extending the expiration date to _____________________ from ____________________. All other terms and conditions of the Letter of Credit remain unchanged.

This amendment is effective only when accepted by Southern California Public Power Authority, which acceptance may only be valid by a signature of an authorized representative.

Dated: _______________________
Yours faithfully,
(name of issuing bank)
By
Title

ACCEPTED
Southern California Public Power Authority
By
Title
Date
361 of 1291
F-1

APPENDIX F
TO THE

AMENDED AND RESTATED

POWER PURCHASE AGREEMENT

BETWEEN

SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY
and
WHITEGRASS NO. 1, LLC

INSURANCE
I. GENERAL REQUIREMENTS
Within five Business Days after the Effective Date, Seller shall furnish Buyer evidence of coverage from insurers acceptable to Buyer and in a form acceptable to Buyer’s Risk Management Section in accordance with Section 14.19(c). Such insurance shall be maintained by Seller at Seller’s sole cost and expense. Such insurance shall not limit or qualify the liabilities and obligations of Seller assumed under this Agreement. Buyer shall not, by reason of its inclusion under these policies, incur liability to the insurance carrier for payment of premium for these policies.

Any insurance carried by Buyer which may be applicable shall be deemed to be excess insurance and Seller’s insurance is primary for purposes under this Agreement despite any conflicting provision in Seller’s policies to the contrary.

Said evidence of insurance shall contain a provision that the policy cannot be canceled or reduced in coverage or amount without first giving thirty (30) days’ prior notice thereof (ten (10) days for non-payment of premium) by registered mail to Buyer, addressed as follows: Southern California Public Power Authority, 1160 Nicole Court, Glendora, CA 91740.

Should any portion of the required insurance be on a “Claims Made” policy, Seller shall, at the policy expiration date following completion of work, provide evidence that the “Claims Made” policy has been renewed or replaced with a retroactive date back to the policy in effect as of the Effective Date with the same limits, terms and conditions of the expiring policy.

Seller shall be responsible for all subcontractors’ compliance with the insurance requirements.

II. SPECIFIC COVERAGES REQUIRED
A. Commercial Automobile Liability
Seller shall provide Commercial Automobile Liability insurance, which shall include coverages for liability arising out of the use of owned, non-owned and hired vehicles for performance of the work as required to be licensed under the California, or any other applicable state, vehicle code. The Commercial Automobile Liability insurance shall have not less than one million dollars ($1,000,000.00) combined single limit per occurrence and shall apply to all operations of Seller.
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F-2
The Commercial Automobile Liability policy shall include Buyer, its members, and its and their officers, agents, and employees while acting within the scope of their employment, as additional insureds with Seller and shall insure against liability for death, bodily injury or property damage resulting from the performance of this Agreement. The form of evidence of insurance shall be a Buyer Additional Insured Endorsement or an endorsement to the policy acceptable to Buyer’s Risk Management Section.

B. Commercial General Liability
Seller shall provide Commercial General Liability insurance with Blanket Contractual Liability, Independent Contractors, Broad Form Property Damage, Premises and Operations, Products and Completed Operations, fire Legal Liability and Personal Injury coverages included. Such insurance shall provide coverage for total limits actually arranged by Seller, but not less than ten million dollars ($10,000,000.00) combined single limit per occurrence. Umbrella or Excess Liability coverages may be used to supplement primary coverages to meet the required limits. Evidence of such coverage shall be on Buyer’s Additional Insured Endorsement form or on an endorsement to the policy acceptable to Buyer’s Risk Management Section and shall provide for the following:

1. Include Buyer and its officers, agents, and employees as additional insureds with the Named Insured for the activities and operations under this Agreement.

2. Include Severability-of-Interest or Cross-Liability Clause such as:
“The policy to which this endorsement is attached shall apply separately to each insured against whom a claim is made or suit is brought, except with respect to the limits of the company’s liability.”

3. Include a description of the coverages included under the policy.

C. Excess Liability
Seller may use an Umbrella or Excess Liability Coverage to meet coverage limits specified in this Agreement. Seller shall require the carrier for Excess Liability to properly schedule and to identify the underlying policies as provided for Buyer on the Buyer Additional Insured Endorsement Form, or on an endorsement to the policy acceptable to Buyer’s Risk Management Section. Such policy shall include, as appropriate, coverage for Commercial General Liability, Commercial Automobile Liability, Employer’s Liability or other applicable insurance coverages.

D. Workers’ Compensation/Employer’s Liability Insurance Seller shall provide Workers’ Compensation insurance covering all of Seller’s employees in accordance with the laws of any state in which the work of the Agreement is to be performed and including Employer’s Liability insurance, where possible, and a Waiver of Subrogation in favor of Buyer. The limit for Employer’s Liability coverage shall be not less than one million dollars ($1,000,000.00) each accident and shall be a separate policy if not included with Workers’ Compensation coverage. Evidence of such insurance shall 363 of 1291
F-3
be in the form of a Buyer Special Endorsement of insurance or on an endorsement to the policy acceptable to Buyer’s Risk Management Section. Workers’ Compensation/Employer’s Liability exposure may be self-insured, provided that Buyer is furnished with a copy of the certificate issued by the state authorizing Seller to self-insure.

Seller shall notify Buyer’s Risk Management Section by receipted delivery as soon as possible of the state withdrawing authority to self-insure.

E. Property All Risk Insurance
Seller shall procure and maintain an All Risk Physical Damage policy to insure the full replacement value of the property located at the Facility as described in this Agreement.

The policy shall include coverage for expediting expense, extra expense, Business Interruption, ensuing loss from faulty workmanship, faulty materials or faulty design. 364 of 1291
G-1

APPENDIX G
TO THE

AMENDED AND RESTATED

POWER PURCHASE AGREEMENT

BETWEEN

SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY
and
WHITEGRASS NO. 1, LLC

QUALITY ASSURANCE PROGRAM
Seller shall implement a Quality Assurance (“Q/A”) Program to ensure that the operation and maintenance of the Facility fulfills the requirements of this Agreement. The Q/A Program shall provide assurance that design, purchasing, manufacturing, shipping, storage, construction, testing and examination of all equipment, materials, services and maintenance of the Facility will comply with the requirements of this Agreement, all applicable Requirements of Law and the manufacturers’ and/or suppliers’ requirements for successful operation of the Facility.

Quality at Seller
What is quality? Seller believes that quality is the unit of measure for assessing fulfillment of project goals. A quality project meets or exceeds the contract requirements and accepted standards of professional and industry practice. Furthermore, high quality projects are those that address client and societal needs more successfully than “low” quality projects. While this may seem like a straightforward definition, the process to ensure quality is much more involved and includes quality management, quality planning, quality control, quality assurance, a quality system, and total quality management.
“Quality assurance” refers to a process that reduces the potential for error throughout the phases of a project. On projects with a Q/A Program, the chances of producing a poor quality deliverable are substantially reduced. Quality control procedures are an integral part of quality assurance.

Historically, industry has used the term “quality control” to indicate a checking procedure for verifying the quality of deliverables. This checking commonly occurs at the end of the process, long after an error may have been made and compounded by subsequent work. While quality control checks at the end of a project are an essential exercise, scheduled periodic reviews at each phase of project conceptual and final design are integral to Seller’s Q/A Program. In addition, quality maintenance which meets or exceeds manufacturers’ and/or suppliers’ requirements and best industry practices must be an integral part of Seller’s Q/A Program.

The Quality Management Process
The surest way to achieve satisfactory quality is to adhere to a proven quality process. The term “quality” most accurately refers to a project’s ability to satisfy needs when considered as a whole and each part of the process meets or exceeds the standards of Prudent Utility Practices. 365 of 1291
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Seller’s project management team is responsible for proactively planning and directing the quality of the work process, services, and deliverables. Seller’s project management team will prepare a written maintenance manual for the Facility applicable for the duration of the Delivery Term that complies with the maintenance manuals of the manufacturers and suppliers from whom Seller has purchased equipment and/or material and best industry practices.

Written Work Plan and Q/A Manual
The idea of a written work plan and Q/A manual is to incorporate quality assurance in all areas of project execution. Seller has found that quality needs to be institutionalized into the project process, not only in the budgeting process, but everywhere. For example, specific tasks and duties need to be allocated to specific individuals; roles and interface points need to be clearly defined; individual assignments need to be realistic; special attention needs to be paid to complex areas within projects; schedules need to be realistic and achievable; and, lastly, the work culture needs to be enjoyable and open so that employees are empowered to react quickly to symptoms of quality problems before they actually manifest.

Seller’s quality program shall be documented in a written work plan and Quality Assurance manual (the “Q/A Manual”). The form and the format of the Q/A Manual shall be developed by Seller, but must comply with Prudent Utility Practices and follow manufacturers’ and suppliers’ recommendations without deviation. The content of the Q/A Manual shall provide written descriptions of policies, procedures and methodology to accomplish a quality project. Seller shall submit three (3) copies of the Q/A Manual within ninety (90) days after the Effective Date to Buyer or Buyer’s Representative. The Q/A Manual shall be kept current by Seller throughout the Agreement Term through the submittal of revisions, as appropriate, by Seller to Buyer or Buyer’s Authorized Representative.

The Q/A Manual shall describe the authority and the responsibility of the Persons in charge of the Q/A Program and inspection activities. Furthermore, it shall provide the plan and strategy for quality control and review for maintenance and operations during the Delivery Term. The Q/A Manual shall strive; at a minimum, to define control procedures or methods to assure the following:
(a) The design documents, drawings, specifications, Q/A procedures, records, inspection procedures and purchase documents are maintained to be current, accurate and in compliance with all applicable law.
(b) The purchased materials, equipment and services comply with the requirements of this Agreement and all applicable Requirements of Law.
(c) The materials received at the site are inspected for compliance with specifications. (d) The subcontracted work is adequately inspected by third parties. (f) Proper documentation, control and disposition of nonconforming equipment and materials is maintained.
(g) Proper records are kept and available following project completion to ensure accurate documentation of as-built conditions.
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(h) Detailed and complete plan for maintenance and operation during the Delivery Term consistent with manufacturers’ and suppliers’ recommendations and best industry practices.

Quality Assurance and Quality Control (“Q/C”) Activities During the Delivery Term Throughout the Agreement Term, Seller shall perform Q/A and Q/C activities on all materials and equipment associated with the Facility on a periodic basic, and at a minimum once every six (6) months. At the completion of such Q/A and Q/C activities, Seller shall provide Buyer a detailed report identifying all areas of inspections performed, a detailed checklist, results found, remedial actions taken, if any, and follow up for any corrective actions.

Seller shall provide Buyer with a schedule for performance actions needed as result of Q/A and Q/C activities. Buyer shall review the schedule and provide comments to Seller.

QUALITY ASSURANCE (Q/A) AND QUALITY CONTROL (Q/C) CHECKLIST Pre-Construction
o Third-party review of drawings and major equipment (generator step-up transformer, downhole pumps, VFD’s, switchgear, etc.)
o Geotechnical reports
o Environmental reports
Construction
o Civil: Compaction testing, concrete testing
o Electrical: Third-party review of contractor QA/QC testing and reports o Mechanical: Third-party review of contractor QA/QC testing and reports o Procurement: Third-party verification that major equipment meets design specifications
o Independent Engineer Construction Reports: Periodic reports to confirm compliance with construction drawings and documents
o Commissioning and Start-up: Equipment Performance Testing (Independent Engineer Verification)
Operations
o Preventative Maintenance Plan
o Plant Inspections (2x per year)
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APPENDIX H
TO THE

AMENDED AND RESTATED

POWER PURCHASE AGREEMENT

BETWEEN

SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY
and
WHITEGRASS NO. 1, LLC
[RESERVED]
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APPENDIX I
TO THE

AMENDED AND RESTATED

POWER PURCHASE AGREEMENT

BETWEEN

SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY
and
WHITEGRASS NO. 1, LLC

FORM OF NON-CONSOLIDATION OPINION
Southern California Public Power Authority
1160 Nicole Court
Glendora, California 91740
RE: Power Purchase Agreement between Southern California Public Power Authority and Whitegrass No. 1, LLC; Nonconsolidation of Whitegrass No. 1, LLC
Dear Sir or Madam:

We have acted as counsel to Whitegrass No. 1, LLC, a Nevada limited liability company (“Seller”), in connection with that certain Power Purchase Agreement dated as of February __, 2020 (the “PPA”) between Southern California Public Power Authority (“SCPPA”) and Seller. This opinion letter is provided to you at the request of Seller pursuant to Section 2.1(y)(c) of the PPA.

OPINION REQUEST
In connection with the PPA and pursuant to the condition precedent to the Effective Date of the PPA set forth in Section 2.1(y)(c) thereof, Seller has requested that we provide you with our opinion whether, in a properly presented and argued case under title 11 of the United States Code, 11 U.S.C. § 101 et seq. (the “Bankruptcy Code”) in which any Parent Entity, Ultimate Parent Entity, or any other Seller Affiliate (as such terms are defined in the PPA; collectively, an “Opinion Entity”) is the debtor, a United States bankruptcy court or other court exercising bankruptcy jurisdiction over a case under the Bankruptcy Code (the “Court”) would order the substantive consolidation of the assets and liabilities of Seller with those of such Opinion Entity.

DOCUMENTS REVIEWED
For purposes of the opinion set forth below, we have examined originals, or copies certified or otherwise identified to our satisfaction, of the following documents (collectively, the “Opinion Documents”):
• the PPA;
• the Opinion Backup Certificate dated as of the date hereof (the “Factual Certificate”) of an officer of Seller, certifying (among other things) the 369 of 1291
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authenticity and completeness of the following organizational documents of Seller (collectively, “Seller’s Organizational Documents”):
o State of Nevada Limited Liability Company Articles of Organization dated March 6, 2017 (“Seller’s Articles”);
o Operating Agreement dated as of March 6, 2017 (the “Original LLC Agreement”);
o Amended and Restated Operating Agreement dated as of October 1, 2018 (the “First Amended LLC Agreement”); and
o Second Amended and Restated Operating Agreement dated as of February __, 2020 (the “SPE LLC Agreement”).

Seller’s Articles and the SPE LLC Agreement are referred to herein together as “Seller’s Current Organizational Documents” and the Original LLC Agreement and the First Amended LLC Agreement are referred to herein together as the “Seller’s Legacy LLC Agreements”.

FACTS
I. General Factual Background Regarding Seller
We have been advised of the following general background facts relevant to the opinion set forth below:
• Seller is a limited liability company organized under Nevada law on March 6, 2017.
• Seller owns and operates a geothermal energy generating facility with nominal nameplate capacity of 4.0 MW (the “Facility”) in Lyon County, Nevada. • Seller has one member, Open Mountain Energy, LLC, a Delaware limited liability company (“Parent”), which holds 100% of the equity interests in Seller.
• Seller is entering into the PPA with SCPPA. The PPA provides for Seller’s sale to SCPPA of certain renewable energy and associated environmental attributes generated by the Facility.

II. Amendment of Seller’s Organizational Documents to Make it a Special Purpose Entity In order to comply with SCPPA’s requirements in the PPA, Seller is amending and restating its First Amended LLC Agreement and replacing it with the SPE LLC Agreement.

Specifically, pursuant to the PPA, Seller is agreeing that it will at all time comply with the requirements of, and qualify as, a “Special Purpose Entity” as defined in the PPA (a “Special Purpose Entity”). Section 12.5 of PPA defines a Special Purpose Entity to mean a limited liability 370 of 1291
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company which at all times prior to (except as otherwise provided below), on and after the date thereof:
(a) shall not (without the prior written consent of Buyer) (i) engage in any dissolution, liquidation or consolidation or merger with or into any other business entity, (ii) acquire by purchase or otherwise all or substantially all of the business or assets of or beneficial interest in any other entity, (iii) transfer, lease or sell, in one transaction or any combination of transactions, all or substantially all of its properties or assets except to the extent permitted herein, (iv) modify, amend or waive any provisions of its organizational documents related to its status as a Special Purpose Entity, or (v) terminate its organizational documents or its qualifications and good standing in any jurisdiction;
(b) has limited, is limiting and will limit its activities to acquiring, developing, owning, holding, selling, financing, leasing, transferring, exchanging, managing and operating the Facility, entering into the PPA with Buyer and the Ancillary Documents and transacting lawful business that is incident, necessary and appropriate to accomplish the foregoing;
(c) has not been, is not, and will not be engaged in any business other than that relating to its limited purpose as set forth in the immediately preceding subsection (b);
(d) has not had, does not have and will not have, any assets other than those related to the Facility;
(e) has held itself out and will hold itself out to the public as a legal entity separate and distinct from any other entity and has not failed and will not fail to correct any known misunderstanding regarding the separate identity of such entity, provided that (for the avoidance of doubt), the foregoing shall not restrict any Parent Entity, Ultimate Parent Entity or any other Seller Affiliate2 from identifying its indirect relationship to the Facility through Seller; (f) has maintained and will maintain its financial statements, bank accounts, accounts, books, resolutions, agreements and records separate from any other Person except as required by GAAP; provided, however, that to the extent permitted by GAAP, any such consolidated financial statement shall contain a note indicating that its separate assets and liabilities are neither available to pay the debts of the consolidated entity nor constitute obligations of the consolidated entity, and has filed and will file its own tax returns (except to the extent such limited liability company is treated as a “disregarded entity” for tax purposes and is not required to file separate tax returns under applicable law);
2 The PPA defines an “Affiliate” to mean, as to any Person, “any other Person that, directly or indirectly, is in Control of, is Controlled by or is under common Control with such Person or is a director or officer of such Person or of an Affiliate of such Person.”
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(g) has held itself out and identified itself, and will hold itself out and identify itself, as a separate and distinct entity under its own name or in a name franchised or licensed to it by an entity other than an Affiliate of Seller (except to the extent such limited liability company is treated as a “disregarded entity” for tax purposes and is not required to file separate tax returns under applicable law) and not as a division, department or part of any other Person; (h) has maintained and will maintain its assets in such a manner that it will not be costly or difficult to segregate, ascertain or identify its individual assets from those of any other Person;
(i) has not made and will not make loans or advances to any Person or hold evidence of indebtedness issued by any other Person (other than cash and investment-grade securities issued by an entity that is not an Affiliate of or subject to common ownership with such entity) or made any gifts or fraudulent conveyances to any Person;
(j) has not identified and will not identify its members, or any Affiliate of any member, as a division or department or part of it, and has not identified itself and shall not identify itself as a division or department of any other Person; (k) has not entered into or been a party to, and will not enter into or be a party to, any transaction with its members or Affiliates, except in the ordinary course of its business and on terms which are commercially reasonable and comparable with those which could be obtained in a comparable arm’s-length transaction with an unrelated third party;
(l) has not had and will not have any obligation to indemnify, and has not indemnified and will not indemnify its officers, managers or members, as the case may be, other than (i) the Independent Manager in connection with the Independent Manager’s actions related to the performance of the PPA, and (ii) its officers, managers, and members with respect to actions taken or omitted to be taken in good faith by such officer, manager or member with respect to the development, construction, financing, ownership and operation of the Facility; (m) has considered and shall consider the interests of its creditors in connection with all limited liability company actions;
(n) except for obligations to Facility Lenders or Tax Equity Investors, does not and will not have any of its obligations guaranteed by any Affiliate and will not hold itself out as being responsible for the debts or obligations of any other Person;
(o) will comply with all of the terms and provisions contained in its organizational documents including the provision requiring that there be an Independent Manager at all times on and after the date hereof and has done or caused to be done and will do all things necessary to preserve its existence; 372 of 1291
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(p) will not commingle, its funds or assets with those of any Person and will not participate in any cash management system with any other Person; (q) will conduct all business in its own name and, except in connection with a Tax Equity Financing utilizing a lease or inverted lease structure, from and after the Commencement Date, has held, and will hold, its assets in its own name and conducted and will conduct all business in its own name; (r) has maintained and will maintain its financial statements, accounting records and other entity documents separate from any other Person and has not permitted and will not permit its assets to be listed as assets on the financial statement of any other entity except as required by GAAP; provided, however, that to the extent permitted by GAAP, any such consolidated financial statement shall contain a note indicating that its separate assets and liabilities are neither available to pay the debts of the consolidated entity nor constitute obligations of the consolidated entity;
(s) has paid and will pay its own liabilities and expenses, including the salaries of its own employees, out of its own funds and assets, and has maintained and will maintain a sufficient number of employees in light of its contemplated business operations (it being acknowledged and agreed that Seller may have no employees to the extent it contracts out its requirements for all necessary managerial, operational and other services);
(t) has observed and will observe all limited liability company formalities;
(u) has not assumed or guaranteed or become obligated for, and will not assume or guarantee or become obligated for, the debts of any other Person and has not held out and will not hold out its credit as being available to satisfy the obligations of any other Person;
(v) has not acquired and will not acquire obligations or securities of its members or any Affiliate;
(w) will allocate fairly and reasonably any overhead expenses that are shared with any Affiliate, including paying for shared space and services performed by any employee of an Affiliate;
(x) now maintains and uses, and will maintain and use separate stationery, invoices and checks bearing its name; such stationery, invoices and checks utilized by it or utilized to collect its funds or pay its expenses have borne and shall bear its own name and shall not bear the name of any other entity unless such entity is clearly designated as being its agent;
(y) except in connection with the development or construction, or financing of the development or construction of the Facility, has not pledged and will not pledge its assets for the benefit of any other Person; 373 of 1291
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(z) now has, and will have articles of organization, a certificate of formation or an operating agreement, as applicable, that provides that it will not:
(A) dissolve, merge, liquidate or consolidate; (B) sell, transfer, lease or otherwise convey all or substantially all of its assets (other than as permitted under Section

14.7 of the PPA); (C) engage in any other business activity, or amend its organizational documents with respect to the matters set forth in this definition without the affirmative vote of its Independent Manager; or (D) without the affirmative vote of its Independent Manager, file a bankruptcy or insolvency petition or otherwise institute insolvency proceedings with respect to itself or to any other entity in which it has a direct or indirect legal or beneficial ownership interest;
(aa) has been, is and intends to remain solvent and has paid and intends to continue to pay its debts and liabilities (including, as applicable, shared personnel and overhead expenses) from its assets as the same shall have or become due, and has maintained, is maintaining and intends to maintain adequate capital for the normal obligations reasonably foreseeable in a business of its size and character and in light of its contemplated business operations; and (bb) has and will have no indebtedness other than (i) Facility Debt relating to the development, construction or permanent financing or refinancing for the Facility, including indebtedness in its replacement or substitution thereof, (ii) Taxes and Insurance premiums, (iii) liabilities incurred in the ordinary course of business relating to its ownership, management, administration leasing and operation of the Facility and its routine administration, which liabilities are not more than sixty (60) days past due, are not evidenced by a note and are paid when due, and which amounts are normal and reasonable under the circumstances, and in any event not in excess of one percent (1%) of the Facility Cost in the aggregate, (iv) the Performance Security and indebtedness incurred in support of or connection with the Performance Security, and (v) such other liabilities that are permitted pursuant to the PPA.

In addition to these Special Purpose Entity provisions (the “SPE Covenants”), the SPE LLC Agreement contains the following terms often associated with special purpose entities (collectively, the “Bankruptcy Remote Terms”):
• Section 7 of the SPE LLC Agreement provides in part that Parent shall cause Seller to be operated as a Special Purpose Entity; and
• Section 10 of the SPE LLC Agreement provides that, notwithstanding anything to the contrary therein, Seller shall not without the affirmative vote of its Independent Manager:
(a) engage in any business activity (other than (A) dissolving, merging, liquidating or consolidating; (B) selling, transferring, leasing or otherwise conveying all or substantially all of its assets (other than as permitted under Section 14.7 of the PPA)) or amend its organizational documents with 374 of 1291
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respect to the matters set forth in the definition of “Special Purpose Entity” in the PPA; or
(b) file a bankruptcy or insolvency petition or otherwise institute insolvency proceedings with respect to itself or to any other entity in which it has a direct or indirect legal or beneficial ownership interest.

III. Seller’s Activities Before it Became a Special Purpose Entity Because Seller’s Legacy LLC Agreements did not contain separateness covenants or other provisions designed to make Seller a “special purpose entity” with limited purposes and activities prior to its adoption of the SPE LLC Agreement, we understand that Seller may have engaged in activities (“Legacy Activities”) that would be contrary to certain of the SPE Covenants. In this regard, creditors with claims that arose before Seller’s adoption of the SPE LLC Agreement (“Legacy Claims”) may have grounds for seeking substantive consolidation of the assets and liabilities of Seller with those of other Opinion Entities that would not be available to creditors holding claims against Seller that arose after Seller’s adoption of the SPE LLC Agreement.

Given the possible difference in substantive consolidation analysis for Legacy Claims, we have inquired whether there are any Legacy Claims against Seller that will remain outstanding beyond Seller’s ordinary accounts payable cycle. According to Seller, all of the Legacy Claims will be resolved in the ordinary course of Seller’s business in a short period of time following adoption of the SPE LLC Agreement. In support of this proposition, Seller represents in the Factual Certificate that it has no outstanding long term indebtedness, either absolute or contingent; no outstanding secured obligations; and no pending litigation. In support of these representations in the Factual Certificate, we have conducted the (a) Uniform Commercial Code, federal and state tax liens and judgment liens searches, (b) litigation searches, and (c) bankruptcy searches described in Schedule 1 hereto.

These activities were not designed to be in the nature of an audit, i.e., to provide a critical assessment of the facts provided to us, but rather to confirm certain of the underlying facts and issues that might affect the reliability of this opinion letter. As such, we cannot and do not warrant the truth and accuracy of the factual assumptions on which this opinion is based, including those concerning Legacy Claims.

ASSUMPTIONS
In rendering the opinion set forth below, we have assumed the due authorization, execution and delivery of the PPA and Seller’s Current Organizational Documents by all parties thereto, that such parties have the legal power to act in the capacities in which they are to act thereunder, the authenticity of all documents submitted to us as originals, the conformity to the original documents of all documents submitted to us as copies and the genuineness of all signatures on all documents submitted to us.

For purposes of this opinion, we have relied without investigation on the accuracy of, and compliance by Seller and Parent with, their respective representations, warranties, and covenants contained in the Opinion Documents. Except for the searches described in Schedule 1, we have made no independent investigation of the facts referred to herein and have relied for the purpose 375 of 1291
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of rendering this opinion exclusively on those facts which are listed under the heading “FACTS” in this opinion, which facts are contained in the Opinion Documents. We assume that such facts have been, and will continue to be, true in all material respects, taking into account the exceptions for Seller’s Legacy Activities.

In rendering our opinion below, we have further assumed that: (a) each of the Opinion Documents, from and after the execution thereof, constitutes the legal, valid and binding obligation of each of the parties thereto, will be enforceable in accordance with their respective terms, and will not be modified in any way that we would conclude would be material to the conclusions expressed herein; (b) Seller is duly formed and, since its formation and except as set forth herein, Seller has and will continue to observe all such formalities in all respects material to separateness; (c) except as set forth herein, Seller has and will comply with the applicable terms of the Opinion Documents regarding separateness; (d) as a matter of applicable Nevada law, Seller is a separate legal entity, separate and distinct from each Opinion Entity; (e) the officers or members, as appropriate, of Seller have duly authorized all limited liability company actions of Seller, to the extent required by its organizational documents, instruments and agreements and applicable Nevada law; (f) in entering into the Opinion Documents, the parties thereto have relied upon the status of Seller as a legal entity separate and distinct from any other entity, including each Opinion Entity; (g) Seller maintains its limited liability company existence and good standing to the extent required under the laws of the State of Nevada; (h) Seller is qualified to do business in each state in which the conduct of its business so requires, except where the failure to so qualify would not have a material adverse effect on its financial condition or results of operations; (i) all material transfers between Seller and an Opinion Entity, including, without limitation, capital contributions, have been made for reasonably equivalent value and supported by fair consideration; (j) the terms and conditions of any agreements between Seller, on the one hand, and any Opinion Entity, on the other hand, are intrinsically fair and substantially similar to those that would be available on an arm’s-length basis and on customary market terms with unaffiliated third parties; (k) Seller is solvent; (1) Seller does not intend to file a voluntary application for relief under the Bankruptcy Code or any similar applicable state law with respect thereto; (m) Seller will not dissolve, merge, liquidate or consolidate; (n) Seller will not sell, transfer, lease or otherwise convey all or substantially all of its assets, except in connection with a sale-leaseback transaction permitted by the PPA; and (o) the foregoing facts and assumptions are now and (except with respect to subsections (k) and (1)) will remain accurate in all material respects at all relevant times and there are no, and will not be any, facts or circumstances that are materially inconsistent with the foregoing facts and assumptions.

We have assumed that the SPE LLC Agreement will remain in effect, with no modifications, amendments, or deletions of any of the SPE Covenants, and SCPPA will not consent to any exceptions from or waiver of the SPE Covenants. With respect to SPE Covenants (f) and (r), we have assumed that GAAP will permit the Opinion Entities to include in any consolidated financial statements that include the assets and liabilities of Seller a note indicating that Seller’s separate assets and liabilities are neither available to pay the debts of the consolidated entity nor constitute obligations of the consolidated entity. With respect to SPE Covenant (y), which permits Seller to pledge its assets for the benefit of another Person in connection with the development or construction, or financing of the development or construction of the Facility, we have assumed that Seller will only make such a pledge to a person that it not an Affiliate, and not to an Opinion Entity.
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We have further assumed that (i) the Court addressing substantive consolidation would find facts consistent with the assumptions set forth herein; and (ii) SCPPA would timely present an objection to substantive consolidation and properly brief and argue such objection and timely and properly pursue all available appeals from any adverse decision on that issue.3 We have further assumed that a party opposing substantive consolidation would show that substantive consolidation would harm one or more parties in interest.

In rendering our opinion, we have relied, as to matters of fact, to the extent we deem necessary and proper, on representations and warranties and other statements as to certain factual matters contained in the Opinion Documents. We have made no independent investigation as to whether the representations and warranties and other statements in the Opinion Documents are accurate or complete.

THE SUBSTANTIVE CONSOLIDATION DOCTRINE
Substantive consolidation is a doctrine of federal bankruptcy law under which bankruptcy courts may, in the exercise of their general equitable powers under section 105(a) of the Bankruptcy Code, consolidate the assets and liabilities of different entities and treat them as one for purposes of the bankruptcy proceeding. See In re Augie/Restivo Baking Co., Ltd., 860 F.2d 515, 518 n.1 (2d Cir. 1988) (“Courts have found the power to consolidate substantively in the court’s general equitable powers as set forth in 11 U.S.C. § 105.”); James Talcott, Inc. v. Wharton (In re Continental Vending Machine Corp.), 517 F.2d 997, 1000 (2d Cir. 1975) (“The power to consolidate is one arising out of equity . . . .”); In re Owens Corning, 419 F.3d 195, 205 (3d Cir. 2005) (“Substantive consolidation, a construct of federal common law, emanates from equity.”), cert. denied, 126 S.Ct. 1910 (2006). There is no direct statutory authority or prescribed standard for substantive consolidation. See In re Augie/Restivo, 860 F.2d at 518; In re Bonham, 229 F.3d 750, 765 (9th Cir. 2000); Lisanti v. Lubetkin (In re Lisanti Foods, Inc.), 2006 WL 2927619, at *5 (D.N.J. Oct. 11, 2006), aff’d, 241 Fed. Appx. 1 (3d Cir. 2007). But see In re Cyberco Holdings, Inc., 431 B.R. 404, 430-31 (Bankr. W.D. Mich. 2010) (concluding that Bankruptcy Code section 542 and, to a lesser extent, Bankruptcy Code section 502(j) serve as the statutory authority for substantive consolidation); In re Stone & Webster, Inc., 286 B.R. 532, 541-43 (Bankr. D. Del. 2002) (holding that section 1123(a)(5)(C) of the Bankruptcy Code authorizes substantive consolidation in a plan of reorganization). Instead, judicially developed standards control whether substantive consolidation should be granted in any given case.

The reported decisions regarding substantive consolidation show that the cases are to a great degree sui generis and, as a result, case law is only a general guide to the potential applicability of the doctrine to any particular combination of facts. See Munford, Inc. v. TOC Retail, Inc. (In re Munford, Inc.), 115 B.R. 390 (Bankr. N.D. Ga. 1990); 2 Collier on Bankruptcy 11105.09[2] (16th ed. 2011). As several courts have noted, “as to substantive consolidation, precedents are of little value” and, therefore, each analysis must be made “on a case by case basis.” In re Crown Mach. & Welding, Inc., 100 B.R. 25, 27-28 (Bankr. D. Mont. 1989); see also In re Bonham, 229 F.3d at 765. This ad hoc approach taken by the courts has made it impossible 3 See Simon v. New Center Hospital (In re New Center Hospital), 187 B.R. 560 (E.D. Mich. 1995); In re Standard Brands Paint Co., 154 B.R. 563 (Bankr. C.D. Cal. 1993) (substantively consolidated five debtors for voting and distribution purposes in the absence of any objection by creditors). 377 of 1291
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to provide definitive guidance whether substantive consolidation will be granted or denied by a court exercising its discretionary equitable authority in any given instance.

The doctrine of substantive consolidation has evolved primarily in cases in which the courts were called upon to determine whether one corporate entity should be substantively consolidated with another corporate entity. However, a relatively few cases have involved the substantive consolidation of a partnership or limited liability company with another entity, and it appears that courts apply similar, if not identical, substantive consolidation analyses in partnership and limited liability company cases as in corporate cases. The relationship between the two entities is of much greater importance than the legal structure of the entities for consolidation purposes. 2 Collier on Bankruptcy ¶ 105.09[1][c]. See Holywell Corp. v. Bank of New York, 59 B.R. 340, 347-48 (S.D.

Fla. 1986) (affirming order approving substantive consolidation of corporate and partnership debtors’ estates; approved application of corporate substantive consolidation standards), appeal dismissed, 820 F.2d 376 (11th Cir. 1987), remanded on reh’g for dismissal of appeal, 838 F.2d 1547 (11th Cir. 1988), cert. denied, 488 U.S. 823 (1988); In re R.H.N. Realty Corp., 84 B.R. 356, 358 (Bankr. S.D.N.Y. 1988) (substantive consolidation of non-debtor partnership with debtor corporate partner denied); In re DRW Prop. Co. 82, 54 B.R. 489 (Bankr. N.D. Tex. 1985) (debtor partnership not substantively consolidated with non-debtor partnerships due to failure to satisfy balancing standard applied in corporate cases); In re Alpha & Omega Realty, Inc., 36 B.R. 416 (Bankr. D. Idaho 1984) (substantive consolidation of non-debtor partnership with debtor corporation denied); see also In re Bounds, 112 B.R. 308 (Bankr. E.D. Mo. 1990); In re Gainesville P-H Props., Inc., 106 B.R. 304 (Bankr. M.D. Fla. 1989) (substantive consolidation of partnership and corporate debtors); In re Parkway Calabasas Ltd., 89 B.R. 832 (Bankr. C.D. Cal. 1988), aff’d, 949 F.2d 1058 (9th Cir. 1991); In re N.S. Garrott & Sons, 48 B.R. 13 (Bankr. E.D. Ark. 1984) (substantive consolidation of partnership debtors denied).

A few other cases have considered the substantive consolidation of a limited liability company with other entities, see, e.g., In re Cent. European Indus. Dev. Co. LLC, 288 B.R. 572, 575-76 (Bankr. N.D. Cal. 2003); In re World Access, Inc., 301 B.R. 217 (Bankr. N.D. Ill. 2003), and at least one case has considered the substantive consolidation of various limited liability companies. See In re Eagle Creek Subdivision, LLC, 407 B.R. 206, 208 (Bankr. E.D.N.C. 2008).

As a result, our analysis is subject to the general assumption that case law regarding substantive consolidation issues involving corporations and other entities is sound authority for resolving consolidation issues arising in the context of a limited liability company. The following analysis, therefore, will discuss the issues considered by courts primarily in the corporate context, notwithstanding Seller’s organization as a limited liability company, and all references herein to “corporate” matters, insofar as they concern Seller, shall be deemed to refer to “limited liability company” matters.

The substantive consolidation of affiliated debtors’ estates can have a drastic effect on the rights of shareholders and creditors of the merging entities similar to a corporate merger:

Substantive consolidation usually results in, inter alia, pooling the assets of, and claims against, the two entities; satisfying liabilities from the resultant common fund; eliminating inter-company claims; and combining the creditors of the two companies for purposes of voting on reorganization plans. 378 of 1291
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In re Augie/Restivo Baking Co., 860 F.2d at 518. See Fed. Deposit Ins. Corp. v. Colonial Realty Co., 966 F.2d 57, 58-59 (2d Cir. 1992).4
Courts have recognized that substantive consolidation may often result in a harsh redistribution of value to some creditors at the expense of others and, therefore, the power to do so is an extraordinary remedy that must be exercised sparingly. See, e.g., In re Owens Corning, 419 F.3d at 211; Colonial Realty Co., 966 F.2d at 61; Eastgroup Props. v. Southern Motel Assoc.

Ltd., 935 F.2d 245, 248 (11th Cir. 1991); In re Augie/Restivo, 860 F.2d at 518; Drabkin v. MidlandRoss Corp. (In re Auto-Train Corp, Inc.), 810 F.2d 270, 276-77 (D.C. Cir. 1987); Chem. Bank New York Trust Co. v. Kheel, 369 F.2d 845, 847 (2d Cir. 1966). See also Bank of New York Trust Co. v. Official Unsecured Creditors’ Comm. (In re Pacific Lumber Co.), 584 F.3d 229, 249 (5th Cir. 2009); Wells Fargo Bank of Texas N.A. v. Sommers (In re Amco Ins.), 444 F.3d 690, 696 n.5 (5th Cir. 2006); Gandy v. Gandy (In re Gandy), 299 F.3d 489, 499 (5th Cir. 2002) (substantive consolidation is “an extreme and unusual remedy”).

Further, substantive consolidation should not invalidate or modify a validly perfected lien.

See Chem. Bank New York, 369 F.2d at 847; In re Tureaud, 45 B.R. 658, 663 (Bankr. N.D. Okla. 1985), aff’d, 59 B.R. 973 (N.D. Okla. 1986). If consolidation would affect such a lien, consolidation may not be appropriate and should not be ordered unless some alternative protection may be implemented. See Fed. Deposit Ins. Corp. v. Hogan (In re Gulfco Inv. Corp.), 593 F.2d 921, 927 (10th Cir. 1979); James Talcott, Inc. v. Wharton (In re Continental Vending Machine Corp.), 517 F.2d 997, 1000-02 (2d Cir. 1975), cert. denied, 424 U.S. 913 (1976). For example, it would not be appropriate to consolidate a solvent subsidiary into its parent corporation if there are creditors that hold perfected liens on the stock of the subsidiary. See In re Gulfco, 593 F.2d at 927.

The burden of proof is initially placed on the parties seeking substantive consolidation.

In re Owens Corning, 419 F.3d at 212; In re Silver Falls Petroleum Corp., 55 B.R. 495, 498 (Bankr. S.D. Ohio 1985); see In re Introgen Therapeutics, Inc., 429 B.R. 570, 582 (Bankr. W.D.

Tex. 2010) (recognizing the evidentiary burden is placed on the proponent of substantive consolidation), and the “burden of proof for those seeking consolidation is substantial.” N.S.

Garrott, 48 B.R. at 18. The court in Snider Bros. required a threshold showing of more than the mere presence of substantive consolidation “elements.” In re Snider Bros., Inc., 18 B.R. 230, 238 (Bankr. D. Mass. 1982). If successful on the issue of necessity, the proponents of substantive consolidation must carry the burden of demonstrating that the benefits of consolidation outweigh the prejudice to creditors. Id. Finally, creditors objecting to consolidation have the burden of proof on defenses to consolidation, including the question whether the benefits of consolidation outweigh the harm. See Id.

The reported decisions under the Bankruptcy Act of 1898, 30 Stat. 544 (1898), and cases decided shortly after the enactment of the Bankruptcy Code relating to substantive consolidation rely principally on the presence or absence of certain “elements” that are identical or similar to factors relevant to “piercing the corporate veil” and “alter ego” theories. See, e.g., In re Gulfco, 593 F.2d at 928-29; In re Food Fair, Inc., 10 B.R. 123 (Bankr. S.D.N.Y. 1981); In re Vecco Constr. 4 Substantive consolidation is not to be confused with joint administration “in which inter alia all docketing and noticing is done in one case file for more than one related case, but the estates and creditor bodies are not merged.” In re Cooper, 147 B.R. 678, 682 (Bankr. D.N.J. 1992).
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Indus., Inc., 4 B.R. 407 (Bankr. E.D. Va. 1980). Although the “instrumentality” or “alter ego” factors are important, if not critical, to a court’s decision regarding substantive consolidation, the requirements for substantive consolidation are not identical to those for piercing the corporate veil.

First, substantive consolidation is not concerned only with liability limitation issues; second, it may be applied to entities other than a corporation and its stockholder. Helena Chem. Co. v. Circle Land & Cattle Corp. (In re Circle Land & Cattle Corp.), 213 B.R. 870, 874-75 (Bankr. D. Kan. 1997); see also, Colonial Realty Co., 966 F.2d at 60-61 (distinguishing the two doctrines); In re Bonham, 226 B.R. 56, 76-77 (Bankr. D. Alaska 1998) (discussing the history and use of substantive consolidation), aff’d, 229 F.3d 750 (9th Cir. 2000). Further, although the standards for piercing the corporate veil vary from jurisdiction to jurisdiction, those standards are fairly fixed.

For example, in New York the defendant must have dominated the corporation, disregarded its separate existence and used it to perpetrate a fraud or other wrong. See Rochester Gas & Elec.

Corp. v. GPU, Inc., 355 Fed. Appx. 547, 549-50 (2d Cir. 2009); Wm. Passalacqua Builders, Inc. v. Resnick Developers South, Inc., 933 F.2d 131, 138 (2d Cir. 1991); Waterville Inv., Inc. v.

Homeland Sec. Network Inc., 2010 WL 2695287, at *8 (E.D.N.Y. July 2, 2010); Morris v. New York State Dept. of Taxation and Fin., 82 N.Y.2d 135, 141, 623 N.E.2d 1157, 1160-61, 603 N.Y.S.2d 807, 810-11 (N.Y. 1993). In contrast, the standards for substantive consolidation are a matter of federal bankruptcy law that should not vary from state-to-state, the standards are flexible, and there is no specific fraud or intentional tort requirement for substantive consolidation.

Other cases take factors such as those described in the previous paragraph into account within the context of a balancing test in which the interests of parties objecting to substantive consolidation are considered. In a balancing analysis, the impact of consolidation on creditors appears to have been given a greater degree of significance than mere proof of the substantive consolidation “elements.” See, e.g., In re Crown Mach., 100 B.R. 25; In re Steury, 94 B.R. 553 (Bankr. N.D. Ind. 1988); In re DRW Prop., 54 B.R. 489; In re Snider Bros., 18 B.R. 230. But cf.

In re Gainesville, 106 B.R. 304 (relying on alter ego factors). The balancing test shifts the focus from the manner in which the debtor and other entities proposed to be consolidated conducted business to the effect of substantive consolidation on creditors, and requires a balancing of the benefits derived from consolidation against the harm to some creditors caused thereby. The fundamental premise of the balancing analysis is that the prejudicial impact of the imposition of an equitable remedy must be taken into account. See Chem. Bank New York, 369 F.2d at 847.

Finally, in Augie/Restivo, the Second Circuit set forth the following alternative tests to determine whether substantive consolidation is warranted: (i) whether creditors dealt with the entities as a single economic unit and did not rely on their separate identities in extending credit or (ii) whether the entities’ affairs are so entangled and confused that substantive consolidation will benefit all creditors. In re Augie/Restivo, 860 F.2d at 518. The Second Circuit reaffirmed these tests in Colonial Realty Co., 966 F.2d at 61. The Ninth Circuit has adopted the Augie/Restivo tests, see In re Bonham, 229 F.3d at 766, and the Third Circuit has adopted a modified version of the Augie/Restivo tests in In re Owens Corning, 419 F.3d at 211, discussed below.

Irrespective of which variant of the standard for substantive consolidation is applied, the “elements” enumerated in several cases remain relevant, but not necessarily dispositive, as to whether substantive consolidation should be granted. Two sets of substantive consolidation elements are often cited. In the cases that use an “alter ego” or “piercing the corporate veil” type 380 of 1291
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analysis, the following factors are cited as relevant to the issue of whether substantive consolidation is justified:
• parent corporation owns all or a majority of the capital stock of the subsidiary;
• parent and subsidiary have common officers and directors; • parent finances subsidiary;
• parent is responsible for incorporation of subsidiary; • subsidiary has grossly inadequate capital;
• parent pays salaries, expenses or losses of subsidiary; • subsidiary has substantially no business except with parent; • subsidiary has essentially no assets except for those conveyed by parent; • parent refers to subsidiary as department or division of parent; • directors or officers of subsidiary do not act in interest of subsidiary, but take directions from parent; and
• formal legal requirements of a subsidiary as a separate and independent corporation are not observed.

In re Tureaud, 45 B.R. at 662 (citing Fish v. East, 114 F.2d 177 (10th Cir. 1940) and Gulfco, 593 F.2d at 928-29). A second statement of substantive consolidation “elements,” which are cited in some of the more recent cases, appears in Vecco Constr.:
• the degree of difficulty in segregating and ascertaining individual assets and liabilities;
• the presence or absence of consolidated financial statements; • the profitability of consolidation at a single physical location; • the commingling of assets and business functions;
• the unity of interests and ownership between the various corporate entities; • the existence of parent and intercorporate guarantees on loans; and • the transfer of assets without formal observance of corporate formalities.

Vecco Constr., 4 B.R. at 410.
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A determination as to whether substantive consolidation is or is not appropriate does not necessarily depend upon the presence or absence of some or all of the Tureaud and Vecco Constr. “elements” outlined above. For example, it is not a foregone conclusion that, if proponents demonstrate that all of the elements of substantive consolidation are present, substantive consolidation should be granted. Conversely, parties objecting to substantive consolidation cannot rely solely upon rebutting a majority of the factors to successfully defeat substantive consolidation.

One can be expected to find many of the above factors in most bankruptcy cases involving affiliated debtors. For example, stock ownership, interaffiliate transfers, incorporation caused by the parent, common directors and officers, the existence of intercorporate claims, and consolidated financial statements or tax returns are all typical of most affiliated corporations. Accordingly, these relatively common factors should be afforded less weight than the less common ones when a court is determining whether substantive consolidation is appropriate.

Factors that may be given more weight in determining that substantive consolidation is appropriate include the debtor’s failure to comply with corporate formalities in connection with directors’ and shareholders’ meetings, representations made to third parties regarding corporate entities, interaffiliate transfers and third party transactions and any other formal conduct required by corporate law. Still, the failure to consistently observe corporate formalities is usually not dispositive unless such elements, together with other evidence, support a finding of fraudulent or inequitable conduct by the debtors or their principals. For example, in In re Tureaud the court found “an almost total disregard of the corporate fiction; the corporations are a sham -- functionally indistinguishable from each other with commingling of assets and business functions.” 45 B.R. at 661. The court also found that directors and officers of the non-debtor affiliates, which were substantively consolidated with the debtor, acted in the interest of the debtor rather than independently. Some of the affiliates failed to file tax returns and others were suspended for failure to make requisite corporate filings. More significant evidence in In re Tureaud included the debtors’ principal’s fraudulent purposes for incorporation (“front to raise money for [principal’s personal] purposes, and to hinder and delay judgment creditors”), and “hopeless commingling” of assets and liabilities. Id. at 660.

Decided at almost the same time that the Second Circuit issued its Augie/Restivo decision, the D.C. Circuit adopted a two-part “balancing test” in its decision in In re Auto-Train Corp., Inc., 810 F.2d 270 at 276. Under the Auto-Train test, the proponent of consolidation must first show that there is “a substantial identity between the parties to be consolidated [and] that consolidation is necessary to avoid some harm or realize some benefit.” Id. at 276 (citing Flora Mir Candy Corp. v. R.S. Dickson & Co., 432 F.2d 1060, 1063 (2d Cir. 1970); In re Snider Bros., Inc., 18 B.R. 230 at 237-38; and Chem. Bank New York, 369 F.2d at 847). If the proponent is able to make this case, the burden shifts to the objecting creditor to demonstrate that it “relied on the separate credit of one of the entities and that it will be prejudiced by consolidation.” Id. at 276 (citing Chem. Bank New York, 369 F.2d at 848). Even if the creditor is able to make this showing, the court may still order substantive consolidation if it determines that the benefits of substantive consolidation “heavily” outweigh the harm. Id. at 276 (citing In re Continental Vending Machines Corp., 517 F.2d at 1001).

In adopting its balancing test approach to substantive consolidation, the Auto-Train court cited to an earlier bankruptcy court decision In re Snider Bros., Inc., 18 B.R. 230. In Snider Bros., the bankruptcy court reviewed a string of Second Circuit decisions identifying grounds for 382 of 1291
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substantive consolidation before applying a balancing test analysis. Id. at 234-38 (reviewing Soviero v. Franklin National Bank, 328 F.2d 446 (2d Cir. 1964); Chemical Bank New York, 369 F.2d 845; Flora Mir Candy Corp. v. R.S. Dickson & Co., 432 F.2d 1060; In re Continental Vending Machine Corp., 517 F.2d 997). The Snider Bros. court focused on objecting creditors’ interests instead of “elements” that are largely attributable to the debtors’ pre-petition conduct:

A review of the case law reveals that equity has provided the remedy of consolidation in those instances where it has been shown that the possibility of economic prejudice which would result from continued corporate separateness outweighed the minimal prejudice that consolidation would cause. While several courts have recently attempted to delineate what might be called “the elements of consolidation” [citing Vecco Constr. and Food Fair], I find that the only real criterion is that which I have referred to, namely the economic prejudice of continued debtor separateness versus the economic prejudice of consolidation.

There is no one set of elements which, if established, will mandate consolidation in every instance. Moreover, the fact that corporate formalities may have been ignored, or that different debtors are associated in business in some way, does not by itself lead inevitably to the conclusion that it would be equitable to merge otherwise separate estates.

In re Snider Bros., 18 B.R. at 234 (emphasis added). The court articulated the following balancing test principles: (1) the proponent must demonstrate a “necessity for consolidation, or a harm to be avoided by use of the equitable remedy of consolidation”; (2) supporting evidence must go beyond a mere showing of commingling or unity of interest and must demonstrate the harm caused thereby or prejudice without consolidation; (3) “elements” are only one factor in the proof of necessity; and (4) even if the proponent can demonstrate the necessity for consolidation, objecting creditors possess the defense that the benefits of consolidation do not counterbalance the harm to the objector. Id. at 238.

The balancing test formulated in Snider Bros. has been adopted, either expressly (see In re Steury, 94 B.R. at 554; In re Alico Mining, Inc., 278 B.R. 586, 588-89 (Bankr. M.D. Fla. 2002); In re DRW Prop., 54 B.R. at 495; In re Donut Queen, Ltd., 41 B.R. 706, 709-10 (Bankr. E.D.N.Y. 1984); In re F.A. Potts & Co., Inc., 23 B.R. 569, 572 (Bankr. E.D. Pa. 1982); In re Lewellyn, 26 B.R. 246, 251 (Bankr. S.D. Iowa 1982); Holywell Corp., 59 B.R. at 347), or implicitly (see In re Luth, 28 B.R. 564, 567 (Bankr. D. Idaho 1983) (citing Snider Bros. test as another “element”); In re Helms, 48 B.R. 714, 717 (Bankr. D. Conn. 1985) (balancing interests is another important factor); In re N.S. Garrott, 48 B.R. at 18 (adopting Snider Bros. principles as important factors); In re Silver Falls, 55 B.R. at 498) by a majority of courts outside the Second Circuit (since the Augie/Restivo decision), the Third Circuit (since Owens Corning), and the Ninth Circuit (since Bonham).

Although the traditional substantive consolidation “elements” are generally still relevant under the more recent case law, the importance of these elements is not settled. Snider Bros. and its direct progeny tend to relegate proof of the substantive consolidation “elements” to a secondary role, i.e., the “elements” may be considered, in the aggregate, as a single factor in a balancing analysis. In re Snider Bros., 18 B.R. at 234. However, some courts take the opposite approach by treating the conclusion reached under the balancing test as another, albeit important, “element” in 383 of 1291
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the general substantive consolidation “elements” analysis. See, e.g., In re Luth, 28 B.R. at 567 (citing Snider Bros. test as another “element”).

Nevertheless, a review of reported decisions suggests that courts have moved away from a substantive consolidation analysis which primarily relies on a check list of “elements.” See In re Owens Corning, 419 F.3d at 210-11 (refusing to adopt a set of factors for consideration in substantive consolidation because “[t]oo often the factors in a checklist fail to separate the unimportant from the important, or even to set out a standard to make the attempt.”). As noted above, the Second, Third and Ninth Circuits all have adopted a third approach to substantive consolidation that limits the use of substantive consolidation to “compelling circumstances.” In re Owens Corning, 419 F.3d at 211; see also In re Augie/Restivo, 860 F.2d at 518; In re Bonham, 229 F.3d at 766.

The Augie/Restivo tests result in (i) the reduction of the traditional “elements” to a single significant factor—financial entanglement—and (ii) the application of the balancing test with emphasis on creditors’ alleged reliance on the consolidated credit of the entities proposed to be consolidated. Accordingly, in Augie/Restivo, the Second Circuit reviewed two “critical factors,” namely, “whether creditors dealt with the entities as a single economic unit and ‘did not rely on their separate identity in extending credit’ . . . [or] whether the affairs of the debtors are so entangled that consolidation will benefit all creditors.” Augie/Restivo, 860 F.2d at 518 (citations omitted). The presence of either factor is sufficient to grant substantive consolidation. Id. at 518; In re Bonham, 229 F.3d at 766. See also In re 599 Consumer Electronics, Inc., 195 B.R. 244, 250 (S.D.N.Y. 1996) (“A finding that creditors knew they were dealing with separate entities does not necessarily preclude substantive consolidation on the ground that it is impossible or prohibitively expensive to unravel the debtors’ commingled finances.”) In expanding on the “corporate separateness” prong of the Augie/Restivo tests, the Third Circuit held that a prima facie case for substantive consolidation exists when, based on the parties’ prepetition dealings, a proponent can prove “corporate disregard creating contractual expectations of creditors that they were dealing with debtors as one indistinguishable entity.” In re Owens Corning, 419 F.3d at 212 (footnote omitted). To this end, proponents of substantive consolidation “must also show that, in their prepetition course of dealing, they actually and reasonably relied on debtors’ supposed unity.” Id. (internal citation omitted). An opponent of consolidation can defeat this prima facie showing by proving it would be “adversely affected” by consolidation and that it “actually relied on debtors’ separate existence.” Id.

Courts applying the Augie/Restivo “entanglement” prong of the test have recognized that substantive consolidation of estates that failed to observe any corporate formalities or whose financial affairs had not been properly segregated may inure to the benefit of all creditors:
[I]n the rare case such as this, where the interrelationships of the group are hopelessly obscured and the time and expense necessary even to attempt to unscramble them so substantial as to threaten the realization of any net assets for all the creditors, equity is not helpless to reach a rough approximation of justice to some rather than deny any to all.

Chem. Bank New York, 369 F.2d at 847.
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However, the degree of entanglement is the central question to be examined, because the potentially prejudicial effect of substantive consolidation is not likely to be justified based on mere contentions of administrative convenience. It is important to note that the courts appear to have established a stringent standard for the degree to which the affairs of the entities to be consolidated need to be obscured by commingled funds or lax corporate form before consolidation is appropriate. In reversing the lower court’s substantive consolidation order, the Second Circuit in Augie/Restivo held:

Resort to consolidation in such circumstances [corporate affiliates with commingled assets and business functions], however, should not be Pavlovian.

Rather, substantive consolidation should be used only after it has been determined that all creditors will benefit because untangling is either impossible or so costly as to consume the assets . . . . Commingling, therefore, can justify substantive consolidation only where “the time and expense necessary even to attempt to unscramble them [is] so substantial as to threaten the realization of any net assets for all the creditors” . . . or where no accurate identification and allocation of assets is possible. In such circumstances, all creditors are better off with substantive consolidation.

In re Augie/Restivo, 860 F.2d at 519 (emphasis added) (citations omitted). Perfection in identifying and allocating assets is not necessary to avoid substantive consolidation. See In re Owens Corning, 419 F.3d at 214 (“Neither the impossibility of perfection in untangling the affairs of the entities nor the likelihood of some inaccuracies in efforts to do so is sufficient to justify consolidation.”).

Under the Augie/Restivo “entanglement” analysis, poor or nonexistent record keeping of separate assets (particularly cash and other liquid assets) and liabilities and interaffiliate transactions is one of the more common reasons for imposing substantive consolidation. When the combination of affiliates’ assets, liabilities, and business affairs is so “hopelessly entangled” that segregation is either prohibitively expensive or impossible, courts are more willing to grant substantive consolidation.

In adopting the Augie/Restivo tests, the Third Circuit in Owens Corning narrowed the circumstances when entanglement justifies substantive consolidation. The Third Circuit held that every creditor must benefit from consolidation and, moreover, “the benefit to creditors should be from cost savings that make assets available rather than from the shifting of assets to benefit one group of creditors at the expense of another.” 419 F.3d at 214. Benefit to only some creditors or administrative benefit to the court “falls far short” of that necessary to justify substantive consolidation. Id.

Regardless of the standard for substantive consolidation used by the courts in any given instance, in all three approaches the courts generally (i) identify the presence or absence of the relevant substantive consolidation elements, (ii) decide the weight to be attached to such elements, then (iii) determine the significance of competing considerations offered by the objecting creditors.

ANALYSIS OF SUBSTANTIVE CONSOLIDATION OF SELLER
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The following reasoning, on which we base our opinion, is dependent on the “Opinion Documents,” the “Facts,” and the “Assumptions” set forth above and on which we have relied.

All of the facts and circumstances relating to the Opinion Entities and Seller, including the procedures that Seller follows in conducting its business, the relationships that are established and maintained between the Opinion Entities, on the one hand, and Seller, on the other hand, and their respective creditors, and the purpose of the operations of the Opinion Entities and Seller, must be taken into account. The opinion expressed below is particularly dependent on the assumptions we have relied on, including the assumption that Seller will observe all limited liability company formalities in all respects material to its separateness. It is impossible to know the extent to which Seller will observe limited liability company formalities, including the SPE Covenants in the PPA.

Adherence to such formalities (which we have assumed will be the case) is critical to the opinions expressed herein.

As stated above, substantive consolidation is a severe remedy and courts will not order consolidation unless it is clearly warranted.

Assuming compliance with the SPE Covenants, a proponent of consolidation would not likely be able to demonstrate a sufficient identity of interest or commingling of assets or functions to support a valid claim for substantive consolidation of the assets of Seller with the bankruptcy estate of any Opinion Entity. The assets and liabilities of Seller and each Opinion Entity will be ascertainable in bankruptcy or otherwise so as to preclude valid assertions of financial entanglement as support for substantive consolidation under any of the standards discussed above.

Although Seller’s financial statements may be included in consolidated financial statements that include the Opinion Entities, we note that any such consolidated financial statement shall contain a footnote stating that the assets of Seller will not be available to pay the debts of any consolidated entity nor constitute obligations of the consolidated entity. As stated above, this factor is also given less weight by the courts because consolidated financial statements are frequently prepared for affiliated companies.

Seller is a separate legal entity, distinct from each Opinion Entity, and Seller’s financial and business affairs are and will be segregated and readily distinguishable from those of each Opinion Entity.

Further, Seller (except as noted herein) has observed, and will in the future strictly observe, all limited liability company and other statutory formalities, in each case as related to the separateness of Seller. As a result of Seller’s strict compliance with appropriate formalities and preservation of all indicia of separateness, creditors of an Opinion Entity should not have a reasonable basis for relying on assets of Seller to satisfy their claims against an Opinion Entity.

It would be difficult for any third party to persuade a court that substantive consolidation of Seller with any Opinion Entity is warranted under the balancing test approach because of the lack of any actual prejudice to creditors’ interests associated with recognition of Seller and the Opinion Entity as separate entities. As noted above in Snider Bros. and its progeny, the fundamental premise of the balancing analysis is that the Court must take into account the prejudicial impact of the imposition of an equitable remedy. We do not think that a Court examining the issue would hold that the benefits of consolidating the assets of Seller with the 386 of 1291
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assets of the estate of any Opinion Entity would counterbalance the harm to creditors of Seller objecting to consolidation.

This analysis assumes, however, that Seller would not otherwise properly be a debtor in a case under the Bankruptcy Code. As noted in the “FACTS” Section, Seller is a special purpose “bankruptcy remote” entity, making it less likely that Seller would voluntarily file for bankruptcy in connection with the bankruptcy filing of an Opinion Entity. It should be noted, however, that a voluntary bankruptcy filing by Seller is not inconceivable and the mere fact that a voluntary petition must be authorized by an independent manager is no guarantee that a “bankruptcy remote” entity will not file for bankruptcy protection. See In re General Growth Properties, Inc., 409 B.R. 43 (Bankr. S.D.N.Y. 2009) (upholding the voluntary bankruptcy filings of “bankruptcy remote” special purpose entities and holding under Delaware law that independent managers could consider the interests of the larger debtor group and indeed had a duty to consider the interests of the company’s shareholders). We believe that a court could conceivably, if Seller were a debtor in a bankruptcy case, apply the balancing test discussed above slightly differently. In the event Seller was not at the time a debtor in a bankruptcy proceeding, a court would likely view causing it to become a debtor in a bankruptcy case as a significant harm against which the benefits of consolidation would be weighed; if, however, Seller was already a debtor in bankruptcy, the harms against which the benefits of consolidation would be weighed would be correspondingly less.

However, even if Seller was a debtor in bankruptcy and a request was made for substantive consolidation, there would still be significant factors weighing against such consolidation. Here, SCPPA has entered into the PPA with Seller in principal reliance on the separateness of Seller from each Opinion Entity, demonstrated by, among other things, the fact that this nonconsolidation opinion letter is required as part of the transaction. Another element of such reliance is based on the premise that the assets of Seller are subject only to the claims of creditors of Seller and not to the claims of creditors of any Opinion Entity. Thus, SCPPA should be able to demonstrate that it would be harmed if consolidation were ordered. Under such circumstances, we assume that SCPPA would oppose any motion to consolidate Seller with any Opinion Entity, arguing that such consolidation would prejudice it.

Consequently, considering the prejudice that would be suffered by the creditors of Seller in the event of a consolidation of Seller’s assets with the estate of any Opinion Entity, the balance should come out against substantive consolidation, regardless of whether Seller is also a debtor in a case under the Bankruptcy Code.

Further, the absence of several of the substantive consolidation “elements” discussed above suggest that Seller is not an alter ego or instrumentality of any Opinion Entity and, accordingly, favors a denial of substantive consolidation in this case. Specifically, we note that: (i) as of the date hereof, Seller is adequately capitalized; (ii) Seller will strictly observe all limited liability company formalities relevant to separateness; (iii) there will be no transfers of assets to or from Seller without observance of appropriate formalities; (iv) Seller has its own assets and business operations that are separately identifiable from those of each Opinion Entity; and (v) there should be no commingling of assets and business functions of any Opinion Entity, on the one hand, and Seller, on the other hand, and it should not be difficult (much less impossible) to segregate the assets, liabilities and business functions of any Opinion Entity from those of Seller. We also note that Seller has not and will not enter into any transaction with any Opinion Entity or any other 387 of 1291
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employment or service agreements, except upon terms and conditions that are intrinsically fair and substantially similar to those that would be available on an arm’s-length basis and on customary market terms with unaffiliated third parties.

Given that the courts have consistently held that substantive consolidation is an extraordinary remedy that should be sparingly granted and the burden of proof for those seeking substantive consolidation is substantial, we believe that a proponent of substantive consolidation should not be able to demonstrate the need for consolidation, or a cognizable harm to be avoided by the use of the equitable remedy of substantive consolidation. Our belief is founded on the absence of any credible indication that creditors of any Opinion Entity or Seller extended credit to any of them on the basis that any Opinion Entity, on the one hand, and Seller, on the other hand, together constitute a single economic unit.

In connection with our analysis, we note that SPE Covenant (n), which provides that Seller will not have any of its obligations guaranteed by any Affiliate and will not hold itself out as being responsible for the debts or obligations of any other Person, includes an exception for Seller’s “obligations to Facility Lenders or Tax Equity Investors.” Under the traditional “elements” test for substantive consolidation, the existence of parent and intercorporate guarantees on loans, Vecco Constr., 4 B.R. at 410, and a parent company providing financing to a subsidiary, In re Tureaud, 45 B.R. at 662, are identified as factors supporting substantive consolidation. Such guarantees have been cited in support of substantive consolidation, based on the proposition that “creditors dealt with the entities as a single economic unit” rather than “rely[ing] on their separate identity in extending credit”. See, e.g., Holywell Corp., 59 B.R. at 347; In re Donut Queen, Ltd., 41 B.R. at 709.

Accordingly, we consider the exception to SPE Covenant (n) an adverse circumstance under the old “elements” approach to substantive consolidation. But we do not consider this circumstance material to our analysis of the risk of substantive consolidation of Seller and an Opinion Entity as a result of more recent substantive consolidation case law. Specifically, courts have recognized that intra-corporate guarantees are a “common business practice and a normal feature of parent-subsidiary relationships,” Calvert v. Huckins, 875 F. Supp. 674, 679 (E.D. Cal. 1995), and may in fact support the separateness of entities.

Indeed, in the Owens Corning substantive consolidation litigation, the Third Circuit reversed the District Court’s order permitting substantive consolidation based in part on intercompany guarantees. Where the District Court found that “the very existence” of certain subsidiary guarantees of the parent company’s credit agreement “is a further reason for approving substantive consolidation”, Owens Corning, 316 B.R. 168, 172 (D. Del. 2004), the Court of Appeals took a directly opposite view:
[O]btaining the guarantees of separate entities, made separate by [Owens Corning’s] choice of how to structure the affairs of its affiliate group of companies, entitles a lender, in bankruptcy or out, to look to any (or all) guarantor(s) for payment when the time comes. As such, the District Court's conclusions of “substantial identity” of [Owens Corning] and its subsidiaries, and the Banks’ reliance thereon, are incorrect. For example, testimony presented by both the Banks and the Debtors makes plain the parties’ intention to treat the entities separately. 388 of 1291
I-21
CSFB presented testimony from attorneys and bankers involved in negotiating the Credit Agreement that reflected their assessment of the value of the guarantees as partially derived from the separateness of the entities. As [Owens Corning] concedes, these representatives “testified that the guaranties were . . . intended to provide ‘structural seniority’ to the banks,” and were thus fundamentally premised on an assumption of separateness.

Owens Corning, 419 F.3d at 212-13. In addition, we note that only the Facility Lenders or Tax Equity Investors may obtain the benefit of the intercompany credit support permitted by the exception in SPE Covenant (n). The exception provides no basis for the Opinion Entities’ general creditors to have to recourse to Seller.

Taking these considerations into account, the exception in SPE Covenant (n) remains an adverse fact that mitigates to some extent but does not overcome our belief that SCPPA would be able to show reliance on the credit and assets of Seller separate from those of the Opinion Entities.

Viewed in the full context of the PPA transactions, we do not believe the possibility of Seller credit support for Opinion Entities’ obligations to Facility Lenders or Tax Equity Investors evidences a lack of reliance on the credit and assets of Seller.

REASONED OPINION
Based on the facts, assumptions, and analysis of applicable case law (although there is no precedent directly on point) set forth above and subject to the qualifications, limitations, and exclusions set forth below, we are of the reasoned opinion that: In a properly presented and argued case under the Bankruptcy Code in which an Opinion Entity is the debtor, a Court would not order the substantive consolidation of the assets and liabilities of Seller with those of such Opinion Entity.

QUALIFICATIONS, LIMITATIONS, AND EXCLUSIONS
The opinion expressed above is based on our analysis of cases decided by courts in various jurisdictions with respect to entities other than limited liability companies, and certain of such cases might not be regarded as controlling precedent in a bankruptcy or reorganization proceeding with respect to the matters addressed in this opinion letter. The opinion above is limited to the present law of substantive consolidation as applied by federal courts in cases under the Bankruptcy Code, as in effect as of the date hereof.

The opinion expressed above is not a guarantee or assurance what a particular court would actually hold in an actual bankruptcy case, but an analysis of the legal principles generally applicable to substantive consolidation in bankruptcy. Judicial analysis has typically proceeded on a case-by-case basis. The determination is usually made on the basis of an analysis of the facts and circumstances of the particular case, rather than as a result of the application of consistently applied legal doctrines. Existing reported decisional authority is therefore not conclusive as to the relative weight to be accorded to the factors present in a particular case and does not provide consistently applied general principles or guidelines with which to analyze all of the factors present in the transaction.
389 of 1291
I-22
We have assumed that provisions of law under which Seller and each Opinion Entity are organized do not materially impact conclusions set forth herein.

The opinions set forth herein are expressly subject to there being no additional facts, other than those referenced or set forth herein, that would materially affect the validity of the assumptions and conclusions set forth herein or upon which this opinion is based, and compliance with the SPE Covenants.

We express no opinion herein other than the “Reasoned Opinion” set forth on page 23 hereof. Without limitation to the foregoing, we express no opinion with respect to:
• the consolidation, substantive or otherwise, of the assets and liabilities of Seller with those of any Opinion Entity if such consolidation is incorporated into a plan of reorganization that is accepted by the creditors of Seller by the majorities required by Section 1126 of the Bankruptcy Code; • a partial substantive consolidation that does not include or affect SCPPA; • whether a court would order joint administration or “administrative consolidation” of the bankruptcy estates of Seller and any Opinion Entity, if any of them were to be debtors under the Bankruptcy Code, pursuant to Federal Rule of Bankruptcy Procedure 1015(b) or any local variation thereof;
• whether a court would grant a motion for substantive consolidation based on Seller’s Legacy Activities prior to payment of all outstanding Legacy Claims; or
• the enforceability of the Bankruptcy Remote Terms or their effectiveness to prevent Seller from becoming a debtor under the Bankruptcy Code.

This opinion relates solely to the Bankruptcy Code and should be interpreted in accordance with the Special Report by The TriBar Opinion Committee, Opinions in the Bankruptcy Context:

Rating Agency, Structured Financing, and Chapter 11 Transactions, 46 BUS. LAW. 717 (1991). * * *
This opinion is rendered to SCPPA, and it may not be relied upon by any other person or for any other purpose, without our prior written consent. This opinion may be relied upon solely as of the date hereof, and we undertake no obligation to update or supplement this opinion after the date hereof for any addressee or any other person. This opinion letter is not intended to be employed in any transaction other than the PPA becoming effective, and is being delivered to you on the understanding that neither it nor its contents may be relied upon by any other person or for any other purpose or used, circulated, quoted, published, communicated or otherwise made available, in whole or in part, to any other party or entity without, in each instance, our specific prior written consent; provided, that it may be provided to any governmental regulatory authority 390 of 1291
I-23
having jurisdiction over you and to rating agencies, auditors, regulators or government agencies or pursuant to court order.

Very truly yours,
(Schedule 1 follows)
391 of 1291
I-24
Schedule 1
(UCC, Lien, Litigation & Bankruptcy Searches)
Searches for Whitegrass No. 1, LLC
Courts and Office Searched Search Search Date
Lyon County, Nevada
Recorder/Auditor
UCC Filings, Liens &
Judgments 2/21/2020
Nevada Secretary of State,
UCC Division UCC Filings 2/21/2020
District Court for the Eleventh
Judicial District of Nevada
Pending Suits;
Unsatisfied Judgments 2/21/2020
U.S. Bankruptcy Court for
the District of Nevada
Pending Bankruptcy Cases
and Adversary Proceedings 2/21/2020
392 of 1291
J-1

APPENDIX J
TO THE

AMENDED AND RESTATED

POWER PURCHASE AGREEMENT

BETWEEN

SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY
and
WHITEGRASS NO. 1, LLC

REAL PROPERTY AGREEMENTS
Geothermal Resources Lease, entered into as of April 10, 2017, by and between Homestretch Geothermal 2010, LLC, as lessor, and Whitegrass No. 1, LLC, as lessee Ground Lease, entered into as of April 10, 2017, by and between Homestretch Geothermal 2010, LLC, as lessor, and Whitegrass No. 1, LLC, as lessee
Water Rights Lease with Option to Purchase, entered into as of April 10, 2017, by and between Homestretch Geothermal 2010, LLC, as lessor, and Whitegrass No. 1, LLC, as lessee 393 of 1291
K-1

APPENDIX K
TO THE

AMENDED AND RESTATED

POWER PURCHASE AGREEMENT

BETWEEN

SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY
and
WHITEGRASS NO. 1, LLC
[RESERVED]
394 of 1291
L-1

APPENDIX L
TO THE

AMENDED AND RESTATED

POWER PURCHASE AGREEMENT

BETWEEN

SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY
and
WHITEGRASS NO. 1, LLC

FORM OF CASH ESCROW AGREEMENT

ESCROW AGREEMENT
Pursuant to this Escrow Agreement, dated , [XXXX] (the “Depositor”) hereby establishes an Escrow Account (the “Account”) with U.S. Bank National Association (the “Agent”), to be maintained and administered for the benefit of Southern California Public Power Authority (the “Beneficiary”) as described in Schedule II attached hereto in accordance with the following terms and conditions:

This Agreement is the Escrow Agreement that was contemplated in that certain Power Purchase Agreement dated as of February 20, 2020 by and between the Depositor and the Beneficiary. The funds and/or property described on Schedule I attached hereto and incorporated herein will be deposited in the Account upon delivery thereof to the Agent in the manner and at the time(s) specified in Schedule I. The Agent is hereby authorized and directed by the Depositor, as its escrow agent, to hold, deal with and dispose of all amounts deposited in the Account by Depositor, as well as any investment or interest income thereon (collectively the “Account Funds”), as provided in the Instructions set forth in Schedule II attached hereto and incorporated herein; subject, however, to the terms and conditions set forth below, which in all events, shall govern and control over any contrary or inconsistent provisions contained in Schedules I or II attached hereto.

1. Agent’s Duties. Agent’s duties and responsibilities shall be limited to those expressly set forth in this Agreement, and Agent shall not be subject to, or obliged to recognize, any other agreement between any or all of the parties or any other persons even though reference thereto may be made herein; provided, however, this Agreement may be amended at any time or times by an instrument in writing signed by all the parties hereto. Agent shall not be subject to or obligated to recognize any notice, direction or instruction of any or all of the parties hereto or of any other person, except as expressly provided for and authorized in Schedule II, and in performing any duties under this Agreement, Agent shall not be liable to any party for consequential damages (including, without limitation, lost profits), losses, or expenses, except for gross negligence or willful misconduct on the part of the Agent.

2. Court Orders or Process. If any controversy arises between the parties to this Agreement, or with any other party, concerning the subject matter of this Agreement, or its terms or conditions, 395 of 1291
L-2
Agent will not be required to determine the controversy or to take any action regarding it. Agent may hold all documents and funds and may wait for settlement of any such controversy by final appropriate legal proceedings or other means as, in Agent’s discretion, Agent may require, despite what may be set forth elsewhere in this Agreement. In such event, Agent will not be liable for interest or damages. Agent is authorized, in its sole discretion, to comply with orders issued or process entered by any court with respect to the Account, the Account Funds or this Agreement, without determination by the Agent of such court’s jurisdiction in the matter. If any Account Funds are at any time attached, garnished, or levied upon under any court order, or in case the payment, assignment, transfer, conveyance or delivery of any such property shall be stayed or enjoined by any court order, or in case any order, judgment or decree shall be made or entered by any court affecting such property or any part thereof, then in any of such events Agent is authorized, in its sole discretion, to rely upon and comply with any such order, writ, judgment or decree which it is advised by legal counsel of its own choosing is binding upon it; and if Agent complies with any such order writ, judgment or decree, it shall not be liable to the Depositor or to any other person, firm or corporation by reason of such compliance even though such order, writ, judgment or decree may be subsequently reversed, modified, annulled, set aside or vacated.

3. Agent’s Actions and Reliance. Agent shall not be personally liable for any act taken or omitted by it hereunder if taken or omitted by it in good faith and in the exercise of its own best judgment. Agent shall also be fully protected in relying upon any written notice, instruction, direction, certificate or document which in good faith it believes to be genuine, including written instructions from Depositor or Beneficiary in the form of the attached Schedule(s), if any.

4. Collections. Agent shall proceed as soon as practicable to collect any checks, interest due, matured principal or other collection items with respect to Account Funds at any time deposited in the Account. All such collections shall be subject to the usual collection procedures regarding items received by Agent for deposit or collection. Agent shall not be responsible for any collections with respect to Account Funds if Agent is not registered as record owner thereof or otherwise is not entitled to request or receive payment thereof as a matter of legal or contractual right. All collection payments or receipts shall be deposited to the Account. Agent shall not be required or have a duty to notify anyone of any payment or maturity under the terms of any instrument, security or obligation deposited in the Account, nor to take any legal action to enforce payment of any check, instrument or other security deposited in the Account.

5. Agent Responsibility. Agent shall not be responsible or liable for the sufficiency or accuracy of the form, execution, validity or genuineness of documents, instruments or securities now or hereafter deposited in the Account, or of any endorsement thereon, or for any lack of endorsement thereon, or for any description therein. Agent may maintain all Account Funds in a Federal Reserve Bank or in any registered clearing agency as Agent may select, and may register such deposited funds in the name of Agent or its agent or nominee on the records of such Federal Reserve Bank or such registered clearing agency or a nominee of either. Agent shall not be responsible or liable in any respect on account of the identity, authority or rights of the persons executing or delivering or purporting to execute or deliver any such document, security or endorsement or this Agreement.
396 of 1291
L-3

6. Investments. All Account Funds shall be invested by Agent in the (i) direct obligations of the United States, or of any agency of the United States, or obligations guaranteed as to principal and interest by the United States or any agency of the United States, maturing not more than 90 days from the date of acquisition, (ii) money market mutual funds investing solely in obligations maturing within 365 days, including funds for which the [Bank] or an affiliate provides investment advice or other services, or (iii) certificates of deposit issued by a United States commercial bank or a foreign bank with a United States branch, which United States commercial bank or United States branch has at the applicable time a Credit Rating of (a) A- or better from Standard & Poor’s Rating Services and (b) “A3” or better from Moody’s Investors Service, Inc. So long as the funds and/or property available to the Beneficiary hereunder are not diminished, accrued interest shall be distributed to the Depositor on an annual basis. All entities entitled to receive interest from the Account will provide Agent with a W-9 or W-8 IRS tax form prior to the disbursement of interest.

A statement of citizenship will be provided if requested by Agent. The Agent shall not be liable for losses, penalties or charges incurred upon any sale or purchase of any such investment.

7. Notices/Directions to Agent. Notices and directions to Agent from Depositor or Beneficiary, as expressly set forth in Schedule II, shall be in writing and signed by an authorized representative as identified pursuant to Schedules III and IV (each, an “Authorized Representative”), and shall not be deemed to be given until actually received by Agent’s employee or officer who administers the Account. Agent shall not be responsible or liable for the authenticity or accuracy of notices or directions properly given hereunder if the written form and execution thereof on its face purports to satisfy the requirements applicable thereto as set forth in Schedule II, as determined by Agent in good faith without additional confirmation or investigation.

8. Books and Records. Agent shall maintain books and records regarding its administration of the Account, and the deposit, investment, collections and disbursement or transfer of Account Funds, shall retain copies of all written notices and directions sent or received by it in the performance of its duties hereunder and shall afford the Depositor and Beneficiary periodic statements for the Account and reasonable electronic access to it.

9. Disputes Among Depositor and Third Parties. In the event Agent is notified of any dispute, disagreement or legal action between or among the Depositor and any third parties, relating to or arising in connection with the Account, the Account Funds or the performance of the Agent’s duties under this Agreement, the Agent shall be authorized and entitled, subject to Section 2 hereof, to suspend further performance hereunder, to retain and hold the Account Funds and take no further action with respect thereto until the matter has been fully resolved, as evidenced by written notification signed by the Depositor and any other parties to such dispute, disagreement or legal action.

10. Notice by Agent. Any notices which Agent is required or desires to give hereunder to the Depositor or Beneficiary shall be in writing and may be given by sending the same to the address indicated in Schedule II for the Depositor or Beneficiary (or to such other address as may have been substituted by written notification to Agent), by United States certified or registered mail, overnight courier service or confirmed facsimile transmission. Any notice sent by Agent to Depositor must also be sent to Beneficiary. Whenever under the terms hereof the time for Agent’s 397 of 1291
L-4
giving a notice or performing an act falls upon a Saturday, Sunday or banking holiday, such time shall be extended to the next business day.

11. Legal Counsel. If Agent believes it to be reasonably necessary to consult with counsel concerning any of its duties in connection with the Account or this Agreement, or in case Agent becomes involved in litigation on account of being escrow agent hereunder or on account of having received property subject hereto, then, in either case, its costs, expenses and reasonable attorney’s fees shall be paid by Depositor.

12. Agent Compensation. Agent shall be paid a fee for its services as set forth on Schedule V attached hereto and incorporated herein, which shall be subject to increase upon notice sent to Depositor, and reimbursed for its reasonable costs and expenses incurred. The Depositor shall pay and reimburse Agent’s fees and reasonable costs and expenses. The Depositor and its successors and assigns agree to indemnify and hold Agent harmless against any and all losses, claims, damages, liabilities and expenses, including reasonable costs of investigation, counsel fees, including allocated costs of in-house counsel, and disbursements that may be imposed on Agent or incurred by Agent in connection with the performance of its duties under this Agreement, including but not limited to any litigation arising from this Agreement or involving its subject matter.

13. Agent Resignation. Agent may resign by giving at least forty-five (45) days’ advance written notice of its resignation to the Depositor and the Beneficiary. Within forty-five (45) days after receiving the aforesaid notice, the Depositor and the Beneficiary agree to appoint a successor escrow agent, to which Agent shall transfer the Account Funds then held in the Account, less its unpaid fees, costs and expenses. If a successor escrow agent has not been appointed and has not accepted such appointment by the end of the 45-day period, Agent may apply to a court of competent jurisdiction for the appointment of a successor escrow agent, and the costs, expenses and reasonable attorney’s fees which Agent incurs in connection with such a proceeding shall be paid by Depositor.

14. Escrow Termination. Unless previously terminated as provided in Schedule II, this Agreement shall terminate on [DATE] at which time the Account Funds then held in the Account, less Agent’s unpaid fees, costs and expenses, shall be distributed as provided in Schedule II.

15. Governing Law. This Agreement shall be construed, interpreted, enforced, and administered in accordance with the laws of the State of California, without regard to conflict of law principles.

All litigation arising out of, or relating to, this Agreement shall be brought in a state or federal court in the County of Los Angeles in the State of California. The Depositor and the Agent irrevocably agree to submit to the exclusive jurisdiction of such courts in the State of California and waive any defense of forum non conveniens.

16. Automatic Succession. Any company into which the Agent may be merged or with which it may be consolidated, or any company to whom Agent may transfer a substantial amount of its escrow business, shall be the successor to the Agent without the execution or filing of any paper or any further act on the part of any of the parties, anything herein to the contrary notwithstanding. 398 of 1291
L-5

17. Brokerage Confirmations. The Depositor and the Beneficiary acknowledge that, to the extent regulations of the Comptroller of Currency or other applicable regulatory entity grant a right to receive brokerage confirmations of security transactions of the escrow, the Depositor and the Beneficiary waive receipt of such confirmations, to the extent permitted by law. The Agent shall furnish a statement of security transactions on its regular monthly reports.

18. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be one and the same instrument. The exchange of copies of this Agreement and of signature pages by facsimile transmission shall constitute effective execution and delivery of this Agreement as to the parties and may be used in lieu of the original Agreement for all purposes. Signatures of the parties transmitted by facsimile shall be deemed to be their original signatures for all purposes.

19. Assignment, Binding Effect. No party shall assign any of its rights or obligations under this Agreement without obtaining the prior written consent of the other parties to this Agreement.

Subject to the foregoing, all the provisions of this Agreement shall be binding upon and shall inure to the benefit of and be enforceable by the parties to this Agreement and their respective successors and assigns. Any purported assignment in violation of this provision shall be null and void and of no force or effect.

20. Further Assurances. Each party shall execute and deliver such additional documents or take such additional actions if such requested document or action is reasonably necessary to effect the transactions described in this Agreement.

21. Miscellaneous. This Agreement represents the complete and final agreement among the Depositor, the Agent and the Beneficiary and supersedes all prior agreements, written or oral, on the subject matter hereof and may not be contradicted by evidence of prior, contemporaneous or subsequent oral agreements of such parties. There are no unwritten oral agreements between or among the Depositor, the Agent and the Beneficiary. Time is of the essence for the performance of each of the terms and provisions of this Agreement.

The undersigned Agent hereby agrees to hold, manage and dispose of the Account Funds at any time deposited to the Account in accordance with the foregoing Agreement. [signature page follows]
399 of 1291
L-6
IN WITNESS WHEREOF, the undersigned have affixed their signatures and hereby adopt as part of this instrument Schedules I through V which are incorporated by reference.

DEPOSITOR:

By: By:

Its: Its:

BENEFICIARY:

By:

Its:

AGENT:

By:

Its:
400 of 1291
L-7

SCHEDULE I
DEPOSITS:

Deposits will be the following:

1. An initial deposit in the amount of [xxx] Dollars United States Currency ($xxx.xx) (the “Escrow Deposit”) to be delivered by the Depositor [on/before specified date, if any]. Depositor shall restore the Account to [$xxx.xx] after any drawing on the account by the Beneficiary, within seven days after notice by the Beneficiary of such drawing, up to a maximum aggregate deposit obligation (including the initial deposit) of [xxx] Dollars ($xxx.xx). 401 of 1291
L-8

SCHEDULE II

INSTRUCTIONS OF DEPOSITOR

1. All amounts deposited in the Account by Depositor, as well as any investment or interest income thereon (collectively the “Account Funds”), shall be invested during the term of this Escrow Agreement as set forth in Section 6 above.

2. Funds to be deposited into the Account shall be delivered by wire over the Federal Funds Wire System as follows:

U.S. National Bank Association
ABA # 091000022
U.S. Bank Trust N.A.

Account #[ ]
Remark: [Escrow Deposit pursuant to the Escrow Agreement dated xxx with XXXX]

3. Any notices to be delivered shall be in writing and shall be sent by United States certified or registered mail, overnight courier service or confirmed facsimile transmission. For all purposes hereof, any notice so sent shall be effectual as though served upon the person to whom it was sent at the time of confirmation by confirmed facsimile, the business day following the time it was sent by overnight courier service or three business days following the day it was sent by certified or registered mail.

The address and facsimile for the Agent are as follows, unless updated by the Agent at any time in writing:

U.S. National Bank Association
60 Livingston Avenue
St. Paul, MN 55107-2292
Attn: [ ]
Phone: [ ]
Fax: [ ]
With a fax copy to:

Linda McConkey
Fax: 503-275-5738
The address and facsimile for the Beneficiary are as follows, unless updated by the Beneficiary at any time in writing:

Southern California Public Power Authority
1160 Nicole Court
Glendora, CA 91740
The address and facsimile for the Depositor are as follows, unless updated by the Depositor at any time in writing:
402 of 1291
L-9
[XXXX]

4. Agent shall hold the Account Funds and shall dispose of them only in accordance with the following provisions:
a) Agent shall deliver the Account Funds to the Depositor upon receipt of a written certification by the Beneficiary’s Chief Financial Officer or his designee that the obligations of the Depositor under the [agreement dated xxxx] have been satisfied in full. b) Agent shall deliver the Account Funds to the Depositor or the Beneficiary as designated by an instruction letter jointly executed by both the Depositor and the Beneficiary; provided, however, that if Agent delivers any notice of resignation pursuant to Section 13 within the period specified in such instruction letter for delivery of Account Funds, Agent shall deliver such funds on the date of such resignation notice.
c) Agent shall deliver the requested portion of the Account Funds to the Beneficiary by wire transfer within three (3) business days of the receipt by the Agent of a written, notarized certification in the form attached as Exhibit A hereto by a Beneficiary Authorized Representative; provided, however, that if Agent delivers any notice of resignation pursuant to Section 13 within such three (3) business day period, Agent shall deliver such funds on the date of such resignation notice.
d) In the event the Agent has resigned pursuant to Section 13 of this Agreement, the Agent shall transfer the Account Funds to any successor agent appointed pursuant to Section 13.

5. This Agreement shall terminate upon the delivery of all the Account Funds in the manner provided by Section 4 of this Schedule II, or upon written agreement by all parties to this Agreement.

Upon such termination of this Agreement, all undelivered Account Funds shall be returned to the Depositor in accordance with the wiring instructions to be provided by the Depositor, and the Agent shall be relieved of its duties hereunder without any liability thereafter to any party whatsoever. 403 of 1291
L-10

EXHIBIT A TO SCHEDULE II
U.S. Bank National Association
60 Livingston Avenue
St. Paul, MN 55107-2292
Attn: [ ]
Phone:

Fax:

Dear Sir or Madam:

This letter is a request for disbursement to Beneficiary in the amount of $____ on deposit in the escrow account [# ] maintained as specified in Schedule II of that certain Escrow Agreement dated [ , 20__] between [XXXX], U.S. Bank National Association, and Beneficiary. The undersigned certifies that we are entitled to these funds because [XXXX] is in default of its obligations under that certain [agreement dated xxxx] due to the following reason(s):

You are hereby instructed to deliver the funds by federal funds wire in accordance with the wire instructions below:
[insert wiring instructions]
Sincerely,
Beneficiary Authorized Representative
Name:

Title:

Subscribed and sworn to be before me this ____ day of _______, 20__. _________________________________
Notary Public
My Commission Expires:_____________
404 of 1291
L-11

SCHEDULE III

DEPOSITOR AUTHORIZED REPRESENTATIVES
Each of the following individuals is designated as a “Depositor Authorized Representative,” and is authorized to act on behalf of the Depositor under this Agreement. The Depositor may add, change or delete such Authorized Representative upon written and notarized notice to the Agent.

Depositor Authorized Representatives:

Specimen Signature: ________________________________
Name/Title: _______________________________________
Specimen Signature: ________________________________
Name/Title: _______________________________________
Subscribed and sworn to be before me this ____ day of _______, 20__. _________________________________
Notary Public
My Commission Expires:_____________
405 of 1291
L-12

SCHEDULE IV

BENEFICIARY AUTHORIZED REPRESENTATIVES
Each of the following individuals is designated as a “Beneficiary Authorized Representative,” and is authorized to act on behalf of the Beneficiary under this Agreement. The Beneficiary may add, change or delete such Authorized Representative upon written and notarized notice to the Agent.

Beneficiary Authorized Representatives:

SCHEDULE V

SCHEDULE OF FEES FOR SERVICES AS ESCROW AGENT
FOR ______________________

BILLED ANNUALLY
01010 Acceptance Fee
The acceptance fee includes the administrative review of documents, initial set-up of the account, and other reasonably required services up to and including the closing. This is a one-time fee, payable at closing.
_______________________ reserves the right to refer any or all escrow documents for legal review before execution. Legal fees (billed on an hourly basis) and expenses for this service will be billed to, and paid by, the customer. If appropriate and upon request by the customer, _______________________ will provide advance
estimates of these legal fees.

TBD
04460 Escrow Agent
Annual administration fee for performance of the routine duties of the escrow agent associated with the management of the account.

Administration fees are payable in advance.

TBD
Direct Out of Pocket Expenses
Reimbursement of expenses associated with the performance of our duties, including but not limited to publications, legal counsel after the initial close, travel expenses and filing fees. At Cost Extraordinary Services
Extraordinary services are duties or responsibilities of an unusual nature, including termination, but not provided for in the governing documents or otherwise set forth in this schedule. A reasonable charge will be assessed based on the nature of the service and the responsibility involved. At our option, these charges will be billed at a flat fee or at our hourly rate then in effect.

Dated:
407 of 1291
M-1

APPENDIX M
TO THE

AMENDED AND RESTATED

POWER PURCHASE AGREEMENT

BETWEEN

SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY
and
WHITEGRASS NO. 1, LLC

COMMENCEMENT DATE
In accordance with the terms of that certain Power Purchase Agreement dated as of February 20, 2020 (“Agreement”) by and between Southern California Public Power Authority (“Buyer”) and Whitegrass No. 1, LLC (“Seller”), Seller must demonstrate to Buyer that the Commencement Date Conditions have been satisfied by delivery of a Certificate in the following form (the “Certificate”), signed by an authorized representative of Seller as to all of the items below. Any term used but not defined in the Certificate shall have the meaning set forth in the Agreement. The Certificate shall be submitted by Seller, along with reasonable documentation as may be requested by Buyer, and certify as to the following:
(a) Seller has obtained all Permits required for the operation and maintenance of the Facility in accordance with this Agreement (including those identified in Appendix B) except for those expected in the ordinary course of business, and all such Permits are final and nonappealable; (b) The Facility is both authorized and able to operate and deliver Energy at full capacity in accordance with Prudent Utility Practices, the requirements of this Agreement and all Requirements of Law;
(c) Seller has obtained Insurance coverage for the Facility as required by Appendix F; (d) Seller has executed and provided to Buyer the Performance Security; (e) If applicable to Seller and the Facility, Buyer has received Seller’s proof of registration with NERC for all applicable Function Types in the NERC Compliance Registry in accordance with the currently effective NERC Rules of Procedure, including Seller’s registration as both Generator Owner and Generator Operator;
(f) If applicable to Seller and the Facility, Buyer has received Seller’s mapping of NERC registered Function Types in accordance with the currently effective WECC Entity Function Mapping Procedures;
(g) Buyer’s Authorized Representative has received and approved, in his or her reasonable discretion, Seller’s Quality Assurance Program found in Appendix G. (h) The Facility is CEC certified.
408 of 1291
N-1

APPENDIX N
TO THE

AMENDED AND RESTATED

POWER PURCHASE AGREEMENT

BETWEEN

SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY
and
WHITEGRASS NO. 1, LLC

ORGANIZATIONAL STRUCTURE AND OWNERSHIP

OF SELLER AND PARENT ENTITIES
Open Mountain Energy,
LLC
(Delaware LLC)
Whitegrass No. 1, LLC
(Nevada LLC)
100%
Principals:
- Brady Olson, Manager, Chief
Operating Officer and Board
Member
- Yan Tang, Board Member
- Kejian Cao, Board Member
Principals:
- Brady Olson, Manager
409 of 1291
O-1

APPENDIX O
TO THE

AMENDED AND RESTATED

POWER PURCHASE AGREEMENT

BETWEEN

SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY
and
WHITEGRASS NO. 1, LLC

METEOROLOGICAL AND PYRANOMETER MEASUREMENTS
Monitored Meteorological Data Points:

1. Ambient air temperature

2. Relative humidity

3. Barometric pressure
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P-1

APPENDIX P
TO THE

AMENDED AND RESTATED

POWER PURCHASE AGREEMENT

BETWEEN

SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY
and
WHITEGRASS NO. 1, LLC

FORM OF QUARTERLY CERTIFICATE

QUARTERLY CERTIFICATE
THE UNDERSIGNED HEREBY CERTIFIES THAT:
(1) I am the duly elected [Officer’s title] of Whitegrass No. 1, LLC, a Nevada limited liability company (“Seller”);
(2) I have reviewed the terms of that certain Amended & Restated Power Purchase Agreement dated as of ____________, 2023, as amended, supplemented or otherwise modified to the date hereof (said Power Purchase Agreement, as so amended, supplemented or otherwise modified, being the “Power Purchase Agreement”, the terms defined therein and not otherwise defined in this Certificate (including Attachment No. 1 annexed hereto and made a part hereof) being used in this Certificate as therein defined), by and between Seller and Southern California Public Power Authority, and the terms of the other Ancillary Documents, and I have made, or have caused to be made under my supervision, a review in reasonable detail of the transactions and condition of Seller and Seller Parties during the accounting period covered by the attached financial statements; and
(3) the representations and warranties of Seller set forth in the Power Purchase Agreement remain true and correct as of the date hereof, and Seller is in compliance with all terms of the Power Purchase Agreement in all material respects; (4) The examination described in paragraph (2) above did not disclose, and I have no knowledge of, the existence of any condition or event which constitutes a Default during or at the end of the accounting period covered by the attached financial statements or as of the date of this Certificate or that, after notice or with the passage of time or both, would constitute a Default during or at the end of such period[, except as set forth below]; [Set forth below are all exceptions to paragraph (3) above listing, in detail, the nature of the condition or event, the period during which it has existed and the action which Seller has taken, is taking or proposes to take with respect to each such condition or event:
].

The foregoing certifications, together with the computations set forth in Attachment No. 1 annexed hereto and made a part hereof and the financial statements delivered with this 411 of 1291
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Certificate in support hereof, are made and delivered this [__________] day of [_____________, ____] pursuant to the Power Purchase Agreement.
[Seller Name]
By: